EL ECTRONI C CI TATI ON: 2007 FE D App. 0006P (6th Cir.) File Na me: 07b0006p.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 nre : KE R RYE HIL LL E BO VITZ, ) ) Debtor. )

_____________________________________ ) ) KE R RYE HIL LL E BO VITZ, ) ) Appellant, ) ) v. ) No. 06-8039 ) NORMAN P. HAGEMEY ER, ) CHAPTER 7 TRUSTEE, ) ) Appellee

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

Di str ic t of

Te nn e sse e , We ste rn

Di vis ion a t Me mph is Case No. 05- 38391 Argued: Fe bruar

y 6, 2007
Dec ided and F iled: March 30, 2007
B e fo re : A UG , G REG G, and SCO TT , B ank

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

____________________ CO UN SEL
ARG UED: El le n B . V e rgos, MA RTI N, TA TE , M ORRO W & MA RST ON , P. C., Me mph is, Tenne ssee, f

or Appe llant. J ames E. B ailey I I I , FARRI S MATHEWS BRANA N B OB ANGO HEL L EN & DUNLAP, PL C, Memphis, Tenne ssee, for Appellee

. O N B RI E F: El le n B . V e rg os , MARTI N, TATE, MORROW & MARSTON, P.C ., Memphis, Tennesse e, for Appellant. James E. B a ile y I I I , F ARRI S MA TH EWS B RA NA N B OB AN GO HE L L EN & DU NLAP, PL C, M e mph is, Tenne ssee, f

or Appe llee.- 2- ____________________ OP IN ION

____________________ J AMES D. GREGG, B ankruptc y Appellate Pane l J udg e. In this chapter 7 c ase, the Debtor appea ls the bankr

uptcy court’s or der g ranting the Trustee ’s motion for turnover and sustaining the Trustee ’s objection to the exemption claimed by the Debtor

in five pieces of jewelr

y . The De btor claims the jewe lry

is ex empt as “ne cessa

ry and prope r we aring appar el” pur suant to Tennesse e Code Annotated § 26- 2-104. F or the re asons that follow, the ba nkruptcy court’s or der is AF FI RMED.
I. ISS UE ON AP P EAL The issues in this appea l are (1) whe ther the D ebtor’s je welry const i t u t es “nec essar

y and proper wea ring appar el” pur suant to Tennesse e Code Annotated § 26-2-104; ( 2) whe ther the bankruptc y

court a bused its discretion in denying the Debtor’ s motion t o s tr ike an a ffidavit submitted by the Trustee showing the re tail va lue of the jewelr y afte r the close of proofs; and (3) whether the ba nk ru ptc y c ourt e rr e d in fa ili ngto i ns tr

uc t th e Tr us te e to c on sid e r whe th er sa le s p ro c e e ds wo uld

re su lt i n a

me anin g ful di st ri bu tio n to c re dit or s a ft e r p ay me nt o f a dmi nis tr a tiv e e xpe ns e s in deter mining whe ther e ventually to sell the Debtor’ s jewelry

. II. JU RI SDI CT ION AND STANDARD OF RE VI EW
Th e B ank ru ptc y Ap pe llate Pane l of the Sixth Cir c uit (“ Pane l” ) ha s juri sd ic tio n to de c ide thi s
a pp e a l

. T h e Un i t e d St a te s D istri c t Co ur t f or the Wes te rn

Di str ic t of

Te nn e sse e ha s a

uth or ize d a

pp e a ls to t he Pane l. Afi na l or de r o f t he ba nk ru ptc y c ourt may be a pp e a le d as of ri g ht. 28 U. S.C. § 1 58 (a )( 1) . T he ba

nk ru ptc y c ourt ’s or de r d e nyingthe De bto r’ s cla im ed exemp tio n o f c e rt a in jewelr y is a final appe alable or der. See Mason v. Y oung ( In re Young) , 2 38 B .R. 11 2, 11 3 ( B .A .P. 6th Cir. 1999).
The ba nkruptcy court’s finding s of fac t a re revie wed under the clea rly err oneous standar d. F e d. R. B ank

r. P. 8 01 3. A f

a c tua l de te rm inatio n is c le arly err 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 . Bailey ( In re Bailey ), 254 B.R. 901, 903 (B .A.P. 6th Ci r. 2000) ( citations omitt ed).- 3-

The ba nkruptcy court’s inter

pretation of Tennesse e’s e x emption statute is review ed under the de novo standa

rd bec ause it involves a que stion of law. Hamo v. W ilson (I n re Hamo) , 2 33 B .R. 718, 721 (B .A.P. 6th Ci r. 1999). “ De novo r eview me ans that the a ppellate c ourt deter

mines the law independe ntly

of the trial court’s dete rmination.” Tre ini sh v . No rwe

st B an k Mi nn ., N.A . (

In re Pe ria nd ri) , 266 B.R. 651, 653 (B .A.P. 6th Ci r. 2001).
The ba nkruptcy court’s de cision to admit or exclude evidence is revie we d for a n abuse of discretion. United States v. Hum phrey , 279 F.3d 372, 376 ( 6th Cir. 2002). “An a buse of discr etion is defined a s a ‘de finite and fir m conviction that the [c o u rt b el ow] commit ted a c lear err or of judgme nt.’ The que stion is not how the re viewing court would have rule d, b u t rathe r whe ther a

re a so na ble pe rs on

c ou ld a g re e wi th t

he ba nk ru ptc y c ourt ’s de c isi on ; if

re a so na ble pe rs on s c ou ld differ as to the i ssue, then ther e is no abuse of discretion.” Ma

y or & City Cou nc il v . W

. V a. ( In re Eagle-Pic her Indus., Inc .) , 285 F.3d 522, 529 ( 6th Cir. 2002). Under this standard, the bankruptc y
c ourt ’s de c isi on

wi ll b e dis tu rb e d o nly

if it “ re lie d u

po n c le arl y

e rr on e ou s f

ind ing s o f f

a c t, improperly

applied the g overning law, or used an err oneous leg al standar d.” Elec. W orkers Pe nsion Trust Fund of

Local Union # 58, IBEW v. Gary ’s El ec. Se rv. Co. , 3 4 0 F. 3 d 3 7 3 , 3 7 8 (c i t i n g Blue Cross & Blue Shield Mut. v. B lue Cross & Blue Shi el d Ass’n , 110 F.3d 318, 322 ( 6th Cir. 1997)).

