Curtis Nessan v. John LovaldCurtis Nessan v. John Lovald
Filed: December 5, 2012
Before RILEY, Chief Judge, COLLOTON and GRUENDER, Circuit Judges.
PER CURIAM.
Curtis Nessan filed for Chapter 7 bankruptcy on November 8, 2010. Among his assets, he listed a 2002 Chevrolet Silverado and a Triton boat with a motor and trailer. Nessan had financed the purchase of the truck and boat by granting BankWest a security interest in them. At the time of filing, BankWest’s security interest
When BankWest financed Nessan’s purchase of the truck and the boat, it also sold him a disability credit insurance policy, which was issued by AIG Insurance (“AIG“). Nessan later became disabled, and AIG commenced monthly payments to BankWest to service Nessan’s loans in satisfaction of the policy. AIG, however, stopped making payments, which, according to Nessan, violates its policy. Nessan intends to sue AIG for specific performance of the policy and damages for bad-faith refusal to pay. On his asset schedule, Nessan valued this legal claim at one dollar and took a one-dollar exemption for the claim.
Trustee John Lovald (“Trustee“) objected to Nessan’s exemption of the legal claim and moved for “all asset equity created by the application of AIG insurance policy payments upon the secured loan at BankWest” to be declared property of the estate. The bankruptcy court1 ordered that any amount recovered on the claim against AIG in excess of one dollar would become property of the estate. The Trustee then sent Nessan a check for three dollars in satisfaction of his claimed exemptions and instructed him to deliver the truck and boat to BankWest. Nessan refused to deliver the property, arguing that the bankruptcy court’s order did not support the Trustee’s request. In response, the Trustee filed another motion with the court, asking it to order Nessan to turn over the truck and boat. The Trustee also asked the bankruptcy court to order that Nessan “not contrail the manner in which the AIG insurance claim is negotiated or processed prior to payment.” The bankruptcy court granted the motion and ordered Nessan to deliver the truck, boat, and legal claim against AIG to the Trustee.
Nessan appealed to the district court,2
“[W]e review the bankruptcy court’s interpretation of the Bankruptcy Code de novo and its findings of fact for clear error.” In re Zahn, 526 F.3d 1140, 1142 (8th Cir. 2008) (quoting In re Farmland Indus., Inc., 397 F.3d 647, 650 (8th Cir. 2005)). “Although the district court’s conclusions about the bankruptcy court’s decision may carry some persuasive weight, our appellate review of the bankruptcy court’s decision is independent of the district court’s opinion.” In re Foust, 52 F.3d 766, 768 (8th Cir. 1995).
“When a debtor files a Chapter 7 bankruptcy petition, all of the debtor’s assets become property of the bankruptcy estate . . . .” Schwab v. Reilly, 560 U.S. ---, 130 S. Ct. 2652, 2657 (2010); see also
Federal law provides a list of property that the debtor may exempt. See
South Dakota is one of many states that opt out of the Bankruptcy Code’s exemptions. See
The South Dakota exemption laws allow debtors to exempt several categories of assets from judicial process. Certain personal effects, such as family pictures, burial lots, and clothing, are “absolutely exempt from . . . process, levy, or sale” regardless of their value.
[T]he debtor, if the head of a family, may . . . select from all other of the debtor’s personal property, not absolutely exempt, goods, chattels, merchandise, money, or other personal property not to exceed in the aggregate six thousand dollars in value; and, if not the head of a family, property as aforesaid of the value of four thousand dollars.
Nessan argues that the bankruptcy court erred when it ordered him to turn over the property, believing that
The check for three dollars satisfied any potential interest Nessan had in the truck, boat, and legal claim against AIG, and therefore there was no error in ordering Nessan to deliver that property to the Trustee. We affirm.