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

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

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

REPUBLISHED BY LIT: OCT 14, 2021

LAURIE SELBER SILVERSTEIN, UNITED STATES BANKRUPTCY JUDGE

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

OPINION

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.

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

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:

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.

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;”

and

(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

and

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

The Boyer Court’s description of principal residence and its analytical approach is consistent with case law cited by Debtor interpreting the homestead exemption under either non-Delaware state law or the Bankruptcy Code. Courts look at the totality of the. circumstances with respect to where debtor is residing and debtor’s intent.¹³

LIT EXCLUSIVE: If you’re lookin’ for proof of the conspiracy between Wall St Banks, Foreclosure Mills and Non Banks like PHH Ocwen, wherein they produce #fakedocs and commit #perjury -y’all have to read the trial transcript in this case. https://t.co/upkrbfeDUq@uscourts #txlege pic.twitter.com/zeTrWhIJGD

— LawsInTexas (@lawsintexasusa) October 10, 2021

Burden of Proof

A debtor must list the property she claims as exempt on her schedules.¹⁴ Unless a party in interest objects, all property on the list is exempt.¹⁵ If an objection is filed, the objecting party has the burden of proof to show that the exemption is not properly claimed.¹⁶

In its Reply Brief, Deutsche Bank cites to In re Scioli ¹⁷ for the proposition that once an objecting party produces evidence, the burden shifts to the debtor to come forward with “unequivocal” evidence to show the exemption is proper.¹⁸

From this, Deutsche Bank suggests (without actually stating) that (i) the debtor (not the objector) has the ultimate burden of proof/persuasion at a claim exemption hearing and (ii) once an objecting party produces some evidence to support its position that the exemption is not properly claimed, a debtor must meet some heightened standard of evidence in response.

These inferences are not consistent with Bankruptcy Rule 4003.

Bankruptcy Rule 4003 places the burden of persuasion in claim exemption disputes squarely on the objecting party. The rule provides: “In any hearing under this rule, the objecting party has the burden of proving that the exemptions are not properly claimed.”¹⁹

Neither § 522(1) nor Bankruptcy Rule 4003 requires a debtor to provide “unequivocal evidence” that it is entitled to the exemption.

Further, there is an inherent inconsistency between Rule 4003’s mandate that the objector has the burden of proof and the Scioli court’s recitation that a debtor provide “unequivocal evidence” to show her exemption is properly taken.

While the “unequivocal evidence” standard is nowhere defined, as the common usage of the term “unequivocal” means “unambiguous; clear; free from uncertainty,”²⁰ such a standard would appear to be greater than “preponderance of the evidence” or even “clear and convincing evidence.”

As a practical matter, an “unequivocal evidence” standard would certainly shift the ultimate burden of proof from the objector to the debtor.

In re Scioli recited, but did not analyze, the burdens of production and persuasion in the context of a claimed exemption of personal property. The totality of the discussion (without citations) is:

Bankruptcy Rule 4003(c) provides:

“In any hearing [on an objection to a claim of exemptions], the objecting party has the burden of proving that the exemptions are not properly claimed.”

“Such burden may be met by a preponderance of the evidence.”

Courts have uniformly held that Rule 4003(c) operates under a “burden shifting” framework.”

‘A claimed exemption is presumptively valid . . . If the objecting party can produce evidence to rebut the exemption, the burden of production then shifts to the debtor to come forward with unequivocal evidence to demonstrate that the exemption is proper.'”²¹

For the proposition that a debtor must come forward with “unequivocal evidence,” the Scioli court cites In re Kicenuik ²² citing to the Ninth Circuit’s decision in In re Carter.²³

Goodwin Law

In Carter, the Ninth Circuit states (again, without analysis) that:

(i) a claimed exemption is presumptively valid;

and

(ii) the objecting party has the burden to prove that the exemption is not properly claimed.

