- Category: Judge Karlin
- Published: 23 January 2013
- Written by Judge Karlin
SIGNED this 22nd day of January, 2013.
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF KANSAS
Donald Lee Fisher,
Case No. 05-44841
Jan Hamilton, Trustee,
Plaintiff, Case No. 12-7014
v. Adversary Proceeding
Donald Lee Fisher,
Memorandum Opinion and Order Denying
Trustee’s Complaint to Revoke Discharge and Denying
Trustee’s Objection to Exemptions
Case 12-07014 Doc# 78 Filed 01/22/13 Page 1 of 22
This matter is before the Court on Jan Hamilton, Chapter 13 Trustee’s,
Objection to Exemptions,1 and his adversary complaint seeking revocation of
Defendant Donald Lee Fisher’s (“Fisher”) discharge. The basis for both actions
is the Trustee’s belief that Fisher fraudulently claimed property in Bourbon
County, Kansas as his exempt homestead.2
After a trial, the Court is ready to rule. This matter constitutes a core
proceeding over which the Court has the jurisdiction and authority to enter a
I. Findings of Fact
Fisher filed his Chapter 13 bankruptcy petition on December 19, 2005.4 In
that petition, he listed 874 E. 650th Avenue, Arma, Kansas (“Arma property”)
as his “Street Address.” Fisher did not indicate that he used a different address
for mailing purposes, which information is specifically requested in a separate
box on the petition form. On his Schedule A (real property), Fisher listed
1 Doc. 115 in Case No. 05-44841.
2 The adversary complaint also contained a second count concerning a fraudulent taxreturn allegedly filed by Fisher’s son using Fisher’s name and social security number. Atthe conclusion of the Trustee’s case, the Court granted Fisher’s uncontested motion forjudgment as a matter of law on that count because the Trustee did not present any evidencein support of that claim. Therefore, only issues surrounding the homestead exemptionremain to be decided.
3 See 28 U.S.C. §§ 157(b)(2)(B) and (J) (core proceeding) and (1) (authority to hearcore proceedings).
4 Case No. 05-44841.
Case 12-07014 Doc# 78 Filed 01/22/13 Page 2 of 22
“Homestead Property in Bourbon County, KS” (“Bourbon County property”) as
the sole piece of real estate in which he had any legal or equitable interest.
Fisher claimed the same Bourbon County property as his exempt homestead on
both his original and amended Schedule C. Fisher did not reveal that the
property he claimed as his homestead in Bourbon County was different than the
Arma property where his wife lives, and the Trustee was unaware that the
address in Arma, Kansas was not in Bourbon County.5
The Trustee believed the Arma property and the Bourbon County property
were the same until Jeanette Fisher, Donald Fisher’s wife, was deposed in her
own bankruptcy case in January 2012. During that deposition, it was discovered
that the Arma property was in an adjoining county, Crawford County, and was
therefore not the same tract of property that Fisher was claiming as his exempt
homestead. Jeanette Fisher’s deposition testimony raised questions about
whether Fisher was living independently at the undeveloped Bourbon County
property, or at the Arma property with her, and whether the Bourbon County
property was ever Fisher’s true permanent residence.
5 Fisher also indicated on his petition that his county of residence was Shawnee,
which was clearly incorrect as the only two possible addresses for him are the property inArma, Kansas, which is in Crawford County, and the property in Bourbon County.
Although admittedly not relied on by this Court, the Court does note Fisher’s bankruptcywas filed by a now deceased bankruptcy practitioner, and the vast majority of cases he filedwere for residents of Shawnee County.
Case 12-07014 Doc# 78 Filed 01/22/13 Page 3 of 22
On February 13, 2012, within one year after Fisher received his discharge,
the Trustee filed a motion to reopen his case for the purpose of investigating
whether he had intentionally failed to disclose pre-petition assets and whether
he improperly claimed the Bourbon County property as his exempt homestead.6
After that motion was granted, the Trustee simultaneously objected to the
exemption of the Bourbon County property and filed this adversary proceeding
to revoke Fisher’s discharge on the basis that it was obtained by fraud.
According to the Trustee, Fisher fraudulently claimed the Bourbon County
property as exempt, which allowed him to avoid paying the value of that
property to his creditors through his Chapter 13 plan.
