Opinion
Case No. 13-30251 HRT
05-29-2014
In re: PADDY SEAMUS McGRATH MOORE and CYNTHIA SOLIDARIOS MOORE, Debtors.
Chapter 7
ORDER ON TRUSTEE'S LIMITED OBJECTION TO CLAIM OF EXEMPTION
This case comes before the Court on Trustee's Limited Objection to Debtors Automobile Exemptions (docket #13) (the "Objection") and the Debtors' response (docket #16) (the "Response"). On May 21, 2014, the Court held a hearing on the Trustee's Objection. The parties stipulated to admission of their exhibits and the Debtors testified. The Debtors' claims of exemption and the Trustee's Objection present primarily an issue of law as to the interpretation of COLO. REV. STAT. § 13-54-102(1)(j)(II).
I. BACKGROUND
1. The Debtors have a four year old boy who has been diagnosed with a number of medical conditions.
2. Mr. Moore works full time and provides the bulk of financial support for the family in addition to assisting with the care of the couples' children.
3. Mrs. Moore spends the majority of her time caring for their son as well as the other children.
4. The Debtors own two motor vehicles:
| Vehicle | Value | |
| a. | 2000 Dodge Durango (the "Durango") | $2,000.00 |
| b. | 2009 Honda Odyssey (the "Odyssey") | $15,075.00 |
5. The Trustee has not disputed the values that the Debtors have claimed for their vehicles.
6. The Debtors have claimed both motor vehicles as fully exempt under COLO. REV. STAT. § 13-54-102(1)(j)(II).
The Debtors have two sons and a daughter. But it is only the Debtors' younger son who is the subject of the matter before the Court and the Court's references to the Debtors' son refer solely to their younger son.
II. DISCUSSION
The Colorado exemption statutes allow for an enhanced motor vehicle exemption in certain cases where either a debtor or the spouse or dependant of a debtor is disabled. See COLO. REV. STAT. § 13-54-102(1)(j)(II) & COLO. REV. STAT. § 13-54-101(2.5). Colorado debtors are allowed to claim as exempt property in bankruptcy:
One or more motor vehicles kept and used by any elderly or disabled debtor, or by any debtor with an elderly or disabled spouse or dependent, in the aggregate value of ten thousand dollars.COLO. REV. STAT. § 13-54-102(1)(j)(II) (2013).
The normal exemption amount that a debtor may claim for a motor vehicle in Colorado is $5,000.00. See COLO. REV. STAT. § 13-54-102(1)(j)(I) (2013).
A. The Debtors' Son Is a Disabled Dependent
The Debtors have claimed the motor vehicle exemption under § 13-54-102(1)(j)(II) on account of their son who they claim is disabled. The definition of "disabled dependent," for purposes of Colorado's exemption statutes is:
"[D]isabled dependent" means a . . . dependent who has a physical or mental impairment that is disabling and that, because of other factors such as age, training, experience, or social setting, substantially precludes the . . . dependent from engaging in a useful occupation as a homemaker, a wage-earner, or a self-employed person in any employment that exists in the community for which he or she has competence.COLO. REV. STAT. § 13-54-101(2.5).
The definition of disabled that appeared in COLO. REV. STAT. § 13-54-102(1)(j)(II)(B) was deleted in the 2007 amendments, S. BILL 07-158, COLO. SESS. LAWS, ch. 226, § 3 (2007), but a substantially similar definition was added to COLO. REV. STAT. § 13-54-101. Id. That section contains definitions that apply generally to the exemption provisions in Article 54.
The Trustee does not dispute that the Debtor's son is disabled. As well, the evidence presented at hearing confirms that the Debtors' four year old son is a "disabled dependant" as that term is defined in the statute. The Debtors presented a letter from a physician at the Special Care Clinic at Children's Hospital Colorado that describes their son's various medical diagnoses and medications. The Court also heard testimony from the Debtors concerning their son's conditions and the care that they provide for him.
The statutory definition of "disabled dependant" effectively has two parts. First it requires a finding that the dependant has a "physical or mental impairment that is disabling." Id. The statute does not specify what it means by "disabling" but the definition contained in the Americans with Disabilities Act ("ADA") provides what the Court believes is a generally accepted definition of "disability," which is: "a physical or mental impairment that substantially limits one or more of the major life activities . . ." of the affected individual. 42 U.S.C. § 12102(1)(A). The evidence establishes that the Debtors' son has physical impairments that are disabling.
But, having an impairment that is disabling, in the general sense, does not meet Colorado's definition for purposes of its exemption statutes. It further requires that the dependant's disabling condition, "because of other factors such as age, training, experience, or social setting, substantially precludes the . . . dependent from engaging in a useful occupation as a homemaker, a wage-earner, or a self-employed person in any employment that exists in the community for which he or she has competence." COLO. REV. STAT. § 13-54-101(2.5) (2013). Here that additional requirement is easily met because the age of the Debtors' son precludes him from "engaging in a useful occupation." Id.
B. Relevance of Whether the Exempt Vehicles Are Used to Provide Transportation for Disabled Dependent
The evidence was that the Odyssey is the vehicle principally used to transport the Debtors' disabled son. The Durango has been used for that purpose but much less frequently. The Debtors frequently travel from their home in Longmont to Children's Hospital in Denver as well as to other locations for the purpose of obtaining medical treatment for their son. They do not require a vehicle with adaptive modifications for that purpose. Either vehicle may be used by simply transferring a child's car seat from one vehicle to the other.
