Opinion
Case No. 13-13437
05-12-2014
In Re: Michael Scott Plymesser Lesley Tricia Plymesser Michael Scott Plymesser Lesley Tricia Plymesser Debtors v. Ripley Federal Savings Bank Creditor
This document has been electronically entered in the records of the United States Bankruptcy Court for the Southern District of Ohio.
IT IS SO ORDERED.
__________
Burton Perlman
United States Bankruptcy Judge
Chapter 7
Judge Burton Perlman
ORDER RE LIEN AND EXEMPTION
I. Introduction and Background.
In this chapter 7 bankruptcy case, rights in certain real estate are in question. Debtors have a home on that real estate, located at 687 Bethlehem Road, Winchester, Ohio (hereafter "the property"). Debtors hereafter will be referred to by their first names. The parties have stipulated that the property at issue consists of a single parcel, though portions of it are located in two different counties and in three different townships within those counties. Ripley Federal Savings Bank (hereafter "Ripley") holds a mortgage on the property, and the parties have stipulated that it is valid. It is stipulated that the property is titled solely in debtor Lesley's name. The parties further stipulated that Ripley holds a judgment lien against the property.
Now before the Court are two motions. One is by Debtors to avoid fixing of the lien of Ripley. The other is a motion by Ripley for relief from stay so that it may proceed with its state court action for foreclosure. Debtor Lesley has claimed an exemption in the property under R.C. § 2329.66(A)(1)(a), to which Ripley has objected. These matters came before the Court for an evidentiary hearing. Both Debtors testified at the hearing. Ripley offered no evidence other than its cross examination of Debtors.
II. Jurisdiction.
This court has jurisdiction of this matter pursuant to 28 U.S.C. § 1334(b) and the General Order of Reference entered in this district. This is a core proceeding arising under 28 U.S.C. §157.
III. Positions of the Parties.
A. Ripley
Ripley argues that Debtor Lesley should not be allowed to claim her homestead exemption in the full 34.103 acre property because only a small portion, approximately one to two acres, of the property actually contains the home and is used as a primary residence. The remaining approximately thirty-two to thirty-three acres—is vacant land used primarily as horse pasture for the Debtors' sixteen horses. Because the "highest and best" use of this portion of the land is not as a residence, Ripley argues, Debtor Lesley should not be able to claim her homestead exemption in this portion of the property. If Ripley succeeds in its objection to Debtor Lesley's exemption, it argues that the property should be bifurcated and that the motion to avoid should be accordingly be denied.
B. Debtors
Debtors assert that this is a "single 34 acre parcel of real estate . . . acquired in a single purchase, with a single deed, which contained a single legal description of the property." The Debtor suggests that the analysis is a simple two-step approach: first, determine whether the real property in question is a lot of land with a dwelling thereon; then, the court only need decide whether the property is occupied as a principal residence. Becase this is a lot of land with their dwelling thereon and said dwelling is occupied as a principal residence, the Debtors argue that the Court's analysis should end there. The Debtors argue that their use of property in question is primarily as a residence; the fact that they also happen to pasture and ride their horses and maintain their chickens for the sale of eggs and hatchlings, and the income resulting therefrom, is "minimal, incidental, and not inconsistent with residential purposes." The Debtors further argue that there is no legal basis to support the "economic value approach" of hypothetically carving up the property that Ripley suggests.
IV. Facts.
The Court finds the following facts: Leslie is a retired school teacher. She receives a pension on account of her service. Michael is employed as a truck driver for Brown County Asphalt. These sources are the only ones providing income for debtors. There is a dwelling on the property occupied by debtors as their residence. In the vicinity of the residence is a barn housing some of the horses and equipment, as well as chickens and turkeys that Debtors have. There is also a shed used as a dog kennel and a garage. Until recently Debtors boarded a horse for which they received $150.00 bi-monthly, but this activity has ceased. Debtors sold eggs from their chickens, donating some of them to a local dog rescue shelter, and they have sold chicken hatchlings and consumed some of their chickens. None of these activities of Debtors' has resulted in any reportable income.