The Trustee alleged that Fisher’s homestead was actually the Arma
property because Fisher did not reside on the Bourbon County property at the
time he filed his bankruptcy petition. More significantly, the Trustee alleged
that even if Fisher lived on the Bourbon County property on the date he filed,
such living arrangements were only temporary and therefore the Bourbon
County property did not qualify as an exempt asset under Kansas law. Finally,
the Trustee claimed that, by failing to disclose the fact that he had some legal
or equitable interest in the Arma property and that it was a different tract than
the Bourbon County property, Fisher deprived the Trustee of the opportunity to
6 Doc. 104 in Case No. 05-44841.
Case 12-07014 Doc# 78 Filed 01/22/13 Page 4 of 22
object to the claim of exemption for the Bourbon County property and secure
additional distributions for the benefit of Fisher’s creditors.
At trial, Fisher testified he was effectively permanently separated from his
wife and that he was, in fact, residing at the Bourbon County property at the
time he filed for bankruptcy. Fisher further claimed that he listed the Arma
property as his residence only because that was where he received his mail, and
he never intended to mislead anyone into believing that he actually resided at
that address. Fisher claims that he did not inform the Trustee that he was
separated from his wife at the time of filing because he did not think it relevant
to the proceeding. Fisher further explained that he excluded the Arma property
from his schedules because it is titled solely in his wife’s name, even though she
has since testified that he “owns half” since it was acquired from his family.7
Additional facts will be discussed below.
A. Trustee’s Objection to Debtor’s Homestead Exemption
7 The claims in the preceding two sentences were not presented, by either side, asevidence at trial. Instead, they were raised by Fisher in his response to the Trustee’smotion for summary judgment. Doc. 29 in Adv. No. 12-7014. Because the claims were notpresented at trial, the Court does not consider them evidence and has not relied upon theclaims in reaching a final decision in this case. They are provided here solely forbackground reference. Although Jeanette Fisher did testify by deposition that DonaldFisher owned half of the Arma property, the evidence presented at trial showed that theproperty is in fact titled solely in Jeanette Fisher’s name.
Case 12-07014 Doc# 78 Filed 01/22/13 Page 5 of 22
The first issue the Court must determine is whether the Bourbon County
property constituted Fisher’s homestead on the date he filed his bankruptcy
petition. Section 522 of the Bankruptcy Code governs exemptions.8 Subsection
(b) allows states to prohibit their citizens from choosing the federal exemptions
set forth in subsection (d) and to require the use of state exemptions. Kansas has
opted out of the federal plan and enacted its own exemptions.9 Therefore, Kansas
law determines whether the Bourbon County property constituted Fisher’s
exempt homestead. A debtor’s exemption rights are determined as of the date of
the filing of the petition.10
In bankruptcy, Federal Rule of Bankruptcy Procedure 4003 governs
exemptions. Subsection (c) provides that “the objecting party has the burden of
proving that the exemptions are not properly claimed.” Further, “[i]n
determining whether a debtor is entitled to claim an exemption, ‘the exemption
laws are to be construed liberally in favor of exemption.’”11
8 11 U.S.C. § 522.
9 K.S.A. 60-2312.
10 Lampe v. Williamson (In re Lampe), 278 B.R. 205, 210 (10th Cir. BAP 2002)
(holding that debtor's right to exemption is determined as of date petition is filed).
11 Lampe v. Williamson (In re Lampe), 331 F.3d 750, 754 (10th Cir. 2003) (quoting In
re Ginther, 282 B.R. 16, 19 (Bankr. D. Kan. 2002)).
Case 12-07014 Doc# 78 Filed 01/22/13 Page 6 of 22
Pursuant to Kansas law, a homestead can only attach to land “occupied as
a residence” by the owner and/or the family of the owner.12 “Residence” means
“domicile” or “the place adopted by a person as his place of habitation, and to
which, whenever he is absent, he has the intention of returning.”13 In order to
establish a homestead, a party must intend to occupy it as a homestead and
must actually occupy it as a homestead within a reasonable time of filing (if not
occupied on the date of filing).14 The owner’s intentions are critical in
determining whether a homestead has been established.15 Once a homestead is
established, two elements are required to find that the homestead has been
abandoned: removal from the property and an intent not to return.16
The first issue the Court must address is the Trustee’s contention that the
listing of the Bourbon County property on Schedule C was insufficient to assert
an exemption claim. The Trustee claims that Fisher did not properly claim any
homestead exemption because simply listing “Homestead Property in Bourbon
County, Kansas” was too vague to constitute a proper exemption.
