In re Williams
| Decision Date | 26 June 2018 |
| Docket Number | Case No.: 16–16621–JKO |
| Citation | 586 B.R. 355 |
| Parties | IN RE: Darryl Edwin WILLIAMS, Debtor. |
| Court | U.S. Bankruptcy Court — Southern District of Florida |
Chad T. Van Horn, Ft. Lauderdale, FL, for Debtor.
Mark Bonacquisti, Plantation, FL, for Trustee.
ORDER OVERRULING CHAPTER 7 TRUSTEE'S OBJECTION TO CLAIM OF EXEMPTION IN NATIONAL FOOTBALL LEAGUE PLAYER'S CONCUSSION INJURY LITIGATION SETTLEMENT [ECF 204]
THIS CASE came before the Court for a hearing on April 4, 2018, upon Trustee's Objection to Claim of Exemption in National Football League Player's Concussion Injury Litigation Settlement (the "Disputed Exemption") [ECF 204]. After hearing argument from both parties, and because this appears to be an issue of first impression, the matter was taken under advisement. Upon further consideration, the Trustee's Objection [ECF 204] is OVERRULED .
Debtor Darryl Edwin Williams initiated this case by filing a voluntary petition for Chapter 7 relief on May 6, 2016. On July 5, 2016 and July 20, 2016, Debtor filed his first and second amendments to his initial Schedule C, listing property to be claimed as exempt, neither of which contained the Disputed Exemption [ECF 43 and 62]. Trustee filed an Agreed Motion for Denial of Discharge [ECF 152], signed by the Debtor, on February 10, 2017, and the Court granted that motion on March 1, 2017 [ECF 162]. The Debtor will accordingly not receive a bankruptcy discharge in this case. On December 6, 2017, Trustee noticed a Rule 2004 Examination of the Debtor (the "Examination"), which was conducted on January 10, 2018 [ECF 182]. Following the Examination, Debtor filed his third amended Schedule C, which this time did include the Disputed Exemption [ECF 183]. The Trustee subsequently filed an objection to the exemption, asserting, inter alia , that the descriptions of the underlying asset were too vague (the "initial objection") [ECF 187]. Thereafter, Florida Asset Recovery Group, LLC ("FARGL" or the "Creditor") filed a joinder into the Trustee's initial objection [ECF 191]. In response to the initial objection, Debtor filed his fourth amended Schedule C, which provided greater detail as to the asset in question [ECF 197]. At the hearing on the Trustee's initial objection, the Debtor had already filed a fourth amended Schedule C, and so the Court dismissed the matter as moot and gave the Trustee and Creditor until March 8, 2018, to object to Debtor's fourth amended Schedule C [ECF 200]. On March 7, 2018, Trustee filed an objection to Debtor's fourth amended Schedule C, and FARGL subsequently joined into that objection [ECF 204 and 206].
The NFL Class Action Settlement Agreement (the " Settlement Agreement") is an agreement between the National Football League (the "League") and its players1 , arising from "the alleged effects of mild traumatic brain injury
allegedly caused by the concussive and sub-concussive impacts experienced by former NFL Football players.2 " Class Action Settlement Agreement , https://www.nflconcussionsettlement.com/Documents.aspx, at 1 (last updated June 18, 2018). It is important to note that the Settlement Agreement explicitly carves out any policies under the League's Collective Bargaining Agreement (CBA); players must pursue claims under these "Original Policies" separately.3 The Settlement Agreement further provides that the original lawsuits "[sought] to hold the NFL Parties responsible for ... [failing] to warn and protect them from the long term health problems associated with concussions ...." Id. (emphasis added). The Settlement Agreement allows for a "Monetary Award" for "Qualifying Diagnoses made by properly credentialed physicians." Id. at 32. Those Qualifying Diagnoses include: (a) Level 1.5 Neurocognitive Impairment; (b) Level 2 Neurocognitive Impairment; (c) Alzheimer's Disease
; (d) Parkinson's Disease ; (e) Death with Chronic Traumatic Encephalopathy (CTE); and (f) Amyotrophic Lateral Sclerosis (ALS). Id.
