Richardson v. Schafer (In Re Schafer), 455 B.R. 590

Steven M. Schafer filed Chapter 7; claimed $44,695 exemption in homestead with FMV about $160,000 and liens totaling $99,305; claimed Michigan bankruptcy-specific exemption Mich. Comp. Laws § 600.5451(1)(n) to protect up to $51,650 in value.
Dorothy Ann Jones filed Chapter 7; claimed homestead exemption under Mich. Comp. Laws § 600.5451(1)(n) for up to $30,000 in equity; property not encumbered.
Trustees objected to exemptions on constitutional grounds under the Bankruptcy and Supremacy Clauses; argued Michigan § 600.5451(1)(n) is unconstitutional.
Bankruptcy court consolidated Schafer and Jones hearings, held that § 600.5451 is constitutional under the Supremacy Clause, and overruled the trustees’ objections.
The Michigan Attorney General and amici supported constitutionality; the Panel later granted intervention and an amicus brief; the Panel reverses the bankruptcy court’s ruling.
Both trustees appeal, arguing § 600.5451 violates the Bankruptcy Clause by failing geographic uniformity and exceeding Congress’s power under the Bankruptcy Clause.]
The Panel ultimately concludes Michigan’s bankruptcy-specific exemption statute is unconstitutional under the Bankruptcy Clause, reversing the bankruptcy court.”],
Issues only 0

Issue	Plaintiff's Argument	Defendant's Argument	Held
Does Mich. § 600.5451 violate the Bankruptcy Clause (geographic uniformity)	Schafer/Jones argue statute creates bankruptcy-specific exemptions that violate geographic uniformity.	Bankruptcy court and Michigan contend concurrent jurisdiction allows such exemptions.	Unconstitutional under the Bankruptcy Clause.
Does Michigan’s statute reflect unconstitutional state sovereignty in bankruptcy, given the Constitution ceded authority to Congress	Trustees contend states cannot enact bankruptcy-specific exemptions.	State power to opt-out exists, but not to create bankruptcy-specific exemptions.	Statute violates Bankruptcy Clause by creating bankruptcy-specific exemptions.
Does concurrent jurisdiction authorize a state to enact bankruptcy-specific exemptions applicable only to debtors in bankruptcy	Rhodes/Storer support concurrent jurisdiction allowing opt-out but not bankruptcy-specific laws.	Concurrent jurisdiction used to support opt-out, not state-internal bankruptcy laws.	Concurrent jurisdiction does not validate bankruptcy-specific exemptions.
Should the Supremacy Clause be addressed if Bankruptcy Clause issue suffices	Not necessary if Bankruptcy Clause violation proven.	Supremacy Clause issue may be reached if needed.	Unnecessary to reach Supremacy Clause given Bankruptcy Clause holding.

Hanover Nat’l Bank v. Moyses, 186 U.S. 181 (1902) (geographic uniformity; trustee takes in each state what creditor would have had)
Rhodes v. Stewart, 705 F.2d 159 (6th Cir.1983) (states may opt-out of federal exemptions)
Storer v. French (In re Storer), 58 F.3d 1125 (6th Cir.1995) (opt-out consistent with Rhodes; Supremacy Clause not violated)
In re Cross, 255 B.R. 25 (Bankr.N.D.Ind.2000) (opt-out does not grant authority to create exemptions)
In re Wallace, 347 B.R. 626 (Bankr. W.D.Mich.2006) (statute to reference state law; limitations under federal structure)
In re Pontius, 421 B.R. 814 (Bankr.W.D.Mich.2009) (state exemptions in bankruptcy context)
In re Hood, 541 U.S. 440 (2004) (ceding sovereignty; uniformity implications)