12 K.S.A. 60-2301.
13 Beard v. Montgomery Ward and Co., 215 Kan. 343, 348 (1974).
14 In re Snook, 134 B.R. 424, 425 (D. Kan. 1991) (citing Security State Bank of Scott
City v. Coberly, 5 Kan. App. 2d 691 (1981)).
15 Id. (citing Smith v. McClintock, 108 Kan. 833 (1921)).
16 Id. at 425-26 (citing In the Matter of the Estate of Fink, 4 Kan. App. 2d 523 (1980)).
Case 12-07014 Doc# 78 Filed 01/22/13 Page 7 of 22
Although arising under varying contexts, a handful of courts have
addressed the specificity requirements of bankruptcy schedules. In Hardee v.
Mitchell, the Fourth Circuit Court of Appeals relied extensively on the Advisory
Committee Notes to the bankruptcy schedules in stating:
The 1991 Advisory Committee Notes to the Form 6 Schedules(Schedules A-J) explain that “[t]he schedules require a completelisting of assets and liabilities but leave many of the details toinvestigation by the trustee.” 11 U.S.C.A. Official Bankr. Form 6,
advisory committee's notes (West pamph.1998) (emphasis added).
Indeed, the schedules were intended to be summaries that could
serve as a quick and easy list of relevant information. The Notesstate that Schedule C, for example, was simplified in 1991 by“eliminat[ing the] duplication of information provided” on otherschedules. See id. Similarly, a former requirement in Schedule Cthat the debtor state the present use of property was “eliminated asbest left to inquiry by the trustee.” See id. The requirements forlisting personal property in Schedule B also reflect the basic purposeof the schedules. The Notes state that this schedule requires thatdebtors declare whether they have “any property in each categoryon the schedule.” Id. They add that the trustee “can request copiesof any documents concerning the debtor's property necessary to theadministration of the estate.” Id. The Advisory Committee Noteselaborate that “Section 521(3) of the Code requires the debtor tocooperate with the trustee, who can administer the estate moreeffectively by requesting any documents from the debtor rather thanrelying on descriptions in the schedules which may prove to beinaccurate.”17
Other courts have similarly held that the degree of specificity must be sufficient
to provide enough information to allow the trustee to determine whether the
trustee should inquire further into an asset, liability or exemption.
17Hardee v. Mitchell, 1998 WL 766699, 4 (4th Cir. 1998).
Case 12-07014 Doc# 78 Filed 01/22/13 Page 8 of 22
For example, in Payne v. Wood, the Seventh Circuit Court of Appeals held
that “it would be silly to require a debtor to itemize every dish and fork,” but
“every bankrupt must do enough itemizing to enable the trustee to determine
whether to investigate further.”18 And in In re Furlong, the court noted that
“[t]he courts have generally agreed that if an asset is scheduled in a way that
reasonably puts the trustee on notice of its existence and potential value, it may
be abandoned under § 554(b).”19 Similarly, in In re Mohring, the court held that
“[t]here are, however, no bright-line rules for how much itemization and
specificity is required. What is required is reasonable particularization under the
Based upon this standard, the Court finds that Fisher did properly claim
the Bourbon County property as exempt. Admittedly, listing the real estate as
“Homestead Property in Bourbon County, Kansas” was not the model of clarity,
and the Trustee would have been well within his rights to require additional
information. But at trial, Fisher credibly testified that because this is rural land
with no house, and because he continued to get mail at his wife’s house, he was
not even aware of the actual street address of the property at the time he filed
18 Payne v. Wood, 775 F.2d 202, 205-207 (7th Cir.1985).
19 In re Furlong, 437 B.R. 712, 718-19 (Bankr. D. Mass. 2010).
20 In re Mohring, 142 B.R. 389, 395 (Bankr. E.D. Cal. 1992).
Case 12-07014 Doc# 78 Filed 01/22/13 Page 9 of 22
his bankruptcy petition. Only after this litigation ensued did he consult with
postal authorities to obtain a street address. For that reason, it was reasonable
to simply list the property as being in Bourbon County, Kansas.
