James W. Ladd v. Charles W. Ries ( 2005 )

United States Bankruptcy Appellate Panel
FOR THE EIGHTH CIRCUIT
No. 04-6040 MN
In re: *
*
James W. and Sherri L. Ladd, *
*
Debtors. *
*
* Appeal from the United States
James W. and Sherri L. Ladd, * Bankruptcy Court for the
* District of Minnesota
*
Plaintiffs-Appellants, *
*
v. *
*
Charles W. Ries, *
*
Defendant-Appellee. *
*
Submitted: December 1, 2004
Filed: February 1, 2005
Before SCHERMER, FEDERMAN, and MAHONEY, Bankruptcy Judges.
SCHERMER, Bankruptcy Judge.
This is an appeal from an order of the bankruptcy court1 entered on June 21,
2004, sustaining the objection of Charles W. Ries, Chapter 7 Trustee ("Trustee") to
the amended claim of homestead exemption filed by debtors James W. and Sherri L.
Ladd (“Debtors”). For the reasons stated below, we affirm.
I. Standard of Review
The facts are not in dispute. The allowance or disallowance of an exemption
is subject to de novo review. Drenttel v. Jensen-Carter (In re Drenttel), 309 B.R.
320, 322 (B.A.P. 8th Cir. 2004); Williams v. Bradley (In re Bradley), 294 B.R. 64, 68
(B.A.P. 8th Cir.). Likewise, the application of res judicata is subject to de novo
review. Banks v. Int’l Union Electronic, Electrical, Technical, Salaried & Mach.
Workers, 390 F.3d 1049, 1052 (8th Cir. 2004); Sianis v. Jensen, 294 F.3d 994, 999-
1000 (8th Cir. 2002).
II. Background
The Debtors filed a petition for relief under Chapter 7 of the Bankruptcy Code
on September 26, 2002. The Debtors reside on approximately 127 acres of
contiguous farmland in rural Rock County, Minnesota (the “Property”). They earn
rental income from agricultural operations on the Property. The Debtors filed
schedules and statements accompanying their petition including a Schedule C in
which they asserted a homestead exemption in the Property under 11 U.S.C.
§ 522(d)(1).2
1
The Honorable Gregory F. Kishel, United States Bankruptcy Judge for the
District of Minnesota.
2
Minnesota law permits debtors in bankruptcy to claim either the federal
exemptions available under 11 U.S.C. § 522(d) or the state exemptions available
(continued...)
2
On December 3, 2002, the Trustee filed an objection to the claimed homestead
exemption. The Debtors did not respond to the objection nor appear at the hearing
thereon. The bankruptcy court entered its order dated January 13, 2003 (“January
2003 Order”) sustaining the Trustee’s objection and disallowing the Debtors’
homestead exemption.
On April 23, 2004, approximately fifteen months after entry of the January
2003 Order, the Debtors filed an amended Schedule C asserting a homestead
exemption in the Property under the Minnesota homestead law. The Trustee objected
to the amended Minnesota homestead exemption.
At the hearing on the objection to the amended exemption, the Debtors
explained that they did not respond to the Trustee’s objection to the federal
homestead exemption because they believed they had an absolute right to amend their
exemptions pursuant to Federal Rule of Bankruptcy Procedure 1009(a). The court
sustained the Trustee’s objection on res judicata grounds and disallowed the Debtor’s
state homestead exemption. This appeal followed.
III. Discussion
This is a simple case of res judicata. The doctrine of res judicata bars a later
suit where (1) an earlier suit resulted in a final judgment on the merits; (2) the earlier
suit was based on proper jurisdiction; (3) both suits involve the same cause of action;
and (4) both suits involve the same parties or their privies. Lovell v. Mixon, 719 F.2d
1373, 1376 (8th Cir. 1983). Res judicata, also known as claim preclusion, bars the
2
(...continued)
under Minnesota law. Under 11 U.S.C.§ 522(b) a debtor may elect federal or state
exemptions unless the state opts out of the federal exemption scheme. Minnesota has
not opted out of the federal exemption scheme; therefore debtors domiciled in
Minnesota may elect either option.
3
relitigation of issues which were actually litigated as well as issues “which could have
been litigated in the first suit.” Id.(emphasis in original). Here, the Debtors’
entitlement to a homestead exemption was litigated when the Trustee objected to their
federal homestead exemption. The Debtors do not dispute that the January 2003
Order was final, that the earlier objection involved the same parties, or that the court
exercised proper jurisdiction when it entered the January 2003 Order. The Debtors
dispute that the objection to the federal exemption and the objection to the state
exemption are the same cause of action. We disagree.
