## Facts

- Gerald E. Geise, Jr. filed a voluntary Chapter 13 bankruptcy petition in 1988 in Wisconsin; the case was later converted to Chapter 7.
- At filing, Geise had a pending personal-injury cause of action in Nevada.
- Geise elected Wisconsin state exemptions under 11 U.S.C. § 522 and claimed the personal-injury cause of action as exempt.
- The bankruptcy trustee objected, asserting that Wisconsin law then provided no statutory exemption for personal-injury actions or proceeds.
- The bankruptcy court overruled the objection and allowed the exemption based on earlier bankruptcy decisions.
- The district court reversed, concluding the prior decisions were not controlling and Wisconsin law did not exempt the claim.
- Wisconsin later enacted Wis. Stat. § 815.18(3)(i)(c), effective May 4, 1990, creating a limited personal-injury exemption, but that statute did not apply because Geise filed before its effective date.

## Issues

1. Whether, under Wisconsin exemption law applicable on the bankruptcy petition date (before May 4, 1990), a debtor could exempt a pending personal-injury cause of action from the bankruptcy estate.
2. Whether prior federal decisions interpreting Wisconsin law required recognition of an implied personal-injury exemption absent a specific Wisconsin statutory exemption.

## Decision

- The Seventh Circuit affirmed the district court.
- The court held the pending personal-injury cause of action was property of the estate under 11 U.S.C. § 541 and was not exempt under Wisconsin law in effect when Geise filed.
- The court rejected reliance on earlier federal decisions as establishing a controlling or persuasive Wisconsin-law basis for exempting the claim.
- The personal-injury cause of action remained in the bankruptcy estate for administration by the trustee.

## Legal Principles

- Under 11 U.S.C. § 541, a debtor’s legal or equitable interests at the commencement of the case, including contingent or unliquidated causes of action, become property of the bankruptcy estate.
- Under 11 U.S.C. § 522(b), when a debtor elects state exemptions, exemption rights are determined by state law applicable on the petition date, not by later statutory changes.
- Exemptions must rest on applicable state statutory text or clear state-law authority; federal bankruptcy courts may not create exemptions based on equity or nonbinding interpretations of state law.
- A later-enacted state exemption for a category of property does not retroactively establish that the property was exempt under earlier law absent a state-law basis for retroactivity.

## Conclusion

The Seventh Circuit held that Wisconsin debtors who filed before the effective date of the state’s personal-injury exemption statute could not exempt pending personal-injury causes of action; such claims entered the bankruptcy estate and were available to satisfy creditor claims.


Matter of Geise, 992 F.2d 651 (7th Cir. 1993)