Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-15-06019/USCOURTS-ca8-15-06019-0/pdf.json

Parties Involved:
Sandra Jo Bruess
Appellant
Michael S. Dietz
Appellee

Document Text:

United States Bankruptcy Appellate Panel

For the Eighth Circuit

___________________________

No. 15-6019

___________________________

In re: Sandra Jo Bruess, formerly known as Sandy B. Macho, formerly known as

Sandra J. Rolloff

lllllllllllllllllllllDebtor

------------------------------

Sandra Jo Bruess

lllllllllllllllllllllDebtor - Appellant

v.

Michael S. Dietz

lllllllllllllllllllllTrustee - Appellee

____________

Appeal from United States Bankruptcy Court 

for the District of Minnesota - St. Paul

____________

 Submitted: October 9, 2015

 Filed: October 29, 2015

____________

Before SCHERMER, SALADINO and NAIL, Bankruptcy Judges.

____________

SALADINO, Bankruptcy Judge.

Appellate Case: 15-6019 Page: 1 Date Filed: 10/29/2015 Entry ID: 4331322 
The Appellant, Sandra Jo Bruess, appeals from an order of the bankruptcy

court sustaining the bankruptcy trustee’s objection to her claim of an exemption in 1

certain real property and limiting the exemption to $155,675.00. We have jurisdiction

over this appealfromentry ofthe bankruptcy court’s final order pursuant to 28 U.S.C.

§ 158(b). For the reasons set forth below, we affirm.

Factual Background

This case arises out of the Chapter 7 bankruptcy proceeding filed by Ms.

Bruess in the District of Minnesota on December 15, 2014. On Schedule C of her

bankruptcy filing, Ms. Bruess claimed as exempt, pursuant to Minnesota law, her

one-third interest in her homestead property located in Minnesota. Ms. Bruess

acquired her interest in the property by quitclaim deed from her father and his wife

dated April 5, 2010, which was filed for record in Brown County, Minnesota, on

January 14, 2013. The value of her claimed exemption was $562,760.33. 2

The bankruptcy trustee objected to the homestead exemption claim asserting

that Ms. Bruess did not acquire her interest in the property until her father caused the

quitclaim deed to be recorded on January 14, 2013, which was only 700 days prior

to bankruptcy filing. As such, according to the trustee, Ms. Bruess acquired the

property within the 1215-day window of 11 U.S.C. § 522(p)(1), thereby limiting her

state law exemption to $155,675.00 in value. Ms. Bruess, on the other hand, argued

that she acquired the property when the deed was executed on April 5, 2010, which

The Honorable Gregory F. Kishel, Chief Judge, United States Bankruptcy

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Court for the District of Minnesota.

Under the terms of the quitclaim deed, Donn Bruess (Ms. Bruess’ father) and

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his wife, conveyed a life estate in the property to Donn Bruess and the remainder

interest to Ms. Bruess and her brothers, Steven and William.

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Appellate Case: 15-6019 Page: 2 Date Filed: 10/29/2015 Entry ID: 4331322 
was substantially more than 1215 days prior to the bankruptcy filing. Therefore, her

state law homestead exemption should not be limited pursuant to 11 U.S.C. 522(p)(1).

On March 31, 2015, the bankruptcy court held a hearing on the trustee’s

objection and Ms. Bruess’ resistance. The parties submitted a Stipulation of Fact

under which they agreed:

1. That the quit claim deed filed as document

number 391317 ofthe Brown County, Minnesota Recorder

was executed by the Debtor’s father, Donn Bruess, and his

wife, Audrey Bruess, on April 5, 2010. 

2. Attorney Robert D. Hinnenthal of New Ulm,

Minnesota, drafted said deed, and notarized it on the date

that it was executed. 

3. That the deed remained in the possession of

Attorney Hinnenthal from April 5, 2010 to the date that it

was recorded on January 14, 2013. 

