REVISED MARCH 18, 2003
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_______________________
No. 02-50449
_______________________
In the Matter of: DENNIS RAY BOUCHIE; SHERRI BOUCHIE,
Debtors.
-------------------
RUSH TRUCK CENTERS OF TEXAS L.P.; HELEN G. SCHWARTZ, Trustee,
Appellants,
versus
DENNIS RAY BOUCHIE, doing business as
Mission Truck Repair, formerly known as Trinity Vision
Transportation; SHERRI BOUCHIE, also known as Sherri L. Griffin,
Appellees.
_________________________________________________________________
Appeal from the United States District Court
for the Western District of Texas, San Antonio Division
_________________________________________________________________
March 17, 2003
Before WIENER, BENAVIDES, and DENNIS, Circuit Judges.
PER CURIAM:
Appellants Rush Truck Centers of Texas, L.P. and Helen G.
Schwartz, Trustee (collectively “Rush Truck”) challenge the
bankruptcy court’s finding (as affirmed by the district court) that
84.557 acres of land owned by debtors-appellees Dennis and Sherri
Bouchie (collectively “Bouchie”) is a rural homestead under Texas
law and thus exempt from the bankruptcy estate. Based on the
factors plainly articulated by Texas law for differentiating
between rural and urban homesteads, we affirm.1
I. FACTS AND PROCEEDINGS
The bankruptcy court found that Bouchie’s property is a rural
homestead under Tex. Prop. Code 41.002(c). This statute2 states
that:
(c) A homestead is considered to be urban if, at
the time of designation is made, the property
is:
(1) located within the limits of a
municipality or its extraterritorial
jurisdiction or a platted
subdivision; and
(2) served by police protection, paid or
volunteer fire protection, and at
least three of the following
services provided by a municipality
or under contract to a municipality
(A) electric;
(B) natural gas;
(C) sewer;
(D) storm sewer; and
(E) water.
The bankruptcy court held that the property is within the
extraterritorial jurisdiction of Converse, Texas; that it is served
by police protection and fire protection; but that it is not
provided at least three of the listed services by a municipality,
as required by the express language of the statute. Thus, as the
bankruptcy court concluded, Bouchie’s property is a rural
homestead. The district court affirmed.
1
See Tex. Prop. Code § 41.002(c) (2000).
2
Id.
2
II. ANALYSIS
A. Standard of Review.
Whether a homestead is urban or rural is a question of fact.3
The bankruptcy court’s findings of fact are subject to clearly
erroneous review and its conclusions of law receive de novo
review.4 A finding of fact premised on an incorrect legal
standard, however, loses the protection of the clearly erroneous
rule.5
B. Determination of Rural or Urban.
1. Currently Applicable Test.
Rush Truck first challenges the district court’s
characterization of Bouchie’s property as a rural homestead based
on the district court’s sole application of Tex. Prop. Code §
41.002(c).6 The bankruptcy court did not apply the “multiple
3
Crowell v. Theodore Bender Accounting, Inc., 138 F.3d 1031,
1033 (5th Cir. 1998).
4
Id.
5
Southland Corp. v. Toronto-Dominion, 160 F.3d 1054, 1057
(5th Cir. 1998).
6
Rush Truck also argues that the bankruptcy court erred in
its determination that Bouchie’s property was not provided with
sewer services by a municipality or under contract to a
municipality. As Rush Truck did not present this argument to the
district court, we will not consider it on appeal. Little v.
Liquid Air Corp., 37 F.3d 1069, 1071 n.1 (5th Cir. 1994) (en banc).
See also United States v. Olson, 4 F.3d 562, 567 (8th Cir. 1993)
(holding that a party waives an argument considered by the
bankruptcy court if he does not reassert the argument on appeal to
the district court).