III . F AC TS
On Octobe r 14, 2005, Ke rry e Hill L ebovitz (“Debtor” ) filed a voluntary petition for re lief und er chapte r 7 of the B ankruptc y Code. On Schedule B, the Debtor listed a “ weddingring and other jew elry” havingan unknown va lue. (J.A. at 11.) This jewelry was c laimed as e x em pt on Schedule C under Tennessee Code Annotated § 26-2-104. The Debtor s tated that the amount of the

e xe mp ti o na n d

th e ma r k e t v a lu e o f

th e je w e lr

y w a s u n kn o w n. On Octobe r 2 5 , 2 0 0 5 , G e o r g e W. Em e rs on wa s a pp oin te d c hapte r 7 tr

us te e . H e wa s su c c e e de d o n Apr il 4 , 2 00 6, by No rm a n P. Hag emey er ( “Truste e”)

. I n 2 00 4, be fo re the c omm e nc e me nt of the De bto r’ s c a se , th e De bto r’ s hus ba nd , D r. Mo rr is L ebovitz, filed a bankruptc y case
. Be cause Dr. L ebovitz is no longe r able to prac tice medicine , he

rec eives disability

income of $16,000 pe r month. The bankr uptcy court took judicial notice that Dr. L ebovitz re ceive d his ba

nkruptcy discharg e on September 16, 2005. A fter c ommenceme nt of Dr.Although not e x plicitly addre ssed in the bankr

uptcy court’s opinion, t he Panel notes the 1 rec ord establishes that Dr . L ebovitz bought this ring using a Tiffa ny ’s cr edit car d. I n his bankruptcy case , he eve ntually

obtained a disc harg e of the debt owed to T iffany & Company in the amount of $29,780.05. Th e De bto r g a ve tr ou

ble so me and

c on fl ic tin g tes tim on y

a bo ut t his a sse rt e d r e pla c e me nt. 2 On direc t examination, s he testified that the or igina l ring was lost a nd the new, e x pensive, Tiff any ring was to re place it. On cross examination, she t estified that she never wore t he original ring , but rathe r simply

put it away , and that when she moved to a new residenc e, she was unable to find the orig inal weddingring

.

- 4- L ebovitz’s case, it wa s discovere d that the Debtor co-sig ned a la

rg e loan. As a

result, s he filed he r separ ate c hapter

7 case

. The ba nkruptcy court found that Dr. L ebovitz and the Debtor have been marr ied for a number of y ear s and have four c hildren. Ad d i tionally , the cour t found that althoug h the Debtor has a r eal estate lice nse, she is not ac tively eng ag ed in marke ting or

selling r eal e state.
The De btor owns five pie ces of jewel ry claimed a s exempt. One of them is a five c arat diamond weddingring purcha sed by Dr. L ebovitz for between $40,000 and $50,000. The De btor 1

wea rs this ring daily

. I t was purchase d by Dr. L ebovitz several y ear s after their we dding to r eplac e the Debtor ’s orig inal weddingring

. Second, the De btor claimed e x em p t a p ai r o f diamond stud 2

ear ring s which ar e slig ht l y u n d er one ca rat e ach. T he ea

rring s were g iven to the Debtor by Dr. L ebovitz approx imately eleve n y ear s ear lier when their first daughte r wa s born. These ear ring s are worn by the De b to r

w e e k ly

. T h ir d , th e D e b to r c la im e d e xe mp t a d ia mo n d dr o p n e c k la c e w h ic h

a g g r e g a te s a

p p r o xim a te ly o n e an d o n e - h a lf c ar a ts

. T h is n e c k la c e w a s g iv e n to th e De btor by Dr. L e bo vit z wh e n th e ir

se c on d d a

ug hte r w a s b or

n. Th e Debto r wears this ne c kla c e se ve ra l ti me s a month. Fourth, a diamond tennis brac elet given to the Debtor by her husband as a birthday g ift was claimed e x empt. I t is unknown how often this brac elet is worn. F ifth, claimed e x empt is a Cartier

watc h p ur c ha se d b y

the De bto r’s hu sb and

a s a Mo the r’ s D ay

g if t. T he De bto r s ta te d th e watc h is

no t op e ra ble , bu t pr e vio us ly wa s wo rn da ily

. As re qu e ste d b y the Tr us te e , th e De bto r c on su lte d w ith jewele rs to obtain an estimated va lue of the jewelr y
. Three jewele rs offe red to pur chase all of the ite ms, wi th t

he e xce pti on of the we dd ing ri ng
. A fo ur th j e we le r o ff

e re d to purc ha se a ll o f t

he ite ms for a total of $14,800. He va lued the Tiff any weddingring at $8,000.- 5-

