In re Friesenhahn, Bankruptcy No. 92-51599-C.

CourtUnited States Bankruptcy Courts. Fifth Circuit. U.S. Bankruptcy Court — Western District of Texas
Citation169 BR 615
Docket NumberBankruptcy No. 92-51599-C.
PartiesIn re Gerald FRIESENHAHN and Joyce Friesenhahn, Debtors.
Decision Date18 July 1994

Johnny W. Thomas, San Antonio, TX, for debtors.

Marion A. Olson, Jr., Chapter 13 Trustee, San Antonio, TX.

Craig A. Gargotta, San Antonio, TX, for U.S.


LEIF M. CLARK, Bankruptcy Judge.

CAME ON for consideration in the above styled case the motion of the United States of America on behalf of the Internal Revenue Service ("IRS") for leave to file a third amended proof of claim and for an order allowing the claim, and the response of the IRS to the chapter 13 trustee's claims recommendations. Upon consideration of the arguments of the parties, their legal memoranda, and the relevant authorities, the court concludes, for the several reasons expanded upon below, that the IRS is not entitled to file a third amended claim for the purpose of adding an alleged responsible person liability under 26 U.S.C. § 6672 (West 1989 & Supp. 1994). The following constitutes the court's findings of fact and conclusions of law. FED. R.BANKR.P. 7052.


The court has jurisdiction over this contested matter pursuant to 28 U.S.C. § 1334(b), and the District Court's general order of reference in bankruptcy proceedings. This is a core matter under 28 U.S.C. § 157(b)(2)(B).


Gerald and Joyce Friesenhahn (collectively, the "debtors") filed a joint petition for relief under chapter 13 of the Bankruptcy Code, 11 U.S.C. §§ 101-1330 (as amended), on May 5, 1992. Prior to their chapter 13 filing, the debtors were involved with a company known as Southwest Machinery & Parts, Inc. ("Southwest"). In June 1991, both the debtors and Southwest were experiencing financial difficulties, which led to chapter 7 filings by the debtors and Southwest. The debtors received a discharge in their chapter 7 case on November 8, 1991.1 There was no distribution to creditors in that case. Southwest, although an asset case, left most of its creditors unpaid, including priority creditors who received only approximately 2.8% on their claims.2 The IRS, having filed a claim in the Southwest case for delinquent withholding and social security or "FICA" taxes,3 received its pro rata share of the meager distribution. Southwest's case was closed, after distribution, on April 28, 1994.

In accordance with the local practice of this court, debtors' chapter 13 plan was confirmed on July 30, 1992, prior to the final date for filing claims, which was September 8, 1992. The plan proposed to pay all unsecured creditors — priority and general alike — one hundred percent of their claims over a period of approximately 60 months.

On August 10, 1992, the IRS, a scheduled creditor, filed a proof of claim (the "Original Claim") in the amount of $38,241.46 for federal income taxes, interest and penalties for the tax years 1990 and 1991. That claim was characterized as unliquidated because no returns had been filed by the debtors for those years. Debtors filed an objection to the IRS's Original Claim on September 11, 1992. In apparent response to the debtors' objection, the IRS filed its first amended claim (the "First Amended Claim") in the amount of $31,968.40. Like the Original Claim, the First Amended Claim sought recovery only of the debtors' personal federal income tax liability for the 1990 and 1991 tax years. On January 6, 1993, the IRS filed yet another claim (the "Second Amended Claim") which purported to amend the Original Claim. In the Second Amended Claim it was asserted that the debtors owed $21,968.64 in federal income taxes for the tax years 1990 and 1991. An agreed order was entered by the court on February 18, 1993, that allowed the Second Amended Claim of the IRS, and resolved the debtors' original objection.

In July 1993, the IRS filed the instant motion for leave to amend the Original Claim yet a third time (the "Third Amended Claim"). The Third Amended Claim asserted again the claim for debtors' personal federal income tax for the tax years 1990 and 1991, plus $212.13 in post petition accrued personal tax liability.4 In addition, the Third Amended Claim included a claim of $36,560.68 ($18,280.34 × each debtor)5 under 26 U.S.C. § 6672, also known as the responsible person or 100% penalty provision ("section 6672"). That latter claim was the result of the IRS's investigation into potential parties who could be responsible on Southwest's delinquent payroll taxes for the second quarter of 1991. There is no evidence in the record regarding when that investigation was begun, although the IRS represented that it completed its investigation in March 1993, at which time it concluded that the debtors were responsible parties, each liable for the penalty prescribed by section 6672.


