In re Gary J. Senczyszyn And Rose I. Senczyszyn

444 B.R. 750

In re Gary J. SENCZYSZYN and Rose I. Senczyszyn, Debtors.Michigan Department of Treasury, Appellant,

v.Gary J. Senczyszyn and Rose I. Senczyszyn, Appellees.

No. 10–11586.Bankr.No. 09–49868.

United States District Court, E.D. Michigan, Southern Division.

Feb. 11, 2011.

Juandisha M. Harris, Michigan Department of Attorney General, Detroit, MI, for Appellant.Charles J. Schneider, Charles J. Schneider Assoc., Livonia, MI, for Appellees.

OPINION AND ORDER AFFIRMING BANKRUPTCY COURT'S OPINION AND ORDER

ROBERT H. CLELAND, District Judge.

The court in this appeal is presented with two questions of law. First, which section or sections of the Bankruptcy Code govern how to characterize a “straddling” tax claim, specifically whether it is a post-petition claim under the statutory scheme enacted by Congress for chapter 13 bankruptcies. Second, if 11 U.S.C. § 1305 governs, the court must decide at what time a straddling tax claim “become[s] payable” as that phrase is used in that section.

I. BACKGROUND

The essential facts of this matter are not in dispute. Debtor–Appellees Gary and Rose Senczyszyn filed a 2008 joint tax return with the State of Michigan on February 14, 2009, calculating a tax due in the amount of $1,900. They then filed a petition for relief pursuant to chapter 13 of the Bankruptcy Code on March 31, 2009, and a chapter 13 plan followed on April 15, 2009, the same day their already-filed tax return was due. The plan included Appellant Michigan Department of Treasury (listed as “State of Michigan”) as a claimant with a $1,900 claim based on taxes due for income earned in 2008. Appellees also filed a Schedule E on April 15, 2009, which listed Appellant as a priority creditor to be paid $1,900 for 2008 state income taxes. The plan was confirmed by the bankruptcy court in a September 19, 2009, order.

Appellant did not object to the plan by the June 23, 2009, deadline. Nor did Appellant file a proof of claim by the September 27, 2009, deadline for governmental creditors. As a result, Appellees filed a proof of claim on Appellant's behalf on October 8, 2009, under 11 U.S.C. § 501(c) and Federal Rule of Bankruptcy Procedure 3004.

Instead of participating in the plan, on February 12, 2010, Appellant filed an objection to that proof of claim, arguing that its claim is a post-petition, rather than pre-petition, claim because Appellees' tax return was not due until April 15, 2009. The bankruptcy court denied the objection on April 7, 2010. Appellant appeals that order.

This appeal presents only a question of statutory interpretation: whether the statutory scheme for chapter 13 bankruptcies renders a straddling tax ¹ claim a post-petition claim subject to § 1305(a)(1).

II. STANDARD

In reviewing a bankruptcy appeal, the district court accepts as correct the bankruptcy court's findings of fact, unless they are clearly erroneous. Fed. R. Bankr.P. 8013; see In re Wingerter, 594 F.3d 931, 935–36 (6th Cir.2010). The bankruptcy court's conclusions of law are reviewed de novo. In re Wingerter, 594 F.3d at 935–36. Issues of statutory interpretation are conclusions of law and are reviewed de novo. United States v. Springer, 609 F.3d 885, 889 (6th Cir.2010); In re Westfall, 599 F.3d 498, 501 (6th Cir.2010).

III. DISCUSSION

The court will affirm the bankruptcy court's opinion and order overruling Appellant's objection, but will do so on different grounds.

A. Statutory Scheme

Like many of the other courts that have considered the issue, the court finds that the meaning of “become payable” in § 1305 controls whether Appellant's straddling tax claim is a pre-petition or post-petition claim.

Navigating the Bankruptcy Code often presents a challenge and sometimes seems to require a topographical map. Chapter 5 of Title 11 of the United States Code contains certain definitions and procedures which are generally applicable to bankruptcy filings under chapters 7, 11, 12, and 13. 11 U.S.C. § 103(a). Title 11 U.S.C. § 501 provides that a creditor may file a proof of claim, but if the creditor does not timely file such a proof of claim, the debtor may file the proof on the creditor's behalf. 11 U.S.C. § 501(a)-(c).

A claim of a kind specified in section 502(e)(2), 502(f), 502(g), 502(h) or 502(i) of this title may be filed under subsection (a), (b), or (c) of this section the same as if such claim were a claim against the debtor and had arisen before the date of the filing of the petition.

11 U.S.C. § 501(d). Relevant here is § 502(i), which states:

A claim that does not arise until after the commencement of the case for a tax entitled to priority under section 507(a)(8) of this title shall be determined, and shall be allowed under subsection (a), (b), or (c) of this section, or disallowed under subsection (d) or (e) of this section, the same as if such claim had arisen before the date of the filing of the petition.

