In re Robinson, Bankruptcy No. 95-71118-TBB-7. Adversary No. 96-00525.
| Decision Date | 29 September 1999 |
| Docket Number | Bankruptcy No. 95-71118-TBB-7. Adversary No. 96-00525. |
| Parties | In re Roger G. ROBINSON & Zelda R. Robinson, Debtors. First National Bank of Jasper, Plaintiff, v. Roger G. Robinson & Zelda R. Robinson, Defendants. |
| Court | U.S. Bankruptcy Court — Northern District of Alabama |
COPYRIGHT MATERIAL OMITTED
David Hood, Jasper, AL, for plaintiff.
Eric J. Breithaupt, Birmingham, AL, for debtor/defendant.
The bankruptcy of Roger G. and Zelda R. Robinson (collectively the Robinsons) is the result of their failed chicken raising business and succumbing to the enticements of others to join the ranks of those who protest against governmental actions by refusing to pay taxes owed. When the Robinsons' joint case under Chapter 13 of the Bankruptcy Code, 11 U.S.C.S. § 1301 et seq., proved unsuccessful, its conversion to one under Chapter 7, 11 U.S.C.S. § 701 et seq., followed.
Shortly after the conversion, this fight over the scope of the discharge of debts began when the First National Bank of Jasper (Bank) commenced an adversary proceeding against the Robinsons to have excepted from discharge two loan obligations. One was used to purchase a 1994 Honda Civic (Honda Obligation). This contract was executed by only Mr. Robinson. The other agreement was entered into by Mr. and Mrs. Robinson to enable them to purchase a 1994 GMC Sierra pickup truck (GMC Obligation). The basis on which the Bank sought to have these debts excepted from discharge was that each was obtained by use of false pretenses, false representations, or actual fraud within 11 U.S.C.S. § 523(a)(2)(A) (Law.Coop.1997)'s ambit. Following a trial, judgment was rendered, excepting both the Honda Obligation and the GMC Obligation from the bankruptcy discharge which otherwise would have been accorded Mr. Robinson. For Mrs. Robinson, only the GMC Obligation was excepted from discharge.
The amounts determined to be non-dischargeable are sixteen thousand six hundred forty-two dollars and seven cents ($16,642.07) for the Honda Obligation and sixteen thousand five hundred forty-three dollars and eighty-three cents ($16,543.83) for the GMC Obligation. The judgment excepting these debts from discharge is final (the Judgment).
Following entry of the Judgment, the Bank started its collection efforts. It chose not to execute or levy against any tangible personal property in the Robinsons' possession. Instead, it focused its endeavors on what it perceived to be the valuable property: Mr. Robinson's wages.
Having selected the property from which it hoped to obtain payment of the Judgment, the Bank garnished the wages payable to Mr. Robinson by his employer, Altec Industries, Inc. (Altec). In response to the writ of garnishment, Altec has tendered in excess of four thousand four hundred sixty-eight dollars and ninety-eight cents ($4,468.98) to the Clerk of this Court. The Bank has not contested whether Mr. Robinson could avail himself of a procedural limit on the remedy of garnishment of his wages under state or federal law. This is to be differentiated from a claim to exempt property. Indeed, Mr. Robinson has never affirmatively sought use of either an Alabama or the federal statute which restrains the amount of an individual's earnings which may be taken by this statutory remedy. At best, the shielding of all but a percentage of his wages from the Bank's garnishment efforts is the result of his passive act of acceptance of that portion of his wages determined to be within the safe harbor from garnishment under either Alabama of federal law. Which one was used by Altec is not self-evident from the evidence before the Court.
Mr. Robinson's reaction to the garnishment was his filing of a declaration of exemptions and a supplement. So far, Mrs. Robinson has not claimed any exemption to place her property outside the Judgment's grasp. This is most probably due to the Bank limiting its collection efforts to the garnishment of Mr. Robinson's wages. The circumscription of its collection efforts is predicated, in part, on the perception that the cost of obtaining possession and disposing of other properties of the Robinsons' would yield little, if any, monies to apply against the Judgment. Also, Mrs. Robinson does not have a source of income.
