Opinion
Case No. 2:05-mc-0002.
November 16, 2007
ORDER
This case came before the Court for an evidentiary hearing on October 30, 2007. The purpose of the hearing was to determine certain exemptions claimed by Debtor Michael Bray, to consider any other issues about execution on the plaintiffs' judgment raised by intervener Jayne Bray, and to consider a motion to delay the eviction of the Brays from their home pursuant to the previously-issued writ of execution. At the close of the hearing, plaintiffs agreed that the Brays could remain in their house until a date for sale by auction is determined. This order will address the other issues raised by the parties' filings.
I.
The testimony given at the evidentiary hearing can fairly be summarized as follows.
The first witness who testified was Jayne Bray. Mrs. Bray testified that certain property was seized from her home on October 1, 2007 by the United States Marshals acting pursuant to a writ of execution issued by this Court. She stated that a number of items were removed which did not belong to Michael Bray, the judgment debtor. Those included an RCA television set which belongs to the couple's daughter, Epiphany; a video camera belonging to one of their sons (probably a Sony camera); a digital camera which had been loaned to the family; a DVD player which was won by one of the couple's daughters in a school contest; the computer which was located in a hallway outside the main bedroom, which also belongs to Epiphany; and miscellaneous books, DVDs or videos which may have been borrowed from a library or rented.
Mrs. Bray also testified that she considers herself to be the joint owner of the balance of the items that were seized. Additionally, she testified that some items seized were owned jointly by the entire family. She identified the deed to the family home which indicated that she and Michael Bray, the debtor, jointly owned the property.
On cross-examination, Mrs. Bray acknowledged that she completed both a mortgage application and a home equity application indicating that there were no judgments pending against her or her husband and that neither was a party to a lawsuit. She believed that she discussed the judgment with a loan officer at the time of the home equity loan application. She was unaware whether Michael Bray had earned any money from writing or speaking since 2005.
Michael Bray was the second witness who testified at the hearing. He confirmed his wife's testimony that a number of items were seized which did not belong either to him or to the Bray family. He testified concerning his employment history, stating that he had worked as a lay assistant at Grace Lutheran Church from 1981 through 1984 and as an associate pastor at Reformation Lutheran Church, located in Maryland, from 1984 through 2003. In addition to serving as a pastor of that church, he also taught subjects at the church school. He acknowledged writing his book, A Time to Kill, in 1983 and being paid for that effort. He also testified that he received some money from a newsletter which he publishes. He testified that some of his personal writings which were on computer storage media and which were seized during the execution on the writ may be publishable but that their value was not known to him. He also testified that he is working on obtaining a real estate license.
Mr. Bray specifically claimed his $5,000.00 exemption available in one parcel of real property and asked that it be applied to his home. He also claimed exemptions for professional books or tools of the trade in the amount of $750.00, noting that approximately 90% of the books seized from his home are professional books. He did not believe that these books were worth more than a few hundred dollars. He also claimed a $200 per item exemption in other household items including a computer, a printer, a scanner, non-professional books, removable computer media such as thumb drives, videotapes, and other items.
On cross-examination, Mr. Bray testified that he received one $50 fee for a speaking engagement since 2005. He acknowledged that he was not currently performing pastoral services but it was possible that he would be paid for such work in the future. He did visit prisons as a pastoral representative of a church for some period of time. Mr. Bray acknowledged that he has been interviewed by a number of journalists and that he has been the subject of a number of books and has appeared on television to talk about his writings.
Mr. Bray testified that the computer which belonged to the family (as opposed to the one belonging to his daughter Epiphany) was purchased between 1999 and 2001. The scanner was purchased about the same time. The computer belonging to his daughter was purchased by her from a used computer store.
Mr. Bray acknowledged that in an affidavit he earlier filed with this Court he stated that he did not have any personal property with significant value. However, he now believes that his writings may have greater value, especially in light of the effort gone to by the plaintiffs to seize those writings.
II.
