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<pre>                  United States Court of Appeals <br>                      For the First Circuit <br>                       ____________________ <br> <br> <br>No. 99-9002 <br> <br>                      IN RE: LEE C. CHRISTO, <br> <br>                            Debtor. <br>                                 <br>                      ____________________ <br> <br> <br>                        LEE C. CHRISTO, <br> <br>                            Appellant, <br> <br>                                v. <br> <br>                       JONATHAN D. YELLIN, <br>                       Chapter 7 Trustee, <br> <br>                            Appellee. <br> <br>                                  <br>                       ____________________ <br> <br>                 <br>            APPEAL FROM THE BANKRUPTCY APPELLATE PANEL <br> <br>                       OF THE FIRST CIRCUIT <br> <br>  [Hon. Goodman, Lamoutte, and de Jess, U.S. Bankruptcy Judges] <br> <br>                       ____________________ <br>                      <br>                              Before <br> <br>                     Stahl, Circuit Judge, <br>             John R. Gibson, Senior Circuit Judge, <br>                   and Lynch, Circuit Judge. <br>                       ____________________ <br>                      <br> <br> <br>  Carl E. D'Angio, Jr. on brief for appellant. <br>  Jonathan D. Yellin, Craig J. Ziady, and Riemer & <br>Braunstein LLP on brief for appellee. <br> <br>                       ____________________ <br>                      <br>                        October 4, 1999 <br>                       ____________________

  LYNCH, Circuit Judge. The question presented is whether <br>a debtor under Chapter 7 of the Bankruptcy Code may claim more than <br>$15,000 in exemption for payment received on account of personal <br>bodily injury under 11 U.S.C.  522(d)(11)(D). We hold that a <br>debtor may not. <br>  Lee C. Christo filed a voluntary petition for bankruptcy <br>under Chapter 7 of the Bankruptcy Code on January 22, 1997. In her <br>Schedule C, she claimed three exemptions for three personal injury <br>claims stemming from three separate pre-petition accidents. <br>Christo's personal injury claims had not yet been settled; she <br>sought potential exemptions of $15,000 for each of the three <br>personal injury claims, for a total potential exemption of $45,000. <br>The trustee filed a "Limited Objection to Claim of Exemption" with <br>respect to the three tort claims on the grounds that no value was <br>listed. The bankruptcy court sustained the objection, continued the <br>matter generally, and directed Christo to file amended schedules of <br>exemptions. Christo then filed a "Motion for Determination of <br>Validity of Exemptions and Consequent Denial of Trustee's Limited <br>Objection to Claims of Exemption." In response, the trustee argued <br>that, under 11 U.S.C.  522(d)(11)(D), Christo was entitled only to <br>a total exemption of $15,000 for all her personal injury claims. <br>The Bankruptcy Court found for the trustee, and the Bankruptcy <br>Appellate Panel (BAP) affirmed. See In re Christo, 228 B.R. 48, 53 <br>(B.A.P. 1st Cir. 1999).  <br>  The interpretation of  522(d)(11)(D) of the Bankruptcy <br>Code is a legal question, which we review de novo. See In re <br>Lamanna, 153 F.3d 1, 3 (1st Cir. 1998). Section 522(d)(11)(D) of <br>the Code states:  <br>    d) The following property may be exempted under <br>  subsection (b)(1) of this section: . . . (11) The <br>  debtor's right to receive, or property that is traceable <br>  to-- . . . (D) a payment, not to exceed $15,000, on <br>  account of personal bodily injury, not including pain and <br>  suffering or compensation for actual pecuniary loss, of <br>  the debtor or an individual of whom the debtor is a <br>  dependent . . . . <br> <br>11 U.S.C.  522(d)(11)(D). <br>  Christo, relying on the arguments set forth in In re <br>Marcus, 172 B.R. 502 (Bankr. D. Conn. 1994), contends that a debtor <br>is entitled, under  522(d)(11)(D), to multiple exemptions for <br>personal injury judgments or settlements. See also In re Anderson, <br>932 P.2d 1110, 1113-14 (Okla. 1996) (relying on Marcus to interpret <br>an analogous provision of the Oklahoma Code). She argues that <br> 522(d)(11)(D) is not plain on its face and, thus, should be <br>interpreted within the context of the entire exemption scheme of <br> 522(d) and the legislative history of the statute. That scheme <br>and history, she argues, support a reading that permits as many <br>$15,000 exemptions as there are personal injury claims. She notes <br>that exemptions allowed under subsections (1), (3), (4), (5), (6), <br>and (8) of  522(d) all refer to the "aggregate" interest that may <br>be exempted, while subsection (11) does not. When Congress intended <br>to