Opinion ID: 146451
Heading Depth: 2
Heading Rank: 3

Heading: Baker Has an Interest in the Annuity Payments

Text: On appeal, the trustee maintains that Baker cannot rely on New York law to exempt the annuity at issue from the bankruptcy estate because he does not own it. The argument is flawed in conflating the annuity contract, which is owned by the insurance company, with the proceeds payable under that contract, which are due solely to Baker. New York law does not exempt only the annuity; it exempts the proceeds and avails thereof, N.Y. Debt. & Cred. Law § 282, specifically providing that [t]he benefits, rights, [and] privileges under the annuity contract are not subject to execution, N.Y. Ins. Law § 3212(d)(1). These provisions are broad enough to allow Baker to exempt future annuity payments from the bankruptcy estate. See In re Keil, 88 F.2d 7, 8 (2d Cir.1937) (observing that [e]xemption statutes are to be liberally construed in interpreting term proceeds and avails); Webster's Third New International Dictionary 150 (1986) (defining avails as profits or proceeds esp. from a business or from the sale of property); id. at 1807 (defining proceeds as what is produced by or derived from something (as a sale, investment, levy, business) by way of total revenue). [3] The trustee's argument to the contrary contradicts itself. The trustee suggests that the annuity proceeds are not part of the bankruptcy estate for purposes of the exemption but are property of the estate for purposes of distribution to creditors. To the extent In re Constantino, 274 B.R. 580, supports this position, it is not persuasive. Constantino acknowledged that the right to receive annuity payments was property of the bankruptcy estate. See 274 B.R. at 582. In holding that a debtor could exempt annuity payments only to the limited extent necessary for the support of the debtor under New York Debtor and Creditor Law § 282(3)(ii), Constantino misconstrued the annuity exemption of New York Debtor and Creditor Law § 282 and Insurance Law § 3212 to apply only to annuities owned by the debtor. See 274 B.R. at 582-83. This conclusion overlooks the plain language of § 3212(d)(1), which governs annuities and exempts from attachment not only annuity contracts owned by the debtor, but also the benefits, rights, privileges and options of an annuity contract for which the annuitant paid the consideration. Bankruptcy cases addressing § 3212 have thus concluded that debtors may exempt annuity payments from the bankruptcy estate. See Jacob v. Swimelar ( In re Jacob ), 418 B.R. 37, 40-41 (N.D.N.Y.2009); In re Lyons, 381 B.R. 444, 450-55 (Bankr.S.D.N.Y.2008); In re Tappan, 277 B.R. 491, 492 (Bankr. W.D.N.Y.2002). We think these cases accurately state New York law. Finally, the gap between our approach and that employed in Constantino may not be as wide as the parties suggest. In Constantino, the court permitted the debtor to exempt only so much of the annuity payments as was `reasonably necessary for [her] support.' 274 B.R. at 583 (quoting N.Y. Debt. & Cred. Law § 282(3)(ii)). Under Insurance Law § 3212(d)(2), a court may order the annuitant to pay to a judgment creditor or apply on the judgment in installments, a portion of such benefits that appears just and proper to the court, with due regard for the reasonable requirements of the judgment debtor and his family. We need not now decide whether or when this subsection permits a bankruptcy court to attach some portion of an annuity if doing so would be just and proper, see In re Lyons, 381 B.R. at 452 (interpreting judgment creditor in N.Y. Ins. Law § 3212(d)(2) to extend to any party in interest in a bankruptcy case), because the bankruptcy court concluded that no basis was presented for the court to exercise its discretion to invade the annuity, In re Baker, 2009 WL 2872830, at  n. 3. Moreover, as the trustee acknowledged at oral argument, the trustee did not invoke § 3212(d)(2) in the bankruptcy court, the district court, or this court in his opening brief. See Virgilio v. City of New York, 407 F.3d 105, 116 (2d Cir.2005) (In general we refrain from passing on issues not raised below. (internal quotation marks omitted)); Norton v. Sam's Club, 145 F.3d 114, 117 (2d Cir. 1998) (Issues not sufficiently argued in the briefs are considered waived and normally will not be addressed on appeal.). Accordingly, we here conclude only that the debtor held an interest in annuity proceeds that New York law permitted him to exempt from the bankruptcy estate.