# U ni te d S ta te s B an kr up tc y A pp el la te P an el

For the Eig hth Circu it

__ __ __ __ __ __ __ __ __ __ __ __ __ _

No. 1 6- 60 28

__ __ __ __ __ __ __ __ __ __ __ __ __ _

In re: Tod d Al le n C rab tre e; Terry l Ly nn Crab tre e

ll ll ll ll ll ll ll ll ll ll l Deb to r s

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

Dan ie l M cDerm ot t, Un it ed Sta te s Tru st ee

ll ll ll ll ll ll ll ll ll ll l Pla in ti

ff - App el le e

v.

Tod d Al le n C rab tre e; Terry l Ly nn Crab tre e

ll ll ll ll ll ll ll ll ll ll l Defe nd

an ts - App el la nt

s

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

Tod d Al le n C rab tre e; Terry l Ly nn Crab tre e

ll ll ll ll ll ll ll ll ll ll l Deb to rs - App el la nt s

v.

Gen e W. Doel in g

Ch ap te r 7 Tru st ee - Ap

pe ll ee

__ __ __ __ __ __
App eal fro m

Uni te d S ta te s B an kr up tc y Co ur t fo r th e Dis tri ct of M in ne so ta - Ferg us Fal ls__ __ __ __ __ __

Su bm it te d: Decem

be r 8, 2 01 6
Fil ed : J an ua ry

24 , 20 17

__ __ __ __ __ __

Befo re FEDERMAN, Ch ie f Ju dg e, SALADINO and NAIL, Bank ru pt cy Ju dg es

.

__ __ __ __ __ __
NAIL, Ban kr up tc y

Ju dg e.

Deb to rs Tod d All en Crab tre e an d Terryl Ly nn Crab tre e ("De bt or s" ) ap pe al th e Aug us t 8, 20 16 m em or an du m de ci si on an d or de r of th e ba nk ru pt cy co ur t su st ai ni ng

Trus te e Gen e W

. Doe li ng 's ("Tru st ee" ) ob jecti on to Deb to rs ' cl ai m ed ho m es te ad

ex em pt io n. W e rev ers e an d rem an d fo r fu rth e r p r oc eed in gs co ns is te nt wit h th is

op in io n.

BACKGROUND

In Mar ch 20 12

, Deb to rs be ga n m ak in g im pr ov em en ts to th e real pr op ert y th ey
cl ai m as th ei r ho m es te ad

. Aro un d th e sa m e ti m e, Deb to rs ' da ug ht er Bet ha ny Harri s

op en ed a ch eck in g acco un t at W el ls Farg o Ban k. Sh e an d Deb to rs ' so n Bro r Crab tre e

were si gn at or ie s on th e acco un t an d m ad e so m e de po si ts in to it

. Deb t or s were no t

si gn at or ie s o n t he acco un t b ut m ad e th e "l arg e b ul k" of t he de po si ts in to it

.

Deb to rs us ed th e ch eck in g acco un t, whi ch th ey refe r to as "t he farm acco un t,"

to pa y fo r so m e of th e im

pr ov em en ts to th ei r ho m es te ad

. Bet ween Aug us t 21

, 20 12

an d Decem

be r 3, 20 12

, Deb to rs ' da ug ht er is su ed ei gh t ch eck s to ta li ng $4 5,9 51 .21 to

va rio us co nt ract or s fo r th at pu rp os e.

The farm acco un t was n ot th e o nl y so ur ce o f pa y m en ts for th e im pr ov em en ts

to Deb to rs ' ho m es te ad

. In Ja nu ary 20 13

, Deb to r Tod d Crab tre e's si st e r D i a n ne

-2

-Mer rif

ie ld wire d $1 9,9 90 .00 to Pi er c e Log Hom es

. In Ju ly 20 13

, Deb to r Tod d

Crab tre e is su ed a ch eck f o r $6 ,00 0.0 0, dr awn on hi s pe rs on al ch eck in g acco un t, to Ugs ta d Pl um

bi ng

. And in Aug us t 20 13

, Deb to r Tod d Crab tre e tra ns ferr ed 25 0 si lv er

co in s to hi s so n- in -la w Mi ke Harri s, who so ld th e co in s fo r $6

, 3 7 5

. 0 0

, d e po si te d

$4 ,02 1.5 3 in hi s pe rs on al ch eck in g acco un t, an d us ed th e rem ai ni ng $2 ,35 3.4 7 to pa y

ot he r co nt ract or s.

