Calderon v. Lang (In Re Calderon) , 507 B.R. 724 ( 2014 )

FILED
1 ORDERED PUBLISHED FEB 28 2014
2 SUSAN M. SPRAUL, CLERK
U .S . B K CY. A P P . P A NE L
O F T H E N IN T H C IR C U IT
3 UNITED STATES BANKRUPTCY APPELLATE PANEL
4 OF THE NINTH CIRCUIT
5
6 In re: ) BAP No. AZ-13-1273-KuDPa
)
7 AMADO G. CALDERON, ) Bk. No. 4:12-bk-16880-EWH
)
8 Debtor. )
______________________________)
9 )
AMADO G. CALDERON, )
10 )
Appellant, )
11 )
v. ) O P I N I O N
12 )
BETH LANG, Chapter 7 Trustee, )
13 )
Appellee. )
14 ______________________________)
15
Argued and Submitted on January 23, 2014
16 at Tempe, Arizona
17 Filed – February 28, 2014
18 Appeal from the United States Bankruptcy Court
for the District of Arizona
19
Honorable Eileen W. Hollowell, Bankruptcy Judge, Presiding
20
21
Appearances: Barry W. Rorex argued for appellant Amado G.
22 Calderon; Trudy A. Nowak argued for appellee Beth
Lang, chapter 7 trustee.
23
24
25 Before: KURTZ, DUNN and PAPPAS, Bankruptcy Judges.
26
27
28
1 KURTZ, Bankruptcy Judge:
2
3 INTRODUCTION
4 In his chapter 7 1 bankruptcy case, debtor Amado Calderon
5 claimed as exempt his former family residence. Chapter 7 trustee
6 Beth Lang objected to Calderon’s homestead exemption claim
7 because, at the time of Calderon’s bankruptcy filing, Calderon no
8 longer was living at the residence, nor was he storing his
9 personal possessions there. Instead, Calderon was living
10 elsewhere and renting out the residence.
11 The bankruptcy court sustained the trustee’s objection and
12 disallowed Calderon’s homestead exemption claim, opining that
13 Arizona law did not permit Calderon to hold and retain a
14 homestead exemption in the residence based solely on a vaguely
15 expressed intent to return someday to the property. Calderon
16 appealed.
17 We disagree with the bankruptcy court’s interpretation of
18 Arizona homestead exemption law. Arizona law permits debtors to
19 move out of their homesteads for up to two years and retain
20 preexisting homestead exemption rights, so long as they don’t
21 manifest a clear intent for their absence from the homestead to
22 be permanent. Because the bankruptcy court incorrectly
23 interpreted Arizona homestead exemption law, we VACATE AND
24 REMAND.
25
26 1
Unless specified otherwise, all chapter and section
27 references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
all "Rule" references are to the Federal Rules of Bankruptcy
28 Procedure, Rules 1001-9037.
2
1 FACTS
2 Calderon and his wife Sheri purchased the residence in 2002,
3 and Calderon lived in the residence until he and Sheri divorced
4 in 2011. Pursuant to the couple’s divorce settlement, Sheri
5 conveyed her interest in the residence to Calderon in March 2011,
6 and he thereafter became the sole owner of the residence. In
7 April or May 2011, Calderon moved out of the residence and moved
8 into a different house that he rented from a man named Paul
9 Berkley (“Berkley House”). Meanwhile, Calderon rented out the
10 residence to a couple named Brian and Lisa Torma. The Tormas and
11 Calderon entered into a written twelve-month lease agreement that
12 commenced on May 1, 2012 and was scheduled to end on April 30,
13 2013. However, the lease agreement also contained an annual
14 renewal option, which the Tormas apparently exercised.
15 Calderon commenced his bankruptcy case in July 2012. In the
16 initial version of his schedules, Calderon listed his ownership
17 interest in the residence, but identified the Berkley House as
18 his home address and the location where he kept all of his
19 personal property. Calderon also scheduled the income he derived
20 from renting the residence as $1,895 per month and his monthly
21 mortgage expense for the residence, referred to in Schedule J as
22 his “rental property,” as $2,209 per month. Even though
23 Calderon’s monthly mortgage payments for the residence exceeded
24 the rental income he was receiving from the residence, Calderon
25 filed a statement of intention indicating that he desired to keep
26 the residence.
