Robert A. Barton

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF MARYLAND
at Baltimore
In re: 	:
Robert A. Barton 	: 	CASE NO. 05-41280-DK
CHAPTER
:
Debtor.
:
_____________________________________________________________________
MEMORANDUM OF DECISION
Before the court is the Chapter 7 Trustee’s Objection to Debtor’s Exemptions.
The Debtor has not filed any response to the Objection. The court has reviewed the
Trustee’s pleading and the applicable statutes and caselaw and finds that a hearing would
not aid the decisional process. For the reasons set forth herein, the Trustee’s Objection will
be sustained.
Debtor commenced this case under chapter 7 of the Bankruptcy Code on October
15, 2005. George Liebmann, Esquire was appointed as the chapter 7 trustee and pursuant to
Section 704 of the Bankruptcy Code was charged with the duty of investigating and
administering the assets of the estate.
With his petition, Debtor filed his Schedule B listing, inter alia, personal property
Signed: July 26, 2006
SO ORDERED
Entered: July 27, 2006 Case 05-41280 Doc 17 Filed 07/27/06 Page 1 of 4

1 That section provides:
The following items are exempt from execution on a judgment: . . . (2)
Money payable in the event of sickness, accident, injury, or death of any
person, including compensation for loss of future earnings. This exemption
includes but is not limited to money payable on account of judgments,
arbitrations, compromises, insurance, benefits, compensation, and relief.
Disability income benefits are not exempt if the judgment is for necessities
contracted for after the disability is incurred.
Md. Code Ann. Cts. & Jud. Proc. § 11-504(b)(2).
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in the nature of an anticipated tax refund of $22,000 (the “Anticipated Tax Refund”) and a
$10,000,000 claim against Ford (Primus) (the “Claim Against Ford”). Schedule B further
noted that the Debtor was asserting the ownership of the Anticipated Tax Refund to be
“joint.”
On Schedule C, Debtor asserted an exemption in the Anticipated Tax Refund and
stated the grounds of the exemption to be that the property was owned as tenants by the
entireties. As to the Claim Against Ford, Debtor asserted an exemption in the entire amount
pursuant to Md. Code Ann. Cts. & Jud. Proc. § 11-504(b)(2).1 The Trustee has objected to
the Debtor’s asserted exemptions of both the Anticipated Tax Refund and the Claim Against
Ford. The Debtor has not filed any response to the Objection.
As to the Anticipated Tax Refund, the Trustee argues that tax refunds from joint
returns do not qualify for the tenants by the entireties exemption. The Trustee cites caselaw
recognizing the positions of the courts with regard to the proper determination of the proper
allocation of the joint tax refunds, but has not taken a position on how the instant Debtor’s
Anticipated Tax Refund should be allocated.
The court finds that there are no facts before the court which would substantiate
any finding that the Anticipated Tax Refund could be exempt by reason of tenants by the
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entireties. In McClelland v. Massinga, 786 F.2d 1205 (4th Cir. 1986), the United States
Court of Appeals for the Fourth Circuit, citing Maryland law, held that there was no legal
basis for finding a joint tax refund to be owned as tenants by the entireties. Id. at 1209. The
court wrote:
We think Diamond dispositive of the standing of the obligated spouses
to maintain as plaintiffs this proceeding. It is manifest that, in making
the payment pursuant to a joint tax return, the husbands in this case
were not intending to create an interest in any possible overpayment in
favor of their wives as tenants by the entireties; as the district judge
correctly opined, the husbands were seeking the advantage that would
accrue to them as taxpayers by filing a joint tax return. At the time
they filed their returns, the husbands presumably had no more basis to
assume that they retained any interest in the payment they made to the
State than when they paid any other obligation. To read in such a
payment, though made pursuant to a joint tax return, an intention to
create a tenancy by the entireties would be pure fantasy. Nor was the
State creating an estate by the entireties by issuing the refund check in
the name of the husband and wife; that method was used simply to
assure that each party received such of the refund as he or she by his or
her contribution, was entitled to receive on the basis of his share in the
overpayment.
Id. at 1209 (citing Diamond v. Diamond, 298 Md. 24, 467 A.2d 510 (1983).
As in the McClelland case, this court finds that there are no facts before the court
from which is could be determined that there existed the requisite manifest intent to create
an entireties property in the Anticipated Tax Refund. Accordingly, the court must deny the
exemption as claimed.
Nevertheless, the Trustee notes in his Objection that the Debtor has unused
exemptions under Md. Code Ann. Cts. & Jud. Proc. § 11-504(b)(5) and (f) in the amount of
$7,395.00 that could be applied to the Debtor’s portion of a joint tax refund. The Trustee
therefore requests that the court allow an exemption in that amount and the court will so
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allow.
With respect to the Claim Against Ford, the court finds that the claimed
exemption must be disallowed. The caselaw in this district is clear in setting forth that the
exemption available under Maryland Code Ann. Cts. & Jud. Proc. § 11-504(b)(2) is limited
to “money that was awarded to a person for sickness, accident, injury or death” and that
compensates the debtor for an injury to the physical person. See In re Hurst, 239 B.R. 89,
91 (Bankr. D. Md. 1999). See also In re Butcher, 125 F.3d 238 (4th Cir. 1997); In re
Hernandez, 272 B.R. 178 (Bankr. D. Md. 2001). The exemption does not extend to claims
or awards based on fraud, misrepresentation, or breach of contract. Accordingly, the
asserted exemption pursuant to Md. Code Ann. Cts. & Jud. Proc. § 11-504(b)(2) will be
denied.
The court will enter an Order in conformity with this Memorandum.
cc: 	Debtor
Debtor’s counsel
Chapter 7 Trustee
All creditors and parties in interest
End of Order
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