U.S. Court of Appeals For the Seventh Circuit
Bankruptcy – Free Exercise Clause – RFRA
A religious exemption to the bankruptcy code’s provisions regarding preferential transfers is not required.
“The case for a religious exception is even weaker here than in Lee and Hernandez, since what the Archdiocese asks us to do is write in an exception for purported fraud. The Court has rejected the idea that fraudulent or improper actions can be excused in the name of religion: ‘Nothing we have said is intended even remotely to imply that, under the cloak of religion, persons may, with impunity, commit frauds upon the public. … Even the exercise of religion may be at some slight inconvenience in order that the State may protect its citizens from injury.’ Cantwell v. Conn, 310 U.S. 296, 306 (1940); see also McDaniel, 435 U.S. at 643 n.* (Stewart, J., concurring) (‘[A]cts harmful to society should not be immune from proscription simply because the actor claims to be religiously inspired.’); Gonzalez, 280 U.S. at 16 (noting fraud exception to intrachurch doctrine). We do not believe that there is, nor can there be, a religious exception that would allow a fraudulent conveyance in the name of free exercise. For these reasons, we find that the Challenged Provisions are of general and neutral applicability. Assuming the Archbishop’s religious practice is substantially burdened, we find that there is a compelling interest in the application of the Challenged Provisions here that is narrowly tailored to achieve that interest.”
Affirmed in part, and Reversed in part.
13-2881, 13-3353 & 13-3495 Listecki v. Official Committee of Unsecured Creditors
Appeals from the United States District Court for the Eastern District of Wisconsin, Randa, J., Williams, J.