Bianca Rucker v. Johnny BelewBianca Rucker v. Johnny Belew
MELLOY, Circuit Judge.
Chapter 7 debtor Johnny Belew (Debtor) initially failed to disclose an account in his wife‘s name that previously had received direct deposits of his social security checks. When this account came to light, Debtor amended his schedules to list the account and claim its contents, $2.30, as exempt. The Trustee did not object.
After learning of the account, however, the Trustee conducted further investigation and discovered Debtor had withdrawn over $30,000 from a different account more than one year prior to entering bankruptcy and had placed that cash in a home safe. When this additional information came to light, Debtor again amended his schedules, identifying several assets. He included a possible interest in the $30,000 cash and
In Kaelin v. Bassett, 308 F.3d 885, 888 (8th Cir. 2002), our court stated: The bankruptcy court has the discretion to deny the amendment of exemptions if the amendment is proposed in bad faith or would prejudice creditors. In Law v. Siegel, 571 U.S. 415, 421 (2014), however, the Supreme Court clarified that bankruptcy courts could use neither statutory nor inherent sources of broad, general authority to contravene specific statutory provisions. We conclude that Law abrogates Kaelin and precludes the denial of an amendment to a schedule of claimed exemptions based on a debtor‘s bad faith.
In Law, a bankruptcy court assessed a surcharge for an administrative expense against a debtor‘s homestead exemption based on that debtor‘s bad faith. The Supreme Court reversed, citing the express statutory provisions protecting exempt property from administrative expenses,
The Court based its conclusion on two general principles: the axiom that a statute‘s general permission to take actions of a certain type must yield to a specific prohibition found elsewhere, id. at 421, and the longstanding requirement that whatever equitable powers remain in the bankruptcy courts must and can only be exercised within the confines of the Bankruptcy Code, id. (quotation omitted). The Court also emphasized that
The Trustee argues Law does not control in the present case because Law addressed the application of an equitable surcharge and not the amendment of claimed exemptions. We do not find this distinction meaningful. Importantly, in rejecting an argument from the trustee in Law, the Court equated the act of barring a debtor from amending an exemption schedule to the act of denying an exemption. Id. at 425 (disallow[ing] an exemption is much the same thing as bar[ring] a debtor from amending his schedules to claim an exemption). Whether viewed as a holding or as strong dicta, we conclude this expansive statement by the Court requires us to recognize that Law abrogates Kaelin. See In re Pre-Filled Propane Tank Antitrust Litig., 860 F.3d 1059, 1064 (8th Cir. 2017) (stating that appellate courts should give deference and respect to strong dicta from the Supreme Court); Ellmann v. Baker (In re Baker), 791 F.3d 677, 682 (6th Cir. 2015) ([Law] prohibits the bankruptcy court from disallowing the debtors’ claimed exemptions because of their alleged bad faith and fraudulent conduct.); see also Clabaugh v. Grant (In re Grant), 658 F. App‘x 411, 414-15 (10th Cir. 2016) (applying Law in the context of a lien avoidance motion and stating, the bankruptcy court could not exercise its equitable powers to deny [a]
The bankruptcy court correctly overruled the Trustee‘s objection. We affirm.