Nowak v. Hummel (In Re Hummel)
440 B.R. 814
| 9th Cir. BAP | 2010Background
- Hummel filed Chapter 7; ownership of three Prudential Whole Life Policies with cash surrender values $27,608.02, $3,266.82, $10,188.01; named adult nondependent daughter as beneficiary; debtor did not list daughter as dependent on Schedule I or tax returns; Nowak objected to exemption under Ariz. Rev.Stat. § 33-1126(A)(6) and § 20-1131(D); bankruptcy court overruled, Nowak appealed.
- Tober filed Chapter 7; owned Nationwide Annuity valued at $33,316.52; named adult nondependent daughter as beneficiary; Lang objected under Ariz. Rev.Stat. § 33-1126(A)(7); Tober did not list daughter as dependent; bankruptcy court overruled, Lang appealed.
- Arizona exemptions statute § 33-1126(A)(6) covers cash surrender value of life insurance with named beneficiaries including dependent family members, and defines dependent as a family member dependent for not less than half support; § 33-1126(A)(7) provides a similar rule for annuity contracts; both statutes use the term “any other dependent family member.”
- Statutory interpretation issue: whether the named beneficiary must be a dependent of the debtor for exemptions to apply under § 33-1126(A)(6) and (7).
- The Ninth Circuit BAP reviewed de novo, considering statutory text, ambiguity, legislative history, and Arizona law principles; concluded the beneficiary must be a dependent to qualify for the exemption.
- The court held that § 33-1126(A)(6) and (7) require the named child to be a dependent and reversed the bankruptcy court’s orders in both appeals.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the statute require the named child to be a dependent? | Nowak argues the statute allows exemption when named beneficiary is any dependent family member, not limited to the listed categories. | Hummel/Tober argue the phrase 'any other dependent family member' expands only to dependents and requires the named child to be dependent. | Yes; dependent requirement applies to named child. |
Key Cases Cited
- Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542 (9th Cir. 1990) (statutory interpretation principles; use plain language and liberal exemption construction)
- Hayes v. Cont'l Ins. Co., 872 P.2d 668 (Ariz. 1994) (interpreting Arizona statutes and legislative intent; to inform construction)
- In re Hoffpauir, 125 B.R. 269 (Bankr. D. Ariz. 1990) (liberal construction of exemptions in debtor's favor)