3
factors” test adopted in United States v. Blakeman.7 Blakeman’s
applicability in light of the 1999 amendments of section 41.002(c)
is a question of first impression for this court.8
The bankruptcy court in the instant case applied the approach
it had previously developed in In re Perry.9 In that case, the
bankruptcy court concluded that the question whether a homestead is
rural or urban is answered by first applying section 41.002(c).10
Under Perry, if the homestead does not qualify as urban under the
statute, it is rural and the inquiry ends.11 If, however, the
homestead meets the statutory definition of “urban,” then the court
continues with its analysis by applying the Blakeman five-factor
test.12 The bankruptcy court in the instant case held that
Bouchie’s property did not meet the statutory definition of “urban”
and thus classified it as rural, ending its inquiry.
To determine whether the Blakeman test is applicable in light
of the 1999 amendment to section 41.002(c), it is useful to
summarize briefly its origins. Prior to 1989, a homestead was
characterized as urban or rural by applying a five-factor test
7
United States v. Blakeman, 997 F.2d 1084 (5th Cir. 1992).
8
See Act of June 19, 1999, 76th Leg., R.S., ch. 1510, § 2,
1999 Tex. Gen. Laws 5232 (amending Tex. Prop. Code § 41.002(c)).
9
267 B.R. 759 (Bankr. W.D. Tex. 2001).
10
Id. at 766.
11
Id.
12
Id.
4
developed by the Texas courts.13 The factors that the courts
considered included “(1) the location of the land with respect to
the limits of the municipality; (2) the situs of the land in
question; (3) the existence of municipal utilities and services;
(4) the use of the lot and adjacent property; and (5) the presence
of platted streets, blocks and the like.”14
In 1989, the Texas legislature enacted section 41.002(c).15
As enacted, section 41.002(c) stated that “[a] homestead is
considered to be rural if, at the time the designation is made, the
property is not served by municipal utilities and fire and police
protection.”16 In Bradley, we held that a homestead that is not
served by municipal utilities, fire, and police protection is rural
under section 41.002(c) as it was then written.17 We left the
question open, however, whether section 41.002(c) provided the
exclusive test for making the rural/urban determination or whether
13
Blakeman, 997 F.2d at 1091.
14
Id. at 1091 n.14 (quoting In re Bradley, 960 F.2d 502, 511-
12 n.18 (5th Cir. 1992) (citing Vitron Corp. v. Winstead, 521
S.W.2d 754, 755 (Tex. Civ. App. -- Eastland 1975, no writ); Rockett
v. Williams, 78 S.W.2d 1077, 1078 (Tex. Civ. App. -- Dallas 1935,
writ dism’d); Purdy v. Grove, 35 S.W.2d 1078, 1081-82 (Tex. Civ.
App. -- Eastland 1931, writ ref’d); 43 Tex. Jur. 3d Homesteads § 15
(1985))).
15
Bradley, 960 F.2d at 511-12 n.18.
16
Id. at 511 (quoting Act of June 14, 1989, 71st Leg., R.S.,
ch. 391, § 2, 1989 Tex. Gen. Laws 1519, amended by, Act of June 19,
1999, 76th Leg., R.S., ch. 1510, § 2, 1999 Tex. Gen. Laws 5232).
17
Id. at 511-12.
5
it was but a factor to consider.18 We indicated, nevertheless, that
the legislative history suggested that section 41.002(c) “might not
displace the traditional common law definition of ‘homestead’ in
all cases.”19
We answered that question in Blakeman, ruling that the 1989
version of section 41.002(c) is not “the exclusive test to
determine whether a property’s homestead status: it is but one
factor a court considers to determine whether a court considers to
determine whether the homestead is urban or rural.”20 We thus held
that section 41.002(c) did not overturn the common law five-factor
test.21 We then determined on the facts in Blakeman that the
property at issue constituted a rural homestead, despite the fact
that it was served by municipal utilities or fire and police
protection.22
In 1999, the Texas legislature substantially rewrote section
41.002(c) in its current form, as quoted above. Unlike the
previous version of the section, the current version provides a
detailed framework for determining when a property is “urban” and
substantially incorporates the factors included in the traditional
18
Id. at 511-12 n.18.
19
Id.
20
Blakeman, 997 F.2d at 1091.
21
See id.
22
Id.
6
test. Like its predecessor version, however, section 41.002(c)
does not explicitly state that it is the exclusive test for whether
a homestead is urban or rural.