Appellant's state income tax claim is entitled to priority under § 507(a)(8) because it is an unsecured claim of a governmental unit for an income tax of a taxable year that ended before the petition was filed and which meets other certain specified criteria. 11 U.S.C. § 507(a)(8)(A). A claim is allowed if proof is filed and a party in interest does not object. 11 U.S.C. § 502(a).

Section 1305 of Title 11, entitled “Filing and allowance of postpetition claims,” provides in relevant part:

(a) A proof of claim may be filed by any entity that holds a claim against the debtor—

(1) for taxes that become payable to a governmental unit while the case is pending; ...

....

(b) Except as provided in subsection (c) of this section, a claim filed under subsection (a) of this section shall be allowed or disallowed under section 502 of this title, but shall be determined as of the date such claim arises, and shall be allowed under section 502(a), 502(b), or 502(c) of this title, or disallowed under section 502(d) or 502(e) of this title, the same as if such claim had arisen before the date of the filing of the petition.

Subsection (c) is inapplicable to tax claims. Chapter 5 applies to chapter 13 cases. 11 U.S.C. § 103(a). Chapter 13, and thus § 1305, applies only in a chapter 13 case. 11 U.S.C. § 103(i).

To summarize, a pre-petition tax claim is one filed under § 501, and is so named because it “arise[s] before the date of the filing of the petition.” 11 U.S.C. § 501(d); see 11 U.S.C. § 101(10). Claims that arise after the petition is filed, so-called “post-petition claims,” generally are not addressed in bankruptcy. United States v. Ripley (In re Ripley), 926 F.2d 440, 443 (5th Cir.1991) (citing 5 Collier on Bankruptcy ¶ 1305.01[1] (L. King ed., 15th ed. 1988)). As with any rule, there are exceptions. Tax claims that arise after the commencement of a case may be included in a bankruptcy pursuant to § 502(i). In addition, in chapter 13 cases, proofs of claim for those taxes that “become payable ... while the case is pending” may be filed under § 1305(a)(1). While pre-petition claims arise in any type of bankruptcy, for numerous types of claims, and proof thereof may be filed by various parties in interest, post-petition claims under § 1305 are at issue only in chapter 13 bankruptcies, comprise only two narrow classes of claims, and proof thereof may be filed only by the creditor.

In passing § 1305, Congress carved out for chapter 13 bankruptcies a narrow exception to the claim allowance procedures generally applicable in all bankruptcies. See S.Rep. No. 95–989, at 140 (1978), reprinted in 1978 U.S.C.C.A.N. 5787, 5926. Thus, the bankruptcy court erred in finding that § 1305 need not be considered in the case at hand. In coming to that conclusion, the bankruptcy court held that

it is not necessary for the Court in this case to try to resolve the split in cases construing § 1305, because § 1305 does not control the issue in this case. Section 1305(a)(1) gives an option to governmental units to consider whether they are treated more favorably by filing a proof of claim for taxes that become payable post-petition while a Chapter 13 case is pending, or not. That makes perfect sense for the taxes based upon income earned post-petition by debtors, since many Chapter 13 plans run as long as five years. Then, at their choosing, § 1305(a)(1) permits governmental units to file a proof of claim for those post-petition taxes. But that section does not determine whether a claim is pre-petition or post-petition for purposes of filing and allowance under §§ 501 and 502. Section 1305 solely governs proofs of claims filed by entities other than a debtor, and if the claim is for taxes, § 1305(a)(1) governs only if the proof of claim is filed by a governmental unit for taxes that become payable while a case is pending. It is unnecessary for this Court to consider whether or not a governmental unit may hypothetically file a proof of claim under § 1305 when the proof of claim that is the subject of the objection in this case was not filed by a governmental unit, was not filed under § 1305, and is based upon a right to payment that is plainly rooted in the pre-petition relationship between the Debtors and the State of Michigan, based upon the income earned by the Debtors during 2008.

In re Senczyszyn, 426 B.R. 250, 258 (Bankr.E.D.Mich.2010). However, Appellant was not required to file a proof of claim in order to argue that § 1305 applies; after all, Appellant reads that statute to say that only it, and not Appellees, was permitted to file a proof of claim, and it consciously declined to do so. Appellant can therefore logically base an objection on § 1305. If that statute is given the construction for which it argues, Appellant's objection would have to be sustained, as Appellees could not have filed a proof that was not permitted under the statute, and Appellant would not be required to file such a proof.

The case law contains two strands of thought that attempt to reconcile the general provisions of chapter 5 with the language...