Fo r reas on s un rel at ed to th e co ns tru ct io n of th ei r ho m e, Deb to rs fil ed a pe ti ti on
fo r r e li ef un de r ch ap te r 7 of th e ba nk ru pt cy co de on Decem be r 16

, 20 13

. On th ei r

sc he du le of real pr op ert y , Deb to rs va lu ed th ei r ho m e at $2 00 ,00 0.0 0. On th ei r

sc he du le of cred it or s ho ld in g se cu red cl ai m s, Deb to rs li st ed a m or tg ag e ag ai ns t th ei r
ho m e, wit h a ba la nc e owi ng of $1 33 ,72 5.0 0. On th ei r sc he du le of pr op ert y cl ai m ed

ex emp t

, Deb to rs cl ai m ed th e eq ui ty of $6 6,2 75 .00 ex em pt un de r Mi nn es ot a's

ho m es te ad ex em

pt io n.

Trus te e fil ed an ob

jecti o n to Deb to rs ' cl ai m ed ex em pt io ns

. In hi s ob

jecti on , Trus te e al le ge d, in te r al ia

, Deb to rs ' cl ai m ed ho m es te ad ex em pt io n sh ou ld be red uc ed

un de r 11 U.S.C. § 5 22 (o ) by th e $7 0,0 00 .00 to $9 0,0 00 .00 of ot he rwis e no ne xe m pt

prope rt y that Trus te e be li ev ed Deb to rs ha d tra ns ferr ed in to th ei r ho m es te ad wit hi n th e

pa st ten y ears wit h t he in te nt to hi nd er, d el ay , or d efra ud th ei r cre di to rs

.

The Uni te d St at es Trus te e fil ed a co mp l a i nt ob jecti ng to Deb to rs ' di sc ha rg e.

In hi s co m

pl ai nt

, th e Uni te d St at es Trus te e al le ge d Deb to rs sh ou ld be de ni ed a
di sc ha rg e un de r 11 U.S.C. § 72 7( a)(2 )(A) fo r tra ns ferr in g pr op ert y wit h th e in te nt to

hi nd er, de la y , or de frau d th ei r cred it or s, un de r 11 U.S.C. § 7 2 7( a)(3 ) fo r fai li ng to

ke ep or pr es erv e reco rd ed in fo rm at io n fro m whi ch th ei r fin an ci al co nd it io n an d

bu si ne ss tra ns act io ns m ig ht be as cert ai ne d, an d un de r 11 U.S.C. § 7 27 (a)( 4) (A) fo r

m ak in g fa ls e o at hs in or i n c on ne ct io n wi th th ei r ba nk ru pt cy cas e.

-3

-The two m at te rs were tri ed se pa rat el y , bu t be cau se of th ei r in te rco nn ect ed ne ss ,

th e ba nk ru pt cy co u r t i s su ed a si ng le m em or an du m de ci si on an d or de r ad dr es si ng
bo th

. The re i n , th e ba nk ru pt cy co ur t, in te r al ia

, su st ai ne d Trus te e's ob jecti on to

Deb to rs ' cl ai m ed ho m es te ad ex em pt io n an d red uc ed Deb to rs ' ho m es te ad ex em pt io n by $7 4,2 49 .68

, co m

pr is in g th e co st s of th e im pr ov em en ts id en ti fie d ab ov e, de ni ed

Deb to rs ' di sc ha rg e, an d di rect ed th e en try of jud gm en t i n th e ad ve rs ary pr oc eed in g.

