Document: 500 U.S. 305 111 S.Ct. 1833 114 L.Ed.2d 350 Dwight H. OWEN, Petitionerv.Helen OWEN. No. 89-1008. Argued Nov. 5, 1990. Decided May 23, 1991. Syllabus The Bankruptcy Code allows States to define what property is exempt from the estate that will be distributed among debtor's creditors. Florida Constitution provides a homestead exemption, which state courts have held inapplicable liens attach before in question acquires its status. Petitioner purchased his condominium 1984 subject respondent's pre-existing judgment lien, and first qualified as under 1985 amendment State's law. After petitioner filed chapter 7 petition for bankruptcy 1986, Court, inter alia, sustained claimed exemption condominium, but subsequently denied postdischarge motion avoid lien pursuant § 522(f). District Court of Appeals affirmed, finding since had attached was not Held: 1. Judicial can eliminated 522(f) even though State has defined such way specifically exclude encumbered by liens. section provides, "the debtor may fixing [judicial] on an interest extent impairs would been entitled under," effect, 522(d), lists federal exemptions, or At blush, argument seems entirely reasonable her does "impair" petitioner's within meaning because assertable against judicial liens, permitting avoidance preserve expand it. However, this result widely uniformly rejected with respect exemptions 522(d). To determine application 522(f), those ask whether fact entitled, it he itself. This approach, gives phrase "would entitled" applicable text, correct. A different approach cannot adopted light equivalency treatment accorded Pp. 308-314. 2. expresses no opinion on, leaves resolve instance, questions said "impair[ed] [petitioner] at time fixed, did yet interest; fixed "on debtor" if, law, simultaneously acquisition statute extending retroactive. P. 314. 877 F.2d 44, (CA 11 1989), reversed remanded. SCALIA, J., delivered REHNQUIST, C.J., WHITE, MARSHALL, BLACKMUN, O'CONNOR, KENNEDY, SOUTER, JJ., joined. STEVENS, dissenting opinion. Roger L. Fishell, Sarasota, Fla., petitioner. Timothy B. Dyk, Washington, D.C., respondent. Justice SCALIA Court. 1 U.S.C. 522(b). also encumbering eliminated. case elimination operate when 2 * In 1975, Helen Owen, respondent, obtained former husband, approximately $160,000. recorded Sarasota County, Florida, July 1976. own any after-acquired county. B.A. Lott, Inc. v. Padgett, 153 Fla. 304, 14 So.2d 667 (1943). 1984, County; upon title, became lien. Porter-Mallard Co. Dugger, 117 137, 157 So. 429 (1934). 3 One year later, amended law so previously homestead, thereafter did. Under Constitution, "exempt forced sale . judgment, decree execution [can] thereon .," Const., Art. 10, 4(a). interpreted provision, however, being i.e., acquired Bessemer Gersten, 381 1344, 1347, n. (Fla.1980); Aetna Ins. LaGasse, 223 727, 728 (Fla.1969); Pasco Harley, 73 819, 824-825, 75 30, 32-33 (1917); Volpitta Fields, 369 367, (Fla.App.1979); Lyon Arnold, 46 451, 452 (CA5 1931). Pre-existing then, are effect exception exemption. 4 January Code, condominium. valued $135,000, primary asset; liabilities included $350,000 owed court discharged personal liability these debts, sustained, over objections, 5 remained after discharge, moved reopen 522(f)(1). refused avoidance; therefore property. 86 B.R. 691 (MD Fla.1988). Eleventh Circuit affirmed same ground. 44 (1989). We granted certiorari. 495 ----, 110 2166, 109 496 (1990). II 6 An consists all interests property, legal equitable, possessed filing, well recovered recoverable through transfer provisions. withdrawn (and hence creditors) benefit debtor. Section 522 determines exempt. 522(b), must select between list (set forth 522(d)) provided State, "unless authorize," 522(b)(1)—that is, unless "opts out" list. If opts out, then debtors limited Nothing subsection (b) (or elsewhere Code) limits power restrict scope exemptions; indeed, could theoretically accord all. Property properly exempted (with some exceptions) immunized prebankruptcy debts. 522(c). No thereby immunized), falls estate. 