Hanson v. Trustee (In re Hanson)
| Decision Date | 06 January 2017 |
| Docket Number | No. 16–6023,16–6023 |
| Parties | IN RE: Sheri Lynn HANSON, formerly known as Sheri Lynn Alger Debtor Sheri Lynn Hanson Debtor–Appellant v. Randall L. Seaver Trustee–Appellee |
| Court | Bankruptcy Appellate Panels. U.S. Bankruptcy Appellate Panel, Eighth Circuit |
Timothy Casey Theisen, Theisen Law, Anoka, MN, for Debtor–Appellant.
Matthew D. Swanson, Fuller & Seaver, Burnsville, MN, for Trustee–Appellee.
Before FEDERMAN, Chief Judge, SALADINO and NAIL, Bankruptcy Judges.
The debtor appeals from an order of the bankruptcy court1 sustaining the trustee's objection to an exemption claimed by the debtor. Specifically, the bankruptcy court held that a Minnesota property tax refund under Minn. Stat. Ann. § 290A.04 (West) is not exempt under Section 550.37 (Subd. 14) of the Minnesota statutes as "government assistance based on need," following this panel's decision in Manty v. Johnson (In re Johnson) , 509 B.R. 213 (8th Cir. BAP 2014). The debtor appeals, asserting that Johnson was implicitly overruled by a subsequent decision of the Eighth Circuit Court of Appeals in In re Hardy , 787 F.3d 1189 (8th Cir. 2015).
For the reasons set forth below, we affirm.
The panel reviews the bankruptcy court's findings of fact for clear error and conclusions of law de novo . Manty v. Johnson (In re Johnson) , 509 B.R. 213, 214 (8th Cir. BAP 2014) (citing Addison v. Seaver (In re Addison ) , 540 F.3d 805, 809 (8th Cir. 2008) ). The bankruptcy court's statutory interpretation is a question of law that is subject to de novo review. Id. at 214–15 (citing Graven v. Fink (In re Graven) , 936 F.2d 378, 384–85 (8th Cir. 1991) ). Likewise, the allowance or disallowance of an exemption is subject to de novo review. Id. at 215 (citing Drenttel v. Jensen–Carter (In re Drenttel) , 309 B.R. 320, 322 (8th Cir. BAP 2004) ).
Bankruptcy debtors in Minnesota may choose either the federal exemptions or the exemptions provided under Minnesota and other federal law. Johnson , 509 B.R. at 215 (citing Martin v. Bucher (In re Martin) , 297 B.R. 750, 751–52 (8th Cir. BAP 2003) ). The debtor in this case opted to protect her assets under the Minnesota exemption provisions and claimed an exemption in a portion of a $1,500.00 property tax refund as government assistance based on need. The bankruptcy court sustained the Chapter 7 trustee's objection to the exemption, stating that the precedent of Johnson and In re Padilla , 513 B.R. 116 (D. Minn. 2014), precluded a contrary ruling.
Section 550.37 of the Minnesota statutes sets forth a list of property that may be claimed as exempt. Subdivision 14 of that statute in effect as of the petition date exempts public assistance, as follows:
Subd. 14. Public assistance . All government assistance based on need, and the earnings or salary of a person who is a recipient of government assistance based on need, shall be exempt from all claims of creditors including any contractual setoff or security interest asserted by a financial institution. For the purposes of this chapter, government assistance based on need includes but is not limited to Minnesota family investment program, general assistance medical care, Supplemental Security Income, medical assistance, MinnesotaCare, payment of Medicare part B premiums or receipt of part D extra help, MFIP diversionary work program, work participation cash benefit, Minnesota supplemental assistance, emergency Minnesota supplemental assistance, general assistance, emergency general assistance, emergency assistance or county crisis funds, energy or fuel assistance, and food support. The salary or earnings of any debtor who is or has been an eligible recipient of government assistance based on need, or an inmate of a correctional institution shall, upon the debtor's return to private employment or farming after having been an eligible recipient of government assistance based on need, or an inmate of a correctional institution, be exempt from attachment, garnishment, or levy of execution for a period of six months after the debtor's return to employment or farming and after all public assistance for which eligibility existed has been terminated. The exemption provisions contained in this subdivision also apply for 60 days after deposit in any financial institution, whether in a single or joint account. In tracing the funds, the first-in first-out method of accounting shall be used. The burden of establishing that funds are exempt rests upon the debtor. Agencies distributing government assistance and the correctional institutions shall, at the request of creditors, inform them whether or not any debtor has been an eligible recipient of government assistance based on need, or an inmate of a correctional institution, within the preceding six months.
