Bruin Portfolio, LLC [“Bruin”] appeals the bankruptcy court’s order avoiding its judicial hen on Gregory and Sara Leicht’s [“Leicht”] residence. After considering carefully Bruin’s challenges to the order, we affirm.
Jurisdiction
The bankruptcy court’s lien avoidance order is a final order.
See In re Weinstein,
Scope of Review
Bruin’s challenge to the bankruptcy court’s lien avoidance order raises legal issues exclusively. We review
de novo
the lower court’s legal conclusions.
See Krikor Dulgarian Trust v. Unified Management Corp. Of Rhode Island, Inc. (In re Peaberry’s Ltd.),
Background
The Leiehts, Chapter 7 debtors, executed a $272,000.00 promissory note to Home National Bank of Milford on July 8, 1988. Bruin eventually succeeded to the bank’s interest by assignment via the Federal Deposit Insurance Corporation.
The Leiehts purchased a home in Westbor-ough, Massachusetts on February 13, 1992, and, pursuant to state statute, recorded a declaration of homestead for the property on October 12,1994.
Bruin initiated suit on its promissory note in state court and obtained a writ of attachment, recorded as a lien against the Leiehts’ real estate on April 4, 1995. The state court issued judgment in Bruin’s favor on August 30,1996.
The Leiehts filed a voluntary Chapter 7 petition on April 7, 1997. They scheduled their Westborough residence, held in joint
On August 12,1997, after a nonevidentiary hearing, the bankruptcy court granted the Leichts’ lien avoidance motion. This appeal ensued.
Discussion
Bruin’s attack on the bankruptcy court’s lien avoidance order proceeds on two fronts. First, it argues that the court misapprehended the substance of the Massachusetts homestead exemption, leading, in turn, to a misapplication of § 522(f). Second, it urges that, if § 522(f) operates to avoid its lien, the statute effects a “taking” offensive to the United States Constitution’s Fifth Amendment. We will address each argument in turn.
I.
Section 522(f) and the Massachusetts Homestead Statute
a. The Lay of the Land
We begin by noting that, under § 522(b), debtors in bankruptcy may elect to utilize either the Bankruptcy Code exemptions set forth in § 522(d) or the exemptions provided by their state of residence together with those provided by federal, nonbank-ruptcy law. If a state has “opted out” of the federal exemption scheme, its resident debtors are restricted to the latter option. 2 Massachusetts permits its debtors to elect between the state and federal exemption alternatives. The Leichts selected the Massachusetts exeippuon scheme and claimed the Massachusetts statutory homestead exemption. 3
1. The Massachusetts Homestead Statute
We begin by examining the Massachusetts homestead statute. It provides:
§ 1. Right to acquire; exemptions; definitions
An estate of homestead to the extent of one hundred thousand dollars in the land and buildings may be acquired pursuant to this chapter by an owner or owners of a home or one or all who rightfully possess the premise by lease or otherwise and who occupy or intend to occupy said home as a principal residence. Said estate shall be exempt from the laws of conveyance, descent, devise, attachment, levy on execution and sale for payment of debts or legacies except in the following cases:
(1) sale for taxes;
(2) for a debt contracted prior to the acquisition of said estate of homestead;
(3) for a debt contracted for the purchase of said home;
(4) upon an execution issued from the probate court to enforce its judgment that a spouse pay a certain amount weekly or otherwise for the support of a spouse or minor children;
(5) where buildings on land not owned by the owner of a homestead estate are attached, levied upon or sold for the ground rent of the lot whereon they stand;
(6) upon an execution issued from a court of competent jurisdiction to enforce its judgment based upon fraud, mistake, duress, undue influence or lack of capacity.
For the purposes of this chapter, an owner of a home shall include a sole owner, joint tenant, tenant by the entirety or tenant in common; provided, that only one owner may acquire an estate of homestead in any such home for the benefit of his family; and provided further, that an estate of homestead may be acquired on only one principal residence for the benefit of a family. For the purposes of this chapter, the word “family” shall include either a parent and child or children, a husband and wife and their children, if any, or a sole owner.
Mass. Gen. Laws ch. 188, § 1 (Supp.1998).