At this point, the canons of statutory construction come to
bear. “A ‘statute is presumed to have been enacted by the
legislature with complete knowledge of the existing law and with
reference to it.’”23 Our holding in Blakeman that section 41.002(c)
was not the exclusive test for determining homestead status pre-
dated the Texas legislature’s amendment of section 41.002(c) by
seven years. Thus, at first glance, the fact that the amended
version does not state that section 41.002(c) supplies the
exclusive test suggests that the legislature did not intend to
displace Blakeman. As we explain below, however, the Texas
legislature did incorporate part of the Blakeman test into the
current version of the statute. Under the well-known canon
inclusio unius est exclusio alterius, this indicates that the
legislature intentionally excluded the other factors from the
rural/urban determination. This latter inference is more
consistent with the other evidence that section 41.002(c) in its
current form leaves no room for the Blakeman test.
Another fundamental principle of statutory interpretation
holds that “[w]hen the legislature amends a law, it is presumed
23
Wichita County v. Hart, 917 S.W.2d 779, 782 (Tex. 1996)
(quoting Acker v. Texas Water Comm'n, 790 S.W.2d 299, 301 (Tex.
1990)).
7
that it intends to change the law.”24 This canon of interpretation
suggests that the Texas legislature, by substantially amending
section 41.002(c), intended to change the test for determining
which homesteads are urban and which are rural.
In the framework of these interpretive rules, we conclude that
the Blakeman approach did not survive the 1999 amendment to section
41.002(c). In amending section 41.002, the legislature created a
detailed scheme for determining which homesteads are to be
considered urban. If courts continued to graft the common law test
on to this statute, they would fundamentally rewrite it and, in
effect, would defeat the legislature’s ability to change the state
of the law by statutory amendment. Further, applying Blakeman to
section 41.002(c) as amended in 1999 is inappropriate in light of
the legislature’s deliberately including some of the Blakeman
factors in the amendment and excluding others. The legislature
included two of the Blakeman factors in the statute: Location of
the property with respect to municipal limits and whether the land
is platted.25 In addition, the statute refers to a third Blakeman
factor —— the existence of municipal utilities and services ——
which was part of the predecessor statute.26 Under the expressio
24
Buckner Glass & Mirror, Inc. v. T.A. Pritchard Co., 697
S.W.2d 712, 714 (Tex. App. —— Corpus Christi 1985, no writ) (citing
Amer. Surety Co. of New York v. Axtell Co., 120 Tex. 166, 177-78,
36 S.W.2d 715, 719 (1931)).
25
Tex. Prop. Code § 41.002(c).
26
Id.
8
unius maxim, the decision to include three of the Blakeman factors
but not the others must be construed to prohibit the extra-
statutory consideration of those other factors.27
Finally, in construing any statute, a court’s primary goal is
to give effect to the legislature’s intent.28 The purpose of the
1999 amendment was to provide more certainty to lenders and to
municipal taxing authorities as to the homestead character of
land.29 Continuing to apply the Blakeman factors in addition to the
detailed definition provided by the statute would frustrate this
purpose. The legislature went as far as to weigh how many services
a municipality must provide (assuming other predicate conditions
are met) for a homestead to be urban.30 Courts should not preempt
this balancing by reweighing or adding factors.
Our interpretation of the statute today is consistent with
that of a noted scholar of Texas property law. Professor McKnight
states that, unlike the 1989 version of section 41.002 which
defined some homesteads as rural without stating that all other
homesteads were necessarily urban, the 1999 amendment states
27
See Rodriguez v. State, 953 S.W.2d 342, 354 (Tex. App. ——
Austin 1997, pet. ref’d).
28
In re Canales, 52 S.W.3d 698, 702 (Tex. 2001) (citing Tex.
Gov’t Code § 312.005 (2000)).
29
Joseph W. McKnight, Family Law: Husband and Wife, 55 SMU.
L. Rev. 1035, 1053 (2002).
30
See Tex. Prop. Code § 41.002(c)(2) (a municipality must
provide three of six listed services in order for property to be
considered urban).