Deb to rs ti m el y ap pe al e d

. Deb to rs ' no ti ce of ap pe al refe ren ces bo th th e
ba nk ru pt cy co ur t's m em or an du m de ci si on an d or de r an d th e res ul ti ng jud gm en t in th e
ad ve r s ary pr oc eed in g. Howev er, Deb to rs do no t ch al le ng e th e ba nk ru pt cy co ur t's

de ci si on to de ny th ei r di sc ha rg e. The y ch al le ng e on ly th e ba nk ru pt cy co ur t's de ci si on

to red uc e th e am ou nt of t he ir c la im ed ho m es te ad ex em pt io n.

STANDARD OF REVIEW

Deb to rs co nt en d th e ba nk r up tc y co ur t erre d in it s in te rp ret at io n of 11 U.S.C.
§ 52 2( o)

. W e rev ie w th e ba nk ru pt cy co ur t's in te rp ret at io n of a st at ut e de no vo

. Se e

Ferr el l v. West

Bend Mut . Ins . Co. , 39 3 F .3d 78 6, 7 96 (8t h C ir. 2 00 5)

.

Deb to rs al so co nt en d th e ba nk ru pt cy co ur t erre d i n i nc lu di ng th e $1 9,9 90 .00

Deb to r Tod d C r ab tre e's si st er Dian ne Mer rif ie ld wire d to Pi erce Log Hom es in th e

am ou nt by whi ch Deb to rs ' cl ai m ed ho m es te ad ex em pt io n sh ou ld be red uc ed

. To th e

ex te nt th is im

pl ic at es th e ba nk ru pt cy co ur t's fin di ng s of fa ct

, we rev ie w th os e fin di ng s
fo r cl ear e rro r. Is la mov v. Ung ar ( In re Un ga r ), 63 3 F.3d 67 5, 6 79 (8t h C ir. 2 01 1)

. To th e ex te nt it im

pl ic at es th e ba nk ru pt cy co ur t's co nc lu si on s of la w, we rev ie w th os e

co nc lu si on s de no vo

. Ung ar , 63 3 F .3d at 6 79

.

-4

-DISCUSS ION

W it h res pe ct to th e i s s u e o f whe th er th e ba nk ru pt cy co ur t erre d in it s
in te rp ret at io n o f § 5 22 (o ), th at sec ti on pro vi de s, i n p ert in en t p art :

[T]he v al ue of a n i nt eres t i n–

. . .

(4 ) real or p e r s o n a l pr op ert y th at th e de bt or or a de pe nd en t o f th e d eb to r cl ai m s as a ho m es te ad [ ]

sh al l be red uc ed to th e ex te nt th at su ch va lu e is at tri bu ta bl e
to an y po rti on of an y pr op ert y th a t th e de bt or di sp os ed of
in th e 10 -y ear pe rio d en di ng on th e da te of th e fil in g of th e
pe ti ti on wit h th e in te nt to hi nd er, de la y , or de frau d a cred it o r an d th at th e de bt or co ul d no t ex em pt

, or th at

po rti on th at th e de bt or co ul d no t ex em pt

. . . if on su ch da te th e d eb to r ha d h el d t he pro pe rty so di sp os ed of.

11 U.S.C. § 5 22 (o ).

Trus te e arg ue s § 52 2( o) is su sc ep ti bl e to m or e th an on e m ean in g. W e di sa gr ee.

Sect io n § 52 2( o) is cle ar an d u na m bi gu ou s an d re qu ire s n o i nt erp ret at io n.

As in al l su c h cas es , we be gi n by an al y zi ng th e st at ut or y la ng ua ge , gi v[ in g] wor ds th ei r or di na ry , co nt em po rary,

co m m on m ean in g un le ss th ey are ot he rwis e de fin ed in th e
st at ut e it se lf[ .] If th e la ng ua ge 's m ean in g is un am bi gu ou s whe n read in it s pr op er co nt ex t, th en , th is fir st can on is al so th e la st : jud ic ia l i nq ui ry

is co m pl et e[.]

-5

-Uni te d St at es v. Smi th

, 75 6 F.3 d 10 70

, 10 73 (8 th Ci r. 20 14 ) (in te rn al ci ta ti on s an d

qu ot at io n m ark s o m it te d)

.