While recognizing that the burden of persuasion always remains with the objecting party, the Ninth Circuit also states that

“If the objecting party can produce evidence to rebut the exemption, the burden of production then shifts to the debtor to come forward with unequivocal evidence to demonstrate that the exemption is proper.”²⁴

The Ninth Circuit borrowed this standard from In re Moneer, a bankruptcy court decision from the Northern District of Illinois interpreting Illinois state law on exemption.²⁵

At issue in Moneer was whether the debtor had lost his homestead exemption by abandonment. Examining Illinois law, the Moneer Court determined that the question of abandonment was largely a matter of intention, which could be shown by words or deeds.

The Moneer Court quoted Illinois decisional law for two principles:

(i) “[s]uch intention to return [to the homestead] must be unequivocal—equivocal intention to return is not sufficient”

and

(ii) “when no new homestead has been acquired, absence from the old one, unless for an extended period of time, does not create a presumption of abandonment.”²⁶

The Moneer Court then applied Federal Rules of Evidence 301 ²⁷ and 302²⁸ made applicable by Federal Rule of Bankruptcy Procedure 9017 to the exemption hearing. Apparently concluding there is a substantive presumption in the Illinois homestead law with respect to abandonment that runs against the party claiming the exemption, the Moneer Court concluded that “although the [objector] has the burden of proof as mandated by Bankruptcy Rule 4003(c), under [Illinois state law] and Federal Rule of Evidence 301, the Debtor has the burden of coming forward with unequivocal evidence to rebut the presumption that when he left his spouse and immediate family and removed himself from the Property, he left without any intention of returning and thereby abandoned his estate of homestead in the Property. “²⁹

At most, Moneer stands for the proposition that bankruptcy courts applying Illinois homestead exemption law in a scenario where abandonment is at issue require a debtor to come forward with “unequivocal evidence” that he did not mean to abandon the homestead. I respectfully disagree with courts that have adopted the Moneer standard wholesale in different exemption contexts, interpreting federal exemptions or interpreting state exemptions for states other than Illinois.³⁰

Delaware law governs the matter before me. Assuming, without deciding, that the Moneer analysis is the correct approach generally with respect to the burdens on parties in exemption disputes under the Bankruptcy Code, Deutsche Bank cites no Delaware state law creating a presumption running against Debtor under 10 Del. § 4914, the relevant statute.

Therefore, Debtor is not required to provide “unequivocal evidence” that she is entitled to her claimed exemption. Rather, as stated in Rule 4003, Deutsche Bank has the burden of proof.

As no party has cited a standard greater than “preponderance of the evidence,” that is the standard Deutsche Bank must meet.

One court has observed: “placing the burden of proof on the objector presents a formidable task since most of the information regarding the exempt asset will be held by the debtor or some other third party, not the objector.”³¹ But this standard reflects Congress’ goals in providing exemptions: namely, to permit debtors a fresh start with a minimal safety net and to reduce dependence on the public fisc.

It is against this backdrop that I approach the matter before me.

This bankruptcy mortgage was $91.5k Y’all could have paid it forward and just paid the loan off for an 1/8th of the ridiculous attorney $743k fee request. @uscourts #txlege @usbank @SDMissBankr @usbcsdny @cacbnews @FloridaMiddle @USBCDRI1 @WSJopinion @ReutersLegal @statesman @ABC https://t.co/r8Ng1Vx6d0

— LawsInTexas (@lawsintexasusa) October 12, 2021

Procedural Posture

On December 7, 2017 (“Petition Date”), Nancy Goldfeder (“Debtor”) filed a voluntary bankruptcy petition³² (“Petition”) under chapter 7 of the United States Bankruptcy Code (“Code”).

At each place on the Petition requiring a signature, the Petition was signed by both Debtor and Emil Mikhail who signed as “Guardian Ad Litem (Superior Court Order).”