4. That on or about January 14, 2013, Donn

Bruess directed Attorney Hinnenthal to record the deed. 

5. That Donn Bruess died on April 21, 2013. 

6. That Audrey Bruess died in October, 2013. 

The trustee also submitted affidavits, along with a transcript of Ms. Bruess’

testimony at her § 341 meeting. Ms. Bruess did not submit any evidence, and the

parties submitted the matter to the bankruptcy court for consideration. The

bankruptcy court issued its oralruling on the record sustaining the trustee’s objection.

Specifically, the bankruptcy court found that, until he instructed his attorney to record

it, “Donn Bruess retained complete control over the fate of that deed.” Therefore,

delivery (and transfer of interest) did not take place until January 14, 2013, when he

directed his attorney to record it.

Ms. Bruess appealed, asserting that the bankruptcy court erred in determining

that she did not acquire her interest in the property, and the deed from her father was

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Appellate Case: 15-6019 Page: 3 Date Filed: 10/29/2015 Entry ID: 4331322 
not “delivered” under Minnesota law, until her father instructed his attorney to record

it. 

Standard of Review

We review the bankruptcy court’s conclusions of law de novo and its findings

of fact for clear error. Addison v. Seaver (In re Seaver), 540 F.3d 805, 809 (8th Cir.

2008); Doeling v. Nessa (In re Nessa), 426 B.R. 312, 314 (B.A.P. 8th Cir. 2010). The

parties are in agreement that the resolution of this appeal turns on when the deed was

delivered under Minnesota law, which is a question of fact. Under long-standing

Minnesota case law:

It is, of course, very elementary law that a deed does not

take effect until there is a delivery to the grantee, . . . .

Delivery is a question of fact, . . . . The important question

in determining whether there has been a delivery is the

intent of the grantor that the instrument shall pass out of

his control, and operate as a conveyance.

Babbitt v. Bennett, 71 N.W. 22, 22-23 (Minn. 1897).

A factual finding is clearly erroneous if, after examining the entire record, we

are left with a definite and firm conviction that the bankruptcy court has made a

mistake. Anderson v. City of Bessemer City, 470 U.S. 564, 573 (1985) (quoting

United States v. United States Gypsum Co., 333 U.S. 364, 395 (1948)). This standard

plainly does not entitle a reviewing court to reverse the finding of the trier of fact

simply because it is convinced that it would have decided the case differently.

Anderson, 470 U.S. at 573. Where there are two permissible views of the evidence,

the fact finder’s choice between them cannot be clearly erroneous. Id. at 574. 

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Appellate Case: 15-6019 Page: 4 Date Filed: 10/29/2015 Entry ID: 4331322 
Discussion

Under 11 U.S.C. § 522, a debtor who files bankruptcy may exempt from

property of the estate the property delineated in 11 U.S.C. § 522(d), or may use the

3

exemptions available under state law and other federal laws. 11 U.S.C. § 522(b)(1)-

(3). Here, Ms. Bruess elected to use the exemptions available under state and federal

law other than bankruptcy law. 

One of the exemptions claimed by Ms. Bruess is the Minnesota homestead

exemption as set forth in Minnesota Statutes §§ 510.01 and 510.02. “The homestead

may include any quantity of land not exceeding 160 acres. The exemption per

homestead, whether the exemption is claimed by one ormore debtors, may not exceed

$390,000 or, if the homestead is used primarily for agricultural purposes, $975,000

. . . .” Minnesota Statutes § 510.02. In Schedule C, Ms. Bruess claimed her entire

interest in her homestead property, valued at $562,760.33, as exempt. 

