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September 17, 2008

More on the Constitutionality of the California Wildcard Exemption

As I reported earlier, August 9, 2008, an Arizona Bankruptcy Judge has ruled that the California Wildcard exemption (CCP 703.140(b)) is unconstitutional.  In re Regevig, 389 B.R. 736 (Bkrtcy, Ariz, Haines J, June, 2008)  As I understand it, certain trustees in California intend to attack the exemption as well.  The Supreme Court in Perez v. Campbell, 402 U.S. 637 (1971) struck down an Arizona statute which it deemed violated the Supremacy clause. 

In the 5-4 decision, Justice White wrote:

"Deciding whether a state statute is in conflict with a federal statute, and hence invalid under the Supremacy Clause, is essentially a two-step process of first ascertaining the construction of the two statutes and then determining the constitutional question whether they are in conflict. In the present case, both statutes have been authoritatively construed.  In Schecter v. Killingsworth, 93 Ariz. 273, 380 P.2d 136 (1963), the Supreme Court of Arizona held that

"[t]he Financial Responsibility Act has for its principal purpose the protection of the public using the highways from financial hardship which may result from the use of automobiles by financially irresponsible persons."

"With the construction of both statutes clearly established, we proceed immediately to the constitutional question whether a state statute that protects judgment creditors from "financially irresponsible persons" is in conflict with a federal statute that gives discharged debtors a new start "unhampered by the pressure and discouragement of preexisting debt."  As early as Gibbons v. Ogden, 9 Wheat. 1 (1824), Chief Justice Marshall stated the governing principle -- that

"acts of the State Legislatures . . . [which] interfere with, or are contrary to the laws of Congress, made in pursuance of the constitution,"

are invalid under the Supremacy Clause. Id. at 22 U. S. 211 (emphasis added).  [In the final analysis] our function is to determine whether a challenged state statute "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." Hines v. Davidowitz, 312 U. S. 52, 312 U. S. 67 (1941).  Since Hines, the Court has frequently adhered to this articulation of the meaning of the Supremacy Clause. See, e.g., Nash v. Florida Industrial Comm'n, 389 U. S. 235, 389 U. S. 240 (1967); Sears, Roebuck & Co. v. Stiffel Co., 376 U. S. 225, 376 U. S. 229 (1964); Colorado Anti-Discrimination Comm'n v. Continental Air Lines, Inc., 372 U. S. 714, 372 U. S. 722 (1963) (dictum); Free v. Bland, 369 U. S. 663, 369 U. S. 666 (1962); Hill v. Florida, 325 U. S. 538, 325 U. S. 542-543 (1945); Sola Electric Co. v. Jefferson Electric Co., 317 U. S. 173, 317 U. S. 176 (1942)."

I'm going to prepare an amicus brief for the Central District Consumer Bankruptcy Attorneys Assn supporting the debtor and the constitutionally of the wildcard exemption.  I will update this as I get further along in the research. 

September 17, 2008 in Current Affairs | Permalink


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From your writing I can't tell, but it seems that the issue of whether or not the wildcard exemption is still in play in California or if this case is in process. I'm assuming if you are writing an amicus brief the issue has not been fully adjudicated? And that the wildcard exemption is still valid at this point in California?

Posted by: Wendi Tafoya | Oct 2, 2008 6:05:30 PM

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