Wake Forest Law Review

By Sophia Blair

On January 5, 2017, the Fourth Circuit published an amended opinion for the civil case, Lynch v. Jackson, originally decided on January 4, 2017.

Bankruptcy Court Decision and Appeal to the Fourth Circuit

Gabriel and Monte Jackson (“Jackson”) filed a petition for Chapter 7 bankruptcy relief. Marjorie Lynch (“Lynch”), a Bankruptcy Administrator, moved to dismiss their case as an abuse. Lynch alleged that the Jacksons over reported their expenses when filing for relief because they used the National and Local Standard amounts in their application form instead of their actual expenses, which were lower.

In filing for Chapter 7 bankruptcy, the Jacksons had to fill out a means test because they earned over the median income for a family of their size. The test is used to determine the amount of a debtor’s disposable income, which may reveal abuse if that income is above a certain level and prevent them from proceeding under Chapter 7. The Jacksons followed the instructions of form 22A-2, which says, “Deduct the expense amounts set out in lines 6-15 regardless of your actual expense. In later parts of the form, you will use some of you actual expenses if they are higher than the standards.” The Jacksons used the standard mortgage and car payment expenses, even though both were higher than their actual expenses.

Lynch argued that the official forms were incorrect and that a Chapter 7 debtor was “Limited to deducting their actual expenses or the applicable National or Local Standard, whichever [was] less.” The Jacksons countered, stating the statute was unambiguous. The Bankruptcy Court denied Lynch’s motion to dismiss on the basis that the Jackson’s interpretation comported with the plain meaning of the statute, and both parties filed a request for permission to directly appeal to the Fourth Circuit.

The Fourth Circuit held that they had jurisdiction over the appeal, and granted the appeal with respect to the question: does 11 U.S.C. § 707(b)(2) permit a debtor to take the full National and Local Standard amounts for expenses even though the debtor incurs actual expenses that are less than the standard amounts?

Was there an abuse of Bankruptcy Relief?

The Fourth Circuit held that under the plain meaning of the statute, a debtor is entitled to deduct the full National and Local Standard amounts even though their actual expenses are below the standard amounts.

In order to determine whether the Jacksons abused bankruptcy relief, the Fourth Circuit looked to the plain meaning of § 707(b)(2)(A)(ii)(I) of the statute. This section states: “the debtor’s monthly expenses shall be the debtor’s applicable monthly expense amounts specified under the National Standards and Local Standards, and the debtor’s actual monthly expenses for the categories specified as Other Necessary Expenses issued by the Internal Revenue Service for the area in which the debtor resides . . . .”

Where the statute’s language is plain, the Fourth Circuit ends its inquiry after enforcing the statute according to its terms in the context of the overall statutory scheme. See Hartford Underwriters Ins. Co. v. Union Planters Bank, N.A., 530 U.S. 1, 6 (2000); Davis v. Mich. Dep’t of Treasury, 489 U.S. 803, 809 (1989). The court found that the language of  § 707(b)(2)(A)(ii)(I) was clear on its face because it specified that “[t]he debtor’s monthly expenses shall be the debtor’s applicable monthly expense amounts specified under the National Standards and Local Standards.” The court relied on the theory of statutory construction that where Congress uses different words in the same statute, they should have different meanings. Here the court distinguished between “applicable monthly expenses” in the first clause of the statute, and “actual monthly expenses” in the second clause. Therefore, the court understood that the”applicable monthly expenses” were the full National and Local Standard amounts.

Additionally, the Fourth Circuit opined that to construe “applicable” and “actual” to have the same meaning would have the absurd result of punishing frugal debtors. A frugal debtor would be punished to for spending less. Relying on Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 575 (1982), the court sought to read the statute in such a way as to avoid absurd results.

Disposition

The Fourth Circuit affirmed the bankruptcy court’s judgment to deny Lynch’s motion to dismiss, because the Jacksons had not abused bankruptcy relief by providing the National and Local Standard amounts, instead of their actual expenses in form 22A-2.

