Morgan v. Regions Bank ( 2021 )

Case: 20-20358 Document: 00515798057 Page: 1 Date Filed: 03/26/2021
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
March 26, 2021
No. 20-20358 Lyle W. Cayce
Clerk
In the Matter of: Alwin Gerald Morgan,
Debtor,
Alwin Gerald Morgan,
Appellant,
versus
Regions Bank,
Appellee.
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 4:19-CV-4139
Before King, Smith, and Haynes, Circuit Judges.
Per Curiam:*
When Alwin Gerald Morgan filed his Chapter 11 bankruptcy petition,
he claimed a family homestead exemption for a property in which he had
*
Pursuant to 5th Circuit Rule 47.5, the court has determined that this
opinion should not be published and is not precedent except under the limited
circumstances set forth in 5th Circuit Rule 47.5.4.
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No. 20-20358
never lived. One of his creditors, Regions Bank, filed an objection to the
homestead designation, and the bankruptcy court sustained the objection.
The district court affirmed the bankruptcy court. For the reasons that follow,
we AFFIRM.
I.
Fifteen days after he filed for divorce from his former wife, Kimberly,
Appellant Alwin Gerald Morgan entered into an earnest money contract to
purchase 426 Warner Road, in Bellville, Texas (“Warner Road”). At that
time, Kimberly refused to consent to the purchase, and as a consequence, the
closing never finalized. Instead, Morgan began leasing Warner Road from the
sellers and moved in there.
After his divorce from Kimberly was finalized, Morgan married Keyla
Turro. Together, Morgan and Turro purchased a property at 604 Logans
Lane, in Austin, Texas (“Logans Lane”). The closing took place on May 26,
2016, eleven days after Morgan and Turro’s wedding. They signed the deed
of trust as husband and wife.
Shortly after closing on Logans Lane, Morgan also closed on the
purchase of Warner Road. The closing documents listed only Morgan, and
not Turro, as the purchaser and, in the deed of trust, Morgan represented
that he was unmarried. Not long after the closings, Morgan and Turro
separated. During the separation, Turro lived at Logans Lane, while Morgan
lived at Warner Road.
In 2019, Morgan filed his Chapter 11 bankruptcy petition, and he
claimed a homestead exemption in Logans Lane. One of Morgan’s
nonpriority unsecured creditors, appellee Regions Bank, filed an objection to
Morgan’s designation of Logans Lane as his family homestead. The
bankruptcy court sustained Region Bank’s objection. It concluded that
Logans Lane was not Morgan’s primary residence, and that Morgan could
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not claim Logans Lane as his homestead. The district court affirmed, and this
appeal followed.
II.
On appeal, we generally review the bankruptcy court’s factual
findings under the clearly erroneous standard. In re Barron, 325 F.3d 690, 692
(5th Cir. 2003). We overturn the bankruptcy court’s factual findings only
when “we are left with a ‘firm and definite conviction’ that the bankruptcy
court committed a mistake.” In re Bradley, 960 F.2d 502, 507 (5th Cir. 1992)
(quoting United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948)
(alteration in original)). But, unlike factual findings, we review the legal
conclusions of the bankruptcy court de novo. In re Argo Fin., Inc., 337 F.3d
516, 522 (5th Cir. 2003).
III.
Morgan asks us to reverse the conclusion that he failed to prove that
Logans Lane was his family’s homestead when he filed his voluntary petition
for Chapter 11 bankruptcy.
Given that the determination of whether a property is a homestead is
a question of fact, Zorrilla v. Aypco Constr. II, L.L.C., 469 S.W.3d 143, 160
(Tex. 2015), our review of the bankruptcy court’s findings is highly
deferential. See In re Bradley, 960 F.2d at 507.