27 Calderon did not attempt to claim as exempt his equity in
28 the residence in the initial version of his schedules. However,
3
1 he filed an amended Schedule C in September 2012 in which he
2 claimed a homestead exemption in his interest in the residence
3 under Arizona Revised Statutes (“A.R.S.”) § 33-1101(A).
4 According to his amended Schedule C, the residence was worth
5 roughly $300,000, and he had roughly $84,000 in equity in the
6 residence, in which he claimed the exemption.
7 The trustee filed an objection to Calderon’s homestead
8 exemption claim, asserting that Calderon could not claim a
9 homestead exemption in the residence under A.R.S. § 33-1101
10 because he had moved out of the residence in May 2011 and because
11 he was renting the residence to the Tormas.
12 Calderon filed a response opposing the objection. Calderon
13 disputed that he had abandoned his homestead. He claimed that he
14 moved out of the residence and was renting it as a temporary
15 measure to reduce his housing expenses. He further claimed that
16 he intended to return to the residence as soon as his lease with
17 the Tormas expired.
18 The bankruptcy court scheduled the matter for an evidentiary
19 hearing on May 1, 2013. In addition to setting the hearing date,
20 the court’s scheduling order contained deadlines for completing
21 various aspects of pre-hearing procedure, including a deadline
22 for exchanging lists of witnesses and exhibits and a deadline for
23 submitting to the court a joint pre-hearing statement. The
24 court’s scheduling order further warned the parties that
25 sanctions might be imposed if either party failed to cooperate or
26 comply with the pre-hearing procedures.
27 The trustee duly filed a list of witnesses and exhibits and
28 a unilateral pre-hearing statement. The trustee also filed a
4
1 legal brief in support of her objection. Calderon, on the other
2 hand, did not participate in the filing of the required joint
3 pre-hearing statement, nor did he otherwise comply with the
4 court’s pre-hearing requirements. The only thing Calderon filed
5 in advance of the hearing was a one-page motion, filed two days
6 before the hearing, seeking to convert his bankruptcy case from
7 chapter 7 to chapter 13. The trustee opposed the motion to
8 convert, contending that it was part of Calderon’s bad-faith
9 tactics aimed at obstructing the resolution of the trustee’s
10 exemption claim objection.
11 The bankruptcy court held the hearing on the exemption claim
12 objection on May 1, 2013, as scheduled. As a sanction for
13 Calderon’s noncompliance with the scheduling order, the
14 bankruptcy court prohibited Calderon from presenting any evidence
15 or argument in support of his exemption claim. 2 As a result, the
16 bankruptcy court relied entirely on the evidence and testimony
17 presented by the trustee. The trustee was the sole witness to
18 testify, and her testimony largely consisted of what she learned
19 from various documents of Calderon’s, including his bankruptcy
20 schedules, his tax returns, his divorce settlement with his wife
21 and his lease with the Tormas.
22 The trustee’s evidence tended to show that Calderon was the
23
2
24 Calderon did not challenge in his appeal brief the
propriety of the bankruptcy court’s sanction excluding him from
25 presenting any evidence. As a result, he has forfeited the
26 issue, and we will not address it. See Christian Legal Soc’y
Chapter of Univ. of Cal. v. Wu, 626 F.3d 483, 487–88 (9th Cir.
27 2010); Brownfield v. City of Yakima, 612 F.3d 1140, 1149 n.4 (9th
Cir. 2010) (citing Greenwood v. FAA, 28 F.3d 971, 977 (9th Cir.
28 1994)).
5
1 sole owner of the residence but that he was not living there;
2 rather, he was living at the Berkley House and was renting out
3 the residence. According to the trustee’s testimony, her
4 exemption claim objection was based on the fact that Calderon no
5 longer lived at the residence. At the same time, the trustee
6 conceded during cross-examination that Calderon had been living
7 at the residence through April 2011. The trustee further
8 conceded that Calderon, through his counsel, had expressed a
9 generalized intent “to move back into [the residence] at some
10 point.” 3 Hr’g Tr. (May 1, 2013) at 31:14-22.