9
expressly which homesteads are urban and which are rural.31 “Under
the statutory amendments . . . , availability of [the enumerated]
services within a municipality makes the homestead urban, but lack
of amenities allows the rural character of the homestead to be
maintained.”32
Having concluded that the Blakeman approach can no longer be
used to distinguish between rural and urban homesteads, we cannot
endorse the Perry approach crafted by the bankruptcy court. Under
Perry’s bifurcated approach, a bankruptcy court could determine
that a homestead that is “urban” within the express terms of the
amended section 41.002(c) is, nevertheless, not urban based on non-
statutory common law factors.33 This cannot be correct. Perry may
have been designed to accommodate Blakeman with the amended
statute, but our dispensing with Blakeman removes the need to make
such an accommodation. The amended statute is the exclusive
vehicle for distinguishing between rural and urban homesteads.
2. Use of the Property.
Rush Truck also argues that even if Bouchie’s property is not
urban, as defined within section 41.002(c), it still should not
receive the benefit of the homestead exemption because the property
is not “used for the purposes of a rural home” as required by Tex.
31
Joseph W. McKnight, Family Law: Husband and Wife, supra, at
1026.
32
Id. (footnotes omitted).
33
Perry, 267 B.R. at 766-67.
10
Prop. Code § 41.002(b) (2000). Rush Truck does not challenge the
bankruptcy court’s finding that the Bouchie’s use the property as
their home. Rather, Rush Truck contends that the bankruptcy court
erred in not requiring Bouchie to show that the land is used for
rural purposes.
Rush Truck is correct only to the extent that the bankruptcy
court was required to determine that Bouchie intended to use their
property as a rural home. Rush Truck goes further, however,
contending that there must also be a showing that the land around
the home is used for support of the family. Rush Truck relies
primarily on the bankruptcy court’s decision in In re Spencer,34
which held that a property owner seeking to take advantage of the
rural homestead exemption must demonstrate that the land is used
for agricultural or other rural economic activity to support the
family. We disagree with Rush Truck and with the Spencer decision
as well. To date, Spencer remains an outlier, and its analysis of
the homestead exemption has not been adopted by other bankruptcy
judges in the Western District of Texas.35 We agree with the
reasoning in Mitchell: Under Texas homestead law, all that is
34
109 B.R. 715 (Bankr. W.D. Tex. 1989).
35
See In re Mitchell, 132 B.R. 553 (Bankr. W.D. Tex. 1991).
See also Painewebber, Inc. v. Murray, 260 B.R. 815, 829 (E.D. Tex.
2001) (noting that Spencer is the only bankruptcy case that focuses
on the “means of livelihood” in determining a rural homestead).
11
required for rural homestead purposes is that the property be used
as a home.36
3. Severance of the Property.
Rush Truck alternatively suggests that Bouchie effectively
severed the property into two separate tracts by taking out a
mortgage on only 15 of the 84.557 acres, and that the unmortgaged
portion of the property is thus part of the homestead only if
Bouchie can show that they used it to support their home on the
fifteen acres. As Rush Truck cites no authority for this
proposition, it is not adequately briefed and is therefore waived.37
III. CONCLUSION
The Texas legislature in 1999 enacted a detailed test for
classifying homesteads as urban or rural. It is not the place of
the courts to redefine urban and rural homesteads under the guise
of applying extraneous common law factors when the legislature has
told us which factors to apply. Additionally, for a rural
homestead to qualify for the homestead exemption, it need only be
used as a home. No more is required. The bankruptcy court was
correct in exempting Bouchie’s homestead. For the foregoing
36
Id. at 559. See also Posey v. Bass, 77 Tex. 512, 514, 14
S.W. 156 (1890) (stating that “[i]t is the place of the homestead
that gives character to it, not the business of the head of the
family. If it be in the country, it is a rural homestead”);
Franklin v. Coffee, 18 Tex. 413 (1857) (allowing homestead
protection when evidence showed that property was used as home and
no evidence property was being used for economic support).
37
L&A Contracting Co. v. Southern Concrete Servs., 17 F.3d
106, 113 (5th Cir. 1994) (waiver for failing to cite authority).
12
reasons, we affirm the judgment of the bankruptcy court as
previously affirmed by the district court.
AFFIRMED.
13