Debtors purchased the property in 2003. Prior to that time they occupied a larger tract on which they kept a larger number of horses, and there they were in the horse breeding business. The present property is smaller, 32 of the 34 acres providing pasturage for the sixteen horses that they now have. Leslie has had horses since 1989. On their prior land they had as many as 35 horses, some of which were sold, for Debtors then were in the horse breeding business. Some horses that Leslie now has are rescue horses, some are aging show horses. Where on their old property they had show horses, the horses that they have now can best be characterized as dray horses. Leslie attends to the needs of the horses with shots, antibiotics, grain, hay, and other feed. Debtors do not make a profit for their horse operation. The horses which Debtors have largely feed on grazing, and the need for this activity is two acres per horse.
V. Discussion.
Debtor Leslie claims an exemption in the property pursuant to Ohio Rev. Code § 2329.66(A)(1)(a). The Ohio statute there provides an exemption on "one parcel or item of real or personal property that the person or a dependent of the person uses as residence." While there have been some discussion of whether the property comprised one parcel or more than one because parts of the property lies in different counties, that matter has been settled by the stipulation of the parties that the property comprises a single parcel. The property consists of 34.03 acres. It is undisputed that Leslie and her husband Michael maintain a residence on the property. These facts alone justify a conclusion that debtors are entitled to the exemption claimed.
The Court will, however, consider Ripley's claim that the property should be considered to consist of two parcels. Ripley's first parcel would be the some two acres devoted to Debtors' residence. The remaining acreage, some 32 acres, should be considered as a separate unit. Ripley contends that the 32 acres should be considered separately because they are not used for residential purposes. Ripley's argument in this respect fails because the usage of the 32 acres as forage ground for the horses is not inconsistent with a usage of the property as a residence.
The Court holds that the entirety of the property is entitled to the Homestead Exemption. Leslie has stated that two acres are necessary to provide forage for a horse, and Debtors have sixteen of them. The entire acreage is held by Debtors in order to properly take care of their domestic animals. One would not argue that keeping a dog detracts from property being a residence. So here where Debtors have a like relationship with their horses, it cannot be said that the property is not entirely devoted to residential purposes. In order to maintain the horses, acreage is necessary. What is required is two acres per horse. This is necessary to provide forage for them.
Because the entirety of the property is needed in order for Debtors to have a residence consistent with their needs, the Court holds that the entire property is entitled to the exemption.
No Ohio case law is to be found dealing with exemptions in a situation such as this. Indeed, the court in In re Miller, Case No. 10-30025, Doc. 42 (Bankr. N.D. Ohio 2011) recognized that there is no controlling Ohio authority to deal with the question of exemption in a situation such as this. The Miller case is of further interest here for it reinforces the conclusion that Debtors are entitled to the exemption. In the Miller case, the court overruled the exception of the trustee to debtor's claim of exemption. In reaching that conclusion, the court said: "the property is also necessary to pasture the horses owned by the Miller's and is used by their family for bon fires and by their sons to practice for their horse-riding/showing competition, and for paint ball tournaments."
The cases cited by Ripley to support a different conclusion are distinguishable under the facts. The Williams case involved properties that were not contiguous. In re Williams, 345 B.R. 853 (Bankr. N.D. Ohio 2006). While the Caperton case did involve adjacent, contiguous properties, the property upon which the residence was not located was used primarily as income producing rental property. In re Caperton, Case No. 10-31775 (Bankr. N.D. Ohio Mar. 31, 2011). Here, the use of the property at issue is incidental to the Debtors' use of their residence, not as a source of income.
VI. Conclusion.
The Court, having considered the facts and arguments of the parties, has reached the conclusion that Debtors' motion to avoid the fixing of Ripley's lien is granted. They are also entitled to prevail on Ripley's Motion for Relief from Stay. That motion is denied.
IT IS SO ORDERED. Copy to: Default List Richard L. Goettke
213 N. Broadway
Blanchester, OH 45107-1207