Thereafter, on December 11, 2017, Debtor filed a motion to appoint Mikhail as her guardian ad litem for purposes of the bankruptcy case.³³

In that motion, Debtor represented that Mikhail had been appointed Debtor’s guardian ad litem by order of the Superior Court dated July 26, 2012 because of Debtor’s debilitating physical and mental illnesses, which were not anticipated to improve.

No objections were filed to Debtor’s request and an Order appointing Mikhail as Debtor’s guardian ad litem was entered on January 19, 2018.³⁴ Debtor received her discharge on April 10, 2018.³⁵

The only controversy in the bankruptcy case has been with Deutsche Bank over Debtor’s claimed exemption.

On Schedule A filed with the Petition, Debtor lists a property at 1610 North Union Street, Wilmington, Delaware 19806 as a single-family home with a current value of $100,000 (“Union Street Property”).³⁶

Debtor also schedules “3 Rooms Used Household Goods” valued at $1,500. On Schedule C, Debtor claims her Delaware exemptions, including “100% of the fair market value, up to any applicable statutory limit” for the Union Street Property pursuant to 10 Del C. § 4914(c)(1).

On February 9, 2018, Deutsche Bank filed the Objection. Deutsche Bank does not take issue with Debtor’s valuation of the Union Street Property. Nor does Deutsche Bank dispute ownership of the Union Street Property.

Rather, Deutsche Bank contends that the Union Street Property is not Debtor’s principal residence and that she has not lived at the Union Street Property for “at least approximately ten (10) years, if not longer.”

After the filing of the Objection, the parties began discovery. Deutsche Bank diligently pursued both written discovery and deposition testimony. It sent document requests and noticed Mikhail’s deposition.

On October 17, 2018, a Joint Stipulated Pretrial Scheduling Order was entered setting the Objection for trial on January 2, 2019.³⁷

The Pretrial Order also set a deadline for completion of discovery and depositions of trial witnesses, specifically including the deposition of Mikhail. It further contemplated that the parties might determine to resolve the matter on the papers, rather than a trial.

On November 30, 2018, the parties submitted a joint status letter informing the court that the parties would indeed take that route.³⁸

On December 7, 2018, a further Joint Stipulated Scheduling Order was entered setting forth deadlines for exchanges of final exhibit lists, motions in limine and a briefing schedule on the Objection.³⁹

Consistent with the agreed to schedule, on February 8, 2019, Deutsche Bank filed a motion in limine setting forth specific objections to potential exhibits Debtor might offer in connection with the Objection as follows.⁴⁰

Exhibits (see pdf version)

Debtor responded to the Motion in Limine.⁴¹ At a hearing on February 21, 2019, I determined that Deutsche Bank was entitled to a two hour deposition of Mikhail on the issues of authentication and foundation of documents and could be examined on his testimony at the section 341 meeting. I also determined I would consider relevancy objections in connection with the briefing.

On May 6, 2019, Deutsche Bank filed a motion for sanctions⁴² based on Mikhail’s failure to appear for his deposition. Mikhail asserted that his own health was deteriorating and he was not available to attend a deposition.

In the Motion for Sanctions, Deutsche Bank sought an order precluding Debtor from submitting into evidence the documents identified in the Motion in Limine.

Debtor’s response included a motion for a limited re-opening of the discovery period and suggested possible alternative witnesses on the documents.⁴³

At that hearing, I permitted another 30 days for additional discovery so that either party could obtain further discovery on the authentication of documents to be submitted.

I also stated that I would decide all objections to exhibits in the context of the briefing and directed parties to state (or re-state) any evidentiary objections in their respective briefs.

The Opening Brief,⁴⁴ Answering Brief and Reply Brief were duly filed. I have reviewed the documents submitted with the briefs, considered the objections to the documentary evidence in Deutsche Bank’s Motion in Limine as well as its objection to further documents submitted by Debtor with her Answering Brief⁴⁵ and the Motion for Sanctions.

The matter is ripe for decision.