11 At the conclusion of the trustee’s presentation of evidence,
12 the bankruptcy court announced its ruling sustaining the
13 trustee’s exemption claim objection, and the court later reduced
14 its oral ruling to a written order, which contains the court’s
15 holding and its key reasoning. According to the court, the
16 totality of the evidence demonstrated that the debtor was not
17 then living in the residence and had not done so “for the better
18 part of the last two years.” Order (May 29, 2013) at 2:6. The
19 court further noted that, after he moved out of the residence,
20 Calderon had been using the property as income-producing property
21 by renting it out.
22 Based on these facts, the court reasoned, Arizona law did
23
3
24 Of course, this is hearsay and probably double hearsay.
But no one objected to the trustee’s testimony regarding what
25 Calderon’s counsel told her about Calderon’s intent to move back
into the residence. Moreover, the bankruptcy court apparently
26 credited this testimony, as the bankruptcy court posited that
Calderon had a vague intent to return to the property. We found
27
no other evidence in the record specifically addressing
28 Calderon’s intent to return to the property.
6
1 not permit Calderon to hold and retain a homestead exemption in
2 the residence, even though he had moved out of the residence less
3 than two years prior to his bankruptcy filing and even though he
4 might have had, as the court described it, a vague intent to
5 return to the property at some unspecified future point. As
6 stated in the bankruptcy court’s order sustaining the trustee’s
7 exemption claim objection:
8 The Arizona homestead exemption set forth in A.R.S.
§ 33-1101(A) is not so broad as to allow the Debtor a
9 homestead exemption, even if within two years of his
filing date, when his intent to return to the Property
10 is vague[.]
11 Order (May 29, 2013) at 1:20-22.
12 The bankruptcy court entered its order sustaining the
13 trustee’s exemption claim objection on May 29, 2013, and Calderon
14 timely filed his notice of appeal on June 10, 2013.
15 JURISDICTION
16 The bankruptcy court had jurisdiction pursuant to 28 U.S.C.
17 §§ 1334 and 157(b)(2)(B). We have jurisdiction under 28 U.S.C.
18 § 158.
19 ISSUE
20 Did the bankruptcy court correctly interpret Arizona
21 homestead exemption law in the process of disallowing Calderon’s
22 homestead exemption claim?
23 STANDARD OF REVIEW
24 We review de novo the bankruptcy court’s interpretation of
25 state exemption laws. See Hopkins v. Cerchione (In re
26 Cerchione), 414 B.R. 540, 545 (9th Cir. BAP 2009). Under the de
27 novo standard of review, “we consider a matter anew, as if no
28 decision had been rendered previously.” Mele v. Mele (In re
7
1 Mele), 501 B.R. 357, 362 (9th Cir. BAP 2013).
2 DISCUSSION
3 The commencement of a bankruptcy case creates a bankruptcy
4 estate consisting of all of the debtor’s property. See § 541;
5 Wolfe v. Jacobson (In re Jacobson), 676 F.3d 1193, 1198 (9th Cir.
6 2012); Gaughan v. Smith (In re Smith), 342 B.R. 801, 805 (9th
7 Cir. BAP 2006). The debtor may exempt property from the estate
8 to extent permitted by applicable law. See § 522(b); In re
9 Jacobson, 676 F.3d at 1198. Typically, the debtor’s entitlement
10 to an exemption is determined based on the facts as they existed
11 at the time of the debtor’s bankruptcy filing. See In re
12 Jacobson, 676 F.3d at 1199; Ford v. Konnoff (In re Konnoff),
13 356 B.R. 201, 204-05 (9th Cir. BAP 2006). 4 And the trustee bears
14 the burden of proof to establish that the debtor is not entitled
15 to the claimed exemption. See Rule 4003(c); In re Cerchione, 414
16 B.R. at 548-49.
17 Because Arizona has opted out of the federal bankruptcy
18 exemption scheme, Arizona residents are limited to those
19
20
4
We are aware of the holding in In re Jacobson, and in
21 England v. Golden (In re Golden), 789 F.2d 698, 700 (9th Cir.
1986), that the bankruptcy court must consider postpetition
22
events when: (1) the debtor claims an exemption in the proceeds
23 from the sale of the debtor’s homestead, (2) the applicable
homestead exemption law requires the debtor to reinvest the sale
24 proceeds in another homestead within a fixed amount of time, and
(3) the time period for reinvestment has not yet run at the time
25 of the debtor’s bankruptcy filing. But In re Jacobson and In re
26 Golden are inapposite. As explained below, Calderon’s homestead
exemption was not subject to an absolute, fixed time limitation.
