In re King, Bankruptcy No. 380-02421.
Decision Date | 03 March 1981 |
Docket Number | Bankruptcy No. 380-02421. |
Citation | 9 BR 376 |
Parties | In re William A. KING, Debtor(s). |
Court | U.S. Bankruptcy Court — District of Oregon |
Allan D. Sobel, Portland, Or., for Joseph I. Aizawa and John E. Hahn, for creditors of the debtor.
David Denecke, Beaverton, Or., for Cable Business Systems Co. and Clifford Schrock.
On September 22, 1980 the debtor filed herein his petition for an order for relief under chapter 7 of 11 U.S.C. On October 1, 1980 an order was entered appointing an interim trustee. The § 341(a) meeting of creditors was held on November 3, 1980. On November 9, 1980 the debtor filed a motion to convert his case to a case under chapter 13 and at that time also filed a chapter 13 statement and a chapter 13 plan. A hearing upon the debtor's motion to convert was held on November 20, 1980 after notice to the debtor and to the chapter 7 trustee. At that time the court expressed concern as to whether the debtor was eligible for relief under chapter 13 because of the limitations imposed by 11 U.S.C. § 109(e). Following notice to the debtor, the creditors and other interested parties, a further hearing was held on February 12, 1981 to determine the eligibility of the debtor for relief under chapter 13. At this hearing the debtor appearing in person. The proceedings were reported by Linda Foster.
From the schedules filed by the debtor, from the files in adversary proceedings Nos. 80-0352, 80-0351 and 81-0008 and the representations made to the court at the time of the hearing, the following facts appear.
Schedule A-1 filed by the debtor in his chapter 7 case lists priority unsecured tax claims of $4,200. Schedule A-2 lists one secured creditor, Xerox, with an amount due of $7,229.76 and a value of the collateral of $6,000. Therefore the unsecured portion of the claim of Xerox is $1,229.76. Schedule A-3 lists unsecured claims totalling $394,922.46. Included in this total of unsecured claims is scheduled a disputed claim of Joseph Aizawa of $219,006.25; a disputed claim of John Hahn of $60,000; and a disputed claim of William Kallman of $70,000. On November 13, 1980 the debtor filed amended schedules showing eleven additional creditors. One of these additional creditors was the Willamette Falls State Bank, a fully secured creditor. Of the other ten, the debtor testified that there was a total amount owing on their claims of approximately $1,000.
It was contended by Aizawa and Hahn that the debtor did not qualify for relief under chapter 13 for the reason that his unsecured debts exceeded $100,000, the maximum limit imposed by 11 U.S.C. § 109(e). No contention was made that the secured debts exceeded the $350,000 limitation imposed by that section.
In its relevant portions § 109(e) provides that only "an individual with regular income that owes, on the date of the filing of the petition, non-contingent, liquidated, unsecured debts of less than $100,000 * * * may be a debtor under chapter 13 of this title." 11 U.S.C. § 101(11) provides that "`debt' means liability on a claim." 11 U.S.C. § 101(4) provides:
It is to be noted that the term "claim" is broader than the term "debt" under the definitions contained in § 101(4) and § 101(11). It is also noted that § 109(e) refers to unsecured "debts" rather than unsecured "claims".
The monetary limits imposed by § 109(e) apply to "debts". Since the term "debt" is limited to liability upon a "claim", the court must make a determination of liability and amount due in the case of a disputed claim in order to determine what amount, if any, of the disputed claim should be included in determining the total amount of non-contingent, liquidated, unsecured debt owing at the time of the filing of the petition for relief.
No contention has been made that any of the claims scheduled by the debtor or otherwise shown by the testimony or representations made to the court are contingent claims. The court must, however, determine what part of the claims represent liquidated debts.
The term "liquidated" is not defined by the Bankruptcy Reform Act. We must therefore turn to other sources for a definition.
The definition of the word "liquidated" was discussed in In re Silver, 109 F.Supp. 200 (E.D.Illinois 1952) as follows:
It would appear from the above authorities that a debt is not liquidated if there is a substantial dispute regarding liability or amount. On the other hand it would appear that if there is no dispute as to liability but only as to amount, then a claim should be treated as liquidated at least to the extent of the amount admitted by the obligor.
The claims scheduled by the debtor of Aizawa, Hahn and Kallman are included in three separate adversary proceedings filed in this court. The complaints in each of these adversary proceedings pray for both compensatory damages and punitive damages. Clearly, under the above definitions of the term liquidated, a claim for punitive damages is not a liquidated debt.
Adversary No. 80-0352 was instituted by the filing of a complaint by Joseph V. Aizawa and John E. Hahn as plaintiffs against the debtor which seeks a judgment for special damages of $20,000 and punitive...
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