Georgia Jean Saavedra

UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW MEXICO
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06/10/06
Georgia Jean Saavedra
04-10318
Order Overruling [32-1] Objection To Exemptions by Philip J. Montoya.
Received on: 2005-06-06 10:37:49.000
2005-06-06 00:00:00.000
2005-06-06 00:00:00.000
Patti Hennessy
Case 04-10318-m7 Doc 44 Filed 06/06/05 Entered 06/06/05 11:10:00 Page 1 of 5

UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW MEXICO
In re: GENE SAAVEDRA and No. 7-04-10318 MA
GEORGIA SAAVEDRA,
Debtors.
ORDER OVERRULING TRUSTEE’S OBJECTION TO EXEMPTIONS
THIS MATTER is before the Court on the Chapter 7 Trustee’s Objection to the Debtors’
Amended Claim of Exemption (“Objection to Exemption”). The Court held a final hearing on the
Objection to Exemption and took the matter under advisement. Debtors claim a homestead exemption
in the amount of $60,000.00 in a residence that Gene Saavedra acquired as his sole and separate
property as a gift from his aunt in 1993. At issue is whether the Debtors’ residence has been
transmuted into community property such that both Debtors are entitled to claim the homestead
exemption amount of $30,000.00, for a total claimed exemption in the amount of $60,000.00 in
accordance with N.M.S.A. 1978 § 42-10-9 (Cum. Supp. 2003). Because the uncontroverted
testimony supports a finding that the property has been transmuted into community property, the Court
will overrule the Trustee’s objection and allow the Debtors’ claimed exemption.
DISCUSSION
Whether separate property has been transmuted into community property is predicated on the
grantor’s intent. Macias v. Macias, 126 N.M. 303, 308, 968 P.2d 814, 819 (Ct. App. 1998) (“Our
courts have made clear for some time that transmutation requires evidence of intent on the part of the
grantor spouse.”). See also, Blake v. Blake, 102 N.M. 354, 367, 695 P.2d 838, 851 (Ct.App. 1985)
(finding that wife failed to establish a transmutation where husband testified that he never intended to
make a gift of any interest in the property to wife). The proponent bears the burden of proving
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transmutation into community property by clear and convincing evidence; a preponderance of evidence
is insufficient. Nichols v. Nichols, 98 N.M. 322, 327, 648 P.2d 780, 785 (1982) (“a party must
prove the transmutation of the separate property into community property by clear and convincing
evidence.”) (citing Corley v. Corley, 92 N.M. 716, 594 P.2d 1172 (1979)). Unless the grantor
intends to make a gift or transfer of his or her separate property to his or her spouse that would create a
community property interest in both spouses, there has been no transmutation, and character of the
property remains separate. Swink v. Fingado, 115 N.M. 275, 292, 850 P.2d 978, 995 (1993)
(noting that “[i]t is well settled that when a spouse merely places his or her separate property into joint
tenancy with the other spouse, without an intention to make a gift or otherwise transmute the separate
property . . . the property retains its character as separate property.”) (citing LeClert v. LeClert, 80
N.M. 235, 237, 453 P.2d 755, 757 (1969)).
There is no dispute that Gene Saavedra received the property as a gift from his aunt by
warranty deed in 1993 as his separate property. See N.M.S.A. 1978 § 40-3-8A.(4) (separate
property includes “property acquired by either spouse by gift, bequest, devise or descent”); In re
Trimble’s Estate, 57 N.M. 51, 53, 253 P.2d 805, 807 (1953) (“In New Mexico, property which is
owned by either spouse before marriage, or acquired thereafter by gift . . . is his or her separate
property.”). At that time, Gene Saavedra was married to Georgia Jean Saavedra. Concepcion
Montoya, Gene Saavedra’s aunt, was aware that Gene and Georgia Jean Saavedra were married.
Indeed, Gene and Georgia Jean Saavedra lived with Concepcion Montoya in the property and cared
for Ms. Montoya when her health was failing. Although no deed was ever prepared to convey the
property from Gene Saavedra to Gene Saavedra and Georgia Jean Saavedra as community property,
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Gene Saavedra testified that he always intended that the property be held as community property with
his wife. When the Debtors obtained a loan and granted a mortgage against the property in 1995, both
Gene Saavedra and Georgia Jean Saavedra executed the mortgage. The Debtors made payments on
the mortgage, for homeowner’s insurance, and for property taxes from their joint checking account. See
Exhibits E, F, and G. The homeowner’s insurance reflects both Gene Saavedra and Jean G. Saavedra
as insureds. See Exhibit C. In a previous bankruptcy proceeding, the Debtors listed the property as
joint property, and both claimed a homestead exemption in the property. See Case No. 7-97-13887
MA.
While “a mortgage may be evidence of . . . intent to transmute, . . . it ‘is not conclusive and is
not, by itself substantial evidence . . . of intent to transmute.’” Macias, 126 N.M. at 308, 968 P.2d at
819 (quoting Nichols, 98 N.M. at 328, 648 P.2d at 786). Nevertheless, factors such as the granting
of a joint mortgage on the home to secure a loan to the community, and the use of community funds to
pay the mortgage, pay taxes, and pay for upkeep may be considered collectively as evidence of an
intent to transmute separate property into community property, though the existence of any one factor
alone is likely insufficient. Id.
Here, Debtor testified that he always intended for the property to be held as community
property with his wife, and Georgia Jean Saavedra testified that she and her husband had talked about
it. This testimony is uncontroverted, and is further supported by the fact that the Debtors together
granted a mortgage on the property and used community funds to pay the mortgage, property taxes and
homeowner’s insurance, and by the fact that the Debtors listed this property as joint property in a prior
bankruptcy. This evidence considered collectively indicates that Gene Saavedra intended to transmute
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the property he received from his aunt into community property. The Court, therefore, concludes that
the property has been transmuted into community property.
WHEREFORE, IT IS HEREBY ORDERED, that the Trustee’s Objection to the Debtors’
Amended Claim of Exemption is OVERRULED. The Debtors’ homestead exemption in the total
amount of $60,000.00 is hereby allowed. The Debtors’ residence located at 512 Hannah, Socorro,
New Mexico is held as the community property of Gene Saavedra and Georgia Jean Saavedra.
_________________________________________
MARK B. McFEELEY
United States Bankruptcy Judge
I certify that on the date shown on the attached document verification, a true and correct copy of
the foregoing was either electronically transmitted, faxed, delivered or mailed to the listed counsel
and/or parties.
Stephen C.M. Long
Attorney for Debtors
2501 Yale Blvd. SE, Suite 204
Albuquerque, NM 87106
Bonnie Gandarilla
Attorney for Philip J. Montoya, Chapter 7 Trustee
PO Box 216
Albuquerque, NM 87103 -0216
________________________________
Patti G. Hennessy
Law Clerk
(505) 348-2545
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