Section 2329.66(A) of the Ohio Revised Code provides in relevant part:
Every person who is domiciled in this state may hold property exempt from execution, garnishment, attachment, or sale to satisfy a judgment or order, as follows:
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(1)(b) . . ., the person's interest, not to exceed five thousand dollars, in one parcel or item of real or personal property that the person or a dependent of the person uses as a residence.
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(4)(b) . . ., the person's interest, not to exceed two hundred dollars in any particular item, in household furnishings, household goods, appliances, books, animals, crops, musical instruments, firearms, and hunting and fishing equipment, that are held primarily for the personal, family, or household use of the person;
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If the person does not claim an exemption under division (A)(1) of this section, the total exemption claimed under division (A)(4)(b) of this section . . . shall not exceed two thousand dollars. If the person claims an exemption under division (A)(1) of this section, the total exemption claimed under division (A)(4)(b) of this section . . . shall not exceed one thousand five hundred dollars.
(5) the person's interest, not to exceed an aggregate of seven hundred fifty dollars, in all implements, professional books, or tools of the person's profession, trade, or business, including agriculture.
Ohio Rev. Code Ann. § 2329.66(A) (Baldwin 2007).
A.
The Court will turn first to the exemptions claimed by Mr. and Mrs. Bray in the household goods seized pursuant to the writ of execution. According to the inventory prepared by the United States Marshal, the items seized included various items that might be considered to be household goods, such as computers and associated equipment, televisions, stereos, and similar items. The Court understands the Brays to claim that all such items are household goods.
Section 2329.66(A)(4)(b), which contains the "household goods" exemption, implies a two-part inquiry. First, the items must be "household goods." Second, they must be intended for personal or household use. In re Szydlowski, 186 B.R. 907, 911 (Bankr. N.D. Ohio 1995). Some courts have defined "household goods" as "items of personal property reasonably necessary for the day to day existence of people in the context of their homes." Id. (quotingIn re Barnes, 117 B.R. 842, 847 (Bankr. D. Md. 1990)). Courts have consistently held televisions and VCR's to be "household goods" under this definition. Id. On the other hand, an additional television may be considered an unnecessary luxury item not subject to exemption. Id. Other courts have defined "household goods" as any personal property normally used by debtors or their dependents in or about their residence. In re Keeton, 161 B.R. 410, 414 (Bankr. S.D. Ohio 1993). A personal computer, printer, and software are considered to be household goods under either definition. See In re Vaughn, 64 B.R. 213 (Bankr. S.D. Ind. 1986); In re Gray, 87 B.R. 591 (Bankr. W.D. Mo. 1988); In re Rhines, 227 B.R. 308 (Bankr. D. Mont. 1998); In re Reid, 121 B.R. 875 (Bankr. D.N.M. 1990); In re Ratliff, 209 B.R. 534 (Bankr. E.D. Okla. 1997).
The testimony adduced at the hearing further established that any computers, televisions, VCRs, stereos, and similar items were used by the Brays and their children for personal and household tasks. Accordingly, to the extent they have an interest in these items, the Brays may each properly claim an exemption under section 2329.66(A)(4)(b) to the extent of two hundred dollars per item. Because the Brays have each asserted an exemption in their real property pursuant to section 2329.66(A)(1)(b), the total value of the household goods in which they claim an exemption may not exceed one thousand five hundred dollars per individual.
The parties have disputed ownership of the various items of personal property. Planned Parenthood and the other judgment creditors argue that the household goods should be considered solely the property of Michael Bray. They contend that under Ohio law, neither spouse has any interest in the property of the other, see Ohio Rev. Code § 3103.04, and that, as a result, Jayne Bray may not claim an ownership interest in such property.
"Ohio courts generally have treated the phrase `property of the other' in section 3103.04 to mean `separate property' or `non-marital property.'" Ransier v. McFarland (In re McFarland), 170 B.R. 613, 620 (Bankr. S.D. Ohio 1994) (citations omitted). The testimony established that Mrs. Bray has free use of the household goods along with her husband and their children. Accordingly, the household goods seized from the Brays' residence are jointly owned by Mr. and Mrs. Bray to the extent they are not owned by third parties. See id. at 622. Mrs. Bray, therefore, may assert a one-half ownership interest in these goods, so that Mr. Bray's claim of exemption will apply to his one-half interest only.
