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Midland Credit Management v Chatman

Case No. A10-1241 (MN Ct. App., Mar. 22, 2011)

Appellant challenges the district court‟s denial of his claim that funds he received in settlement of a personal-injury claim are exempt from garnishment. We affirm.

FACTS

In 2006, respondent Midland Credit Management (Midland) obtained a money judgment against appellant Eldridge Chatman. In 2008, Chatman suffered personal injuries and commenced a lawsuit. In 2009, Chatman settled the lawsuit and deposited the settlement proceeds into his bank account. In 2010, Midland garnished Chatman‟s bank account. In response to the garnishment, Chatman filed a notice of exemption, asserting that because the money in the account constituted proceeds of the personal injury settlement, it represented “[r]ights of action for injuries to the person of the debtor” and was exempt from creditors‟ claims under Minn. Stat. § 550.37, subd. 22. Midland objected to the exemption claim. The district court determined that personal-injury-settlement proceeds are not exempt. This appeal follows.

ISSUE

Does Minn. Stat. § 550.37, subd. 22 exempt proceeds from the settlement of a personal-injury action from creditor claims?

ANALYSIS

This court reviews de novo questions of statutory interpretation. Molde v. Citimortgage, Inc., 781 N.W.2d 36, 39 (Minn. App. 2010). Words and phrases are interpreted according to their common meaning. Minn. Stat. § 645.08 (2010); ILHC of Eagan, LLC v. County of Dakota, 693 N.W.2d 412, 419 (Minn. 2005). “Where the legislature‟s intent is clearly discernable from plain and unambiguous language, statutory construction is neither necessary nor permitted and we apply the statute‟s plain meaning.” Hans Hagen Homes, Inc. v. City of Minnetrista, 728 N.W.2d 536, 539 (Minn. 2007); see also Minn. Stat. § 645.16 (2010) (directing that, when the language of a statute is “clear and free from all ambiguity, the letter of the law shall not be disregarded under the pretext of pursuing the spirit”).
 

 

Judge(s): David Minge
Jurisdiction: Minnesota Court of Appeals
Court of Appeals Judge(s)
Roger Klaphake
Michelle Larkin
David Minge

 
Appellant Lawyer(s) Appellant Law Firm(s)
Michael Kemp MET Law Group, PLLC

 
Appellee Lawyer(s) Appellee Law Firm(s)
Jefferson Pappas Messerli & Kramer PA
Derrick Weber Messerli & Kramer PA

 

