FILED JUN 30 2015 SUSAN M. SPRAUL, CLERK 1 NOT FOR PUBLICATION U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT 2 3 UNITED STATES BANKRUPTCY APPELLATE PANEL 4 OF THE NINTH CIRCUIT 5 In re: ) BAP No. AZ-14-1503-PaJuKi ) 6 CHRISTINA M. CLINE and ) Bankr. No. 13-19488 JASON H. CLINE, ) 7 ) Debtors. ) 8 ___________________________________) ) 9 ) CHRISTINA M. CLINE; ) 10 JASON H. CLINE, ) ) 11 Appellants, ) ) 12 v. ) M E M O R A N D U M1 ) 13 JILL H. FORD, Chapter 7 Trustee, ) ) 14 Appellee. ) ___________________________________) 15 Argued and Submitted on June 19, 2015 16 at Phoenix, Arizona 17 Filed - June 30, 2015 18 Appeal from the United States Bankruptcy Court for the District of Arizona 19 Hon. Daniel P. Collins, Chief Bankruptcy Judge, Presiding 20 21 Appearances: Lawrence D. Hirsch of Parker Schwartz, PLLC argued for appellants Christina and Jason Cline; Steven D. 22 Nemecek of Steve Brown & Associates, LLC argued for appellee Jill H. Ford, Chapter 7 Trustee. 23 24 Before: PAPPAS, JURY, and KIRSCHER, Bankruptcy Judges. 25 26 1 This disposition is not appropriate for publication. 27 Although it may be cited for whatever persuasive value it may have (see Fed. R. App. P. 32.1), it has no precedential value. See 9th 28 Cir. BAP Rule 8024-1.
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1 Chapter 72 debtors Christina and Jason Cline (“Debtors”) 2 appeal the order of the bankruptcy court sustaining the objection 3 filed by chapter 7 trustee, Jill H. Ford (“Trustee”), to Debtors’ 4 claim of exemptions. We AFFIRM. 5 I. FACTS 6 Debtors lived in Missouri for ten years before moving to 7 Arizona in the summer of 2013. On November 18, 2013, Debtors 8 filed a chapter 7 petition. On schedule C, Debtors claimed some 9 of their property exempt under § 522(d). Trustee objected to 10 Debtors’ attempt to use the exemptions provided under § 522(d), 11 arguing that, pursuant to § 522(b)(3)(A), Debtors were limited to 12 claiming those exemptions allowed under Missouri law. 13 The parties agreed that, applying § 522(b)(3)(A) and Mo. Rev. 14 Stat. § 513.427, Debtors were required to look to Missouri state 15 law to determine their exemptions. The parties disputed, however, 16 what Missouri law provided. Debtors argued that the Missouri 17 statutes only allowed that State’s exemptions to be used by its 18 residents. Because when they filed their bankruptcy petition they 19 were residents of Arizona, Debtors insisted they were precluded 20 from claiming exemptions under Missouri law. As a result, 21 pursuant to the “hanging paragraph” of § 522(b)(3), Debtors 22 contended they were entitled to claim the federal exemptions. 23 Trustee countered that nothing in the Missouri exemption 24 statutes, nor in the case law interpreting those statutes, 25 required a debtor to be a resident of Missouri in order to claim 26 27 2 Unless otherwise indicated, all chapter, section and rule references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and 28 to the Federal Rules of Bankruptcy Procedure, Rules 1001-9037.