522(b) certain "from estate"; obviously, exempted. Thus, if holds only bare title house—if, example, house purchase-money mortgage full value—then passes estate; equitable remains holder, 541(d). And pass estate, neither Legal pass, exemption; remain holder. rule Long Bullard, 617, 917, 29 L.Ed. 1004 (1886), codified 522. Only where empowers transfers originally passed (through claim exemption) 8 It provision issue here, we now turn. reads follows: 9 "(f) Notwithstanding waiver section, is— 10 "(1) lien; "(2) nonpossessory, nonpurchase-money security interest. ." 12 present assume without deciding property." See Farrey Sanderfoot, --- 1825, ---- (1991). presented "impairs (b)." Since chosen opt out listed see Fla.Stat. 222.20 (1989), described above. Respondent suggests that, case, need obviously not, permit respondent urges, 13 reasonable. Several Courts addition here reached built-in limitations exemptions,1 others it.2 What give us pause, exemptions. Most federally explicitly restricted "debtor's aggregate interest" up maximum amount. §§ 522(d)(1)-(6), (8). were applied, perhaps well)3 unavoided interest, exceed $7,500 value, residence." 522(d)(1). interpretation applied who owned worth $10,000 $9,000 $7,500. avoidable "aggregate $1,000. uniform practice courts, contrary. they itself.4 As preceding italicized words suggest, reading more consonant text 522(f)—which establishes baseline, impairment measured, "is entitled," one entitled." latter denotes affairs conceived hypothetical, rather than actual, requires reader disregard element reality. "Would been" what? answer given, issue, 15 other conceivable possibility harking back beginning "Notwithstanding use contrary-to-fact construction "notwithstanding" common usage, permissible. Moreover, might employ main point ("Notwithstanding waiver, shall retain (b)"), most strange phrase, aside. waivers (though done passing, addressed directly 522(e)) provide context, every instance accurate (because incidentally mentioned occurred) there thousands instances should used. refer generality, indeed universality, cases covered provision; premise invited existence 16 accepted, least become irrelevancy venerable, important (§ 522(d)(1)), motor vehicles 522(d)(2)), household goods wearing apparel 522(d)(3)), tools trade 522(d)(6)), reference "interest" interest," encumbrances avoided. Surely promises that—and surely bizarre scheme prevent items, less crucial items (for "unmatured life insurance contract debtor," 522(d)(7)) fashion unquestionably 17 doubt, lower courts' unanimously agreed-upon manner applying exemptions—ask avoiding entitle would, recover lien—is correct.5 becomes do how possible. remotely justifies treating two categories differently. refers "exemption[s] (b)," includes alike. Nor overwhelmingly clear policy impelling us, power, create distinction contain. asserts inconsistent Code's "opt-out" policy, whereby their refuse take limitations. That plainly true, doubt purports available waived" given waived, purposes 522(f)—the which, noted, recites applies "[n]otwithstanding exemptions." Dominion Bank Cumberlands, NA Nuckolls, 780 408, 412 (CA4 1985). Just state-defined another disfavoring federal- state-created; impingement types state-created. basis pronouncing opt-out absolute, apply along whatever competing limiting policies contains. 18 On analysis set above conclude Florida's exclusion protection achieve similar provision.6 III 19 foregoing conclusion necessarily case. permits "fixing debtor." Some already it, never lien" re McCormick, 911, 914 (Bkrtcy.Ct.WD Pa.), aff'd, 22 997 (WD Pa.1982); Scott, 613, 615 Okla.1981). so, argued fix nor subsidiary taking, cf. United Security Industrial Bank, 459 70, 103 407, 74 235 (1982). express points, leave them considered remand. 20 reversed, remanded proceedings consistent 21 ordered. dissenting. 23 Court's puts cart horse. I read necessary reach majority addresses. construing provisions recognize classes cases: right right. category. explain, believe correctly decided Appeals, affirmed. 24 facts raise straight forward issue: 522(f)1 undisputed November 1984. single. time, "head household" Article Constitution. effective broadened extend "a natural person." 4. date case.2 attached. 