Court Opinion

ID: 4026202
Source: CourtListenerOpinion
Date Created: 2016-08-18 00:00:56.442502+00
Date Added: 2024-06-11T07:45:05.599331
License: Public Domain

Case: 16-20241      Document: 00513641643         Page: 1    Date Filed: 08/17/2016

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT

                                    No. 16-20241                         United States Court of Appeals
                                  Summary Calendar                                Fifth Circuit

                                                                                FILED
                                                                          August 17, 2016
In the Matter of: ROBERT T. SMITH,                                         Lyle W. Cayce
                                                                                Clerk
              Debtor

DAN HENNIGAN; DELIA STEPHENS,

              Appellants
v.

ROBERT T. SMITH,

              Appellee

                   Appeal from the United States District Court
                        for the Southern District of Texas
                             USDC No. 4:13-CV-1313

Before JOLLY, DAVIS, and SOUTHWICK, Circuit Judges.
PER CURIAM: *
       This bankruptcy appeal concerns whether someone who plans to sell and
move from his residence as soon as possible may still claim that property as
homestead. On the facts of this case, we agree with the bankruptcy and district
courts that the homestead exemption applies. AFFIRMED.
       Robert T. Smith, debtor, acquired an interest in a residence in Crosby,

       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
    Case: 16-20241    Document: 00513641643     Page: 2   Date Filed: 08/17/2016

                                 No. 16-20241
Texas (the “Property”), under the will of his aunt, Barbara Christley. In 2005,
Smith, an American citizen, was living in Australia. At Christley’s request, he
moved in with and cared for her until she died in January 2008. Under
Christley’s will, Smith was to receive the Property as well as 50% of the
residual estate. After Christley’s death, a dispute arose between Smith and
the executor of Christley’s estate. As a result, Smith hired the appellants,
attorneys Dan Hennigan and Delia Stephens, to represent him. Four years of
litigation followed, culminating in a settlement whereby Smith agreed to
receive the Property in exchange for forfeiting his 50% share of the residuary
estate. Smith was deeded the Property on September 26, 2011. On October
27, Smith filed for Chapter 7 bankruptcy, claiming the Property as homestead
and therefore exempting it. Hennigan and Stephens sought to recover what
they claimed from their contingency-fee contract with Smith.
      In bankruptcy court, Hennigan and Stephens argued that Smith should
not have been able to claim the Property as a homestead. Because he clearly
intended to return to Australia, they asserted he could not also intend to make
the Property his homestead. The bankruptcy court disagreed: “Debtor has
established the homestead character of his property by living there for the last
eight years and claiming the property as his homestead.” The district court
affirmed: “Even if the Court were to inquire into Debtor’s intentions, he merely
discussed a future move back to Australia, without any definite plans to do so.”
On appeal to this court, Hennigan and Stephens argue Smith always intended
to sell the Property and return to Australia. It was only due to protracted
litigation that Smith lived in the house for an extended period of time.
      “[H]omesteads are favorites of the law, [and] we must give a liberal
construction to the constitutional and statutory provisions that protect
homestead exemptions.      Indeed, we must uphold and enforce the Texas
homestead laws even though in so doing we might unwittingly assist a
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    Case: 16-20241     Document: 00513641643       Page: 3   Date Filed: 08/17/2016

                                    No. 16-20241
dishonest debtor in wrongfully defeating his creditor.” In re Bradley, 960 F.2d
502, 507 (5th Cir. 1992) (citations and quotation marks omitted). “It is well
settled in Texas that an individual who seeks homestead protection has the
initial burden to establish the homestead character of her property.” Id. To
meet this burden, “the claimant must have a possessory interest in the
homestead he or she is claiming. But [m]ere ownership or possessory interest
is not of itself sufficient to establish a homestead. A claimant must show both
(i) overt acts of homestead usage and (ii) the intention on [his] part . . . to claim
the land as a homestead.” In re Saldana, 531 B.R. 141, 156 (Bankr. N.D. Tex.
2015) (quotation marks omitted). Once a property is established as homestead,
it can only be lost through death, abandonment, or alienation. In re Perry, 345
F.3d 303, 310 (5th Cir. 2003). In determining homestead status, we consider
the facts as they existed on the date Smith filed for bankruptcy. White v.
Stump, 266 U.S. 310, 313 (1924).
      The strongest statement about Smith’s intentions is this: when asked if
it was his “intent from the get-go that [he was] going to get the house and sell
it and go back,” Smith responded, “And go back to Australia? . . . Yes.” Smith,
however, immediately clarified: “In the long run that was my intent. My family
is there. I have children there.”
      We agree with the district court. Though Smith has consistently been
clear that he intends eventually to sell the Property and move to Australia,
there is no evidence showing that when Smith declared bankruptcy, he lacked
the intention of making the Property his homestead. The fact that a party
desires to sell the property and move does not defeat the exemption. Bradley,
960 F.2d at 509.
      AFFIRMED.

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