27 Rather, the key to Calderon’s retention of his homestead
exemption was whether he intended to permanently remove himself
28 from the residence. See A.R.S. § 33-1104(A)(3).
8
1 exemptions permitted by Arizona law. See In re Smith, 342 B.R.
2 at 805 (citing A.R.S. § 33–1133). Consequently, we must
3 interpret and apply Arizona law to determine whether Calderon was
4 entitled to claim a homestead exemption in the residence. See
5 id.; see also Renner v. Ariz. Dept. of Econ. Sec. (In re Renner),
6 822 F.2d 878, 879 n.1 (9th Cir. 1987).
7 When we interpret state law, we are bound by the decisions
8 of the applicable state’s highest court. Kekauoha-Alisa v.
9 Ameriquest Mortg. Co. (In re Kekauoha-Alisa), 674 F.3d 1083, 1087
10 (9th Cir. 2012) (citing Sec. Pac. Nat’l Bank v. Kirkland (In re
11 Kirkland), 915 F.2d 1236, 1238 (9th Cir. 1990)). And when, as
12 here, the state’s highest court has not interpreted the
13 dispositive state law, we do our best to predict how that state’s
14 highest court would decide the issue. See In re Kekauoha-Alisa,
15 674 F.3d at 1087-88. Accord White v. Brown (In re White), 389
16 B.R. 693, 701 (9th Cir. BAP 2008).
17 In interpreting Arizona statutes, the Arizona Supreme Court
18 has stated that its duty is to determine the intent of the
19 legislature at the time of enactment. Jackson v. Phoenixflight
20 Prods., Inc., 700 P.2d 1342, 1345 (Ariz. 1985). “Where the
21 language of the Legislature is clear and leaves no opportunity
22 for interpretation, the language must be followed.” Id. And
23 “clear language in a statute is given its usual meaning unless
24 impossible or absurd consequences would result.” In re Marriage
25 of Gray, 695 P.2d 1127, 1129 (Ariz. 1985).
26 Specifically with respect to Arizona’s homestead exemption
27 statutes, the Arizona Supreme Court has stated that these laws
28 should be liberally interpreted to carry out their fundamental
9
1 purpose, which is to protect the claimant and the claimant’s
2 family from the forced sale of their homestead property by
3 creditors. See First Nat’l Bank of Mesa v. Reeves, 234 P. 556,
4 558 (Ariz. 1925). 5 The Arizona Supreme Court further has stated:
5 [Arizona] Homesteads are purely creatures of the
statute, and we must, therefore, look to our own
6 statutes to find out what that term or designation
means. If the language is plain, it is the duty of the
7 court to give it effect by following it; if its meaning
be doubtful, we may look to the reasoning of other
8 courts upon similar statutes, if there be any, to aid
us in the construction of our statute.
9
10 Wuicich v. Solomon–Wickersham Co., 157 P. 972, 972 (Ariz. 1916).
11 The trustee asserts that the resolution of this appeal is
12 governed by the residency requirement necessary to establish a
13 homestead exemption under Arizona law. See A.R.S. § 33-1101. 6
14 Because Calderon was not living at the residence when he filed
15
5
16 At the time Reeves was decided, the exclusive focus of
Arizona’s homestead exemption was the claimant’s family; the
17 Arizona homestead exemption statutes did not protect individuals.
See Phlegar v. Elmer, 325 P.2d 881, 882 (Ariz. 1958). More
18
recently, however, the Arizona legislature broadened Arizona’s
19 homestead exemption laws to provide homestead exemptions to
individuals as well as families. See First Nat’l Bank of Dona
20 Ana Cnty. v. Boyd, 378 F. Supp. 961, 963 (D. Ariz. 1974).
21 6
In relevant part, A.R.S. § 33-1101 provides:
22
A. Any person the age of eighteen or over, married or
23 single, who resides within the state may hold as a
homestead exempt from attachment, execution and forced
24 sale, not exceeding one hundred fifty thousand dollars
in value, any one of the following:
25
26 1. The person’s interest in real property in one
compact body upon which exists a dwelling house in
27 which the person resides.
