The opinion of the court was delivered by: David N. Hurd United States District Judge
MEMORANDUM-DECISION and ORDER
Creditor-appellant Sandra Danussi ("Danussi") appeals from an Order of Hon. Robert E. Littlefield Jr., Chief United States Bankruptcy Court Judge for the Northern District of New York, denying her objection to the claimed homestead exemption of debtor-appelle Jesse P. Kaska ("Kaska"). Both parties filed their briefs, and the appeal was taken on submission without oral argument.
Danussi agreed to loan Kaska, her nephew, $100,000.00 in August of 2002 in order to help him build a used car and snowmobile dealership on his property in Ellenburg Center, New York ("Ellenburg Center property"). At that time, the parties executed a promissory note obligating Kaska to repay the loan within eighteen months. Although there is some evidence that they intended to use the Ellenburg property as collateral for the loan, it is undisputed that the parties never executed a valid mortgage agreement.
In March of 2005, Kaska wrote Danussi a letter concerning the status of his loan repayments. In his letter, he stated that he had recently begun building a home on another parcel of land. He explained that he intended to mortgage the other property after he completed construction of his home and use the mortgage funds to repay the loan from her. As a result, she agreed in April of 2005 to execute a new promissory note requiring complete repayment of the loan on or before April 5, 2006.
On May 31, 2005, Danussi sent Kaska a letter asserting the right to review and approve any proposed modifications to the Ellenburg Center property after learning that he had begun building a residential apartment on the premises. In his written reply to her letter, he informed her that he anticipated being able to pay the first half of the principal debt on October 5, 2005 as provided in the most recently executed promissory note. He also stated that he had already begun converting a portion of the Ellenburg Center property into a residence for himself three weeks prior to his receipt of her letter dated May 31, 2005.
Kaska began living in the newly renovated apartment in either late June or early July of 2005. He failed to make his scheduled payment on October 5, 2005. In March of 2006, his license to sell cars expired. He testified that his car and snowmobile business had ceased at that time, and the last business he conducted on the Ellenburg Center property was in June 2006 when he briefly stored junk cars on behalf of the local township. Having failed at his attempt to start his own business, he began working for Tony's Ticonderoga Sports in either October or November of 2006.
On June 19, 2007, Danussi obtained a state court judgment against Kaska for the full amount due on the loan. The filing of her judgment with the appropriate county clerk created a lien on the Ellenburg Center property for the debt owed. On September 26, 2007, Kaska filed his voluntary bankruptcy petition pursuant to Chapter 13 of the United States Bankruptcy Code. In his petition, he declared the Ellenburg Center property to be valued at $92,500.00. However, he also claimed a homestead exemption of $50,000.00 against the same property.
On January 11, 2008, Danussi objected to Kaska's claimed homestead exemption. Following a hearing before Judge Littlefield on September 8, 2008, her objection was denied on January 14, 2009. In particular, the Bankruptcy Court distinguished his homestead exemption from the homestead exemption claimed in In re Hager, 74 B.R. 198 (Bankr. N.D.N.Y. 1987) and determined that his conduct did not demonstrate an intent to hinder, delay, or defraud her in violation of 11 U.S.C. § 522(o). (See Order, Dkt. No. 1-1, 6-7, 9-10.) This timely appeal followed.
In reviewing a bankruptcy court's decision, a district court applies the clearly erroneous standard to conclusions of fact and conducts a de novo review for conclusions of law. FED. R. BANKR. P. 8013; In re Manville Forest Prods. Corp., 209 F.3d 125, 128 (2d Cir. 2000); In re Petition of Bd. of Directors of Hopewell Int'l Ins. Ltd., 275 B.R. 699, 703 (Bankr. S.D.N.Y. 2002).
Danussi bases her appeal on two separate grounds. First, she contends that Kaska is entitled to a homestead exemption for only the portion of the Ellenburg Center property that was converted to a residential apartment unit. Second, she argues that the Bankruptcy Abuse Prevention and Consumer Protection Act, 11 U.S.C. § 522(o), bars his homestead exemption because his actions ...