On Marc h 8, 2006, the Trustee filed a Motion for T urnover of Pro p erty

to the Estate. He soug ht turnover of

the exempted jewelr

y . The De btor objecte d. The Tr ustee a lso objected to the De bto r’ s c la im o f e xemp tio ns . A n e vid e nti ary he ari ngre g ard ingthe se c on te ste d ma tte rs wa s h e ld on May 4, 2006. The De btor testified that the va lue of he r Tiffa ny weddingring is $8,000 and that the ag g reg ate va lue of the r emaining items is $6,000. After the conclusion of the he aring , and bef ore a ruling by

the bankr

uptcy court, the D ebtor filed a mendments to S ch ed u l es B a nd C asserting values , co n s i s t ent wit h her pr ior testimony , of her jewelr y as follows: (1) w edding ring - $8,000; (2) ne cklac e - $2,500; (3) ear ring s - $2,000; (4) tennis brac elet - $1,000; and (5) Car tier watch - $1,500.
The Tr

ustee subseque ntly

filed anothe r objec tion to the Debt o r’ s am ended claim of exemptions . He objected beca use the De btor’s value s were wholesale values a nd asser ted that the

e xemp tio ns we re le g a lly

imp ro pe r. Th e Tr

us te e a lso su

bmi tte d th e a ff

ida vit of L e s Sav e ll, the same jewele r r e li e d u

p o n b y th e D e b to r to s u

p p o rt h e r s tate d v a lu e s a t th e e v id e n ti ar y h e ar ing. T he aff idavit reiterates Savell’s prior offe r t o purcha se t he jewelry and st ates that the esti mated value s
are ba se d up on a wh ole sa le va luatio n. Th e a ff ida vit fu rt he r state s that re ta il va lue is at le a st d ou ble the wholesa le value.
Af te r fi rs t re lying up on Sa ve ll’ s va luatio n a t the e vid e nti ary he ari ng , b ut n ot a g re e ingwi th his subsequent aff

idavit, the Debtor

moved to strike Savell’s af fidvit beca

use (1) it was prese nted afte r the c lose of proof

s, (2) it supposedly

constit u t ed h ea rs ay , and (3) she wa s not give n an op po rt un ity to c ro ss e xami ne Sa ve ll. As he r p ri nc ipa l argume nt, the De bto r a sse rts th at val ue is irrele vant bec ause the Tenne ssee e x emption statute has no monetar y limit ation whatsoeve r.
The Tr ustee re sponded that the De btor failed to adequate ly decla re the value of the jewe lry befor e, or at , t he hea

ring . He a

rg ues that Savell’s a ffidavit is proper to rebut or suppleme nt the Debtor’ s statements about Savell’s prior opinion of the value of

the jewe lry

. The ba nkruptcy court de termined that the Tennessee exemption i s limi ted to wea ring appar el which is “ne cessa

ry and prope r.” Be cause there was no evidenc e offere d at t he evide ntiary hear ing that the jewe lry

is neede d by

the Debtor

for c urre nt or future employ ment, t h e b an k ruptcy

court d e te r mi n e d th a t th e je w e lr

y w a s n o t “ n e c e s s ar

y an d p r o p e r
. ” U ti li zi n g th e an a ly sis of In re Ha ze lhu rst , in fra , the court found t hat all the i tems of ex empted jewelry wer e “luxury ” items. The- 6-

c ourt a lso fo un d th a t th e De bto r s uf fe re d n o p re

jud ic e by the int ro du c tio n o f S a ve ll’ s a ff ida vit beca use the c ourt relied sole ly upon the value of

the jewe lry

as ac knowledg ed by

the Debtor

at the evidentiar y hear ing.
On J u n e 9 , 2006, an orde r wa s entere d g ranting the Trustee ’s Motion for Turnove r of Property of the Estate, overr

uling the Debtor’ s objection there to, sustainingthe Trustee ’s Objec tion to Claimed Ex emptions and Amended Objection t o Claimed Ex emptions, and deny ing the Debtor’ s Mo tio n to Str ike Tru ste e ’s Am e nd e d O bje c tio n to Cla ime d E xemp tio ns and Atta c he d ( Sa ve ll’ s) Affida vit.
On J une 19, 2006, the Debtor filed her Motion to Alter or Amend the J udg ment. This motion raised only one new issue. The De btor reque sted the cour t to inst ruct the Tr

ustee to consider

whether future sales proce eds would result in a meaning ful distribution to cre ditors a ft er p aym en t of

a dmi nis tr a tiv e e xpe ns e s. On July 19 , 2 00 6, the ba

nk ru ptc y c ourt de nie d th e De bto r’ s Mo tio n to Alter or A mend J udg ment. The court reiter ated that despite t he af fidavit submitted by

the Trustee , it found the jewe lry

to be lux ury

items based so le ly on the values a cknowledg ed by the Debtor

at the hear ing. T he cour

t also further clar ified that it was not placingan ag g reg ate moneta ry limit on the claimed e x emptions. The cour t stated:
The c ourt place d no dollar limit on t h e T en nessee wea ring appar el exemption, b u t d id clear ly rec og nize the limi t placed on the exemption by

the Tenne ssee leg islature, that the we aring appar el be nece ssary and proper

. Lux ury items are by definition not nece ssary items. Va l u e i s important, as J udg e Stair ac knowledg ed in the opinion [ I n r e H az e lhu rst ] re lie d u

po n s o h e a vil y

by the De bto r, in deter mining whe ther an item is a lux ury item. This court deter

mined, based upon the values placed upon the i tems of j ewe lry by the Debtor herse lf, based upon the indicators of what will be consider ed a luxury item with re s p ec t to jewelry found in the B ankruptc y Code and the Tenne ssee Code, and ba sed upon the fa ilure of the D ebtor to testify that the items were nece ss ar y t o any work she w as doing or contempla t ed doing , that these we re luxury items. The Tenne ssee Code provides a

n alternativ e for the e x emption of lux ury items, the so -c a lle d ‘ wi ld- c ard ’ e xemp tio n of $4 ,0 00 . T his c an b e us e d to e xemp t any ite ms of pe rs on a l pr op e rt y , wh e the r luxur

y ite ms o r n ot, up to a value of $ 4 ,000. To ig nore the limit ation place d upon the wea ring appar el exempt i o n by the Tenne ssee leg islature and a rg ue that that exemption i s unlimi ted, espe cially in light of the clea r dollar- 7- lim itatio n p ro vid e d in

the wi ld- c ard

e x emption , w ou ld b e a

g ro ss mis re a din g of

the Te nn e sse e e xemp tio n s ta tut e s.
(J.A. at 141-42.)
The De btor timely

appea led the bankr

uptcy court’s or der.

