Deutsche Bank’s Decade Long Pursuit for a Dilapidated Property Worth Less Than $125k

The historical purpose of exemption laws has been to protect a debtor from creditors, to provide her with the basic necessities of life.

In re Goldfeder, No. 17-12873 (LSS)

(Bankr. D. Del. Oct. 26, 2020)



Chapter 7 Re: Docket Nos. 21, 27, 52, 62, 70, 72, 73


Before me is the Objection to Debtor’s Claim of Exemption Filed by Deutsche Bank National Trust Company as Trustee1 (“Objection”)2 by which Deutsche Bank objects to Debtor’s homestead exemption.

While there have been multiple discovery disputes, the issue before me boils down to the following question: whether, on December 7, 2017—the day Ms. Goldfeder filed her bankruptcy petition—the real property Ms. Goldfeder seeks to exempt was her principle residence.3

Because Deutsche Bank has the burden of proof and it has not shown that Ms. Goldfeder improperly claimed her homestead exemption, I will overrule the Objection.

1 Deutsche Bank National Trust Company as Trustee for Morgan Stanley, ABS Capital 1 Inc., Trust 2005-HE2 (“Deutsche Bank”).

2 Obj. to Debtor’s Claim to Exemption Filed by Deutsche Bank National Trust Company as Trustee, D.I. 21.

3 Reply Br. of Creditor in Further Supp. of Debtor’s Claimed Exemption (“Reply Brief”) 2, D.I. 73.


The Law on Exemptions

Exemptions exist to protect “property essential to life and livelihood” from the collection efforts of creditors.4

Exemptions are provided by nearly every state and by the *2 United States Congress (through the Bankruptcy Code) to protect debtors from “destitution and, as a consequence, dependence upon the public fisc.”5 Together with the discharge, exemptions provide the principal way in which a debtor receives her fresh start in Because of that, exemption provisions are liberally construed.6

4 See 3 William L. Norton III, Norton Bankruptcy Law & Practice § 56.1 (3d ed. 2019); Law v. Siegel, 571 U.S. 415, 427 (2014) (quoting Schwab V. Reilly, 560 U.S. 770, 791 (2010)

(“[I]n crafting the provisions of § 522 ‘Congress balanced the difficult choices that exemption limits impose on debtors with the economic harm that exemptions visit on creditors.'”)).

5 Norton, supra note 4, at § 56.1; see also In re Krebs, 527 F.3d 82, 85 (3d Cir. 2008)

(“The historical purpose of exemption laws has been to protect a debtor from [her] creditors, to provide [her] with the basic necessities of life so that even if [her] creditors levy on all of [her] nonexempt property, the debtor will not be left destitute and a public charge.”).

6 Norton, supra note 4, at § 56.1.

Delaware has opted out of the federal exemptions.7 So, as here, debtors seeking to take advantage of exemptions look to Delaware law. As relevant, Delaware law provides:

7 Del. C. Ann. tit. 10 § 4914(a).

In any federal bankruptcy or state insolvency proceeding, an individual debtor and/or such individual’s spouse domiciled in Delaware shall be authorized to exempt from the bankruptcy or insolvency estate, in addition to the exemptions made in subsection (b) of this section and in § 4915 of this title, the following:

(1) Equity in real property or equity in a manufactured home (as defined in Chapter 70 of Title 25) which constitutes a debtor’s principal residence in an aggregate amount not to exceed $75,000 in 2010, $100,000 in 2011, and $125,000 thereafter, except that the exemption for persons totally disabled from working or married persons where at least 1 of the spouses is 65 years old or older shall be $125,000 effective immediately.8

The term “principal residence” is not defined in the statute, and neither party has cited case law defining the term or setting forth the factors a court uses to determine a debtor’s principal residence in this context.9 Debtor cited two Delaware cases in the divorce context that examine domicile for jurisdictional purposes.10 Deutsche Bank does not cite any Delaware case law.

8 Del. C. Ann. tit. 10 § 4914(c)(1).

9 Our independent research did not reveal any reported cases.

10 Debtor’s Resp. to Deutsche Bank’s Letter Br. in Supp. of the Obj. to the Homestead Exemption (“Answering Brief”) 9- 10, D.I. 72 (citing Long v. State, 44 Del. 262 (1949) (discussing jury instructions given by the lower court regarding defendant’s intent to make Arkansas his home) and In re Marriage of Pascavage v. Pascavage, 1994 WL 837452, at *9 10 (Del. Fam. Ct. July 1, 1994), aff’d sub nom. Pascavage v. Aperio, 655 A.2d 1225 (Del. 1995) (ruling that “actual reside[ncy] satisfying the jurisdictional requirements of 13 Del.C. § 1504 has been defined to mean domicile;” but recognizing residence and domicile are not equivalent. Further stating “it is well settled that the essential components of a domicile are (1) the fact of physical presence and (2) the intent to permanently make that place home.”)).

In Boyer v. Sylvester, a recent decision of the Delaware Court of Common Pleas, the Court explored the term “principal residence” for purposes of Delaware’s Landlord Tenant Code.11

Recognizing, as here, that the term is not defined in the statute, the Boyer Court found instructive cases defining the term “domicile.”

Citing to previous Delaware cases,12 the Boyer Court variously defined principal residence as:

(i) “the combination of a temporary or permanent presence on the property, with the intent to make the property’s one home[sic];”

(2) “the act or fact of abiding or dwelling in a place for some time; an act of making one’s home in a place;”

(3) “a temporary or permanent dwelling place, abode or habitation to which one intends to return as distinguished from a place or temporary sojourn or transient visit;”

(4) “reside, despite the fact that it is somewhat formal, may be the preferred term for expressing the idea that a person keeps or returns to a particular dwelling place as his fixed, settled or legal abode;”


(5) “domicile is defined as a dwelling place with the intention to make that place the resident’s permanent home.

It requires a concurrence of the fact of living at a particular place with the necessary intention of making that the permanent home.” Applying that standard to the facts before it, the Boyer Court found the property at issue to be defendant’s principal residence where, among other things,

(i) defendant was the owner of record, paid the bills (e.g. utilities, mortgage) and those bills were in her name,

(ii) prior to her one year absence from the home she had lived there for fifty years, her absence was due to her husband’s death and her desire to live with her daughter in another state for a period of one year,

(iii) the residence was rented during that one year period


(iv) defendant intended the property to he her permanent home.

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Deutsche Bank’s Decade Long Pursuit for a Dilapidated Property Worth Less Than $125k
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