Opinion
Case No. 02-82201-RGM
October 28, 2002
Thomas O. Murphy, counsel for debtor.
Joel S. Aronson, counsel for trustee.
MEMORANDUM OPINION
This case was before the court on October 22, 2002, on the objection of the chapter 7 trustee to the debtor's claim of exemption of his 1997 Buick Park Avenue. The debtor asserts that the vehicle is used in his occupation or trade and is, therefore, exempt under § 34-26(7) of the Code of Virginia. The debtor valued the vehicle at $9,430.00 on his schedules and the trustee has taken no exception to the value. The question is whether the vehicle falls within the statutory exception provided by § 34-26(7) which provides:
In addition to the exemptions provided in Chapter 2 (§ 34-4 et seq.) of this title, every householder shall be entitled to hold exempt from creditor process the following enumerated items:
* * *
7. Tools, books, instruments, implements, equipment, and machines, including motor vehicles, vessels, and aircraft, which are necessary for use in the course of the householder's occupation or trade not exceeding $10,000 in value, except that a perfected security interest on such personal property shall have priority over the claim of exemption under this section. A motor vehicle, vessel or aircraft used to commute to and from a place of occupation or trade and not otherwise necessary for use in the course of such occupation or trade shall not be exempt under this subdivision. "Occupation," as used in this subdivision, includes enrollment in any public or private elementary, secondary, or career and technical education school or institution of higher education.
The debtor is a self-employed consultant for the marketing, sales and installation of computer software. He works out of his home and travels to his client's offices. There is significant travel involved in his job, almost all of it out of the area in which he lives and much outside of Virginia. Since he does not maintain an office outside his home, there is no commuting involved.
Prior to the 1990 amendment to § 34-26 of the Code of Virginia, the tools of the trade exemption as limited to mechanics. There was also no mention of a car or other vehicle. There was case law that held that vehicles were not tools of the trade and did not fall within the predecessor to § 34-26. See In re Allen, 52 B.R. 206 (Bankr.E.D.Va. 1985); In re Williams, 39 B.R. 944 (Bankr.W.D.Va. 1984); In re Dummitt, 2 B.R. 136 (Bankr.W.D.Va. 1980). The 1990 amendment modified § 34-26(7). It now applies to all debtors who are engaged in an occupation or trade, not merely mechanics. It expressly includes "motor vehicles, vessels, and aircraft, which are necessary for use in the course of the householder's occupation or trade no exceeding $10,000" but not if the use is simply to commute to work. § 34-26(7).
The statute, while allowing vehicles to be considered tools of the trade, imposes a necessity standard. The necessity standard was addressed by this court in In re Lyall, 193 B.R. 767 (Bankr.E.D.Va. 1996) (Adams, J.). In that case the court allowed the exemption of a car used by a self-employed architect in Hampton Roads, Virginia. The court posited six questions to aid in its analysis. Those questions were:
1. Whether the vehicle is needed to further the debtor's employment; is it vital to the performance of the debtor's duties in his occupation?
2. Whether the automobile is a necessity because there is no alternative available to the debtor in the effective pursuit of his employment?
3. Whether the automobile's use in the debtor's occupation is the standard requirement in the professional and geographical area for non-debtors similarly employed?
4. Whether the debtor's car is used primarily for the purpose of commuting to and from his place of employment?
5. Did the debtor exempt the vehicle under § 34-26(7) for his own use?
6. Whether the fair market value of the vehicle is no more than $10,000?
Id. at 768-69.
In this case, the vehicle is needed to further the debtor's employment and is in fact vital to the performance of his duties. He works from his home but must meet with his clients at their businesses. Without this contact, he would be unable to perform his duties. Because of the multiple locations and the distances involved, there is no alternative means of transportation available to the debtor. Salesmen and consultants in this business typically meet with clients at their businesses.
Training is typically performed at the client's place of business or close to it. Computer equipment and software are almost always located at the client's place of business. The use of an automobile is a common and standard requirement in this business. Here, there is no commuting and minimal personal use. The court notes that the debtor scheduled two other, albeit older, vehicles, that are available for personal use. The vehicle has been valued by the debtor at less than $10,000, a valuation to which the trustee has not objected.
In these circumstances, the 1997 Buick Park Avenue vehicle is exempt in its entirety pursuant to § 34-26(7) of the Code of Virginia. The trustee's objection will be overruled.