Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

In Re: Danny W. Aden and Rozell J. Aden, Debtors. v. Jeremy Gugino

November 29, 2012

IN RE: DANNY W. ADEN AND ROZELL J. ADEN, DEBTORS.
DANNY WAYNE ADEN AND ROZELL J ADEN, APPELLANTS,
v.
JEREMY GUGINO, TRUSTEE,
APPELLEE.
IN RE: JUDITH CLARICE SATHER, DEBTOR.
JUDITH CLARICE SATHER,
APPELLANT,
v.
JEREMY GUGINO, TRUSTEE,
APPELLEE.



The opinion of the court was delivered by: Honorable B. Lynn Winmill Chief U. S. District Judge

Consolidated with:

MEMORANDUM DECISION AND ORDER

INTRODUCTION

The debtors appeal from the bankruptcy court's decision sustaining the trustee's objections to the debtors' claimed exemptions in annuity contracts. For the reasons explained below, the Court will reverse.

BACKGROUND

The debtors in these cases purchased annuity contracts before filing their bankruptcy petitions. The common theme in the annuity contracts is that they contain different payout options and, at the time they filed their bankruptcy petitions, the debtors had not selected any particular payout option. The more specific details follow.

1. The Sather Annuity

In June 1999, Judith Sather purchased a "John Hancock Venture Annuity."*fn1 It provided Sather the option -- exercisable in June 2012 and each June after that until 2036 -- to elect receiving a ten-year stream of monthly payments during her lifetime, with a minimum guaranteed payment of around $325.

Sather filed her bankruptcy petition in October 2011, a few months shy of June 2012. At that time, she had not yet exercised her option to begin receiving the ten-year stream of payments. Sather claimed the annuity was exempt under Idaho Code § 41-1836.

2. The Aden Annuities*fn2

There are four annuities at issue in the Aden bankruptcy. Danny Aden acquired two annuities in January 2009 from the Principal Financial Group. Together, these annuities were worth around $135,000 in August 2011, when the Adens filed bankruptcy. Mr. Aden also received two other annuities before filing bankruptcy -- totaling around $10,000 in value -- as bonuses related to his employment.

The parties stipulated that when the Adens filed bankruptcy, the annuities had not yet been set up to make periodic payments. The parties also stipulated that each of the annuity policies had a cash-surrender option "in which the Debtors could surrender some part of the policies for a Cash Surrender Value . . . which is defined as the accumulated value on the surrender date less any surrender charge, which varies by the date of the surrender and the age of the annuity." Aden ER, Dkt. 12 at 29, ¶ 10. Lastly, the parties stipulated that if Mr. Aden did not elect a payout date and method by a certain date, the annuity companies would select a payout method and he would be bound by that choice.

STANDARD OF REVIEW

District courts review bankruptcy court decisions in the same manner as would the Ninth Circuit. See In re George, 177 F.3d 885, 887 (9th Cir. 1999). Thus, the Court reviews the bankruptcy court's conclusions of law de novo and its factual findings for clear error. Id. Mixed questions of law and fact are reviewed de novo. In re Chang, 163 F.3d 1138, 1140 (9th Cir. 1998).

ANALYSIS

When a debtor files a bankruptcy petition, a bankruptcy estate is created, consisting of all property in which the debtor has a legal or equitable interest. 11 U.S.C. § 541. The debtor may exempt property included within this estate under applicable federal or state law. The Bankruptcy Code gives each state an option -- (1) it can allow debtors to exempt property included in a federal laundry list of exemptions, or (2) it can allow debtors to rely on state and federal law other than this laundry list for allowable exemptions. See 11 U.S.C. § 522(b)(2); § 522 (d); see generally In re Antonie, 432 B.R. 843, 845 (Bankr. D. Idaho 2010). Idaho has chosen the second option, see Idaho Code § 11-609, and the exemption at issue here will thus turn on the proper interpretation of Idaho statutory law -- specifically Idaho Code § 41-1836.

The trustee bears the burden of proving that the annuities are not exempt under Idaho Code ยง 41-1836. See Fed. R. Bankr. P. 4003(c). Additionally, the Court must liberally construe exemptions in favor of the debtor. See Lang v. Nowak (In re Tober), 688 F.3d 1160, 1163 (9th Cir. 2012). Thus, if "the text of a statutory exemption ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.