specify a limit to the total number of exemptions under a <br>specific category, she concludes, it made its view clear. Congress <br>made no such specification in subsection (11)(D) and, therefore, <br>none can be presumed. Christo also points to a note to the <br>precursor provision to  522(d)(11)(D) in the Report of the <br>Commission on the Bankruptcy Laws of the United States, H.R. Doc. <br>No. 93-137, 93rd Cong., 1st Sess. (1973), which states that the <br>value of personal injury exemptions "is not limited." Since the <br>House Report on the final bill did not explicitly reject this note, <br>she contends that we should adopt the Commission Report's view in <br>our interpretation of the statute. Finally, she points to the <br>policy of liberally construing exemptions in favor of the debtor. <br>  The trustee, espousing the view taken in In re Rhodes, <br>147 B.R. 443, 444-45 (Bankr. N.D. Ill. 1992) (interpreting an <br>analogous provision of the Illinois Code), argues that the language <br>of the statute is clear, the statutory scheme contradicts Christo's <br>claim, and that to hold otherwise would lead to nonsensical <br>results. The trustee points out that  522(d)(11)(D) refers to "a <br>payment, not to exceed $15,000, on account of personal bodily <br>injury," 11 U.S.C.  522(d)(11)(D) (emphasis added), and does not <br>use language such as "payment, not to exceed $15,000, on account of <br>each instance of personal bodily injury." Furthermore, the trustee <br>argues,  522(d) distinguishes exempted property from non-exempted <br>property by type and not number. While certain subsections do refer <br>to "aggregate" interests (e.g., subsections (1) (real property), <br>(3) (household furnishings), and (4) (jewelry)) and subsection (2) <br>does limit the exemption to "one" motor vehicle, the trustee notes <br>that it is easy to see how Congress anticipated multiple properties <br>and so multiple claims in these areas but did not do so in the <br>context of personal bodily injuries. Finally, the trustee argues <br>that Christo's reading of the statute would result in inequity <br>because it would treat similarly situated debtors differently. <br>  The BAP agreed with the trustee's interpretation in an <br>opinion examining text, context, and legislative history. We <br>affirm, largely adopt the BAP's opinion, and outline briefly our <br>reasons. First, the language of the exemption in 11 U.S.C. <br> 522(d)(11)(D) refers to "a payment." While there is some <br>ambiguity, the more natural reading is that there is a single <br>exemption. Second, the overall scheme of exemptions in  522(d)(11) <br>displays a pattern of allowing one exemption per category. Third, <br>the purpose of exemptions is to provide support for the debtors at <br>a reasonably necessary level. The reasonably necessary level should <br>not, logically, vary to provide more in total exemption amount to <br>someone who is in three minor accidents than one who is in a single <br>catastrophic accident. That is particularly so given that there are <br>the exemptions in  522(d)(10)(A) and (C) for social security and <br>disability benefits. That is, the exemption for "a payment in <br>account of personal bodily injury" is not a proxy for degree of <br>disability. Fourth, the reading of the exemption as limited to one <br>$15,000 exemption more equitably treats similarly situated debtors. <br>  As the BAP states, "[t]he purpose of the statute . . . is <br>served by limiting it to one exemption, regardless of the number of <br>incidents of bodily injury, because the determination of what is <br>'reasonably necessary' to support the debtor should not hinge on <br>the number of injuries suffered." Christo, 228 B.R. at 52-53. If <br>the statute were read as Christo suggests, Debtor A who sustained <br>a single $45,000 personal injury would receive only a $15,000 <br>exemption, while Debtor B who sustained three separate injuries of <br>$15,000 each, totaling $45,000, would receive a $45,000 exemption. <br>The "value" of the personal injury claims to Debtors A and B would <br>be the same but the exemptions allowed to each of them would be <br>wildly different. Certainly it is possible that multiple incidents <br>of personal bodily injuries might be more severe, and require more <br>support, than a single incident, but, as the BAP pointed out, see <br>id. at 53, that will not necessarily be so. More importantly, <br>"Congress set a cap of $15,000.00 to be exempted on account of <br>bodily injury, and there is no indication that amount should be <br>multiplied depending on an individual debtor's situation." Id. <br>  Though we acknowledge the default rule that courts should <br>construe the Bankruptcy Code's exemptions "liberally to reflect <br>their remedial purposes," In re Caron, 82 F.3d 7, 10 (1st Cir. <br>1996), we also recognize that, in certain