In re Bailey

Summarized by Jason Stitt , Keating Muething & Klekamp PLL
14 years 12 months ago

Citation:

6th Cir. BAP, Case No. 10-8042, Opinion March 9, 2011

Tag(s):

6th Circuit

Ruling:

The Bankruptcy Appellate Panel of the Sixth Circuit affirmed the order of the bankruptcy court sustaining the Trustee's objection to the debtors' claim of exemption because the Debtor stipulated that no exemption was available to be claimed regarding the debtors’ claim against ODOT and the record contained no evidence to support an inference that any part of the settlement of the ODOT claim was based on or related to future earnings.

Procedural context:

The debtors filed an appeal of the bankruptcy court's order sustaing the Trustee's objection to the debtors' statement of intention to amend Schedule C, in which they sought to exempt proceeds from a settlement of claims against ODOT as a claim for future earnings.

Facts:

Edwin D. Bailey (“Bailey”) and his wife, Jamie S. Bailey, filed a voluntary petition for relief under chapter 7 of the Bankruptcy Code on March 28, 2005. Listed on Schedule B at line 20 was a “Lawsuit against Ohio Department of Transportation in Cuyahoga County Common Pleas Court Case No. DV-01-443852 - for reinstatement of job.” The current market value of this claim was noted as “NONE.” The lawsuit related to Bailey’s claims against the Ohio Department of Transportation (“ODOT”) related to his 1999 termination. The claims were previously settled for $17,000, but Bailey sought in various venues to have the settlement vacated. On September 25, 2009, the Trustee filed a motion to approve a compromise between Bailey and ODOT whereby the Trustee would receive $17,000 in exchange for a full and complete release of any and all of Bailey’s pre-petition claims against ODOT. The Debtors objected to the Trustee’s motion to compromise. At the hearing on the motion to compromise, the Debtors stipulated they did not claim any exemption regarding the ODOT claim and no exemption was available to be claimed. On December 10, 2009, the bankruptcy court issued a memorandum opinion approving the settlement. The court held that the claim against ODOT constituted property of the estate and that the settlement was in the best interests of the creditors and the estate. The Debtors appealed that rulling to the BAP, where the ruling was affirmed. On April 1, 2010, the Debtors filed a “Statement of Intention; Amendment to Schedule by Adding Exemption to Schedule C,” in which they asserted an exemption under Ohio Revised Code § 2329.66(A)(12)(6). The Debtors asserted that because their lawsuit against ODOT was “termed ‘for reinstatement of job’ ” it should be construed as a claim for lost future earnings and the settlement of the suit should, therefore, be exempted. The Trustee objected. On May 18, 2010, the court issued its memorandum opinion and order sustaining the Trustee’s objection based on two separate and independent reasons: (1) the Debtors stipulated that no exemption was available to be claimed regarding their claim against ODOT; and (2) the record contained no evidence to support an inference that any part of the settlement of the ODOT claim was based on or related to future earnings. The Debtors appealed.

ABI Membership is required to access the full summary. Please Sign In using your ABI Member credentials. Not a Member yet? Join ABI now - it is absolutely worth it!