The description of the property is not in itself misleading — as would be
the case, for example, if a debtor simply listed a “2009 Chevrolet” without
further indicating that the vehicle was actually a 2009 Corvette ZR1. The
admittedly brief description did properly identify where the property was
located, and gave the Trustee enough information to allow him to further
inquire, if he elected to do so.
The lack of specificity became an issue because the Trustee was not aware
that the address given by Fisher as his residence in Arma, Kansas was located
in Crawford, not Bourbon, County. The Court certainly does not fault the
Trustee for not realizing this, or for not asking clarifying questions at Fisher’s
11 U.S.C. § 341 meeting. And best practices for debtors’ lawyers is to provide
more detail. But the fact is that sufficient information was provided that
disclosed the ownership of the property and could have led to such inquiry. The
Court will not deny Fisher a homestead on the basis that he only listed the
property as being located in Bourbon County, Kansas. The listing was sufficient
to identify the existence of the property and enable the Trustee to inquire
Case 12-07014 Doc# 78 Filed 01/22/13 Page 10 of 22
further. Accordingly, the Schedule C description of the real property was
sufficient to create a valid claim of exemption in the property.
The Trustee next claims that the Bourbon County property did not qualify
as Fisher’s homestead under Kansas law.21 Although Jeanette Fisher was not a
joint debtor in this case and the issue of Fisher and his wife each claiming a
separate homestead exemption did not arise, the Court finds that its prior
holding in In re Hall22 provides some relevant guidance here. In Hall, the joint
debtors each claimed a separate homestead, asserting that although they were
still married, they lived apart and could each claim a separate homestead. The
Court analyzed Kansas homestead law and ultimately found:
Given the policy considerations this Court must utilize whendetermining exemption issues, as well as the treatment of otherKansas exemptions, the Court finds that married debtors may claimseparate homesteads provided they can establish that both tracts ofproperty qualify as a homestead. The Court notes that this holdingis specifically limited to circumstances in which a husband and wife
21 Any objection to exemptions typically must be made within 30 days after themeeting of creditors held pursuant to § 341 or within 30 days after any amendment orsupplemental schedule is filed, whichever is later. Fed. R. Bankr. P. 4003(b)(1). Anexception to this rule is made when the debtor fraudulently asserts a claim of exemption. Ina case where fraud is present, a trustee may bring an objection to exemptions within oneyear from the closing of the case. Fed. R. Bankr. P. 4003(b)(2). The Trustee filed hisobjection to exemption on May 4, 2012, which was more than 30 days after Fisher filed hisAmended Schedule C (Doc. 37 filed May 18, 2006), but within one year of the date the casewas closed on May 16, 2011. Therefore, the Trustee’s objection to exemption would only betimely if Fisher fraudulently claimed the homestead exemption. Because the Court finds, asdetailed below, that the exemption was properly claimed, the Court does not need toaddress the issue of fraud.
22 385 B.R. 722 (Bankr. D. Kan. 2008).
Case 12-07014 Doc# 78 Filed 01/22/13 Page 11 of 22
have each legitimately established a separate homestead pursuantto Kansas law, which separate homesteads were not created for thepurpose of defeating or defrauding creditors. It is only in thoseadmittedly rare situations where a husband and wife have remainedmarried, but can show that they have elected to and do live apart ona permanent basis, that this holding will be applicable.23
Having examined the facts in this case, including the testimony presented
both by way of deposition and live testimony, the Court finds that Fisher was
entitled to claim the Bourbon County property as his exempt homestead. Fisher
testified that there existed significant marital discord as a result of their son
moving back into what was at that time the family home in Arma, Kansas.
Fisher testified he feared that his son would cause him physical harm—for
reasons he detailed, and elected to move out of the Arma property.
Fisher testified he lived for a time on the Bourbon County property in a
slide-in camper on the back of a pickup he owned, before eventually moving into
a pull-behind trailer he placed on the otherwise vacant land. Although the
trailer does not have electric service, Fisher does have a generator that he uses
when he needs power, and it is heated in the winter by propane. Fisher also
testified that because the trailer is not connected to a constant water supply, he
brings in water for the trailer in a large tank. Because of the lack of a constant
water supply, Fisher typically bathes at a neighbor’s house, in a stock tank, or
23 Hall, 385 B.R. at 731.
Case 12-07014 Doc# 78 Filed 01/22/13 Page 12 of 22
down at the creek located on the land. Fisher also stated that he rarely uses the
toilet in the trailer, opting instead to either use the restroom at a local
convenience store or to simply go outdoors in the woods. Fisher pays a woman
he knows to do all of his laundry.
