By order of the Bank ruptcy Appe llate Panel, the prec edential effec t of t his de c isi on is l im ite d to thec as e an d p ar tie s p ur su an t to 6th C i r
. B A P L B R 8 0 1 3 -1 (b). S

ee a l s o 6 th C i r
. B

A P L B R 8 0 1 0 -1 (c).
F ile Nam e: 08b0011n.06
BA NK RU P TC Y A P P ELLA TE P AN EL OF THE SI XT H C IR CU IT
I n r e : D A N I E L W

. B R O W N A N D L O R A J. BROWN,
De bto rs
.

______________________________________ L ORA J . BROWN,

Appellant/Cross-Appe llee,

v. JEF F A. MO YE R, C HA P TE R 7 B AN KR UPT CY TRUSTEE, Ap pe lle e /Cr os s- Ap pe lla nt.

______________________________________ ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Nos. 07-8061; 07-8066

Appea l from the United States B ankruptc y Court fo r t he Wes te rn

Di str ic t of

Mic hig an, a t G ra

nd Ra pid s. No. 06-05085. Submit ted: May

14, 2008
Dec ided and F iled: J une 11, 2008
B e fo re : F UL TO N, Mc I VO R, a nd SCO TT , B ank

ru ptc y Ap pe llate Pane l Judg e s.

____________________ CO UN SEL
O N B RI E F: M i t c h e l l J

. Ha l l , J ef f A

. M o y er , T HE BANK R UP T C Y G R OU P , I

NC

. , W y o m i n g, Michig an, for

Appellee . L ora J. Brown, Jenison, Michiga n, pro se.- 2- ____________________ OP IN ION

____________________ J OSEPH M. SC OTT, JR ., Ba nkru p tc y A p p e ll a te Pa n e l Ju d g e
. T h e A

p p e ll a nt/ Cr o s s - A

p p e llee (“Mr s. Br own”) appea ls the decision of t he bankr uptcy court disallowing her c laim of exemption for spousal support in the amount o f $90,000 pursua nt to 11 U.S.C . § 522(d)( 10)(D) . The Ap pe lle e /Cr os s- Ap pe lla

nt ( the “ Tr

us te e ” ) a pp e a ls the de c isi on

of the ba nk ru ptc y c ourt no t to consider the Trustee ’s supplemental brief, which was filed afte r t he briefing deadline established by the c ourt

. I. ISSU ES ON AP P EAL The issue pre sented in Case N o. 07-8061 is wheth e r th e b a nkruptcy court e rre d in disallowing Mr s. B ro wn ’s c la im of ex empt ion fo r s po us a l su

pp or t in the a mou

nt o f $ 90 ,0 00 purs ua

nt t o 11 U. S.C. § 5 22 (d )( 10 )( D) . T he iss ue pr e se nte d in Ca se No

. 07 -8 06 6 is wh e the r the c ourt e rr e d in not consideringthe Trustee ’s supplemental brief, filed afte r the briefing deadline established by the

c ourt

. II. JU RI SDI CT ION AND STANDARD OF RE VI EW
The B ankruptc y

Appellate Pane l of the Six th Circuit (“B AP”) ha s jurisdiction to h ea r and decide this appeal. 28 U.S.C. § 158(b)( 1). The United States District Court for the Western District of Mic hig an h a s a

uth or ize d a

pp e a ls t o th e B AP, and

ne ith er part y has tim e ly

e le c te d to have thi s appea l hear d by

the district court. 28 U.S.C. §§ 158(b)( 6), (c )(1) . A final order of a ba nkruptcy court ma y b e a p p e a le d b y r ig h t u n d e r 2 8 U

. S. C. § 1 5 8 ( a ) ( 1 )

. A n o r d e r is f in a l if it “‘ends the litigation on the mer its and leave s nothing for the court to do but ex ecute the judg ment.’” Midland Asphalt Corp. v. United States , 489 U.S. 794, 798, 109 S. Ct. 1494, 1497 (1989) ( citation omitted). A r uli ngon an o bje c tio n to a

de bto r’ s c la im o f e xemp tio n is a fi na l or de r f

or purp os e s o f a

pp e a l. W ic he ff v . B au mg

ar t ( In re W ic he ff) , 215 B .R. 83 9, 84 0 (B .A .P. 6th Cir . 199 8) . The c ro ss- a pp e a l,

asser tion of a “pr o cedur al def iciency” by

the bankr

uptcy court in not consider ing the Trustee ’s supplemental brief

, is in the context of the c ourt’s ruling on the debtor’ s claim of exemption.T he exact d at e i s no t cert ai n f rom t he reco rd on ap p eal

. H o wever, al o ng wi t h t he wo rds “ gi ve t o cl i ent , ” t he 1 dat e O ct ob er 17, 200 6, i s ha ndwr i t t en on t he C ons ent Judgment of D i vor ce. R ega r dl es s of t he exa ct dat e t hat t he di vor ce w as fi na l i ze d , t he b an kru p t cy co urt “ t rea t [ed ] t he o b l i ga t i o n as ha ving arisen p rep eti t i o n si nc e t ha t interp retati o n m o st fav o rs M s. B ro w n .” (A p p e llee /C ro ss-A p p e llan t’s A p p . at 2 8 9 .)

