Mpm Financial Group, Inc. v. Morton, No. 2007-SC-000652-DG.
| Court | United States State Supreme Court (Kentucky) |
| Writing for the Court | Venters |
| Citation | 289 S.W.3d 193 |
| Parties | MPM FINANCIAL GROUP, INC., Appellant v. Michael P. MORTON, Appellee. |
| Docket Number | No. 2007-SC-000652-DG. |
| Decision Date | 25 June 2009 |
v.
Michael P. MORTON, Appellee.
[289 S.W.3d 195]
Carroll Morris Redford III, Susan Yuk Wo Chun, Miller, Griffin and Marks, PSC, Lexington, KY, Counsel for Appellant.
Charles William Arnold, Lexington, KY, Counsel for Appellee.
John T. McGarvey, M. Thurman Senn, Morgan and Pottinger, P.S.C., Debra Kaye Stamper, Kentucky Bankers Association, General Counsel, Louisville, KY, Counsel for Amicus Curiae: Kentucky Bankers Association.
Opinion of the Court by Justice VENTERS.
This case is before this Court on a grant of discretionary review to determine whether KRS 427.170, which incorporates by reference the federal bankruptcy exemptions of 11 U.S.C. § 522(d), applies only to debtors in bankruptcy proceedings, or whether it renders those exemptions available to all individual debtors in Kentucky, including those who are not involved in bankruptcy proceedings. The Court of Appeals concluded that the plain language of the statute was not ambiguous, and since it failed by express language to limit its application to debtors in bankruptcy, it applied to all individual debtors, the non-bankrupt as well as the bankrupt. We disagree, and accordingly reverse.
The material facts in this case were not disputed, and are set forth below. First, we provide the history of the statutes involved, followed by a recitation of the pertinent procedural facts.
Our analysis of the issue requires an examination of KRS 427.170 before and after its amendment in 2005, and its relationship to federal bankruptcy proceedings. KRS 427.150, KRS 427.160 and KRS 427.170, were enacted in 1980, as a legislative response to the 1978 revision of the federal bankruptcy code which was codified as 11 U.S.C. § 522(b)(1) and (2). That revision provided that an individual debtor in bankruptcy could choose to exempt from his or her estate either the exemptions provided under the federal bankruptcy code, or the exemptions available under the debtor's state law, unless that state had enacted legislation prohibiting such a choice. Each state was thus given the option of making the federal exemptions unavailable to debtors in bankruptcy, thereby limiting those debtors to the same exemptions provided by state law to non-bankrupt debtors domiciled in the state. By virtue of KRS 427.170, Kentucky exercised its option, which in its original form, read as follows:
An individual debtor domiciled in this state is not authorized to exempt from property of said debtor's estate the property specified under subsection (d) of section 522 of The Bankruptcy Code of 1978, 92 Stat. 2549 (1978), Public law 95-598.
The title given to the statute was "Federal Bankruptcy Code Exemptions Not to Apply in Kentucky." Obviously, by its enactment of KRS 427.170, the General Assembly expressed the policy that Kentucky
would "opt-out" of the exemptions otherwise available to bankrupt debtors. It should also be noted that KRS 427.150 and 427.160 enumerated some of the exemptions that would be available to Kentucky debtors in bankruptcy court, in lieu of those identified in 11 U.S.C. § 522(d). Although in its original form KRS 427.170 did not expressly limit its application to debtors in bankruptcy, the statute made no sense outside the context of a bankruptcy proceeding. There was no other context in which the non-availability of the federal bankruptcy exemptions mattered.
In 2005, Congress again made substantial changes to the federal bankruptcy code by way of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). At the same time, the General Assembly reconsidered the various exemptions allowed under our statutes. Although broader revisions of our statutory exemptions were proposed, the legislature passed a revision of KRS 427.170 which simply deleted the word "not" from the statute, thereby converting Kentucky from an "opt-out" state to an "opt-in" state with respect to the exemptions provided by 11 U.S.C. § 522(d). Thus, in its present form, the statute reads:
An individual debtor domiciled in this state is authorized to exempt from property of said debtor's estate the property specified under 11 U.S.C. § 522(d).1 The statute was re-titled: "Federal Bankruptcy Code Exemptions Applicable in Kentucky."