28 (Emphasis added.)
10
1 bankruptcy, the trustee reasons, he did not qualify for a
2 homestead exemption under A.R.S. § 33-1101. According to the
3 trustee, Calderon’s continued occupancy of the residence was a
4 prerequisite for him to be entitled to claim a homestead
5 exemption in the residence, and any such entitlement
6 automatically and immediately ceased when Calderon moved out and
7 began using the residence as a rental property.
8 The trustee’s assertion lacks merit. It is undisputed here
9 that Calderon had been living in the residence and occupying it
10 as his home between 2002 and 2011. This prolonged period of
11 residency was more than sufficient to establish the residence as
12 Calderon’s homestead by operation of law. See A.R.S. §§ 33-1101,
13 33-1102; see also In re Allman, 286 B.R. 402, 403-04 (Bankr. D.
14 Ariz. 2002) (holding that debtor, by operation of law,
15 established his homestead in a mobile home by residing in the
16 mobile home). Once Calderon’s homestead was established by
17 operation of law, the controlling question shifted from whether
18 Calderon established a homestead in the residence to whether he
19 abandoned his homestead in the residence.
20 Accordingly, this appeal hinges on the meaning of A.R.S.
21 § 33-1104, which governs abandonment of homesteads and which
22 provides in relevant part as follows:
23 A. A homestead may be abandoned by any of the following:
24 1. A declaration of abandonment or waiver.
25 2. A transfer of the homestead property by deed of
conveyance or contract for conveyance.
26
3. A permanent removal of the claimant from the
27 residence or the state. A claimant may remove from the
homestead for up to two years without an abandonment or
28 a waiver of the exemption.
11
1 It is undisputed that Calderon did not execute and record a
2 declaration of abandonment or waiver. Nor did he transfer away
3 his homestead by a deed or contract of conveyance. Thus, we are
4 only concerned here with paragraph 3 of § 33-1104(A), which deals
5 with the “permanent removal of the claimant from the residence or
6 the state.” (Emphasis added.) In accordance with the Arizona
7 Supreme Court’s rules of construction, we presume that the
8 Arizona legislature intended the word “permanent” to have its
9 usual meaning, which is: “Continuing or designed to continue or
10 last indefinitely without change; abiding, enduring, lasting;
11 persistent. Opposed to temporary.” Oxford English Dictionary
12 Online (http://www.oed.com/search?searchType=dictionary&q
13 =permanent&_searchBtn=Search) (last visited February 24, 2014);
14 see also Merriam-Webster Online (http://www.merriam-webster.com/
15 dictionary/permanent) (last visited February 24, 2014).
16 So stated, the usual meaning of the word “permanent”
17 introduces an element of intent into the statutory inquiry. This
18 focus on intent for purposes of determining whether debtors have
19 permanently abandoned their homestead is consistent with the
20 consideration of intent for purposes of determining debtors’
21 “residence” under Arizona’s homestead exemption laws. As one
22 Arizona bankruptcy court decision put it, “under Arizona law, the
23 intent of the individual is the critical factor in determining
24 where an individual resides and . . . the individual need not be
25 present at the residence on a day-to-day basis.” See In re Elia,
26 198 B.R. 588, 598-99 (Bankr. D. Ariz. 1996) (citing Garcia v.
27 Garcia (In re Garcia), 168 B.R. 403, 408 (D. Ariz. 1994)).
28 We also must consider the import of the second sentence of
12
1 A.R.S. § 33-1104(A)(3). That sentence states: “A claimant may
2 remove from the homestead for up to two years without an
3 abandonment or a waiver of the exemption.” Read in a vacuum,
4 this sentence arguably means that, for up to two years, debtors
5 can live somewhere other than their homesteads without being
6 deemed to have abandoned their homesteads. And by negative
7 implication, this sentence also could be read in isolation to
8 mean that, after two years living elsewhere, debtors are deemed
9 to have automatically abandoned their homesteads.