The Debtors argue that res judicata does not apply to bankruptcy motions.
They try to distinguish a civil lawsuit from a contested matter within a bankruptcy
proceeding, arguing that a civil lawsuit is similar to an entire bankruptcy proceeding,
not an isolated contested matter within the bankruptcy proceeding.3 They note that
amendments are routine in civil litigation and argue that the second claim of
exemption is merely an amended pleading within the bankruptcy proceeding. We
agree that amendments are routine in civil litigation and that motions to amend should
be freely granted. Fed. R. Civ. P. 15(a). Likewise, relief which was not specifically
pleaded may be granted at trial as long as the evidence demonstrates an entitlement
to such relief. Fed. R. Civ. P. 54(c). These rules apply in the bankruptcy context as
well as in federal civil litigation. Fed. R. Bankr. P. 7015, 7054. The problem with
the Debtors’ argument is that a bankruptcy motion is the equivalent of a civil lawsuit;
to allow the Debtors an amended exemption after entry of the January 2003 Order is
3
If the Debtors’ argument that a contested matter is not the equivalent of a
civil lawsuit were correct, then the order sustaining the Trustee’s objection to their
exemption would not be a final order and they would have no right to this appeal.
Such is not the case. McGowan v. Ries (In re McGowan), 226 B.R. 13, 16 (B.A.P.
8th Cir. 1998). See, also Huebner v. Farmers State Bank, Grafton, Iowa (In re
Huebner), 986 F.2d 1222, 1224 (8th Cir. 1993), cert denied, 510 U.S. 900, 114 S.Ct.
272 (U.S. Oct. 4, 1993)(No. 93-5597), holding that an order denying a claimed
exemption was final for purposes of appeal.
4
akin to allowing a party to add a new claim to a complaint after trial and entry of a
judgment. While liberal amendments are permitted in federal civil litigation and
relief can be granted even if not originally pleaded, once judgment has been entered
new claims generally cannot be raised and new theories cannot be argued. Similarly,
liberal amendments are permissible in the bankruptcy context and the bankruptcy
court may grant relief not specifically pleaded in the motion prior to entry of an order
or judgement resolving the matter. However, once a matter has been decided, the
parties cannot later assert a new theory to obtain the relief which they have already
been denied by a final court order.4
The procedural rules which the Debtors cite support our conclusion that once
an objection to an exemption is filed, a debtor must raise all theories under which the
asset in dispute may be exempted in the context of the resolution of the objection. An
objection to an exemption is a contested matter under Federal Rule of Bankruptcy
Procedure 9014. Federal Rule of Civil Procedure 54 applies in contested matters.
Fed. R. Bankr. P. 9014(c), 7054. The order resolving the objection to the exemption
is a final judgment. Fed. R. Civ. P. 54(a). Every final judgment shall grant the relief
to which the party in whose favor it is rendered is entitled, even if the party has not
demanded such relief in the party’s pleadings. Fed. R. Civ. P. 54(c). Consequently,
if an objection to an exemption is filed, the debtor has the right to prove his or her
entitlement to exemption of the asset at the hearing and the court may allow the
exemption under any theory which the debtor proves at trial. Once an objection to
the exemption of an asset has been filed, the debtor must raise all theories for the
exemption of that asset prior to the resolution of the exemption issue. Otherwise res
judicata prevents a later attempt to exempt the asset on a different theory.
4
The limited avenues for post-judgment relief are set forth in Federal Rules
of Civil Procedure 59 and 60. Those rules apply in the bankruptcy context pursuant
to Federal Rules of Bankruptcy Procedure 9023 and 9024. The Debtors have not
attempted to seek relief under those options.
5
The Debtors also argue that Federal Rule of Bankruptcy Procedure 1009 gives
them the right to amend their exemptions at any time prior to the closing of their
bankruptcy case. This is true. They have the right to file an amended Schedule C
asserting exemptions at any time before their case is closed. Fed. R. Bankr. P.
1009(a). However, this does not mean any exemption they assert will be allowed.