Fisher testified consistently that he was living at the Bourbon County
property at the time he filed his bankruptcy petition, and that he intended for
that to be his permanent residence. This testimony regarding the permanency
of his living arrangements is supported by the fact that it is more likely than not
that he continues to live in the trailer on the Bourbon County property, more
than seven years after he filed his petition. Although it is difficult to believe
anyone would wish to live in such conditions, especially during what can be
harsh Kansas winters, Fisher’s testimony was believable. He convinced the
Court that he only used the Arma property to receive his mail, and that his
permanent, albeit extremely rustic, residence was on the Bourbon County
In addition to his own testimony, Fisher presented two additional
witnesses to support his claim that he was living on the Bourbon County
property at the time he filed his bankruptcy petition. One witness was a
neighbor who runs a hunting lodge on property located near the Bourbon County
property. That witness testified that he saw Fisher coming and going from the
Case 12-07014 Doc# 78 Filed 01/22/13 Page 13 of 22
property on a regular basis, usually very early in the morning. Another witness
testified Fisher gave him hunting access to the Bourbon County property and
that he had, in fact, hunted on the property approximately 50-60 times. He
indicated that he had often seen Fisher on the property. The hunter also testified
that he had once briefly been inside the trailer before beginning to hunt.
Although the Trustee argued that these witnesses likely saw Fisher on the
land because he needed to visit daily to feed and water cattle—not because he
lived there, the Court simply found the combined testimony more likely than not
buttressed Fisher’s story. The Trustee did offer evidence suggesting that Fisher’s
living arrangements on the Bourbon County property were not permanent and
that the property did not qualify as Fisher’s homestead. The most direct
evidence of this was the deposition testimony of Fisher’s wife.24
Ms. Fisher was questioned about whether her husband resided with her
at the Arma property. She admitted that Fisher had lived on the Bourbon
County property, but that “[i]t was just temporary” and that him living there
was “[j]ust off and on.”25 She further indicated that he would stay at the Bourbon
County property “[t]ill we got things straightened out . . . .” Ms. Fisher then later
24 This deposition was taken in connection with Jeanette Fisher’s bankruptcy, CaseNo. 11-11883 on January 6, 2012. The parties stipulated to the admission of JeanetteFisher’s deposition testimony in lieu of her live testimony.
25 Jeanette Fisher Deposition, Exhibit §, 122:10 - 123:14, Jan. 6, 2012.
Case 12-07014 Doc# 78 Filed 01/22/13 Page 14 of 22
testified that by January 2012, Fisher had returned to reside full time with her
at the Arma property. When questioned again about the time period when
Fisher permanently stopped residing on the Bourbon County property, she
responded “[l]ast year, a couple years maybe, I don’t know for sure.”26
The Trustee also presented evidence of a local resident he hired to
photograph the entrance into the Bourbon County land. This witness testified
he observed the property in September and October 2012 from the road adjacent
to the main entrance to the property. On one of his visits, the witness noted that
it had rained heavily two to three days before his visit, and that he did not
observe any tire tracks or ruts in the mud leading in or out of the gate to the
property. The Trustee argued that this evidence showed that Fisher had not
been entering or leaving the property on a daily basis — which arguably showed
he was not permanently residing on the property.
But Fisher’s rebuttal testimony on this issue was believable, at least in
part because the photographs admitted into evidence supported his story. He
testified the reason there wouldn’t have been ruts or tire tracks, after a rain, is
because the road leading into the property is covered with rock for some
distance. No tire tracks or ruts are ever created on the uphill portion of the
26 Id. at p. 124:19-20.
Case 12-07014 Doc# 78 Filed 01/22/13 Page 15 of 22
property that is visible from the road regardless of how much rain the property
has received or how much automobile traffic there is on the property.
The Trustee’s other evidence concerning Fisher’s residence at the time he
filed for bankruptcy protection are found in his own bankruptcy petition. On
page one of the Voluntary Position, Fisher indicated that the “Street Address of
Debtor” was 874 E 650th Avenue, Arma, KS. Two boxes below that address is
another box that requests “Mailing Address of Debtor (if different from street
address)”. Fisher left that box blank, which caused the Trustee to conclude that
his street address and mailing address are the same.
