806 F.3d 987
8th Cir.
2015
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Background

  • Stephanie Dittmaier received a 2012 federal and state income tax refund that included an Earned Income Credit (EIC) about five hours before filing bankruptcy.
  • The bankruptcy trustee moved to compel turnover of the refund; bankruptcy court exempted some funds but denied exemption for the EIC under Mo. Rev. Stat. § 513.430.1(10)(a).
  • The bankruptcy court ordered turnover of $4,968.03; Dittmaier’s motion for reconsideration was denied.
  • The district court affirmed, concluding the statutory exemption for a person’s “right to receive … a public assistance benefit” does not cover benefits already received before bankruptcy.
  • The Eighth Circuit reviewed de novo whether Missouri law exempts a public assistance benefit received prior to filing; it affirmed the lower courts’ rulings.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Whether Mo. Rev. Stat. § 513.430.1(10)(a) exempts a public assistance benefit (the EIC) that the debtor received before filing bankruptcy Dittmaier: the statute’s grouping with Social Security and unemployment, and canons like noscitur a sociis/ejusdem generis, show legislative intent to protect benefits even if received prepetition Trustee: the statute protects only the “right to receive” a benefit; once funds are received prepetition they are debtor’s property and not exempt The Eighth Circuit held the statute does not exempt public assistance benefits received before filing; the EIC was not exempt and turnover was required

Key Cases Cited

  • JPMorgan Chase Bank, N.A. v. Johnson, 719 F.3d 1010 (8th Cir. 2013) (standard of de novo review for legal questions)
  • In re Bargfrede, 117 F.3d 1078 (8th Cir. 1997) (predicting state supreme court interpretation of state law)
  • Fraser v. Deppe, 770 S.W.2d 479 (Mo. Ct. App. 1989) (interpretation that “right to receive” does not include funds already received)
  • In re McCollum, 287 B.R. 750 (Bankr. E.D. Mo. 2002) (payments received prepetition extinguish the “right to receive”)
  • In re McGoy, 86 B.R. 174 (Bankr. E.D. Mo. 1988) (same construction: “right to receive” terminates upon receipt)
  • Hatfield v. Cristopher, 841 S.W.2d 761 (Mo. Ct. App. 1992) (distinguishing federal § 407(a) exemption from Missouri’s “right to receive" language)
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