IV . D ISC USS ION
A b a n kr u p t c y e s t a t e c o n s i s t s o f

a l l l e g a l an d

e qu i t a b l e i n t e r e s t s i na d e b t o r ’ s p r o p e rt y. 11 U.S.C. §541(a)(1)

. A debtor is per mitted to ex empt cer

tain proper

ty from the e state. A prope r exemp t i o n wi t h draw s proper ty from the ba

nkruptcy estate, a nd conseque ntly

from the r eac h of

cre ditors. W

ic he ff v . B au mg

ar t ( In re W ic he ff) , 215 B .R. 83 9, 84 2 (B .A .P. 6th Cir . 199 8) . A state may decide whether

its residents may

elect av ai l ab l e fede ral e x emptions, 11 U.S.C. § 522, or be limit ed to the state’ s exempti ons. See 11 U.S.C. § 522(b). Tenne ssee ha s elec ted to opt out of the fede ral exemptions

. A debtor must utiliz e Tenne ssee’ s exemptions

. See Tenne ssee Code A nnotated § 26-2-112. An entity objecting to an ex emption must establish, by a pre pondera

nce of the evidenc e, that the e xemp tio n is imp ro pe r. F e d. R. B ank . P. 40 03 (c ); Hamo v. W ilson ( In re Hamo) , 233 B.R. 718, 723 (B .A.P. 6 th Cir. 1999). The fa cts and c ircumstance s of ea ch cla imed exemption and the objection there to must be separately examined. Id

. Ex emptions should be liberally construed in a debtor’s f avor. In re Nipper , 2 4 3 B. R

. 3 3 , 3 5 (B an kr. E

. D. T en n
. 1 9 9 9 ) ( ci t i n g Terry v. M cDaniel , 53 S.W. 73 2 ( Te nn . 1 89 9) ). Al so , a c la ime d e xemp tio n sh ou ld be c on str ue d in lig ht o f t he purp os e for whic h it was cre ated. See I n re He ndrick , 45 B.R. 965, 972 (B ankr. M.D. L a. 1985).
Th e e xemp tio n b e fo re thi s Pa ne l is Te nn e sse e Cod e Anno ta te d § 26 -2 -1 04 wh ic h sta te s, in pe rt ine nt p a rt : (a) I n add i t i o n to the exemption s et out in § 26-2-105 [Tennessee ’s

exemptions applicable to retireme nt and pensions], there shall be further exempt to every

resident debtor the following specific article s o f p e r s o n a l t y: (1 ) A ll nece

ssary and proper weari ng apparel for the a ctual use of debtor a nd family . . . .;Leech i n volved a c laimed exemption of two rings, c ontaining two diamonds and one 3 sapphire, e ach va lued at $2,000. The Kentucky statute exempted “all we aringappar el” with no re str ic tiv e te rm s. Th e Sixth C ir c uit a ff ir me d th e dis tr ic t c ourt ’s ho ldi ngthat th e ri ng s w e re e xemp t. The district cour

t held the ring s exempt beca use t hey wer e wearing appar el and because while the statut e ha d f

ixed lim itatio ns of

va lue re g ard ingoth e r k ind s o f p ro pe rt y e xemp te d, it a ff

ixed no ne to we ari nga pp are l. Th e dis tr ic t c ourt a lso no te d, “ I f the ph ra se we re ‘a ll ne c essa ry wea ring appar el,’ we should be permitted to inquire into the question of nece ssity for persona l or naments of a

ny kind.” In re Lee ch , 171 F. 591, 592 (W.D. Ky

. 1908) (emphasis added)

. On appeal, t he S ix th Circuit stated in d ic ta , “ fo r w e c on c e ive tha t th e tur nin g po int

up on the pr ov isi on s o f the Ke ntu c ky statut e wo uld be whe ther these ring s wer e ac quired a nd used as or

namental a

ppare l, or wer e ac quired a nd kept as an investment of va lues, as a matter of business, rather than f or the purpose of ornament.” In re Leech , 171 F. at 626. Courts in states with sim ilar exemption statutes ag re e that jewelr y may be “w ear ing 4 appar el.” See e .g. Fe rn an de z v . S e idl e r ( In re Fe rn an de

z) , 855 F.2d 218 (5th Cir. 1988) (construing t h e T ex as ex emption statute) ; W ikle v. W esthem ( In re W esthem) , 642 F.2d 1139 ( 9th Cir. 1981) (c on str uin g the Ca lif

or nia e xemp tio n s ta tut e ); In re Pe terson , 280 B.R. 886 (B ankr. S.D. Ala . 2001) (construingthe Alabama statute); In re Mi tc he ll , 103 B.R. 819 (B ankr. W.D. Tex . 1989) (c onstruing the Texas statute).

