Opinion ID: 206314
Heading Depth: 3
Heading Rank: 2

Heading: Compensation for Loss of Future Earnings

Text: The exemption under Ohio Revised Code § 2329.66(A)(12)(d) exempts payments made to the debtor as compensation for the loss of future earnings. In re Bartholomew, 214 B.R. 322, 325 (Bankr. S.D. Ohio 1997) (citing In re Carson, 82 B.R. 847 (Bankr. S.D. Ohio 1987)). The Debtors’ arguments regarding the settlement being for loss of future earnings are convoluted and do not, in fact, appear to actually argue that the settlement itself was in any part for future earnings. Rather, they appear to argue that approval of the compromise of Bailey’s lawsuit against ODOT for reinstatement to his former position prevents him from obtaining future earnings from ODOT and, therefore, the settlement proceeds should be considered compensation for loss of future earnings. At the hearing before the bankruptcy court, the Debtors stated: [W]e don’t believe the compromise is attributable to future earnings. The only thing we believe was that the lawsuit . . . in Cuyahoga County and the grievance settlement agreement that accompanied it, that we believe was future earnings. We can’t find any place where future earnings could be from the compromise. We didn’t want the compromise and we don’t believe the compromise is in future earnings. We only believe that that lawsuit and everything that was attached to that lawsuit was the future earnings. .... We’re not trying to say that the compromise is - - is our exemption. We want only to exempt the lawsuit that was in our schedules on the - - on Schedule B to be amended to be - - yes, it would effectively void out that compromise . . . . (Transcript of Exemption Hearing, May 13, 2010, Bankr. Ct. Docket #155, at 7 and 10-11.) In their brief to the Panel, the Debtors explain: Denying Bailey’s right to pursue his wrongful termination directly and adversely affects Bailey pecuniarily. Bailey’s remedy to his contested lawsuit was to “be made whole”. Bailey asks for reinstatement to his former position with full back pay and seniority. To deny this exemption stops a recovery of back pay that would fully administer his bankruptcy and denies his right of future earnings from ODOT. Bailey currently earns $13.35/hr. While his former position at ODOT currently makes $22.00/hr. Taking into consideration 11 Bailey’s longevity; thus the disparity in his lost wages makes him pecuniarily affected for the rest of his life. .... We respectfully request [the Panel] to reverse the Bankruptcy Court’s decision and approve our exemption for lost future earnings and reverse the compromise made over this proposed exemption. (Appellants’ Br. at 9-10 and 13.) In other words, as the bankruptcy court noted in its memorandum opinion, the Debtors are not seeking to exempt the $17,000 in settlement funds, but rather to throw out the approved settlement so that they may continue to pursue their lawsuit against ODOT in state court. Amending their schedules to claim the exemption available in Ohio Rev. Code § 2329.66(A)(12)(d) does not provide for such a result. As the bankruptcy court stated in its memorandum opinion, the Debtors cannot pursue their suit against ODOT unless they are successful in their appeal of the bankruptcy court’s order approving the settlement. In our August 17, 2010, opinion, this Panel held that the Debtors do not have standing to appeal the order approving the settlement. The Debtors have appealed that decision to the Sixth Circuit Court of Appeals and that appeal is still pending. Consequently, the Debtors are attempting to use this appeal as an end run around the proper appeal process with a collateral attack of the earlier order approving the settlement. See e.g., Miller v. Meinhard-Commercial Corp., 462 F.2d 358, 360 (5th Cir. 1972) (action challenging integrity of court’s judgment is impermissible collateral attack; an action is a collateral attack if a court must in some fashion overrule a previous judgment).2 The Debtors have also taken the appropriate direct attack by appealing the bankruptcy court’s order approving the settlement. Rather than attempt to reverse that order by claiming this exemption, they must wait for the appeal process to run its course. 2 The “collateral attack doctrine” bars the tactic whereby a party seeks to circumvent an earlier ruling of one court by filing a subsequent action in another court. Pratt v. Ventas, Inc., 365 F.3d 514, 519 (6th Cir. 2004). W hile the procedural posture of this case does not fall squarely into the collateral attack doctrine pattern, it nevertheless is an attempt to improperly circumvent an earlier ruling of the bankruptcy court by collaterally attacking it. 12