Under Texas law, an individual who seeks homestead protection has
the initial burden to establish the homestead character of his property. Burk
Royalty Co. v. Riley, 475 S.W.2d 566, 568 (Tex. 1972). To meet this initial
burden of establishing a family homestead, the claimant must show “(1) overt
acts of homestead usage and (2) the intention to claim the property as a
homestead.” Zorrilla, 469 S.W.3d at 159.
In this case, we must decide whether we hold a “firm and definite
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conviction” that the bankruptcy court made a mistake when it found that
Morgan, the head of the household, 1 did not undertake the requisite acts and
failed to display the requisite intention to establish his family’s homestead at
Logans Lane. See Riley, 475 S.W.2d at 569.
As the courts below found, Morgan’s time spent at Logans Lane has
been fleeting at best. Although Morgan moved some furniture and clothing
into Logans Lane, the lower courts correctly noted that he could not clearly
indicate whether this happened before or after he closed on Warner Road. It
is certainly true that Logans Lane was purchased after Morgan and Turro
were married, and that the property was in both Morgan and Turro’s name.
But, under Texas law, mere ownership of a residential property does not
establish a homestead. Dominguez v. Castaneda, 163 S.W.3d 318, 331 (Tex.
App.—El Paso 2005, no pet.) (“It must always be remembered that mere
ownership alone is insufficient to constitute premises of a homestead.”).
The bankruptcy court also relied on the fact that, shortly after the
purchase of Logans Lane, Morgan and Turro separated. During this time
Morgan stayed, primarily, at Warner Road, and Turro lived in Logans Lane,
In fact, Morgan and Turro do not currently cohabitate and never have
cohabitated for more than a few days. For tax years 2017, 2018, and 2019,
Morgan claimed Warner Road as his homestead for property-tax purposes.
And, in his bankruptcy petition, Morgan listed Warner Road as his
residence; 2 he stated that he had not lived anywhere else during the previous
1
Turro’s intent to have Logans Lane designated as the family homestead would be
insufficient to designate it as such, given that she is not the head of the household. See Riley,
475 S.W.2d at 569. Indeed, Morgan was the head of the household, as he supported her.
See Roco v. Green, 50 Tex. 483, 490 (1878).
2
Morgan and Turro signed a Non-Homestead Affidavit and filed it before the
bankruptcy court, renouncing and disclaiming any homestead rights to Warner Road.
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No. 20-20358
three years.
Despite the fact that Morgan kept some of his belongings at Logans
Lane, visited on weekends, and conducted some business there, such
infrequent activity was insufficient to convert Logans Lane into a homestead.
See Hillard v. Home Builders Supply Co., 399 S.W.2d 198, 201 (Tex. Civ.
App.—Fort Worth 1966, writ ref’d n.r.e.)(“The mere fact that they may
have actually resided in the house over weekends or at other times of longer
duration standing alone does not convert it to a homestead.”). As the lower
courts concluded, Morgan’s announced intentions of reconciling with Turro
and eventually undertaking the requisite acts to impart upon Logans Lane a
homestead character are insufficient. See In re Claflin, 761 F.2d 1088, 1091
(5th Cir. 1985) (applying Texas law).
Plainly put, the district court affirmed the bankruptcy court’s factual
finding that Morgan failed to show any intent, supported by overt acts, to
make Logans Lane the family homestead. 3 On this record, we are not “left
with a ‘firm and definite conviction’ that the bankruptcy court committed a
mistake.” In re Bradley, 960 F.2d at 507 (quoting United States v. U.S.
Gypsum Co., 333 U.S. 364, 395 (1948) (alteration in original)).Thus, we find
no occasion to overturn the district court.
IV.
For the reasons detailed above, we AFFIRM.
3
Morgan also asks us to address whether the district court erred in affirming the
bankruptcy court’s finding that § 522(p)(1) of the Bankruptcy Code limits the amount of
Morgan’s homestead exemption and that he was not entitled to the § 522(p)(2)(B)
exception. Because we agree with the courts below that Morgan failed to establish a
homestead in Logans Lane, we do not reach this issue.
5