- 8- (Emphasis adde d.)
The Te nnessee Supreme Court has not y et addr essed whe ther jew elry constitutes wear ing appar el within the meaningof its exemption statute. I ndeed, no Tenne ssee state court ha s addre ssed t h i s i s s u e
. T h e T e n n e s s e e e x e mp t i o n s d o n o t i n c l u d e an y s e p ar a t e e x e mp t i o na l l o w an c e f o r j e w e l r y. Com pa re 11 U.S.C. § 522(d)(4) ( a debtor may curr ently exempt up to $1,225 i n specific jewelr y ). I t is inst ructive that the C ourt of Appeals for the Six th Circuit, in an older decision, affirmed a lower court’s holding that diamond ring s wer e exempt under a simil ar K entucky statute which e x empted “all wearingappar el.” Sherrill v

. Leech ( In re Leec h) , 171 F. 622 ( 6th Cir. 1909). I n a more rec ent 3 opinion c onstruing the Tenne ssee e x emption statute, In re Ha ze lhu rst , 228 B.R. 199 (B ankr. E.D

. Tenn. 1998), a

bankruptc y

court used B lack’ s L aw Dic tionary ’s definiti on of “w ear ing a ppare l.” After taking notice of the modern da y use of jew elry , the Ha

ze lhu rst court he ld that the Tenne ssee exemption s tatute includes jew elr y
. T his Panel ag ree s that some ty pes of jew elry

are cover ed by 4 Tenne ssee’ s “nec essar

y and prope r we aringappar el” e x emption.
The De btor argues that this exempti on is unlimited beca use it doe s not contain a moneta ry limit

. This Panel di sag ree s. The statute imposes a li mitation by the phrase “ne cessa ry and prope r,” which is n o t d e f

in e d b y th e T e n n e s s e e s tatute

. N o r e p o rte d T e n n e s s e e c a s e e xis ts c o n s tr u in g the- 9-

phrase , and no leg islative history has been found re g ardingthe meaningof “ne cessa ry and prope r” within the exempti on statute.
I n the absenc e of any repor ted Tenne ssee case law or le g islative history , this P anel e x amines the historical purpose of Tenne ssee ’s ex emptions. Tennessee ’s exemptions ensure that a de btor reta ins sufficie nt proper

ty to obtain a fre sh start and provide a debtor with the basic nece ssities of life, thereby av oiding destitut ion

. Lawrence v. J ahn ( In re Lawrence

) , 219 B.R. 786 , 7 92 (E.D. T en n
. 1 9 9 8 ) ( ci t i n g Arango v. Third Nat’l Bank in Nashville ( In re Arango) , 992 F .2 d 6 11 , 6 13 (6 th Cir. 1993)). The Tenne ssee Supre me Court has stated:

The publi c policy

underly ing our exemption s tatutes for he ads of famili es is that a cre ditor should be restra ined from having satisfac tion of his debt out of cer tain k i n d s of prope rty

which ar e nece ssary to the maintenanceof the families o f im p r o v id e n t or unfortunate debtors. Prater v. Re ichman , 187 S.W

. 305, 305 (Tenn. 1916) (empha sis added). The Prater c ourt a lso sa id that “ [t ]h e a n im a ls an d v e h ic le s n a me d in th e s c h e d u le ar e s u c h a s w e r e u s u a ll y o w n e d by such debtors and u s ed b y

them in the work nece

ssary to be done to support their families . . . .” Id. (empha sis added). The Tenne ssee Supreme Court f ocuses on an intent to pr ovide worke rs with the means to support their f amilies, providing those things whic h are nece ssary to the family ’s maintenanc e. As fur

ther guidance , the Tenne ssee Suprem e Court has de fined “ nece ssaries” as “thing s require d for [one’s] sustenance o r comfort, and suitable to [one’s] means, condition, and habits of life . . . .” Mc

Nai ry Cou nty v . M c Coi n , 45 S.W . 1070, 1070 (Tenn. 1898)

. Ce rt a inl y , it c ann ot be g a ins a id that de bto rs re qu ir e “ ne c e ssa ry and pr op e r w e ari nga

pp a re l” to be employ ed and support their fa milies. Accordingto the definition of “ne cessa ries” se t forth by the Tenne ssee Supre me Court, debtors may need “nec essar y and proper wearing appar el” to attend social, business or prof

essional eng ag ements which a re suitable t o t h eir “means, condition, and habits of life.” The De btor has a r eal e state l icense . Howeve r, she is not workingoutside the home. Moreove r, there is no evidence in the rec ord that the Debtor is se eking outside employ ment. There also is no evidenc e that the j ewe lry claimed e x empt is nece ssary for the D ebtor’s e mploy

ment or her “fr esh star t

. ” No evidence exists t hat any of this Debtor’s e x empted jewe lry is “nec essar

y ” or “prope r” w ear ing a

ppare l for her social, busi ness or profe ssional eng ag ements which a re in ke epingO th e r c o u rts w h e n r e v ie w in g s im il ar s tatute s h a v e c o n s id e r e d v alue. See e.g., In re 5 Peterson , 28 0 B .R. 88 6 (B ank r. S.D

. Al a
. 20 01 ) (f

ind ing that a watc h va lue d a t $3 ,2 00 greatly outweig hed its u t ilitarian value a nd was not “ne cessa

ry and prope r” unde r Alaba ma’s exemption statut e ); In re He ndrick , 45 B.R. 965, 972 (Bankr . M.D. L a. 1985) ( “When an item’s va lue der ives primarily from its artistic, orname ntal or re cre ational value or from its char acte ristics solely desig ned to enhanc e the pr estig e or status of its owne r, then the item is not rea lly an item of

. . . ‘clothing ’ .