- 3- The B AP review s the bankruptc y court’s f indings of f

act f or cle ar e rror

and questions of law de novo

. Dery

v. Cumberland Cas. & Sur. Co. ( In re 5900 Assocs., Inc.) , 4 68 F .3 d 3 26 , 3 29 (6 th Cir . 2 00 6) (c itatio n o mitte d) . “ A f a c tua l de te rm inatio n is cle arl y e rr on e ou s ‘ wh e n a lth ou g h th e re is evidenc e to support it, the revie wing court on the e ntire evide nce is lef t with the definite and f

irm conviction that a mistake ha s been c ommitt ed.’” Bailey v . Suhar ( In re Bailey

) , 380 B.R.486, 488 (B .A.P. 6 th

Ci r
. 2 0 0 8 ) ( c it a ti o n s o mi tt e d )

. “ D e n o v o r e v ie w me an s th at t h e a p p e ll a te court deter mines the law indepe ndently of the trial c ourt’s dete rmination.” Treini s h v. N orwest Bank Mi nn ., N.A . (

In re Pe ria nd

ri) , 266 B.R. 651, 653 (B .A.P. 6th Ci r. 2001).

III . F AC TS
On Octobe r 13, 2006, Dr. a nd Mrs. Br own filed a

voluntary

petition for re lief under

chapte r 7 of the B ankruptc y

Co d e. S ch ed u les also wer e filed. Per sonal proper ty listed on Schedule B included Gr andville Ch ir o p r a c ti c , I n c
. a n d a “ c o ntinge nt and unliquidated” c laim, namely , “divorc e,”

eac h with “zero value ” and jointly held. Sch ed u l e I , cu rrent income, stated that Mrs. B rown wa s
r e c e i v i n g $ 1 , 1 0 0 m o n t h l y i n “ [a ]l i m o n y , m a i n t e n an c e o r s u p p o rtp ay m e n t s
. ” A s e p ar a t e S c h e d u l e J,
c ur re nt e xpe nd iture s, wa s f ile d f or e a c h d e bto r b e c a

us e the y ma int a ine d s e pa

ra te ho us e ho lds

. Statement of F inancial Af fairs listed their divorce case as “pe nding” and indicate d Dr. B rown’s separ ate a ddress, fr om 2004 to 2006, with the ex planation “moved be cause of divorce .” Ap pa re ntl y , f our d ay s a ft e r t

he fi lin g , o n O c tob e r 1 7, 20 06 , d iss olutio n o f t he parties ’ marria g e wa s finalized. A document titled “Consent of J udg ment of Divorc e” inc ludes, ea rly in the 1 ag ree ment, the following lang uag e under the hea ding “S POUSALSUPP ORT”: “Ne ither [Dr. Br own] nor [ Mrs. Br own] is entit led to s p o u s al s u p p o rt. Spousal support is foreve r bar red.” Along side th a t p ar a g r a

p h ar e h an dw r itte n , an d in it ia le d , th e w o r d s “ Se e p r o p e rty d iv is io n
. ” The proper ty division section includes the following lang uag e:

GR AN DV I L L E CH I RO PRA CTI C PC. [Dr. B rown] sha ll r etain the business of Gra ndville Chiropr actic, a

nd will pay [Mr s. B ro wn ] t

he sum of $9 0, 00 0. 00 fo r [Mr s. B ro wn ’s ] sha re of sa id b us ine ss. Sa idM r s
. B r own wa s r epre s ent ed dur i ng t he di vor ce procee di ng s by at t orn ey D awn I

. K r upp, an d D r
. B r own wa s 2

re p re se n te d b y D a n a S n o a p . T h e re c o rd o n a p p e a l d o e s n o t d isc lo se the re la tio n sh ip , i f a n y , b e tw e e n M rs . B ro w n ’s di vor ce couns el an d t he part i es ’ bank r upt cy coun s el , al t houg h i n br i ef i ng M r s
. B r own r ef

er s t o “ t he l aw f

i r m t hat represent ed m e i n m y divorce and joi nt ba nkruptcy

. ” (Ap p el l ant / C ross- A p p el l ee’ s b ri ef at 4.)
Ref er en ce w as ma de at t h e h ea r i n g t o D r
. B r own ’ s h av i n g s epa r at e cou n s el , a l t h ou g h D r
. B r own w as n ot 3

re p re se n te d the re b y se p a ra te c o u n se l.