The Debtors confuse the filing of a schedule of exemptions with the allowance of an
exemption.5 Even though the Debtors may be able to file a new schedule of
exemptions, Rule 1009 does not prevent the Trustee from objecting to a newly
asserted exemption nor does it prevent the bankruptcy court from denying a new
theory for exempting property on the grounds of res judicata where the court has
already ruled on the exemptibility of such property.6
The application of res judicata in the context of bankruptcy exemptions is not
new. At least two bankruptcy judges from the District of Minnesota have published
opinions applying res judicata to prevent a second attempt to exempt an asset after
5
“[T]he right to amend schedules to add exemptions ‘is not the same as the
right to the exemption.’” Knupfer v. Wolfberg (In re Wolfberg), 255 B.R. 879, 883
(B.A.P. 9th Cir. 2000), quoting Andermahr v. Barrus (In re Andermahr), 30 B.R. 532,
534 (B.A.P. 9th Cir. 1983).
6
The dissent compares Rule 1009(a) to Federal Rule of Bankruptcy
Procedure 3008 and to Sections 1112(b)(5), 1208(c)(5), and 1307(c)(5) of the
Bankruptcy Code. However, none of these provisions is applicable. Rule 3008
governs the reconsideration of an order allowing or disallowing a claim. Such
reconsideration is expressly authorized in Section 502 of the Bankruptcy Code. 11
U.S.C. § 502(j). Sections 1112(b)(5), 1208(c)(5), and 1307(c)(5) of the Bankruptcy
Code acknowledge modifications of plans in cases under Chapters 11, 12, and 13.
Modification of plans in Chapters 11, 12, and 13 are likewise expressly authorized
in the Bankruptcy Code. 11 U.S.C. §§ 1127(b), 1229, and 1329. The Bankruptcy
Code also expressly authorizes the revocation of a confirmation order in a Chapter 11
case. 11 U.S.C. § 1144. In contrast, the Bankruptcy Code does not authorize the
reconsideration of an order allowing or disallowing an exemption. Rule 1009(a)
should not be construed to provide relief not available under the Bankruptcy Code.
6
the entry of an order sustaining an objection to an earlier asserted exemption of the
same asset. In re Walls, 249 B.R. 506, 508 (Bankr. D. Minn. 2000)(Kishel, J.)(“[T]he
adverse ruling on the Debtors’ prior claim of exemption does indeed preclude them
from raising a different substantive basis to exempt the same asset.”) ; In re Marshall,
224 B.R. 399, 400 (Bankr. D. Minn. 1998)(Kressel, J.)(“Because the debtor’s claim
that the [asset] is exempt has already been litigated and decided by a final judgment,
principles of res judicata prohibit the debtor from relitigating the exemptibility of the
[asset], even if he can come up with a new theory.”).7
The Debtors argue that the applicability of res judicata to exemptions places
them in an impossible position because the bankruptcy judge before whom their case
is pending does not allow alternative pleading of exemptions. In support of their
argument, the Debtors cite In re Cochrane, 178 B.R. 1011 (Bankr. D. Minn.
1995)(Kishel, J.). We disagree with the Debtors’ interpretation of Cochrane.
In Cochrane, the debtor owned a condominium in Florida and asserted a
homestead exemption in the condominium under Florida law. During the course of
the hearing on several objections to the homestead exemption, the debtor’s counsel
“opined in passing” that in any event the debtor was entitled to exclude or exempt the
condominium under a tenancy by the entireties theory. Id. at 1015. The court
sustained the objections to the homestead exemption and entered a separate order
determining that “thus far” the debtor had not formally claimed protection for any of
his assets under the Florida law of tenancy by the entireties and directed him to serve
and file an amended Schedule C to make that claim if he intended to do so. Id. The
court directed the debtor to file an amended Schedule C no later than a date certain,
“setting forth his final election as to his claims of exclusion or exemption in all of this
7
See also In re Wolfberg, supra, and Magallanes v. Williams (In re
Magallanes), 96 B.R. 253 (B.A.P. 9th Cir. 1988), applying res judicata in the claim
exemption context.
7
[sic] assets. For the remaining pendency of this bankruptcy case, the Debtor shall
have no right to file a further amended Schedule C.” Id. at 1017. In that order, the
court noted that the debtor “should not be allowed to play an extended game of ‘hide
the ball.’” Id. In response to the order, the debtor filed an Amended Schedule C
asserting exemptions under Florida law and an Alternative Schedule C asserting
exemptions under Minnesota law. The court held that the debtor’s tactic for
attempting to assert alternative exemptions at that juncture was “just the sort of
maneuvering that the Court sought to prohibit” in the earlier order. Id.
