Memorandum of Decision Re: Disability Homestead Exemption

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UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In re KARL and JOUMANA SHWEIKY,                                       No. 98-12046      Debtor(s). ______________________________________/
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." The statute further provides a rebuttable presumption of eligibility for the exemption for someone receiving Social Security disability benefits. Debtor Joumana Shweiky has claimed the disability homestead exemption based on her stuttering. The trustee's objection is now before the court.      The court's initial reaction was not sympathetic to Mrs. Shweiky's claim; people who stutter can often lead fully productive lives. However, two factors came out at the hearing which have changed the court's mind. First, Mrs. Shweiky has become eligible for Social Security disability benefits, shifting the burden of proof to the trustee. Second, as counsel for the trustee so clearly demonstrated in calling her to the witness stand, Mrs. Shweiky's stuttering is severe and is a significant disability.      The key phrase in the statute is the requirement that the debtor not be able to engage in "substantial gainful employment." Prior to their bankruptcy the Shweikys operated a restaurant. Mrs. Shweiky worked as an errand-runner for the restaurant from 1992 to 1998, when the restaurant closed. This is her only recent work experience outside the home. The trustee has submitted the opinion of an expert that Mrs. Shweiky's disability would not prevent her from working in the food service industry as a "banquet waitress or a buffet style waitress reloading food that requires little communication with the public." On this basis, he objects to the disability exemption.      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. Mrs. Shweiky has not earned that amount in the past. Her work as a runner for the restaurant was not worth that amount. The trustee has not shown that jobs paying that much for work that Mrs. Shweiky is capable of performing are readily available on a full-time basis so that she could earn more than $700 per month. Accordingly, the trustee has not met his burden of proof that Mrs. Shweiky is capable of substantial gainful employment.      For the foregoing reasons, the trustee's objection to the claim of exemption will be overruled. Counsel for Mrs. Shweiky shall submit an appropriate form of order.
Dated: December 9, 1999                                                                           ____________________________                                                                                                                      Alan Jaroslovsky                                                                                                                      United States Bankruptcy