In re Comeaux

• Decision Date: 29 December 2003
• Docket Number: No. 03-10240.,No. 03-10949.,03-10240.,03-10949.
• Citation: 305 B.R. 802
• Parties: In re Joseph P. COMEAUX, Ella M. Comeaux, Debtors. In re Zula G. LeBlanc, Debtor.
• Court: U.S. Bankruptcy Court — Eastern District of Texas

305 B.R. 802

In re Joseph P. COMEAUX, Ella M. Comeaux, Debtors.

In re Zula G. LeBlanc, Debtor.

No. 03-10240.

No. 03-10949.

United States Bankruptcy Court, E.D. Texas, Beaumont Division.

December 29, 2003.

Daniel Jacob Goldberg, Ross, Banks, May, Cron & Cavin, P.C., Houston, TX, for Daniel J. Goldberg, Chapter 7 Trustee.

Robert E. Barron, Robert E. Barron, P.C., Nederland, TX, for Debtors, Joseph P. and Ella Comeaux and for Debtor, Zula G. LeBlanc.

MEMORANDUM OF DECISION

BILL G. PARKER, Chief Judge.

These matters are before the Court upon similar objections by the Chapter 7 Trustee, Daniel J. Goldberg ("Trustee"), to the claim of exemptions filed by each of the debtors in their respective cases. Based upon the evidence and legal argument presented at the hearing on this matter, the Court concludes that the Trustee's objections should be sustained in part and overruled in part.¹

Factual and Procedural Background

Comeaux Facts:

On February 19, 2003, Joseph and Ella Comeaux (the "Comeauxs") filed for relief under Chapter 7 of the Bankruptcy Code. The original schedules and statement of financial affairs of these Debtors did not list the three assets that the Debtors now claim as exempt. On May 12, 2003, the Comeauxs filed several amendments to their schedules. On Amended Schedule B, under the category for "Other contingent and unliquidated claims of every nature," the Comeauxs listed three community assets:

1. "Asbestosis Claim" with value "Unknown";

2. "Baycol Liquidation" with value "Unknown"; and

3. "Workman's Compensation Claim" with value "Unknown."

The Comeauxs' Amended SOFA makes it clear that these three claims are unrelated, and that the Debtors had previously retained separate counsel to pursue each of the three individual claims. Also on May 12, 2003, the Comeauxs amended their Schedule C to claim each of these three assets as exempt as a payment on account of personal bodily injury pursuant to 11 U.S.C. § 522(d)(11)(D) and as a payment in compensation of loss of future earnings which are reasonably necessary for the debtor's support under § 522(d)(11)(E). The "Value of the Claimed Exemption" was listed as "Unknown" in each instance. The Asbestosis Claim was also listed as exempt pursuant to the "wildcard" exemption of § 522(d)(5), again with the value of the claimed exemption listed as "Unknown."

On June 2, 2003, Daniel J. Goldberg, Chapter 7 trustee (the "Trustee"), filed a timely objection to the Comeauxs' amended claim of exemptions.² In his objection the Trustee asserted that the Comeauxs' valuation of the three assets as "Unknown" in their amended Schedule B was improper, as was their valuation of the claimed exemptions as "Unknown" in their amended Schedule C.³ Without objection from the Comeauxs, the Court, on June 25, 2003, entered its "Order Granting Trustee's Objections To Debtors' Amended Schedules And To Property Claimed As Exempt," giving the Comeauxs 10 days within which to amend their schedules to properly reflect the valuation of the three claims and the value of the claimed exemptions.

Though untimely, on August 26, 2003, the Comeauxs filed their Second Amended Schedule C, which (a) valued the 11 U.S.C. § 522(d)(11)(D) personal bodily injury exemption at $17,425.00 for each of the three assets; (b) valued the 11 U.S.C. § 522(d)(11)(E) exemption for loss of future earnings at 100% for each of the three assets; and (c) valued the 11 U.S.C. § 522(d)(5) wildcard exemption at $16,350.00 for the Asbestosis Claim. However, the Comeauxs again listed the current market value of these three assets as "Unknown."

On September 4, 2003, the Trustee filed a timely objection to the Comeauxs' second amended claim of exemptions. In this objection, the Trustee asserted that the Comeauxs are entitled to only a single claim of exemption in the amount of $17,425.00 under § 522(d)(11)(D), rather than three separate exemptions of $17,425.00 as claimed by the Comeauxs. The Trustee also claimed that the Debtors' valuation of the § 522(d)(11)(E) exemption at 100% is improper when the claim has not yet been settled or otherwise concluded and the current value of each of the three claims is "Unknown."

