In re Christo, BAP No. MB 98-016.

• Decision Date: 06 January 1999
• Docket Number: BAP No. MB 98-016.
• Citation: 228 BR 48
• Parties: In re Lee C. CHRISTO, Debtor. Lee C. Christo, Appellant, v. Jonathan D. Yellin, Chapter 7 Trustee, Appellee.
• Court: U.S. Bankruptcy Appellate Panel, First Circuit

228 B.R. 48 (1999)

In re Lee C. CHRISTO, Debtor Lee C. Christo, Appellant, v. Jonathan D. Yellin, Chapter 7 Trustee, Appellee.

BAP No. MB 98-016.

United States Bankruptcy Appellate Panel of the First Circuit.

January 6, 1999.

Carl E. D'Angio, Jr. and D'Angio Law Offices, Waltham, MA, for appellant.

Jonathan D. Yellin, David M. Belcher, and Stroock & Stroock & Lavan LLP, Boston, MA, for appellee.

Before GOODMAN, LAMOUTTE and DE JESÚS, U.S. Bankruptcy Judges.

LAMOUTTE, Bankruptcy Judge.

The issue before the panel is whether a debtor under Chapter 7 of the Bankruptcy Code may claim more than one exemption of $15,000.00 for payment received on account of personal bodily injury pursuant to 11 U.S.C. § 522(d)(1)(D) when the debtor has three separate tort claims pending as a result of three separate pre-petition automobile accidents. The debtor appeals the bankruptcy court's determination that she may not claim more than one exemption on account of personal bodily injury.

Jurisdiction

The Bankruptcy Appellate Panel has jurisdiction over this appeal pursuant to 28 U.S.C. § 158. We review the Bankruptcy Court's application of the law de novo and its findings of fact under a clearly erroneous standard. Jeffrey v. Desmond, 70 F.3d 183, 185 (1st Cir.1995); In re SPM Mfg. Corp., 984 F.2d 1305, 1311 (1st Cir.1993).

Background

The debtor, Lee C. Christo, filed her voluntary petition under Chapter 7 of the Bankruptcy Code on January 22, 1997. The debtor included in Schedule B three tort actions for motor vehicle accidents which occurred on April 22, 1994; May 25, 1995; and May 3, 1996; and claimed an exemption for each action under section 522(d). The debtor is permanently disabled as a result of the injuries sustained in these accidents.

On March 24, 1997, the chapter 7 trustee filed a limited objection to the claimed exemption on the grounds that no amount for the claimed exemption was listed, and the bankruptcy court sustained the objection. The debtor subsequently filed a motion for determination of the validity of the exemptions, to which the trustee replied, arguing that the debtor is only entitled to a total exemption of $15,000 for settlement of one or all of the personal injury actions. At a hearing on January 21, 1998, the court held that the exemption set forth in § 522(d)(11)(D) is limited to a single $15,000 claim on account of personal injury.

The debtor argues that she should be allowed the statutory exemption for each of her personal injury claims. She argues that the meaning of 11 U.S.C. § 522(d)(11)(D) is not plain, but rather is ambiguous and should be construed liberally to effect the legislative purpose as reflected in the legislative history. It is her position that an evaluation of the entire exemption provision, along with the legislative history, leads to the conclusion that a debtor should be able to exempt the right to payment for any personal injury up to the statutory maximum as long as the payment is in compensation of actual bodily injury.

The trustee argues that the debtor is only entitled to a single exemption totaling $15,000 for all personal bodily injury, regardless of the number of accidents, because the statutory language, on its face, does not support an exemption which varies in amount depending upon the number of accidents incurred. Further, he argues that § 522, read as a whole, does not support debtor's position; and to hold otherwise would result in disparate treatment between similarly situated debtors.

Discussion

Section 522 of the Bankruptcy Code sets forth which property a debtor may exempt from property of the estate, including property which is compensation for certain types of losses described in subsection (d)(11). Specifically, § 522(d)(11)(D) provides that a debtor may exempt:

The debtor\'s right to receive, or property that is traceable to — a payment, not to exceed $15,000, on account of personal bodily injury, not including pain and suffering or compensation for actual pecuniary loss, of the debtor or an individual of whom the debtor is a dependent.

11 U.S.C. § 522(d)(11)(D). The exemption is designed to cover only payments compensating actual bodily injury. 4 Lawrence P. King, et al., Collier on Bankruptcy ¶ 522.0911 (15th ed. rev.1998). Collier goes on to state "if the debtor has sustained injuries in separate accidents, he or she may claim an exemption for the injuries suffered in each accident. Following this logic, it would appear that the debtor could make separate claims for exemption for each injury suffered in a single accident." Id. at 522-67, citing In re Marcus, 172 B.R. 502 (Bankr. D.Conn.1994).