To pr ev ai l un de r § 52 2( o) , a pa rty o bjec ti ng to a de bt or 's cl ai m ed ho m es te ad

ex em pt io n m us t s ho w:

(1 ) th e de bt or di sp os ed of p r o pe rty wit hi n th e 10 y ears
p r e ced in g th e ba nk ru pt cy fil in g; (2 ) th e pr op ert y th at th e de bt or di sp os ed of was no n e x e mp t; (3 ) so m e of th e
pr oc eed s f

r o m th e sa le of th e no ne xe m pt pr op ert y were

us ed to bu y a ne w ho m es te ad

, i mp ro ve an ex is ti ng ho m es te ad , or re du ce t he de bt as so ci at ed wit h a n e xi st in g ho m es te ad ; an d (4 ) th e d eb to r di sp os ed of th e no ne xe m pt

pr op ert y wit h th e in te nt to hi nd er, de la y or de frau d a cred it or

.

In re Pres to
, 37 6 B.R. 55 4, 56 8 (Ban kr

. S.D. Tex

. 20 07 ). Deb to rs ap pe ar to co nc ed e

Trus te e es ta bl is he d e ach of t he se ele m en ts

.

Trus te e arg ue s Deb to rs ' cl ai m ed ho m es te a d ex em pt io n sh ou ld th eref

or e "b e
red uc ed

. . . by th e va lu e of th e no ne xe m pt as se ts co nv ert e d i n t o th e ho m es te ad [,]"

whi ch is wha t th e ba nk ru pt cy co ur t di d in th is cas e. Trus te e po in ts us to th ree cas es
in whi ch ot he r co ur ts ha ve so he ld : Tu rn e r v

. K e c k ( In re Kec k

), 36 3 B.R. 19 3 (Ban kr

. D. Kan

. 20 07 ); In re Rob er ts
, 52 7 B.R. 46 1 (Ban kr

. N.D. Fl a. 20 15 ); an d In

re Co ll ia u , 55 2 B .R. 15 8 (B an kr . W .D. Tex. 2 01 6)

.

Deb to rs d i s a g r e e

. The y arg ue "t he pl ai n m ean in g of [§ 52 2( o) ] req ui res th e
ob jecti ng pa rty to of

fer ev id en ce as to wha t va lu e of th e ho m es te ad is at tri bu ta bl e to

no n- ex em

pt ass et s i nv es te d i n i t i n t he pri or ten y ears ." W e ag ree wi th Debt or s.

-6

-Sect io n 52 2( o) au th or iz es a ba nk ru pt cy co ur t to red uc e th e va lu e of a de bt or 's

in te res t in a ho m es te ad to th e ex te nt su ch va lu e, i.e.

, th e va lu e of th e de bt or 's in te res t

in th e ho m es te ad

, is "at tri bu ta bl e" to th e de bt or 's frau du le nt co nv ers io n of no ne xe m pt

pr op ert y in to in crea se d eq ui ty in th e ho m es te ad

. Sect io n 52 2( o) sa y s no th in g ab ou t

th e v al ue of t ha t n on ex em pt pro pe rty.

Si m pl y be cau se th e [o bjec ti ng pa rty] ha s es ta bl is he d al l of
th e el em en ts un de r § 52 2( o) do es no t m ean th at th e r el ie f

to whi ch it is en ti t l e d s h ou ld be th e fu ll am ou nt sp en t on th e im pr ov em en ts to th e [h om es te ad ]. Th e sc op e of [§ 5 2 2 ( o )] is li m it ed to th e va lu e in a de bt or 's ho m es te ad
th at is "at tri bu t ab le " to no ne xe m pt pr op ert y th at was frau du le nt ly co nv ert ed in to eq ui ty i n th e ho m es te ad

. T he [ ob je ct in g pa rt

y ] be ar s th e bu r d e n of

. . . sh ow [ in g ] by
wh at amo un t th e imp ro vemen ts mad e by t h e Deb to r

ac tu al ly in cr ea se d t he va lu e o f t he [ ho mes te ad ].