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1 that State’s exemptions. Therefore, Trustee argued, Debtors were 2 compelled to use the Missouri exemptions. 3 The hearing on Trustee’s objection occurred on May 8, 2014, 4 at the conclusion of which the bankruptcy court took the issues 5 under advisement. On May 30, 2014, the court entered its order 6 sustaining Trustee’s objection to Debtors’ claimed exemptions. In 7 the order the bankruptcy court concluded that “there is no 8 language in Missouri’s current opt-out statute or exemption 9 statutes indicating that an individual must be a resident of 10 Missouri to claim Missouri exemptions. See Mo. Rev. Stat. 11 §§ 513.427, 513.430, 513.440, [and] 513.475. If Missouri’s 12 legislature wanted its exemption statutes to only be available to 13 Missouri residents[] it could have said so.”3 In re Cline, 14 2014 WL 2463018, at *2 (Bankr. D. Ariz. May 30, 2014). 15 On June 4, 2014, Debtors’ filed a “Motion to Reconsider Order 16 Sustaining Objection to Exemptions.” At an October 15, 2014 17 hearing, the bankruptcy court announced it would deny the motion. 18 An order confirming its decision was entered on October 16, 2014. 19 Debtors filed a timely notice of appeal. 20 II. JURISDICTION 21 The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334 22 and 157(b)(2)(B). We have jurisdiction under 28 U.S.C. § 158. 23 24 25 3 At the hearing on Trustee’s objection the court considered Debtors’ proposal to certify this question to the Missouri Supreme 26 Court due to the lack of case law addressing the issue; however, Trustee objected to this course of action. In the court’s order 27 it noted Trustee’s objection and declined to certify the question. The parties did not ask this Panel to certify the question to the 28 Missouri Supreme Court.
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1 III. ISSUE 2 Whether a debtor must be a current resident of Missouri to 3 claim Missouri exemptions. 4 IV. STANDARD OF REVIEW 5 We review a bankruptcy court’s interpretation of state 6 exemption law and the Bankruptcy Code de novo. Hopkins v. 7 Cerchione (In re Cerchione), 414 B.R. 540, 545 (9th Cir. BAP 8 2009). De novo review requires that “we consider a matter anew, 9 as if no decision had been rendered previously.” Mele v. Mele 10 (In re Mele), 501 B.R. 357, 362 (9th Cir. BAP 2013). 11 V. DISCUSSION 12 A. Debtors’ Arguments on Appeal 13 Debtors argue that Missouri law allows only residents of that 14 State to claim its exemptions. Therefore, they should be entitled 15 to claim the federal exemptions under § 522(d) because they are 16 now residents of Arizona. See § 522(b)(3) (providing “[i]f the 17 effect of the domiciliary requirement under subparagraph (A) is to 18 render the debtor ineligible for any exemption, the debtor may 19 elect to exempt property that is specified under subsection 20 (d).”). Debtors argue that even though Missouri’s “opt out 21 statute” and its exemption statutes contain no express reference 22 to limiting their use to “residents” of the State, that 23 requirement has been the law in Missouri for over one hundred 24 years. 25 B. Applicable Law and Disposition 26 A bankruptcy estate is created upon the filing of a petition 27 that consists of all of the debtor’s interest in property. 28 § 541(a). Section 522(b)(1) allows the debtor to exempt certain
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1 interests in property to remove them from the bankruptcy estate, 2 “and hence from the creditors[] for the benefit of the debtor.” 3 Owen v. Owen, 500 U.S. 305, 308 (1991). A debtor may elect 4 between the federal exemptions provided in § 522(d) or exemptions 5 provided by the debtor’s State, “unless the State law that is 6 applicable to the debtor under paragraph (3)(A) specifically does 7 not so authorize.” § 522(b)(2). As mentioned above, 8 § 522(b)(3)(A) provides the means to determine the State law that 9 is “applicable to the debtor” based upon the debtor’s domicile 10 during the specified time period before the filing of the 11 petition.4 “For purposes of § 522(b) ‘domicile’ means actual 12 residence coupled with a present intention to stay there.” 13 Drummond v. Urban (In re Urban), 375 B.R. 882, 888 n.14 (9th Cir. 14 BAP 2007) (citing Lowenschuss v. Selnick (In re Lowenschuss), 15 171 F.3d 673, 684 (9th Cir. 1999)). However, if the effect of the 16 analysis under § 522(b)(3)(A) is to leave the debtor “ineligible 17 for any exemption, the debtor may elect to exempt property that is 18 specified under [§ 522(d)].” § 522(b)(3). 19 4 Section 522(b)(3)(A) provides in full: 20 (3) Property listed in this paragraph is 21 (A) subject to subsections (o) and (p), any 22 property that is exempt under Federal law, other than subsection (d) of this section, or 23 State or local law that is applicable on the date of the filing of the petition to the 24 place in which the debtor's domicile has been located for the 730 days immediately preceding 25 the date of the filing of the petition or if the debtor's domicile has not been located in 26 a single State for such 730-day period, the place in which the debtor's domicile was 27 located for 180 days immediately preceding the 730-day period or for a longer portion of such 28 180-day period than in any other place[.]