The testimony of Fisher’s daughter, Julie was critical to this Court’s
ultimate findings. Julie Fisher testified that she knew her parents’ relationship
was poor, that when she was considerably younger and lived at home (before this
bankruptcy), they had frequently argued but had tried to conceal their marital
problems from the public as much as possible. She has observed the trailer on
the Bourbon County property, but admitted she did not know whether her father
permanently lived on the property.
What Ms. Fisher did know concerning her mother’s mental state at the
time of her deposition testimony, however, was compelling. Ms. Fisher testified
that she has noticed a considerable amount of confusion and memory loss in her
mother over the past five years. For example, Ms. Fisher testified that she once
Case 12-07014 Doc# 78 Filed 01/22/13 Page 16 of 22
asked her mother for a simple recipe that her mother had known off the top of
her head for years, but her mother was unable to remember the recipe. In
addition, once when Ms. Fisher was speaking with her mother on the telephone,
her mother asked about the health of a close family friend’s parent. When Ms.
Fisher reminded her mother that the friend’s parent had passed away several
years ago and that they had attended the funeral together, her mother seemed
completely surprised and had no recollection of either the death or the funeral.
In light of all of the evidence presented, the Court finds that this case
essentially comes down to the testimony of Fisher and his wife, Jeannette
Fisher. Those are the only two witnesses who provided any direct evidence as to
Fisher’s living arrangements at the Bourbon County property. The
circumstantial evidence presented by the other witnesses, although relevant,
was not substantial and did little to persuade the Court.
As with most cases of this nature, the credibility and reliability of the
witnesses, as a whole, are crucial to the Court’s decision. Although Mr. Fisher
did not appear credible in every instance,27 overall the Court found his testimony
on the main issues of residence and permanency of residence to be consistent
27 For example, the Trustee confronted him with a live recording of his testimonyduring his 11 U.S.C. § 341 meeting, where he said he “lived” at the Arma property. Hequibbled about this, which was not credible, but ultimately satisfied this Court that thisparticular testimony by this elderly and fairly uneducated man was not dispositive in lightof all the other evidence received at trial.
Case 12-07014 Doc# 78 Filed 01/22/13 Page 17 of 22
and truthful. Fisher made what is an almost unbelievable story about his living
Conversely, the Court was unable to observe Jeanette Fisher testify, as her
testimony was presented only by way of a deposition transcript. Jeanette Fisher
did testify that her husband’s living arrangements at the Bourbon County
property were only temporary, and that he had returned to the Arma property.
And admittedly Jeanette Fisher had much less motivation to fabricate her
testimony, since where Fisher lived (and intended to live) on the date of his
bankruptcy some 7 years earlier would have little, if any, impact on her own
bankruptcy case. But Jeanette Fisher’s memory and ability to correctly recall
events was called into serious doubt by the live testimony of her daughter — who
this judge found to be extremely credible. Without the ability to actually see
Jeanette Fisher testify and determine the accuracy of her memory of the events,
especially in light of her daughter’s testimony questioning her memory, the
Court simply does not have as much faith in her testimony.
In light of the standard by which the Court must review the testimony and
other evidence admitted at trial, and the liberality of construing claims of
exemptions, the Court finds that the Trustee has failed to meet his burden to
establish that Fisher 1) did not live at the Bourbon County property at the time
he filed his bankruptcy petition, and 2) did not intend for that to be his
Case 12-07014 Doc# 78 Filed 01/22/13 Page 18 of 22
permanent residence. Fisher’s claimed homestead exemption is presumed to be
valid, and it is the Trustee’s burden to rebut the presumption.28 Although a fairly
close call, the weight of evidence presented by the Trustee was at least matched,
if not exceeded, by the evidence presented by Fisher. Because the Trustee has
the burden of proof in this action, the Court finds in favor of Fisher and
overrules the Trustee’s objection to Fisher’s homestead exemption claim.
B. Intent to Defraud by Description of Homestead
The Trustee seeks to revoke Fisher’s discharge pursuant to 11 U.S.C. §
1328(e). Under that section, the Court may revoke Fisher’s discharge if the
Trustee shows that (1) the discharge was obtained through fraud and (2) the
moving party did not know of the fraud until after the discharge was granted.
