NORTHERN DISTRICT OF CALIFORNIA
DAVID CLOWES and KATHARINE STADTER, No. 99-13888
Memorandum of Decision
The normal California homestead exemption is $75,000.00. However, California Code of Civil
Procedure §704.730(a)(3)(B) provides that the exemption is $125,000.00 for "[a] person physically or
mentally disabled and as a result of that disability is unable to engage in substantial gainful employment."
Debtor David Clowes has claimed the disability homestead exemption based on his atrophied left leg
caused by polio. The objection of creditor Six Rivers National Bank is now before the court.
In order to be eligible for the increased exemption, a debtor must be both disabled and unable to
engage in substantial gainful employment. The term "substantial gainful employment" is the same term
used in federal social security law. Federal rules define the term as the ability to earn at least $700 per
month. 20 CFR § 404.1574. Pursuant to FRBP 4003(c), the objecting party has the burden of proving
an exemption is not properly claimed. In re Rostler
, 169 B.R. 408, 411 (Bkrtcy.C.D.Cal. 1994).
There is no doubt that Clowes is seriously disabled; his leg is atrophied and he needs a cane to
walk. He cannot stand for any length of time, nor can he walk for extended distances. However, the
Bank alleges that he earns more than $700.00 per month, and therefore does not meet the second part
of the test.
Clowes is self-employed as a saddle maker, and also has earned some money teaching a course
at a local college. His income was, at the time of the bankruptcy filing, about $1000.00 per month. His
wife, who is partially disabled, earns about $75.00 per month.
If the court were free to make its own definition of "substantially gainful employment," it would
not use the Social Security amount of $700.00, which amounts to poverty level income. However, it
seems clear that the California legislature, by use of the phrase, intended that definition. There is no
other definition in any case law, nor has Clowes urged a different definition. Accordingly (albeit
reluctantly), the court concludes that Clowes is capable of substantial gainful employment.
However, there is unrebutted evidence that debtor Katherine Stadter is disabled and earns less
than $1,000.00 per year. The statute does not call for combining income; if either
the debtor or his
spouse meets the requirements of § 704.730(a)(3)(B), then they may claim the higher homestead
The Bank having failed to meet its burden of proof, its objection must be overruled. However,
since both sides focused their attention on Clowes alone, the Bank may seek reconsideration if it wishes
to present any evidence that the higher homestead amount is not justified by Stadter's disability.
Counsel for the debtors shall submit an appropriate form of order.
Dated: June 8, 2000 ___________________________