The Brays contend that many of the items seized belong to third parties. The evidence was uncontroverted that the RCA television set and the computer located in a hallway outside the main bedroom are owned by their daughter, Epiphany, that one of the video cameras belongs to one of their sons, and that the DVD player belongs to one of their daughters. The evidence was less clear concerning the ownership of the other video camera loaned to Epiphany by an Anglican priest located in Maryland where the family previously resided. The Court need not decide whether the priest expects the camera to be returned because even were the transaction to be considered a gift rather than a loan, the property would be Epiphany's and not Mr. Bray's and, therefore, not subject to seizure in either event. The Brays also speculated that some of the books, DVD's, and videotapes that were seized may have been borrowed from a library or rented. To the extent that an examination of the items bears out these suspicions, the items should not be sold, but instead returned to the proper owner.
The Court believes that most, if not all, of the items under the category of "household goods" are worth less than four hundred dollars and that the aggregate value of Mr. Bray's interest in these items is less than fifteen hundred dollars, so that it is within the limits of Mr. Bray's exemption under Ohio Rev. Code § 2329.66(A)(4)(b). To the extent any party disputes the value of one or more of these items, such party may request that an appraisal be conducted pursuant to Ohio Rev. Code § 2329.68. Otherwise, however, the items should be returned. The parties should attempt to stipulate to the value of the returned items so that a determination can be made of how much of Mr. Bray's exemption for household goods has been utilized.
B.
The Court will turn next to Michael Bray's claims of exemption under § 2329.66(A)(5) as to professional books. Mr. Bray estimates that ninety percent of the books seized from his home are professional books he uses in furtherance of his profession. The other ten percent of his books would appear to qualify as property exempt under § 2329.66(A)(4)(b) to the extent that such exemption amounts are not already exhausted.
It has been held that "[t]he books used and needed by a minister of the gospel for the purposes of his calling are not liable to seizure . . ." State ex rel. Mt. Calvary M.E. Church v. St. Paul, 35 So. 389 (La. 1903). Mr. Bray testified that although he has not been employed as a pastor since 2003, he continues to publish a newsletter and believes that his writings have the potential of creating future income. He also has not ruled out again becoming a pastor should another parish wish to employ him.
A debtor is not required to be engaged in a given trade at the time of execution in order to claim an exemption for "tools of the trade" so long as he can show reasonable prospects for re-engaging in such trade in the future. See, e.g., In re Johnson, 19 B.R. 371 (Bankr. D.Kan. 1982). In deciding whether a debtor is still engaged in a profession for exemption purposes, despite his temporary absence therefrom, a court should consider the debtor's prospects for returning to that profession, the amount of time since the debtor has engaged in the profession, and any other circumstances affecting the debtor's return of the profession. In re Henke, 294 B.R. 105 (Bankr. D.N.D. 2003).
In this case, Mr. Bray's absence from the ministry appears not to be the result of any change in his vocation, but from his subjective fear of civil and criminal liability should he associate openly with other persons who share his religious and political beliefs. Moreover, Mr. Bray presumably relies on his professional library for his current writings from which he reasonably hopes to produce income to support himself and his family. Therefore, the Court rules that Mr. Bray may exempt his professional books up to an aggregate value of seven hundred fifty dollars. If Planned Parenthood and the other judgment creditors believe these books are worth more than seven hundred fifty dollars, they may request an appraisal under section 2329.68. Otherwise, as set forth above, they should attempt to stipulate to the value of the books so that the amount of the exemption utilized may be determined.
The Court notes that, in addition to books, certain unpublished writings of Mr. Bray's were seized. These writings do not appear to be either household goods or professional books. Further, it does not appear that Mrs. Bray has any ownership interest in them. Consequently, the plaintiffs' ability to have these writings sold pursuant to the writ of execution does not appear to be in question.
C.