10 But the Arizona Supreme Court requires us to consider this
11 sentence in context and not in isolation. See Adams v. Comm’n on
12 App. Ct. Appointments, 254 P.3d 367, 374 (Ariz. 2011). And that
13 context includes the first sentence of A.R.S. § 33-1104(A)(3),
14 which focuses on the intended permanency of the removal from the
15 homestead. That context also includes the Arizona homestead
16 exemption statutes as a whole, their intended purpose, and the
17 requirement that we construe the homestead exemption statutes
18 liberally to effectuate their intended purpose. As a result,
19 when read in context, we are convinced that the Arizona
20 legislature did not intend for the second sentence of A.R.S.
21 § 33-1104(A)(3) to create an absolute temporal bar, that on the
22 second anniversary of removal from their homesteads, debtors
23 automatically are deemed to have abandoned their homesteads for
24 exemption purposes. To the contrary, our contextual reading of
25 A.R.S. § 33-1104(A)(3) leads us to conclude that the temporal
26 aspect of the statute simply was meant to aid courts in
27 determining the intended permanency of the removal from the
28 residence. In other words, the Arizona legislature meant to make
13
1 it harder for debtors to abandon their homesteads simply by
2 moving out of their homes for less than two years, but easier for
3 them to abandon their homesteads if they have been living
4 elsewhere for two years or more. Regardless of the amount of
5 time elapsed, the controlling question always remains the intent
6 of the debtors – whether they intended for their removal to be
7 permanent. 7
8 Once so understood, the statute is not particularly
9 difficult to apply in bankruptcy cases. On the petition date, if
10 the debtor has been living elsewhere for less than two years,
11 only evidence of a clear intent of permanent removal will suffice
12 to permit the bankruptcy court to find that the debtor has
13 abandoned his homestead exemption under Arizona law. On the
14 other hand, on the petition date, if the debtor has been living
15 elsewhere for two years or more, then the debtor is presumed to
16 intend for the removal to be permanent, and only evidence of a
17 clear intent for the removal to be temporary will overcome that
18 presumption.
19 Arizona case law encourages us to consider precedent from
20 other states with similar homestead exemption laws, especially
21
7
If the Arizona legislature had intended a create a per se
22
rule of abandonment based on two years removal from the
23 residence, it easily could have done so by stating in the statute
something like the following: “A homestead may be abandoned by
24 any of the following . . . a removal from the residence of two
years or more.” Notably, the Arizona legislature did not employ
25 such language. Instead, it provided for abandonment to turn on
26 the intended permanency of the removal and also provided that:
"[a] claimant may remove from the homestead for up to two years
27 without an abandonment.” (Emphasis added.) We find it
significant that the Arizona legislature used permissive language
28 in the statute rather than prohibitive or preemptory language.
14
1 when there are no binding Arizona cases on point. See Wuicich,
2 157 P. at 972. But we have not found a homestead abandonment
3 statute from another state with a similar combination of both
4 intent and temporal components.
5 Nonetheless, it is instructive to note that many
6 jurisdictions fall into one of two “camps” regarding the nature
7 of proof required to establish that debtors intended to abandon
8 their existing homesteads. The first camp requires evidence of a
9 clear intent not to return to the homestead. See, e.g., Thomas
10 v. Graham Mortg. Corp., 408 S.W.3d 581, 589 (Tex. App. 2013)
11 (holding that there must be a clear intent not to use the subject
12 property as a homestead again); In re Wells, 132 B.R. 966, 968
13 (Bankr. D.N.M. 1991) (holding that debtor who moved out of her
14 homestead but did not manifest “an absolute and unequivocal
15 intent to abandon” the homestead did not abandon the homestead);
16 see also Jones, Givens, Gotcher & Bogan, P.C. v. Berger, 46 P.3d
17 698, 702 (Okla. 2002) (stating that temporary absence from the
18 homestead and occupancy of another property does not necessarily
19 demonstrate an intent to abandon the homestead and that renting
20 out some or all of the homestead does not as a matter of law
21 demonstrate abandonment); In re Beebe, 224 B.R. 817, 820 (Bankr.
22 N.D. Fla. 1998) (“For a debtor to abandon homestead property, a
23 debtor must state an intention to abandon the property and have
24 an intent of not returning to the property.”).
25 In contrast, the second camp considers the homestead
26 abandoned unless there is evidence of a clear intent to return to
27 the property at a fixed time. See, e.g., In re Nguyen, 332 B.R.
