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8th Circuit Hears Oral Arguments in Property Tax Refund Exemption Case

| Feb 16, 2018 | Bankruptcy, Firm News

I had the privilege to argue before the Eighth Circuit Court of Appeals on Tuesday. The issue was whether a Minnesota property tax refund is exempt under Minnesota law as “government assistance based on need.”

A Minnesota property tax refund is limited to people whose income is under $105,000 per year. The maximum amount for people at the lower end of that range of $2,500, and then it phases out, as a homeowner’s income reaches that threshold. Homeowners with less than $20,000 equity in their house can almost always protect the right to receive this under the federal exemption scheme, and homeowners with more than that much equity would need to rely on the “government assistance based on need” exemption in order to protect this.

The existing case law on this subject (the Grace Johnson case), which is at the Bankruptcy Appellate Panel level, holds that it is not exempt. The BAP in Grace Johnson had relied on another BAP case (Hardy), which the 8th Circuit subsequently reversed on appeal, and Grace Johnson was never appealed.

Briefing was completed in April 2017, and it took us 10 months to get a hearing. I am hoping that a decision will be issued in the next couple months. If we do not prevail, we will seek a legislative amendment.

After the hearing, opposing counsel (for the trustee) informed me that his wife had just given birth a couple hours before we arrived, and he had spent the night in the hospital with her. I was impressed that he was there to make it, and it reminded me that while going to the big court room is a big day in one’s career, there are more important things in life.

Click here for audio of the oral arguments.