IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF PENNSYLVANIA

THOMAS MICHAEL LEWIS, ET AL.,

Plaintiffs, 05cv1336

v. ELECTRONICALLY FILED

TRUSTEE CHARLES O. ZEBLEY,

Defendant.

Memorandum Order

Plaintiffs (Debtors), who are husband and wife, appeal from a final order of the

bankruptcy court determining that they could not exempt in excess of fifty percent of the value

certain real property, but rather, for exemption purposes the value of the property must be equally

allocated between the debtors because of their spousal relationship. After careful consideration,

this Court affirms the order of the bankruptcy court.

Plaintiffs filed a Chapter 7 bankruptcy on March 22, 2005 and a trustee was thereafter

appointed. At the time of filing, plaintiffs owned a 6.5 acre parcel of real estate which they

valued at $3,000.00. According to 11 U.S.C. § 522(d)(5), either debtor may exempt $10,225.00

in assets of their choosing. Instead of each plaintiff exempting one-half the declared value of the

entireties property, they chose to “allocate” the entire declared value to the interest of wife

plaintiff and zero value to the interest of husband plaintiff. The trustee objected to this

exemption and argued before the bankruptcy court that this amount should be allocated equally

between the debtors, such that each debtor can take an exemption in at most only fifty percent of

the property. By order of court dated June 29, 2005, the bankruptcy court held that because

husband and wife were tenants by the entireties, which is a form of joint tenancy based upon the

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common law fiction that the husband and wife are a single entity, that they may not “allocate” all

the value of entities property to one spouse and none of the value to the other. In support of its

ruling, the bankruptcy court cited In re Brannon, a decision by the bankruptcy court which was

recently affirmed by United Stated District Court Judge Terrence McVerry in Brannon v.

Rothschild (W.D.Pa. September 15, 2005, Docket No. 05-cv-00948)(unpublished).

This Court, sitting as an appellate tribunal, applies a clearly erroneous standard of review

on the bankruptcy court’s factual findings and a de novo standard of review on its conclusions of

law. In re Sicilano, 13 F.3d 748, 750 (3d Cir. 1994). Plaintiffs, in this case, appeal the

bankruptcy court’s conclusion of law, and accordingly, this Court employs a de novo standard of

review.

Plaintiffs argue that wife plaintiff may exempt the sum of $3,000.00 and the trustee

argues that wife plaintiff may exempt only $1,500.00 as tenants by the entireties. After

reviewing the order of United States Bankruptcy Judge Bernard Markovitz sustaining the

trustee’s objections to the exemption, along with the briefs of appellants and appellee in this

case, this Court finds and rules that the reasoning and conclusion of Judge Markovitz is sound

and that arguments raised by the appellee are compelling. Accordingly, this Court affirms and

adopts the decision of Judge Markovitz on this issue. Further, as stated above, this Court notes

that the issue of whether a claimed exemption must be equally allocated between a husband and

wife was recently considered and resolved in favor of the trustee in Brannon v. Rothschild. This

Court finds that result to be instructive here.

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AND NOW, this 4th day of November, 2005, this Court hereby affirms the June 29,

2005 Order of Bankruptcy Judge Markovitz and hereby dismisses the debtors’ appeal. The Clerk

of Court shall mark this case closed.

s/Arthur J. Schwab 

Arthur J. Schwab

United States District Judge

cc: All counsel of record as listed below

United States Bankruptcy Court

Western District of Pennsylvania

Paul W. Johnson, Esquire

420 Temple Building

New Castle, PA 16101

Charles O. Zebley

P.O. Box 2123

Uniontown, PA 15401

 

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