Opinion ID: 795702
Heading Depth: 2
Heading Rank: 3

Heading: Constitutionality of allowing avoidance of transfers to the Church

Text: 38 The Church argues that allowing the trustee to avoid these contributions would violate both the Free Exercise and Establishment clauses of the First Amendment. We find these arguments to be entirely without merit. 39 It is well established that a generally applicable law that does not target religious practices does not violate the Free Exercise clause. See Employment Div. v. Smith, 494 U.S. 872, 890, 110 S.Ct. 1595, 108 L.Ed.2d 876 (1990). The provisions of the bankruptcy code at issue here permit anyone to give up to 15 percent of her income to a charitable cause of her choice without avoidance of those contributions in a subsequent bankruptcy. The Church does not contend that the law allowing avoidance of transfers was intended to burden religion. In fact, there is no safe harbor at all for non-charitable contributions; the avoidance principal is generally applicable and religion-neutral. Thus it does not violate the Free Exercise clause, regardless of the burden it may place on the religious practices of those who believe in contributing more than 15 percent of their income to their religion. 40 For a statute to be permissible under the Establishment Clause, [it] must have a secular purpose; it must neither advance nor inhibit religion in its principal or primary effect; and it must not foster an excessive entanglement with religion. DeStefano v. Emergency Housing Group, Inc., 247 F.3d 397, 406 (2d Cir.2001). The secular purpose of the transfer avoidance provisions of the Bankruptcy Code is to protect the interests of creditors against fraudulent transfers. See Begier v. IRS, 496 U.S. 53, 58, 110 S.Ct. 2258, 110 L.Ed.2d 46 (1990) (noting the purpose of avoidance provisions is to preserve the property of the estate for distribution to creditors). The fraudulent conveyance provision applies equally to religious and non-religious entities, while allowing a limited safe harbor for any charitable contributions, so it neither advances nor inhibits religion. Because prior cases have made clear that entanglement is merely an aspect of the statute's effect, avoidance also does not create an excessive entanglement with religion by requiring religious institutions to return funds previously received. See Skoros v. City of New York, 437 F.3d 1, 36 (2d Cir.2006) (The entanglement of the two becomes constitutionally `excessive' only when it has `the effect of advancing or inhibiting religion.' (quoting Agostini v. Felton, 521 U.S. 203, 233, 117 S.Ct. 1997, 138 L.Ed.2d 391 (1997))). Thus, allowing avoidance here does not run afoul of the Establishment clause. 41 We therefore conclude that the fraudulent conveyance provisions of the Bankruptcy Code raise no constitutional difficulties under either of the religion clauses of the First Amendment.