Lastly, the Court will consider whether Planned Parenthood and the other judgment creditors have properly executed on the Brays' residential real property. Under Ohio law, a judgment creditor can execute on real property of the judgment debtor in either of two ways. The judgment creditor can elect to foreclose directly on the real property by filing an action under Ohio Rev. Code § 2323.07. If this option is chosen, there is no requirement that the judgment creditor first exhaust the goods and chattels of the judgment debtor. Feinstein v. Rogers, 440 N.E. 2d 1207, 1210 (Ohio Ct.App. 1981). The second alternative is to levy execution on the judgment debtor's property pursuant to Ohio Rev. Code Ch. 2329. This option presupposes that the levy first be directed to the judgment debtor's goods and chattels. See Ohio Rev. Code § 2329.11. In the matter before the Court, Planned Parenthood and the other judgment creditors have proceeded under Chapter 2329 with a simultaneous levy on both personal and real property and have not instituted a direct foreclosure action on the Brays' real estate.
While it has been held that the statutory provisions that prescribe the sequence of levy are directory in nature, see Wheeling L.E. P. Coal Co. v. First Nat. Bank, 45 N.E. 630, 631 (Ohio 1896) (construing former section 5383 of the Ohio Revised Statutes), these provisions are manifestly for the benefit of the judgment debtor. Id. "It may be to the advantage of the debtor to save his real property from sale, and this he may do by compelling resort first to be had to his chattel property when that is sufficient to satisfy the writ . . .". Id. In this case, the Brays, unlike the debtor in Morgan v. Kinney, 38 Ohio St. 610, 613-14 (1883), have not waived their right to compel Planned Parenthood and the other judgment creditors to exhaust the personal property seized pursuant to the writ before executing on the Brays' real estate. Accordingly, this Court holds that in proceeding under Chapter 2329, Planned Parenthood and the other judgment creditors must conduct a sale of any non-exempt goods seized pursuant to the writ of execution and determine whether the proceeds obtained from such sale are sufficient to pay the judgment in full before subjecting the Brays' real property to execution and sale.
Moreover, even were the Brays' real property subject to execution at this time, they would not be required to vacate the premises prior to the sale and confirmation thereof. A levy upon real property differs from a levy on personal property in which the officer executing the writ secures possession of the goods and chattels. See Willis v. Beeler, 90 F.2d 538, 542 (6th Cir. 1937). "Nowhere in the statutes is the officer directed to make any actual seizure, which it would seem could only be done by ousting the judgment debtor." Morgan, 38 Ohio St. at 612. In fact, "[a]n entry upon the land by the officer holding the writ is not necessary to constitute a valid levy." Wheeling, 45 N.E. at 631. In Willis, the judgment debtor continued to occupy the realty in the operation of its business for nine months after the levy until it filed a petition in bankruptcy. 90 F.2d at 541-42. The levy on the real estate, thus, did not confer constructive or actual possession of the property upon the judgment creditor. Id. at 542.
III.
Based on the foregoing, the Court holds that Michael Bray has asserted a valid claim of exemption for his one-half interest in household goods to the extent allowed by Ohio Rev. Code § 2329.66(A)(4)(b). He has also asserted a valid claim for exemption in his professional books pursuant to Ohio Rev. Code § 2329.66(A)(5).
The parties shall proceed with respect to these items as set forth above. Plaintiffs are ordered to proceed with the sale of any non-exempt personal property seized pursuant to the writ before going forward with the sale of the realty.
Any party may, within ten (10) days after this Order is filed, file and serve on the opposing party a motion for reconsideration by a District Judge. 28 U.S.C. § 636(b)(1)(A), Rule 72(a), Fed.R.Civ.P.; Eastern Division Order No. 91-3, pt. I., F., 5. The motion must specifically designate the order or part in question and the basis for any objection. Responses to objections are due ten days after objections are filed and replies by the objecting party are due seven days thereafter. The District Judge, upon consideration of the motion, shall set aside any part of this Order found to be clearly erroneous or contrary to law.
This order is in full force and effect, notwithstanding the filing of any objections, unless stayed by the Magistrate Judge or District Judge. S.D. Ohio L.R. 72.4.