. . . The fa ir marke t value of suc h items is far more than t he value of ut ilitarian items that would serve the same f

unction.”). The Pane l does not sugg est that these are the only criter ia that should be consider ed whe n 6 evaluating the je welry

/wear ing a

ppare l issu e. Ho we v er, in this appea l we nee d not develop, or consider, additional criteria . The ba nkruptcy court prope rly

focuse d on the value of

the items as deter minative in this i nstance

. I f t he De bto r i s c or

re ct, for me rl y su pe r- ri c h d e bto rs c ou ld m ov e to T e nn e sse e wi th t he ir 7

“ Ho pe Di a mon d, ” fi le fo r bank ru ptc y , a nd us e the dia

mon d a s a

“ fr e shsta

rt .” Te nn e sse e c ou ld become a n ew ba

nkruptcy “have n” for

those who dec ide to conver t assets into valuable e x empt jewelr y
.

- 10- with her “ habits of life.” Wit hout question, this “diamond collection” is not neede d for the D ebtor’s sustenance or comfor

t.
I n Ha ze lhu rst , the bankr

uptcy court c onsidered the criter ia to deter mine when jew elry

may be “ne cessa

ry and prope r” unde r the Te nnessee wea ring appar el exemption. Those criteria are : (1) the nature of the items, i.e. , a re the y c omm on ly

wo rn a rt ic le s of je we lr

y su c h as ri ng s, e arr ing s, brac elets, watches, a

nd neckla ces; (2) how often a re the y worn by the debtor, i.e. , f

r e qu e n t l y, infreque ntly , or neve r; (3) w hat occ asions, if any , dictate the wea ring of t he jewe lry ; and (4) va lue. 5 Ha ze lhu rst , 228 B.R. at 203. The Ha ze lhu rst court a lso opined:
Whil e not an e lement for consideration under the statute, value may nonetheless be important in det er mining whe ther a n article may

be cate g orized as a luxury

item. As such, it might we ll not be “nec essar y and pr op e r. ” Th e c ourt do e s not s ug g e st that th e se are a ll the c ri te ri a that might be looke d at in evaluating the je welry /wear ing a

p p arel issue. As stated, ea ch ca se stands on its own. Id. 6
The De btor primarily focuse s on Hazelhurst’s fourth cr iteria – va lue. S he arg ues t hat value is completely irrele vant because the statute place s no monetary limit on the exemption. Ha ze lhu rst 7

corr ectly rec og nizes that a lux ury

item of j ewe lry is not “nec essar y and proper” under the Te nnessee- 11-

statute. Whil e the lac k of a monetary limit in the Tennessee ex emption statute cer tainly clouds the inquiry , value is a r eleva

nt consideration that cannot be ig nored as the De btor urg es this Panel to do. “The purpose of

exemption l aws is to save debtors and their families from want, not to enable them to w e ar lu xu r io u s o r

n a me n ts a t th e e xp e n s e o f th e ir c r e d it ors.” Mi ll in gto n v . H e rb e rt ( In re Millington’s Estat e) , 2 1 8 P

. 1 0 2 2 ( C a l

. C t

. A p p
. 1 9 2 3 )

. W h a t w a s t r u e i n1 9 2 3 i s e qu a l l y t r

u e t o d a y.
The term “prope r” in the s tatute nece ssitates consideration of value. No reported Te nnessee d e c is io n s h a v e a d dr e s s e d th e me an in g o f

th e te r m “ p r o p e r ” a s u s e d

in th e e xe mp ti o ns tatute

. We must int erpr et the g overningstate law f rom “a ll releva

nt data.” Garden City Osteopathic Hosp. v

. HBE Corp. , 5 5 F .3 d 1 12 6, 11 30 (6 th C ir . 1 99 5) . T he “ re le va nt d a ta ” to b e c on sid e re d in c lud e s st a te

a pp e llate c ourt de c isi on s, wh ic h are la c kin g , “ state ’s su pr e me c ourt dic ta , restate ments of law, la w revie w commentar ies, and t h e m aj o rity rule among othe r states.” Id. Additionally , “[w]here statutory lang uag e is not expressly defin ed , i t will be give n its common meaning .” Burlington N.R.R. Co. v. Oklahoma Tax Comm’n , 4 81 U. S. 4 54 , 4 61 , 107 S. Ct . 1 85 5, 18 59 (1 98 7) ; Gleave s v. Chec ker Cab Transit Corp., Inc. , 1 5 S. W.3 d 7 99 , 8 02 -0 3 ( Te nn . 2 00 0) (“ [ A] court a sc e rt a ins a statute’s purpose from the plain a nd ordinary

meaningof its lang uag e . . . .”)

. I n the abse nce of

any “re levant data ,” this Panel must look to t he common mea ni n g of the word. B lack’ s L aw Dic tionary define s “prope r” a s “[t] hat which is fit, suitable, appr opriate, a dapted,

corr ect. Reasonably sufficient . Peculiar; naturally or esse ntially belong ing to a person or thing; not common; appropriate; one’s own.” Black’s L aw Dic tionary 1029 (6th ed. 1990) ( emphasis adde d). Particularly

pertinent to this exemption inquiry is the “reasona bly sufficie nt” l ang uag e in t he B lack’ s definit i o n
. “Rea sonable” is defined a s “[f]air, proper, just, moderate, suitable under the circ u m stance s. Fit and a ppropriate to the end in view. . . . Not immoderate or e x cessive, be ing sy nony mous with rational, honest, equitable, f air, suitable, moder ate, toler able.” Id

. at 1265. “Sufficie nt” i s d efine d as “[a]dequate, e noug h, as much a s may be nec essar

y , equal or

fit for e nd proposed, a

nd that which may

be necessar

y to acc omplish an object. Of suc h quality , number, for ce
or value as to serv e a nee d or purpose. ” Id . at 1433 (e mphasis added)

