Coffin v. Ecast Settlement Corp..

• Decision Date: 15 September 2010
• Docket Number: BAP No. EP 08-090.,Bankruptcy No. 07-20955-JBH.
• Citation: 435 B.R. 780
• Parties: Scott W. COFFIN, Debtor. Scott W. Coffin, Appellant, v. eCast Settlement Corporation and Peter C. Fessenden, Chapter 13 Trustee, Appellees.
• Court: U.S. Bankruptcy Appellate Panel, First Circuit

435 B.R. 780

Scott W. COFFIN, Debtor.Scott W. Coffin, Appellant,

v.eCast Settlement Corporation and Peter C. Fessenden, Chapter 13 Trustee, Appellees.

BAP No. EP 08-090.

Bankruptcy No. 07-20955-JBH.

United States Bankruptcy Appellate Panelof the First Circuit.

Sept. 15, 2010.

COPYRIGHT MATERIAL OMITTED.

J. Scott Logan, Esq., Biddeford, ME, on brief for Appellant.

William Andrew McNeal, Esq., Malvern, PA, on brief for Appellee eCast Settlement Corporation.

Peter C. Fessenden, Esq., on brief for Appellee Chapter 13 Trustee.

Ramona D. Elliott, Esq., Miami, FL, P. Matthew Sutko, Esq., Washington, DC, and David I. Gold, Esq., on brief for the Executive Office for United States Trustees, Department of Justice, as Amicus Curiae.

Before LAMOUTTE, BOROFF, and ROSENTHAL, ¹ United States Bankruptcy Appellate Panel Judges.

LAMOUTTE, Bankruptcy Judge.

Scott Coffin (the “Debtor”) appeals from an order, dated November 18, 2008, issued by the United States Bankruptcy Court for the District of Maine (the “Order”) ² denying confirmation of his chapter 13 plan because it included a deduction for an ownership expense on a vehicle which was neither leased nor encumbered. The bankruptcy court concluded that, under § 707(b)(2)(A)(ii)(I), ³ the vehicle ownership expense deduction is not “applicable” to above-median debtors who have no loan or lease payments, and that the Debtor had therefore failed to apply all of his disposable income to make payments to unsecured creditors as required by § 1325(b)(1)(B).

We do not say that the bankruptcy court's well-reasoned decision failed to reach a sensible conclusion. However, the statute, as drafted, and in light of its underlying policies, mandates a different result. Accordingly, we conclude that the mandatory language of § 707(b)(2)(A)(ii)(I), read in the context of its statutory scheme, purposes, and policies, provides that above-median debtors “shall” enter the Internal Revenue Service (the “IRS”) Local Standards (rather than their actual expenses) onto their Form B22C ⁴ in determining their projected net disposable income. For this reason, we REVERSE.

BACKGROUND

The relevant facts are not in dispute.

The Debtor has current monthly income ⁵ which is above the median for the District of Maine. He owns three motor vehicles outright: a 2002 Chevrolet Camaro, a 1973 Cadillac El Dorado, and a 1987 Chevrolet plow truck. On his amended Schedule I, the Debtor disclosed total monthly gross income of $8,766.73, and total net monthly take home pay of $6,557.03. On his amended Schedule J, he disclosed monthly living expenses totaling $5,859.93. On his amended ⁶ Form B22C, the Debtor calculated deductions from his income totaling $8,692.86, leaving $73.87 in projected monthly disposable income. As part of those deductions, the Debtor claimed ownership expenses of $478.00 a month for each of two vehicles, for a total of $956.00 per month, but listed no monthly debt payments on those vehicles.

The Debtor's Second Amended Plan, in which he proposed a 16 percent distribution to general unsecured creditors, “depend[ed] on his entitlement to the two $478 deductions.” ECast Settlement Corporation (“eCast”), an unsecured creditor in the Debtor's bankruptcy, objected to confirmation of the Second Amended Plan on the grounds that the Debtor had understated his projected disposable income by deducting ownership expenses for two vehicles that were neither leased nor encumbered. The Debtor filed a brief in response to eCast's objection, in which he set forth multiple arguments as to why he should be allowed to claim the vehicle ownership expense deduction. The chapter 13 trustee disagreed; in his brief, he acknowledged that there was no controlling authority in this circuit, but argued that the applicable statutory scheme does not allow the Debtor to claim the ownership expenses.

The bankruptcy court held a hearing and took the matter under advisement. The court subsequently issued the Order, accompanied by a memorandum of decision in which it concluded that the Bankruptcy Code does not permit an above-median chapter 13 debtor to deduct a vehicle ownership expense that he is not incurring. The bankruptcy court examined the legislative intent behind BAPCPA and the language of § 1325(b)(3), which governs the determination of “reasonably necessary expenses” for debtors with income above the median for their jurisdiction. The court reasoned that, while the language of § 1325(b)(3) divulged no plain meaning, “[t]he determinative standard for Chapter 13 debtors' expenses is reasonableness and necessity,” and that a “non-expenditure” such as the Debtor sought to apply did not qualify. Additionally, the court explained that it had rejected a vehicle's declining worth as an ownership expense because chapter 13 budgeting had traditionally taken no account of such “costs” and “BAPCPA did not alter confirmation standards so fundamentally (and so adversely to creditors' interests) that they must now be taken into account.” Accordingly, the court concluded that because the Debtor was not incurring out-of-pocket ownership expenses, they could not fairly be “projected” into his plan. This appeal followed. ⁷

