In re Phillips

• Decision Date: 27 December 2012
• Docket Number: No. 12–72379–ast.,12–72379–ast.
• Citation: 485 B.R. 53
• Parties: In re Anthony Christopher PHILLIPS and April Lashawn Phillips a/k/a April Lashawn Singleton, Debtors.
• Court: U.S. Bankruptcy Court — Eastern District of New York

485 B.R. 53

In re Anthony Christopher PHILLIPS and April Lashawn Phillips a/k/a April Lashawn Singleton, Debtors.

No. 12–72379–ast.

United States Bankruptcy Court, E.D. New York.

Dec. 27, 2012.

Stuart P. Gelberg, Garden City, NY, for Debtors.

Kenneth Kirschenbaum, Kirschenbaum & Kirschenbaum, Garden City, NY, Trustee.

U.S. Trustee, Central Islip, NY.

DECISION AND ORDER GRANTING TRUSTEE'S MOTION TO DISALLOW CO–DEBTOR ANTHONY CHRISTOPHER PHILLIPS FROM CLAIMING MULTIPLE PERSONAL INJURY EXEMPTIONS

ALAN S. TRUST, Bankruptcy Judge.

Issue Pending and Summary of Ruling

Pending before this Court is the Chapter 7 Trustee's motion to disallow two personal injury exemptions claimed by the co-debtor, Anthony Christopher Phillips (“Mr. Phillips”). Mr. Phillips asserts that, under § 522(d)(11)(D) of the Bankruptcy Code,¹ he may exempt payments to be received from two discrete prepetition personal injury lawsuits, and from each lawsuit receive up to the statutory cap set out in § 522(d)(11)(D), thus potentially doubling the exemption available had he only been in one accident. The Trustee argues that Mr. Phillips may only claim one personal injury exemption up to the cap in § 522(d)(11)(D) regardless of how many discrete prepetition personal injuriesMr. Phillips suffered. The issue presented is the extent to which a debtor is entitled to exempt payments to be received from multiple prepetition personal bodily injuries. For the reasons more fully set forth herein, the Court grants the Chapter 7 Trustee's motion and limits Mr. Phillips' exemption claim to the statutory cap regardless of the number of injuries suffered, and regardless of the number of events which caused the injuries.

Jurisdiction

This Court has jurisdiction over this core proceeding pursuant to 28 U.S.C. §§ 157(b)(2)(A), (B) and 1334(b), and the standing Order of Reference in effect in the Eastern District of New York dated August 28, 1986, and as amended on December 5, 2012 but made effective nunc pro tunc as of June 23, 2011.

Background

On April 17, 2012, Mr. Phillips and April Lashawn Phillips a/k/a April Lashawn Singleton (“Mrs. Phillips”) filed a voluntary joint petition (the “Petition”) for relief under Chapter 7 of the Bankruptcy Code. [dkt. item 1] Prior to commencement of this case, Mr. Phillips and Mrs. Phillips each suffered personal bodily injuries resulting from their involvement in three separate car accidents. In the Petition, Mrs. Phillips scheduled an interest in one prepetition personal injury cause of action stemming from one of these car accidents; she claimed one personal injury exemption under § 522(d)(11)(D) for the statutory maximum of $21,625. Mr. Phillips scheduled interests in two prepetition personal injury causes of action stemming from two different car accidents (the “Accidents”), which resulted in separate and distinct injuries. Mr. Phillips has claimed two separate personal injury exemptions pursuant to § 522(d)(11)(D),² each for the statutory maximum, and for an aggregate value of $43,250 (the “Exemptions”).³

On July 18, the Chapter 7 Trustee (the “Trustee”) filed an objection to Mr. Phillips' claim of exemptions under Rule 4003(b) of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”) (the “Trustee's Motion”). [dkt. item 20]. The Trustee asserts that the plain language of § 522(d)(11)(D), as analyzed by the Court of Appeals for the First Circuit in In re Christo, 192 F.3d 36 (1st Cir.1999), prohibits Mr. Phillips from claiming the Exemptions to the extent so claimed.

On August 3, Mr. Phillips filed an objection to the Trustee's Motion, contending that the Christo decision does not control this Court's analysis, that the language of the statute should be liberally construed in favor of Mr. Phillips, and that as discussed in several decisions from bankruptcy courts outside this district, § 522(d)(11)(D) authorizes Mr. Phillips to claim multiple personal injury exemptions stemming from multiple prepetition personal injury causes of action. [dkt. item 23]

On September 19, the Court held a hearing on the Trustee's Motion and at the conclusion of the hearing took this matter under submission.