Minn. Stat. Ann. § 550.37 (West).
The asset that the debtor claimed as exempt under that statute was a property tax refund the debtor received under the State of Minnesota Property Tax Refund Act, Minn. Stat. Ann. § 290A.01, et. seq. (West). The stated purpose of the Act is "to provide property tax relief to certain persons who own or rent their homesteads." Minn. Stat. Ann. § 290A.02 (West).
In Johnson , we determined that the Minnesota property tax refund was not "government assistance based on need" under Minn. Stat. Ann. § 550.37 (West) and, therefore, not exempt. In doing so, we described the property tax refund:
The Act sets out three ways an individual may be eligible for such a property tax refund. First, the Act provides a refund for homeowners whose property taxes are in excess of certain percentages of household income. This provision provides for a phase-out of the refund as income level increases. The household income limit for these homeowners in 2012 was $103,729.20. Second, Minnesota provides a refund to renters whose rent exceeds certain percentages of their household incomes. Similar to the homeowners' refund, the statute has a phaseout of the renters' refunds as income increases. The household income limit for the renters' refund in 2012 was $56,219.22. And third, a homeowner may receive a refund if property taxes on a homestead increase more than twelve percent over the previous year, excluding increases attributable to improvements made to the property. This refund is available regardless of the homeowner's income.
Johnson, 509 B.R. at 217. We then discussed our decision in In re Hardy , 503 B.R. 722 (8th Cir. BAP 2013), which involved a similar issue under Missouri law. In that case, we affirmed the bankruptcy court's holding that the refundable component of the federal child tax credit, also known as the "additional child tax credit," was not an exempt "public assistance benefit" under Missouri law. After further discussion of the Minnesota property tax refund statute, we said, "In sum, for the same reasons articulated in In re Hardy , we conclude that the property tax refund at issue here is not ‘government assistance based on need,’ and is therefore not exempt under § 550.37, subd. 14." Johnson, 509 B.R. at 219.
Hardy was appealed to the Eighth Circuit Court of Appeals, which reversed. In re Hardy , 787 F.3d 1189 (8th Cir. 2015). The Court of Appeals focused on a series of amendments to the child tax credit statute in determining that Congress designed it to benefit low-income families and therefore it is need-based and within the Missouri exemption requirement for a public assistance benefit. The Eighth Circuit reached this conclusion after reviewing a decade's worth of legislative activity that made the credit available to all families with qualifying children, increased the amount of tax credit per child, increased the refundable portion of the tax credit, and lowered the threshold earned income amount for refund eligibility. The applicable tax tables indicated the phase-out income levels for various family sizes were modest—one example in the opinion showed the refundable credit for a single parent with two children phasing out completely at $37,550.00. 787 F.3d at 1196. The substantive effect of the amendments, the court observed, "substantially shifted the balance between providing incentives for taxpayers to earn income, on the one hand, and simply providing benefits to the needy, on the other." Id. at 1195.
In this appeal, the debtor argues that our decision in Johnson was implicitly overruled by the reversal of our decision in Hardy by the Eighth Circuit. We disagree.
In the Eighth Circuit, it is clear that under most circumstances, a decision by one panel binds a subsequent panel addressing the same issue:
"[A]bsent an intervening opinion by a [state] court," we are bound by a prior panel's interpretation of state law. Washington v. Countrywide Home Loans, Inc ., 747 F.3d 955, 958 (8th Cir. 2014) ; see also Mader v. United States , 654 F.3d 794, 800 (8th Cir. 2011) (en banc) .
Neidenbach v. Amica Mut. Ins. Co. , 842 F.3d 560, 566 (8th Cir. 2016). However, the rule regarding the binding precedent of a previous panel decision "does not apply when the earlier panel decision is cast into doubt by an intervening Supreme Court decision." [United States v. Anderson , 771 F.3d 1064, 1066–67 (8th Cir. 2014) ] (citing [United States v. ] Williams , 537 F.3d [969,] 975 [ (8th Cir. 2008) ] ). United States v. Eason , 829 F.3d 633, 641 (8th Cir. 2016).
Accordingly, our earlier decision in Johnson is binding on this panel, absent an intervening opinion on the issue by a state court—which has not been alleged—or an intervening decision by a higher court which casts doubt on the earlier panel's decision. The debtor asserts that our decision in Johnson was overruled by the Eighth Circuit's decision in Hardy . For several reasons, we determine that it was not overruled—implicitly or otherwise.
In Hard...
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