CARMEN A ORTIZ

OCR transcription for search; preserved printed pages are authoritative

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

AUTHENTICATE
U.S. GOVERNMEN
INFORMATION

GP

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF PUERTO RICO

IN RE: : CASE NO. 04-13171
CARMEN A. ORTIZ, : CHAPTER7 Fy LED & ENTERED
Debtor ;
OCT 05 2005
OPINION AND ORDER U.S. BANKRUPTCY COURT

SAN JUAN, PUERTO RIGO
Before the court is the trustee’s objection to the debtor’s claimed exemption for

real and personal property pursuant to Texas law. For the reasons set forth below, the
trustee’s objection is granted.
Background

Debtor, Carmen A. Ortiz, filed a petition under chapter 7 of the Bankruptcy Code
on December 28, 2004. The petition lists debtor’s street address as one in Fort Worth,
Texas, and her mailing address as one in Carolina, Puerto Rico. In the section regarding
“venue”, debtor checks that she “has been domiciled or has had a residence, principal
place of business, or principal assets in this District for 180 days immediately preceding
the date of this petition or for a longer part of suck 180 days than in any other District.”
Her schedules list $80,000.00 in real property and $3,975.00 in personal property. The
schedules also indicate there are no secured or priority claims, and $41,830.74 in
unsecured claims.

In her “Schedule C - Property Claimed as Exempt”, debtor elected an exemption
under 11 U.S.C. § 522 (b)(2), detailed as “[e]xemptions available under applicable
nonbankruptcy federal laws, state or local law where the debtor’s domicile has been

located for the 180 days immediately preceding the filing of the petition, or for a longer

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

portion of the 180-day period than in any other place, and the debtor’s interest as a tenant

by the entirety or joint tenant to the extent the interest is exempt from process under
applicable nonbankruptcy law.” Debtor claims as exempt a house valued at $80,000.00
pursuant to Tex. Const. art. 16, § 50, and personal property valued at $3,975.00 pursuant
to Tex. Prop. Code § 42.001(a)(2) and § 42.002(a). On Schedule F, debtor lists as
unsecured creditors eight different financial institutions for credit cards debts totaling
$41,830.74.

The trustee filed an objection to claimed exemptions on February 25, 2005,
arguing that, as a resident of Puerto Rico, the debtor could not claim exemptions under
Texas law (dkt. #4). The court entered an order on April 7, 2005, granting the objection
as unopposed (dkt. #6).

On April 13, 2005, the debtor filed a motion to vacate the order, arguing that she
was not notified of the trustee’s objection and that the same did not appear on the court’s
docket of this case as of the date of the filing of her motion to vacate (dkt. #8). On June
2, 2005, the court entered an order granting the motion to vacate, but directing the debtor
to monitor CM/ECF and not PACER.

The trustee filed another (identical) objection to debtor’s claimed exemptions on
June 20, 2005 (dkt. #11). The debtor filed an opposition to the trustee’s objection on July
7, 2005 (dkt. #12).

The debtor argues that she is a domiciled resident of the state of Texas, where she
established a homestead with her husband; that upon his death and the probation of his

estate she decided to move to Puerto Rico; that her only income is from Social Security

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

and the pension of her husband from American Airlines; that her only debts are credit

card debts of her husband from creditors that are not from either Texas or Puerto Rico;
and that the real property she owns in Texas is fully exempt pursuant to Article 16 § 50 of
the Constitution of the State of Texas and her personal property is exempt pursuant to the
“Texas Property Code”!.

The trustee’s motions do not provide any legal basis for his objection to the
debtor’s claimed exemptions. The debtor argues that she should be allowed to filed her
bankruptcy petition in the district where its filing and prosecution will be the most
economical and convenient for her. She further argues that pursuant to 11 U.S.C.
§ 522(b)(2)(A) and (d), she should be allowed to choose the exemptions under the
Bankruptcy Code or the exemptions under the “applicable state law to which she might
be entitled”. According to the debtor, she may claim a homestead exemption on a
residence outside the state where the petition is filed, especially where no lien holders are
involved. Debtor points out that none of her unsecured creditors have objected to the
claimed exemptions, that the trustee has the burden of proof to establish his objection to
her claimed exemption, and that the availability of exemptions should be liberally
construed in favor of the debtor to fulfill the bankruptcy purpose of obtaining a “fresh
start’.