- 4- pay ment shall commence November 12, 2006 and shall be in the amount of $800.00 pe r mon th. Com me nc ing on June 12 , 200 7, [Dr . B ro wn ’s ] pay me nts sh a ll i nc re a se to the a mo u n t o f $ 1 , 1 0 0

. 0 0 p e r mo n th

. T h e e n ti r e b a la n c e d u e an d o w in g shall be pa id i n f ull no lat er tha

n 5 y e ars fr om t

he e ntr y of thi s Judg me nt o f D ivo rc e . T his $90,000.00 shall car

ry a simple interest rate of 6% ( six perc ent per annum).
Th e a g re e me nt n ote s th a t D r. B ro wn ’s e mpl oy me nt i s Grand ville Chi ro pr a c tic PC ( “ Gr andvil le C h i ro p ra ct i c”) and that Mrs. B rown is a r eal e state ag ent. The a g ree ment also provides that Dr

. Br own pay

$300.00 per month in child support until May 12, 20 0 7 , (t h e month prior to when the Gra ndville Chiropractic pa

y ments incre ase) and that uninsured medica l and dental e x penses f or the parties’ minor child be split between the parties a ccor ding to their income, with D r. B rown pa y ing 70% and Mr s. Br own pay ing 30%. Under the heading “Miscellane ous Provisions,” the ag ree ment states that “[t] he prope rty division provisi ons of this J udg ment fully satisfies [ sic] all claims either party may have a g ainst the other e x cept for oblig ations and re servations contained in it” and that the parties “ have f

iled a joint bankruptcy .” The ag ree ment is signed by Dr. a nd Mrs. Br own as we ll as the ir re sp e c tiv e c ouns e l.
On Fe bruar

y 20, 2007, the cha

pter 7 trustee (the “ Trustee ”) f il ed two motions t o compel tur no ve r. He a sse rt e d in bo th mot ion s th a t th e pa rt ie s h a d n ot d isc los e d o r e xemp te d th e pa y me nts to Mrs. Br own under

the divorce ag ree ment for he r intere st in Grandville C h iroprac tic and, citing §§ 54 2(a) and 52 1, that pa st p ay me nts , in the tot a l amou

nt o f $ 3, 20 0. 00 , a

nd a ll f utu re pa y me nts
s h o u l d b e tu r n e d o v e r t o h i m a s t r

u s t e e o f t h e b an kr

u p t c y e s t a t e
. A t t o r

n e y C h r i s t i anG

. K

r u p p , II, who had f iled the petition, filed an objection asser ting that the pa

y ments were spousal support. On 2 Marc h 29, 2007, a hearing was conducted. The followingday , on Marc h 30, 2007, the bankr uptcy 3 court e ntere d two order s ref lecting its decision at the hearing

. One order denied wit hout prejudice the Tru s t ee ’s re q uest for turnove r of f uture pa y ments from Dr. B rown. The second g rante d the Trustee ’s re quest for turnove r of p as t p aym ents from Mrs. B rown. Spec ifically , Mrs. Br own wasFur t her r ef er enc es t o t he Federa l Rul es of B ank r upt cy P r ocedur e wi l l be made as “ B ank r upt cy Rul e ___ ”. 4

- 5- order ed to turnover , or to ac count fo r, al l p ay ments that she had r ece ived to date a nd all future pa y me nts , unle ss s he wa s su c c e ssf ul i n c la imi ngthe m a s e xemp t.
Three attempts were made to ame nd Mrs. Br own’s Schedule s. Amended Sche dules B a nd C w e re fi le d o n Apr il 23, 20 07 , an d on Apr il 24, 20 07 , but we re str uc k b y or de rs e nte re d th os e same day s beca use the amendments did not include a c ase numbe r. Correc ted schedule s were filed for a third time on April 25, 2007, and an order striking was enter ed. This time the amen d m en t s we re struck bec ause Mr s. Br own had not sig ned them, as r equire d by Fe dera l Ru l e o f Bankruptc y Procedur e 1008. Howeve r, the orde r striking was not ente re d i n t h e rec ord until September 18, 4 2007. Eac h order

striking state s: “The doc ument must be ref iled with the Court to corre ct the def ect within twenty

(20) da y s of the date below. A defe ctive pleading which is timely filed to corr ect the defe ct, [sic] shall be consider ed filed a s of the date that the pleadingwas orig inally rec eived by

the Court.” (Appe llee/Cross-Appe llant’s App. at H, K, P.) Mr s. Br own co rr ec ted the “de fec t” in the third amendm en t s by

signingthem at a he aringon September 20, 2007, at which time they wer e “benc h filed.” A mended Sche dule B , in addition to Mrs. Br own’s signature, a dds the entry “spousal support” in the amount of $90,000. Amended Sche dule C, in addition to Mrs. Brown’ s signature, adds a c la im e d e xe mp ti o n in G r an dv il le Ch ir o p a c ti c , p u r s u an t to 1 1 U

. S. C. § 5 2 2 ( d ) ( 5 ) , w ith a n
e xemp tio n v a lue of

$1 00 and no c ur re nt v a lue . T he a me ndme nt a lso a dd s a c la ime d e xemp tio n in

