Morgan v. Regions Bank ( 2021 )


Menu:
  • 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    opinion should not be published and is not precedent except under the limited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.
    Case: 20-20358     Document: 00515798057           Page: 2   Date Filed: 03/26/2021
    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
    2
    Case: 20-20358        Document: 00515798057        Page: 3   Date Filed: 03/26/2021
    No. 20-20358
    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
    3
    Case: 20-20358         Document: 00515798057                Page: 4        Date Filed: 03/26/2021
    No. 20-20358
    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.
    4
    Case: 20-20358        Document: 00515798057             Page: 5      Date Filed: 03/26/2021
    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