The Parties’ Positions

In the Objection, Deutsche Bank asserts that the Union Street Property is not Debtor’s principal residence because she has not lived there for at least ten years.

Deutsche Bank makes two legal arguments in its Opening Brief.

First, Deutsche Bank argues that Debtor is estopped from arguing that the Union Street Property is her principal residence because of positions she took before the Delaware Superior Court and Supreme Court in prepetition foreclosure litigation regarding the Union Street Property.

Second, it argues “Debtor has failed to establish through credible evidence that the [Union Street Property] is her principal residence.”⁴⁶

Deutsche Bank argues that the evidence produced by Debtor is inconsistent, non-credible or contradictory. Further, Deutsche Bank questions Mikhail’s interest in the Union Street Property.

While making this argument, Deutsche Bank barely challenges Debtor’s intent to live at the Union Street Property. Rather, the argument is that she does not live there.⁴⁷

Debtor argues that by any measure the Union Street Property is Debtor’s principal residence as she owns the Union Street Property, was living there on the Petition Date, her personal belongings were there as of the Petition Date, and while she was absent from the Union Street Property over the years due to her medical condition, Debtor always intended to make the Union Street Property her home.

Debtor argues that Deutsche Bank has not sufficiently established that the Union Street Property is not Debtor’s principal residence.

Finally, Debtor argues that Deutsche Bank should be held in contempt for its overly litigious stance.

Discussion

I.  Debtor is not Estopped from Arguing that the Union Street Property is her Principal Residence

Deutsche Bank’s main argument is that Debtor is estopped from arguing that the Union Street Property is her principal residence because of positions taken by her (or on her behalf) in a foreclosure proceeding commenced by Deutsche Bank in the Superior Court of the State of Delaware (“Foreclosure Action”) and/or findings made by the judge overseeing that action.

In the Foreclosure Action, Deutsche Bank foreclosed on a mortgage encumbering the Union Street Property, which went to a sheriff’s sale.

Debtor successfully argued that she did not receive notice of the Foreclosure Action because she was not living at the Union Street Property at the time. Indeed, the Superior Court found that at the time of the sheriff’s sale, Ms. Goldfeder was living in the basement of the property located at 205 Ayre Street, Newport, Delaware (the “Ayre Street Property”), Mikhail’s home.

As a result, the trial court vacated the sheriff’s sale, returning the parties to their original positions. The Supreme Court ultimately affirmed the trial court’s ruling.⁴⁸

Deutsche Bank argues that the position taken by Debtor in the Foreclosure Action—that she did not live at the Union Street Property—is inconsistent with the position taken in her bankruptcy case that the Union Street Property is her principal residence.

Deutshe Bank cites cases for the proposition that if a party takes inconsistent positions, she may be estopped from later making a contradictory argument.⁴⁹ Defendant is correct. Applying that doctrine here, however, does not result in the application of any estoppel theory because Debtor is not taking inconsistent positions.

Because Deutsche Bank’s estoppel position is firmly rooted in the Foreclosure Action, a chronology assists in evaluating the estoppel argument. The following chronology is largely gleaned from the Supreme Court’s February 14, 2014 Opinion (which contains the most complete timeline):⁵⁰

Timeline (see pdf version)

As is evident from the chronology, Debtor’s argument before the state courts that she did not live at the Union Street Property at the time that the sheriff served the writ of levari facias, focused on the time frame at and before November, 2011—a full six plus years before Debtor filed her petition on December 7, 2017.

This is verified by the Superior Court’s finding that Debtor lived at the 205 Ayre Street Property from 2007 until 2011.⁵³ 

Here, the question is whether the Union Street Property was Debtor’s principal residence on the Petition Date, some six years after the time period addressed by the Superior Court in the Foreclosure Action.

