In re Wiley
| Decision Date | 31 July 1995 |
| Docket Number | No. C 94-4116.,C 94-4116. |
| Citation | 184 BR 759 |
| Parties | In re Dale Eldon WILEY, Doris Jean Wiley, Debtors. |
| Court | U.S. District Court — Northern District of Iowa |
A. Frank Baron of Baron, Sar, Goodwin, Gill, Lohr & Horak, Sioux City, IA, for debtor Doris Jean Wiley.
Donald H. Molstad, Trustee, Sioux City, IA.
TABLE OF CONTENTS
I. BACKGROUND............................................................. 761
II. LEGAL ANALYSIS......................................................... 762
A. Want Of Prosecution................................................. 762
B. Standard Of Review.................................................. 764
C. Preservation Of Issues For Appeal................................... 764
D. Qualification Of Annuity For Exemption.............................. 764
E. Extent Of Exemption................................................. 766
III. CONCLUSION............................................................. 767
In this appeal from a decision of the bankruptcy court for the Northern District of Iowa, the debtor asserts error in the bankruptcy court judge's determination that an annuity in favor of the debtor as a settlement for a personal injury lawsuit was an asset of the estate and the bankruptcy court judge's further determination that only ten percent of the annuity payments is exempt under Iowa Code § 627.6(8)(e), which provides an exemption for payments "on account of" disability. Finding no error, this court affirms.
Debtors Doris and Dale Wiley filed a pro se Chapter 7 petition in bankruptcy on May 5, 1994. Among the items listed on their schedule of personal property was a "settlement from accident" as Doris Wiley's property. The Wileys claimed the property was exempt under Iowa Code § 627.6(8)(e). On or about June 20, 1994, the Trustee filed an objection to this exemption on the ground that the accident settlement was not exempt under the Iowa Code. The Wileys, by this time represented by counsel, resisted the objection on July 6, 1994. In a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(B), the bankruptcy court held a hearing on the objection to exemption on August 23, 1994, at which exhibits, including the settlement agreement and resulting annuity policy, were presented and testimony, including that of Doris Wiley, was heard.
Following the hearing, the bankruptcy court entered a decision on September 20, 1994. It is from this order that debtor Doris Wiley appeals. In the September 20, 1994, order, the bankruptcy court made the following findings of fact of interest here. The "accident settlement" listed by the Wileys in their schedule of personal property was a settlement with Farm Bureau Mutual Insurance Company for injuries suffered by Doris Wiley in a motor vehicle accident on July 31, 1983. Wiley was fifteen years old at the time of the accident. Wiley's injuries in the accident included a broken ankle, broken femur, third-degree burns, head concussion, and whiplash. In settlement of Wiley's claim for damages as the result of the accident,1 Farm Bureau purchased a single premium annuity policy with guaranteed payments as follows:
$14,000.00 payable on June 29, 1993
$25,000.00 payable on June 29, 1998
$35,000.00 payable on June 29, 2003
Under the terms of the policy, Farm Bureau is the owner, and Doris Wiley is the annuitant and payee. Furthermore, under the terms of the settlement agreement, Farm Bureau is required to "retain ownership" of the policy. Farm Bureau did not reserve the right to make payments to any other payee, and therefore is precluded, by the terms of the policy, from doing so.
The bankruptcy court also found that, at the time the settlement agreement was made, Doris Wiley had been told by her doctors that she would have long-term physical problems. Since that time, Wiley has had physical examinations revealing continuing problems from her injuries. These problems include difficulties with lifting and problems with standing or walking for extended periods of time, which can result in discomfort and limping. Wiley expects these disabilities to be permanent. However, the bankruptcy court found that Wiley had presented little evidence to enable the court to evaluate Wiley's possible loss of earning capacity as the result of her injuries. The court found that Wiley had obtained degrees in accounting and business from a two-year college and had been working as a clerk at Iowa Beef Processors (IBP) for the past five and one-half years.
