When a case is heard at the Supreme Court, the docket is filled with briefs of amicus curiae trying to say something that will catch the court's attention. With so many briefs filed, they sometimes cancel each other out in a flutter of pdf files sounding variations on the same themes. However, amicus briefs are much less common at the Court of Appeals level. Recently I was part of an effort where a panel of the Fifth Circuit reversed itself in one instance and reversed a district court in another. The cases are Hawk v. Engelhart (In re Hawk), 871 F.3d 287 (5th Cir. 2017) and Lowe v. DeBerry (In re DeBerry), 2018 U.S. Appl LEXIS 5772 (5th Cir. 3/7/18). In this post, I would like to share how our amicus briefs came together as well as some tips on amicus practice before the Fifth Circuit.
A Split Arises
The issue in Hawk and DeBerry was whether a chapter 7 debtor who disposed of exempt property post-petition could lose that exemption if the proceeds were not reinvested within the period allowed by state law. Outside of bankruptcy it is clear that proceeds that are not reinvested lose their exempt status and become subject to claims of creditors. However, under the Bankruptcy Code, if there is not a timely filed objection to exemption, the exemption is allowed, even if it was frivolous. Taylor v. Freeland & Kronz, 503 U.S. 638 (1992). This result was clouded by a Fifth Circuit decision which suggested that an "esssential element of the exemption must continue in effect even during the pendency of the bankruptcy case." Zibman v. Tow (Matter of Zibman), 268 F.3d 298, 301 (5th Cir. 2001). This led the Fifth Circuit to hold that if a Texas homestead was sold during a chapter 13 case and the proceeds were not exempted within six months as provided by Texas law, they would lose their exempt status. Viegelahn v. Frost (In re Frost), 744 F.3d 384 (5th Cir. 2014).
Following Frost, there was a split between Texas bankruptcy courts as to whether Frost's logic would apply in a chapter 7 case. Two cases made their way to the Fifth Circuit at about the same time. In Lowe v. DeBerry (In re DeBerry), 2017 U.S. Dist LEXIS 113203 (W.D. Tex. 2017), Bankruptcy Judge Craig Gargotta had ruled that proceeds from post-petition sale of a homestead could not be recaptured once the exemption became final. However, he was reversed by U.S. District Judge Royce C. Lamberth. In Hawk v. Engelhart (In re Hawk), 556 B.R. 788 (S. D. Tex. 2016), Bankruptcy Judge Jeff Bohm had ruled that proceeds from an IRA lost their exempt status if they were not reinvested within sixty days notwithstanding failure to object to the original exemption. He was affirmed by U.S. District Judge Melinda Harmon. Thus, there was two cases proceeding to the Fifth Circuit where the District Court had ruled that property could lose its exempt status in a chapter 7 case.
An Amicus Brief Takes Shape
I was approached by Professor Christopher Bradley to see if I would be interested in participating in an amicus brief in the DeBerry case. Chris had more than an academic interest in the issue (pun intended). He had clerked for Bankruptcy Judge Tony Davis. Judge Davis had written an opinion, In re D'Avila, 498 B.R. 150 (Bankr. W. D. Tex. 2013) holding that Frost did not apply in chapter 7. After finishing his clerkship and working in private practice, Chris had obtained an appointment at the University of Kentucky School of Law. I had written at least five blog articles on the disappearing exemption issue, including one which strongly criticized the Frost decision. Michael Baumer, who is a homestead expert within the consumer bar, agreed to join our group. We hastily filed our brief in the DeBerry case and waited.
A few days later, a different panel of the Fifth Circuit handed down an opinion in Hawk v. Engelhart (In re Hawk), 864 F.3d 364 (5th Cir. 2017) finding that un-reinvested proceeds lost their exemption and became property of the estate. This posed a huge problem for us because under the rule of orderliness, one panel of the Fifth Circuit could not overrule another. Thus, we fashioned a second amicus brief arguing that the en banc Fifth Circuit should reconsider the Frost decision, or, in the alternative, limit it to the chapter 13 context. Retired Bankruptcy Judge Leif Clark joined our group of collaborators for this second brief. Judge Clark had presciently written about the issue in In re Bading, 376 B.R. 143 (Bankr. W.D. Tex. 2007) in which he had tolled the period for the debtor to reinvest homestead proceeds out of a concern that Zibman could be applied even in the absence of a timely exemption. (In the interest of telling a compact story, I am not explaining all of the legal arguments in detail. However I did discuss these issues in more depth in my article for the ABI Journal, "Fifth Circuit Walks Back Disappearing Exemption Decision,"American Bankruptcy
Institute Journal (Jan. 2018)).
Success
The Hawk panel vacated its prior opinion and substituted an opinion limiting Frost to chapter 13 cases. One of the points that the panel relied upon was part of the ruling by Judge Ronald King in the Frost case that the case would have come out differently in a chapter 7 proceeding. Since we did not cite these comments in our brief, it is possible that our brief did not change the result. A few months later, the Fifth Circuit released its opinion in DeBerry in which it reversed the District Court and affirmed Judge Gargotta. The DeBerry opinion cited our brief which was gratifying.
A Few Notes on Amicus Practice in the Fifth Circuit
Amicus practice before the Fifth Circuit is a specialized area with strict time limits. An amicus brief must be filed within seven days after the brief of the party it supports. Fed.R.App. P. 29(a)(6). This means that the decision to file should be made well before the party being supported has filed its brief. Otherwise, there is not sufficient time to compose a credible brief.
Unless a brief is filed with the consent of both parties, it must be accompanied by a motion for leave to file the brief with a copy of the proposed brief. Fed.R.App. P. 29(a)(2). In my experience, parties rarely consent to filing an amicus brief in support of their opponent, so the proposed amicus should be prepared to file a motion for leave.
The proposed brief must state the interest of the amicus. Generally it is better to have an organization with an interest in the point of law sponsor an amicus brief. In our case, we were not able to find a sponsoring organization. However, having a professor and a retired judge among our collaborators certainly did not hurt.
An amicus brief is limited to half the length of the brief it is supporting. Fed.R.App. P. 29(a)(5). This is particularly tricky on a petition for rehearing or rehearing en banc. Under Fed.R.App. P. 35(b)(2)(A), a petition for en banc hearing or rehearing is limited to 3,900 words. This means that the maximum length of an amicus in support of en banc hearing or rehearing is 1,950 words. This post is 1,401 words long which gives an idea of just how short 1,950 words is. A merits brief may run up to 13,000 words, Fed.R.App. P. 32(a)(7)(B), which allows for an amicus of up to 6,500 words. While the rule states that the length of an amicus brief is based on the maximum amount allowed for a principal brief, we had the clerk limit us to one-half of the actual brief filed which required some last minute cutting.
One final note is that the Fifth Circuit is a forum where strict compliance with format is enforced. I have had to resubmit briefs on multiple occasions to correct technical issues. There are two pieces of advice here. The first is to adhere strictly to the time limit for resubmitting a brief. The second is to be nice to the clerk's office. While it is frustrating to have to revise a brief for format issues, the clerk's office is uniformly willing to walk practitioners through how to make it right. Staying friendly with the clerk's office will avoid a world of unpleasantness.
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