Defendant’s estoppel theory based on her representations in filings with the Delaware Superior Court and Delaware Supreme Court, thus, fails. At most, the position taken by Debtor in the Foreclosure Action is some evidence that she did not always live at the Union Street Property and can be factored into whether Deutsche Bank has met its burden of proof on the Objection.

II.     Other Evidence Submitted by Deutsche Bank Does Not Establish that the Union Street Property is not Debtors’ Principal Residence

Throughout Deutsche Bank’s submission is an underlying theme that the Union Street Property is not habitable and so Ms. Goldfeder could not have been living at the Union Street Property on the Petition Date.

Alternatively, Deutsche Bank insinuates that Mikhail’s actions undercut the position that the Union Street Property is Debtor’s principal residence.

With its Objection or its Opening Brief, Deutsche Bank submitted documentation in support of its position, as follows:

The November 12, 2013 Superior Court decision supplying answers to questions upon remand from the Delaware Supreme Court in the Foreclosure ⁵⁴

A transcript of a December 7, 2017 hearing in the Foreclosure ⁵⁵

A printout of a docket sheet for the case styled Nancy Goldfeder v. McCloskey and Mikhail, CPU4-17- 000010 filed December 21, 2016 by attorney Darrell Baker, which lists Ms. Goldfeder’s address as the Ayre Street Property.⁵⁶

A Delaware State Identification Card dated 12-29-2014 showing Ms. Goldfeder’s address as the Ayre Street ⁵⁷

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— LawsInTexas (@lawsintexasusa) October 13, 2021

A review of the briefs show that Deutsche Bank is using much of this evidence affirmatively to support its estoppel argument, in an attempt to show that the Union Street Property is uninhabitable and therefore could not be Debtor’s principal residence or that the Union Street Property is being used for some other, unspecified, purpose.

Four of the documents are close in time to the Petition Date and merit consideration. First, the Vacant Property List reflects the Union Street Property on a list dated 1/12/18, one month after the Petition Date.

This page also lists the owner of the Union Street Property as Select Portfolio Servicing. The ownership listing is incorrect or, at best, outdated, which calls into question the accuracy of the remaining information on the Vacant Property List.

At no point in time has Deutsche Bank suggested that Debtor was not the legal owner of the Union Street Property on the Petition Date.⁶⁵ So, while the Vacant Property List may be some evidence that the Union Street

Property was vacant on 12/18/2008—nine years before the Petition Date—the inaccurate ownership information as of the printout date does not provide convincing evidence that the Union Street Property was vacant on 1/12/18, or the Petition Date.

Second, Deutsche Bank relies on the October 19, 2017 sheriff’s return of an alias fi fa levy of Debtor’s goods and chattel and lands and tenements at the Union Street Property. Deutsche Bank correctly states that the sheriff writes:

“Deputy spoke with neighbor at 1608, she informed deputy that home is vacant @ 2 years.”⁶⁶

But, Detusche Bank ignores the immediately previous sentence in which the sheriff writes:

“Defendant [Ms. Goldfeder] refused to grant access to the property resulting in Nulla Bona as to G&C; thereafter L&T “⁶⁷ In her response to the objection, Ms. Goldfeder asserts that she has had significant problems with one of her neighbors.⁶⁸

In any event, the statement from the neighbor contradicts the sheriff’s statement that Debtor refused him access to the Union Street Property so he was unable to levy on Debtor’s goods and chattels.

If the Union Street Property were vacant, the sheriff could have (and presumably would have) simply noted that as the reason he was unable to levy on Debtor’s goods and chattels.

Third, the Docket Sheet (presumably containing information supplied by attorney Darrell J. Baker) provides some evidence that the Union Street Property was not Debtor’s principal residence one year prior to the Petition Date.

Fourth, Deutsche Bank submitted a transcript of a teleconference on an emergency motion to set aside a sheriff’s sale before Judge Butler. This hearing occurred on December 7, 2017—the Petition Date.