The trustee does not dispute Ms. Bruess’ entitlement to a homestead exemption

under Minnesota law. The trustee only argues that the limitation of 11 U.S.C. §

522(p) should apply. That section was added by the 2005 BAPCPA amendments to

the BankruptcyCode and provides a limitation on the dollar value of certain state law

exemptions for recently acquired property. Specifically, for purposes of this appeal,

that section limits a state law exemption in real property as follows:

[A] debtor may not exempt any amount of interest that was

acquired by the debtor during the 1215-day period

preceding the date of the filing of the petition that exceeds

in the aggregate $155,675 in value in — 

This choice among exemption schemes is not available for debtors living in 3

states that have opted out of the right to use the Bankruptcy Code exemptions. 11

U.S.C. § 522(b)(2). Minnesota has not opted out.

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Appellate Case: 15-6019 Page: 5 Date Filed: 10/29/2015 Entry ID: 4331322 
(A) real or personal property that the debtor or a

dependent of the debtor uses as a residence[.]

11 U.S.C. § 522(p)(1)(A). The only issue in this appeal is whether Ms. Bruess

“acquired” the property in which she claims her homestead exemption within the

1215-day period preceding the filing of the petition thus limiting her homestead

exemption to $155,675.00. 

In bankruptcy, property rights are determined by reference to state law. Butner

v. United States, 440 U.S. 48, 55 (1979). Minnesota law is well-settled that the

transfer of an interest in real property does not occur until the delivery of the deed.

Under Minnesota law, to transfer title to real

property, a deed must be delivered to the intended

recipient. Slawik v. Loseth, 207 Minn. 137, 290 N.W. 228,

229 (1940); In re Estate of Savich, 671 N.W.2d 746, 750

(Minn. Ct. App. 2003). A physical delivery of the deed is

not necessary to convey title, all that is required is to show

an unconditional intention by the grantor to part with

ownership. Barnard v. Thurston, 86 Minn. 343, 90 N.W.

574, 576 (1902). In Barnard, the court stated “To

constitute a complete delivery thereof, the grantor must

deal with it in a way evincing an intention to part presently

and unconditionally with all control over it, and that itshall

take effect according to its terms.” Id.

The two essential elements to delivery of a deed are,

(1) surrender of control by the grantor, and (2) an intent to

convey the title. Exsted v. Exsted, 202 Minn. 521, 279

N.W. 554, 557 (1938). The delivery depends on the intent

of the grantor “as appearsfromthe contents of the deed and

all the surrounding circumstances.” Vessey v. Dwyer, 116

Minn. 245, 133 N.W. 613, 614 (1911).

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Appellate Case: 15-6019 Page: 6 Date Filed: 10/29/2015 Entry ID: 4331322 
Georgen-Running v. Bidwell (In re Bidwell), 326 B.R. 759, 764-65 (Bankr. D. Minn.

2005) (footnote omitted).

Thus, the fact question for the bankruptcy court was whether Donn Bruess

intended to surrender control of the deed with an intent to convey title when he signed

it and left it with his attorney. As the party objecting to the homestead exemption, the

trustee had the burden of proving that the exemption was not properly claimed. Fed.

R. Bankr. P. 4003(c). The trustee’s evidence included the Stipulation of Fact between

the parties. Under the terms of that stipulation, the parties agreed that the deed was

executed by Donn Bruess and his wife on April 5, 2010; that it was notarized by his

attorney; that the deed remained in the attorney’s possession fromApril 5, 2010, until

it was recorded on January 14, 2013; and that on January 14, 2013, Donn Bruess

directed his attorney to record the deed. 

The trustee also presented affidavits from each of Ms. Bruess’ two brothers,

William and Steven. Steven’s affidavit stated: “I was party to discussions with my

father about various considerations that influenced how he intended to finalize his

estate plan. There were several factors that he was weighing. These included my

brother’s severe illness and my sister’s poor record regarding financial matters.” The

affidavit further stated: “My understanding is that my father did not make a final

decision to pass title to his real estate to his children by deed until he instructed his

lawyer to record the deed in January of 2013.” William’s affidavit echoed those

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statements. 

It is not clear whether the attorney for Ms. Bruess objected to the use or 4

admissibility of the affidavits, although the transcript indicates the bankruptcy judge

found that a hearsay exception should apply and the affidavits were admissible. Ms.