The Settlement Agreement provides a Baseline Assessment Program (BAP),4 whereby players can receive a "baseline assessment examination" from "Qualified BAP Providers" (the "Providers"). Id. at 20, 21. The exam includes: (1) a neuropsychological exam that must be done by both a board-certified neuropsychologist and a board-certified clinical neuropsychologist; and (2) a basic neurological exam performed by a board-certified neurologist. Id. In order to receive a qualified diagnosis for Level 1.5 or Level 2 Neurocognitive Impairment, the diagnosis must be agreed upon by both the neuropsychologist and the neurologist. Id. In the event that no agreement is reached, the BAP Administrator may require that (1) the Providers reconvene to come to a definitive conclusion, (2) another BAP examination be completed, or (3) the matter be referred to an "Appeals Advisory Panel." Id. at 30. The decision of the Appeals Advisory Panel is "final and binding."5 Id. In the event a player receives a Qualified Diagnosis, his ultimate compensation will depend upon both his age6 at diagnosis and his number of eligible seasons.7 The Settlement Agreement explicitly provides that "All Monetary Awards will be subject to downward adjustments." Id. at 36. In turn, if a player receives a qualified diagnosis, he is very likely to receive a revised-down Monetary Award. Of course, in the event that he does not receive a qualified diagnosis and has exhausted all appeals, he will not receive any compensation.
11 U.S.C. § 522(d)(10)(C) and (E)
The State of Florida has generally opted out of federal bankruptcy exemptions,8 prohibiting its debtors from claiming federal exemptions pursuant to Section 522(d) ; notwithstanding, F.S. § 222.201 provides an exception to that general rule, whereby debtors may claim exemptions under Section 522(d)(10). 11 U.S.C. § 522(d)(10) ; Fla. Stat. § 222.201.
Section 522(d)(10), in relevant part, provides exemptions for the following:
At issue here is whether the proceeds from the Settlement Agreement fall into either of these exemptions. The Court finds that the Settlement Agreement provides disability benefits which are exempt under Subsection (C). There is thus no need to assess whether the benefits are exempt under Subsection (E).
The Debtor's argument misconstrues some important aspects of the Settlement Agreement. Most importantly, Debtor conflates benefits under the Original Policies with those under the Settlement Agreement. Debtor proceeds to lay out the requirements for the NFL CBA Neurocognitive Disability Benefit, suggesting that his injuries fall squarely within its scope; however, the benefits in question are not those pursuant to the Original Policies. In fact, the Settlement Agreement explicitly carves out the Original Policies, as the Trustee outlines in her argument. Nevertheless, the Settlement Agreement establishes a new basis for contractual benefits, thereby creating a new and separate disability policy (the "New and Separate Disability Policy").
Both at hearing and in her Objection [ECF 204], the Trustee relied heavily on Chesley v. Woodard , 526 B.R. 888, 895 (M.D. Fla. 2014), which she claims is dispositive of the issue. In Chesley , the court analyzed whether proceeds from a tort claim settlement would be exempt under § 522(d)(10)(C), and provided that: "for the exemption to apply ... it must be established that (1) the proceeds are disability income benefits and (2) these benefits are under a policy." Chesley , 526 B.R. at 895. There, the court held that the benefits were not exemptible under § 522(d)(10)(C) because the Debtor did not show that the benefits were pursuant to a disability policy. Id. at 896. Similarly, the Trustee suggests that the NFL Settlement Agreement is simply resolving a tort claim, for which there are no exemptions under applicable Florida law. In her Objection, the Trustee provides an exhibit that includes all instances of the word "disability," and its relevant derivatives, within the Settlement Agreement. The exhibit includes multiple sections, which carve out and preserve the Original Policies. The Trustee gives particular weight to Section 18.5, which in relevant part provides that: "this Settlement Agreement does not alter the showing that Settlement Class Members must demonstrate to pursue successful claims for worker's compensation and/or successful claims alleging entitlement to NFL CBA Medical and Disability Benefits ." (emphasis in original settlement agreement).
Nevertheless, the Trustee's argument fails to see the forest for the trees. The Settlement Agreement establishes a new and separate pool of funds, distinct from those established in the Original Policies, and the language within the Settlement Agreement, along with its overall structure, is undeniably indicative of a disability policy. The Settlement Agreement describes the Debtor's injury as a "Level 1.5 or Level 2 Neurocognitive Impairment;" a "neurocognitive impairment" falls within even the narrowest interpretation of the word "disability." Additionally, it is important to note the fact that...
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