The Cochrane court noted that no basis exists in the Federal Rules of
Bankruptcy Procedure for proposing an alternative claim of exemptions at the same
time as one asserts a main claim in a Schedule C. The Debtors rely on this statement
of the court for their argument that the judge does not allow alternative pleadings of
exemptions. We disagree. First of all, the statement must be kept in context. The
ruling disallowing the “alternative theories” was based on the debtor’s violation of
the prior order requiring the debtor to make a final election with respect to
exemptions. The statement regarding whether the rules countenance alternative
exemptions was dicta. Second, the Cochrane court had already given the debtor a
second bite at the apple after losing his first attempt at exempting his property by
directing the debtor to file any amended schedule of exemptions by a date certain.
Third, in the present case, at the hearing on the objection to the Debtors’ state
exemption, the court acknowledged that a “claim [of exemption] may be resolvable
by application of law in the alternative.” (Transcript, p.11.)8 Finally, the Debtors
8
The judge presiding over the Debtors’ case published the Walls opinion
applying res judicta in the exemption context five years after the Cochrane decision.
In the present case, he acknowledged the application of alternative theories of
resolving an objection to an exemption. We simply disagree with the Debtors and
with the dissent that the Debtors could not have sought the allowance of a homestead
exemption under state law at the time of the hearing on the Trustee’s original
(continued...)
8
have not demonstrated any evidence that they attempted to plead alternative bases for
exempting their homestead at any single point in time. Upon the filing of an
objection to a federal exemption, it would be appropriate for a debtor to respond as
to the merits of the objection, but to also ask, in the alternative, that the debtor be
allowed an exemption under state law. At the hearing, the debtor would have the
opportunity to establish entitlement to an exemption under either theory or, if denied
the right to present evidence on the alternative theory, the opportunity to make an
offer of proof to preserve rights on appeal under that theory. The bankruptcy court's
decision would be subject to review under either theory of exemption. Here,
however, the Debtors filed no response of any sort to the Trustee's objection, so they
failed to preserve the right to assert the state law exemption.
An opinion on the issue of successive claims of exemptions would be
incomplete without a mention of Kaelin v. Bassett (In re Kaelin), 308 F.3d 885 (8th
Cir. 2002). In Kaelin, the debtor listed a claim against his insurance company as an
asset of his estate and asserted an exemption with respect to the claim. The trustee
and creditors objected to the exemption. The matter was settled with a consent order
determining that the claim against the insurer was non-exempt property. The trustee
hired counsel to pursue the claim against the insurer. The trustee later amended the
employment application to expand the scope of counsel’s employment to include a
malpractice claim against the debtor’s pre-petition personal injury attorney. The
debtor had been previously unaware of the possible malpractice claim and within a
week of learning of its existence filed an amended schedule of assets and filed a
motion for leave to amend his Schedule C to assert an exemption with respect to the
claim. The bankruptcy court denied the motion for leave to amend the exemption
schedule as being in bad faith. The Eighth Circuit Court of Appeals reversed. The
court noted the general rule allowing liberal amendment of exemption claims, but
8
(...continued)
objection to the federal homestead exemption.
9
acknowledged that the right to amend is not absolute. Bad faith and prejudice to
creditors are two exceptions to the liberal right to amend exemptions. The court
concluded that neither existed in that case and therefore reversed the denial of the
debtor’s motion to amend exemptions.
The facts in Kaelin differ substantially from the case at hand. In Kaelin, the
debtor became aware of an asset during the course of his bankruptcy proceeding and
promptly scheduled the asset and attempted to exempt it. Kaelin involved the
exemption of an asset that the debtor had not previously exempted. Res judicata was
not applicable because there had been no litigation regarding the exemption of the
newly discovered and newly exempted asset. Kaelin does not control the present
situation and its holding does not preclude the application of res judicata in the
exemption context.
Similarly, the recent decision of this court in Ardrey v. Blackwell (In re
Ardrey), 316 B.R. 531 (B.A.P. 8th Cir. 2004), merits mention; however, it likewise has
no affect on the application of res judicata in the present case. In Ardrey, the debtor
scheduled an exemption of $1,000 in tax refunds. The debtor later received a tax
refund in excess of $1,000. The trustee sought and obtained an order directing the
debtor to turn over the excess tax refund which the debtor had not exempted. The
court found that the debtor had not exempted the excess tax refund and entered a
judgment directing the debtor to turn the excess refund over to the trustee. After
entry of the judgment, the debtor amended her schedules to assert an exemption in the
excess tax refund under a statute pursuant to which the debtor had not previously
sought any exemption. The trustee objected to the amended exemption. The
bankruptcy court sustained the objection because the trustee had substantially
administered the asset prior to the asserted exemption and to allow the exemption at
that juncture would be unduly prejudicial to creditors. On appeal, the BAP held that
the trial court erred when it found that the trustee had substantially administered the
asset and therefore reversed the order sustaining the objection to the exemption.