Deutsche Bank argues the transcript reflects that Judge Butler “presumed Debtor lived [at the Ayre Street Property] on the date she filed her petition.”⁶⁹

Deutsche Bank takes Judge Butler’s statement out of context. As reflected in the transcript, during the teleconference, Judge Butler had not seen Debtor and Deutsche Bank for at least a year (maybe two), and he poses questions regarding the condition of the Union *22 Street Property. The following colloquy took place between Judge Butler and Debtor’s counsel:

The Court: So, let’s say that this property goes to sheriff’s sale. The last I heard it was in a state of serious disrepair. I doubt the guardian has done diddly squat to repair it. So, is it still the case that the place’s in bad shape?

Mr. Brown: Your Honor, that is my understanding. My understanding is that Miss Goldfeder resides there. But due to the condition of the property, she actually spent a fair amount of time taking advantage of the amenities that guardians do to, you know, provide for her, and stuff.⁷⁰

After that, the following colloquy took place between Judge Butler and Deutsche Bank’s counsel:

Ms. Rogin: Your Honor, well, there’s a couple things. I do not believe anyone does live in the house because every time the sheriff has tried to serve Mrs. Goldfeder or the guardian at the property, they’ve been told by neighbors that it’s vacant and they can never find anyone there. So, you know, I’m not sure that the arguments that, you know, that she was being devastated by the sale of the house holds up.

The Court: She lives in the basement of Mikhail’s house in Newport.

Ms. Rogin: Right, that’s what I believe is true.⁷¹

Contrary to Deutsche Bank’s contention that Judge Butler “presumed” Debtor lived at the Ayre Street Property, he appears to simply be recalling the previous status. Taken in context, Judge Butler is not making any statement about where Debtor lived on the Petition Date, and certainly, he is not making any finding.

Moreover, as reflected in the transcript, Debtor’s counsel states his understanding that Debtor was living at the Union Street Property on the Petition Date.

The remainder of the documents submitted by Deutsche Bank suggest that Mikhail was listing the Union Street Property as his address. While these documents perhaps raise some questions regarding Mikhail or his motivations (or, perhaps not), these documents do not support a conclusion that the Union Street Property is not Debtors’ principal residence.⁷²

Reviewed in its totality, the evidence submitted by Deutsche Bank does not persuade me, by a preponderance of the evidence, that the Union Street Property was not Debtor’s principal residence on the Petition Date.

Consistent with Deutsche Bank’s estoppel argument, much of the evidence significantly pre-dates the Petition Date. The evidence on or close to the Petition Date contains statements that may support Deutsche Bank’s position, but also support Debtor’s claimed exemption. To the extent the evidence is contradictory, Deutsche Bank has not met its burden of proof.

III.       Evidence submitted by Debtor

Assuming Debtor had a burden of production with respect to the Objection (see supra n. 23), she has met it. In addition to the Petition and Schedules⁷³ (which show the Union Street Property as her address), Debtor submitted documentary evidence in opposition to the Objection as follows:

See PDF Version for list of Documented Evidence.

As stated above, Deutsche Bank objects to much of this evidence. In particular, Deutsche Bank asserts authentication and foundation objections to the photographs of the Union Street Property, and the Delaware state identification cards. Deutsche Bank adds hearsay objections to the bank and utility statements. And, Deutsche Bank adds “failure to produce” in discovery as grounds to preclude the section 341 meeting transcript and the National Title Insurance Company record.