. Unless impossible, this Panel must construe the exemption statute “in such as fashion that

ever y word ha s some operative eff ect.” United States v. Nordic Village, Inc

. , 503 U.S. 30, 36, 112 S. Ct . 1 01 1, 10 15 (1 99 2) ; Ho ffm an v . Conn . De

pt. of In c om e Ma int

. , 49 2 U. S. 96 , 10 4, 10 9 S. Ct

.The P anel believes t hat ex empting the Debtor’ s diamond jewelr y collection not only

runs 8 afoul of the statute but also is outrag eous, especially g iven t hat the multi-car at Tiffa ny diamond ring w a s n o t f u ll y p a id f o r b y D r
. L e b o v it z. Al tho ug h, the te rm

“ luxur y ite m” is n ot u se d in

the Te nn e sse e g e ne ra l e xemp tio n s ta tut e s, 9 the term “ lux uries” is used by the Tenne ssee Commissioner of Revenue in its rules and regulations promulg ated to enf

orce the Tenne ssee Tax Enforc ement Ac t. The we aring appar el exemption under the Tax Enf

orce ment Act is similar to the g ener al exemption for wea ring appar el. T h e t ax act exempts from levy

“[s] uch items of we aringappar el . . . as a re ne ce s s ar y fo r t h e taxpay er or for members of

the taxpay er’ s family

. . . .” Te nn. Code Ann. § 67-1-1407( a) and (b)( 1)(A)

. The rule s and regulations pr omulgated to a dminist er this tax e x emption state, “ [e] xpensiv e it ems of wearing apparel, such as furs or jewelry, which are luxuries and ar e not nec essa ry for the ta x pay er or

for members of

his family

are not exempt from levy . . . .” Te nn. Comp. R. & Reg s. 1320-2-1-.07 (empha sis added). The Tenne ssee Supre me Court has held that a n ag ency ’s i n t erp re t at ion of the statutes it is charg ed with implementing, is entitl ed to g reat weig ht if that interpre tation is consistent with the statutes. See Exx on Corp. v. Metro. Gov ’t , 72 S.W

. 3d 638, 641 (Tenn. 2002). Whil e not binding he re, the analog ous exempti on is enlighte ning a nd persua sive. I n the T en nessee tax l aw exemption, expe nsive jewelr y is a lux ur y . As decide d by

the bankr uptcy court, va lue is an important consideration.

- 12- 2818, 2824 (1989). To completely ignor e the va lue of the je welry would be to ig nore the limit ing term “pr oper.” Wit hout que stion, jew elry of an excessive value is more tha n “re asonably

sufficie nt.” To deter mine what is “re asonably

sufficie nt” or “ of such . . . value as to ser ve a ne ed or pur

pose” a nd is, th erefo re , “ pr op e r, ” we mus t c on sid e r w he the r a n it e m’ s v a lue is m or e tha n th e va lue of

le ss expensive utili tarian items that would serve the same f unction. For

example, “[a] watch is an item of eve ry day

life, something worn by

most people that could be c onsidered a ‘minimum essential of daily life.’” In re M

eye r , 211 B.R. 203, 215 (B ankr. E.D. Va. 1997) (holdingthat the debtor’ s watch purcha sed for

$30 serve d both a utilitarian and de corative purpose a nd could be e x empted un der Virg inia’s exemption for “we aringappar el”). The De btor’s Cartier watch ( with a value of approximately

$1,500) fa

r outweig hs its uti litarian value. I t is bey ond fair de bate that the va lue of the Debtor ’s other c laimed exempt jewelry also far outweig hs its uti litarian value

. 8
The ba nkruptcy co u rt fo u nd that all of the De btor’s diamond jewe lry and the wa

tch ar e “l u x u ry i t em s
. ” Al s o , t h e b an kru p t cy co u rt n o t edt h at t h e B an kru p t cy C o d e e x ce p t s fr o m d i s ch ar ge 9

c on su me r d e bts ow e d to a sin g le c re dit or a g g re g a tin g mor e tha n $ 50 0 f or luxur y g oo ds inc ur

re d in the ninety

day s befor e an or der f or re lief is enter ed. 11 U.S.C. § 523(a) (2)( C)(I ). That nondischarg eability

section provides that “lux ury go o d s and services doe s not include g oods and service s rea sonably

nece ssary for the support and maintenanc e of the debtor or a depende nt of the- 13-

debtor.” 11 U.S.C. § 523(a) (2)( C)(ii). The bankruptcy court stated, “ Those sec tions taken tog ether indicate that luxury

g oods may have any value, so long a s they are not rea sonably

nece ssary

for the

su pp or t or ma int e na

nc e of the de bto r or a de pe nd e nt of the de bto r, bu t pe rh a ps mor e c le arl y

be c ome lux ury g oods when their pur chase price exceeds $500.” (J.A. at 92.) The c ourt also consider ed other fac tors such as the limitation of $1,225 in the fede ral ba nkrupt cy ex em p tion for jewe lry , and the 2005 amendments to the B ankruptc y Code which e x clude jew elry with a fa ir marke t value of more tha n $ 50 0 in the a g g re g a te (e xcept wed di ngri ng s) fr om t he te rm “ ho us e ho ld g oo ds .” 11 U. S.C. § 522(f) (1)( B) . Additionally , the bank rupt cy court c orre ctly

rec og nized that Tennessee does not provide a specific exemption for jewelry to aug ment i t s co n clus ion that jewelry may be a luxury item. Finally , the bankruptc y court looked at the Tenne ssee “ wild-ca rd” e x emption of $4,000, which may be used f or any exempt goods, whe ther jew elry or otherwise, as further support that the Debtor ’s d i a m o n d c o l l e c t i o nw a s i nt h e “ l u x u r y” c a t e g o r

