Abdullah Abdul-Rahim, et al v. John LaBarge

Filing

OPINION FILED - THE COURT: Robert J. Kressel, Arthur B. Federman and Charles L. Nail, Jr. AUTHORING JUDGE:Robert Kressel (PUBLISHED) [3955717] [12-6037]

United States Bankruptcy Appellate Panel
FOR THE EIGHTH CIRCUIT

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No. 12-6037
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In re:

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Abdullah I. Abdul-Rahim, formerly
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known as Larry Hickson, and
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Stephanie A. Abdul-Rahim,
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Debtors.
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Abdullah I. Abdul-Rahim and
* Appeal from the United States
Stephanie A. Abdul-Rahim
* Bankruptcy Court for the Eastern
* District of Missouri
Debtors -Appellants,
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v.
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John V. LaBarge, Jr.,
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Trustee - Appellee.
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Submitted: September 12, 2012
Filed: September 21, 2012
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Before KRESSEL, Chief Judge, FEDERMAN and NAIL, Bankruptcy Judges.
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KRESSEL, Chief Judge.

Appellate Case: 12-6037

Page: 1

Date Filed: 09/21/2012 Entry ID: 3955717

The bankruptcy court1 denied the debtors a claimed exemption in an
unliquidated personal injury claim. On appeal, the debtors argue that the Eighth
Circuit precedent relied upon by the bankruptcy court is erroneous and we should
disregard it and reverse. We decline the debtors’ invitation and affirm the bankruptcy
court.
BACKGROUND
The background of this case is simple. The debtors filed a chapter 13 petition
on August 3, 2011, and in an amended schedule C, claimed a personal injury claim
as exempt under Mo. Rev. Stat. § 513.427 and Missouri common law. The trustee
objected to the exemption and the bankruptcy court, relying on the Eighth Circuit’s
opinion in Benn v. Cole (In re Benn), 491 F.3d 811 (8th Cir. 2007), disallowed the
exemption.
DISCUSSION
The disposition of this appeal is equally simple. The debtors rely first on Mo.
Stat. § 513.427. However, the Eighth Circuit explicitly held that that section was not
an exemption statute. Benn, supra. It said “section 513.427 opts out of the federal
exemptions listed in 11 U.S.C. § 522(d), but announces no new exemptions under
Missouri law. The statute simply provides that where another Missouri statute
specifies that certain property is exempt from attachment and execution, then a debtor
may exempt that property from the bankruptcy estate.” Benn, 491 F.3d at 814.
The debtors alternatively argue that they can exempt their personal injury claim
under Missouri “common law.” However, the Eighth Circuit in Benn also held that

The Honorable Kathy A. Surratt-States, United States Bankruptcy Judge
for the Eastern District of Missouri.
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Appellate Case: 12-6037

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Date Filed: 09/21/2012 Entry ID: 3955717

“in the context of 11 U.S.C. §522, [exemption] refers to laws enacted by the
legislative branch which explicitly identify property that judgment debtors can keep
away from creditors for reasons of public policy.” Benn, 491 F.3d at 814 (citations
omitted). By definition, common law does not meet the Eighth Circuit’s requirement
that an exemption be created by the legislative branch. At bottom, the debtors are
confusing the concept of a bankruptcy exemption with a creditor’s inability to attach
certain assets because of their inchoate nature.2
The debtors lastly have a litany of arguments based on Supreme Court opinions
from Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938) through Butner v. United
States, 440 U.S. 48 (1979) and the Constitution’s bankruptcy clause’s uniformity
requirement. However, what the debtors fail to appreciate is that in Benn, the Eighth
Circuit was interpreting federal law, specifically what Congress meant when it used
the word “exemption” throughout § 522.
CONCLUSION
Because the debtors’ arguments raise issues already decided by the Eighth
Circuit, we are compelled by principles of stare decisis to affirm the bankruptcy
court’s disallowance of the debtors’ exemption.

In fact, while the debtors refer us to Missouri cases that they argue make
personal injury claims exempt, they do not use the word exempt, but only hold that
such claims are not attachable because of their contingent or unliquidated nature.
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Appellate Case: 12-6037

Page: 3

Date Filed: 09/21/2012 Entry ID: 3955717