(i) Authentication/Foundation

In the Third Circuit, the standard for authenticating evidence is “slight.”⁸⁵ Only a prima facie showing is necessary, and once made, it is for the fact finder to ultimately determine the authenticity of the evidence. Federal Rule of Evidence 901 provides examples of appropriate methods of authentication, such as “reliance on appearance, contents, substance, internal patterns of other distinctive characteristics of the item.”⁸⁶ But, this list is not exhaustive and circumstantial evidence can suffice to show authenticity.⁸⁷

I conclude that the Delaware Polling Place Card, state issued identification cards, mortgage statements, Delmarva Power bills, quarterly utility statements from the City of Wilmington, and the bank statements from M&T meet the slight burden to show authenticity, and as the fact finder, I find them authentic. The appearance of these *26 documents appear as they should, and contain the information such documents would typically ⁸⁸ And, the documents were produced by Debtor during discovery.⁸⁹ Further, while it is Debtor’s burden to prove authentication, Deutsche Bank has not suggested any credible reason to doubt authenticity.⁹⁰

I also conclude that I can consider these documents under Federal Rule of Evidence 807, the residual hearsay exception. While I recognize the rule is to be used rarely, these documents have “exceptional guarantees of trustworthiness” because Debtor, banks and others rely on them to show evidence of residency.⁹¹

I also note that the mortgage statements are from Select Portfolio Servicing, Deutsche Bank’s agent and/or Further, Deutsche Bank is capable of verifying such documents through discovery requests to third parties and so was in a position to debunk these documents if they were in error or falsified in any way.⁹²

The photographs of the Union Street Property, Ms. Mattia’s certification and memorandum, however, are not the type of information that Deutsche Bank was in a position to independently validate. The photographs show both the outside and inside of the Union Street Property as of two points in time: April, 2018 (“Initial Photographs”) and May, 2019. The photographs reflect furnishings and personal belongings in the living spaces, or, in other words, a house that is lived in.

Debtor points out the photographs were produced in direct response to Deutsche Bank’s interrogatories and document requests. On March 27, 2018, Deutsche Bank propounded the following document requests:

3. Produce pictures of the Property which show its current physical condition.

4. For each and every room within the Property, produce pictures of the Property which show its current interior physical condition.⁹³

In August, 2018, Deutsche Bank acknowledged receipt of the Initial Photographs taken in April 2018 and as a follow-up asked Debtor to “[p]lease confirm that the pictures produced reflect each and every room within the Property.”⁹⁴

Debtor further explains that because Mikhail was not available for a deposition, Debtor’s counsel sent her paralegal, Ms. Mattia, to retake photographs of the Union Street Property to, in essence, recreate the photographs taken in April 2018. Ms. Mattia was also offered up for a deposition at the May 30, 2019 hearing.

While I believe these photographs to be authentic, these are not the types of documents that lend themselves to the authentication and admission analysis in Turner.

Further, Mikhail did not submit to a deposition and so Deutsche Bank did not have an opportunity to explore the genesis of the photographs or his testimony at the section 341 meeting.

Deutsche Bank’s Motion in Limine and/or Motion for Sanctions is granted as to the photographs and Ms. Mattia’s certification and I will not consider them.⁹⁵

But, even without the photographs and other excluded evidence, the admitted evidence is more than enough to meet the evidence submitted by Deutsche Bank in support of the Objection.

The Delaware Polling Place Card, state issued identification cards, mortgage statements, Delmarva Power bills, quarterly utility statements from the City of Wilmington (subject to the caveat below) and M&T bank statements all evidence that Debtor was living at the Union Street Property on the Petition Date.

While Deutsche Bank questions this and makes sweeping conclusions because of Debtor’s admitted inability to live in the Union Street Property for long periods of time, Debtor’s evidence is sufficient to meet Deutsche Bank’s evidence and suppositions.

Simply put, to the extent that Debtor has a burden of production, Debtor’s evidence is sufficient to bring the burden of persuasion—which falls on Deutsche Bank— into play.

IV.      Deutsche Bank Fails to Meaningfully Impeach Debtor

In its Reply Brief, Deutsche Bank proffers, in a footnote, that it seeks to use “photographs and documents produced by Debtor” for impeachment purposes.⁹⁶

Deutsche Bank does not articulate specific documents or an impeachment purpose for each document (e.g., contradictory facts, prior inconsistent statement, bias, etc.).

Nonetheless, Deutsche Bank raises what it terms inconsistencies that discredit Debtor’s testimony.

