United States Bankruptcy Appellate Panel of the Eighth Circuit
In re: Todd Allen Crabtree; Terryl Lynn Crab tree DebtorsDaniel McDermott, United States Trustee Plaintiff- Appellee
Todd Allen Crabtree; Terryl Lynn Crabtree Defendants-AppellantsTodd Allen Crabtree; Terryl Lynn Crabtree Debtors - Appellants
Gene W. Doeling Chapter 7 Trustee - Appellee
Submitted: December 8, 2016
from United States Bankruptcy Court for the District of
Minnesota - Fergus Falls
FEDERMAN, Chief Judge, SALADINO and NAIL, Bankruptcy Judges.
Todd Allen Crabtree and Terryl Lynn Crabtree
("Debtors") appeal the August 8, 2016 memorandum
decision and order of the bankruptcy court sustaining Trustee
Gene W. Doeling's ("Trustee") objection to
Debtors' claimed homestead exemption. We reverse and
remand for further proceedings consistent with this opinion.
March 2012, Debtors began making improvements to the real
property they claim as their homestead. Around the same time,
Debtors' daughter Bethany Harris opened a checking
account at Wells Fargo Bank. She and Debtors' son Bror
Crabtree were signatories on the account and made some
deposits into it. Debtors were not signatories on the account
but made the "large bulk" of the deposits into it.
used the checking account, which they refer to as "the
farm account, " to pay for some of the improvements to
their homestead. Between August 21, 2012 and December 3,
2012, Debtors' daughter issued eight checks totaling $45,
951.21 to various contractors for that purpose.
farm account was not the only source of payments for the
improvements to Debtors' homestead. In January 2013,
Debtor Todd Crabtree's sister Dianne Merrifield wired
$19, 990.00 to Pierce Log Homes. In July 2013, Debtor Todd
Crabtree issued a check for $6, 000.00, drawn on his personal
checking account, to Ugstad Plumbing. And in August 2013,
Debtor Todd Crabtree transferred 250 silver coins to his
son-in-law Mike Harris, who sold the coins for $6, 375.00,
deposited $4, 021.53 in his personal checking account, and
used the remaining $2, 353.47 to pay other contractors.
reasons unrelated to the construction of their home, Debtors
filed a petition for relief under chapter 7 of the bankruptcy
code on December 16, 2013. On their schedule of real
property, Debtors valued their home at $200, 000.00. On their
schedule of creditors holding secured claims, Debtors listed
a mortgage against their home, with a balance owing of $133,
725.00. On their schedule of property claimed exempt, Debtors
claimed the equity of $66, 275.00 exempt under
Minnesota's homestead exemption.
filed an objection to Debtors' claimed exemptions. In his
objection, Trustee alleged, inter alia, Debtors'
claimed homestead exemption should be reduced under 11 U.S.C.
§ 522(o) by the $70, 000.00 to $90, 000.00 of otherwise
nonexempt property that Trustee believed Debtors had
transferred into their homestead within the past ten years
with the intent to hinder, delay, or defraud their creditors.
United States Trustee filed a complaint objecting to
Debtors' discharge. In his complaint, the United States
Trustee alleged Debtors should be denied a discharge under 11
U.S.C. § 727(a)(2)(A) for transferring property with the
intent to hinder, delay, or defraud their creditors, under 11
U.S.C. § 727(a)(3) for failing to keep or preserve
recorded information from which their financial condition and
business transactions might be ascertained, and under 11
U.S.C. § 727(a)(4)(A) for making false oaths in or in
connection with their bankruptcy case.
matters were tried separately, but because of their
interconnectedness, the bankruptcy court issued a single
memorandum decision and order addressing both. Therein, the
bankruptcy court, inter alia, sustained
Trustee's objection to Debtors' claimed homestead
exemption and reduced Debtors' homestead exemption by
$74, 249.68, comprising the costs of the improvements
identified above, denied Debtors' discharge, and directed
the entry of judgment in the adversary proceeding.
timely appealed. Debtors' notice of appeal references
both the bankruptcy court's memorandum decision and order
and the resulting judgment in the adversary proceeding.
However, Debtors do not challenge the bankruptcy court's
decision to deny their discharge. They challenge only the