The bankruptcy court concluded that the annuity in question constitutes "rights in payment" as required for exemption under Iowa Code § 627.6(8)(e). The court also concluded that the annuity was "on account of" disability, at least to some extent, as required by the Iowa exemption provision.2 The court concluded, however, that "disability" means different things in different contexts. The court therefore concluded that the exemption in § 627.6(8)(e) "is intended to include payments for loss of earning capacity, not for loss of bodily function." The bankruptcy court cited as supporting this conclusion H.R.Rep. No. 595, 95th Cong., 1st Sess. 361-62 U.S.Code Cong. & Admin.News 1978, p. 5787 (1977), which discusses 11 U.S.C. § 522(d)(10) as providing exemptions that are "akin to future earning." The bankruptcy court noted, however, that loss of bodily function may be evidence of lost earning capacity.
The bankruptcy court found that little evidence had been presented, none of it medical evidence, from which an inference could be drawn of lessened earning capacity created by Wiley's loss of physical capacity. The court determined that it would be "unfair" to decide the exemption issue on an "all-or-nothing basis" in light of the likelihood that other components besides loss of earning capacity had figured in the settlement agreement. The court identified these other components as including future medical expenses, past and future pain and suffering, and past and future loss of bodily function. Recognizing a dearth of evidence presented by the parties, the court found that ten percent of Wiley's annuity rights were "on account of disability" and exempted that portion of Doris Wiley's rights in the annuity payments pursuant to Iowa Code § 627.6(8)(e).3
Doris Wiley, through counsel, filed a notice of appeal of the bankruptcy court's September 20, 1994, order on September 28, 1994, and a notice of filing of notice of appeal on September 29, 1994. Wiley's designation of record and statement of issues on appeal was subsequently filed on October 6, 1994. The issues presented on appeal are identified in Wiley's October 6, 1994, filing as follows:
The Clerk of the Bankruptcy Court filed a Certificate On Appeal with this court on December 14, 1994. That same day the Clerk of this court filed a Notice Of Petition For Review In Bankruptcy notifying the parties of the filing of the Certificate On Appeal and the applicable rules establishing the deadlines for briefing of the appeal. None of the parties subsequently filed any briefs or other materials pertaining to this appeal.
The Notice Of Petition For Review In Bankruptcy in this case was docketed by the Clerk of the District Court on December 14, 1994. That Notice states that it provides notice pursuant to Local Rule 34 (now N.D.Iowa L.R. 35) and Bankruptcy Rule 8009. A copy of N.D.Iowa L.R. 34 (now 35) was attached. The local rule affirms the applicability of "the official rules and forms of practice and procedure in bankruptcy (Bankruptcy Rules 801, et seq.)." N.D.Iowa L.R. 35 (formerly Rule 34). The local rule otherwise specifies only the length of briefs and the sanction of dismissal for failure to pay fees. Id.
However, Bankruptcy Rule 8009 specifies the due dates for briefs on appeal from the bankruptcy court, in pertinent part, as follows:
Bankruptcy Rule 8009(a). The briefing schedule identified in this rule is not triggered by docketing of the certificate of appeal by the bankruptcy clerk, or transmittal of the record from the bankruptcy clerk, nor by receipt of the notice from the clerk of the district court by the parties, but by "the docketing and sending of notice by the district court clerk." Jewelcor Inc. v. Asia Commercial Co., Ltd., 11 F.3d 394, 397-98 (3d Cir.1993) (emphasis in the original). The record in this case shows that the Clerk of the District Court filed and sent the notice to the parties on December 14, 1994,4 thereby triggering the briefing schedule. Although the bankruptcy rule provides for alteration of the briefing schedule by local rule or court order, neither the local rule nor any court order altered the briefing schedule in this case. Thus, under the applicable rules identified in the notice from the clerk of the district court, appellant's brief was due December 29, 1994, appellee's brief was due January 13, 1995, and appellant's reply brief was due January 23, 1995. However, no briefs were...
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