The courts have noted the difficulty of interpreting and applying § 522(d)(11)(D). See, e.g., In re Ciotta, 222 B.R. 626, 630 (Bankr.C.D.Cal.1998) ("The legislative history of the federal exemption statute is sparse and largely unhelpful in interpreting the exemption.") and ("Several bankruptcy courts have recognized that Congress' intent in this area is `somewhat ambiguous'."); In re Gregoire, 210 B.R. 432, 436 (Bankr.D.R.I.1997) ("While neither the statute nor its legislative history are noteworthy for clarity. . . ."); In re Bova, 205 B.R. 467, 476 (Bankr.E.D.Pa. 1997) ("We find § 522(d)(11)(D) to be a difficult section to understand when read literally.").

The First Circuit has stated that, in interpreting a statute, "the `plain meaning' of statutory language controls its construction." Summit Investment & Development Corp. v. Leroux, 69 F.3d 608, 610 (1st Cir.1995). However, the meaning of particular statutory language "is to be gleaned from the statute as a whole, including its overall policy and purpose". Id. (citations omitted). While "plain statutory language does not prompt recourse to counterveiling legislative history . . . the congressional intendment conveyed by unclear statutory language may be discernible from its legislative history." Id.

Furthermore, it is well established that exemptions should be construed liberally in favor of the debtor. See, e.g., In re Ciotta, 222 B.R. 626, 630 (Bankr.C.D.Cal.1998) ("Several bankruptcy courts have held that when Congress' intent is ambiguous, bankruptcy exemptions should be liberally interpreted in favor of the Debtor."); In re Chavis, 207 B.R. 845, 846 (Bankr.W.D.Pa.1997) ("Bankruptcy exemptions should be construed liberally in favor of debtors."); Gaertner v. Claude (In re Claude), 206 B.R. 374, 377 (Bankr.W.D.Pa.1997) ("If it is possible to construe an exemption statute in ways that are both favorable and unfavorable to a debtor, then the favorable method should be chosen."); In re Martinez-Whitford, 199 B.R. 74, 77 (Bankr.D.Mass.1996) ("It is axiomatic that bankruptcy exemptions should be liberally construed in favor of debtors.").

The trustee in the case before the panel relies on In re Rhodes, 147 B.R. 443 (Bankr. N.D.Ill.1992), wherein the bankruptcy court sustained the chapter 7 trustee's objection to the debtors' claim of four exemptions for payments received on account of personal bodily injury resulting from four separate incidents, and held that the statutory exemption is limited to one per debtor rather than one per injury. The court in Rhodes interpreted the Illinois personal exemption statute,¹ the wording of which is substantially similar to § 522, with the exception that the Illinois statute does include pain and suffering. In so doing, the court employed the rules of statutory construction used by the Illinois Supreme Court, including the following canons of construction: (1) the consideration of the entire statute; (2) the last antecedent doctrine; (3) the presumption for statutory consistency; and (4) the presumption against absurdity and injustice. 147 B.R. at 445, 446.

Applying these canons to the Illinois statute, the court found that the plain language of the statute does not support an exception which varies in amount depending on the number of personal injuries affecting the debtor. 147 B.R. at 446. The court noted that the statute contains no language relating to the number of personal injuries. Id. Further, the court found that the statutory scheme as a whole indicates that the phrase "on account of personal bodily injury" "must be seen as defining the nature of the payment that is exempt and not the number of injuries." 147 B.R. at 447. The court found it would be unjust to interpret the statute to allow exemptions based upon the number of incidents because that would result in disparate treatment of similarly-situated debtors, noting that the number of incidents suffered by a debtor has no bearing on the debtors need for funds, and therefore should not affect the exemption allowed. Id.

A contrary result was reached in In re Marcus, 172 B.R. 502 (Bankr.D.Conn.1994). In Marcus the Bankruptcy court overruled the chapter 7 trustee's objection and held that the debtor, who sustained separate permanent injuries in two different automobile accidents, could claim an exemption for each injury under § 522(d)(11)(D). The court noted that "the language of § 522(d)(11)(D) is not plain, but ambiguous, as to whether it exempts single or multiple exemptions for bodily injury. A court, accordingly, should consider both the complete exemption scheme outlined in § 522(d), and the statute's legislative history." 172 B.R. at 504.

In examining the complete exemption scheme outlined in § 522(d), the court found that while subsections (1), (3), (4), (5), (6), and (8) of § 522(d) all refer to the "aggregate interest" of the debtor which may be exempted, subsection (11) contains no such restrictive language. Id. Further, the court found that another subsection, 522(d)(2), contains specific language limiting the exemption to one motor vehicle, indicating that Congress specifically intended to limit that type of exemption. In contrast, no such language was included in § 522(d)(11)(D). The court concluded, "taken together, the language of the entire exemption provision and the...