“ sp ou sa l su

pp or t,” purs ua nt t o 1 1 U .S. C. § 52 2( d) (1 0) (D ) i n th e a mou nt of $9 0, 00 0, § 5 22 (d )( 5) in the amounts of $1,730.00 and $16,480.00, w ith the curre nt value of the proper ty as $90,000.
On May 21 , 2 00 7, the tr us tee f

ile d a n o bje c tio n to Mr s. B ro wn ’s c la ime d e xemp tio ns
. Hea ring s were conducte d on J uly 12, 2007, Aug ust 2, 2007, and September 20, 2007. Soon after the second a djournment, on Aug ust 6, 2007, the bankruptcy court e ntere d an orde r outlining two issues to be brief

ed, esta blishing a brie fing deadline, a nd schedulingthe hea

ring on September 20, 2007. Th e or de r s tate s: “ Th e pa

rt ie s sh a ll h a ve un til Septem ber 14, 2007 , to f ile and serve their re spective br ie fs on the se iss ue s. No oth e r b ri e fs may be fi le d w ith ou t leave of c ourt .” (A

pp e lle e /Cr os sAppellant’s App. at 309.)
The Tr ustee a nd counsel for

Mrs. Br own filed their br iefs on September 14, 2007, and the Trustee filed a suppleme ntal brief on Septe mber 17, 2007. As noted pr eviously , an orde r striking- 6-

Mrs. Br own’s Apr il 25, 2007, amended Sche dules was en t ere d on September 18, 2007, a nd the amendments we re signe d and filed on Septe mber 20, 2007, at the adjourne d hear ing on the Trustee ’s objections to Mrs. Br own’s cla im of exempti ons. The cour t delivere d a bench opi nion on September 24 , 2 00 7. Th e c ourt state d that it wa s no t c on sid e ri ng the Tr us te e ’s su pp le me nta l br ie f “ be c a

us e it

wa s f ile d w ith ou t per

mis sio n af

te r the Se pte mbe r 14t

h, 20 07 , b ri e fi ngde a dli ne se t in my Au g us t 6t

h schedulingorder .” (A

ppellee/Cross-A

ppellant’s App. at 286.)
On Octobe r 3, 2007, Mrs. B rown timely fi led her pr o s e appea l, and nine day s later, on Oc tob e r 1 2, 20 07 , th e Tr

us te e fi le d h is c ro ss- a

pp e a l.
IV . D ISC USS ION
A. BAP No. 07-8066 (P roce dural Iss ue):
I n th e c ro ss- a

pp e a l, B AP No

. 07 -8 06 6, the Tr us te e a sse rt s that the ba

nk ru ptc y c ourt e rr e d in not consideringhis supplemental brief when ruli ng on Mrs. Br own’s cla im of exempti ons. He
conce des that his brief w as late- filed, but argues that it should have bee n considere d by the cour t beca use it was filed pr ior to the hea ring at which the a

mendments to schedules w ere “benc h filed”–thus i n effect a sserting that there wer e no ame ndments until t hen. The Trustee also argues that his brief should have been considere d beca use it a ddresse d the “va lid and deter minative” issue of the untimeliness of Mrs. Br own’s claim of exemptions , g iven that the ten-da y filing r equire ment of B ank ru ptc y Rul e 10 07 (h ) wa s no t fo llo we d and “ e xcu sa ble ne g le c t” purs ua

nt to B ank

ru ptc y Rul e 9006(b)( 1) wa s not asserted.
The Tr ustee’s suppleme ntal brief clea rly , and admittedly , was filed in violation of the cour t’s

sc he du lin g or de r: “ Th e pa rt ie s sh a ll h a ve un til Septem ber 14, 2007 , to file and serve their re spective br ie fs on the se iss ue s. No oth e r b ri e fs may be fi le d w ith ou t le a ve of c ourt .” (Ap pelle e /Cr os sa p p e l l an t ’ s A p p
. a t 3 0 9

. ) T h e r e i s n o c o n c l u s i o n b u t t h a t t h e b r i e f w a s o u t

- o f

- t i m e
. C o n s e qu e n t l y, the Tr us te e ’s argume nt that Mr s. B ro wn is no t e nti tle d to any e xemp tio n b e c a

us e he r a me ndme nts
wer e untimely

is raised for the first time on a ppeal. Ge nera lly , a re viewing court will not consider an issue ra ised for the first time on appea l. Steve nson v. J.C. Bradford & Company ( In re Cannon) , 277 F.3d 838, 848 ( 6th Cir. 2002). Even so, exceptional circ umstances may war rant a depar ture from the g ener al rule. Po ss. v . M orris ( In re Mo rri

s ), 260 F .3d 654, 663 (6th Cir. 2001).- 7-

Ho we ve r, the Tr

us te e ’s argume nt o f u

nti me lin e ss i s mi sp la c e d. Th e Tr us te e ’s ob je c tio n to Mrs. Br own’s cla im of exempti ons was filed near ly one mont h afte r her third eff ort to file ame nded

sc he du le s, on

May 21 , 2 00 7, and

the Tr us te e did no t r a ise the iss ue of un ti mel ines s unti l hi s supplemental brief