The crux of the Trustee's argument is that the Debtors never need more than a single vehicle to transport their son to his medical appointments. For that reason, they should not be allowed to apply the enhanced exemption under § 13-54-102(1)(j)(II) to more than a single motor vehicle.
The Trustee makes a perfectly logical argument but it is one that is difficult to sustain given the current language of the statute. The Trustee's argument would have prevailed under the earlier version of that provision as it appeared prior to July 1, 2000. Prior to that date, a debtor could exempt:
One motor vehicle kept and used by any elderly or disabled debtor, for the purpose of obtaining medical care for himself or his elderly or disabled dependent. The value of the vehicle shall not exceed three thousand dollars.COLO. REV. STAT. § 13-54-102(1)(j)(II)(A) (1999).
In 2000, the Colorado state legislature made the following amendment to that portion of the statute to allow the exemption of:
(II) (A) One OR MORE motorS. BILL 00-003, COLO. SESS. LAWS, ch. 172, § 2 (2000) (additions in uppercase, deletions lined out).vehicleVEHICLES kept and used by any elderly or disabled debtor,for the purpose of obtaining medical care for himself or his elderly or disabled dependent. The value of the vehicle shall not exceed threeOR BY ANY DEBTOR WITH AN ELDERLY OR DISABLED SPOUSE OR DEPENDENT, IN THE AGGREGATE VALUE OF SIX thousand dollars.
The 2007 amendments increased the exemption amount of $10,000.00. S. Bill 07-158, COLO. SESS. LAWS, ch. 226, § 3 (2007).
In addition to adjusting the amount of the exemption, the 2000 amendment made important structural changes to the exemption statute. As a result of the amendment
1. a debtor may apply the exemption to more than one motor vehicle;
2. in addition to an elderly or disabled debtor, now any debtor with an elderly or disabled spouse or dependant may claim the enhanced exemption; and
3. the requirement that the exempt vehicle be used for the purpose of obtaining medical care was removed.
The Court finds the changes made to the statute to be particularly revealing. Of primary importance here is that the changes severed the prior link between the exemption and the need to provide transportation for the disabled person. It also allows each individual debtor to apply their exemption to more than one vehicle. Those changes significantly undercut the Trustee's argument because his argument focuses on the Debtors' need to provide transportation for their disabled son. It is undoubtedly true, as the Trustee argues, that the Debtors never need more than a single vehicle to meet their transportation needs for their son but that fact is no longer relevant to the statute's applicability.
Here, the evidence showed that both motor vehicles were suitable, and were used, for the transportation of the Debtors' son. The Court cannot foreclose the possibility that a different result might obtain where the vehicle claimed to be exempt is one that is patently unsuitable for providing transportation to the disabled person. It is not obvious that a different result would be required under the plain language of the statute but, since there is no question as to suitability and actual use of the vehicles involved here, that is a matter that need not be addressed at this time.
C. Each Debtor May Claim the Exemption
Each Debtor is entitled to claim an exemption under COLO. REV. STAT. § 13-54-102(1)(j)(II) for a motor vehicle that is "kept and used" by that Debtor when the other statutory requirements are met. The Odyssey is scheduled as a jointly owned vehicle. The schedules show no indication of ownership for the Durango. The evidence indicated that Mr. Moore is the primary driver of the Durango and that Mrs. Moore is the primary driver of the Odyssey. There was nothing in the evidence from which the Court could find that either vehicle is "kept and used" exclusively by one debtor or the other.
The Court does not read the phrase "kept and used" to equate to record title ownership of a vehicle. From the evidence, the Court infers that both vehicles are family vehicles kept and used by both Debtors for family purposes. Colorado's exemption statutes allow joint debtors to "stack" their individual exemptions on the same property. See, e.g., In re Larson, 260 B.R. 174, 193 (Bankr. D. Colo. 2001) (allowing each joint debtor to claim the full exemption amounts under both COLO. REV. STAT. §§ 13-54-102(1)(i) & (g)). Since the 2000 amendments were enacted, debtors have been allowed to apply their exemption, under § 13-54-102(1)(j)(II), to multiple vehicles so long as the total value protected by each individual debtor does not exceed the maximum exemption amount - now set at $10,000.00.
In the early Bankruptcy Code case of In re Ferguson, 15 B.R. 439 (Bankr. D. Colo. 1981), Judge Keller said that "[i]t is basic to any right to an exemption . . . that the debtor have an ownership interest in the property before any exemption may be claimed." Id. at 441. But, in another context, the Court commonly disregards record ownership of a vehicle where a debtor is the record owner and the evidence shows that another individual makes the vehicle payments; uses the vehicle; and insures it. In those cases, regardless of record title, the vehicle does not even come into the bankruptcy estate. See, e.g., In re Garberding, 338 B.R. 463, 467-69 (Bankr. D. Colo. 2004). That concept of equitable ownership should also apply to family vehicles where joint resources are typically used to acquire the vehicles and both debtors use them. Also the "kept and used" language does not easily lend itself to a strict record title interpretation of ownership for exemption purposes. --------
The Debtors are each entitled to exempt $10,000.00 of value in their two motor vehicles. They have valued the Odyssey at $15,075.00 and have valued the Durango at $2,000.00. The aggregate value of those vehicles - $17,075.00 - is less than the total $20,000.00 exemption the Debtors are entitled to. The Court approves the Debtors' claims of exemption and will deny the Trustee's Objection. Therefore, it is
ORDERED that Trustee's Limited Objection to Debtors Automobile Exemptions (docket #13) is DENIED.
Dated this 29th day of May, 2014.
BY THE COURT:
/s/_________
Howard R. Tallman, Chief Judge
United States Bankruptcy Court