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In re Maresca

United States District Court, D. Connecticut

September 30, 2019

MELISSA A. MARESCA, Appellee-Debtor. TERRY DONOVAN, Appellant-Creditor,


          Stefan R. Underhill, United States District Judge

         Appellant-Creditor Terry Donovan (“Donovan”), appeals the June 28, 2018 order of the United States Bankruptcy Court for the District of Connecticut, granting the Appellee-Debtor Melissa A. Maresca's (“Maresca”) motion to void liens that were placed against residential property where Maresca's dependent child (“Child”) resides.

         For the reasons set forth below, the Bankruptcy Court's order is affirmed.

         I. Background

         Maresca filed a Chapter 7 petition on May 12, 2016. See Bankruptcy Court's Mem. of Decision (Doc. No. 9-2) at 1. On November 4, 2017, Maresca filed a motion to void the judicial liens of Donovan, Maresca's former attorney, and another creditor arguing that she was entitled to the federal homestead exemption to real property located at 33 Laurel Road in Essex, Connecticut (“the Property”) pursuant to 11 U.S.C. § 522(f). Id. Although Maresca does not reside at the Property, her Child stays there when he visits his father. Id. Maresca and her-ex-husband have joint custody of the Child. Id. at 3.

         Maresca and her ex-husband jointly purchased the Property in 2005. Id. Maresca's ex-husband was the original borrower on the mortgage loan, and he and Maresca both executed the mortgage. Id. At a later date, a second mortgage was recorded against the Property. Id. As of the Petition Date, the total mortgage debt recorded was approximately $525, 899.26, with Maresca owning at least a half interest in the Property. Id. at 3, 10 n.6.

         In 2011, Maresca and her ex-husband initiated a divorce action and Maresca retained Donovan as her attorney. Id. at 3. The action resulted in a divorce decree in 2013. Id. As of the Petition Date, the Child was a minor and a dependent of Maresca. Id. The divorce decree awarded “joint legal custody” to Maresca and to her ex-husband, with the Child's “primary residence” to be with Maresca. Id. at 3-4. The divorce decree noted that the Property would be sold after final entry of the divorce decree, but the parties agreed to modify the decree to delay the sale of the Property. Id. at 4.

         Prior to the Petition Date, Donovan obtained a state court judgment against Maresca for unpaid legal fees in relation to her representation in the divorce action in the amount of $70, 943.00. Id. As a result, a judgment lien was placed on the Property. See Donovan's Mem. in Supp. of Mot. to Reverse (Doc. No. 9-1) at 4. As of the Petition Date, the ex-husband resided at the Property and Maresca resided in a rental apartment in another town. Bankruptcy Court's Mem. of Decision at 4. In addition, the Child spends time with both parents and attends school in the town where the Property is located. Id.

         On June 28, 2018, the Bankruptcy Court granted Maresca's motion to claim an exemption on the Property pursuant to 11 U.S.C. § 522 (f). Id. at 9. Donovan filed a notice of appeal in this court on July 11, 2018. See Doc. No. 1. On August 2, 2018, Donovan filed a motion for leave to appeal (doc. no. 6), which was granted on March 18, 2019. See Doc. No. 10.

         II. Standard of Review

         Under 28 U.S.C. § 158(a)(1), federal district courts enjoy jurisdiction to hear appeals of final judgments, orders, and decrees of bankruptcy judges, including orders approving bankruptcy settlement agreements. Debenedictis v. Truesdell (In re Global Vision Products, Inc.) 2009 WL 2170253, at *2 (S.D.N.Y. July 14, 2009). On appeal, a district court will review a bankruptcy court's conclusions of law de novo and its findings of fact for clear error. In re Flanagan, 415 B.R. 29, 38 (D. Conn. 2009).

         III. Discussion

         The question presented on appeal is whether the Bankruptcy Court erred in holding that, under 11 U.S.C. § 522 (d)(1), Maresca may utilize the federal homestead exemption to void liens placed against real property where her dependent child resides.

         “Under the Bankruptcy Code, 11 U.S.C. § 522(b), a debtor is permitted to choose between the scheme of federal exemptions prescribed in section 522(d) of the Code or the exemptions available under other nonbankruptcy federal law and the law of the state in which the debtor is domiciled.” Gernat v. Belford, 192 B.R. 601, 602 n.1 (D. Conn.), aff'd sub nom. In re Gernat, 98 F.3d 729 (2d Cir. 1996). “While a majority of states have enacted legislation prohibiting debtors from electing section 522(d) exemptions, Connecticut has not. Thus, in ...

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