was filed on Septe mber 17, 2007. I n the interim of almost four months, the parties a n d t h e court addressed the validity of Mrs. B rown’s c laim of exemptions on s ubstantive g ro un ds on ly , in

br ie fi ng a s we ll as in mul tip le c ourt he ari ng s. Th e re fo re , the Tr us te e c an be sa id to h a ve wa ive d h is a sse rt ion of un tim e lin e ss. As fo r t

he Tr us te e ’s argume nt t hat no a me ndme nts
e xiste d at th e tim e of

the Se pte mbe r 20 , 2 00 7, he ari ng , c or re c tio n o f t

he de fe c t in

the a me ndme nts by Mr s. B ro wn ’s sig nin g the m in c ourt wa s ti me ly , a

nd c on se qu e ntl y

the ame nd men ts be c a me eff ective a s of the date they

wer e filed, A

pril 25, 2007.
I n addition, case manag ement dec isions, such as the bankr uptcy court not c o n s i d er i n g the Trustee ’s supplemental brief beca use it wa s filed without pe rmission a fter the brief ing de adline, ar e revie wed for abuse of di scre tion. See I nt’l Union v. Ge neral Motors Corp. , 4 97 F .3 d 6 15 , 6 25 (6 th Cir. 2007). Under

this standard, the ba

nkruptcy court’s de cision will be disturbed only if the cour

t “re lied upon clea

rly err oneous finding s of fa ct, improperly applied the g overni n g law, or use d an

err oneous leg al standar d.” Elec. W orkers Pe nsion Trus t Fund of Local Union # 58 v. Gary ’s Elec

. Serv. Co. , 3 4 0 F. 3 d

3 7 3 , 3 7 8 (6 t h C i r. 2 0 0 3 ) ( ci t i n g Bl ue Cro ss & Bl ue Sh ie ld Mu t. v
. Bl ue Cros s & Blue Shi eld Ass’n , 110 F.3d 318, 322 ( 6th Cir. 1997)). Her e, the c ourt did not abuse its discretion.
B. BAP N o. 07-8061 (Substantive Issu e):
Mrs. Br own appe als that portion of the ba nkruptcy court’s decision conce rning her c laim of exemption for spousal support pursuant to § 522(d)( 10)(D)

. Up on the c omm e nc e me nt o f a ba nk ru ptc y c a se , a ba nk ru ptcy estate is c re a te d w hic h is comprised of “all leg al and equitable interests of the debtor in pr operty as of the c ommenceme nt of the case .” 11 U.S.C. § 541(a ). This estate is c reated for the benef it of distributi on to cre ditors. Even so, the debtor may

exempt certain prope rty

from the ba

nkruptcy estate. 11 U .S.C. § 522(b). See Le bo v itz v . H age me y e r ( In re Le bo v itz

) , 360 B.R. 612, 618 (B .A.P. 6th Ci r. 2007). In Michig an, a debtor may

choose f rom either state law ex emptions or federa l exemptions . The B rowns ele cted the fede ral e x emptions list ed in 11 U.S.C. § 522(d).- 8- Section 522(l) of the Ba

nkruptcy Code requir es a debtor to f ile with the court a lis t of pr op e rt y that he or sh e wi sh e s to e xemp t f

ro m th e ba

nk ru ptc y e state . T ho se proposed e x emptions must be li sted on the debtor’s Schedule C and must include a descr iption of the proper

ty exempted, the statutory

secti o n a uth o r iz in g

th e e xe mp ti o n, the value of t h e ex em p tion, and the marke t value (le ss applicable liens) of the e xemp te d p ro pe rt

y . F e d. R. B ank

r. P. 400 3( a ). Un le ss a

pa rt y in i nte re st o bje c ts t o the lis te d e xemp tio n w ith in 3 0 d ay s o f t he c los e of the me e tin g of c re dit or s o r w ith in 30 day s after

a subseque nt amendmen t t o t h e schedule, the prope rty claimed a s exempt is exempt, revests in the debtor, a nd is no longe r prope rty

of the e state. 1 1 U

. S

. C

. § 5 2 2 ( l ) ; F e d

. R

. B an kr
. P

. 40 03 (b ); In re Br own , 178 B.R. 722, 727 (B ankr. E.D . Tenn. 1995). Olson v. Anderson (

