Shoults v. Brown (In re Shoults)
- Summarized by David Treacy , U.S. Bankruptcy Court, Eastern District of Kentucky
- 7 months 6 days ago
- Case Type:
- Consumer
- Case Status:
- Affirmed
- Citation:
- No. 24-1666 (8th Circuit, Jul 15,2025) Published
- Tag(s):
-
- Ruling:
- The U.S. Court of Appeals for the Eighth Circuit held a bankruptcy court did not err in disallowing the chapter 7 debtors' claimed exemption in a prepetition, contingent, unliquidated personal injury claim against a third party. The Eighth Circuit had previously explained Missouri law does not permit an exemption in such claims, and a 2020 Supreme Court decision did not overrule the circuit's precedential opinions on point.
- Procedural context:
- On appeal, Debtors argued the bankruptcy court, in disallowing their exemption, wrongly applied Eighth Circuit precedent (In re Benn, 491 F.3d 811 (8th Cir. 2007) and In re Abdul-Rahim, 720 F.3d 710 (8th Cir. 2013)), and further that the U.S. Supreme Court overruled these Eighth Circuit decisions in Rodriguez v. FDIC, 589 U.S. 132 (2020). Debtors further averred "Benn and Abul-Rahim represent an invalid exercise of federal common lawmaking." Like the bankruptcy court and the district court, the Eighth Circuit panel hearing the appeal rejected Debtors' argument and considered the prior Eighth Circuit decisions in Benn and Abdul-Rahim binding.
- Facts:
- Debtors/Appellants Robert and Kristina Shoults filed a chapter 7 petition in the United States Bankruptcy Court for the Eastern District of Missouri. Missouri has opted out of the Bankruptcy Code's exemptions in 11 U.S.C. § 522(d). Several months into the case, Debtors amended their Schedule C to claim "that a pre-petition, contingent, unliquidated personal injury tort claim against a third party is exempt under Missouri common law and Missouri Revised Statutes § 513.427." That state statute provides bankruptcy debtors "shall be permitted to exempt from property of the estate any property that is exempt from attachment and execution under the law of the state of Missouri or under federal law, other than . . . Section 522(d)." Chapter 7 Trustee/Appellee Tracy Brown objected to the exemption and the bankruptcy court ruled in Trustee's favor, Debtors appealed to the U.S. District Court for the Eastern District of Missouri, which affirmed. Debtors then timely appealed to the Eight Circuit.
- Judge(s):
- Loken, Arnold, and Kelly
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