Opinion
NO. 4:03-CV-1131-A
February 25, 2004
MEMORANDUM OPINION and ORDER
This action comes before the court as an appeal from a memorandum opinion and order granting in part a motion for relief from stay of the United States Bankruptcy Court for the Northern District of Texas, Fort Worth Division, the Honorable Dennis Michael Lynn presiding. The court, having considered the briefs of appellant, Local Telecom Service, L.L.C., and appellee, Jolene Marie Forsberg, the record on appeal, and applicable authorities, finds that the bankruptcy court's rulings should be affirmed.
I. Jurisdiction
This is an appeal from a final decision on a motion for relief from stay entered June 3, 2003. This court's jurisdiction exists pursuant to 28 U.S.C. § 158(a). Chunn v. Chunn (In re Chunn), 106 F.3d 1239, 1241 (5th Cir. 1997).
II. Underlying Facts and Proceedings
On or about July 26, 2001, appellee, hereinafter "Debtor," commenced a divorce action against her husband, John Forsberg, ("Forsberg") in the 231st Judicial District Court of Tarrant County, Texas (the "Family Court"). On April 11, 2002, Debtor filed a motion to sell the residence she had shared with Forsberg as their homestead. On April 29, 2002, the Family Court granted the motion, authorized Debtor to sell the residence at the earliest date practicable, and ordered Debtor to hold for future equitable division and distribution the net proceeds of the sale of the residence. Later, by agreed order signed May 23, 2002, the court ordered that the net proceeds of the sale be deposited into the trust account of Debtor's attorney to be maintained until further order.
In the meantime, on May 3, 2002, appellant obtained in the 352nd Judicial District Court of Tarrant County, Texas (the "State District Court"), a judgment against Forsberg in the amount of $845,730.16, plus punitive damages, interest, and attorneys' fees. Appellant applied for and obtained from that court a post-judgment writ of garnishment and, on November 4, 2002, Debtor's attorney was served with the writ. On December 9, 2002, appellant filed in the Family Court a motion for summary judgment asking that the court direct distribution of the funds held by Debtor's attorney to appellant on the theory that the sale proceeds could no longer be claimed as exempt because more than six months had passed since the sale of the homestead. See TEX. PROP. CODE ANN. § 41.001(c) (Vernon 2000).
On January 29, 2003, the day before the hearing on the motion for summary judgment, Debtor filed her petition seeking relief under Chapter 13 of the United States Bankruptcy Code. On February 19, 2003, Debtor filed her Chapter 13 plan and various schedules. On Schedule C (property claimed as exempt) Debtor listed proceeds from the sale of her homestead and disclosed that those proceeds were held in the trust account of her attorney in the Family Court. R. at 43. On March 13, 2003, appellant filed a motion for relief from stay, arguing that the proceeds from the sale of the homestead were not property of the estate; therefore, the automatic stay was not applicable to the divorce case or the garnishment action. In the alternative, appellant urged the court to lift the stay so that it could proceed to collect on its writ of garnishment.
On May 8, 2003, the bankruptcy court heard the motion for relief from stay. On June 3, 2003, the bankruptcy court issued a memorandum opinion and order granting the motion in part for the limited purpose of permitting the Family Court to determine whether its orders tolled the six-month period provided by Texas Property Code § 41.001(c) such that no lien could attach to the sale proceeds held by Debtor's attorney. Appellant filed a motion to reconsider, which the bankruptcy court heard June 30, 2003, and denied by order signed July 10, 2003. Appellant appealed only from the June 3, 2003, memorandum opinion and order.
The parties proceeded with a hearing in the Family Court on July 29, 2003. The Family Court issued its findings of fact and conclusions of law on September 23, 2003, determining that the six-month period set forth in § 41.001(c) of the Texas Property Code was tolled while the sale proceeds were held by Debtor's attorney pursuant to that court's order. Appellant filed a motion for leave to appeal the decision of the Family Court, which the bankruptcy court granted by order signed December 10, 2003.
The bankruptcy judge noted that this appeal was pending before this court and that he might not have jurisdiction to grant the relief ordered. Outside of its brief, appellant has never sought leave of this court to pursue further relief in the state courts.
III. Issues on Appeal
Appellant appeals various aspects of the bankruptcy court's memorandum opinion and order. It urges that the bankruptcy court erred: (1) in finding that Debtor had timely listed the sale proceeds as exempt under 11 U.S.C. § 522; (2) in finding that appellant had failed to file an objection to the claimed exemption of the sale proceeds; (3) in finding that the Family Court had jurisdiction to determine the question of whether its orders tolled the six-month period provided by TEX. PROP. CODE§ 41.001(c); and (4) in failing to recognize that the State District Court had dominant jurisdiction under Texas law to determine whether equitable tolling should apply.