In re Ande rson) , 377 B.R. 865, 874 (B .A.P. 6th Ci r. 2007).
Ex emptions should be liberally construed in f

avor of the debtor. [I ]t is well established t hat ex emptions should be construed l ibera lly in favor of the debtor. Se e, e .g ., In re Cio tta , 222 B.R. 626, 630 (B ankr. C.D.Cal. 1998) (“Seve ral bankrup t cy courts have held that when Cong ress’ intent is ambig uous, bankruptcy e xemp tio ns sh ou ld be l ib eral ly int e rp re te d in

fa vo r o f t he De bto r. ” ); In re Cha v is , 207 B.R. 845, 8 4 6 (B ankr. W.D.Pa. 1997) ( “B ankruptc y exemptions should be c on str ue d li be ra lly

in f a vo r o f d e bto rs .” ); Gaertner v

. C l a u de ( In re Claude) , 206 B.R. 374, 377 (B ankr. W.D.Pa. 1997) (“[I ]f it i s possible to construe an e x emption statut e in w ay s th a t are bo th f a vo ra ble and un fa

vo ra ble to a d e bto r, the n th e fa

vo ra ble me tho d s ho uld

be c ho sen .” ); In re Ma rti ne z- W hit for d , 199 B.R. 74, 77 (B ankr. D. Ma ss. 19 96 ) ( “ I t is ax io matic that ba nk ru ptc y e xemp tio ns sh ou ld b e lib e ra lly construed in f

avor of debtors.”) Christ o v. Y

ellin ( In re Christo) , 228 B.R. 48, 50 (B .A.P. 1st Cir. 1999). The party objecting to an exemption has t he burden of proving that the property claimed by the debtor should not be ex empted. Fe d. R. Bankr . P. 4003(c).
B e c a us e the B ro wn s f

ile d th e ir ba nk ru ptc y pe tit ion a ft er Oc tob e r 1 7, 20 05 , th e ir c a se is g overne d by

the B ankruptc y

Code as amende d by

the B ankruptc y

Abuse Preve ntion and Consumer Pr ot e c t i o n A c t ( “ B A P C P A ” )

. T h e r e f o r e , a l l s t a tu t o r

y r e f e r e n c e s ar e t o t h e B A P C P A , 1 1 U .S. C. § 101 to § 1534 (2005), unless other wise spec ifically

noted.
Al tho ug h § 52 2 w a s si g nif ic antl y a me nd e d b y

B APC PA, the pa

rt ic ula r s ub se c tio n a

pp lic a ble here was not. 11 U.S.C. § 522(d)( 10)(D) states t hat property which may be exempted is the debtor’ s rig ht to rec eive “alimony , support, or sepa rate maintenanc e, to the extent rea sonably nece ssary

for the support of the de btor and a ny depende nt of the debtor.” This provision is one of five that a llows f o r t h e e x c l u s i o no f

n o n - w a g e i n c o m e f

r o m a d e b t o r ’ s b an kr

u p t c y e s t a t e
. S o c i a l S e c u r i t y, d i s a b i l i t y,- 9-

and vete rans’ benef

its are e x amples of others. Counsel f or Mrs. Br own argued befor e the ba nkruptcy

c ourt that th e a dd iti on

of the te rm “ do me sti c supp or

t ob lig a tio n” by

B APC PA, a s 1 1 U .S. C. § 101(14A), ma

kes a diff ere nce in the r eadingof § 522(d) (10)( D). Spec ifically , counsel a rg ued that the def inition i ncludes a

n obligation which is “in the nature of” alimony “without reg ard to whe ther such debt is expressly

so desig nated.” See 11 U.S.C. § 101(14A)(B ).
I ndeed, the term “dome stic support obligation” is used in § 523(a)( 5 ), wh i ch was altere d

su bs tanti a lly

by B APC PA. I n e ff

e c t, ra the r tha n a do me sti c su

pp or t ob lig a tio n b e ingde sc ri be d in § 523(a) , the term a

nd an expansive def

inition were a dded to the B ankruptc y Code as § 101(14A)

. “Many of the c oncepts pre viously found in § 523(a) (5) we re e x trac ted and put into t h e definition, now known as § 101( 14A).” Hon. J udith K. Fitzger ald, W e All Live in a Y

el l o w Submarine: BA PCP A’ s Im pa c t on F am ily Law M atte rs , 3 1 S. I L L . U . L .J. 5 63 , 5 64 (2 00 7) . N ota bly , th e ph ra se “domestic support oblig ation” is not used in § 522(d)( 10)(D) , which as stated pre viously was not altere d in any pertinent way by BA PCP A. To put it simpl y , “domestic support oblig ation,” a de fined term in the B ankruptc y Code, is not used in the exemption s tatute. “Cong ress a cts intentionally and purposely when it includes pa

rticular la ng uag e in one se ction of a statute but omits it in another.” BFP v. Re

solution T

rust Corp. , 511 U.S. 531, 537, 114 S. C t. 1757, 1761 (1994) (c itation omit ted). Since B APCP A did not alter § 522(d) (10)( D), the a pproac h to a deter

mination o f wh et her D r. Br own’s obli g ation to pay Mrs. Br own $90,000 over a period of time is alimony /spousal support or proper ty settlement is the same a s it was befor e ena ctment of B APCP A.
One ba nkruptcy court summ arized t he st ate of pre- BA PCP A law r eg arding§ 522(d)( 10)(D)

a s f oll ow s: [F]or the purposes of ex emption, some disag ree ment exis ts over whe ther a b an kr u p t c y c o u rth a s t h e a