Pres to
, 37 6 B.R. at 57 2 (em ph as is ad de d)

. Se e al

so So ul e v. W

il lc ut ( In re W il lc ut ),

47 2 B.R. 88

, 94 (B.A.P. 10 th Ci r. 20 12 ) ("[ Sect io n] 52 2( o)

. . . was en act ed to pr ev en t

th e frau du le nt at te m

pt to bu il d up eq ui ty in a ho mes te ad ." (Em ph as is ad de d.)) ; In re
Smi th er , 54 2 B.R. 39

, 49 (Ban kr

. D. Mas s. 20 15 ) ("[ I]f as of th e fil in g da te th e de bt or
ha s no eq ui ty in he r ho m e an d he nc e he r ho m es te ad ex e mp t i o n c l a i m ha s no real

va lu e, th ere wo ul d b e n o § 52 2( o) red uc ti on in th e cl ai m ed ho m es te ad even if th er e

wer e p re -p et it io n f

ra ud ul en t p ay men ts ." (Em ph as is ad de d.))

.

W he re a de bt or frau du le nt ly co nv ert s no ne xe m pt as se ts to m ak e im

pr ov em en ts

to hi s ho m es te ad

, a ba nk ru pt cy co ur t m us t th eref or e de te rm in e bo th th e va lu e of th e
de bt or 's in t e r e s t in th e ho m es te ad wit h th os e im pr ov em en ts an d th e va lu e of th e
de bt or 's in te res t in th e ho m es te ad wit ho ut th os e im pr ov em en ts

. In m os t su ch cas es ,

1

The sa m e an al y si s is n ot req ui red whe re a de bt or frau du le nt ly co nv ert s 1

no ne xe m pt as se ts to m ak e a do wn pa y m en t on a ho m es te ad or to red uc e or sa ti sf y a

-7

-t h e d iff

eren ce wil l be th e va lu e of th e de bt or 's in te res t in th e ho m es te ad th at i s

"at tri bu ta bl e" to th e im

pr ov em en ts an d th us th e am ou nt by whi ch th e va lu e of th e
de bt or 's in te res t in th e ho m es te ad m us t be red uc ed

. The am ou nt th e de bt or sp en t on 2

th e im pr ov em en ts is rel ev an t on ly to th e ex te nt an ap pr ai se r m ig ht ta ke it in to acco un t

in va lu in g t he ho m es te ad wit h t he im pr ov em en ts

.

Trus te e arg ue s ou r co ns tru ct io n of § 52 2( o) pl aces to o gr eat a bu rd en on

tru st ees : "[T]he tru st ee wou ld pr es um ab ly be ex pe ct ed to pr es en t ev id en ce as to ho w

m uc h in crea se in va lu e co ul d be 'at tri bu te d' to each sp eci fic im pr ov em en t, ev en th os e
of qu es ti on ab le va lu e, ov er a 10 [-]y ear pe rio d of ti m e." Thi s is

, in fact

, wha t § 52 2( o)

req ui res

. And whi le pr oc ur in g an d pr es en ti ng su ch ev id en ce m ig ht be m or e di ffi cu lt

th an si m pl y sh owi ng ho w m

uc h a de b t o r s p e n t on im pr ov em en ts to hi s ho m es te ad

, th is is in su ffi ci en t reas on to ig no re th e pl ai n la ng ua ge of § 52 2( o)

. Se e Uni on Ban k

v. W ol as , 50 2 U.S. 15 1, 15 8 (1 99 1) ("Th e fact th at Co ng res s m ay no t hav e fo res een
al l of th e co ns eq ue nc es of a st at ut or y en act m en t is no t a su ffi ci en t reas on fo r refu si ng

to gi ve effe ct to it s p la in m ean in g." ).