IV. Standard of Review
To the extent the appeal presents questions of law, the bankruptcy court's judgment is subject to de novo review. Pierson Gaylen v. Creel Atwood (In re Consolidated Bancshares, Inc.), 785 F.2d 1249, 1252 (5th Cir. 1986). Findings of fact, however, will not be set aside unless clearly erroneous.Memphis-Shelby County Airport Authority v. Braniff Airways, Inc. (In re Braniff Airways, Inc.), 783 F.2d 1283, 1287 (5th Cir. 1986). A finding is clearly erroneous, although there is evidence to support it, when the reviewing court on the entire evidence is left with a definite and firm conviction that a mistake has been committed. Id. The mere fact that this court would have weighed the evidence differently if sitting as the trier of fact is not sufficient to set aside the bankruptcy court's order if that court's account of the evidence is plausible in light of the record viewed in its entirety.Anderson v. City of Bessemer City, 470 U.S. 564, 573-74 (1985).
V. Merits of the Appeal
A. Ground One.
Bankruptcy Rule 4003(a) requires that a debtor list property claimed as exempt under 11 U.S.C. § 522 on the schedule of assets required to be filed by Bankruptcy Rule 1007. Pursuant to Bankruptcy Rule 1007(c), the schedules and statements are to be filed within fifteen days after the filing of debtor's petition in bankruptcy. Schedules may be freely amended. Bankr. R. 1009. And, the time for filing may be enlarged by the bankruptcy court. Bankr. R. 9006(b).
Implicit in the bankruptcy court's June 3 memorandum opinion and order is a finding that Debtor timely claimed her interest in the sale proceeds as exempt under § 522. The bankruptcy judge discussed his reasoning during the June 30 hearing on the motion to reconsider. R. at 399-403. Although the bankruptcy judge was mistaken as to the due date of the schedules, he correctly pointed out that he could extend the time for filing schedules and stated that he would have done so. No harm was alleged to have been caused by the filing of the schedules a few days late.
The bankruptcy judge seemed to be under the impression that the fifteenth day fell on a weekend. The schedules were actually due on February 13, 2003, a Thursday.
Appellant contends that a proper claim of exemption was not timely filed, relying on Taylor v. Freeland Kronz, 503 U.S. 638 (1992). Taylor, however, discusses only Bankruptcy Rule 4003(b) pertaining to objections to a claim of exemption and not to the filing of the claim itself. Extension of the time period for objecting is expressly limited. Bankr. R. 4000(b) 9006(b)(3). The time for claiming an exemption is not so strictly limited and the bankruptcy court did not err in accepting the claim of exemption as timely made.
B. Ground Two.
In its second ground, appellant maintains that the bankruptcy court erred in finding that appellant had failed to file an objection pursuant to the requirements of Bankruptcy Rule 4003(b). Appellant acknowledges that it did not file a formal written objection. It argues, instead, that its motion for relief from stay should be interpreted as an objection to the claimed exemption. See In re Starns, 52 B.R. 405, 411 (S.D. Tex. 1985). Whether the motion should be so interpreted is an issue that the bankruptcy court has not yet reached and may not have to reach. As the bankruptcy judge explained at the June 30, 2003, hearing, "I have not precluded you at this point from asserting that you have filed an informal objection to exemptions. All I've said is no objection to exemptions was filed." R. at 405. The bankruptcy judge went on to explain why he did not have to reach that issue, noting that it would be made moot by the ruling of the Family Court. Likewise, this court has no need to make a ruling on whether a timely objection was made.
C. Grounds Three and Four.
In its third and fourth grounds, appellant urges that the State District Court, rather than the Family Court, had jurisdiction to hear and determine whether the six-month period provided by § 41.001(c) of the Texas Property Code had been tolled. Appellant argues that the State District Court had "dominant jurisdiction," Perry v. Del Rio, 66 S.W.Sd 239, 252 (Tex. 2001), because it was the only court with jurisdiction over the garnishment action. King King v. Porter, 252 S.W. 1022, 1022 (Tex. 1923). Appellant should not now be heard to complain, however, that the bankruptcy court lifted the stay so that further proceedings could be had in the Family Court, since that is the relief appellant sought. See, e.g., R. at 74-76.Daniels v. Pecan Valley Ranch, Inc., 831 S.W.2d 372, 382 (Tex.App.-San Antonio 1992, writ denied) (one cannot complain of errors he has invited). In any event, the Family Court was the proper court to determine the effect of its own orders regarding the sale proceeds. See First Southern Props., Inc. v. Vallone, 533 S.W.2d 339, 341 (Tex. 1976). And, as should have been expected, the Family Court held that the sale proceeds, held in custodia legis, were exempt from garnishment. See Daniels, 831 S.W.2d at 382; Challenge Co. v. Sartin, 260 S.W. 313, 314 (Tex.Civ.App.-Dallas 1924, no writ).
Thus, whether appellant timely objected to the claimed exemption of the sale proceeds does not matter, because there was not a legitimate objection to be made.
VI. Order
For the reasons discussed herein,
The court ORDERS that the bankruptcy court's memorandum opinion and order the subject of this appeal be, and is hereby, affirmed.