Corcoran v. Richardson

• Decision Date: 31 March 2022
• Docket Number: Case No. 20-cv-12322
• Citation: 596 F.Supp.3d 896
• Parties: Collene CORCORAN, Appellant, v. Kim RICHARDSON, Appellee.
• Court: U.S. District Court — Eastern District of Michigan

596 F.Supp.3d 896

Collene CORCORAN, Appellant,

v.Kim RICHARDSON, Appellee.

Case No. 20-cv-12322

United States District Court, E.D. Michigan, Southern Division.

Signed March 31, 2022

Sandra L. O'Connor, Sandra O'Connor Law, PLLC, Walled Lake, MI, for Appellant.

David R. Ienna, Jaafar Law Group PLLC, Dearborn, MI, Hussein Nasser Rahal, Dearborn, MI, Terrance A. Hiller, Jr., Novi, MI, for Appellee.

OPINION AND ORDER AFFIRMING BANKRUPTCY COURT ORDER

GERSHWIN A. DRAIN, UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

On August 27, 2020, Appellant Collene Corcoran appealed a bankruptcy court order finding $2,214.71 of Appellee Kim Richardson's property exempt under MICH. COMP. LAWS § 600.5451(1)(b). See ECF No. 1. Corcoran argues the bankruptcy court misinterpreted Michigan law because section 600.5451(1)(b) does not exempt money. ECF No. 6, PageID.157. Richardson never filed a Response in Opposition.

Presently before the Court is Corcoran's Appeal of the Bankruptcy Court's Order Denying Trustee's Objection to Debtor's Claim of Exemption [#1]. Upon review of the parties’ submissions, the Court concludes that oral argument will not aid in the matter's disposition. Therefore, the Court elects to resolve the Appellant's appeal on the briefs. E.D. Mich. L.R. 7.1(f)(2). For the reasons discussed below, the Court will AFFIRM the bankruptcy court's order.

II. FACTUAL BACKGROUND

On March 26, 2020, debtor Kim Richardson, a grandmother living with two granddaughters, filed a Chapter Seven bankruptcy petition in the Eastern District of Michigan. ECF No. 4, PageID.75. At the time, Richardson had $32.00 on hand, $2,177.71 in a checking account, and $5.00 in a savings account, amounting to $2,214.71 in total. ECF No. 1, PageID.5–6. Richardson sought an exemption for that amount under MICH. COMP. LAWS § 600.5451(1)(b), which permits exempting "provisions ... for comfortable subsistence of each householder and his or her family for 6 months[,]" from bankruptcy proceedings. Corcoran objected to the exemption request on May 18, 2020, arguing that section 600.5451(1)(b) does not permit exemptions for cash or funds in a bank account. ECF No. 4, PageID.99. On June 1, 2020, Richardson submitted a response to Corcoran's objection. Id. at PageID.106.

The bankruptcy court issued an opinion on August 13, 2020, denying Corcoran's objection. ECF No. 1, PageID.18. Applying precedent from Bostock v. Clayton County, Georgia , ––– U.S. ––––, 140 S. Ct. 1731, 1738–39, 207 L.Ed.2d 218 (2020), the court read section 600.5451(1)(b) based on "the ordinary public meaning of the terms" as they existed at the statute's promulgation. ECF No. 4, PageID.137. The court focused on the terms "provisions" and "comfortable substance" as understood in nineteenth century dictionaries. Id. at PageID.137–138. Looking at the terms’ original meaning, the statute "cannot be read to exclude cash[,]" the bankruptcy court reasoned. Id. at 140. It subsequently denied Corcoran's objection. Id. at PageID.148.

Corcoran timely appealed the bankruptcy court's decision two weeks later. See ECF No. 1. She submitted her brief in support of overruling the decision on October 23, 2020. ECF No. 6, PageID.150. Since then, Corcoran submitted three briefs containing supplemental authority to aid the Court's disposition of this matter, filed on February 25, 2021, July 27, 2021, and December 8, 2021, respectively. See ECF Nos. 7–9.

III. LEGAL STANDARD

"A district court reviewing a bankruptcy court's decision in a ‘core proceeding’ functions as an appellate court, applying the standards of review normally applied by federal appellate courts." In re H.J. Scheirich Co. , 982 F.2d 945, 949 (6th Cir. 1993). The bankruptcy court's factual findings "shall not be set aside unless clearly erroneous." Id. at 949. However, a bankruptcy court's conclusions of law are reviewed de novo. In re Holley , No. 12-13088, 2013 WL 791549, 2013 U.S. Dist. LEXIS 29670 (E.D. Mich. Mar. 4, 2013).

IV. DISCUSSION

The Bankruptcy Code allows a Chapter Seven "debtor to ‘exempt’ ... certain kinds of property from the estate, enabling [her] to retain those assets post-bankruptcy." Law v. Siegel , 571 U.S. 415, 134 S. Ct. 1188, 1192, 188 L.Ed.2d 146 (2014) (quoting 11 U.S.C. § 522(b)(1) ). The Code allows debtors to exempt assets under federal exemptions or state-law exemptions. 11 U.S.C. § 522. Debtors may forgo federal exemptions and claim state-law exemptions at their discretion. 11 U.S.C. § 522(b)(3)(A).