10
Ardrey, like Kaelin, did not involve res judicata. In Ardrey the trustee had not
previously objected to the debtor’s exemption of her tax refund. Therefore, no final
judgment on the issue of the exemptibility of the debtor’s tax refund existed.
Consequently, res judicata did not apply.
We acknowledge the harshness of the result in this case. Had the Debtors
timely asserted a homestead exemption under Minnesota law in response to the
objection to the federal exemption, the Trustee admits that he would not have
objected to the state exemption. However, the Debtors failed to respond to the
objection, despite law in Minnesota holding that the resulting order would have res
judicata effect. Unfortunately, the Debtors’ failure to consider the doctrine of res
judicata does not undo its effect nor change the result in this case.
IV. Conclusion
In conclusion, this is a simple case of res judicata. A debtor’s right to liberally
amend schedules does not override the application of res judicata which in this case
prevents the Debtors from seeking to revisit the issue of the exemptibility of their
homestead. If the Debtors believed they were entitled to a homestead exemption
under any theory, including a theory other than the one asserted in their original
Schedule C, they should have raised the issue in response to the Trustee’s objection
to their original federal homestead exemption. The Debtors cannot wait more than
a year after the court decided the issue and attempt to relitigate the matter under a new
theory. The order sustaining the Trustee’s objection to the Debtor’s state homestead
exemption is AFFIRMED.
MAHONEY, Bankruptcy Judge, dissenting.
I respectfully dissent. The majority finds, as did the trial court, that once a
decision is made denying a claim of exemption under the federal exemption statute,
11
the debtors are forever after precluded from amending their claim of exemption to
obtain the benefits of the Minnesota exemption statutes. Such a determination is
based upon a misapplication of the “res judicata” doctrine or the “claims preclusion”
doctrine. To reach such a result, the majority, as did the trial court, treat the denial of
a claim of exemptions as if it is analogous to ordinary civil litigation in the federal
courts. By treating the contested claim of exemption as ordinary civil litigation, the
majority finds that the doctrine of res judicata bars a later suit where (1) an earlier suit
resulted in a final judgment on the merits; (2) the earlier suit was based on proper
jurisdiction; (3) both suits involve the same cause of action; and (4) both suits involve
the same parties or their privies. Lovell v. Mixon, 719 F.2d 1373, 1376 (8th Cir.
1983).
In Lovell, it was made clear that the doctrine prohibits relitigation of issues
which were actually litigated as well as those “which could have been litigated in the
first suit.” Id. (emphasis in original).
However, as the Eighth Circuit Court of Appeals noted in Huebner v. Farmers
State Bank (In re Huebner), 986 F.2d 1222 (8th Cir. 1993), cert denied, 510 U.S. 900,
114 S.Ct. 272 (U.S. Oct. 4, 1993)(No. 93-5597), “[f]inality for bankruptcy purposes
is a complex subject.” Id. at 1223. In Huebner, the court gave a practical example of
“why at least most exemption decisions should be final orders” under the finality
standards set out in prior case law. Id. at 1224. Although discussing the matter
generally, the court did not hold that all exemption decisions are final orders. In
addition, the court did not suggest that exemption litigation decisions were final
orders which were analogous to orders entered in ordinary civil litigation which
would preclude further activity with regard to a debtor’s claim of exemption.
I suggest that a contested matter dealing with a claim of exemption under the
federal statute and an objection by the trustee is much more analogous to the filing
of a proof of claim by a creditor and an objection by an interested party. In such a
12
contested matter, even after a determination favorable to or adverse to the claimant,
Federal Rule of Bankruptcy Procedure 3008 permits reconsideration of such an order
when a request is made by a party in interest. Rule 1009(a), which gives the debtor
the right to amend a petition, list, schedule or statement as a matter of course at any
time before the case is closed, is of the same ilk as Rule 3008 which gives the
creditors, the trustee, or the debtor a second bite at the apple with regard to claims
allowance or denial.