situations, there are <br>reasons "to afford a more narrow reading," id. In other words, a <br>text's possible ambiguity does not preclude further inquiry into <br>which interpretation better coincides with the Code's purposes. <br>Such an inquiry might include reviewing a particular provision's <br>legislative history (as in Caron) or logic. This evaluation may <br>confirm a construction that is in a debtor's favor. There are <br>times, however, when, as here, a contrary conclusion is warranted. <br>  We agree with the BAP "that the phrase 'on account of <br>personal bodily injury' should be interpreted as defining the <br>nature of the payment that is exempt and not the number of injuries <br>suffered." Id. at 53. Consequently, a Chapter 7 debtor is entitled <br>to one exemption of no more than $15,000 on account of personal <br>injury, regardless of the number of injuries involved. We affirm. <br> <br> <br> <br> <br> <br> <br> <br> <br> <br> <br>                      - Dissent Follows - <br>

  JOHN R. GIBSON, Senior Circuit Judge, dissenting. I <br>respectfully dissent. It is by no means clear that Congress meant <br>section 522(d)(11)(D) to exempt only one payment on account of <br>bodily injury and we should resolve the ambiguity in favor of <br>allowing exemptions, not excluding them. <br>  The Bankruptcy Appellate Panel relied on a case <br>interpreting a distinguishable Illinois statute, In re Rhodes, 147 <br>B.R. 443 (Bankr. N.D. Ill. 1992), and rejected the case <br>interpreting section 522(d)(11)(D), In re Marcus, 172 B.R. 502 <br>(Bankr. D. Conn. 1994), which I consider to be better reasoned and <br>more on point.  <br>  The BAP prefaced its opinion with the observation that <br>courts have found section 522(d)(11)(D) ambiguous and difficult to <br>interpret. In re Christo, 228 B.R. 48, 50 (B.A.P. 1st Cir. 1999) <br>(citing In re Gregoire, 210 B.R. 432, 436 (Bankr. D.R.I. 1997) and <br>In re Bova, 205 B.R. 467, 476 (Bankr. E.D. Pa. 1997)). The BAP also <br>repeated the familiar principle that exemptions should be construed <br>liberally in favor of the debtor. In re Christo, 228 B.R. at 50. <br>  The BAP then discussed the Rhodes case, which applied an <br>Illinois statute similar to section 522(d)(11)(D), but which <br>included pain and suffering in the personal injury exemption, <br>unlike the federal statute. Rhodes stated that it would be unjust <br>to interpret the statute to allow separate exemptions for separate <br>accidents, because "the number of incidents suffered by a debtor <br>has no bearing on the debtor's need for funds, and therefore should <br>not affect the exemption allowed." In re Christo, 228 B.R. at 51. <br>  The Rhodes decision used some four canons of construction <br>employed by the Illinois Supreme Court. 147 B.R. at 445-46. Some of <br>these canons may to an extent be recognized in federal cases, but <br>I reject the conclusion that they dictate our interpretation of <br>this statute. Rhodes also referred to the fact that the statutory <br>list of exemptions distinguishes between exempted and unexempted <br>property by its nature and not number. 147 B.R. at 446. This proves <br>little, however, as those subparagraphs in the federal statute <br>enumerating property which may be aggregated list either groupings <br>of types of property such as household furnishings, section <br>522(d)(3), professional books or tools, section 522(d)(6), or <br>certain enumerated property interest in life insurance contracts, <br>section 522(d)(8). <br>  In my view, the BAP's opinion rests on a shaky policy <br>foundation and ignores language in the statute that would allow <br>separate exemptions for separate bodily injury claims. <br>  After discussing the Rhodes and Marcus, the BAP considers <br>the legislative history. 228 B.R. at 51-52. This discussion, while <br>pointing to the purposes of the exemptions, fails to illuminate the <br>issue before us, whether one or more than one exemption is <br>applicable when a debtor has been unfortunate enough to be involved <br>in two personal injury accidents. <br>  The BAP opinion also demonstrates the tenuous if not <br>speculative reasoning on which it is based. In its grammatical <br>analysis, the panel reasons that the article "a" along with the <br>singular form of "payment" "would seem to" indicate that Congress <br>intended the exemption of a single payment. 228 B.R. at 51. I think <br>it equally plausible that the term "a payment on . . . account of <br>personal bodily injury" can be applied to each such payment.  <br>  In discussing the various subsections referring to <br>aggregate interests, the BAP reasons, "Congress likely did not <br>anticipate a situation . . . involving multiple incidents of bodily <br>injury." Id. (emphasis added). In referring to subsection (d) (2) <br>limiting the exemption to one motor vehicle, the BAP reasoned, <br>"[I]t is easy to see how Congress could have anticipated a debtor <br>owning more than one car." Id. It is evident that the BAP has not <br>attempted to ascertain the intent of Congress, but has simply <br>articulated in the "likely did not anticipate" and "easy to see" <br>phrases support for what is at base little more than speculation as <br>to what Congress might have anticipated. In essence, it is a policy <br>conclusion as to what is best, and in reality, judicial <br>legislation. <br>  Section 522(d) lists some twenty types of exemptions in <br>paragraphs and subparagraphs. Six of those paragraphs limit the <br>exemption granted to "the debtor's aggregate interest . . . in <br>. . . [various types of property]." 11 U.S.C.  522(d)(1), (3), <br>(4), (5), (6) and (8) (emphasis added). Another paragraph limits <br>the number of motor vehicles that may be exempted (i.e., one). <br>Section 522(d)(2). In contrast, section 522(d)(11)(D) contains no <br>requirement to aggregate and no numerical limitation. This contrast <br>on its face is evidence that Congress chose not to aggregate all <br>bodily injury exemptions. See Marcus, 172 B.R. at 504; In re <br>Anderson, 932 P.2d 1110, 1114 (Okla. 1996) (interpreting similar <br>Oklahoma exemption). However, the BAP explained this discrepancy <br>away, saying that the other sections were categories in which <br>Congress would have expected a debtor to have more than one item, <br>whereas it is unusual for a debtor to have more than one separate <br>claim for bodily injury. 228 B.R. at 51. I believe this is <br>resolving an ambiguity against the debtor, rather than in the <br>debtor's favor. <br>  The statute simply does not say whether "a payment . . . <br>on account of personal bodily injury" refers to one or more than <br>one such payment. Congress could have specifically stated which of <br>the two meanings it intended, as it did with motor vehicles, and as <br>it did by the use of the word "aggregate." I can only read the <br>failure to use these restrictive terms as demonstrating an intent <br>from the plain language of the statute that there is no such <br>limitation and more than one such incident may be the subject of <br>exemption. <br>  The legislative history is of no assistance in dealing <br>with this ambiguity. In such circumstances, we should construe the <br>exemption liberally in favor of the debtor. See In re Arrol, 170 <br>F.3d 934, 937 (9th Cir. 1999) (citing strong policy of federal <br>bankruptcy law to interpret exemptions liberally in favor of <br>debtor); In re Parrotte, 22 F.3d 472, 474 (2d Cir. 1994) (Vermont <br>exemption statutes are remedial and receive liberal construction in <br>favor of debtor); Caron v. Farmington Nat'l Bank, 82 F.3d 7, 10 <br>(1st Cir. 1996) (recognizing general rule of liberal interpretation <br>of exemptions). <br>  When the BAP moves on from the language of the statute to <br>policy, it again resolves doubt against the debtor. The BAP states: <br>"While one might argue that a debtor who has suffered more than one <br>incident of bodily injury will require more support than a debtor <br>who has suffered only one, this would not necessarily be the case." <br>228 B.R. at 53. While it might not necessarily be the case, as the <br>BAP speculates, it might also be more costly to be injured three <br>times than once. In this case, there are allegations of three <br>separate accidents producing separate injuries, the net result of <br>which is that the debtor claims to be completely disabled from <br>self-support. Permitting separate exemptions for each injury is <br>consistent with the statutory language and is not an irrational <br>result. <br>  Admittedly, the debtor who suffers multiple incidents of <br>bodily injury presents a circumstance of greater rarity than the <br>debtor who suffers from one, or who owns more than one car. The <br>only limitation that Congress chose to place on the exemption was <br>first $7,500, and later with amendment $15,000. It is evident that <br>Congress knew how to limit the exemption with respect either to <br>numbers or aggregates in addition to the monetary limit. That such <br>was not done permits only the interpretation that if the rare <br>situation occurs where there is more than one personal bodily <br>injury, there will be more than one exemption allowed. <br>  A debtor having more than one bodily injury claim is an <br>unusual situation, but I think the language of the statute must be <br>read to provide that each such incident is exempted. After all of <br>this discussion, perhaps the most telling consideration is the <br>well-established rule that exemptions must be construed liberally <br>in favor of the debtor. <br>  Accordingly, I dissent from the affirmance of the BAP's <br>decision by this court.</pre>

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