28 393, 395 (Bankr. W.D. Mo. 2005) (stating that “a vague and
15
1 indefinite intention to return at some future time under certain
2 conditions is not sufficient to rebut the presumption of
3 abandonment”); In re Patterson, 275 B.R. 578, 584 (Bankr. D.
4 Colo. 2002) (stating that a vague intention to return and resume
5 residency will not preserve a claimant’s homestead); see also
6 Wagenbach v. PHI Fin. Servs., Inc. (In re Wagenbach), 232 B.R.
7 112, 114 (Bankr. C.D. Ill. 1999) (“A removal from the homestead
8 premises will be taken as an abandonment unless it clearly
9 appears that there is an intention to return and occupy them. . .
10 . Such intention must be unequivocal, for an equivocal intention
11 to return is not sufficient.”).
12 In light of our contextual reading of A.R.S. § 33-
13 1104(A)(3), Arizona appears to have one foot firmly planted in
14 each camp. And which camp’s law is helpful in a particular case
15 in determining whether the debtors have abandoned their Arizona
16 homestead will depend on how long the debtors have been removed
17 from their homestead at the time of their bankruptcy filing.
18 The trustee claims that it is “ridiculous” to suppose that
19 debtors subject to Arizona homestead exemption law may absent
20 themselves from their homestead for up to two years without
21 losing a homestead previously established by their prior
22 residence. But this is what A.R.S. § 33-1104(A)(3) explicitly
23 contemplates, and we see nothing ridiculous or absurd in the
24 application of A.R.S. § 33-1104(A)(3) as worded. The statute’s
25 temporal dividing line simply represents the Arizona
26 legislature’s attempt to enact a clear-cut guideline for courts
27 having to interpret what debtors’ absence from their homestead
28 means for purposes of determining whether they intended to
16
1 permanently remove themselves from their homestead.
2 As indicated above, the trustee also argues that we don’t
3 need to reach the issue of abandonment because there was no
4 homestead to abandon in the first place. Because Calderon moved
5 out of the residence and was renting out the residence when he
6 filed bankruptcy, the trustee reasons, he could not qualify for a
7 homestead exemption, let alone abandon a homestead exemption,
8 under A.R.S. § 33-1101. However, if a homestead established by
9 operation of law under A.R.S. §§ 33-1101 and 33-1102 can be
10 automatically extinguished by a debtor living elsewhere for less
11 than two years, then the second sentence of A.R.S. § 33-
12 1104(A)(3) would be rendered meaningless. In short, we reject
13 the trustee’s argument because it would deprive a significant
14 portion of A.R.S. § 33-1104(A)(3) of any meaning.
15 Even though Calderon, at the time of his bankruptcy filing,
16 had been absent from the residence for less than two years, the
17 bankruptcy court interpreted Arizona’s homestead exemption
18 statutes as requiring proof that Calderon held more than a vague
19 intent to return someday to the residence. When, as here, the
20 bankruptcy court has applied an incorrect legal standard, we
21 typically vacate the bankruptcy court’s decision and remand so
22 that the bankruptcy court can apply the correct law to the facts
23 of the case. See Hopkins v. Asset Acceptance LLC (In re
24 Salgado–Nava), 473 B.R. 911, 922 (9th Cir. BAP 2012).
25 On occasion, this Panel has declined to remand and instead
26 has, itself, applied the correct law to the facts previously
27 found when the record has been fully developed on the critical
28 issues and there is no doubt as to the outcome. See, e.g., id.17
1 In this instance, we are not wholly convinced that the record was
2 fully developed and the outcome beyond doubt regarding the key
3 issue of Calderon’s intent. While the bankruptcy court’s written
4 decision included a finding on this point, the evidence presented
5 was thin, even assuming the hearsay statements in the record
6 regarding Calderon’s intent were admissible. We leave it to the
7 bankruptcy court to determine, in the first instance, whether the
8 record should be reopened to allow the presentation of additional
9 evidence on the issue of Calderon’s intent, or whether the
10 correct interpretation of Arizona law should be applied to the
11 facts previously found on an as-is basis. We express no opinion
12 on how the bankruptcy court should decide this issue.
13 CONCLUSION
14 For the reasons set forth above, we VACATE the bankruptcy
15 court’s order sustaining the trustee’s exemption claim objection,
16 and we REMAND for further proceedings consistent with this
17 decision.
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