Clothier v. Internal Revenue Serv. (In re Clothier), Case No. 13-29432-K

• Court: United States Bankruptcy Courts. Sixth Circuit. U.S. Bankruptcy Court — Western District of Tennessee
• Writing for the Court: David S. Kennedy, UNITED STATES CHIEF BANKRUPTCY JUDGE
• Citation: 588 B.R. 28
• Parties: IN RE Terry Lyle CLOTHIER and Barbara Jean Clothier fka Barbara J. Crigger, Debtors. S.S.N: xxx–xx–xxxx (H), S.S.N: xxx–xx–xxxx (W) Terry Lyle Clothier and Barbara Jean Clothier, Plaintiffs, v. Internal Revenue Service, Defendant.
• Docket Number: Adv. Proc. No. 18-00104-K,Case No. 13-29432-K
• Decision Date: 10 August 2018

588 B.R. 28

IN RE Terry Lyle CLOTHIER and Barbara Jean Clothier fka Barbara J. Crigger, Debtors. S.S.N: xxx–xx–xxxx (H), S.S.N: xxx–xx–xxxx (W)

Terry Lyle Clothier and Barbara Jean Clothier, Plaintiffs,
v.
Internal Revenue Service, Defendant.

Case No. 13-29432-K
Adv. Proc. No. 18-00104-K

United States Bankruptcy Court, W.D. Tennessee, Western Division.

Signed August 10, 2018
Filed August 13, 2018

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William A. Cohn, The Cohn Law Firm, Cordova, TN, for Plaintiffs.

Matthew Miller, Department of Justice, Washington, DC, Barbara M. Zoccola, Assistant United States Attorney, Memphis, TN, for Defendant.

MEMORANDUM AND ORDER ON PLAINTIFFS' F.R.B.P. 7056 MOTION FOR SUMMARY JUDGMENT AND DEFENDANT'S F.R.B.P. 7056 MOTION FOR SUMMARY JUDGMENT COMBINED WITH NOTICE OF THE ENTRY THEREOF

David S. Kennedy, UNITED STATES CHIEF BANKRUPTCY JUDGE

INTRODUCTION

On September 4, 2013, the above-named Plaintiffs/Debtors, Terry Lyle Clotheir and Barbara Jean Clothier fka Barbara J. Crigger, filed a joint no-asset case under Chapter 7 of the Bankruptcy Code. On December 18, 2013, they both received general discharges under 11 U.S.C. § 524(a)(1) of all their dischargeable debts whereupon this case was closed. On March 1, 2018, this case was reopened under 11 U.S.C. § 350(b) and F.R.B.P. 5010 to allow the Debtors to file the instant complaint under 11 U.S.C. § 523(a)(1) to determine the dischargeability of certain prepetition income tax obligations owed to the Defendant, the Internal Revenue Service ("IRS"). On May 16, 2018, Debtors filed a

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motion pursuant to F.R.B.P. 7056 for summary judgment (dkt. no. 6) to which the IRS responded and also filed its own motion for summary judgment (dkt. no. 13).

For the reasons discussed below, the Court will grant Debtors' motion for summary judgment as to the 2008 tax debt and also grant the IRS's motion for summary judgment as to the 2009 tax debt.

JURISDICTION

Determinations as to dischargeability of particular debts are core proceedings which the Court may both hear and determine under 28 U.S.C. § 157(b)(2)(I). The Court has subject matter jurisdiction under 28 U.S.C. § 1334(a) - (b) and § 157(a).

FACTS

The relevant background facts in this proceeding are simple and undisputed.

Debtors owed income taxes to the IRS for tax years 2008 and 2009. (Dkt. no. 7, Memorandum in Support of Motion for Summary Judgment ("Memorandum ") 1.) The deadline for the filing of each of those tax returns was extended to October 15, 2009 and October 15, 2010 respectively. (Dkt. no. 14, Memorandum in Support of Response to Motion for Summary Judgment and Cross Motion for Summary Judgment ("Response ") 7.)

Debtors filed a Chapter 11 petition on January 19, 2012. (Memorandum at 1.) The Chapter 11 case was dismissed on June 5, 2013. (Id. ) Debtors thereafter filed a joint Chapter 7 petition on September 4, 2013 and received general discharges of all their dischargeable debts on December 18, 2013. (Id. ) The IRS was listed as a prepetition creditor and was sent notice of the commencement of this joint Chapter 7 bankruptcy case. (Id. ) The IRS did not file a proof of claim in this no-asset Chapter 7 case. (Id. )

ANALYSIS

A. Failure to File a Proof of Claim

Debtors maintain that the IRS's failure to file a proof of claim in the case negates any priority it might have been entitled. None of the legal authority Debtors cite states that failure to file a proof of claim results in the loss of priority/non-dischargeable status in a no-asset Chapter 7 case. Simply put, filing a proof of claim in a no-asset Chapter 7 is not necessary. See, for example, In re Simmons , 765 F.2d 547, 551 (5th Cir. 1985) ; Eide v. Colltech,...