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1 In this case, in applying § 522(b)(3)(A), the parties agree 2 that Missouri is Debtors’ domicile and that Missouri provides the 3 applicable law. Missouri has opted out of the Bankruptcy Code’s 4 exemption scheme. In re Rosen, 354 B.R. 902, 902-03 (Bankr. E.D. 5 Mo. 2006) (citing MO. REV. STAT. § 513.427 and stating “Missouri has 6 exercised its option under []§ 522(b)(2) to opt out of the 7 Bankruptcy Code’s exemption scheme. Thus, a debtor domiciled in 8 Missouri may only exempt property from a bankruptcy estate that is 9 exempt from execution or attachment under Missouri law or federal 10 law outside the Bankruptcy Code.”); see also Abdul-Rahim v. 11 LaBarge (In re Abdul-Rahim), 720 F.3d 710, 712 (8th Cir. 2013). 12 In particular, Missouri’s opt out statute provides: 13 Every person by or against whom an order is sought for relief under Title 11, United 14 States Code, shall be permitted to exempt from property of the estate any property that is 15 exempt from attachment and execution under the law of the state of Missouri or under federal 16 law, other than Title 11, United States Code, Section 522(d), and no such person is 17 authorized to claim as exempt the property that is specified under Title 11, United 18 States Code, Section 522(d). 19 MO. REV. STAT. § 513.427. 20 As relevant here, Missouri’s personal property exemption 21 statute contains a list of items that may be exempted by debtors 22 in the State, providing that “[t]he following property shall be 23 exempt from attachment and execution to the extent of any person’s 24 interest therein . . . .” MO. REV. STAT. § 513.430. Moreover, the 25 Missouri homestead exemption statute, in relevant part, reads: 26 “[t]he homestead of every person . . . not exceeding the value of 27 fifteen thousand dollars . . . shall . . . be exempt from 28 attachment and execution.” MO. REV. STAT. § 513.475.
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1 The Missouri Supreme Court instructs, in interpreting 2 statutes of that State, the “‘[c]ourt’s primary rule . . . is to 3 give effect to the legislative intent as reflected in the plain 4 language of the statute at issue.’” Ivie v. Smith, 439 S.W.3d 5 189, 202 (Mo. 2014) (en banc) (quoting Parktown Imports, Inc. v. 6 Audi of Am., Inc., 278 S.W.3d 670, 672 (Mo. 2009) (en banc)). 7 That is, “‘words should be given their plain and ordinary meaning 8 whenever possible.’” Ivie, 439 S.W.3d at 202 (quoting State ex 9 rel. Jackson v. Dolan, 398 S.W.3d 472, 479 (Mo. 2013) (en banc)). 10 Further, “[a] court may not add words by implication to a statute 11 that is clear and unambiguous.” Asbury v. Lombardi, 846 S.W.2d 12 196, 202 n.9 (Mo. 1993) (en banc). 13 Interpreting the statutes involved in this appeal according 14 to their plain language, we conclude that Missouri law does not 15 require an individual to be a current resident of the State in 16 order to seek the protection of its real and personal property 17 exemptions. Indeed, a review of the relevant statutes shows that 18 the word “resident” is never used. Instead, the Missouri 19 legislature employs the more inclusive phrases “every person” and 20 “any person[]” to describe to whom the statutes apply. See 21 MO. REV. STAT. §§ 513.427, 513.430, 513.475. Given the plain and 22 ordinary meaning of the words used, and mindful of the Missouri 23 Supreme Court’s admonition that we not add words by implication to 24 these clear and unambiguous statutes, we conclude there is no 25 requirement that an individual domiciled in Missouri, pursuant to 26 § 522(b)(3)(A), must also be a current resident of the State in 27 order to use the State’s exemption laws. 28 Our conclusion is reinforced by looking to the law of other