Tr us te e al so arg ue s ou r co ns tru ct io n of § 52 2( o) "cr eat es an in cen ti ve fo r
di sh on es t or vi nd ic ti ve de bt or s to hu rt th ei r cred it or s by co nv ert in g no ne xe m pt as se ts

t o m ak e 'im

pr ov em en ts ' to th ei r ho m es te ad , e ve n whe re th os e im pr ov em en ts fai l t o

y ie ld an y va lu e or , in fact

, co ul d hu rt th e va lu e of th e ho m es te ad ." W e are co nf id en t few, if an y , de bt or s wou ld th ro w th ei r m on ey away in su ch a m an ne r. And th e m ere

m or tg ag e, jud gm en t li en , or ot he r en cu m br an ce ag ai ns t t h e ho m es te ad

. Unl ik e th e

co st of im

pr ov em en ts

, whi ch m ay no t res ul t in a do ll ar-f or -d ol la r in crea se in a de bt or 's eq ui ty i n hi s ho m es te ad , t he se so rts of pa y m en ts "h av e a d ire ct , e qu iv al en t in crea se in eq ui ty." Pres to , 37 6 B .R. at 5 72 n.1 9.

One ob vi ou s ex cep ti on co m es to m in d: "In cas es whe re pr ope rt y ha s in crea se d 2

in va lu e ov er lo ng er pe rio ds of ti m e, th e ob jecti ng pa rty wou ld al so ha ve to sh ow th at th e in crea se di d no t oc cu r fro m m ark et ap pr eci at io n." Pres to
, 37 6 B.R. at 57 2 n.1 9.

-8

-po ss ib il it y th at a few de bt or s m ig ht do so is al so i n s u f f ic ie nt reas on to ig no re th e pl ai n l an gu ag e o f § 5 22 (o ). Se e W ol as , 50 2 U.S. at 15 8.

W e are no t pe rs ua de d ot he rwis e by th e cas es ci te d by Trus te e. Non e of th os e

cas es ad dr es se s § 52 2( o) 's us e of th e wor d "at tri bu ta bl e." S e e Pr es to
, 37 6 B.R. at

57 2 n.1 9 (d is cu ss in g an d reac hi ng th e sa m e co nc lu si on reg ard in g Kec k ). To be fai r,
it do es no t ap pe ar t he co ur ts in th os e cas es were ca ll ed up on to do so

.

W e, ho wev er, ha ve be en cal le d up on to do so

. And w e are no t pe rm it te d to ig no re § 52 2( o) 's us e of th e wor d "at tri bu ta b l e " : "[A] st at ut e m us t, if po ss ib le

, be

co ns tru ed in su ch fas hi on th at ev ery wor d ha s so m e op erat iv e effe ct ." Uni te d St at es

v. Rob er ts on , 47 4 F.3 d 53 8, 54 0 n.2 (8 th Ci r. 20 07 ) (q uo ti ng Uni te d St at es v. No rd ic

Vil la ge
, In c. , 50 3 U.S. 30

, 36 (1 99 2) ) (in te rn al qu ot at io n m ark s om it te d)

. Co ns tru in g § 52 2( o) as Trus te e su gg es ts wou ld effe ct iv el y writ e "t o th e ex te nt th at su ch va lu e is

at tri bu ta bl e to " o ut of t he st at ut e. Thi s we c an no t d o.

S i mi l a r ly, we are no t pe rm it te d to ad d pr ov is io ns to a st at ut e. Ala ba m a v

. No rt h Ca ro li na , 56 0 U.S. 33 0, 35 2 (2 01 0)

. Co ns tru in g § 52 2( o) as Trus te e su gg es ts

wou ld writ e "b y th e va lu e of th e no ne xe m pt as se ts co nv ert ed in to th e ho m es te ad " in to

th e st at ut e. Thi s we c an no t d o, ei th er.

W hi le Trus te e be li ev es ot he rwis e, ou r rel ia nc e on th e pl ai n la ng ua ge of
§ 52 2( o) do es no t le ad to an ab su rd res ul t. See Ki ng v. Bur wel l

, _

__ U.S. _

__ , 1 35

S. Ct . 2 48 0, 2 5 0 5 ( 2 01 5) (an ab su rd res ul t is "a co ns eq ue nc e so m on st ro us , t ha t al l

m an ki nd wou ld

, wit hout he sitati on , un it e in reject in g th e ap pl ic at io n" ) (ci ti ng St ur ge s

v. Cr ow ni ns hi el d

, 17 U.S. 12 2, 20 3 (1 81 9) ) (in t e r n a l q u ot at io n m ark s om it te d)