Here, the relevant Michigan exemption is MICH. COMP. LAWS 600.5451(1)(b), which allows debtors to exempt "provisions and fuel for comfortable subsistence of each householder and his or her family for 6 months." At issue is what Richardson can exempt under the statute. Because this is a matter of statutory interpretation, the Court will consider the statute's history, interpretation over time, and the key terms’ ordinary meanings when read in isolation and together. See Bostock , 140 S. Ct. at 1738.

A. History of Section 600.5451(1)(b)

The contested terms in section 600.5451(1)(b) have a long history stretching over 170 years in Michigan. In 1842, the language "provisions and fuel for the comfortable subsistence" first appeared in Michigan's exemption scheme five years after statehood. 1842 Mich. Pub. Acts 71. Michigan's legislature described the law as "[a]n act to exempt certain property from execution, or sale for any debt, damages, fine or amercement" including:

Household and kitchen furniture of each householder not exceeding in value two hundred and fifty dollars; the wearing apparel of every person and family; the library of every individual and family not exceeding in value one hundred and fifty dollars in value; the tools, implements and stock necessary to enable every mechanic to carry on his business, not exceeding in value one hundred and fifty dollars; all spinning wheels and weaving looms ... two cows, ten sheep ... and five hogs to each householder ... a sufficient quantity of hay, grain, feed and roots for sustaining and keeping the livestock hereinbefore severally allowed to each class of persons for six months, and the requisite provisions and fuel for the comfortable subsistence of every family and housekeeper for six months.

Id. Michigan's legislature removed the term "requisite" in 1846, but otherwise left the exemption for "provisions and fuel for the comfortable subsistence" of a debtor and household unchanged. 1846 Mich. Pub. Acts 477. The legislature amended the statute again in 1849, and 1861, but the phrase "provisions and fuel for the comfortable subsistence" retained its form. 1849 Mich. Pub. Acts 96; 1861 Mich. Pub. Acts 81.

In 1862, the Michigan Supreme Court opined on the statute to decide whether the exemption for "provisions ... for the comfortable subsistence" of a debtor and his household included recently planted crops. King v. Moore , 10 Mich. 538, 541–44 (1862). In an evenly split court, two justices ruled that the debtor could exempt the crops, while two other justices disagreed. Compare King , 10 Mich. at 543 (Christiancy, J.) ("[C]orn and potatoes so recently planted as to be but just visible above the ground, are wholly incapable of use as food, and in that state can with no propriety be called ‘provisions.’ ") with King , 10 Mich. at 545 (Campbell, J.) ("[G]rowing crops of grain, or vegetables, suitable for family consumption, are within the exemption of the statute."). The question regarding whether recently planted crops can constitute exempted "provisions" remains an open question to this day.

However, the King decision is insightful on Richardson's exemption. As Justice Christiancy explained in the context of animal feed:

If the statute, in cases where the debtor has not the full amount of the property exempted by this section, had provided an exemption of money or other property for the purpose of enabling him to purchase enough to made [sic] up the deficiency, there might be good reason for holding the feed for the animals exempted, though he had not the animals at the time of the levy; but the statute has adopted no such principle.

Id. at 540. Justice Campbell agreed with Justice Christiancy's conclusion that no exemption for animals should apply when the debtor possessed no animals. Id. at 544–55. But he disagreed with Justice Christiancy on whether debtors can exempt property not yet fully materialized:

[W]here a family does not possess a supply for six months, then I think they have a right to look to their growing crops for enough to make up the deficiency. Such crops are designed for human sustenance, and are frequently the chief reliance of their owners.

Id. at 545. Although Justice Christiancy interpreted "provisions" as property existing at the time of a debtor's judgment, Justice Campbell construed "provisions" to include anything that could become subsistence to the debtor and his household for up to six months. The Michigan Supreme Court disagreed evenly on what "provisions" meant. While King does not stand for the proposition that MICH. COMP. LAWS § 600.5451(1)(b) includes money, Justice Christiancy's reference to money suggests "provisions" does not include it under a narrow interpretation.

After King , Michigan's legislature left the exemption's language "provisions and fuel for the comfortable subsistence" undisturbed during each subsequent amendment. It was not until 2005 when the Michigan legislature officially codified the phrase under MICH. COMP. LAWS § 600.5451(1)(b), removing "the" from the final rendition.

B. Recent Decisions Discussing Section 600.5451(1)(b)

Beginning in 2017, Michigan bankruptcy courts began opining on whether debtors can exempt money under MICH. COMP. LAWS § 600.5451(1)(b). See, e.g., In re Barlow , Case No. 17-48802 (Bankr. E.D. Mich. Aug. 29, 2017); In re Thibaudeau , No. 19-21006-dob, 2019 WL 6125311, 2019 Bankr. LEXIS 3574 (Bankr. E.D. Mich. Nov. 18, 2019) ; In re Sustaita , 631 B.R. 403, 413 (Bankr. W.D. Mich. 2021). Corcoron's Appeal...