Alfred L. McLaughlin

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Case 09-44714 Doc95 Filed 03/18/10 Entered 03/18/10 14:41:33 Desc Main
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UNITED STATES BANKRUPTCY COURT
DISTRICT OF MASSACHUSETTS

In re:
Chapter 13
Alfred L. McLaughlin, Case No. 09-44714-JBR

Debtor

MEMORANDUM OF DECISION ON
MOTION TO AVOID LIEN (#10) AND OBJECTION TO EXEMPTION (#85)

On March 16, 2010, the Court held a nonevidentiary hearing on the Debtor’s Motion to Avoid
Judicial Liens (#10) and creditor Eric Silva’s Objection to Homestead Exemption (#85). Both motions
hinge on the validity of a Massachusetts homestead exemption claimed by the Debtor in his former home.
Silva and other creditors held judicial liens in the property arising from improvements they performed on
the property prepetition. After the Debtor filed for bankruptcy, the property was sold free and clear of
liens, claims, and encumbrances pursuant to 11 U.S.C. §362(f), and so the practical effect of this decision
will be to determine whether the judicial liens will translate into interests in the proceeds of that sale.

The basis for Silva’s objection to exemption, as stated in his motion and amplified at hearing, is
that the exemption is claimed in bad faith. Silva alleges that at the time the Debtor recorded the
homestead, he intended to sell the property soon thereafter and schemed to have the improvements
completed without paying for them. According to Silva, this lack of good faith constitutes adequate
grounds to deny the debtor his homestead exemption.

Even if all the facts stated by Silva were taken as true and all plausible inferences were drawn in
Silva’s favor, no adequate legal basis would exist to deny the Debtor his exemption. As Silva concedes
in his motion, chapter 188, section 1 of the Massachusetts General Laws merely requires that a
homestead claimant “occupy or intend to occupy said home as a principal residence.” The homestead is

valid under Massachusetts law, as it is undisputed that the Debtor occupied the property as his principal

AUTHENTICATED
U.S. GOVERNMENT
INFORMATION

GPO

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residence at the time he claimed the homestead.

Furthermore, aside from the most indefinite allegations of “bad faith,” Silva has failed to assert
any legal theory that would prevent section 522(b)(2) of the bankruptcy code from giving effect to the
Debtor’s Massachusetts exemption. The two cases cited by the debtor at hearing, 7x re Orlando, 359
B.R. 395 (Bankr. D. Mass. 2007) and Jn re Kravitz, 225 B.R. 515 (Bankr. D. Mass. 1998), are inapposite.
Orlando applied a “bad faith” standard in passing on a debtor’s homestead exemption, but that was in the
context of an amendment to schedules seeking to add an exemption, where such an inquiry is customary.
See In re Wood, 291 B.R. 219, 228-29 (1st Cir. BAP 2003}. Kravitz involved the much more serious
situation of fraud perpetrated by the debtor, which is not alleged here. Moreover, the persuasive value of
Kravitz is limited, considering that tt was based on Florida common law and decided prior to Patriot
Portfolio v. Weinstein (In re Weinstein), 164 B.R. 677 (ist Cir. 1999) and the 2005 adoption of section
522(0) of the bankruptcy code.

The Court finds that the Debtor may make use of his Massachusetts homestead exemption.

There is no need to rule on the timeliness of Silva’s objection, as the Debtor’s counsel stated that the
Debtor was not relying on the alleged late objection.
In accordance with the foregoing, Silva’s objection to exemption is OVERRULED. A separate

order will issue.

Dated: March 18, 2010 By the Court,

(Pd bauctt,

Joel B. Rosenthal
U.S. Bankruptcy Judge