u t h o r i t y t o l o o k

b e h i n d t h e l a b e l a p p l i e d t o anaw ar d

b y a divorce court’s judg ment. Compare In re B entley , 245 B.R. 684, 686-87 ( Ba nkr. D. Kan. 2000) (alimony

lien lab el ed as such by

state cour

t was entitled to exemption, as the state c ourt decision wa s entitled to full faith and cr edit), with In re Sh e ffi e ld , 212 B.R. 1019, 102 0-21 (B ankr. M.D. F la. 1997) (“ [l ]ogic dictates that what constitutes alimony

for pur poses of § 523(a )(5) , an d what constitutes alimony for purposes o f § 5 22(d)( 10)(D) , should involve the same cr iteria” ), and In re J oseph , 157 B.R. 514, 517-18 ( Ba

nkr. D. Conn. 1993) (“[t] here is no readily appar ent re ason why a bankr uptcy court should use diffe rent standa rds in revie wing alimony

awa rds in the nondischarg eability instance a

nd in the ex em p tion inst ance ”), an d I n r e Be nja mi n , 13 6 B .R. 57 4, 57 6 (B ank r. S.D

. F la

. 19 92 ) (t

he awa rd la be le d by the state- 10-

court a s lump sum alim ony awa rd wa s rea lly

an equitable distribution in the nature of a pr operty

settlement and, thus, not exempt). In re Ellertson , 252 B.R. 831, 833 (B ankr. S.D. F la. 2000). In sum, the re w as a “ split of authority .”
Th e le a din g pu

bli sh e d ca se in the Sixth Cir c uit a dd re ssi ng§ 5 22 (d )( 10 )( D) is Harbaugh v. Sweet ( In re Harbaugh) , 257 B.R. 485 (E.D. Mich. 2001). I n Harbaugh , the trustee obje cted to the debtor’s e x emption of pay ments owed to her

pursu an t t o a j u d g ment of divorce . L ike this case, Harbaugh conce rned installment pay ments to be m ad e over

time, but the pay

ments in Harbaugh

we re de sig nate d in

the pa rt ie s’ div or c e a g re e me nt a s a lim ony . In a ns we ri ngthe qu e sti on

of ho w t o de fi ne “ a lim on y ” un de r t

he e xemp tio n s tatut e , th e c ourt state d:
A fe dera l exempti on is at issue here , and . . . it sho u l d be interpr eted to have a nationally uniform meaning . Such uniformity would be under

mined if the fe dera l courts g ave unque stioning cr edenc e to the var ying c ase- b y - c a s e n o me n c la tu r e o f fer ed by state c ourt s. . . . [T] he text, his tory , and structur e of the statute sug g est that Congr ess intended f or section 522(d) (10)( D) to exempt only those monies

. . . that conce rn g ener al spousal sustenance . . . . [W ]hen a fede ral e x emption is invoked, a fede ral de fini t i o n of a lim on y a pp lie s. Id. at 490-91. Havingdefine d “alimony ” in the ex em ption statute as “g ener al spousal sustenanc e,” the Harbaugh court looked at the fac ts of the ca se bef ore it and state d: [S ]ection 522(d)(10) (D), when re ad as a whole, exem p t s an y pay ments from the bankruptc y

estate that (1) ar e inte nd

e d by the pa rti es or thesta te c ou rt to s up po rt a spouse and

(2) a re, in the jud

gm e nt of the ba nk

ru ptc yc ou rt , rea sonably

nece ssary

for such purpose . By

focusingon the questions of whe ther divorc ing pa rties have int e nd e d pu rpo rt ed a lim on y to b e us e d f

or ba sic su ste na

nc e and if the a mou

nt i s rea sonably

nece ssary

to achieve that purpose, the Court can by pass the for

mal issue of nomen cl ature , look to the substance of the obligation, and, in the meantime, up ho ld C on g re ss’ int e nt. Id. at 491 (footnote omitted) ( emphasis adde d). Afte r noting that the bankr uptcy court he ld an

e vid e nti ary hear in g, the a pp e llate c ourt

fo un d th a t th e tr ia l c ourt ha d “ su ff

ic ie nt e vid e nc e ” to conclude that the t rustee had failed to car ry his burden of pr oof. The Harbaugh court a ffirme d the bankruptc y court’s order and held t hat t he cha lleng ed pay ments were exempt from the bankruptc y estate. A lthough not author itative prec edent, Harbaugh is persuasive.- 11-