. Red uc in g a de bt or 's cl ai m ed ho m es te ad ex em pt io n by th e am ou nt o f e qu it y in th e
ho m es te ad ge ne rat ed by th e de bt or 's wro ng do in g– as § 52 2( o) was writ te n to req ui re–

rat he r th an by th e v a l u e of th e no ne xe m pt as se ts he di sp os ed of to ge ne rat e th at

eq ui ty–as § 52 2( o) co ul d hav e be en writ te n to req ui re– can no t fai rly be de sc rib ed as

-9

-m on st ro us : The de bt or wil l n ot reap an y be ne fit fro m hi s wro ng do in g an d m ay be 3

de ni ed a di sc ha rg e as a fu rth er co ns eq ue nc e of th at wro ng do in g, as Deb to rs ha ve be en
de ni ed a di sc ha rg e in th is cas e.

W it h res pe ct to th e is su e of whe th er th e ba nk ru pt cy co ur t erre d in in cl ud in g th e $1 9,9 90 .00 Deb to r Tod d Crab tre e's si st er wire d to Pi erce Log Hom es in de te rm in in g
th e am ou nt b y w h ic h Deb to rs ' cl ai m ed ho m es te ad ex em pt io n sh ou ld be red uc ed

, Deb to rs arg ue th e $1 9,9 90 .0 0 w a s a gi ft ov er whi ch Deb to rs ex erci se d no co nt ro l.

Trus te e co un te rs Deb to r Tod d Crab tre e's fam il ia l an d pr of es si on al rel at io ns hi p wit h

hi s si st er gav e hi m su ffi ci en t con tro l ov er her tha t he was ab le to di rect he r to m ak e
th e tr an sf er, t he reb y

"d is po si ng " o f th e $ 19 ,99 0.0 0 wi th in th e m ean in g o f § 5 22 (o ).

Unf or tu na te ly, th e ba nk ru pt cy co ur t di d no t m ak e ei th er of th es e fin di ng s o r reac h

ei th er o f th es e co nc lu si on s. Given th e b an kr up tc y co ur t's ul ti m at e ru li ng , we cou ld

pe rh ap s in fer th e ba nk ru pt cy co ur t ag reed wit h Trus te e. Howev er, wit ho ut kn owi ng why, we can no t af

fir m th e b an kr up tc y

co ur t's de ci si on to in cl ud e th e $ 19 ,99 0.0 0 i n
de te rm in in g th e am ou nt by whi ch Deb to rs ' cl ai m ed ho m es te ad ex em pt io n sh ou ld be

red uc ed un de r § 5 22 (o ).

CONCLUSION

Sect io n 52 2( o) req ui res th e ba nk ru pt cy co ur t to de te rm in e th e ex te nt to whi ch

th e im pr ov em en ts Debt or s m ad e to th ei r ho m es te ad in crea se d t he va lu e o f Deb to rs '

in te res t in th ei r ho m es te ad

. Bec au se th e ba nk ru pt cy co ur t di d no t do so , we rev ers e

an d rem an d to al lo w th e ba nk r u pt cy co ur t to m ak e th is de te rm in at io n an d, if it 4

The de bt or wil l be ou t-o f-p oc ke t fo r th e co st of th e im pr ov em e n ts

, an d an y 3

eq ui ty in hi s ho m es te ad ge ne rat ed by hi s wro ng do in g wil l be lo ng to th e ba nk ru pt cy

es ta te

.

W he th er th is can be do ne on th e pr es en t reco rd is fo r th e ba nk ru pt cy co ur t to

4
de ci de in th e fi rs t i ns ta nc e.

-1 0-in cl ud es an y im pr ov em en ts th at were pa id fo r by th e $1 9,9 90 .00 Deb to r Tod d

Crab tre e's si st er wire d t o P i e r c e Log Hom es in m ak in g th is de te rm in at io n, to m ak e
fin di ng s i n s up po rt o f it s d eci si on to do so

.

-1 1-