A property owner “aequire[s]” the homestead by declaration, either in the deed by which the debtor obtains the property, or by a subsequently recorded instrument. Id. § 2. Chapter 188 also provides that, in case of marital separation, the probate court may order use and occupation of the homestead by the spouse who is not the declared “owner” of the homestead, minor children of the marriage, or both. Id. § 3 (1991). The homestead “continue^] for the benefit of a surviving spouse and minor children” following the declared owner’s death. Id. § 4. Mortgagees and encumbrancers of the homestead realty are protected against a subsequent homestead declaration, see id. § 5, but the homestead estate will prevail as against a third party who acquires the equity of redemption on execution. See id. § 6. The homestead may be terminated by deed or recorded declaration signed by the record homestead owner and his or her spouse. See id. § 7.
2. Section 522(c)
Although Bruin’s appeal raises § 522(f) lien avoidance issues, § 522(e) is critical to our analysis. It establishes the post-bankruptcy relationship between “property exempted” and debts that arose (or that are treated as having arisen) before the commencement of the bankruptcy case:
(c) Unless the case is dismissed, property exempted under this section is not liable during or after the case for any debt of the debtor that arose, or that is determined under section 502 of this title as if such debt had arisen, before the commencement of the case, except—
(1) a debt of a kind specified in section 523(a)(1) or section 523(a)(5) of this title; or
(2) a debt secured by a lien that is—
(A)(i) not avoided under subsection (f) or (g) of this section or under section 544, 545, 547, 548, 549, or 724(a) of this title; and
(ii) not voided under section 506(d) of this title; or
(B) a tax lien, notice of which is properly filed; or
(3) a debt of a kind specified in section 523(a)(4) or 523(a)(6) of this title owed by an institution-affiliated party of an insured depository institution to a Federal depository institutions regulatory agency acting in its capacity a conservator, receiver, or liquidating agent for such institution.
§ 522(c).
See Davis v. Davis (In re Davis),
3. Section 522(f)
Section 522(f)’s operation is at the center of this appeal. It provides debtors the ability to avoid (i.e. to reduce or eliminate) certain liens, including judicial liens, as is Bruin’s, that encumber exempt property. It states:
(f)(1) Notwithstanding any waiver of exemptions but subject to paragraph (3), the debtor may avoid the fixing of a lien on an interest of the debtor in property to the extent that such lien impairs an exemption to which the debtor would have been entitled under subsection (b) of this section, if such lien is—
(A) a judicial lien, other than a judicial lien that secures a debt—
(i) to a spouse, former spouse, or child of the debtor, for alimony to, maintenance for, or support of such spouse or child, in connection with a separation agreement, divorce decree or other order of a court of record, determination made in accordance with State or territorial law by a governmental unit, or property settlement agreement; and
(ii) to the extent that such debt—
(I) is not assigned to another entity, voluntarily, by operation of law, or otherwise; and
(II) includes a liability designated as alimony, maintenance, or support, unless such liability is actually in the nature of alimony, maintenance or support; or
(B) a nonpossessory, nonpurchase-money security interest in any—
(i) household furnishings, household goods, wearing apparel, appliances, books, animals, crops, musical instruments, or jewelry that are held primarily for the personal, family, or household use of the debtor or a dependent of the debtor;
(ii) implements, professional books, or tools[ ] of the trade of the debtor or the trade of a dependent of the debtor; or
(iii) professionally prescribed health aids for the debtor or a dependent of the debtor.
(2)(A) For the purposes of this subsection, a lien shall be considered to impair an exemption to the extent that the sum of—
(i) the lien[;]
(ii) all other liens on the property; and
(iii) the amount of the exemption that the debtor could claim if there were no liens on the property;
exceeds the value that the debtor’s interest in the property would have in the absence of any liens.
(B) In the case of a property subject to more than 1 lien, a lien that has been avoided shall not be considered in making the calculation under subparagraph (A) with respect to other liens.
(C) This paragraph shall not apply with respect to a judgment arising out of a mortgage foreclosure.
(3) In a case in which State law that is applicable to the debtor—
(A) permits a person to voluntarily waive a right to claim exemptions under subsection (d) or prohibits a debtor from claiming exemptions under subsection (d); and
(B) either permits the debtor to claim exemptions under State law without limitation in amount, except to the extent that the debtor has permitted the fixing of a consensual lien on any property or prohibits avoidance of a consensual lien on property otherwise eligible to be claimed as exempt property;
the debtor may not avoid the fixing of a lien on an interest of the debtor or a dependent of the debtor in property if the lien is a nonpossessory, nonpurehase-mon-ey security interest in implements, professional books, or tools of the trade of the debtor or a dependent of the debtor or farm animals or crops of the debtor or a dependent of the debtor to the extent the value of such implements, professional books, tools of the trade, animals, and crops exceeds $5,000.
