Pangea obtain an arbitration award against Mr. Lakian, who, on that same day, transferred his interest in real property located in Highlands, North Carolina, to the Eagle Ridge Living Trust, for which he was a trustee. Following confirmation of the arbitration award, Pangea successfully brought suit to void this transfer, during which proceeding Mr. Lakian testified that the Highlands property was his only residence, despite his driver's license still having an address in New York. (That same day, Mr. Lakian was incarcerated in federal prison for a 55-month sentence for multi-million dollar fraud schemes.)
Pangea then served Mr. Lakian with a notice of right to claim exemptions and 64 days later Mr. Lakian moved to designate the Highland Property as his homestead, which was granted by the Clerk of Superior Court. Pangea sought to appeal this to the Superior Court, but pursuant to N.C.G.S. § 1C-1603(e)(12), such appeals must be made to the District Court. By the time Pangea sought to correct this error, the time to appeal had lapsed. The District Court nonetheless, reversed the Clerk's order, finding that Mr. Lakian's motion to designate the Highland Property as his homestead was both untimely and impermissible, as he failed to establish residency in North Carolina.
The Court of Appeals first held that the error by Pangea in first filing its appeal regarding the exemptions to the Superior rather than District court was, following the fair inference doctrine, not fatal as that error did not mislead or prejudice Mr. Lakian. Further, the Court of Appeals affirmed the District Court determination that Mr. Lakian offered no evidence of his intent to return to the Highland Property, with all actual evidence indicating a New York address (if not the federal penitentiary) and could not, accordingly, claim it as his homestead. The Court of Appeals did not reach the question of whether Mr. Lakian's exemptions were timely claimed.
This contrasts with In re Foster, 348 B.R. 58, 60 (Bankr. E.D.N.C. Aug. 15, 2006), where the bankruptcy court found that the debtor was entitled to the homestead exemption even though she did not currently live in the house, as it have been rendered uninhabitable by hurricane damage but where the debtor clear intention was to use the property as her residence as soon as the repairs were made, and the debtor continued paying her property taxes, and stored her personal property within the house. In re Foster, 348 B.R. 58, 60 (Bankr. E.D.N.C. Aug. 15, 2006). In addition to Foster having fact that supported her clear intent to return to the property, being a hurricane survivor is far more sympathetic than being a white collar criminal, especially as he had previously sought to claim a New York house as his homestead.
For a copy of the opinion, please click here: