593 B.R. 600
Bankr. M.D. Tenn.2018Background
- Debtor Marlon C. Bush filed Chapter 7 on April 13, 2018 and claimed a $25,000 Tennessee enhanced homestead exemption under Tenn. Code Ann. § 26-2-301(f) based on custody of a minor granddaughter.
- The Trustee objected, arguing Debtor did not have “custody” as defined under Tennessee law and thus was not eligible for the enhanced exemption.
- Two juvenile-court orders were admitted: a 2004 temporary custody order awarding custody to the child’s grandmother, and a December 13, 2017 order appointing Debtor and Sue Bush as guardians of the granddaughter.
- Debtor testified (unchallenged) the granddaughter has lived with him and Sue ~13 years; they provide food, shelter, medical care, transportation, and all child-rearing responsibilities; the father provides no support or visitation.
- Tennessee statutes define custody (Tenn. Code Ann. § 37-1-102(b)(9)) as control of actual physical care and include rights/responsibilities exercised by parents or persons granted custody by a court; guardianship statutes grant rights equivalent to legal custody.
- The bankruptcy court ruled Debtor’s court-appointed guardianship and his practical exercise of custodial duties satisfy Tennessee’s custody concept for the enhanced homestead exemption; Trustee’s objection overruled.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Debtor has "custody" of the granddaughter for Tenn. homestead enhancement | Debtor: guardianship + actual physical care = custody under Tennessee law and fits statutory purpose | Trustee: custody is defined by statute and Debtor lacks custody; the 2017 order expressly "does not effect custody" | Held for Debtor: court-appointed guardianship + exercise of custodial rights = custody for exemption purposes |
| Whether "custody" is ambiguous requiring certification to TN Supreme Court | Debtor: statute undefined; interpret in pari materia with related Tennessee statutes to resolve meaning | Trustee: statutory language is clear; court should not find ambiguity or reinterpret | Held: No ambiguity; related statutes harmonize to define custody as court-granted control of physical care |
| Whether applying Tennessee law conflicts with federal bankruptcy policy | Debtor: exemption aligns with Code's fresh-start policy and state-law objectives to protect minor children | Trustee: (implicit) state-law application should not expand federal exemption improperly | Held: No conflict; applying state law here is consistent with Bankruptcy Code policies |
Key Cases Cited
- U.S. v. Chafin, 808 F.3d 1263 (11th Cir. 2015) (contextual statutory interpretation and ambiguity analysis)
- U.S. Steel Mining Co. v. Director, OWCP, 719 F.3d 1275 (11th Cir. 2013) (statutory-context approach to ambiguity)
- Robinson v. Shell Oil Co., 519 U.S. 337 (1997) (statutory-construction principles; interpret provisions in context)
- In re American Home Mortg. Holdings, Inc., 637 F.3d 246 (3d Cir. 2011) (parties’ divergent interpretations do not alone create ambiguity)
- In re Lawrence, 219 B.R. 786 (E.D. Tenn. 1998) (applying state exemption law consistent with Bankruptcy Code policies)