§ 522(f).
See In re Silveira,
c. Mapping the Issues
1. Bruin’s View
Bruin argues that, properly applied, § 522(f) cannot operate to avoid a judicial hen on Massachusetts homestead property if the hen is in consequence of a debt contracted prior to the acquisition of the debtor’s homestead estate. Its contention pivots on Massachusetts’ limited definition of “homestead,” the manner in which homestead rights are acquired in the State, historical state law treatment of the homestead, and the date that the Leichts became indebted to Bruin’s predecessor in interest. Bruin contends that, because the Massachusetts statute expressly withholds homestead protection against debts contracted for before the homestead is “acquired,” a hen (such as its own) enforcing collection of such a pre-acqui-sition debt cannot “impair” the exemption within the meaning of § 522(f). 5
Bruin characterizes the Massachusetts homestead as an “estate,” distinct from the real estate to which it relates. Thus, in Bruin’s view, Massachusetts does not really provide a state law exemption in real estate at all. It extends protection only to the “homestead estate,” and the homestead estate, by definition, is valued by subtracting pre-acquisition contract claims (and liens enforcing them) from the value of the underlying real estate. According to Bruin, because the Leichts borrowed from its predecessor before they acquired their homestead estate by recorded declaration, its lien is immune from any homestead-exemption-based bankruptcy attack. 6
Bruin points to
In re Fracasso,
2. Appellee’s Position
The decision below is consistent with the bankruptcy judge’s prior published ruling,
see In re Boucher,
This majority view proceeds on the following analytical premises: (1) § 522(b) permits a debtor’s use of state law exemptions; (2) once exemptions are invoked in a bankruptcy proceeding, § 522(c) dictates the extent to which exempt property may be called to answer for prebankruptcy debts; (3) § 522(c) generally provides that, after bankruptcy, exempt property “is not liable” for prebank-ruptcy debts
except
debts secured by tax liens or other valid, unavoided liens and debts for taxes, alimony/support/separate maintenance, and certain debts stemming from bank failures; (4) § 522(c) preempts state laws that define the operative effect of exemptions more restrictively, or more expansively, than it does; and, (5) because the Massachusetts homestead statute purports to limit the operative effect of the homestead exemption against pre-acquisition contract debts, it is preempted by § 522(c).
See In re Whalen-Griffin,
Thus, it would follow, as the lower court concluded here, that a judicial lien that encumbers a Massachusetts homestead can be avoided under § 522(f)’s formula, even a judicial lien that secures a pre-acquisition contract debt. This is so because such a lien “impairs” the homestead exemption within the meaning of § 522(f). In the lower court’s view, Bruin’s lien “impairs an exemption to which [the debtors]
would have been
entitled but for the lien itself.”
Owen v. Owen,
At first blush, the issues create a circular conundrum. If the Code permits a debtor’s invocation of state exemptions, and if the state exemptions are defined in such a way that they simply do not operate against one or more categories of prepetition claims, so that such claims (and resulting liens) hover without the sphere of a debtor’s exemption protections, how can a judicial lien securing such a claim “impair” the exemption so as to be vulnerable to § 522(f) avoidance? To answer the question we must discern the outer limits of a state law’s ability to control an exemption’s operative characteristics in the bankruptcy universe.
As In re Fracasso’s construct makes plain, between state exemption law and federal bankruptcy policy there is much space for disagreement. Well-informed courts may reach conclusions light-years apart.
In the end, however, we are convinced that, although through § 522(b) Congress provided states with the opportunity to define the category and content of exemptions resident debtors may invoke in bankruptcy (going so far as to authorize states to “opt out” of the federal exemption scheme), it defined the operative effect of exemptions in bankruptcy through §§ 522(c) and (f). We reject In re Fracasso’s conclusion because it rests on a fundamental mis-perception regarding the extent to which Congress truncated its deference to state exemption policy through § 522(e)’s preempting provisions. We embrace, instead, the In re Boucher/In re Whalen-Griffin/In re Weinstein construct. As a consequence, those provisions of the Massachusetts homestead statute that limit the exemption’s vitality against certain categories of claims cannot hold sway against conflicting Code provisions.