Discussion
Section 522(b) of the Bankruptcy Code provides for the debtor to exempt certain

property from the estate and from creditor’s claims. Subsection (d) sets forth the

‘Debtor does not cite to a particular section of Texas law.

3

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

categories of property that the debtor may claim as exempt, such as real property,

personal property, a motor vehicle and household furnishings, and in what amount.
Subsection (b) provides that states can “opt out” of the Code’s exemption arrangement,
thereby limiting citizens of that state to the exemptions available under state and non-
bankruptcy federal law. Neither Texas nor Puerto Rico have “opted out”; therefore,
debtor may choose between the § 522(d) exemptions or state exemptions.

Section 522(b)(2)(A) provides that a debtor may exempt property “that is exempt

under State or local law that is applicable on the date of the filing of the petition at the

place in which the debtor’s domicile has been located for the 180 days immediately

preceding the date of the filing of the petition, or for a longer portion of such 180-day

period than in any other place” (emphasis ours). It has been noted that “|t]he law of the

debtor’s domicile, for purposes of section 522, may be different from the law of the
forum, as when the debtor’s place of business or residence is in one state and the domicile

is in another.” 4 Lawrence P. King, Collier on Bankruptcy § 522.06 (15™ ed. rev’d 2005).

The commentator continues, “[i]n such cases, the court must give effect to those
exemptions allowed the debtor by the law of the state of domicile, and it makes no
difference where the property is situated or where the petition initiating a case under title
11 is filed, so long as the property is exempt under the law of the domiciliary state.” Id.
at pp. 522-34, 35.

“Domicile” is “the place at which a person is physically present and that the
person regards as home; a person’s true, fixed, principal, and permanent home, to which

that person intends to return and remain even though currently residing elsewhere.”

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

Black’s Law Dictionary p. 501 (7" ed. 1999). Further,

Domicile, as interpreted with regard to conflicts of law,
means actual residence coupled with a present intention to
remain there. It is the place where one intends to return
when one is absent and where one’s political rights are
exercised. Mere physical removal to another jurisdiction,
without the requisite intent is insufficient to effect a change
of domicile. The fact that the debtor, therefore, has resided
elsewhere during the 180-day period will not defeat the
applicability of the law of the state wehre the debtor keeps
the principal home.

Collier, id. at 523-34.

The representations in debtor’s opposition to the trustee’s objection to her claimed

exemptions indicate that her domicile is in Puerto Rico; to wit:

1.

2.
3.

5.

“Debtor had been a domiciled resident of the State of Texas....” (Emphasis
ours).

“[S]he began exploring the idea of moving back to Puerto Rico....”

“Once she decided to move back to Puerto Rico she understood that she
would have to either rent and eventually sell her Texas home to acquire
new living quarter in Puerto Rico.” [sic]

“Since most of her debts where [sic] not from Texas and her source of
income was not from Texas and her source of income was not from Texas
and she intended to return to Puerto Rico she filed a petition under Chapter
7 at the Bankruptcy Court for the District of Puerto Rico.” (Emphasis
ours.)

“Since debtor would be moving to Puerto Rico ....” (Emphasis ours.)

See dkt. #12. Accordingly, since by her own admittance the debtor intends to

permanently reside in Puerto Rico, and since she indicated on the first page of her

voluntary petition that she had been domiciled or has had a residence in this district

(Puerto Rico) for 180 days immediately preceding the date of the filing of the petition or

for a longer part of such 180 days than in any other District, the court concludes that at

the time of the filing of the petition the debtor’s domicile was in Puerto Rico. Therefore,

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

her domicile was not in Texas and she may not claim the property exemptions provided

for by Texas law.
Conclusion
Debtor’s domicile at the time of the filing of the bankruptcy petition was in Puerto
Rico; accordingly, she may not claim property exemptions provided for by Texas law
pursuant to 11 U.S.C. § 522(b)(2). The trustee’s objection to claimed exemptions is
therefore granted.
SO ORDERED.

In San Juan, Puerto Rico, this 28" day of September, 2005.

asa

~ ENRIQUE S. LAMOUTTE
United States Bankruptcy Judge