Similarly, the Bankruptcy Code itself permits amendment to Chapter 11,
Chapter 12, and Chapter 13 plans after the initial plans have been contested and
rejected by the court. See 11 U.S.C. § 1112(b)(5); § 1208(c)(5); § 1307(c)(5); Lewis
v. United States, 992 F.2d 767, 772 (8th Cir. 1993) (a bankruptcy court order that
neither confirms a plan nor dismisses the underlying petition is not final); Vincent v.
Fairbanks Capital Corp. (In re Vincent), 301 B.R. 732 (B.A.P. 8th Cir. 2003) (motion
denying debtor’s motion to modify a confirmed Chapter 13 plan is no more a final
order for appeal purposes than an order denying confirmation of a plan); Michels v.
Maynard Sav. Bank (In re Michels), 305 B.R. 868, 871 (B.A.P. 8th Cir. 2004)
(because the appeal was from an order which both denied confirmation of a Chapter
12 plan and dismissed the case, the appeal was from a final appealable order.). Each
of the statutory sections referred to above permit the court to convert or dismiss the
case, whichever is in the best interest of creditors and the estate, for cause, if the court
has determined that it should not permit the debtor additional time to file another plan
or modify the current plan. This statutory language assumes the initial order denying
confirmation of a plan under any of these chapters is not a final order to which res
judicata applies. The cited case law confirms the assumption.
Next, even if one assumes that the res judicata doctrine applies, it only applies
if the issue being raised in the second “lawsuit” could have been litigated in the first
suit. Lovell v. Mixon, 719 F.2d at 1376. Because the available relief in the federal
exemption statute is significantly different from the relief available in the Minnesota
13
statutes, it is my position that they are different “causes of action” and could not have
been litigated in the initial contested matter concerning the claim of exemption under
the federal statute.
If, on the other hand, the federal and state statutes do not constitute separate
causes of action, but simply alternative relief that should have been pleaded in the
first contested matter, the debtors face another problem. In the District of Minnesota,
by virtue of the Marshall and Walls decisions relied upon by the majority and the
Cochrane decision to which the majority gives very little consideration, a debtor must
choose whether to proceed with a claim of exemption under the federal statute or the
Minnesota statutes, and the debtor is precluded from presenting a claim under an
alternative statutory scheme. Although the majority suggests that the trial court
acknowledges the right of debtors to plead in the alternative, and the majority
suggests any contrary language in Cochrane is “dicta,” the language in Cochrane is
clear and to the point. Any lawyer who would attempt to list claims of exemption
under the federal statute and, alternatively, under the Minnesota statute, would, by
virtue of Cochrane, risk sanctions under Rule 9011. The Cochrane language I refer
to is as follows:
Second, there is no basis under the Federal Rules of Bankruptcy
Procedure for proposing an “alternative” claim of exemptions at the
same time as one asserts a “main” claim in a Schedule C. The underlying
though[t] could be tagged as, “well, if you don’t like that theory, how do
you like this one?” This little dodge, however, runs entirely contrary to
the clear purpose of Fed. R. Bankr. P. 2007, 4003(a), and 1009: to
provide a procedural framework for the raising of exemption issues one
at a time, and not two-or-more at a time. The vehicle for this assertion
of exemption rights is just not countenanced under the applicable rules
or the prescribed forms, and the Debtor is out of bounds for using it.
178 B.R. at 1017-18.
14
The majority, although dismissing such language as “dicta,” in this case has
fashioned a procedure by which it suggests counsel for debtors may evade the clear
import of Cochrane. The majority tells counsel for debtors to ignore Cochrane and
plead in the alternative, thereby preserving all appeal rights in case a bankruptcy
judge in Minnesota decides the Cochrane language is good precedent and follows it.
Rather than promulgating a procedure which suggests that debtors may
somehow get around the Cochrane language, the majority should simply overrule
Cochrane to the extent it can be construed to mean debtors cannot plead a claim of
exemption under both federal and state laws in the alternative. Of course, such a
procedure as suggested by the majority, and an order overruling Cochrane as I
suggest, would both be totally unnecessary if the majority would simply acknowledge
that litigation of contested matters is, under the Bankruptcy Code and the Bankruptcy
Rules, much more complex and much more liberal with regard to amendments than
is ordinarily the case with general civil litigation. With such an acknowledgment, the
majority would, as I would, reverse the decision of the trial court and remand for a
determination of the rights of the debtors with regard to a claim of exemption under
the Minnesota statutes.
____________________
15