Our conclusions follows from § 522(c)’s context as well as from the practical fact that, however the homestead may function as a state law matter, to defer to state law so far as Bruin asks would import into bankruptcy proceedings alien notions that frustrate federal aims. It follows also from the complementary conclusion that such deference in the bankruptcy process would not square with state law objectives. In re Whalen-Griffin and In re Boucher are our polestars.
e. Charting the Boundaries of the Bankruptcy Debtor’s Exemption
We begin by answering the question of exactly what property is “exempted” by a Massachusetts debtor who invokes the state homestead exemption in bankruptcy. 7 Is congressional deference so great, or are the exceptions set forth in Mass. Gen. Laws ch. 188, § 1 so integral a part of the state exemption’s essence, that the exceptions must operate as part-and-parcel of the exemption when it is invoked in a bankruptcy case? In re Boucher answers the question succinctly:
Allowing a debtor to elect state exemptions constitutes a significant deference to state law on the part of Congress, as does the congressional authorization for states to pass legislation prohibiting their residents from claiming federal exemptions pursuant to section 522(d). See 11 U.S.C. § 522(b) (1994). Congress nevertheless enacted two general rules without giving any indication they are to apply only to the federal exemptions. First, it invalidated exemption waivers, making no exception for waivers deemed valid under state law. See 11 U.S.C. § 522(e), (f) (1994).
Second, and more to the point here, Congress made exempt property liable only for certain nondischargeable debts and unavoided liens. In doing so, it expressed no deference for debts protected by state law from the state’s exemptions ____
In light of the clear command of section 522(c) and the pre-emptive power of Congress under its constitutional authority to establish uniform bankruptcy laws, congressional approval of the use of state exemptions cannot be taken to extend to exemptions that protect debts left unprotected by section 522(c). Yet, Congress obviously wanted a debtor to have exemptproperty. The result is that the Debtor’s election of the state exemption stands, but the state exception for prehomestead debts does not. Invalidating this exception to the exemption is much like voiding the waiver of a state exemption pursuant to section 522(e), notwithstanding the waiver’s validity under state law. Courts have had no difficulty doing this. E.g., Dominion Bank of Cumberlands, N.A v. Nuckolls, 780 F.2d 408 (4th Cir.1985); In re Blair,79 B.R. 1 (Bankr.D.Ariz.1987).
Section 522(c) completes the Code’s treatment of nondischargeable debts, complementing
inter alia
§§ 523(a), 524(a)(3) and 727(b), by providing that exempt property is immunized against liability for prebankrupt-cy debts, including “some,
but not all,
nondis-chargeable debts.”
In re Davis,
Against this federalized scheme of exemption protections, a product of the con-gressionally-conceived fresh start, Bruin’s counter-arguments cannot prevail. Bruin contends that the unique character of the Massachusetts homestead “estate,” with its statutory exception for pre-acquisition contract claims, permissibly frustrates § 522(c)’s mandate. In Bruin’s view, the “property exempted” by a bankruptcy debt- or cannot transcend the exemption’s built-in limitations. It argues that the homestead’s definitional limitations inhere in the homestead estate’s very essence. As an estate, rather than as an operational concept like an “exemption right,” the homestead’s scope is immutably fixed. Thus, the “property” that can be “exempted” by a debtor within the meaning of § 522(e) is similarly limited, and, Bruin argues, there is no conflict between § 522(c) and state law.
Granted, there are hoary Massachusetts cases that describe the homestead exemption under statutory predecessors to Mass. Gen. Laws ch. 188, § 1 in ways that characterize it as a unique estate, derivative of rights in land.
See, e.g., Silloway v. Brown,
Like more conventional exemptions, Massachusetts’ homestead has always been a mechanism to “protect the family home” from enforcement of judgments, to carve out humane protections for a destitute “owner and his family.” Jordan B. Cherrick,
The Homestead Act: An Important Law to Protect the Family But a Law in Need of Re
As a consequence, we decline Bruin’s invitation to recognize the Massachusetts homestead as so different in character from other exemptions that § 522(c)’s fresh start mechanism cannot operate to enlarge its protections. Thus, the conclusion that the Massachusetts law “conflicts” with the Bankruptcy Code’s congressionally-intended operation, and must give way to the Code’s preemptive powers, is unavoidable.