By Taylor Ey

On March 8, 2016, the Fourth Circuit issued its published opinion in the criminal case of United States v. Burleson, reversing the district court’s decision.  At the trial court, in 2013, Defendant Arnold Burleson pled guilty to the crime of possession of a firearm by a convicted felon under 18 U.S.C. § 922(g).  Because Defendant Burleson had at least three prior felony offenses on his record, and the district court classified those offenses as predicate offenses that triggered automatic mandatory minimum sentencing for the felon-in-possession charge, Defendant Burleson was sentenced to fifteen years in prison after he pled guilty.

Defendant Burleson filed a pro se motion under 28 U.S.C. § 2255 with the trial court, asserting that he pled guilty to a crime he could not commit, and he should not have to complete his prison sentence.  Ultimately, the district court denied Defendant Burleson’s motion.  On appeal, the Fourth Circuit agreed with Defendant Burleson, vacating his conviction and prison sentence, and remanding to the district court with instructions to grant his 28 U.S.C. § 2255 motion.

A Question of Statutory Interpretation

Prior to being charged with this possession of a firearm offense, Defendant Burleson was convicted of North Carolina felony offenses, the last time in 1985.  He was discharged on parole in 1988, and his civil rights were fully restored by operation of state law in 1993.  Two years later, in 1995, North Carolina enacted a law that prohibited all people with felony convictions from possessing firearms, regardless of their conviction date.  See N.C. Gen. Stat. § 14-415.1(a) (1995).  For purposes of sentencing, 18 U.S.C. § 924(e) states that if a person charged has been convicted of at least three “crimes punishable by imprisonment for a term exceeding one year” then the person charged is subject to a mandatory minimum sentence.

Thus, this case required the Fourth Circuit to interpret 18 U.S.C. § 921(a)(20) to determine the time point for looking at a state’s statutes.  This statute defines “crime punishable by imprisonment for a term exceeding one year.”  It states, in pertinent part, that “[w]hat constitutes a conviction of such a crime shall be determined in accordance with the law of the jurisdiction in which the proceedings were held.  Any conviction . . . for which a person . . . has had civil rights restored shall not be considered a conviction for purposes of this chapter, unless such . . . restoration of civil rights expressly provides that the person may not ship, transport, possess, or receive firearms.”  18 U.S.C. § 921(a)(20) (emphasis added).

Defendant Burleson urged the court to conclude that those statutes in effect at the time civil rights are restored should control.  In contrast, the government argued that those statutes in effect at the time of the subsequent § 922(g) arrest should control.  Based on the plain text of the statute, the Fourth Circuit decided that the answer is to look to the statutes in effect at the time civil rights are restored.

Fourth Circuit Precedent & the Statute’s Plain Meaning

The Fourth Circuit found decisions from other circuits persuasive, however, the Fourth Circuit also had its own published precedent upon which it could rely.  According to the Fourth Circuit, the district court improperly relied on unpublished decisions in reaching its decision, and thus gave too much weight to the 1995 North Carolina statute.  Even though North Carolina enacted a law in 1995, nothing at the time Defendant Burleson’s civil rights were restored indicated that he could not possess a firearm or otherwise, which is what is required by 18 U.S.C. § 921(a)(20).  The plain meaning of 18 U.S.C. § 921(a)(20) does not indicate that a state retroactive statute should be included in the evaluation.  Instead, the statute requires just the opposite.  It states “such restoration” which plainly refers back to the time of restoration and does not state “unless current state law expressly provides.”

Reverse, Vacate, and Remand

The Fourth Circuit decided that Defendant Burleson was actually innocent of the crime to which he pled guilty because it was not illegal for him to possess at firearm under 18 U.S.C. § 922(g) at the time he was charged.  Thus, the court reversed the judgment, vacated his conviction and sentence, and remanded to the district court.