Case: 09-50852 Document: 00511358206 Page: 1 Date Filed: 01/21/2011
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
January 21, 2011
No. 09-50852 Lyle W. Cayce
Clerk
In the Matter of: MELVIN JOSEPH CAMP, JR.,
Debtor
---------------------------------
MELVIN JOSEPH CAMP, JR.,
Appellee
v.
RONALD E. INGALLS, Trustee,
Appellant
Appeal from the United States District Court
for the Western District of Texas
Before STEWART, PRADO, and ELROD, Circuit Judges.
EDWARD C. PRADO:
The Chapter 7 Trustee, Ronald E. Ingalls (“the Trustee”), appeals the
district court’s reversal of the bankruptcy court’s order sustaining his objection
to the federal exemptions claimed by Chapter 7 debtor Melvin Joseph Camp Jr.
Because Florida’s opt-out statute applies only to Florida residents, and Camp
was not a Florida resident when he filed for bankruptcy, we affirm the district
court’s decision that Camp may use the federal exemptions.
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No. 09-50852
I. BACKGROUND
The facts are not in dispute. Camp lived in Florida from January 17, 2004,
to April 30, 2007. He then moved to Texas, where he filed a voluntary petition
for Chapter 7 bankruptcy on June 10, 2008. In his bankruptcy petition, Camp
elected to claim the federal exemptions set forth in § 522(d) of the Bankruptcy
Code. See 11 U.S.C. § 522(d). The Trustee objected to this exemption claim.
The Trustee argued that because Camp had not lived in Texas for the entire
730-day period preceding the bankruptcy filing, the law that applies to Camp
under the choice-of-law provision in § 522(b)(3)(A) is not the law of the state of
filing—i.e., Texas—but the law of the state in which Camp lived for a majority
of the 180-day period prior to the 730-day period—i.e., Florida. The Trustee
further argued that Florida law does not permit Camp to claim the federal
exemptions.
The bankruptcy court agreed and sustained the objection, ruling that
Camp may use only the exemptions granted by Florida law. Camp appealed to
the district court, which reversed the bankruptcy court and held that Camp may
use the federal exemptions. The Trustee appeals.
II. STANDARD OF REVIEW
“When a court of appeals reviews the decision of a district court, sitting as
an appellate court, it applies the same standards of review to the bankruptcy
court’s finding of fact and conclusions of law as applied by the district court.”
Jacobsen v. Moser (In re Jacobsen), 609 F.3d 647, 652 (5th Cir. 2010) (citation
and internal quotation marks omitted).
“Issues of statutory interpretation are reviewed de novo.” Id. (alteration
and citation omitted). In interpreting a statute, we “always turn first to one,
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cardinal canon before all others”: “courts must presume that a legislature says
in a statute what it means and means in a statute what it says there.” Conn.
Nat’l Bank v. Germain, 503 U.S. 249, 253–54 (1992) (citations omitted). “‘[W]hen
the statute’s language is plain, the sole function of the courts—at least where
the disposition required by the text is not absurd—is to enforce it according to
its terms.’” Lamie v. U.S. Trustee, 540 U.S. 526, 534 (2004) (quoting Hartford
Underwriters Ins. Co. v. Union Planters Bank, N.A., 530 U.S. 1, 6 (2000)).
“When the words of a statute are unambiguous, then, this first canon is also the
last: ‘judicial inquiry is complete.’” Germain, 503 U.S. at 254 (quoting Rubin v.
United States, 449 U.S. 424, 430 (1981)) (citations omitted).
III. ANALYSIS
Section 522(b) of the Bankruptcy Code permits individual debtors to
exempt certain property from the bankruptcy estate. See 11 U.S.C. § 522(b).1
1
Section 522(b) states, in pertinent part:
(b)(1) . . . [A]n individual debtor may exempt from property of the estate
the property listed in either paragraph (2) or, in the alternative, paragraph (3)
of this subsection. . . .
(2) Property listed in this paragraph is property that is specified under
subsection (d), unless the State law that is applicable to the debtor under
paragraph (3)(A) specifically does not so authorize.
(3) Property listed in this paragraph is—
(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 730 days immediately preceding the
date of the filing of the petition or if the debtor’s domicile has not been
located at a single State for such 730-day period, the place in which the
debtor’s domicile was located for 180 days immediately preceding the
730-day period or for a longer portion of such 180-day period in any other
place . . . .
....
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Generally, a debtor has the option to elect either federal or state exemptions.
See id. § 522(b)(1) (“[A]n individual debtor may exempt from property of the
estate the property listed in paragraph (2) [the federal exemptions specified in
§ 522(d)] or, in the alternative, paragraph (3) [the exemptions granted by the
state law that is applicable on the date of the filing of the bankruptcy petition
under § 522(b)(3)(A)] . . . .”). Each state, however, has the right to opt out of the
federal exemption scheme. See id. § 522(b)(2) (allowing a debtor to claim the
federal exemptions “unless the State law that is applicable to the debtor under
paragraph (3)(A) specifically does not so authorize”). In states that have opted
out, debtors are limited to the state exemptions.