See e.g., Rini v. United Van Lines, Inc.,
Our conclusion should not be startling. In the exemption arena, federal courts have, time and again, concluded that the federal fresh start principles promulgated in § 522(e) override state law exemption limitations, even definitional limitations.
See, e.g., Owen,
Moreover, it is not startling that bankruptcy law operates this way in the exemption context. Throughout, bankruptcy law relies upon state law to define and establish the fundamental rights and relationships that arrive, with the debtor, at the bankruptcy court’s door. It is upon these rights and relationships that federal principles operate to render results consistent with bankruptcy
f. Lien Avoidance Under § 522(f).
The foregoing analysis breaks our conundrum’s circularity. Having reached the conclusion that § 522(c) preempts the Massachusetts homestead exemption’s exception for pre-acquisition contract claims, § 522(f)(l)’s application is straightforward. There is little left to say.
Bruin’s lien is a “judicial lien” within the meaning of the Code. See § 101(36)(“‘[Jjudicial lien’ means lien obtained by judgment, levy, sequestration, or other legal or equitable process or proceeding[.]”) And, given our earlier conclusion, there is no remaining dispute that Bruin’s lien “impairs” the Leichts’ exemption and that application of § 522(f)(2)(A)’s formula calls for its total avoidance. See supra note 5.
II.
Does § 552(f)’s Application to Bruin’s Lien Effect an Unconstitutional Taking?
Bruin bears on beyond the statutory argument. It asserts that § 552(f)’s operation against its lien works an impermissible, uncompensated taking of its lien. We disagree.
a. Undertaking Takings Analysis
The Constitution expressly invests Congress with power to enact national bankruptcy legislation: “The Congress shall have Power ... [t]o establish ... uniform Laws on the subject of Bankruptcies throughout the United States.” U.S. Const. Art. I, § 8. Accordingly, Congress has broad authority to enact laws that shape, impact, and alter the contractual and property interests of debtors and creditors.
See generally Hanover Nat’l Bank v. Moyses,
Nevertheless, “[t]he bankruptcy power is subject to the Fifth Amendment’s prohibition against taking private property without compensation.”
United States v. Security Indus. Bank,
Before we reach the meat and bones of takings analysis, we must make a point that simplifies our task considerably: In the case before us, § 522(f) is being applied to a lien that arose after the statute’s enactment (or effective date). 15
There is no dispute that the impact of § 522(f) on Bruin’s judicial lien is prospective. Lien avoidance powers have been part of the federal bankruptcy laws since 1898. See 11 U.S.C. § 107 (1898). Section 522(f), enacted as part of the Bankruptcy Reform Act of 1978 became effective on October 1, 1979. See 95 Stat. 598, § 402 (1978). The most recent amendment to § 522(f) became effective October 24,1994. See 103 Stat. 394, §§ 303, 304, 310 (1994)(clarification of subsection (f) impairment calculation, changes to tools of trade provision, and increased protection of alimony and child support liens); id. § 702 (effective date is enactment date of October 22,1994). Bruin sued the Leichts to collect on its note on March 24, 1995, and obtained its lien, the “property interest” as-sertedly taken from it, when it recorded its attachment writ on April 4, 1995. Thus, Bruin is left to argue that its lien was imper-missibly “taken” by operation of § 522(f)(1), even though the section, including the latest, clarifying revisions to it, was on the books well before the lien arose.
In this way, Bruin’s argument places us a step beyond the takings challenge to § 522(f) addressed by the Supreme Court in Security Indus. Bank. There the Court concluded that Congress intended § 522(f)(2) to operate only prospectively, not retrospectively. 16 It declared:
“Accordingly, in the absence of a clear expression of Congress’ intent to” apply § 522(f)(2) to property rights established before the enactment date, “we decline to construe the Act in a manner that could in turn call upon the Court to resolve difficult and sensitive questions arising out of the guarantees of the” Takings Clause.
Strictly speaking, Security Indus. Bank did not declare that § 522(f)’s prospective application would not amount to a taking, although some courts have found the question (and its answer) implicit in the Supreme Court’s opinion. For example, the Seventh Circuit stated in In re Thompson:
The conclusion that section 522(f), when [,]as here[,] it is applied prospectively, does not violate the takings clause of the Fifth Amendment is the premise of [Security Indus. Bank ], which construed the statute to be applicable only prospectively in order to obviate a constitutional question. The constitutionality of section 522(f) is not an open question, at least at our level.
