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In re Hardy

United States Court of Appeals, Eighth Circuit

June 2, 2015

In re: Pepper Minthia Hardy, Debtor;
v.
Richard Fink, Appellee; Pepper Minthia Hardy, Appellant National Association of Consumer Bankruptcy Attorneys; Holley A. Nicodemus, Amici Curiae

Submitted January 13, 2015.

Appeal from the United States Bankruptcy. Appellate Panel for the Eighth Circuit.

For Pepper Minthia Hardy, Appellant: David L. Dean, Kansas City, MO; Tracy L. Robinson, Tracy L. Robinson & Associates, Kansas City, MO.

For Richard Fink, Appellee: Dana Michelle Estes, Richard V. Fink, Office of The Chapter 13 Trustee, Kansas City, MO.

For National Association of Consumer Bankruptcy Attorneys, Amicus Curiae: Tara A. Twomey, National Association of Consumer Bankruptcy Attorneys, San Jose, CA.

For Holley A. Nicodemus, Amicus Curiae: Nancy L. Thompson, Iowa Legal Aid, Central Iowa Regional Office, Des Moines, IA.

Before LOKEN, MURPHY, and MELLOY, Circuit Judges. LOKEN, Circuit Judge, concurring.

OPINION

Page 1190

MELLOY, Circuit Judge.

Pepper Hardy filed for bankruptcy and sought to exempt from her bankruptcy estate a portion of her tax refund attributable to the Additional Child Tax Credit. See 26 U.S.C. § 24(d). She asserted the refundable credit qualified as a public assistance benefit under Missouri's schedule of exemptions. The trustee, Richard Fink, objected, and the bankruptcy court sustained the objection. The Bankruptcy Appellate Panel (BAP) affirmed. Because Congress demonstrated an intent to help

Page 1191

low-income families through amendments to the Additional Child Tax Credit statute, we conclude the credit at issue qualifies as a public assistance benefit. Accordingly, we reverse.

I

Pepper Hardy filed for Chapter 13 bankruptcy relief in October 2012. In November, she filed her Schedule B and Schedule C. On her Schedule B, Hardy stated that she would be receiving a 2012 tax refund. On her Schedule C, Hardy claimed the majority of the refund as exempt. She noted that $2,000 of the refund was attributable to federal Child Tax Credit (CTC). She claimed that the CTC was a " public assistance benefit" that would be exempt from the bankruptcy estate under Missouri law.

The trustee objected to the exemption. The bankruptcy court sustained the objection in a memorandum opinion in May 2013. It applied Missouri law and found that the CTC was not a public assistance benefit because the purpose of the credit was to " reduce the tax burden on working parents and to promote family values" and because the full credit was available to head-of-household filers with Modified Adjusted Gross Incomes (MAGI) of up to $75,000 and joint-married filers with MAGIs of up to $110,000.[1] The CTC, unlike other traditional public assistance benefits, did not benefit only the " needy." The bankruptcy court determined the differences between the CTC and the refundable portion of the CTC--the Additional Child Tax Credit (ACTC)--were " beside the point" and therefore did not thoroughly address them.

Hardy appealed to the BAP, which affirmed. See Hardy v. Fink (In re Hardy),503 B.R. 722 (8th Cir. B.A.P. 2013). The BAP relied on the same logic as the bankruptcy court. Applying canons of statutory interpretation, the BAP first looked at the plain and ordinary meaning of " public assistance benefit." After searching numerous dictionaries, the BAP reached the same conclusion as the bankruptcy court: " public assistance benefits" are those benefits that the government provides to the " needy." The BAP similarly concluded that because non-needy families--married couples filing jointly ...


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