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Menotte v. Baez

United States District Court, S.D. Florida

May 18, 2018

DEBORAH C. MENOTTE, Trustee in Bankruptcy for Ernesto T. Baez, Appellant,
v.
ERNESTO T. BAEZ, Appellee.

          OPINION AND ORDER

          ROBIN L. ROSENBERG UNITED STATES DISTRICT JUDGE.

         THIS CAUSE is before the Court on the Initial Brief of Appellant, Deborah C. Menotte [DE 10]. The Court has carefully considered the parties' briefs and the entire record on appeal and is otherwise fully advised in the premises. For the reasons set forth below, the Bankruptcy Court's Order Overruling Trustee's Objection to Homestead Exemption and Denying Application for Turnover is AFFIRMED and Appellant's appeal is DENIED.

         I.BACKGROUND

         On February 7, 2017, Appellee Ernesto T. Baez filed a Voluntary Petition under Chapter 7 of the Bankruptcy Code. See DE 5-3 at 1-55. On Schedule C of his Voluntary Petition, Appellee claimed real property located at 4149 Kirk Road in Lake Worth, Florida as exempt homestead property. See Id. at 16. That property consists of 0.56 acres in unincorporated Palm Beach County. See Id. at 60-66. There are two buildings on the property, one of which is Appellee's residence; the other contains a 1, 500-square-foot apartment that Appellee rents out for $600 per month. See Id. at 61; DE 6, Hrg. Tr. 3:25-4:4.

         On June 1, 2017, Appellant Deborah C. Menotte, Trustee in Bankruptcy for Ernesto T. Baez, filed her Objection to Claimed Exemptions and Application for Turnover, objecting to the claimed homestead exemption because Appellee does not use the entire property as his residence. See DE 5-3 at 56-59. On July 19, 2017, the Bankruptcy Court held a hearing on the Objection. See DE 6. The following day, the Bankruptcy Court entered an Order Overruling Trustee's Objection to Homestead Exemption and Denying Application for Turnover, concluding that Appellee is entitled to claim the entire property as his homestead despite the fact that he leases part of the property to another. See DE 5-3 at 73-74. That Order is the subject of this appeal.

         II. DISCUSSION

         The Court begins with the text of article X, section 4 of the Florida Constitution, which provides in relevant part as follows:

(a) There shall be exempt from forced sale under process of any court, and no judgment, decree or execution shall be a lien thereon, except for the payment of taxes and assessments thereon, obligations contracted for the purchase, improvement or repair thereof, or obligations contracted for house, field or other labor performed on the realty, the following property owned by a natural person:
(1) a homestead, if located outside a municipality, to the extent of one hundred sixty acres of contiguous land and improvements thereon, which shall not be reduced without the owner's consent by reason of subsequent inclusion in a municipality; or if located within a municipality, to the extent of one-half acre of contiguous land, upon which the exemption shall be limited to the residence of the owner or the owner's family . . . .

         At issue is whether the Bankruptcy Court correctly interpreted article X, section 4 when it concluded that the language limiting Florida's homestead exemption “to the residence of the owner or the owner's family” does not apply to properties located outside a municipality. In other words, while it is clear that, with respect to properties located within a municipality, the homestead exemption is limited to the portion of the property actually used as the residence of the owner or the owner's family, the Court must determine, with respect to properties located outside a municipality, whether an individual may claim the entire property as exempt where a portion of that property is not used as the residence of the owner or the owner's family. This is a question of law and is therefore subject to de novo review. See Rajsic v. Valley Forge Ins. Co., 574 B.R. 312, 316 (S.D. Fla. 2017).

         The proper interpretation of the Florida Constitution is a matter of state law. Where the Florida Supreme Court has spoken on such a matter, federal courts must follow its rule. See Turner v. Wells, 879 F.3d 1254, 1262 (11th Cir. 2018) (citing Molinos Valle Del Cibao, C. por A. v. Lama, 633 F.3d 1330, 1348 (11th Cir. 2011)). Where, as here, the Florida Supreme Court has not spoken, federal courts follow the decisions of Florida's intermediate appellate courts “unless there is persuasive evidence that the highest state court would rule otherwise.” Bravo v. U.S., 577 F.3d 1324, 1326 (11th Cir. 2009) (internal quotation marks and citation omitted).

         Only one decision emanating from Florida's intermediate appellate courts addresses the issue presently before this Court.[1] In Davis v. Davis, Florida's First District Court of Appeal squarely held “that the language limiting homesteads within municipalities to the residence of the owner or the owner's family does not apply to homesteads located outside municipalities.” 864 So.2d 458, 460 (Fla. Dist. Ct. App. 2003). Absent persuasive evidence that the Florida Supreme Court would hold otherwise, this Court must follow Davis. See Bravo, 577 F.3d at 1326; Turner, 879 F.3d at 1262.

         Before turning to the “persuasive evidence” put forth by Appellant, the Court summarizes the reasons underlying the holding in Davis. First, the Davis court gave article X, section 4 a reading consistent with decisional law under prior constitutions. As that court noted, “language similar to that found in article X, section 4 of the current constitution has appeared in Florida constitutions for well over a century.” Davis, 864 So.2d at 459. Both the 1868 and 1885 constitutions provided a homestead exemption to

the extent of one hundred and sixty acres of land, or the half of one acre within the limits of any incorporated city or town, owned by the head of a family residing in this State, . . . The exemption herein provided for in a city or town shall not extend to more ...

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