Westry v. K. Jin Lim (In Re Westry), 591 F. App'x 429

Debtor Latonya Westry filed Chapter 7 on Nov. 18, 2011 and originally claimed a limited § 522(d)(5) exemption for an unresolved workers’ compensation claim.
The workers’ compensation claim settled for $25,000 on March 19, 2013.
On March 27, 2013 Westry amended Schedule C to claim $25,000 under § 522(d)(10)(C), the full amount under § 522(d)(11)(E), and the balance under § 522(d)(5).
Chapter 7 Trustee K. Jin Lim objected to the late amendment as prejudicial; Lim did not dispute the legal entitlement to the claimed exemptions and conceded the amendment was permitted by Rule 1009(a).
The bankruptcy court sustained the objection, limited Westry’s § 522(d)(5) exemption, and disallowed the other exemptions; the district court affirmed. The Sixth Circuit reversed and remanded.

Issue	Westry's Argument	Lim's Argument	Held
Whether a debtor may amend exemption claims before case closing absent bad faith or fraud	Debtor: Lucius bars exceptions except bad faith or fraudulent concealment; timely amendment should be allowed	Trustee: Court may deny amendments based on prejudice to estate/creditors even if no bad faith	Court: No adequate showing of prejudice; amendment improperly denied and reversal warranted

Lucius v. McLemore, 741 F.2d 125 (6th Cir. 1984) (recognizes bad-faith and fraudulent-concealment exceptions to amendment rights)
Law v. Siegel, 134 S. Ct. 1188 (U.S. 2014) (courts may not create nonstatutory exceptions to exemptions specified in the Bankruptcy Code)
In re Flo-Lizer, Inc., 946 F.2d 1237 (6th Cir. 1991) (standard of appellate review for bankruptcy decisions)
In re John Richards Homes Bldg. Co., 439 F.3d 248 (6th Cir. 2006) (clear-error review for factual findings; de novo for legal conclusions)