According to the plain language of § 522(b)(2), then, Congress has allowed
each state to make its own decision about whether the federal exemptions will
be available to debtors. As the district court correctly decided, because Camp
had not lived in Texas for the entire 730-day period preceding his bankruptcy
filing, the “State law that is applicable” to him under § 522(b)(3)(A) is Florida
law. Thus, § 522(b)(2) requires us to look to Florida law to determine if Camp
is “specifically” disallowed from using the federal exemptions.
Florida has opted out of the federal exemption scheme only with respect
to Florida residents. Specifically, Florida’s opt-out statute states:
In accordance with the provisions of [11 U.S.C. § 522(b)], residents
of this state shall not be entitled to the federal exemptions provided
in [11 U.S.C. § 522(d)]. Nothing herein shall affect the exemptions
If the effect of the domiciliary requirement under subparagraph (A) is to render
the debtor ineligible for any exemption, the debtor may elect to exempt property
that is specified under subsection (d).
11 U.S.C. § 522(b).
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given to residents of this state by the State Constitution and the
Florida Statutes.
F LA. S TAT. A NN. § 222.20 (emphasis added).2 No other provision in Florida law
addresses the right to opt out under § 522(b)(2).
Therefore, Florida’s opt-out statute, by its own express terms, does not
apply to nonresident debtors, who remain eligible to use the federal exemptions
because nothing in Florida law specifically disallows them from doing so. See
In re Battle, 366 B.R. 635, 636 (Bankr. W.D. Tex. 2006) (holding that Florida’s
opt-out statute does not bar nonresident debtors from claiming the federal
exemptions); In re Schultz, 101 B.R. 301, 302 (Bankr. N.D. Fla. 1989) (same);
see also In re Chandler, 362 B.R. 723, 726–27 (Bankr. N.D. W. Va. 2007) (same,
for Georgia’s opt-out statute); In re Underwood, 342 B.R. 358, 361–62 (Bankr.
N.D. Fla. 2006) (same, for Colorado’s opt-out statute); In re Volk, 26 B.R. 457,
460–61 (Bankr. D.S.D. 1983) (same, for South Dakota’s opt-out statute); In re
Walley, 9 B.R. 55, 57–58 (Bankr. S.D. Ala. 1981) (same, for Alabama’s opt-out
statute). Here, because Camp was not a Florida resident at the time he filed
his bankruptcy petition, Florida law does not restrict his access to the federal
exemptions.3
2
Florida also restricts the extraterritorial application of its own state-law exemption
scheme. See, e.g., In re Adams, 375 B.R. 532, 534–35 (Bankr. W.D. Mo. 2007) (citing cases that
stand for the proposition that “Florida exemption law is that its exemptions not be given
extraterritorial effect”).
3
We do not reach the corollary questions of (1) whether the choice-of-law provision in
§ 522(b)(3)(A) preempts state-law restrictions on the extraterritorial application of state-law
exemption schemes, and (2) whether the “savings clause” in the hanging paragraph at the end
of § 522(b) permits debtors to claim the federal exemptions when the applicable state law
opts out of the federal exemption scheme and, at the same time, restricts the extraterritorial
application of the state-law exemption scheme, thereby rendering both exemption schemes
unavailable to the debtor through the normal operation of the Bankruptcy Code. Compare
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The Trustee’s counterarguments are unpersuasive. He argues that the
term “resident” should be read broadly to include any person who is subject
to Florida’s jurisdiction, such as a debtor who is subject to Florida’s state-law
exemption scheme under § 522(b)(3)(A). This argument is incompatible with
the plain language of § 522(b)(2), which clearly evidences Congress’s intent to
defer to each state’s own legislative decision regarding the availability of the
federal exemptions. Accordingly, the Bankruptcy Code does not re-define the
unambiguous terms of a state’s own opt-out statute.
The Trustee has not cited to any Florida case to support his contention
that the term “resident” should be read more broadly than its plain meaning.
Moreover, it is not illogical, as the Trustee argues, for a state to treat its own
residents differently from other persons who have less of a connection to the
state, especially because resident debtors are more likely to claim exemptions
for assets that are located in the state. In addition, Florida’s opt-out statute
has contained a residency requirement ever since it was enacted in 1979, even
though § 522(b), since 1978, has forced some debtors to apply the opt-out law
of the state of their former domicile. In other words, despite being on notice
that nonresident debtors might be required to apply Florida’s opt-out statute,
the Florida legislature has not deleted the residency requirement. Therefore,
we too will refrain from rewriting the statute.
Lastly, it is not true, as the Trustee contends, that our decision today
will lead to impermissible forum shopping. Congress has approved the federal
exemptions for use in every state, and it has delegated to the states the power
In re Stephens, 402 B.R. 1, 5 (B.A.P. 10th Cir. 2009) (finding no preemption, but relying on
the savings clause), with In re Garrett, 429 B.R. 220, 237 (Bankr. S.D. Tex. 2010) (finding
preemption).
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to decide whether those exemptions are available to a particular debtor. Thus,
to the extent there is any forum shopping that arises from our decision, it is
caused by Congress’s decision to defer to state decision making, and it results
in the election of an exemption scheme that has Congress’s explicit approval.
As a result, we cannot say that our straightforward interpretation of the plain
language of § 522(b)(2) and Florida’s opt-out statute is absurd merely because
it might increase the potential for limited forum shopping.
IV. CONCLUSION
Camp may elect to claim the federal exemptions. We affirm the decision
of the district court.
AFFIRMED.
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