PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
MARTIN PATRICK SHEEHAN,
Trustee-Appellant,
v.
GEORGE M. PEVEICH, No. 08-2202
Debtor-Appellee,
STATE OF WEST VIRGINIA,
Intervenor-Appellee.
MARTIN PATRICK SHEEHAN,
Trustee-Appellant,
v.
JAMES HAROLD MELOTT, JR.; MARY
MARGARET MELOTT, No. 08-2204
Debtors-Appellees,
STATE OF WEST VIRGINIA,
Intervenor-Appellee.
2 SHEEHAN v. PEVEICH
MARTIN PATRICK SHEEHAN,
Trustee-Appellant,
v.
SCOTT LEMOYNE JACKSON, No. 08-2205
Debtor-Appellee,
STATE OF WEST VIRGINIA,
Intervenor-Appellee.
MARTIN PATRICK SHEEHAN,
Trustee-Appellant,
v.
NANCY LOUISE SCHUBERT, a/k/a
Nancy Louise Meyers, No. 08-2206
Debtor-Appellee,
STATE OF WEST VIRGINIA,
Intervenor-Appellee.
MARTIN PATRICK SHEEHAN,
Trustee-Appellant,
v.
CANDACE A. CURTIS, a/k/a Candace
A. Baker, No. 08-2207
Debtor-Appellee,
STATE OF WEST VIRGINIA,
Intervenor-Appellee.
SHEEHAN v. PEVEICH 3
MARTIN PATRICK SHEEHAN,
Trustee-Appellant,
v.
CHARLES MICHAEL BAIRD; SHIRLEY
JEAN BAIRD, No. 08-2208
Debtors-Appellees,
STATE OF WEST VIRGINIA,
Intervenor-Appellee.
MARTIN PATRICK SHEEHAN,
Trustee-Appellant,
v.
DANNY G. MORRELL, JR.; RAQUEL
L. MORRELL, No. 08-2209
Debtors-Appellees,
STATE OF WEST VIRGINIA,
Intervenor-Appellee.
4 SHEEHAN v. PEVEICH
MARTIN PATRICK SHEEHAN,
Trustee-Appellant,
v.
CHARLES L. BROWN, JR.; NANCY J.
BROWN, No. 08-2210
Debtors-Appellees,
STATE OF WEST VIRGINIA,
Intervenor-Appellee.
Appeals from the United States Bankruptcy Court
for the Northern District of West Virginia, at Wheeling.
Patrick M. Flatley, Chief Bankruptcy Judge.
(5:08-bk-00287; 5:08-bk-00433; 5:08-bk-00454;
5:08-bk-00464; 5:08-bk-00510; 5:08-bk-00518;
5:08-bk-00519; 5:08-bk-00569)
Argued: May 12, 2009
Decided: July 24, 2009
Before TRAXLER, Chief Judge, AGEE, Circuit Judge,
and Malcolm J. HOWARD, Senior United States District
Judge for the Eastern District of North Carolina, sitting by
designation.
Affirmed by published opinion. Senior District Judge Howard
wrote the opinion, in which Chief Judge Traxler and Judge
Agee joined.
SHEEHAN v. PEVEICH 5
COUNSEL
ARGUED: Martin Patrick Sheehan, SHEEHAN &
NUGENT, PLLC, Wheeling, West Virginia, for Appellant.
Michael G. Clagett, Bridgeport, West Virginia, for Appellees.
ON BRIEF: Darrell V. McGraw, Jr., Attorney General of the
State of West Virginia, Charleston, West Virginia, for Appel-
lee State of West Virginia.
OPINION
HOWARD, Senior District Judge:
The question in these cases is whether the Supremacy
Clause renders invalid state property exemptions that apply
only in bankruptcy actions. Construing West Virginia Code
§ 38-10-4, the bankruptcy court held that such exemptions are
not rendered invalid by the Supremacy Clause. We affirm that
judgment.
I.
We have before us consolidated appeals from eight bank-
ruptcy cases filed by debtors domiciled in West Virginia. In
each of the cases, the debtors have claimed all of their prop-
erty exempt from the bankruptcy estate pursuant to West Vir-
ginia Code § 38-10-4. The bankruptcy trustee objected to the
claims of exemption, arguing that § 38-10-4 is preempted by
federal law. The United States Bankruptcy Court for the
Northern District of West Virginia overruled the trustee’s
objections and allowed the debtors’ exemptions. Pursuant to
28 U.S.C. § 158(d)(2)(A), this court authorized the trustee’s
direct appeal of the bankruptcy court’s decision.
II.
Upon commencement of a Chapter 7 bankruptcy proceed-
ing, a debtor’s legal and equitable interests in property
6 SHEEHAN v. PEVEICH
become part of the bankruptcy estate, subject to administra-
tion by the bankruptcy trustee for payment of creditors. 11
U.S.C. §§ 541(a)(1), 704. An individual debtor is allowed,
though, to exempt certain property from the bankruptcy estate
so as to enable the debtor to start afresh. 11 U.S.C.
§ 522(b)(1).