Like others, we take
Security Indus. Bank’s
teaching as a strong signal, though
For Bruin to succeed we must be satisfied that: (1) the application of § 522(f) to his lien is governmental action; (2) that his judicial lien is “property” of a kind that the Fifth Amendment protects; (3) that the application of § 522(f)(1) to the his judicial lien actually took a property interest from him; and (4) that Congress went “too far” when enacting § 522(f)(1), weighing the burden to Bruin of lien avoidance against the public benefit achieved through the congressional preservation of the homestead exemption. 18 Even assuming that Bruin could satisfy the other elements required to demonstrate an unconstitutional taking, we are convinced that the extent and character of the property involved (i.e., the lien) were circumscribed by the federal lien avoidance remedy at the time the lien was created and, therefore, that § 522(f)’s operation did not take any property from Bruin viewed under the third element of our takings inquiry.
Though a protected interest under the Fifth Amendment, Bruin’s lien is no more than what the law defined it to be at the time it arose. And here is the Achilles heal of Bruin’s takings challenge. The lien was born subject to the Leieht’s right to avoid it pursuant to § 522(f)(1). Ruling on a uniformity challenge to bankruptcy exemptions, the Supreme Court early recognized the defining role exemption laws play vis-a-vis liens created after their enactment. It is, the Court noted,
a rule of the law to subject to the payment of debts under its operation only such property as could by judicial process be made available for the same purpose. This is not unjust, as every debt is contracted with reference to the rights of the parties thereto under existing exemption laws, and no creditor can reasonably complain if he gets his full share of all that the law, for the time being, places at the disposal of creditors.
Hanover Nat’l Bank,
Whether or not Bruin was aware of it at the time,
20
Bruin’s judicial lien was, at its inception, an interest in property subject to and limited by the Leicht’s § 522(f) avoidance powers. This is the insurmountable hurdle that Bruin’s challenge to § 522(f)’s prospective effect cannot clear.
See Radford,
Therefore, protestations that § 522(f) “completely destroyed the property interest that Bruin had in the [Leichts’] Residence” fail. Brain’s lien, its “property interest,” arose subject to the Code’s lien avoidance mechanisms. 22 Section 522(f)(1), as applied here, was (and remains) the positive law context in which Bruin’s lien exists. That law’s application to the lien, and the resulting avoidance of the lien through the Leichts’ bankruptcy remedy, effected no diminution in, no “taking” of, Brain’s rights.
Conclusion
For the reasons set forth above, we conclude that the court below properly applied §§ 522(c) and 522(f) to avoid Bruin’s judicial lien on the Leichts’ Massachusetts homestead and that the avoidance of Bruin’s lien
The bankruptcy court’s order is AFFIRMED.
Notes
. Unless otherwise indicated, all citations are to the Bankruptcy Reform Act of 1978 ("Bankruptcy Code" or "Code”), as amended, 11 U.S.C. § 101, etseq.
. Section 522(b) reads:
Notwithstanding section 541 of this title, an individual debtor may exempt from property of the estate the property listed in either paragraph (1) or, in the alternative, paragraph (2) of this subsection. In joint cases filed under section 302 of this title and individual cases filed under section 301 or 303 of this title by or against debtors who are husband and wife, and whose estates are ordered to be jointly administered under Rule 1015(b) of the Federal Rules of Bankruptcy Procedure, one debtor may not elect to exempt property listed in paragraph (1) and the other debtor elect to exempt property listed in paragraph (2) of this subsection. If the parties cannot agree on the alternative to be elected, they shall be deemed to elect paragraph (1), where such election is permitted under the law of the jurisdiction where the case is filed. Such property is — ■
(1) property that is specified under subsection (d) of this section, unless the State law that is applicable to the debtor under paragraph (2)(A) of this subsection specifically does not so authorize; or, in the alternative,
(2)(A) any property that is exempt under Federal law, other than subsection (d) of this section, or State or local law that is applicable on the date of the filing of the petition at the place in which the debtor’s domicile has been located for the 180 days immediately preceding the date of the filing of the petition, or for a longer portion of such 180-day period than in any other place; and
(B) any interest in property in which the debtor had, immediately before the commencement of the case, an interest as a tenant by the entirety or joint tenant to the extent that such interest as a tenant by the entirety or joint tenant is exempt from process under applicable nonbankruptcy law.