Discussion

This controversy presents only a question of law; resolution of this matter turns on the precise meaning of § 522(d)(11)(D). Thus, the Court must begin its inquiry by looking to the language of the statute itself. Lamie v. United States Trustee, 540 U.S. 526, 534, 124 S.Ct. 1023, 157 L.Ed.2d 1024 (2004); United States v. Ron Pair Enters., 489 U.S. 235, 241, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989); In re Miller, 462 B.R. 421, 429 (Bankr.E.D.N.Y.2011). Courts are required to apply the plain meaning of a statute, unless the statute is ambiguous or applying the unambiguous plain meaning would yield an absurd result. Hartford Underwriters Ins. Co. v. Union Planters Bank, Nat'l Ass'n, 530 U.S. 1, 6, 120 S.Ct. 1942, 147 L.Ed.2d 1 (2000) (“[W]hen the statute's language is plain, the sole function of the courts—at least where the disposition required by the text is not absurd—is to enforce it according to its terms.”); Miller, 462 B.R. at 429–30. Statutory language is ambiguous if it is susceptible to two or more reasonable meanings. In re Med Diversified, Inc., 461 F.3d 251, 255 (2d Cir.2006). In determining plainness or ambiguity, courts are directed to look “to the language itself, the specific context in which that language is used, and the broader context of the statute as a whole.” Robinson v. Shell Oil Co., 519 U.S. 337, 341, 117 S.Ct. 843, 136 L.Ed.2d 808 (1997). Moreover, courts may utilize canons of statutory construction to help resolve any ambiguity. United States v. Colasuonno, 697 F.3d 164, 173 (2d Cir.2012); United States v. Dauray, 215 F.3d 257, 264 (2d Cir.2000). However, where both the plain meaning and the rules of statutory construction are unavailing, courts may resort to legislative history to aid in their interpretation. See Colasuonno, 697 F.3d at 173;Dauray, 215 F.3d at 264;see also In re Aiello, 428 B.R. 296, 299–300 (Bankr.E.D.N.Y.2010). Therefore, this Court will first consider the plain meaning of § 522(d)(11)(D).

1. Textual Analysis of § 522(d)(11)(D) and the Bankruptcy Rules of Construction

Section 522(d)(11)(D) provides that a debtor is entitled to claim as exempt:

(11) The debtor's right to receive, or property that is traceable to ...

(D) a payment, not to exceed $21,625, 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). Mr. Phillips' Exemptions only involve “personal bodily injury,” and not “pain and suffering or compensation for actual pecuniary loss.”

Courts that have considered the plain meaning of § 522(d)(11)(D) have found that the phrase “a payment, not to exceed $21,625, on account of personal bodily injury,” renders the statute ambiguous, because it is susceptible to more than one reasonable meaning. See, e.g., In re Christo, 192 F.3d at 38;In re Daly, 344 B.R. 304, 314 (Bankr.M.D.Pa.2005) (citing Christo, 192 F.3d at 40–41 (Gibson, J., dissenting)) (“The statute simply does not say whether ‘a payment ... on account of personal bodily injury’ refers to one or more such payment.”); In re Comeaux, 305 B.R. 802, 806–07 (Bankr.E.D.Tex.2003); In re Marcus, 172 B.R. 502, 504 (Bankr.D.Conn.1994) ( “The language of § 522(d)(11)(D) is not plain, but ambiguous,as to whether it exempts single or multiple exemptions for bodily injury.”). More specifically, courts have concluded that the statutory text is unclear as to whether a debtor is limited to asserting a single exemption up to the statutory maximum regardless of how many separate injuries the debtor may have suffered, or whether the debtor may assert multiple exemptions for each separate accident. See, e.g., Christo, 192 F.3d at 39 (concluding 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”); Daly, 344 B.R. at 313–15;Comeaux, 305 B.R. at 805–07;Marcus, 172 B.R. at 504. Respectfully, this Court disagrees and concludes that § 522(d)(11)(D) is not ambiguous.

Case law on statutory construction in this Circuit directs this Court, in ascertaining plain meaning, to consider the text of § 522(d)(11)(D) by itself as well as in conjunction with any applicable rules of construction. See Colasuonno, 697 F.3d at 173;Dauray, 215 F.3d at 261. Accordingly, this Court will first look to the rules of construction found in the Bankruptcy Code Section 102(7) provides that “the singular includes the plural.” 11 U.S.C. § 102(7). Thus, § 522(d)(11)(D)'s term “a payment” encompasses both a singular payment as well as multiple payments, and the term “injury” includes multiple injuries. Given this rule of construction, § 522(d)(11)(D) should be read as “a payment [or payments], not to exceed $21,625, on account of personal bodily injury [or injuries].” The grammatical structure of § 522(d)(11)(D), therefore, requires the monetary cap “not to exceed $21,625” to apply with equal force to either one or multiple payment(s) and regardless of how many injuries the debtor suffered. See, e.g., Ron Pair Enters., 489 U.S. at 241, 109 S.Ct. 1026.

This construction is consistent with Second Circuit precedent, which has applied § 102(7) to construe the phrase “a transfer” as meaning one or more transfers. In Universal Church v. Geltzer, the Second Circuit considered whether § 548(a)(2)(A)'s safe harbor provision for transfers of charitable contributions applied individually to each charitable contribution or to a debtor's aggregate charitable contributions for a given year. Universal Church v. Geltzer, 463 F.3d 218, 223 (2d Cir.2006), cert. denied,549 U.S. 1113, 127 S.Ct. 961, 166 L.Ed.2d 706 (2007), aff'g in part, Geltzer v. Universal Church, 2005 WL 6124844 (E.D.N.Y. Feb. 16, 2005)....