The Bankruptcy Code provides two alternative exemption
schemes. Unless state law provides otherwise, a debtor may
choose to exempt from the estate either property listed in the
federal bankruptcy exemptions set forth in § 522(d) of the
Bankruptcy Code or property exempt under applicable state or
local law, together with property exempt under federal, non-
bankruptcy law. 11 U.S.C. § 522(b)(1). However, § 522(b)(2)
of the Bankruptcy Code authorizes the states to opt out of the
federal bankruptcy exemption scheme and thereby deny debt-
ors the right to elect the federal bankruptcy exemptions con-
tained in § 522(d). By opting out, a state restricts its debtors
to any exemptions available under state or local law and fed-
eral, non-bankruptcy law.
In 1981, approximately two years after the Bankruptcy
Code became effective, West Virginia opted out of the federal
bankruptcy exemption scheme upon enactment of West Vir-
ginia Code § 38-10-4. Section 38-10-4 does more than simply
opt out of the federal bankruptcy exemption scheme, though.
It also establishes a number of exemptions modeled after (but
different in certain respects from) those contained in the
Bankruptcy Code. While West Virginia has exemptions that
apply to judgment debtors generally, the exemptions provided
in § 38-10-4 apply only in bankruptcy proceedings.1 In each
of the cases on appeal, the debtors relied upon § 38-10-4 to
claim all property owned by them as exempt from the bank-
ruptcy estate.
1
It is not clear whether the exemptions in § 38-10-4 are intended to
supercede or supplement West Virginia’s general exemptions in bank-
ruptcy proceedings; however, that issue is not before us today.
SHEEHAN v. PEVEICH 7
The trustee asks us to review the bankruptcy court’s deter-
mination that West Virginia Code § 38-10-4 does not violate
the Supremacy Clause. Because that determination is a ques-
tion of law, we review the bankruptcy court’s decision de
novo.
III.
The trustee objects to the debtors’ claims of exemption pursu-
ant to West Virginia Code § 38-10-4, arguing that state
exemption laws that apply only in bankruptcy cases are incon-
sistent with the Bankruptcy Code’s objectives regarding the
distribution of bankruptcy estate assets and are, therefore, ren-
dered invalid by the Supremacy Clause.2 We disagree.
The Supremacy Clause and the doctrine of preemption
invalidate state statutes to the extent they are inconsistent with
or contrary to the purposes or objectives of federal law. Wis-
consin Pub. Intervenor v. Mortier, 501 U.S. 597, 604 (1991).
There are three ways federal law may preempt state law. First,
federal legislation may preempt state law by expressly declar-
ing Congress’ intent to do so. Cox v. Shalala, 112 F.3d 151,
154 (4th Cir. 1997). Second, Congress can "‘occupy the field’
by regulating so pervasively that there is no room left for the
states to supplement federal law." Id. Third, a state law is pre-
2
The constitutionality of bankruptcy-specific exemption statutes has
been the subject of much debate. The courts addressing the issue have
split, although not all have addressed the precise issue presented here (i.e.
whether the Supremacy Clause renders such statutes invalid). See Kulp v.
Zeman, 949 F.2d 1106 (10th Cir. 1991); In re Brown, No. 06-30199, 2007
WL 2120380 (Bankr. N.D.N.Y. July 23, 2007); In re Shumaker, 124 B.R.
820 (Bankr. D. Mont. 1991); In re Vasko, 6 B.R. 317 (Bankr. N.D. Ohio
1980) (all holding bankruptcy-only exemption schemes valid). But see In
re Kanter, 505 F.2d 228 (9th Cir. 1974); In re Regevig, 389 B.R. 736
(Bankr. D. Ariz. 2008); In re Wallace, 347 B.R. 626 (Bankr. W.D. Mich.
2006); In re Mata, 115 B.R. 288 (Bankr. D. Colo. 1990); In re Lennen,
71 B.R. 80 (Bankr. N.D. Cal. 1987); In re Reynolds, 24 B.R. 344 (Bankr.
S.D. Ohio 1982); In re Cross, 255 B.R. 25 (N.D. Ind. 2000) (all holding
bankruptcy-only exemption schemes invalid).
8 SHEEHAN v. PEVEICH
empted "to the extent that it actually conflicts with federal
law." Id. There can be no preemption, however, where Con-
gress "expressly and concurrently authorizes" state legislation
on the subject. Rhodes v. Stewart, 705 F.2d 159, 163 (6th Cir.
1983). "In such instance, rather than preempting the area,
Congress expressly authorizes the states to ‘preempt’ the fed-
eral legislation." Id.
Section 522(b)(1) affords the states the authority to restrict
their respective residents to exemptions promulgated by the
state legislatures, if they so choose. This statutory provision
is an express delegation to the states of the power to create
state exemptions in lieu of the federal bankruptcy exemption
scheme. See Hovis v. Wright, 751 F.2d 714, 716 (4th Cir.
1985) (concluding that § 522(b)(1) grants the states broad
power to craft state exemption laws applicable to bankruptcy
proceedings). Congress has not seen fit to restrict the author-
ity delegated to the states by requiring that state exemptions
apply equally to bankruptcy and non-bankruptcy cases, and
we are without authority to impose such a requirement.
The bankruptcy court’s decision overruling the trustee’s
objection to the exemptions claimed by the debtors pursuant
to West Virginia Code § 38-10-4 is
AFFIRMED.