§ 522(b).
.In its statement of issues, Bruin asserts that the debtors improperly amended Schedule C to assert an exemption in their Westborough homestead after their bankruptcy filing. But Bruin’s brief gives the point short shrift, as did its oral argument. We need not devote extensive treatment to points raised, but effectively abandoned by the appellant.
See Birch v. Choinski (In re Choinski),
. We acknowledge that, pending the Fifth Circuit's en banc decision, the panel decision in Davis carries no weight. Our conclusions do not turn on the Davis panel's holding. Nevertheless, we refer to the panel’s opinion several times for the useful discussion it contains.
. According to Bruin, the Massachusetts homestead is Swiss cheese with its statutory exceptions (including the pre-acquisition contract debt exception) as its holes. The Code sets forth categories of prebankruptcy claims, listed in §§ 522(c)(1), (2), and (3), that may be satisfied by resort to "property exempted” by debtors. Since the "property exempted” is Swiss cheese, Bruin contends, § 522(c) necessarily operates on it holes and all.
. The parties take it as a given, as do we, that the Massachusetts homestead statute sets forth property that "is exempt under ... State ... law” within the meaning of § 522(b)(2)(A).
. We resolve the issues before us by examining the relationship among § 522(b)(2)(A), the Massachusetts homestead exemption and § 522(c). Edmonston v. Murphy (In re Edmonston), 107 B.3d 74 (1st Cir.1997), held that "to the extent there are joint creditors” who may, under Massachusetts law, reach entireties property to satisfy their claims, a bankruptcy debtor's exemption in such property is "invalid ab initio," if "a proper objection by a party in interest” is made in the bankruptcy case. Id. at 77 (holding that Chapter 7 trustee is a proper party to assert the objection). Its rationale does not apply here. A debt- or's right to claim an exemption in entireties property is provided by § 522(b)(2)(B). However, unlike § 522(b)(2)(A), § 522(b)(2)(B) expressly incorporates not only the state’s designation of the "nature” of the property (viz "an interest as a tenant by the entirety or joint tenant”), but also limits the exemption's availability based on creditors' ability to reach the debtor’s interest in the property as a matter of nonbankruptcy (i.e., state) law (entireties property is exempt "to the extent that such interest ... is exempt from process under applicable nonbankruptcy law.”)
. Indeed, § 522(c) may not be a one-way street. It may operate to subject exempt property to liabilities for which it could not be reached under state law. In re Davis illustrates the point. Concluding that the Texas state homestead law, which immunized the debtor’s homestead from, among other things, his former spouse’s claims for alimony, maintenance and support, was preempted by § 522(c)(1), the Fifth Circuit panel stated:
[Fjederal law determines whether property is exempted and immunized against seizure and sale for prebankruptcy debts. § 522. The debtor’s qualified right to exempt property from the estate, and the relationships between the debtor, his creditors, and exempted or non-exempted property with regard to prebank-ruptcy debts, are governed exclusively by federal law. Consequently, it is clear that the state homestead exemption law has been superseded by the Bankruptcy Code, and that the state law cannot alter the obligations of a bankruptcy debtor and his creditors as provided for by federal bankruptcy law. For these reasons, we conclude that the state homestead exemption law is inoperative against the debt- or's former spouse in this case and that she is entitled under the Bankruptcy Code to proceed against the debtor's otherwise exempted property to satisfy her alimony, maintenance, and child support judgment....
Id.,
. If Bruin’s objection were successful, the bankruptcy court could not administer the value of the Leichts’ homestead consistently with state law principles without abridging express provisions of the Code. For example, to the extent the exemption were reduced or eliminated, it could not be shared among only pre-acquisition contract claimants (or others coming within the state law exemption exceptions) without overriding the Code’s distributional priority scheme.
See
§§ 507, 726. It could not be shared among all creditors of the estate (especially administrative claimants) without diluting the protections that state law intended for pre-acquisition contract creditors. And the property could not be set aside for postbankruptcy resort by the excepted creditors without abridging the Leichts’ discharge, overruling § 522(c) and, in consequence, diluting the protections afforded designated categories of creditors Congress expressly preferred
in
§ 522(c).