Although initially Mr. Robinson relied upon the statutory personal property exemption of three thousand dollars set forth in Ala.Code § 6-10-6 (1993) (State Personalty Exemption) to attempt to have monies paid by Altec to the Clerk as garnished funds further excluded from the garnishment process, he subsequently relinquished this justification for reclaiming these monies. His other thrust to prevent the Bank from acquiring any of his wages to satisfy the Judgment is made by reliance on the one thousand dollar exemption of Art. X, § 204 of the Alabama Constitution of 1901 (Constitutional Exemption). According to Mr. Robinson, the Constitutional Exemption allows him to shield from garnishment another one thousand dollars of his wages above and beyond that not already protected by federal and/or state limits on garnishment.1 The practice of attaining the benefit of either Alabama's or the federal limit on garnishment procedure plus using the Constitutional Exemption to protect wages remaining subject to garnishment has been referred to as stacking by the Alabama courts.
When this constitutionally exempt sum is reduced below one thousand dollars due to, among other things, expenditures by the Robinsons for living expenses, Mr. Robinson argues he may reassert it to the extent necessary to replenish the sum to one thousand dollars. The Robinsons' position is the Constitutional Exemption may be asserted ad infinitum so long as the personal property exempted is below or, for permissible reasons under Alabama law, goes below one thousand dollars in value. It is alleged that this is the only way Mr. Robinson will be able to attain and retain the maximum amount of exempt property allowed by the Constitutional Exemption.
To demonstrate his entitlement to repetitively assert the Constitutional Exemption, Mr. Robinson presented the Bank and the Court with an inventory of personal property. The purpose of the inventory was to divulge what personal property he possessed and its value. Mr. Robinson also provided evidence of his income and expenses. He utilized his income and expense evidence for the purpose of illustrating how much the thousand dollar Constitutional Exemption is depleted by living expenses incurred between pay days.
At the hearing held by this Court, Mr. Robinson proved his gross monthly income to be three thousand three hundred seventy-nine dollars and fifty-one cents ($3,379.51), and his monthly income after withheld taxes, payment of health insurance, and a contribution to Altec's 401(k) plan to be two thousand twenty-two dollars and fifteen cents ($2,022.15). From this sum, he expends each month one thousand nine hundred thirty-nine dollars and thirty-three cents ($1,939.33).2 On a weekly basis, Mr. Robinson expends on average, four hundred forty-seven dollars and fifty-four cents ($447.54). According to Mr. Robinson, this leaves for garnishment only eighty-two dollars and eighty-two cents per month ($82.82) before consideration of the Art. X, § 204 thousand dollar personal property exemption.3
Although his analysis rests only on his payment of the Robinsons' alleged living expenses which are supposedly permissible ones for determination of the Constitutional Exemption amount, he overlooks the fact that Altec complied with a statute limiting garnishment to no more than the maximum allowed percent of Mr. Robinson's income. Under the applicable statutes, this may not exceed twenty-five percent. This resulted in Mr. Robinson having the amount of wages garnished already limited by applicable Alabama or federal law before his receipt of his paycheck.4 In other words, he had already received one protection from garnishment before he received his wages net of this garnished amount.
After use of the Constitutional Exemption to further exempt one thousand dollars ($1,000.00) of his wages—once he stacks the Constitutional Exemption on top of the exclusion of the allowed percentage of his disposable earnings from garnishment, Mr. Robinson concedes that the Bank is entitled to the remaining monies. According to him, what is left after stacking may then be used to partially satisfy the Judgment, that is, until Mr. Robinson incurs other or greater expenses above those presented during the trial of this matter which then might decrease the Constitutional Exemption sum below one thousand dollars. Should this occur, the arithmetic must be redone and one may surmise that Mr. Robinson will contend that a lesser sum of wages — if any at all — will remain to satisfy the Judgment.
Although the Bank asserted Mr. Robinson had waived his claim to the Constitutional Exemption, this Court ruled against the Bank on its waiver contention before the hearing on this matter commenced. The Bank also avowed that Mr. Robinson is not otherwise entitled to the Constitutional Exemption under Alabama law. It proffers that he may not stack the Constitutional Exemption on top of either the state or federal limitations on garnishment. Next, it objected to certain of Mr. Robinson's expenses as being excessive and not of a type which may be "counted" to determine if any of the monies previously exempted under the Constitutional Exemption have been used to pay expenses which reduce the value of the exempted property below one thousand dollars ($1,000). Finally, the Bank has challenged whether the amount of monies not subjected to taking by garnishment was the appropriate sum to be retained by Mr. Robinson. It maintains that a 401(k) plan contribution should...
To continue reading
Request your trial
-
In re Faulkner
... ... In re Kimberly M. FAULKNER, Debtor ... Bankruptcy No. 99-16462-TS ... United States Bankruptcy Court, W.D ... ...