#2178 signed 12-5-95
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF KANSAS
WILLIAM CHARLES MOORE,
ORDER DENYING SUMMARY JUDGMENT
This matter is before the Court on the debtor's renewed motion for summary judgment regarding
his claimed homestead exemption. The debtor appears by counsel Jan Hamilton and Leon B.
Graves. Creditor Tracy Moore appears by counsel Gerald W. Scott. The Court has reviewed the
relevant pleadings and is now prepared to rule.
The materials submitted by the parties or otherwise appearing in the court file disclose the following facts.
In the spring of 1988, the debtor was investigated for molesting a ten-year-old girl, after a videotape of his activities was discovered. In June 1988, he pled no contest to sexual exploitation of a child and indecent liberties with a child. In August, he was sentenced to a total of five to twenty years in prison, and committed to the Kansas Secretary of Corrections. In December, the debtor filed an appeal and was released on bond until his appeal was dismissed about two months later. He apparently was denied parole in 1992 and was not eligible again until sometime in 1993. He was released from custody on October 20, 1993.
The debtor and his wife had owned a business that they sold in 1988. Before they were divorced in February 1989, they lived at 1035 Lakeview Drive, Milford, Kansas. In the divorce, the home was awarded to his wife, but he bought it back from her sometime between March and May 1989, after he was back in prison, apparently using at least some of the proceeds he had received from the sale of the business. He now claims the house is his homestead. Since he was in prison then, he did not personally occupy the home from the time he bought it from his ex-wife until he was released from prison in October 1993.
On March 17, 1989, the girl he molested, Tracy Moore (no relation), sued the debtor and his business for slander, libel, defamation, or violation of her right to privacy, based on his release of the videotape to customers of his business. They settled the suit for $500,000, with the debtor agreeing to help the girl try to recover under his business's insurance policy. Among other things, the settlement stated, "No attempt will be made by levy execution on the exempt property of [the debtor] such as the homestead and retirement accounts." A judgment approving the settlement was entered in August 1991.
When he filed for bankruptcy on September 19, 1991, the debtor gave the Milford address as his street address but the prison address as his mailing address. He filed his schedules the following month and declared on Schedule A that he owned no real estate. He claimed no homestead exemption on Schedule C. In late January 1992, he amended his schedules to show he owned the Milford house and to claim it as his homestead. The debtor's attorney has submitted an affidavit asserting that a rough draft of the schedules showed the home was to be listed and claimed as exempt, but that this information was not transferred into the computer program which his firm uses although the computer operator believed it had been.
The debtor apparently had someone living in and taking care of the house from some time after he
bought it until he was released from custody. While he was in prison, he sent some letters to the
girl's parents in which he indicated he planned to leave the area or even the state once released
from prison. In objecting to the debtor's homestead claim, the girl alleged that the debtor did not
receive or record title to the house until April 17, 1989, and that he had not occupied the property
while he was in prison.
DISCUSSION AND CONCLUSIONS
As indicated in the order denying the debtor's previous motion for summary judgment, he relies on the doctrine of constructive occupancy to establish his homestead claim. Contrary to the creditor's assertion, based on Kansas law, that the debtor has the burden to prove his right to exemptions, Federal Rule of Bankruptcy Procedure 4003(c) places the burden on the objecting party to prove that the debtor's exemptions are not properly claimed. Consequently, the creditor has the burden of proof here.
Under Kansas law, constructive occupancy of a homestead has two elements. First, the would-be homesteader must have manifested an intent to occupy the premises as a homestead; second, the homesteader must actually occupy the premises within a reasonable time thereafter. Security State Bank v. Coberly, 5 Kan.App.2d 691, 692, rev. denied 229 Kan. 671 (1981). The parties have largely addressed their arguments to the first element. The Court is convinced the documents presented raise a genuine issue of material fact regarding the debtor's intent. Questions of intent require consideration of intangible factors such as witness credibility and are not to be resolved by summary judgment. Prochaska v. Marcoux, 632 F.2d 848, 851 (10th Cir. 1980), cert. denied 451 U.S. 984 (1981); see also 10A Wright, Miller & Kane, Fed. Prac. & Pro. Civil 2d, §2730 (1983) (indicating actions involving state of mind can rarely be determined by summary judgment).
The facts presented regarding the debtor's intent are conflicting. Obviously, he will testify that he intends to occupy the house as his homestead. This testimony is bolstered by such evidence as his residing in the house with his wife before their divorce, his purchasing it from her shortly after the divorce, and his moving into the house when he was released from prison. But for the divorce's interruption of his occupancy and ownership, his prior history would go far toward establishing his homestead claim. In addition, the reference in the settlement agreement to his exempt property "such as the homestead" may support his current claim. On the other hand, there is no doubt that the debtor's ability to claim the house as his homestead terminated when it was awarded to his wife in the divorce. The cases which the debtor cites concerning the intent required to abandon a homestead are not applicable here because he had no homestead to abandon when he entered prison. Instead, since he was in prison when he later purchased the house from his ex-wife, the question is whether the debtor satisfied the requirements for establishing a homestead under Kansas law. Many of his remarks in letters he sent the creditors' parents indicate that, at least at times while he was in prison, the debtor may not have intended to occupy the house when he was released. This shows the question of his intent cannot be resolved by summary judgment.
As indicated previously, the Court has some question whether the debtor could satisfy the second requirement for constructive occupancy. At the time he bought the house, it was possible he could remain in prison for as much as twenty years. He did not actually occupy it for more than four years after he bought it. Rather than wondering whether an involuntary absence due to incarceration constituted an abandonment of a homestead, the Court wondered whether a person claiming a homestead could satisfy the requirement that he actually occupy the premises within a reasonable time after manifesting the requisite intent when the most he could do was occupy the premises whenever the state decided to release him from custody. As the Court indicated in its prior order, the parties should investigate relevant case law for decisions indicating whether the Kansas requirement of occupancy within a reasonable time can be satisfied by a prisoner who intends to occupy a house whenever the state releases him, or must be accomplished within some more restricted time frame.
The debtor's renewed motion for summary judgment is hereby denied.
IT IS SO ORDERED.
Dated at Topeka, Kansas, this _____ day of December, 1995.
JAMES A. PUSATERI
CHIEF BANKRUPTCY JUDGE