Results from the Fourth Circuit
We mentioned with pride some months ago that a case of ours was winding its way up the appellate chain. Granted, we would have preferred to have simply prevailed at the bankruptcy court level, but when Judge Leonard ruled against us in a case involving the appropriate method of determining a debtor’s household size, we happily took on the challenge of appealing the ruling. Judge Leonard agreed that the issue was important enough for it to be heard on direct appeal, which means we were allowed to skip the usual next step of arguing the matter at the Federal District Court and go straight to the Federal Court of Appeals for the Fourth Circuit in Richmond, Virginia. We were encouraged, as well, that the Court of Appeals asked for oral arguments to be presented, rather than simply making a ruling based on the written briefs of the parties. Agreeing to hear oral arguments was, again, a sign that the court viewed the issue as important enough and complicated enough to give the matter the court’s full attention.
Our litigation attorney, Cort Walker, suited up in May to make the drive to Richmond where he presented our oral argument to the three-judge panel with his characteristic erudition. It was helpful to be reminded, yet again, how the further up the appellate chain a bankruptcy issue climbs the less specialized the judges become. Here in the Eastern District of North Carolina, we are privileged to practice before judges that have worked exclusively in the bankruptcy world for decades. They eat and drink this stuff. At the appellate and Supreme Court levels, the judges are, by necessity, generalists – brilliant generalists, of course, but still generalists. The job of the bankruptcy attorney at the appellate level is to educate as much as to argue a position.
Three weeks ago we were disappointed to receive the Court’s ruling, upholding the bankruptcy court’s decision. We were encouraged by the fact that one of the appellate court judges wrote a lengthy dissent in which he stated his agreement with our position, but regret that his opinion was not shared by a majority of the three-judge panel.
North Carolina Lawyers Weekly published a front-page report on the decision, entitled “King Solomon Was onto Something: Federal appeals court upholds the dividing of children in a bankruptcy case.” (We’ll leave to the side the minor issue we take with the staff writer’s portrayal of King Solomon, as King Solomon only pretended to advocate the dividing of children, but we digress). The Fourth Circuit’s opinion supports the “economic unit” approach to determining household size, rather than the more expansive “heads on beds” approach for which we had advocated. An example illustrates the distinction between the theories best: You are a twice divorced man of forty-five. Billy is a son from your first marriage and Jimmy is a son from your second marriage. Billy lives with you during the school-year, and with his mother during the summer. Jimmy lives with his mother during the school-year and with you during the summer. At no time are both children living with you.
How many people are in your household? We said three. The court said two. For now, that’s the law.
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For more than 20 years, the Sasser Law Firm has been helping individuals and business owners sort through financial hardships to see the light at the end of the tunnel. Our North Carolina bankruptcy attorneys are all board-certified specialists, which means we have passed a complex exam, undergone a thorough peer review, and continue to earn legal education credits in this ever-evolving area of law.