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1 States concerning the beneficiaries of their exemptions. For 2 example, Kansas’s personal property exemption statutes clearly 3 identify and require an individual to be a State resident to claim 4 its exemptions. See KAN. STAT. ANN. § 60-2313 (providing “every 5 person residing in this state shall have exempt . . . .”) 6 (emphasis added). “Under the express language of this statute, 7 Kansas personal property exemptions are not available to debtors 8 who are not residents of Kansas.” In re Nickerson, 375 B.R. 869, 9 871 (Bankr. W.D. Mo. 2007). In re Nickerson involved a debtor who 10 had moved from Kansas to Missouri before filing for bankruptcy, 11 but who was required to look to Kansas law pursuant to 12 § 522(b)(3)(A) to determine her exemptions in that bankruptcy 13 case. The bankruptcy court in Missouri reviewed the Kansas 14 exemption statute cited above and concluded that it required a 15 debtor to be a Kansas resident in order to utilize that State’s 16 exemption laws regardless of the fact that the debtor was 17 domiciled in Kansas pursuant to § 522(b)(3)(A). Id. at 871. 18 Based upon this conclusion, the bankruptcy court held that the 19 debtor could utilize the federal exemptions under § 522(d) because 20 she was not then a resident of Kansas, but rather, a resident of 21 Missouri. Id. at 873. 22 Another example of a State that requires an individual to be 23 a resident in order to utilize its exemptions is Arizona. 24 Arizona’s opt out statute provides: “[i]n accordance with [] 25 § 522(b), residents of this state are not entitled to the federal 26 exemptions provided in [] § 522(d). Nothing in this section 27 affects the exemptions provided to residents of this state by the 28 constitution or statues of this state.” ARIZ. REV. STAT. § 33-1133
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1 (emphasis added). Interpreting this statute, a bankruptcy court 2 has held that “Arizona’s opt-out exemption statute renders the 3 nonresident [d]ebtor ineligible for the state exemptions . . . .” 4 In re Rody, 468 B.R. 384, 391 (Bankr. D. Ariz. 2012). 5 In contrast to Kansas and Arizona, Missouri has no express 6 requirement in its statutes that an individual must be a resident 7 of the State in order to utilize its exemptions. We conclude 8 therefore that there is no such requirement. 9 Debtors cite no relevant cases to the Panel that have held 10 that an individual must be a resident of Missouri in order to 11 utilize the State’s exemption laws, and our review of the case law 12 has found no such authority.5 Instead, Debtors rely on Stotesbury 13 v. Kirtland, 35 Mo. App. 148 (Mo. Ct. App. 1889), Mignogna v. 14 Chiaffarelli, 151 Mo. App. 359 (Mo. Ct. App. 1910), and Ferneau v. 15 Armour & Co., 303 S.W.2d 161 (Mo. Ct. App. 1957) for the 16 conclusion that the residency requirement for Missouri’s exemption 17 statutes has been the law for over one hundred years. But, upon 18 close reading, these decisions do not support Debtors’ position. 19 Stotesbury and Mignogna interpret Missouri exemption statutes that 20 are no longer in effect. Because of this, the courts’ statements 21 of the law as it was in 1889 and 1910 are of no use to Debtors in 22 23 5 Admittedly, we also found no cases, and were cited to none by Trustee, that expressly decided that an individual need not be 24 a current resident of Missouri to claim its exemptions. Trustee cites, and the court discussed in its order, In re Thompson, 25 2009 WL 2461027 (Bankr. W.D. Mo. Aug. 10, 2009) because it implicitly supports their conclusion. The court in that case 26 ordered the debtor, who was a nonresident of Missouri, to utilize Missouri exemptions over debtor’s objection without discussing 27 whether a nonresident of the State could do so under Missouri law. Because there was no discussion of this issue in In re Thompson we 28 find it unpersuasive in resolving this appeal.
