United States Bankruptcy Appellate Panel For the Tenth Circuit
IN RE MELVIN EUGENE SHARP, also known as Mel Sharp, doing business as Aspen Place Outfitters, LLC, Debtor.
MELVIN EUGENE SHARP and UNITED STATES TRUSTEE, Appellees DOUGLAS E. LARSON, Chapter 7 Trustee, Appellant, Bankr. No. 12-21611
Appeal from the United States Bankruptcy Court for the District of Colorado.
John C. Smiley (Harold G. Morris, Jr. with him on the brief) of Lindquist & Vennum LLP, Denver, Colorado, for Appellant.
Michael Jude of Jude Law, LLC, Denver, Colorado, for Appellee Melvin Eugene Sharp.
Before KARLIN, JACOBVITZ, and HALL, Bankruptcy Judges.
HALL, Bankruptcy Judge.
The bankruptcy trustee seeks reversal by this Court of a bankruptcy court decision allowing the debtor to exempt certain personal property under Colorado's " tools of trade" exemption. The trustee objected to the claimed exemption on the ground that the debtor's business was not a " gainful occupation," as required by the exemption statute, because it was not " profitable" as of the date of the petition. We affirm the bankruptcy court's decision allowing the exemption.
Appellee Melvin Sharp (" Debtor" ) filed a Chapter 7 bankruptcy petition on June 1, 2012, and Appellant Douglas Larson (" Trustee" ) was appointed as trustee of his estate. In his schedules, Debtor claimed certain personal property used in his outdoor guide business as exempt under Colorado's " tools of trade" exemption. Debtor's primary occupation is customer relations manager at a Kroger-owned City Market store in Cortez, Colorado. Debtor moved from Arizona to Colorado in June 2010 to take a position as assistant store manager of a City Market in Pagosa, Colorado. That store was closed a few months later, and Debtor worked on an hourly basis for the remaining Pagosa City Market until 2012, when he obtained the Cortez job.
Even before his move to Colorado, Debtor began the process of creating his guide business, Aspen Place Outfitters (" Aspen" ), with the intention of growing it to the point that he could retire from his primary occupation within five years and devote himself fulltime to outfitting. While he remains employed at City Market, Debtor's ability to work as a hunting and fishing outfitter is limited to times when he can use vacation time from the store, which he typically does during the
fall hunting season. In January 2010, while still living in Arizona, Debtor attended an Outfitters Association meeting in Grand Junction, Colorado in order to learn as much as he could about the outfitting business. As a result of that experience, Debtor joined the Association, set up a website for his business, and designed business brochures. He attended another Association meeting in May 2010, in Glenwood Springs, Colorado, to gain even more insight into the business. Also in 2010, Debtor obtained an outfitter's license from the State of Colorado, which has been renewed annually since that time, and set up bank accounts for Aspen at the Dolores State Bank in Colorado. Since February 2010, Debtor has attended some " guide expositions" in Phoenix, Arizona, which he described as " meeting areas for potential clients." Debtor advertises his business both through his own website and with newsletters that his website designer sends out to an email client base.
As an outfitter, Debtor provides clients with as much or as little of the expertise, tools, food, transportation, and lodging as they need or want for hunting or fishing trips. Aspen charges for those services. Debtor can provide clients with appropriate areas in which to hunt or fish, information about dates and restrictions, as well as transport to hunting and fishing areas, appropriate gear, and food and shelter. He also has the ability to pack out clients' kills on horseback. In the future, once he can devote his efforts to Aspen full-time, Debtor plans to become licensed as a firearms safety instructor and to offer horseback rides and pack trips in the summers. Since 2010, Debtor has both attempted to increase his knowledge of the outfitting business and to build up a client base, hoping both for repeat business and for " word of mouth" advertising. Although Aspen had not achieved a net profit by the petition date, it appeared to be gaining momentum, and Debtor expected it to produce a small profit in 2012. However, as of the May 2013 trial date, Debtor was not yet ready to " give up his day job," because he did not feel that Aspen was to the point it needed to be to allow him to do so.
When Debtor filed his bankruptcy schedules, he claimed several firearms, two boats, a camper, an ATV, a utility trailer, a two-horse trailer, and some fishing poles as exempt property used in the operation of Aspen. Trustee objected to the exemption on the ground that it applied only to " gainful occupations," which he asserted means a business that was " profitable" as of the petition date. The bankruptcy court held a non-evidentiary hearing on Trustee's objection in November 2012, ruling thereafter, as a matter of law, that " an occupation need not be profitable at the time of filing."  Rather, the bankruptcy court determined that the proper ...