25 authorize perfected secured deals separate relevant provisions, identifies claims general creditors.3 Focusing bankruptcy, bankrupt sold trustee satisfy H.R.Rep. 95-595, pp. 360-361 (1977); S.Rep. 95-989, 75-76 (1978), U.S.Code Cong. & Admin.News 1978, p. 5787. matter excluded 45 (CA11 1989). fully protected creditors operation 26 second suit, concerned priority creditors' opposed allowing circumstances encumber 27 raises questions: (1) (2) avoided? concerns relative conflicting issues, timing often decisive. question—I call "impairment question"—concerns distribution proceeds resolved. answered positively. 28 determining turns our attention towards "fixed." (1982), 522(f)(2) nonpossessory enactment Reform Act 1978 taking compensation violation Fifth Amendment avoided precise holding retroactively enacted. Although constitutional critical controlling Because attached, lien.4 30 frames decides "can liens." Ante, 306. description arisen concerning avoidability goods. cited, ante, 310, nn. 2.5 each state's definition purported otherwise itself defeated purpose narrowing category property.6 31 opinions McManus, 681 353 1982), adequately identify today addressed. finance company (AVCO) promissory note form chattel furnishings. sought AVCO's ground furniture following reasoning affirmed.7 Louisiana established furniture. Yet, code notwithstanding definitions utilized authority mortgages; impair 32 my erred focused situation bankruptcy. analyzed noting concluded avoidable. judge came recognizing statutory evidences intent consider attachment. He wrote: 33 "The opening '[n]otwithstanding exemptions,' indicates subsection's import return status quo prior improvident When entered office enjoyed seizure goods; left longer solely improvidently covering fail characterized anything found 522(f)." Id., 358.8 34 resolves McManus adopting position dissent disagree reasoning. simply overlooks avoidable—rather avoided—the existed 35 Finally, comment "that provision." 313-314. statement treats refusal equivalent Louisiana's properties mortgage. flawed. attached; reason applicable. affirm Appeals. Pine, 717 281 (CA6 1983); 1982). Brown, 734 119 (CA2 1984); 408 1985); Thompson, 750 628 (CA8 Leonard, 866 335 (CA10 Exemption (7) "owned" debtor, (10) (11) various benefits, awards payments "right receive." 522(d)(7), (10), (11). (9), 522(d)(9), contains language arguably excluding See, e.g., Simonson, 758 103, 105 (CA3 Brantz, 106 62, 68 (Bkrtcy.Ct.ED Pa.1989); Carney, 47 296, 299 (Bkrtcy.Ct.Mass.1985); Losieniecki, 136, 138 Pa.1981). Collier ¶ 522.29 (15th ed. 1990); Weintraub A. Resnick, Law Manual 4.08[2] (1986); Bowmar, Avoidance Liens Impair Exemptions Bankruptcy: Workings 522(f)(1), 63 Am.Bankr.L.J. 375, 387-388, 85 (1989) (hereinafter Bowmar). when, avoidance, 522(d) attach. Richardson, 55 526 (Bkrtcy.Ct.ND Ohio Chesanow, 228, 231 (Bkrtcy.Ct.Conn.1982). But see, Hooper, 60 640 641 Pa.1986); Barone, 540 Pa.1983). Today's speak issue. suggested equity required Miller, 43 Mo.1980), rejected. Cole, 322, 323, Mo.1981). For formulation, B.R., 68; 299; Bowmar 388-392. dissent's view, "exemption 'fixed'." Post, 317. (b), determined filing petition," fixed. (b)(2)(A). follow Code. provides: 8, 1985. 11, 5. part: 541 individual either paragraph or, alternative, subsection. "Such specified (d) (2)(A) authorize; alternative. "(2)(A) Federal local place domicile located 180 days immediately petition, portion 180-day period place; possible find ambiguity placement "under section." understand interaction merely priorities creditors—namely kinds justify avoidance. identifying irrelevant posed statement, - 6, "[w]e Code" ignores point, Two cases, address issues. 1984) involved foreclosure New York allow sale. Nebraska livestock 522(f)(2). contrast, used family residence spouse's subsequent broadening intended protect holders defeat Another facts, Blazer Financial Services Gipson consolidated married couple company's id., 355. Judge Dyer buttressed legislative history: "This clearly indicated 95th Cong., 2d Sess. 76, 5787, 5862: " '[To] debtors' thus fresh start, [t]he absence goods.' "Thus Congress's fullest him laws, waived equally Congress particularly eradicating unconscionable creditor practices consumer loan industry." F.2d, 358.

Category: 7