The burden of proof rests upon the Trustee, the party seeking revocation of the
discharge, and the party seeking revocation must satisfy, by a preponderance of
the evidence, all of the elements of proof enumerated below.29
The Trustee timely sought revocation because he filed the motion to revoke
within one year from the entry of discharge. In addition, the Court finds that
Trustee did not learn of the alleged fraud until the deposition of Jeanette Fisher
28 Fed. R. Bankr. P. 4003(c). See also In re Hodes, 402 F.3d 1005, 1010 (10th Cir.
2005) (holding that objecting party bears burden of proof on an objection to a claimedexemption by a preponderance of the evidence that the exemption was improper).
29 In re Knupp, 461 B.R. 351, 354 (Bankr. W.D. Va. 2011).
Case 12-07014 Doc# 78 Filed 01/22/13 Page 19 of 22
in early 2012, which was after Fisher received his Chapter 13 discharge.
Therefore, the only issue is whether Fisher obtained his discharge by fraud.
A party seeking revocation of a Chapter 13 debtor’s discharge on the basis
of fraud may establish a debtor’s fraudulent attempt (1) through circumstantial
evidence, including an inference drawn from the debtor’s behavior and conduct,
or (2) by proving that the debtor possessed a reckless indifference for the truth.30
The Trustee contends that Fisher fraudulently claimed the Bourbon
County property as his exempt homestead, when his actual homestead was the
Arma property. This fraudulent action, according to the Trustee, shielded the
value of the Bourbon County property from Fisher’s creditors, and allowed
Fisher to obtain a discharge despite having not paid his creditors an amount
equal to what they would have received had Fisher’s estate been liquidated.
Based upon the Court’s prior ruling that Fisher properly exempted the
Bourbon County property, revocation of Fisher’s discharge on that basis is not
warranted. In other words, Fisher cannot be found to have fraudulently claimed
an exemption in property when he was, in fact, entitled to that exemption. But
even if the Court had found in the Trustee’s favor regarding the objection to
exemption, the Court finds that the Trustee failed to establish Fisher committed
fraud in claiming the homestead exemption or in obtaining his discharge.
30 Id. at 356.
Case 12-07014 Doc# 78 Filed 01/22/13 Page 20 of 22
Fisher’s listing the Arma property as his residence rather than the Bourbon
County property appears to be simply a case of an error on the schedules caused
by Fisher not understanding the question asked. Fisher provided clear testimony
that he always used the Arma property to receive mail, but that was not where
he actually lived. Where he actually lived had apparently not been assigned a
street address at that time.
There is little question that Fisher truly considered the Bourbon County
property to be his permanent residence at the time he filed his petition, and,
therefore, his homestead. Although it would have been correct to list the
Bourbon County property as his residence, and list the Arma property as his
mailing address, the Court does not believe his failure to complete the petition
in that fashion was fraudulent. This is especially true in light of the fact that
Fisher did not even know the actual address of the Bourbon County property
until early 2012.
Neither the evidence as a whole, nor Fisher’s demeanor in particular, leads
this Court to believe that he intended to defraud the Trustee or any creditor by
the way he filled out his bankruptcy schedules. Without question, the schedules
could and should have been more clear. But the Court cannot find that Fisher
acted with any fraudulent intent in how he executed the schedules.
Case 12-07014 Doc# 78 Filed 01/22/13 Page 21 of 22
The Trustee’s Objection to Exemptions is overruled. The Court finds that
Fisher was entitled to claim the Bourbon County, Kansas property as his exempt
homestead at the time he filed his bankruptcy petition in 2005. In addition, the
Court finds that the Trustee has failed to establish that Fisher obtained his
Chapter 13 discharge by fraud, and denies the Trustee’s request to revoke that
It is, therefore, by the Court ordered that the Trustee’s Objection to
Exemptions is denied.
It is further ordered that judgment will be entered in favor of the
Defendant Donald Lee Fisher and against the Plaintiff Jan Hamilton, Chapter
13 Trustee, on the Trustee’s adversary complaint seeking revocation of
# # #
Case 12-07014 Doc# 78 Filed 01/22/13 Page 22 of 22
- << Prev