LeBlanc Facts:

On June 29, 2003, Zula G. LeBlanc filed for relief under Chapter 7 of the Bankruptcy Code. Her original schedules and statement of financial affairs scheduled her "Husband's Asbestos's [sic] Claim" as a personal property asset, and her original Schedule C claimed this asbestos claim as exempt under the aforementioned three subsections of 11 U.S.C. § 522(d): § 522(d)(11)(D), § 522(d)(11)(E), and § 522(d)(5). The value of each of these exemption claims was listed as "Unknown," and the current market value of the entire asbestos claim was also listed as "Unknown." On August 20, 2003, Ms. LeBlanc filed an Amended Schedule C which: (a) valued the 11 U.S.C. § 522(d)(11)(D) personal bodily injury exemption at $17,425.00; (b) valued the 11 U.S.C. § 522(d)(11)(E) future earnings exemption at 100%; and (c) valued the 11 U.S.C. § 522(d)(5) wildcard exemption at $9,020. The current market value of the asbestos claim was again listed as "Unknown."

On September 22, 2003, the Trustee filed a timely objection to Ms. LeBlanc's amended claim of exemptions. In this objection, the Trustee raised the same argument that he had asserted in the Comeaux case: that the Debtor's valuation of the § 522(d)(11)(E) exemption at 100% is improper when the claim has not yet been settled or otherwise concluded and the current market value of the claim is "Unknown."

A hearing regarding the Trustee's objections in these two cases was held on November 18, 2003, and the parties were given ten days to submit supplemental briefing. Upon the receipt of such briefing from the Trustee and the respective debtors having waived a similar opportunity, the Court took the matter under advisement. This memorandum disposes of all issues pending before the Court.

Discussion

Personal Bodily Injury Exemption Under 11 U.S.C. § 522(d)(11)(D).

The Comeaux case presents the issue of whether 11 U.S.C. § 522(d)(11)(D)⁴ limits a debtor to one aggregate $17,425.00 exemption "on account of personal bodily injury," or whether a debtor may claim multiple exemptions up to $17,425.00 if he has, in fact, sustained personal bodily injuries arising from a number of separate and distinct episodes for which he is asserting a right to payment. There is no Fifth Circuit precedent and sparse jurisprudence on the issue. However, the two primary cases cited by the parties reflect the two basic options available and they present opposing conclusions and rationales.

The Trustee relies upon Christo v. Yellin (In re Christo), 192 F.3d 36 (1st Cir.1999). In Christo, the debtor suffered three separate pre-petition accidents, and sought to exempt the sum of $15,000.00⁵ for each of the three personal injury claims under § 522(d)(11)(D). Id. at 37. In resolving the issue, the First Circuit held in a 2-1 decision that:

the phrase `on account of personal bodily injury' should be interpreted as defining the nature of the payment that is exempt and not the number of injuries suffered. Consequently, a Chapter 7 debtor is entitled to one exemption of no more than $15,000 on account of personal injury, regardless of the number of injuries involved.

Id. at 39 (emphasis in original). The majority in Christo provided the following explanation of its holding:

First, the language of the exemption in 11 U.S.C. § 522(d)(11)(D) refers to "a payment." While there is some ambiguity, the more natural reading is that there is a single exemption. Second, the overall scheme of exemptions in § 522(d)(11) displays a pattern of allowing one exemption per category. Third, the purpose of exemptions is to provide support for the debtors at a reasonably necessary level. The reasonably necessary level should not, logically, vary to provide more in total exemption amount to someone who is in three minor accidents than one who is in a single catastrophic accident. That is particularly so given that there are the exemptions in §§ 522(d)(10)(A) and (C) for social security and disability benefits. That is, the exemption for "a payment in account of personal bodily injury" is not a proxy for degree of disability. Fourth, the reading of the exemption as limited to one $15,000 exemption more equitably treats similarly situated debtors.

Id. at 38.

The Comeauxs cite the decision in In re Marcus, 172 B.R. 502 (Bankr.D.Conn.1994). In Marcus, the debtor had been involved in two pre-petition automobile accidents, and claimed a $7,500⁶ exemption for each accident. Finding that the language of § 522(d)(11)(D) was "ambiguous on the issue of whether it exempts single or multiple exemptions for bodily injury," the court resolved the issue in favor of multiple exemptions by considering both the complete exemption scheme set forth in § 522(d) and the statute's legislative history. Id. at 504. The Marcus court cited to the numerous subsections of § 522(d) that contain a specific reference to the debtor's "aggregate interest" that may be exempted. See § 522(d)(1), (3), (4), (5), (6) and (8). Because Congress chose to include this "restrictive language" in some subsections of § 522(d), but not (d)(11)(D), the Marcus court concluded that the absence of such language indicates that Congress did not intend to limit the § 522(d)(11)(D) exemption to an aggregate amount of $17,425.00. Id. Moreover, the language of § 522(d)(2) indicates that Congress knew precisely how to limit an exemption to permit only a single exemption of the type covered. See 11 U.S.C. § 522(d)(2) [providing an exemption for "(t)he debtor's interest, not to exceed $2,775 in value, in one motor vehicle"] (emphasis added). Again, the failure of § 522(d)(11)(D) to contain a limitation to "one" payment on account of personal bodily injury indicates that § 522(d)(11)(D) was not meant to be limited in this manner. Accordingly, the Marcus court...