In Re: THOMAS J. MCFARLAND, Debtor.
A. STEPHENSON WALLACE, Defendant - Appellee THOMAS J. MCFARLAND, Plaintiff - Appellant,
[Copyrighted Material Omitted]
Appeal from the United States District Court for the Southern District of Georgia. D.C. Docket Nos. 1:13-cv-00209-JRH-BKE; 11-bkc-10218-SDB.
For THOMAS J. MCFARLAND, Plaintiff - Appellant: Todd Boudreaux, Shepard Plunkett Hamilton & Boudreaux, LLP, EVANS, GA.
For A. STEPHENSON WALLACE, Defendant - Appellee: David B. Bell, David B. Bell, PC, AUGUSTA, GA; Arthur Stephenson Wallace, A. Stephenson Wallace, PC, AUGUSTA, GA.
Before TJOFLAT, WILLIAM PRYOR, and BALDOCK,[*] Circuit Judges.
BALDOCK, Circuit Judge:
After filing for bankruptcy in 2011, Thomas McFarland claimed a number of exemptions from his bankruptcy estate. This appeal concerns two such claims, which are opposed by Trustee A. Stephenson Wallace. Before us, McFarland requests exemption for: (1) an annuity worth well over $150,000; and (2) the nearly $15,000 cash surrender value of a whole life insurance policy. The bankruptcy and district courts denied McFarland both exemptions. Exercising jurisdiction under 28 U.S.C. § 158(d), we affirm.
A. Bankruptcy law
Under federal law, when a debtor files for bankruptcy his property becomes part of the bankruptcy estate and is thereby exposed to creditors. See 11 U.S.C. § 541(a)(1). The debtor, however, may exempt certain types of property from this exposure. See id. § 522; Rousey v. Jacoway, 544 U.S. 320, 325, 125 S.Ct. 1561, 1565-66, 161 L.Ed.2d 563 (2005). That said, the Bankruptcy Reform Act of 1978 permitted states to opt out of the exemptions in 11 U.S.C. § 522(d). See 11 U.S.C. § 522(b)(2). If a state opts out, debtors in that state cannot utilize the § 522(d) exemptions, though they may take advantage of " any exemptions available under state or local law and federal, non-bankruptcy law." Sheehan v. Peveich, 574 F.3d 248, 251 (4th Cir. 2009); id. § 522(b)(3). In general, courts may not refuse to honor an exemption--state or federal--" absent a valid statutory basis for doing so." Law v. Siegel, __ U.S. __, 134 S.Ct. 1188, 1196, 188 L.Ed.2d 146 (2014).
Back in 1980, Georgia opted out and created its own exemptions " for purposes of bankruptcy." Ga. Code Ann. § 44-13-100; Silliman v. Cassell, 292 Ga. 464, 738 S.E.2d 606, 609 (Ga. 2013). Two Georgia exemptions are at issue here. First, under Georgia Code § 44-13-100(a)(2)(E), a bankruptcy debtor may exempt
[a] payment under a pension, annuity, or similar plan or contract on account of illness, disability, death, age, or length of service, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor[.]
Ga. Code Ann. § 44-13-100(a)(2)(E) (emphases added). Under § 44-13-100(a)(9), a bankruptcy debtor may exempt
[t]he debtor's aggregate interest, not to exceed $2,000.00 in value, . . . in any accrued dividend or interest under, or loan or cash value of, any unmatured life insurance contract owned by the debtor under which the insured is the debtor or an individual of whom the debtor is a dependent[.]
Id. § 44-13-100(a)(9) (emphases added). Also key here is a non-bankruptcy provision from the Georgia Code--section 33-25-11(c)--which states that
[t]he cash surrender values of life insurance policies issued upon the lives of citizens or residents of this state, upon whatever form, shall not in any case be liable to attachment, garnishment, or legal process in favor of any creditor of the person whose life is so insured . . . .
Id. § 33-25-11(c) (emphases added). Title 33 contains the Georgia Insurance Code, which " extensively and exhaustively regulates, at the state level, all aspects of the insurance industry in Georgia." Cotton States Mut. Ins. Co. v. DeKalb ...