688 F.3d 1160
9th Cir.2012Background
- Two Chapter 7 debtors contested exemptions of life insurance cash value and annuity value based on named beneficiaries.
- Hummel owned life insurance with an adult, non‑dependent daughter as beneficiary; claimed exempt under Ariz. Rev. Stat. § 33‑1126(A)(6).
- Tober owned an annuity naming the same adult, non‑dependent daughter as beneficiary; claimed exempt under Ariz. Rev. Stat. § 33‑1126(A)(7).
- Trustees objected on the ground that the named beneficiaries were not dependents; the BAP held that only dependents could qualify for the exemption.
- The bankruptcy court ruled in favor of exemptions; the BAP reversed, holding that beneficiaries must be dependents; this appeal followed.
- Court concludes Arizona exemptions may apply to non-dependents if they are within the enumerated list or are dependents under the catch-all, and reverses the BAP to remand for proceedings consistent with this opinion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ‘other’ functions as a differentiator or a dependent‑catch‑all. | Tober/Hummel contend ‘other’ means only dependents qualify. | Trustees argue ‘other’ is not a differentiation; must be dependent. | ‘Other’ differentiates; non‑dependents may qualify if within the catch‑all. |
| Whether the text should be liberally construed in debtors’ favor. | Ambiguity favors debtors; exemptions should be read to grant relief. | Legislative history could counteract ambiguity. | Ambiguity favors debtor exemption; legislative history insufficient to rebut. |
| Is legislative history clear enough to rebut the textual ambiguity? | History does not clearly exclude non‑dependents from exemption. | History supports Trustees’ restrictive view. | Legislative history does not rebut the textual presumption in favor of the debtor. |
| What is the proper remedy given the ambiguity? | Because text supports exemption, debtors prevail. | Remand is needed for application of the statute. | Reverse BAP and remand for further proceedings consistent with opinion. |
Key Cases Cited
- Porto Rico Ry., Light & Power Co. v. Mor, 253 U.S. 345 (1920) (canon that when multiple words precede a clause, the clause may apply to all if appropriate)
- Jama v. Immigration & Customs Enf't, 543 U.S. 335 (2005) (use of ‘other’ as potentially ambiguous, reinforcing liberal debtors’ construction)
- TRW Inc. v. Andrews, 534 U.S. 19 (2001) (ambiguous exemption text interpreted liberally in favor of debtor)
- In re Marriage of Berger, 680 P.2d 1217 (Ariz. Ct. App. 1983) (construction of statutes to avoid superfluity in exemptions)