65 F.3d 1307 (5th Cir. 1995), 94-20128, Matter of Waindel
|Citation:||65 F.3d 1307|
|Party Name:||In the Matter of Patrick Gerald WAINDEL and Susan Louise Waindel, Debtors. UNITED STATES of America, Appellant, v. Patrick Gerald WAINDEL and Susan Louise Waindel, Appellees.|
|Case Date:||October 09, 1995|
|Court:||United States Courts of Appeals, Court of Appeals for the Fifth Circuit|
Gary D. Gray, Randolph L. Hutter, Gary R. Allen, Chief, Kenneth W. Rosenberg, Appellate Sect., Tax Div., Dept. of Justice, Washington, D.C., Gaynell Griffin Jones, U.S. Atty., Waymon G. DuBose, Jr., Dept. of Justice, Tax Div., Dallas, TX, for appellant.
Ian Cain, Bennett G. Fisher, Houston, TX, for appellees.
Appeals from the United States District Court for the Southern District of Texas.
Before JONES, DUHE and STEWART, Circuit Judges.
EDITH H. JONES, Circuit Judge:
The Internal Revenue Service (IRS) appeals the district court's and bankruptcy court's disallowance of a tardily filed claim for unpaid taxes, penalties and interest in the debtors' Chapter 13 case. The lower courts held that tardily filed priority claims are disallowed from recovery under Bankruptcy Rule 3002 and that IRS's claim was not a mere amendment of another claim it filed in the case. Because IRS apparently finds it difficult to comply with the bankruptcy rules'
90-day "bar date" for filing proofs of claim, these questions have arisen repeatedly in recent years, and conflicting authorities have piled up. See, e.g., United States v. Chavis (In re Chavis), 47 F.3d 818 (6th Cir.1995); United States v. Towers (In re Pacific Atlantic Trading Co.), 33 F.3d 1064 (9th Cir.1994); United States v. Vecchio (In re Vecchio), 20 F.3d 555 (2nd Cir.1994); Internal Revenue Service v. Century Boat Co. (In re Century Boat Co.), 986 F.2d 154 (6th Cir.1993). Fortunately, Congress fixed the problem for tax claims in cases filed after October 22, 1994. 1 As for the many pre-amendment cases, however, this court sides with the analysis that holds tardy claims to be tardy, not disallowed, but potentially entitled to no more than lower-priority recovery from the debtor's estate. 11 U.S.C. Sec. 726(a)(3). In this case, our result reverses the judgments of the lower courts insofar as the "allowance" of IRS's late-filed claim is concerned, but we also hold IRS was not entitled to priority claim distribution rights and that its late claim was not a permissible amendment to an earlier, timely claim. The lower court judgments are technically reversed in part and affirmed in part, but IRS recovers nothing on its tardy claim.
Patrick and Susan Waindel filed a Chapter 13 petition on August 5, 1991. Before this filing, the IRS notified them that it was disallowing certain deductions they had taken for the tax years 1982 through 1986. The Waindels listed on the Chapter 13 Statement filed with their petition an estimated tax liability for 1990 of $20,000, and estimated and disputed tax liabilities for 1982 and 1983 of $16,850 and $9,500 respectively. No explanation has been offered as to why the debtors did not schedule estimated and disputed tax liabilities for the years 1984 through 1986.
The bankruptcy court issued a notice of the Sec. 341 meeting of creditors specifying that all proofs of claims were to be filed prior to February 4, 1992 in order to be allowed and paid. Shortly after receiving this notice, the IRS filed a timely proof of claim for taxes, penalties, and interest for 1990 in the amount of $20,796.52. 2 On February 6, 1992, two days after the filing deadline, the IRS filed an "amended" proof of claim asserting a total claim of $73,781.79 spanning the years 1982, 1983, 1984, 1985, 1986, and 1990. 3
Debtors objected to the amended proof of claim arguing that it was actually a new claim that must be disallowed because it was not timely filed pursuant to Bankruptcy Rule 3002(c). Prior to trial, the parties stipulated that deficiencies for all of the tax years in question totalled $71,151.98. At trial, the IRS offered uncontroverted testimony that the amended proof of claim was actually prepared on January 6, 1992--well in advance of the February 4 deadline. Unforeseen personnel changes were blamed for the tardiness of the actual filing.