y r at h e r t h ant h e “ n e c e s s ar

y an d p r o p e r ” c a t e g o r

y.
The De btor asser

ts that as a result of the ba nkruptcy court’s a naly sis, an improper moneta ry limit ation was imposed limiting the Te nnessee exemption t o $500 as the pe rmissible ag g reg ate va lue of jewe lry . This assertion i s incorre ct. The ba nkruptcy court did no such thing . I t merely utiliz ed analog ous statutes as indicators that the diamond collection was a “luxury ” rather than “ nece ssary and prope r” unde r the Te nnessee exemption s tatute.
Given the a

bove, the de termination that the jewelr y is not “nece ssary

and prope r” w ear ing appar el under

the Tenne ssee e x emption statute is corr ect. The finding s of the bankr uptcy court a re not clear ly

err oneous and its leg al ana ly sis is correc t.
The De btor also ar g ues that the ba nkruptcy court e rre d in admitting the Savell af fidavit. The

a ff ida vit wa s su bmi tte d b y

the Tr us te e a ft e r the e vid e nti ary he ari ng and c on ta ins op ini on by Sa ve ll reg ardingthe re tail value of the jewelr y in question. The Debtor arg ues t hat the af fidavit should have b e e ne x c l u d e d

f r o m e v i d e n c e b e c a

u s e i t w a s p r e s e n t e d a f

t e r t h e c l o s e o f p r o o f

s , i tc o n t a i n s h e a r s a y, and she w as not g iven an oppor tunity to cross examine Savell.

I n denying the Debtor’ s motion t o strike, the bankruptcy court stated “the De btor will suffer

no pr e jud ic e if he r m oti on

to s tr ike the Tr

us te e ’s a me nd e d o bje c tio n and the a ff ida vit of Mr . Save ll

are denied, be cause the cou rt finds the items to constitute lux ury items, not necessa

ry or prope r- 14-

wea ring appar el, based sol ely on the values ack nowledged by the Debtor .” (J.A

. a t 93 .) (e mph a sis added)

. The ba

nkruptcy court’s de cision to admit or e x clude e vidence is reviewe d for a n abuse of discretion. United States v. Hum phrey , 279 F.3d 372, 3 7 6 (6 th Cir. 2002). Specifica lly , the bankruptc y

court’s de cision to allow introduction of the af fidavit afte r t he close of proof s is one left to the discretion of the court a nd will be reve rsed only

for a n abuse o f di scre tion. Noble v. Nat’l Mines Corp. , 774 F.2d 144, 149 ( 6th Cir. 1985). I t is noteworthy that t h e De b t o r re l i ed upon a portio n o f Sa

v e ll ’ s o p in io n a s to v a lu e d u r in g th e e v id e n ti ar

y h e ar in g
. T h e r e w a s no abuse of discretion by

the bankr

uptcy court in admitting the affi d av i t b eca use the re cord de monstrates that the af fidavit was g iven no weig ht. T he bankr uptcy court spec ifically

stated that its conclusion that the jewe lry

constituted lux ury items w as “base d solely on the values a cknowledg ed by the Debtor .” (J.A. at 93 and 141.) Ther efor e, ther e wa s no prejudice to the Debtor, or re versible e rror , resulting fr om a dmi ssi on

of the su pp le me nta l po st- he ari nga ff ida vit

. E v en as s u m i n g arguendo that the bankr u p t cy court wa s incorre ct when it admitted the aff idavit, any possible e rror was harmless. “The harmless e rror standard c alls for re versa l when the appellate court lac ks a fa ir assura nce that the outcome of a

[hearing ] was not aff

ecte d by evidentiar

y
err or.” U.S. v. Johnson , 4 4 0 F. 3 d 8 3 2 , 8 4 7 (6 t h C i r. 2 0 0 6 ) ( qu o t i n g McCombs v . Meijer, I nc. , 395 F.3d 346, 358 ( 6th Cir. 2005)). B ased upon the rec ord on appe al, this P anel is convinc ed that the ba nk ru ptc y c ourt did no t pr e mis e its de c isi on on the ret ail va lue s se t f

or th i n th e a ff

ida vit

. Ul tim a te ly , w he n th e dia

mon d c oll e c tio n is so ld, the tr ue va lue s of the va

ri ou s it e ms o f j e we lr

y wi ll become known to all.

L a stl y , th e De bto r a sse rt s th a t th e ban kruptc y c ourt e rr e d b y no t in str uc tin g the Tr

us te e to consider w hether

sales proc eeds w ould result in a meaning ful distribution t o cre ditors after pay ment of administrative e x penses in deter mining whether to sell the De btor’s jewe lry . This issue was not raised at the evidentiar

y hear ing. I t was first raised when the De btor reque sted that the judg ment be altere d or ame nded. Conseq uen tl y , th e iss ue wa s n ot p ro pe rl y be fo re the ba

nk ru ptc y c ourt and is n ot p ro pe rl y be fo re the Pane l. T he iss ue is pr e ma tur e and ne e d n ot b e c on sid e re d at th is t ime . T he pr op e r t ime to raise this issue is if, and whe n, the Trustee seeks a pproval for

the sale o f t h e j ew el ry . Fur ther,- 15-

whether the Debtor

will have standing to object to any such propose d sale should first be a ddresse d by the ba nk ru ptc y c ourt

. Summariz ing, the Tenne ssee ex emption statute permits a debtor to exempt “nece ssary and proper ” jewe lry , such as a modest wedding ring or a utilitarian watch, not this Debtor’s di amond collection.

V. CO NC LU SION
For the fore g oing r easons, the or der of the bankr uptcy court is AF FI RMED.