Bruess did not appeal that evidentiary ruling.

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Appellate Case: 15-6019 Page: 7 Date Filed: 10/29/2015 Entry ID: 4331322 
Finally, the trustee presented the transcript of the § 341 meeting of creditors

at which Ms. Bruess testified on January 7, 2015. In part, that transcript reveals the

following testimony by Ms. Bruess regarding the deed:

Q: So it had been sitting with your dad’s attorney – 

A: It had been sitting there –

Q: – for a while –

A: – for a while until dad made his decision to have it filed.

Q: Okay.

A: It was an issue because dad held off on things for quite

some time my brother was very ill with cancer and he just

wasn’t sure how he was going to handle the estate. So –

Q: Okay.

A: – then he gave the go ahead, he wanted it filed, and

that’s what happened. So . . . .

Q: Okay. Fair enough. Dad just – so I understand your

version of it, dad had the Deed prepared – 

A: Yes.

Q: – and then his attorneys held it because he was

concerned about William’s – 

A: Uh-huh.

Q: – health issues – 

A: Uh-huh.

Q: – and then at some point he was satisfied that he wanted

to move forward and then he had [attorney] file the Deed?

A: Yes.

Q: Thank you. Okay. And did you ever have the Deed? Did

he give it to you and you held it?

A: Never.

Q: All right. When did he tell you about it?

A: Oh, I don’t know.

Q: Did you find out about it before it was recorded?

A: He had said he was going to make the decision to record

it, yeah, but – no.

Q: Okay. When did he tell you he was going to make the

decision to record it?

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Appellate Case: 15-6019 Page: 8 Date Filed: 10/29/2015 Entry ID: 4331322 
A: I don’t even know when it was recorded.

Q: It wasrecorded January 14th of 2013. So roughly a year

ago, I guess.

A: Yeah.

Q: Before then, did he tell you?

A: Shortly. Yeah.

Q: Okay.

In summary, the trustee presented evidence from three sources, including Ms.

Bruess herself, to the effect that instead of recording the deed immediately after

execution, Donn Bruess left it with his attorney until he determined whether to go

forward with that conveyance. As Ms. Bruess said, prior to contacting his attorney in

January 2015 to instruct him to record the deed, “he just wasn’t sure how he was

going to handle the estate.” Notably, Ms. Bruess did not present any evidence at the

hearing. Upon consideration ofthe trustee’s evidence, the bankruptcy court found that

Donn Bruess had not surrendered control of the deed with the intent to irrevocably

convey the property. 

Ms. Bruess argues on appeal that even in the absence of an effective escrow

agreement, delivery of a deed to a third party can be sufficient to pass title under

Minnesota law. While thatstatement may be true in and of itself, it does not affect the

outcome of this appeal. As the attorney for Ms. Bruess even acknowledged in her

appellate brief, “the crucial question is the grantor’s intent, which is a question of

fact.” At oral argument, the attorney for Ms. Bruess suggested that another possible

interpretation of the evidence is that Donn Bruess intended to convey a remainder

interest to his children at the time he executed the deed and delivered it to his

attorney, as evidenced by the fact that he ultimately told the attorney to record it.

Even if that were a plausible interpretation of the evidence, a fact finder’s choice

between two permissible views ofthe evidence cannot be clearly erroneous. Anderson

v. City of Bessemer City, 470 U.S. 564, 574 (1985). 

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Appellate Case: 15-6019 Page: 9 Date Filed: 10/29/2015 Entry ID: 4331322 
The only evidence presented at the hearing overwhelmingly supports the

bankruptcy judge’s finding of fact that Donn Bruess did not intend to convey the

property until he instructed his attorney to record the deed. There being no evidence

to the contrary, the bankruptcy court’s fact findings were not clearly erroneous.

Therefore, we affirm.

Conclusion

For the reasons stated above, we affirm.

______________________________

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