The bankruptcy court ruled that because the amended proof of claim was not of the same generic origin as the original proof of claim, it did not properly qualify as an amendment, but was actually a new claim. The bankruptcy court further held that the bar date set forth in Rule 3002(c) precluded allowance of any claims filed after that bar date. 4 The district court affirmed the decision of the bankruptcy court. The IRS now appeals.
Before the enactment of the Bankruptcy Code in 1978, section 57n of the 1898 Bankruptcy Act (hereinafter "the Act")
barred late-filed claims from sharing in distributions of the debtor's estate. The Waindels assert that the bar date concept was carried over into the Code. IRS argues that to the contrary, the Code eschewed the bar date as a complete bar to recovery and opted instead for a system that separates claims into two categories, timely and tardy. It is of course not enough to posit that Congress meant to preserve the certitude of the bar date. One must rely upon the text of the Code, if it is plain, as the definitive guide to congressional intent. See United States v. Ron Pair Enterprises, 489 U.S. 235, 241, 109 S.Ct. 1026, 1030, 103 L.Ed.2d 290 (1989).
The text of the Code does not support a bar date as a complete bar to recovery. As other courts have noted, sections 501, 502 and 726 are the Code provisions that respectively concern the filing of claims, their allowance, and the priority of distribution to claimants. Although none of these provisions sets a bar date or depends for its efficacy on a total bar, the imposition of deadlines for filing claims is clearly contemplated. Section 501(c) authorizes a debtor or the trustee to file a proof of claim for a creditor who has not timely filed in his own behalf. Section 726 permits late-filed claims to share in the debtor's estate in two circumstances, differentiating according to whether the claimant had sufficient notice of the bankruptcy to permit a timely filing. 11 U.S.C. Sec. 726(a)(2)(C), (a)(3). While Sec. 502(b) lists various exceptions to the "allowance" of claims against the debtor, however, untimeliness is not among them. The Code therefore renders timely filing of claims significant for purposes other than "allowance."
The concept of a bar date as preventing recovery from the debtor's estate arises not from the Code but from Bankruptcy Rule 3002(a), which requires timely filing of a claim for it to be "allowed." Keying "allowance" to timeliness is a vestige of practice under the 1898 Bankruptcy Act; the original authors of the Bankruptcy Rules more or less transcribed the absolute bar date rule based on the Act into Rule 3002 accompanying the Code. See Rule of Practice and Procedure in Bankruptcy 3002, Advisory Committee's Note; 3 Collier on Bankruptcy p 3002.02 at 3002-6 (15th ed. 1993). The Advisory Committee, as delegate of the Supreme Court's bankruptcy rulemaking power, had no authority to write a rule inconsistent with the Code. 28 U.S.C. Sec. 2075. 5 Nevertheless, to the extent that Rule 3002(a) declares every untimely filed claim to be disallowed, the Rule impermissibly conflicts with the Code. We agree with the courts, cited above, that so hold.
In order to read Rule 3002(a) consistently with Code Secs. 501, 502 and 726, the bankruptcy rule must be viewed as providing a dividing line between timely and tardy claims, rather than a flat ban on the allowance of late-filed claims. Accord Vecchio, 20 F.3d at 559 ("[A] rule of procedure that disallows claims for untimeliness cannot stand."); In re Pac. Trading Co., 33 F.3d 1064, 1067 (9th Cir.1994); see also Cisneros v. United States, 994 F.2d 1462, 1465 (9th Cir.1993). 6
In most cases, the inartful language of Rule 3002(a) makes no practical difference. Section 726 sets forth the order for payment
of claims. The general scheme requires payment of priority claims followed by unsecured claims and, if any money remains, payment of late claims, various types of penalties and interest. There will hardly ever be surplus funds available to the estate after payments to the first two tiers of creditors in a Chapter 7 case so as to enable payments upon untimely general...
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