     Case: 16-20589     Document: 00514292120     Page: 1   Date Filed: 01/03/2018




        IN THE UNITED STATES COURT OF APPEALS
                 FOR THE FIFTH CIRCUIT
                                                                  United States Court of Appeals
                                                                           Fifth Circuit

                                   No. 16-20589                          FILED
                                                                   January 3, 2018
                                                                    Lyle W. Cayce
In the matter of: YEMISI AYOBAMI                                         Clerk

             Debtor


DAVID G. PEAKE, Trustee,

             Appellant

v.

YEMISI AYOBAMI, also known as Yemisi Aregbe,

             Appellee




              Appeal from the United States Bankruptcy Court
                     for the Southern District of Texas


Before JOLLY, SMITH, and GRAVES, Circuit Judges.
E. GRADY JOLLY, Circuit Judge:
      This appeal presents questions relating to the scope of a Chapter 13
debtor’s claimed exemptions under § 522 of the Bankruptcy Code.                       The
bankruptcy court certified this direct appeal pursuant to 28 U.S.C. § 158(d)(2).
We answer the certified question only, leaving the other issues the parties raise
for another case on another day.
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                                       No. 16-20589
                                               I.
       On December 1, 2015, the Advisory Committee on Bankruptcy Rules
adopted a new Schedule C form. This form allows Chapter 13 debtors, by
checking the appropriate box on the form in the column titled “Amount of the
exemption you claim,” to exempt from the bankruptcy estate “100% of fair
market value, up to any applicable statutory limit” of certain property. When
filing her Schedule C, Debtor Yemisi Ayobami checked this box indicating her
intent to exempt “100% of fair market value, up to any applicable statutory
limit” for 14 of her 17 exemptions. In the column titled “Specific laws that
allow exemption,” Ayobami identified 11 U.S.C. §§ 522(d)(1), (3)–(5), which cap
the value of a debtor’s interest that may be exempted at a designated statutory
limit. 1
       Following Ayobami’s Schedule C filing, the parties engaged in multiple
rounds of objections, hearings, and orders.               Ultimately, the district court
allowed Ayobami’s amended exemptions that claimed “100% of fair market
value, up to any applicable statutory limit” of certain assets, but only after she
also listed a claimed amount within the statutory limit in the “Specific laws
that allow exemption” column. The parties then jointly requested certification
to directly appeal the court’s order allowing Ayobami’s amended exemptions.
The bankruptcy court certified a specific question for appeal, and this court
granted such leave. 2




       1 We do not address the Schedule C form as it has been completed by Ayobami or
reviewed by the bankruptcy court in this case; it is irrelevant to the certified question. So to
the extent the parties are asking us to decide whether Ayobami’s amended Schedule C is
contrary to the Code, we decline to do so.
       2 A certification by the bankruptcy court on request by a party must include “the

