In re Bajac Const. Co., Bankruptcy No. 184-02346-B-7.
| Decision Date | 23 May 1989 |
| Docket Number | Bankruptcy No. 184-02346-B-7. |
| Court | U.S. Bankruptcy Court — Eastern District of California |
| Parties | In re BAJAC CONSTRUCTION COMPANY, Debtor. |
Andrew D. Weiss, Special Asst. U.S. Atty., San Jose, Cal., Larry J. Gallagher, Asst. U.S. Atty., Fresno, Cal., for U.S.A.
J. Roderick Jarrett, Jarrett & Meyer, Fresno, Cal., for trustee.
Arthur D. Radke, Trustee.
MEMORANDUM OF DECISION ON OBJECTIONS TO CLAIMS
This case was originally filed as a Chapter 11. It was converted to a Chapter 7 proceeding on January 8, 1986. The bar date for filing claims following conversion was June 3, 1986. The Chapter 7 trustee has objected to the allowance of four claims filed by the Internal Revenue Service (hereinafter "IRS"). The dates of filing, amounts, and claim numbers assigned by the clerk of the four claims are as follows:
Date Filed Amount Claim Number
07-01-85 $31,242.49 91
07-01-85 $15,174.26 92
04-24-86 $54,746.92 96
08-03-87 $93,924.34 104
At a hearing held on January 4, 1989, the trustee and IRS stipulated that claim number 91 be disallowed as having been superseded by claim number 104, that claim number 92 be allowed as a pre-petition priority claim rather than as a Chapter 11 cost of administration claim, and that claim number 96 be disallowed as having been superseded by claim number 104, leaving at issue the trustee's objection to a portion of claim number 104 which seeks payment of Form 941 taxes for a quarter—the third quarter of 1985—not included in any of the other claims.
The trustee's objection is that claim number 104 was filed after the bar date and that the inclusion of taxes for a new quarter constitutes the filing of a new, untimely-filed claim as to such new quarter. IRS replies that the inclusion of the new quarter was merely an amendment of its prior claims thereby avoiding the effect of the bar date, as previous timely filed claims covered all other periods from the second quarter of 1984 to the fourth quarter of 1985.
While the trustee acknowledges the general rule that timely filed claims can be amended after the bar date, he urges that the addition of a tax for a period not previously included in a claim is not an amendment but is rather a new claim. This view was expressed in In re Owens, 67 B.R. 418 (Bankr.E.D.Pa.1986). In Owens the court notes at page 423 the consistent policy of courts in freely permitting amendments to timely filed claims and then proceeds to attack that policy under the guise of exposing and condemning the dreaded "new claim."
The "new claim" exception to amendments has been voiced in the Eleventh Circuit in In re International Horizons, Inc., 751 F.2d 1213, 1215 (1985) and in the Ninth Circuit in In re Westgate California Corp., 621 F.2d 983, 984 (1980). Both courts, however spoke of an "entirely new claim" emphasis supplied. What "entirely" adds to "new" is unclear and somewhat puzzling, but at the very least it suggests that the "new claim" exception to claim amendment requires something shockingly different.
The Owens court relied on a difference in tax years between the original and the amended claims and cited In re Sapienza, 27 B.R. 526 (Bankr.W.D.N.Y.1983) for the proposition that amendments would not be permitted to allow claims for later tax years. While Sapienza did in fact involve an amendment for a different year's tax, the main problems were that the amendment was filed a year and a half into a confirmed Chapter 13 plan under which IRS had been receiving payments, and that the court viewed the tax claim in the amendment as a post-petition tax not provided for or otherwise payable under the Chapter 13 plan. It is also clear that the equities of the situation and what the court perceived to be dilatory conduct on the part of IRS formed the basis of the court's decision rather than any clear rule on the amendment of claims.
The law of this circuit requires that amendments be liberally permitted. In re Franciscan Vineyards, Inc., 597 F.2d 181, 182 (9th Cir.1979). This circuit also allows a claim filed after the bar date to qualify as an amendment to a timely filed claim if both claims are of the same generic...
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