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compensation. instead, they have the proceeds arising out of chatman also argues that exempting his personal-injury-settlement proceeds injuries, it could have easily stated that. christians v. dulas, 95 f.3d 703, 705 (8th cir. consideration of the issue.3 injury settlement, it represented "[r]ights of action for injuries to the person of the debtor" conclusion that the [minnesota] exemption statutes adopted during the 1980 session were 11 u.s.c. 522(b)(2) (allowing choice of exemptions); see also carlson, 40 b.r. at 749 allow debtors to elect state or federal exemptions). chatman asserts that, in this unique facts d e c i s i o n settlement proceeds are not exempt. this appeal follows. and his family against absolute want by allowing them out of his property some subd. 22, appears to have been adopted with the bankruptcy context in mind. see medill, the supreme court did laud the "[e]xemption provisions[] protect[ion of] rights of action, not rights of payment"). in one of its decisions, the bankruptcy court an action: purpose of determining what will be included as property of the bankruptcy estate. see affirmed. state of minnesota christians, 95 f.3d at 705, n.3 (explaining that subdivision 22 was adopted after the also minn. stat. 645.16 (2010) (directing that, when the language of a statute is "clear these minnesota exemptions. these and other highly specific provisions of the law 2 exemption is to avoid protracted proceedings by persons (other than those actually injuries and commenced a lawsuit. in 2009, chatman settled the lawsuit and deposited the minnesota statutes identify certain property that is "not liable to attachment, chatman asserts that the bankruptcy-court decisions are inapposite because of the bankruptcy context, bankruptcy court decisions are distinguishable because the pretext of pursuing the spirit"). minn. stat. 550.37, subd. 22 (2010), does not exempt proceeds from the are traceable to exempt sources. see, e.g., minn. stat. 550.37, subd. 9 (2010) although the supreme court held this exemption constitutional in medill v. state, 477 received by a person for labor, skill, material, or machinery contributing to an minge, judge pursuant to settlement agreement are not exempt, explaining that "[t]he statute exempts analysis protects proceeds covered by certain exemptions following their deposit into an account only the decisions of the minnesota supreme court and the u.s. supreme court are does minn. stat. 550.37, subd. 22 exempt proceeds from the settlement of a defendants independent tort claim in proceedings supplemental to the main action"). personal injury could not be attached in garnishment proceedings because they were 647-48 (1965) (holding, under previous version of statutes, that rights of action for construction is neither necessary nor permitted and we apply the statutes plain meaning." courts order denying chatmans exemption claim. in 2006, respondent midland credit management (midland) obtained a money noted that in that proceeding the application of these policies had the effect of exempting a relative whether or not resulting in death. garnishment, or sale on any final process, issued from any court." minn. stat. 550.37, the settlement proceeds into his bank account. in 2010, midland garnished chatmans proprieties of life." medill, 477 n.w.2d at 708 (quotation omitted). we agree that in id., subd. 20 (2010). monies recovered for personal injuries are not covered by any of although not binding on this court, federal court analysis informs our in court of appeals carlson, 40 b.r. at 749 (recounting the legislative history and reasoning that "it is a fair n.w.2d 703 (minn. 1991), neither the minnesota supreme court nor this court has employers when they were injured and were entitled to assert improvement to real estate") (emphasis added). and another subdivision expressly reasonable means of support and education and the maintenance of the decencies and eldridge chatman, settlement of a personal-injury lawsuit from creditors claims. the settlement. [r]ights of action for injuries to the person of the debtor or of (bankr. d. minn. 1984) (summarizing 1979 amendment of federal bankruptcy code to the analysis is being made. objected to the exemption claim. the district court determined that personal-injury- midland credit management, affirmed file no. 27-cv-06-12274 fundamental needs by limiting the assets available for distribution to creditors," and arise when a debtor elects to claim state (as opposed to federal) exemptions for the retirement plans) (emphasis added); subd. 25 (2010) (exempting "[p]roceeds of payments judgment, as in collection proceedings. we disagree; nothing in the bankruptcy courts minge, judge respondent, receive present or future payments, or payments received by the debtor," under specified 3 in settlement of a personal-injury claim are exempt from garnishment. we affirm. injured) with only the potential for additional recovery. cf. nw. nat'l bank of dated: at least partially in response to the exemption provisions of the new bankruptcy code"). vs. referring only to pending or future claims." in re procter, 186 b.r. 466, 468 (bankr. d. minn. 1995); cf. christians, 95 f.3d at 704 (holding that payments from annuity created because minn. stat. 550.37, subd. 22, does not exempt from creditor claims, eagan, llc v. county of dakota, 693 n.w.2d 412, 419 (minn. 2005). "where the legislatures intent is clearly discernable from plain and unambiguous language, statutory judge. damage to, exempt property") (emphasis added); subd. 24 (2010) (exempting "right to bankruptcy debtors to choose between protecting rights of action or rights of payment"); o p i n i o n the district court in this case suggested that the probable purpose for the rights-of-action personal-injury proceeds, and surmising that "minnesotas amendment allowed asserting that because the money in the account constituted proceeds of the personal 2 jefferson c. pappas, derrick n. weber, messerli & kramer p.a., plymouth, minnesota and was exempt from creditors claims under minn. stat. 550.37, subd. 22. midland at a bank or other financial institution "if the funds are traceable to their exempt source." contingent debts and that it would "do violence to the declared policy of the legislature to including garnishment, proceeds from a personal-injury settlement, we affirm the district exemption determinations are made at the beginning of the proceeding, rather than after filed march 22, 2011 here, the debtors proceeds do not constitute a right of action. appellant. exempts identifiable proceeds of the settlement of a personal-injury claim. the term indicate that, had the legislature intended to exempt not just rights of action for personal (exempting "[a]ll money arising from any claim on account of the destruction of, or a10-1241 certainly, the debtors had a right of action against their appellant challenges the district courts denial of his claim that funds he received 4 bloomington-richfield v. hilton & assocs., 271 minn. 564, 565-67, 136 n.w.2d 646, personal-injury action from creditor claims? citimortgage, inc., 781 n.w.2d 36, 39 (minn. app. 2010). words and phrases are a personal injury right of action. medill, 477 n.w.2d at 708. the medill court did not, "right of action" generally is understood to mean "[t]he right to bring a specific case to however, hold that personal-injury proceeds are exempt. 6 explained the difference between a right of action and the proceeds from the settlement of interpreted according to their common meaning. minn. stat. 645.08 (2010); ilhc of 3 5 minn. stat. 550.37, subd. 22. the issue in this appeal is whether this statutory language permit a [creditor] plaintiff to interfere with the prosecution or settlement of [debtor] setting in which they were decided. in federal bankruptcy proceedings, exemption issues michael kemp, met law group, pllc, st. paul, minnesota (for appellant) judgment against appellant eldridge chatman. in 2008, chatman suffered personal (for respondent) dictionary 1438 (9th ed. 2009).1 binding on this court. riley v. jankowski, 713 n.w.2d 379, 404 (minn. app. 2006). hans hagen homes, inc. v. city of minnetrista, 728 n.w.2d 536, 539 (minn. 2007); see bank account. in response to the garnishment, chatman filed a notice of exemption, 1 considered and decided by klaphake, presiding judge; minge, judge; and larkin, certain subdivisions of the exemption section include proceeds and payments that addressed the scope of the language in minn. stat. 550.37, subd. 22. 1996).2 subd. 1 (2010). included among exempt property are and free from all ambiguity, the letter of the law shall not be disregarded under the issue in re gagne, 163 b.r. 819, 823 (bankr. d. minn. 1994). this court reviews de novo questions of statutory interpretation. molde v. s y l l a b u s . . . claims. yet, they no longer have a claim for although this court need not reach the purposes of the statute, minn. stat. 550.37, federal bankruptcy code was amended to allow an alternate federal exemption for injuries, but the subsequent recovery and retention of money received for those personal court" or "[a] right that can be enforced by legal action; a chose in action." black's law consistently construed [minnesotas statutory exemption for] ,,rights of action as hennepin county district court analysis of the plain language of the exemption relies on the procedural posture in which we note that the federal bankruptcy court in minnesota "has would comport with the general purpose of statutory exemptions--"to protect a debtor


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