554 B.R. 440
Bankr. S.D. Ohio2016Background
- Debtor Brian Lee Bellisari filed Chapter 7 on August 30, 2014 and receives $2,000/month from an annuity purchased to fund a settlement of a 1990 uninsured-motorist personal-injury claim.
- Jamestown Life owns the annuity; Debtor is the payee/annuitant and has continued to receive payments post-petition. Debtor disclosed the annuity payments on schedules and claimed exemptions under multiple Ohio statutes.
- Trustee objected to the claimed exemptions. Both parties conceded several statutory claims were inapplicable; Trustee conceded a $23,000 exemption under Ohio Rev. Code § 2329.66(A)(12)(c).
- The remaining dispute: whether Debtor’s right to future annuity payments is exempt under Ohio Rev. Code §§ 2329.66(A)(6)(e) together with § 3923.19(A) (benefits under sickness and accident insurance).
- The court treated the issue as whether Debtor’s right to receive payments (not the annuity contract owned by Jamestown) is exempt, and analyzed whether the underlying insurance falls within § 3923.19 or is excluded by § 3923.20.
Issues
| Issue | Debtor's Argument | Trustee's Argument | Held |
|---|---|---|---|
| Whether annuity payments are "benefits under policies of sickness and accident insurance" exempt under Ohio Rev. Code § 3923.19 | Payments are proceeds of the insurer’s obligations and thus fall within § 3923.19’s broad definition of sickness and accident insurance | § 3923.20 excludes motor-vehicle liability policies (and their supplementary UM/UIM coverage) from § 3923.19, so the annuity-funded UM/UIM payments are not covered | Held for Trustee: § 3923.20 applies and bars § 3923.19 exemption for these payments |
| Whether the character of the payments depends on the underlying obligation | Payments should be characterized by their origin (insurance benefits from a UM/UIM claim) and thus eligible for exemption | Characterization must consider statutory exclusions; underlying policy is a motor-vehicle liability policy subject to § 3923.20 | Court agreed payments retain insurance-benefit character but that § 3923.20 removes them from § 3923.19’s protection |
| Whether Debtor is entitled to any exemption beyond § 3923.19 | Claimed other Ohio exemptions (various sections) for the annuity/payments | Several claimed exemptions are inapplicable | Court allowed only the $23,000 exemption under § 2329.66(A)(12)(c); all other claimed exemptions disallowed |
| Whether the annuity contract (owned by Jamestown) is estate property | Debtor argued exemption in "the annuity" | Trustee noted annuity owner is Jamestown so contract not estate property; only Debtor’s right to payments is estate property | Court: annuity contract not estate property; Debtor’s right to payments is estate property and subject to exemption analysis |
Key Cases Cited
- In re Lindsay, 261 B.R. 209 (Bankr. S.D. Ohio 2001) (payments funded by an annuity are characterized by the underlying obligation and can constitute exempt workers’ compensation-type benefits)
- In re Abbott, 466 B.R. 118 (Bankr. S.D. Ohio 2012) (annuity owned by insurer is not estate property; debtor’s payment right is estate property and exemption depends on underlying nature)
- Baumgart v. Alam (In re Alam), 359 B.R. 142 (6th Cir. BAP 2006) (Ohio exemptions construed liberally for debtors; discusses § 3923.19 similarity to federal exemption)
- In re Kimble, 344 B.R. 546 (Bankr. S.D. Ohio 2006) (prima facie validity of claimed exemptions and burden on objector)
- In re Roselle, 274 B.R. 486 (Bankr. S.D. Ohio 2002) (burden of proof on objecting party under Fed. R. Bankr. P. 4003)
- In re Rhinebolt, 131 B.R. 973 (Bankr. S.D. Ohio 1991) (shifting burden to debtor once prima facie validity of exemption is rebutted)