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1 this contest. 2 Ferneau examines and applies Mo. Rev. Stat. § 525.030, 3 Missouri’s garnishment statute. The current statute, in relevant 4 part, provides: “[t]he maximum part of the aggregate earnings of 5 any individual . . . which is subject to garnishment may not 6 exceed (a) twenty five percentum, or, . . . (c) if the employee is 7 the head of family and a resident of this state, ten percentum, 8 whichever is less.” MO. REV. STAT. § 525.030 (emphasis added). As 9 can be seen, this statute includes an express “resident” 10 requirement. Therefore, it should be no surprise the court in 11 Ferneau noted this requirement that the individual seeking to 12 benefit from the statute actually reside in the State.6 However, 13 as the Missouri bankruptcy court observed, the garnishment statute 14 is not an exemption statute. In re Parsons, 437 B.R. 854, 858 15 (Bankr. E.D. Mo. 2010) (“While true . . . [Mo. Rev. Stat. 16 § 525.030] was used as an exemption statute in times past, in the 17 light of the holding in In re Benn, this can no longer be the 18 case. All debtors henceforth must make do with the Missouri 19 exemptions where the Missouri Legislature has explicitly 20 identified property that a judgment debtor can keep away from 21 creditors . . . .”) (citing Benn v. Cole (In re Benn), 491 F.3d 22 811, 813 (8th Cir. 2007). And, most importantly, the garnishment 23 statute contains a clear indication that the Missouri legislature 24 25 6 The court in Ferneau never quotes Mo. Rev. Stat. § 525.030 as it was in 1957. However, based on the court’s summary of the 26 law in the opinion it appears that it was similar, if not identical, to the current version of the statute. See Ferneau, 27 303 S.W.2d at 167 (“Defendant, a non-resident of Missouri, cannot take advantage of the provisions of Section 525.030 . . . under 28 which wages in excess of 10% of the amount due are exempt.”).
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1 knew how to limit the applicability of the State’s laws to 2 residents when appropriate. The legislature did not do so in 3 adopting the bankruptcy opt out statute or in the specific 4 exemption statutes. We decline to read such a requirement into 5 those laws.7 6 Finally, Debtors rely on statements of the law by courts in 7 factually distinguishable cases. For example, Debtors cite to 8 In re Benn, wherein the Eighth Circuit stated that Mo. Rev. Stat. 9 § 513.427 “restrict[s] Missouri residents to the exemptions 10 available under Missouri law . . . .” 491 F.3d at 813 (emphasis 11 added).8 Of course, this statement of the law is correct in that 12 a resident of Missouri is entitled to claim the State’s 13 exemptions. But there is nothing in the statutes, or cases 14 interpreting those statutes, that limit the applicability of the 15 laws solely to Missouri residents. A more accurate and complete 16 statement of the law would be that, as provided in § 522(b)(3)(A), 17 individuals domiciled in Missouri are entitled to Missouri 18 exemptions, as the bankruptcy court observed in In re Rosen, 19 354 B.R. at 902-03. The cases cited by Debtors, which recite that 20 residents of Missouri may claim Missouri exemptions, simply did 21 22 7 Exemption statutes in Missouri are to be construed liberally in favor of debtors. Hardy v. Fink (In re Hardy), 23 ___ F.3d ___, 2015 WL 3466015, at *2 (8th Cir. June 2, 2015). But “[e]ven though Missouri exemption statutes are liberally 24 construed, ‘a court must be careful not to depart substantially from the express language of the exemption statute or extend the 25 legislative grant.’” In re Shelby, 232 B.R. 746, 765 (Bankr. W.D. Mo. 1999) (quoting In re Goertz, 202 B.R. 614, 618 (Bankr. W.D. 26 Mo. 1996)). 27 8 Debtors cite other cases that have quoted this portion of the In re Benn opinion as well. E.g., In re Haines, 528 B.R. 912, 28 918 (Bankr. W.D. Mo. 2015).
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1 not involve nonresident debtors attempting to utilize Missouri 2 exemptions and whether a nonresident could claim Missouri 3 exemptions. Therefore, the cases are distinguishable and of no 4 assistance in this appeal. 5 VI. CONCLUSION 6 After de novo review, for the reasons explained above, we 7 conclude that the bankruptcy court did not err in sustaining 8 Trustee’s objection to Debtors’ claimed exemptions under § 522(d). 9 Instead, Debtors are limited to the exemptions provided in the 10 Missouri exemption statutes even though they were not residents of 11 that State when they filed the bankruptcy petition. We therefore 12 AFFIRM the order of the bankruptcy court. 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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