First, Deutsche Bank correctly states that Debtor produced a Delaware issued identification card that lists her address as the Ayre Street Property.⁹⁷

This identification card was issued in December of 2014.⁹⁸

Thus, at the most, the identification card listing the address of the Ayre Street Property is some evidence that Debtor, years ago, purported to live at the Ayre Street Property.

It does not, however, establish that Debtor did not live at the Union Street Property as of the Petition Date. While there is certainly an inconsistency among the various Delaware identification cards Debtor produced, I do not find that this discrepancy sufficiently impeaches Debtor’s credibility.

Second, Deutsche Bank takes issue with the fact that Debtor alleged in her Schedules and stated in response to an interrogatory that there was no running water at the Union Street Property but now has produced utility bills reflecting water usage.⁹⁹

As for the Schedules,¹⁰⁰ the objection¹⁰¹ and the interrogatory responses,¹⁰² they reflect different points in time: December 7, 2017 (no running water), March 16, 2018 (no running water) and April 10, 2018 (running water).

There is not necessarily, therefore, any inconsistency in these responses. The water bill and/or its history is a little hard to decipher and Deutsche Bank does not provide me the benefit of its thinking or why the water bill/history calls Debtor’s credibility into question, generally. But, given what appear to be many identical quarterly charges, the bill could reflect a minimum charge, and is therefore of little assistance.¹⁰³

Third, Deutsche Bank points to a contradiction contained in Debtor’s schedules.¹⁰⁴ On Schedule A/B, in response to the question “Do you own or have any legal or equitable interest in [Electronics],” Debtor checked the box “No.”¹⁰⁵

However, on Schedule J, Debtor *31 purports to have expenses for “Cell Phone” and “Internet Access.”¹⁰⁶ These responses are internally, but openly, contradictory. This discrepancy carries little, if any, weight.¹⁰⁷

Finally, I have considered Deutsche Bank’s inability to depose either Debtor or Mikhail. This is less than ideal. But, because of this, I have excluded certain evidence as requested in the Motion in Limine and the Motion for Sanctions.

I observe that Deutsche Bank was not precluded from deposing Debtor’s neighbors or issuing subpoenas to third party custodians of relevant documents. Deutsche Bank chose not to go this route. It also chose to submit this dispute on paper rather than forcing a trial.

Conclusion

After considering the evidence submitted, I find that Deutsche Bank has not satisfied its burden of proof to show that the claimed homestead exemption is not properly claimed.

Its main argument—that Debtor is estopped from arguing she lives at the Union Street Property—is not well taken.

Debtor’s argument before the Delaware State Courts that she was not properly served with process in November, 2011 because she did not then live at the Union Street Property is not inconsistent with her position that the Union Street Property was her principal residence on the Petition Date. Neither the Delaware Superior Court nor the Delaware Supreme Court made any finding with respect to where Debtor lived on the Petition Date as that question was not an issue in the Foreclosure Action.

Further, Deutsche Bank’s argument that Debtor’s evidence is inconsistent, non-credible or contradictory does not win the day even excluding evidence in response to Deutsche Bank’s Motion in Limine and Motion for Sanctions. Deutsche Bank, not Debtor, has the burden of proof.

Deutsche Bank’s frustration at spending years obtaining a judgment only to have Debtor file bankruptcy to avoid execution is understandable,¹⁰⁸ and perhaps explains why it has continued to pursue the Union Street Property, worth less than $125,000, for over ten years.

But, it is quite common for a debtor to file a bankruptcy proceeding only after a judgment is obtained in order to avoid execution.

And, in this instance, Deutsche Bank simply did not meet its burden to show that Debtor’s homestead exemption is not properly claimed.

An order will enter consistent with this Opinion.

Dated: October 26, 2020

LAURIE SELBER SILVERSTEIN
UNITED STATES BANKRUPTCY JUDGE