See In re Whalen-Griffin,
. The cases cited post-date Massachusetts’ enactment of Married Women's Property Acts in 1845 and 1855. See Dianne Avery & Alfred S. Konefsky, The Daughters of Job: Property Rights and Women’s Lives in Mid-Nineteenth-Century Massachusetts, 10 Law & Hist. Rev. 323 (1992). Those statutes reformed women's property rights, providing them the ability to set aside and hold title to premarital property by agreement and, later, without agreement by operation of law. See id. at 326 n. 18. But the homestead statute operated in a different context, where the woman did not ordinarily appear as owner of record. As the cases disclose, women’s (more particularly widows’) rights in homestead property were often under assault by their former spouses' heirs, creditors, and transferees.
. See generally Carlson, supra, at 57. Referring to the creditor community's campaign to undermine § 522(f)'s effectiveness in the period immediately following its 1978 enactment, Professor Carlson observes:
If state law allowed exemption of the debtor’s equity in a thing (as opposed to the thing-in-itself), then secured creditors could justly argue that tlie security interest did not "impair” the exemption, as section 522(f)(1)(B) avoidance requires. Since only the debtor equity was exempt, the security interest could eliminate the exemption simply by assuring that no debtor equity existed.
Such a state-law theory was obliterated by the Supreme Court in Owen v. Owen, where the Court implied that security interests on exempt property could be destroyed regardless of the content of state exemption law.
Id. (footnotes omitted).
. The 1994 amendments to § 522(f)(2)(A) require a hypothetical liquidation of exempt property and full or partial elimination of judicial liens (with exceptions) and certain nonpossesso-ry, nonpurchase money security interests, to the extent that the property's value at bankruptcy will not support them.
See, e.g., In re Silveira,
. See generally Lawrence Ponoroff, Exemption Limitations: A Tale of Two Solutions, 71 Amer. Bankr.LJ. 221 (1997):
The substantive law of bankruptcy is federal law of course, but bankruptcy practice has always involved a complex interplay of state as well as federal law. Ranging from the validity and priority of liens, to the strong-arm powers of the trustee under Bankruptcy Code § 544, to the determination of the property comprising the assets of the estate, application of many bankruptcy rules depends on state law characterization.
Id.
at 221 (footnotes omitted).
See also Butner v. United States,
. As a successor in interest to the FDIC on the July 8, 1988, Note, Bruin may have other “property” interests at stake in the Leicht’s bankruptcy. However, our takings inquiry is limited to avoidance of Bruin’s judicial lien on the Leichts' residence, the only interest Bruin asserts is unconstitutionally avoided pursuant to § 522(f). Section 522(f)(1) leaves untouched whatever other rights Bruin may have as a result of the note.
. Some lower courts applying § 522(f) have concluded that Congress intended the Bankruptcy Reform Act to apply retroactively on rights that vested before its effective date.
See Hertzberg v. Hirschfield & Sons, Inc. (In re Caro Prods., Inc.),
. We are mindful of the rule that courts should avoid reaching a constitutional question if the resolution of the matter can rest on other grounds.
See Security Indus. Bank.,
. We note that: "It is by now well established that legislative Acts adjusting the burdens and benefits of economic life come to the Court with a presumption of constitutionality....”
Usery v. Turner Elkhorn Mining Co.,
.In this sense, nothing has been "taken” from Bruin because at the time he commenced the foreclosure,
he knew or should have known that his rights were circumscribed by the federal legislation. If his property rights are defined by reference to existing law, obviously no taking has occurred. Thus, the proposition that the fifth amendment imposes limitations on even [this] purely prospective restriction[ ] of [Brum's] rights ... seems to assume that the properly rights held by secured creditors are in some sense anterior to positive law.
James Stevens Rogers,
The Impairment of Secured Creditors' Rights in Reorganization: A Study of the Relationship Between the Fifth
.Many courts wrestling with the impact of new laws on property rights have examined whether the aggrieved party had "notice” of the disputed provision.
See Commonwealth National Bank v. United States (In re Ashe),
. The fact that this is a law and not a provision in a contract distinguishes Bruin’s challenge from the successful challenge of the materialmen in
Armstrong v. United States,
. To re-employ the metaphor, preexisting federal lien avoidance rights are limitations that inhere in the essence of Bruin’s judicial lien: the holes, if you will, in its own Swiss cheese construct.