Appellant, MPM Financial Group, Inc. (MPM), sued Appellee, Michael P. Morton, in the Fayette Circuit Court, alleging theft and embezzlement. On January 5, 2004, judgment was entered against Morton for the sum of $14,000.00, plus court costs and interest. After entry of the judgment, Morton could not be located, and MPM's effort to execute the judgment was hindered accordingly. Eventually, Morton was found and MPM sought sources of funds or other property that could be garnished or attached to satisfy the judgment. Morton had purchased a private disability insurance policy from UNUM Provident and was currently receiving benefits under that policy amounting to $3750 per month. In July 2005, MPM served an order of garnishment on UNUM Provident. On August 11, 2005, Morton filed an Affidavit to Challenge Garnishment, claiming that the payments were "disability benefits" and were thus "totally exempt (from garnishment) per KRS 427.150." KRS 427.150(d) allows for an exemption of property consisting of "compensation of the loss of future earnings". A month later, he filed a "Notice of Exercise of Exemptions per KRS 427.170" in which he asserted KRS 427.170 as an additional basis for claiming an exemption of the policy benefits. 11 U.S.C. § 522(d) exempts from the bankrupt debtor's estate disability insurance policy benefits.
Eventually, the trial court rejected Morton's claim that the policy proceeds were exempted by KRS 427.150, reasoning that disability policy proceeds are not the same thing as compensation for future loss of earnings. However, the trial court granted the challenge to the garnishment under KRS 427.170, holding that exemptions allowed under 11 U.S.C. § 522(d), and incorporated by reference into KRS 427.170, are available to any individual debtor domiciled in Kentucky. The Court of Appeals affirmed that conclusion. It declined to
consider Morton's argument that trial court erred in its holding with respect to KRS 427.150, on the grounds that the issue had not been properly preserved by the filing of a cross appeal. MPM sought discretionary review of the Court...
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Jenkins v. Commonwealth, 2014-SC-000353-MR
...construction is that the intention of the legislature should be ascertained and given effect.” “MPM Financial Group, Inc. v. Morton, 289 S.W.3d 193 (Ky.2009).14 As we have noted many times, our Penal Code was heavily influenced by the Model Penal Code. See, e.g., Johnson v. Commonwealth, 44......
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Beth Lewis Maze & Unknown Similarly Situated Purchasers Contracts v. Bd. of Dirs. for the Commonwealth Postsecondary Educ. Prepaid Tuition Trust Fund, 2017-SC-000233-DG
...to ascertain the legislature’s meaning, such as legislative history and public policy considerations. MPM Financial Group Inc. v. Morton, 289 S.W.3d 193, 198 (Ky. 2009). Further, we "read the statute as a whole, and with 559 S.W.3d 364other parts of the law of the Commonwealth, to ensure th......
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Jones v. Perry Cnty. Fiscal Court, Civil Action No. 6: 15–050–DCR
...7 superfluous, contrary to traditional canons of statutory construction recognized by Kentucky courts. See MPM Fin. Grp. v. Morton, 289 S.W.3d 193, 198 (Ky.2009) (Traditional rules of statutory construction counsel against reading statutes so that they are "void of any significant meaning o......
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Jefferson Cnty. Bd. of Educ. v. Fell, No. 2011–SC–000658–DGE.
...construction is that the intention of the legislature should be ascertained and given effect.” MPM Financial Group, Inc. v. Morton, 289 S.W.3d 193, 197 (Ky.2009); Saxton v. Commonwealth, 315 S.W.3d 293, 300 (Ky.2010) (“Discerning and effectuating the legislative intent is the first and card......
-
Jenkins v. Commonwealth, 2014-SC-000353-MR
...construction is that the intention of the legislature should be ascertained and given effect.” “MPM Financial Group, Inc. v. Morton, 289 S.W.3d 193 (Ky.2009).14 As we have noted many times, our Penal Code was heavily influenced by the Model Penal Code. See, e.g., Johnson v. Commonwealth, 44......
-
Beth Lewis Maze & Unknown Similarly Situated Purchasers Contracts v. Bd. of Dirs. for the Commonwealth Postsecondary Educ. Prepaid Tuition Trust Fund, 2017-SC-000233-DG
...to ascertain the legislature’s meaning, such as legislative history and public policy considerations. MPM Financial Group Inc. v. Morton, 289 S.W.3d 193, 198 (Ky. 2009). Further, we "read the statute as a whole, and with 559 S.W.3d 364other parts of the law of the Commonwealth, to ensure th......
-
Jones v. Perry Cnty. Fiscal Court, Civil Action No. 6: 15–050–DCR
...7 superfluous, contrary to traditional canons of statutory construction recognized by Kentucky courts. See MPM Fin. Grp. v. Morton, 289 S.W.3d 193, 198 (Ky.2009) (Traditional rules of statutory construction counsel against reading statutes so that they are "void of any significant meaning o......
-
Jefferson Cnty. Bd. of Educ. v. Fell, No. 2011–SC–000658–DGE.
...construction is that the intention of the legislature should be ascertained and given effect.” MPM Financial Group, Inc. v. Morton, 289 S.W.3d 193, 197 (Ky.2009); Saxton v. Commonwealth, 315 S.W.3d 293, 300 (Ky.2010) (“Discerning and effectuating the legislative intent is the first and card......