Richardson v. Schafer (In Re Schafer)
689 F.3d 601
| 6th Cir. | 2012Background
- Schafer filed a March 2009 Chapter 7 petition; Michigan allows exemptions from §522(d), general exemptions, or bankruptcy-only exemptions; §600.5451(1)(n) provides a higher homestead exemption only for debtors in bankruptcy; the Trustee objected to §600.5451 on Bankruptcy and Supremacy Clause grounds; the bankruptcy court upheld §600.5451; the BAP reversed, finding it unconstitutional; Michigan appealed to this Court seeking to uphold the statute.
- Jones and others in the bankruptcy action are involved; the state sought to intervene in support of Schafer’s position; the district court’s judgment was appealed to the BAP, then to this Court.
- The central issue is whether a state may enact a bankruptcy-specific exemption statute that applies only to debtors in bankruptcy without violating the Bankruptcy Clause or the Supremacy Clause; prior precedents discuss concurrent state authority to create exemptions, and whether such authority survives judicial scrutiny when interfacing with federal bankruptcy law.
- The opinion analyzes (a) the scope of Congress’s power to pass bankruptcy legislation and state participation under Rhodes; (b) uniformity requirements under the Bankruptcy Clause with respect to state exemptions; (c) the Supremacy Clause implications for a state statute that provides bankruptcy-specific exemptions.
- The court ultimately affirms the bankruptcy court and holds Michigan’s Mich. Comp. Laws § 600.5451 constitutional as a valid exercise of concurrent state power within the Bankruptcy Code framework.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Power to pass bankruptcy legislation with state exemptions | Trustee: federal power exclusive; state law undermines uniformity | Michigan: Rhodes permits concurrent authority to exempt; not preempted | Constitutional; states may enact bankruptcy-specific exemptions |
| Uniformity under the Bankruptcy Clause | Trustee: uniformity requires same treatment across debtors | Michigan: uniformity is geographic, not personal; §600.5451 operates uniformly for a class of debtors | Uniformity satisfied; no per-debtor uniformity required |
| Supremacy Clause analysis | Trustee: potential conflict with federal exemptions; unconstitutional | No actual conflict; §600.5451 aligns with federal framework; does not thwart federal objectives | No Supremacy Clause violation; no preemption |
Key Cases Cited
- Rhodes v. Stewart, 705 F.2d 159 (6th Cir. 1983) (states may enact exemptions; §522(b)(2) permits concurrent state action)
- Hood v. Tennessee Student Assistance Corp., 319 F.3d 755 (6th Cir. 2003) (exclusive federal power not absolute; states may act absent federal legislation)
- Moyses, 186 U.S. 181 (1892) (uniformity is geographical, not personal; exemptions may vary by state)
- Storer v. French (In re Storer), 58 F.3d 1125 (6th Cir. 1995) (confirms concurrent state power to create exemptions; no facial restrictions under §522(b)(2))
- Schultz v. United States, 529 F.3d 343 (6th Cir. 2008) (uniformity analysis permits non-uniform laws if uniform application to a defined class of debtors)