I n rea ching its c onclusion in the case befor e the Pane l, the bankruptc y court stated that it was “not satisfied that the $90,000 oblig ation is, in fact, in the natur e of a limony , g iven that it is for a sum certa in based upon a n acknow ledg ed asse t with a fix ed pay ment period a s opposed to one conditioned upon re marria g e or de ath.” ( Appellee /Cross-Appellant’s App. at 29 7.) The c ourt
rea ched this conc lusion without an evide ntiary hear ing, thus without any testimonial or documentar y evidenc e, such a s testimony of the pa rties or pre sentation of their inc ome tax r et u rn s t o s ee if any
c la im o f a lim on y

wa s ma de by

e ith e r p art

y on tho se re tur

ns , and wi tho ut makin g any fi nd ing s o f f

a c t, pursuant to B ankruptc y

Rules 9014(c) a

nd 7052. Fur

thermore , the bankr

uptcy court concluded that its determination that the obl igation was a proper ty settlement, rathe r than a limony , prec luded any deter mination of the extent to which it was “re asonably nece ssary .”
Be cause published case law addre ssing 11 U.S.C. § 522(d)( 10)(D) , espec ially s ince BA PCP A, is scar ce, Mi lli ga n v . E v e rt ( In re Ev e rt) , 342 F.3d 358 ( 5th Cir. 2003), i s helpful. L ike this case, Ev e rt

involved a lump sum awar d from a divor ce se ttlement, with monthl y installment pay ments and annua l interest. Unlike this ca s e, in Ev e rt the par ties’ ag ree ment included a p r o m i s s o r

y n o t e f o r t h e l u mp s u m aw ar d a s w e l l a s l an g u a g e c o n c e r n i n g a l i m o n y

p ay m e n t s
. In discussing w hether

the fa ctors applied in a § 523(a) (5) case should be applied in a § 522(d)( 10)(D)

case , the Fif

th Circuit stated: [A] t least for pur

poses of sec tion 522(d)(10)( D), whe re in the a g ree d divorce decr ee there is 1) also a mea

ningf ul separate alimony provision, 2) t he oblig ation in question is describe d as beingpart of the proper ty division, 3) the label g iven to the obligation in question is matched by its actual cha

rac teristics , an d 4 ) t he evide nce doe s not su g g e st the pa

rt ie s c on sp ir e d to dis g uis e the tr ue natur e of

the ob lig a tio n in

or de r t o subvert the ba

nkruptcy or tax laws, there is no ambig uity nece ssitating the use of

. . . fac tors to e ssentially work backw ards to dete rmine the nature of the obligation. Id. at 368.
I n the ca se bef

ore the P an el , u n l i k e the Ev e rt case , the judg ment of divorce is ambiguous be c a us e of the ha nd wr itt e n ad dit ion

. Th e ba

nk ru ptc y c ourt int e rp re te d th e ha nd wr itt e n r e fe re nc e to the pr op e rt

y se ttl e me nt a s “ a c kn ow le dg me nt b y bo th part ie s tha t a lim ony wa s unn e c e ssa

ry be c a us e Ms. Brown’s intere st in the chiropractic business, which Dr. Br own had ag ree d to purcha se fr om her fo r $ 90 ,0 00 , ma de an ali mony awa rd unne c e ssa

ry .” (A pp e lle e /Cr os s- Ap pe lla

nt’ s App . at 29 4. ) T his interpre tation indeed may be the c orre ct one. Ho we v er , i t is equally plausible that the re fer enceSc h edu l e B w as f i l ed on O ct ober 13, 2006. 5

- 12- me ans that th e pa

y me nts ar e sp ou sa l supp or

t, part ic ula

rl y in lig ht of the pa

rt ie s hav ing state d in

the ir orig inal Schedule B that Mrs. Br own was rec eiving $1,100 a mont h in “alimony , maintenanc e or 5 support,” the e x act amount that, pursuant to their divorce ag ree ment, Dr. Brown was required to pay

mon thl y in ch ild su

pp or t and pa y me nts re late d to Gr andvil le Chi ro pr a c tic . B e c a us e of the a mbi g uit

y
cre ated by

the handwr itten addition, any interpre tation of the addition is premature without an evidentiar y hear ing. A n evidentiar

y hear ing wi l l al l o w t h e bankr uptcy court not only

to hear and ob se rv e the pa

rt ie s r e g ard ing in ten t but a lso to c on sid e r a ny do c ume nta

ry e vid e nc e , s uc h a s th e ir inc ome ta x re tur

ns , a nd wi ll p ro vid e a

ba sis fo r t

he c ourt to m a ke fi nd ing s o f f

a c t.
I n summary , while the cour t is not required to a p ply 11 U.S.C. § 101(14A) in revie wing pay ments exempted under § 522, the court is still require d under feder al ex emption law to make a fac tual deter

mination as t o wh et her a n asset labe led as “ alimony ” is proper ly exempted under § 522(d)( 10)(D) . Such a conc lusion cannot be rea ched without the bankruptcy court conducting an evidentiar y hear ing a

nd making finding s of fa ct and c onclusions of l aw. After a n evidentiar

y hear ing, the bankruptc y court can de termine, upon a pply ing the standard outlined in Harbaugh , if the Trustee produce d sufficie nt evidenc e to carry his burden of pr oof in objectingto Mrs. Br own’s claim of e x emption for spousal support in the amount of $90,000 pur suant to § 522(d)(10) (D).
V. CO NC LU SION
F or the fo re g oin g re a so ns , th e deci si on of th e ba nk ru ptc y c ourt a s to Ca se No . 0 7- 80 66 is AFF I RMED, and Case N o. 07-8061 is REMANDED.