JURISDICTION

A bankruptcy appellate panel may hear appeals from “final judgments, orders and decrees [pursuant to 28 U.S.C. § 158(a)(1) ] or with leave of the court, from interlocutory orders and decrees [pursuant to 28 U.S.C. § 158(a)(3) ].” Fleet Data Processing Corp. v. Branch (In re Bank of New England Corp.), 218 B.R. 643, 645 (1st Cir. BAP 1998). “A decision is final if it ‘ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.’ ” Id. at 646 (citations omitted).

Here, the Panel ordered the Debtor to show cause why this appeal should not be dismissed as interlocutory because an order denying confirmation of a chapter 13 plan is not a final order (as the debtors are free to propose an alternative plan), and the Order did not appear to satisfy any of the exceptions to the final order rule. The Debtor filed a response in which he argued that the Order is a final, appealable order, or alternatively that the Order satisfies each of the three exceptions to the final order rule. The Panel determined that the Debtor had shown sufficient cause to preclude dismissal of the appeal, but did not make a final ruling on jurisdiction. We conclude that the Order is interlocutory, see Hamilton v. Wells Fargo Bank, N.A. (In re Hamilton), 401 B.R. 539 (1st Cir. BAP 2009); Watson v. Boyajian (In re Watson), 309 B.R. 652, 659 (1st Cir. BAP 2004), aff'd, 403 F.3d 1 (1st Cir.2005); Ransom v. MBNA America Bank, N.A. (In re Ransom), 380 B.R. 799, 801 (9th Cir. BAP 2007), aff'd, 577 F.3d 1026 (9th Cir.2009), cert. granted, --- U.S. ----, 130 S.Ct. 2097, 176 L.Ed.2d 721 (2010), but that the Order satisfies the § 158 exception to the final order rule. ⁸ See In re Bank of New England, 218 B.R. at 652-54.

STANDARD OF REVIEW

The Panel generally reviews findings of fact for clear error and conclusions of law de novo. See TI Fed. Credit Union v. DelBonis, 72 F.3d 921, 928 (1st Cir.1995); Western Auto Supply Co. v. Savage Arms, Inc. (In re Savage Indus., Inc.), 43 F.3d 714, 719 n. 8 (1st Cir.1994). We review questions of statutory interpretation de novo.

United States v. Tobin, 552 F.3d 29, 32 (1st Cir.2009). The issue before us is one of statutory interpretation.

DISCUSSION

I. BAPCPA and Statutory Construction

Traditionally, questions of statutory construction begin with the plain language of the statute; courts consider the language in the context of the statutory scheme, avoiding statutory constructions which create results that are “senseless” or contrary to congressional intent. See Hamilton v. Lanning (In re Lanning), ---U.S. ----, ---- - ----, ---- - 130, 130 S.Ct. 2464, 2468-69, 2475-76, 177 L.Ed.2d 23 (2010); United States v. Ron Pair Enters., Inc., 489 U.S. 235, 241, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989); but see Marrama v. Citizens Bank of Mass., 549 U.S. 365, 127 S.Ct. 1105, 166 L.Ed.2d 956 (2007). ⁹ “We presume that Congress intended all words and provisions contained within a statute to have meaning and effect, and we will not readily adopt any construction that renders any such words or phrases meaningless, redundant, or superfluous.” United States v. Ahlers, 305 F.3d 54, 58 (1st Cir.2002). A court should look beyond the language of the statute for interpretive guidance only where the language of the statute is ambiguous; a statute is ambiguous if it allows for more than one reasonable interpretation. General Motors Corp. v. Darling's Auto Mall, 444 F.3d 98, 108 (1st Cir.2006).

It is generally accepted that many provisions of BAPCPA are unclear, making it difficult for courts to discern the congressional intent. See, e.g., Jean Braucher, A Guide to Interpretation of the 2005 Bankruptcy Law, 16 Am. Bankr. Inst. L. Rev. 349, 349 (Winter 2008); Hon. Thomas F. Waldron and Neil M. Berman, Principled Principles of Statutory Interpretation: A Judicial Perspective After Two Years of BAPCPA, 81 Am. Bankr. L.J. 195, 197 (Summer 2007). Further complicating matters, different portions of BAPCPA are driven by different congressional goals, namely the sometimes competing goals of “Bankruptcy Abuse Prevention” and “Consumer Protection.” As such, the canons of statutory interpretation “do not necessarily compel consistent conclusions” with respect to different sections of BAPCPA. ¹⁰ Waldron & Berman, supra, at 199.

Thus, a provision of BAPCPA may be unclear even if it does not appear on its face to be ambiguous. See id.; Braucher, supra, at 349; see also General Motors Corp. v. Darling's Auto Mall, 444 F.3d at 108 (explaining that a determination of statutory ambiguity is not limited to the four corners of a statute, but includes instances where the statute in question allows for more than one reasonable interpretation). Therefore, when interpreting BAPCPA, courts should review...