The IRS's motion raises several complex issues of great interest to the chapter 13 bar and the debtors they represent, in general, and to these debtors, in particular. First, whether the Third Amended Claim is indeed as its name suggests — an amended claim — that relates back to the Original Claim. Second, whether the claim for responsible person liability which was first asserted post petition is a post petition tax liability proof of which may be filed under section 1305(a) of the Bankruptcy Code. Third, whether the IRS, although a scheduled creditor that received notice of the debtors' chapter 13 filing, did not receive sufficient notice of the debtors' potential liability under section 6672. In other words, were the debtors required not only to schedule the IRS as a creditor, but also to advise the IRS of the nature and substance of all claims that it held or may hold against them. Finally, in the event the IRS succeeds under none of the foregoing, the IRS argues that this case may be distinguished from this court's prior decision in In re Duarte, 146 B.R. 958 (Bankr.W.D.Tex. 1992), which held that, absent notice infirmities of statutory or constitutional stature, Rule 3002(c) of the Federal Rules of Bankruptcy Procedure creates an absolute bar date for the filing of claims in chapter 13 cases. Although the IRS does not press for the court to reverse Duarte, in light of the decision in In re Hausladen, 146 B.R. 557 (Bankr.D.Minn.1992), and it progeny, which held to the contrary, the court believes it is appropriate to reconsider this important issue. These issues will be addressed seriatim.

A. Is the IRS's Third Amended Claim an "Amended" Claim in Fact?

Where a creditor files a claim within the time prescribed by the Federal Rules of Bankruptcy Procedure, see FED.R.BANKR.P. 3002(c), 3003 & 3004, or by court order, that claim may be amended. Amended claims generally relate back to the original filing they amend, timely or tardy as that may be. Like pleadings filed in other civil arenas, leave to amend is granted liberally with two provisos. First, the amended claim must be of the same basic genre as, or bear a sufficient relationship to, the claim or claims included in the original filing. In that regard an amendment may cure a defect in the claim as originally filed, describe the claim with greater particularity, or plead a new theory of recovery based upon facts set forth in the original claim. In effect, the inquiry parallels the inquiry made under Rule 15(c) of the Federal Rules of Civil Procedure, applicable herein through Rule 7015 and Rule 9014 of the Federal Rules of Bankruptcy Procedure. See In re Unroe, 937 F.2d 346 (7th Cir.1991); In re Milan Steel Fabricators, Inc., 113 B.R. at 368. Rule 15(c) provides that an amendment will relate back to the initial filing if it arises out of the same "conduct, transaction, or occurrence." This test looks to whether the original claim was sufficient to place others on notice of the existence of the claim made in the amendment. In re Milan Steel Fabricators, Inc., 113 B.R. at 368 (citing 6 C. Wright & A. Miller, FEDERAL PRACTICE & PROCEDURE, ¶ 1472 at 513 (2d ed. 1990)).

Second, it is generally agreed that a court's inherent equitable powers may intervene in the appropriate case to authorize an "amendment."6See United States v. Kolstad (In re Kolstad), 928 F.2d 171, 175 (5th Cir.1991); United States v. International Horizons, Inc. (In re International Horizons, Inc.), 751 F.2d 1213 (11th Cir.1985); In re Kulick, 85 B.R. 680 (E.D.N.Y.1988); Barton v. United States (In re Barton), 151 B.R. 110 (Bankr.W.D.Mich.1993); see also In re Ellington, 151 B.R. 90, 94 (Bankr.W.D.Tex. 1993); In re McLean Indus., Inc., 121 B.R. 704, 708 (Bankr.S.D.N.Y.1990). In balancing the equities, courts commonly consider:

(1) Whether the debtor\'s creditors relied upon earlier filed proofs of claim or whether they had reason to know that the subsequent proofs of claim would follow;
(2) whether the other creditors would receive a windfall to which they are not entitled on the merits by the court\'s denying the amendment;
(3) whether the late filer intentionally or negligently delayed in filing the claim;
(4) the justification, if any, for the late filer\'s failure to request an extension of time within which to file a further claim;
(5) whether there are any other equitable considerations which should be taken into account.

In re International Horizons, Inc., 751 F.2d at 1216; In re Kulick, 85 B.R. at 680-81.

On the issue of claims' amendments and the various standards for consideration the Fifth Circuit observed:

While helpful, these considerations are overlapping and seem to subsume two general questions: (1) whether the creditor is attempting to stray beyond the parameters of the original proof of claim and effectively file a `new\' claim that could not have been foreseen from the earlier claim or events such as an ongoing or recently commenced audit; and (2) the

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