question itself.” Fed. R. Bankr. P. 8006.
                                               2
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                                  No. 16-20589
                                       II.
         The bankruptcy court certified the following question: “May a debtor
claiming federal exemptions under § 522 of the Bankruptcy Code ever exempt
a 100% interest in an asset?” In re Ayobami, No. 15-35488, 2016 WL 3708761,
at *2 (Bankr. S.D. Tex. July 1, 2016) (emphasis added). The answer is yes. A
debtor may do so in certain cases because the relevant provisions of § 522 cap
the value of the asset a debtor may exempt, not the debtor’s interest in that
asset.
                                       III.
         The commencement of bankruptcy triggers the creation of the
bankruptcy estate, which includes “all legal or equitable interests of the debtor
in property as of the commencement of the case.” 11 U.S.C. § 541(a)(1) (2012).
A debtor is allowed, however, to exempt her interest in certain assets from the
property of the estate under 11 U.S.C. § 522(d). A “party in interest,” such as
a trustee, may object to the debtor’s claimed exemptions. 11 U.S.C. § 522(l)
(2012). And “[u]nless a party in interest objects, the property claimed as
exempt . . . is exempt.” Id.
         Peake, the trustee, argues that a debtor may never exempt a 100%
interest in an asset under §§ 522(d)(1)–(6) because allowing such an exemption
effectively removes the entire asset from the bankruptcy estate. And because
the relevant subsections of § 522(d) place a monetary-value cap on the claimed
exemptions, Peake argues, the exemption itself must be “limited to the specific
amount, not [become] an indefinite [monetary] exemption in-kind to be
determined at a later date.”
         Both the bankruptcy court and Peake’s counsel point us to § 522 of the
Bankruptcy Code in addressing the legal question here.             The relevant
exemptions set forth in § 522(d) of the Bankruptcy Code are phrased as follows:
the debtor may exempt her interest or aggregate interest in certain property
                                        3
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                                        No. 16-20589
“not to exceed [a designated amount] in value.” 11 U.S.C. §§ 522(d)(1)–(6).
Thus § 522(d) limits the value that may be exempted, not the debtor’s interest
that may be exempted. On its face, exempting a 100% interest in an asset does
not violate any provision of § 522. See also Schwab v. Reilly, 560 U.S. 770,
794 n.21 (2010) (contemplating a scenario where a debtor “claimed as exempt
a ‘full’ or ‘100%’ interest” in an asset). 3 Of course, there are circumstances
where exempting a 100% interest in an asset would not be allowable under
§ 522, e.g., when the statutory cap is exceeded.                 But addressing only the
certified question before us, we hold that if, when considering any other
exemptions claimed, the debtor’s entire interest in an asset is less than or equal
to any dollar-value limitation imposed by the applicable § 522(d) subsection,
then the debtor may exempt her 100% interest in that asset. 4
       What the certified question does not ask us to determine, and thus we
decline to address, is whether claiming a 100% interest in an asset as exempt
allows the debtor to “walk away” with the asset itself and potentially benefit
from any post-petition appreciation of it. This concern seems to be at the heart
of the question that the parties wish us to address. Although we do not address
the question today, we note that the Supreme Court has found “questionable”
whether “a claim to exempt the full value of the equipment would, if
unopposed, entitle [the debtor] to the equipment itself as opposed to a payment
equal to the equipment’s full value,” explaining:


       3  It is well established in this circuit that, although we are “not bound by dicta, even
of [this court,] [d]icta of the Supreme Court are, of course, another matter.” Campaign for S.
Equal. v. Bryant, 791 F.3d 625, 627 n.1 (5th Cir. 2015).
        4 We make special note of the fact that Ayobami assigned her exempt interest a dollar

value, disclosed on her Schedule C, within the statutory limits. This opinion does not address
or decide a factual situation in which a debtor exempts “100% of fair market value, up to any
applicable statutory limit” of an asset and fails to also designate a specific dollar value within
the statutory limit. We also make special note that this opinion addresses only the question
certified to us. We do not address or decide any further issue of the bankruptcy court’s
holding.
                                                4
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                                 No. 16-20589
      Section 541 is clear that title to the equipment passed to [the
      debtor’s] estate at the commencement of her case, and §§ 522(d)(5)
      and (6) are equally clear that her reclamation right is limited to
      exempting an interest in the equipment, not the equipment itself.
      Accordingly, it is far from obvious that the Code would “entitle”
      [the debtor] to clear title in the equipment even if she claimed as
      exempt a “full” or “100%” interest in it . . . .
Id. Because this question of whether a debtor can walk away with the asset,
as opposed to merely claiming the value of their 100% interest in the asset as
exempt, is not expressly presented in the certified question, we decline to
address it. When the case arises, whose facts present the question, we hope to
rise to the occasion. In the meantime, the bankruptcy courts have ample
discretion to frame the question in a proper case.
                                      IV.
      In sum, we answer the specific certified question in the affirmative.
There are certain situations where a debtor claiming federal exemptions under
§ 522 of the Bankruptcy Code can claim an exemption of a 100% interest in an
asset. What we do not decide is whether doing so entitles such a debtor to clear
title in that asset and any post-petition appreciation. Having answered the
question certified to us, we therefore return the case to the bankruptcy court
for such further proceedings as may be necessary in the disposition of this case.




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