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In re Gonzales

United States District Court, E.D. North Carolina, Western Division

March 11, 2014

IN RE: RAYMOND GENE GONZALES, Debtor.

ORDER

W. EARL BRITT, District Judge.

Before the court is an appeal by the debtor, filed pro se, from the 24 June 2013 order of United States Bankruptcy Judge J. Rich Leonard. In that order, the bankruptcy court allowed the objection by the trustee to the debtor's claimed exemption of his remainder interest in real property located in Raleigh, North Carolina ("real property"). For the reasons set forth below, the decision is affirmed.

I. BACKGROUND

By deed recorded in 2005, Linda W. Barbour conveyed to her daughter, Karen E. Barbour ("Karen"), and Karen's husband and debtor, Raymond Gene Gonzales ("debtor"), an interest in the real property. (Order, DE # 1-1, at 1-2.)[1] The habendum clause[2] of that deed states:

For and in consideration of the sum of ten and NO/100 dollars ($10.00) cash in hand paid, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, LINDA W. BARBOUR ("Grantor") does hereby reserve a Life Estate in herself for her own life, and does grant, bargain, sell, transfer, release, remise and forever quitclaim unto KAREN E. BARBOUR and RAYMOND G. GONZALES, ("Grantees"), their heirs, and assigns, forever, in equal shares, the Remainder of her right, title, and interest in and to a certain tract of land situated in Wake County North Carolina with said tract of land being more particularly described as follows:
BEING all of Lot 72, Trailwood Hills, Phase Four, as shown on plat thereof recorded in Book of Maps 1996, Pa[g]e 1183, Wake County Registry.

(Id. at 2 (emphasis omitted) (alteration in original).)

In 2013, debtor filed a voluntary petition under Chapter 7 of the Bankruptcy Code. (Id. at 1.) On his Amended Schedule C-1, pursuant to 11 U.S.C. § 522 and North Carolina law, debtor claimed as exempt his one-half interest in the real property, classifying the estate conveyed as a tenancy by the entirety. (DE # 3-2, at 4.) The Chapter 7 trustee filed an objection to that claimed exemption, (DE # 3-5), to which debtor responded, (DE # 3-4). After a hearing on the matter, the bankruptcy court found that the deed conveyed a remainder interest in the real property to Karen and debtor as tenants in common and therefore allowed the trustee's objection. Debtor appeals from this ruling.

II. DISCUSSION

"Under 28 U.S.C. § 158(a), United States District Courts have jurisdiction to hear appeals of final judgments, orders, and decrees of Bankruptcy Courts. On appeal from the Bankruptcy Court, the district court acts as an appellate court and reviews the Bankruptcy Court's findings of fact for clear error, while it reviews the conclusions of law de novo. " Singleton v. Countrywide Home Loan, Inc. (In re Singleton) , 358 B.R. 253, 256 (D.S.C. 2006). Pursuant to Federal Rule of Bankruptcy 8013, the district court "may affirm, modify, or reverse a bankruptcy judge's judgment, order, or decree or remand with instructions for further proceedings."

In his opening brief, debtor identifies four issues on appeal. (Appellant Br., DE # 11, at 5.) The issues center on his contention that the subject deed conveyed to Karen and him as tenants by the entirety. Before the court addresses the specific issues debtor raises, a discussion of this estate in land is warranted.

When land is conveyed or devised to a husband and wife as such, they take the estate so conveyed or devised, as tenants by the entirety, and not as joint tenants, or tenants in common. This tenancy by the entirety takes its origin from the common law when husband and wife were regarded as one person, and a conveyance to them by name was a conveyance in law to but one person. The estate rests upon the doctrine of the unity of person, and upon the death of one the whole belongs to the other, not solely by right of survivorship, but also by virtue of the grant which vested the entire estate in each grantee. These two individuals, by virtue of their marital relationship, acquire the entire estate, and each is deemed to be seized of the whole, and not of a moiety or any undivided portion thereof. They are seized of the whole, because at common law they were considered but one person....
"A conveyance to husband and wife creates neither a tenancy in common nor a joint tenancy. The estate of joint tenants is a unit made up of divisible parts; that of husband and wife is also a unit; but it is made up of indivisible parts. In the first case there are several holders of different moieties or portions, and upon the death of either, the survivor takes a new estate. He acquires by survivorship the moiety of his deceased cotenant. In the last case, although there are two natural persons, they are but one person in law, and upon the death of either, ...

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