In re Slusher

• Decision Date: 17 January 2007
• Docket Number: No. BE-S-06-10435-BAM.,BE-S-06-10435-BAM.
• Citation: 359 B.R. 290
• Parties: In re Donald SLUSHER, Debtor.
• Court: U.S. Bankruptcy Court — District of Nevada

359 B.R. 290

In re Donald SLUSHER, Debtor.

No. BE-S-06-10435-BAM.

United States Bankruptcy Court, D. Nevada.

January 17, 2007.

COPYRIGHT MATERIAL OMITTED

David Krieger, Haines and Krieger, L.L.C., Las Vegas, NV, for Debtor.

OPINION DENYING CONFIRMATION OF DEBTOR'S PLAN

BRUCE A. MARKELL, Bankruptcy Judge.

I. Introduction

Donald Slusher, a carpenter, filed for chapter 13 bankruptcy protection on March 17, 2006. With his petition, Mr. Slusher filed his Schedules I & J, which contained statements of his current income and current expenditures. These showed monthly income and expenses of $3,739.82 and $1,285, respectively, for a monthly net income of $2,454.82.

He also filed his form B22C, the means testing form. This form declared seven dependents, and so Mr. Slusher did not complete the expense portion of the means testing form since the applicable median income for such a large family—$71,650—exceeded his declared annualized current monthly income of 553,832.48.¹

On May 4, 2006, Mr. Slusher amended his schedules and his means testing form, in part to reflect a reduction in claimed dependents from his originally claimed seven to just one.² His Schedules I & J were also amended to indicate a revised monthly net income of $2,364.82, calculated by subtracting monthly expenses of $1,375 from monthly income of $3,739.82.³ Mr. Slusher's amended Form B22C, on the other hand, listed his annualized current monthly income at $44,472.48. As this amount was higher than the applicable median income for a household of one—$37,243—Mr. Slusher was then compelled to complete the rest of Form B22C. He did so, with the end result being a reported monthly disposable income of only $37.04.⁴ To arrive at this low amount, Mr. Slusher included a $475 vehicle ownership expense for a car that he owns free of any liens.⁵

Notwithstanding the small net monthly disposable income listed on Form B22C Mr. Slusher filed a chapter. 13 plan indicating he had no "projected disposable income" but proposing to pay $200 a month for 36 months. The chapter 13 trustee objected to this plan, raising issues which arise under language added by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA).⁶

In particular, the trustee raises the following questions:

• whether "projected disposable income" as used in Section 1325(b)(1)(B) is the same as "disposable income" as defined in Section 1325(b)(2) & (3) for an above-median debtor such as Mr. Slusher;

• whether the term "applicable commitment period," as used in Section 1325(b)(4), refers exclusively to a span of time (i.e., it is temporal), or instead is shorthand for a monetary multiplier; and

• whether a debtor may deduct standard vehicle ownership expenses on Form B22C for a vehicle owned free and clear of any liens.

In brief, this court concludes that:

• while disposable income is an important component of projected disposable income, they are not the same, although the amount of disposable income calculated under Section 1325(b)(2) is presumptively projected disposable income;

• The term "applicable commitment period" refers to a time period, not a monetary multiplier; and

• A debtor who owns a car free and clear of any liens may not deduct an ownership expense on line 28 of Form B22C.

II. Projected Disposable Income

The chapter 13 trustee argues that Mr. Slusher's "projected disposable income" under Section 1325(b)(1)(B) should be based on his anticipated net income during the applicable commitment period as listed on Schedule J, line 20c, rather than the net of "current monthly income" and "reasonably necessary expenses" as listed on Form B22C, line 58. Mr. Slusher counters by arguing that the statutory provisions applicable to above-median income debtors are clear and require calculation of "disposable income," as defined in Section 1325(b), and that this amount is to be found through the calculations of Form B22C, and Form B22C alone.

Within this seemingly arcane and obscure question, there is much at stake. For the reasons discussed below, this court holds that line 58 of Form B22C is a presumptive, but not an exclusive, basis for calculating "projected disposable income" as used in 11 U.S.C. § 1325(b)(1)(A).

A. Prior History of Section 1325(b)

Under chapter 13, a debtor must normally commit all of his or her projected disposable income to payments under the plan.⁷ This requirement is not new with BAPCPA. Before BAPCPA, courts and the relevant statute defined "projected disposable income" as income not reasonably necessary for maintaining or supporting the debtor or a dependent, with that determination being made on an estimated basis at plan confirmation. 11 U.S.C. § 1325(b)(2)(A) (2005); see, e.g., Anderson v. Satterlee (In re Anderson), 21 F.3d 355, 357 n. 4 (9th Cir.1994) (holding debtor did not have to sign "best efforts certification" that all disposable income earned during case be paid to trustee because statute only required provision for "payment of all projected disposable income" as calculated at the time of confirmation); Commercial Credit Corp. v. Killough (In re Killough), 900 F.2d 61, 64 (5th Cir.1990) (holding that debtor need not include uncertain overtime income in projected disposable income even when historically such overtime was regularly earned). But cf. Rowley v. Yarnall, 22 F.3d 190, 192-93 (8th Cir.1994) (although not addressing confirmation requirement, holding that discharge may not be granted unless chapter 12 debtor paid all disposable income earned during the case to chapter 12 trustee).

Under the pre-BAPCPA Bankruptcy Code, determining what expenses were "reasonably necessary" under this test required judges to make significant value judgments, leading to a wide diversity of rulings on whether particular expenses were justifiable. See e.g., In re Woodman, 287 B.R. 589, 592-593 (Bankr.D.Me.2003) (tobacco expense of $240 each month was reasonable and necessary), aff'd Evergreen Credit Union v. Woodman, 379 F.3d 1 (1st Cir.2004); Univest-Coppell Village, Ltd. v. Nelson, 204 B.R. 497, 500 (E.D.Tex. 1996) (private school tuition of 8395 each month was not reasonably necessary). Revised Section 1325(b)(2) and new Section 1325(b)(3) partially restrict this discretion for above-median income debtors such as Mr. Slusher.

B. Section 1325(b) After BAPCPA

If the trustee or the holder of an allowed unsecured claim objects to confirmation, current Section 1325(b)(1) mandates that the plan apply all of the debtor's "projected disposable income" received in the "applicable commitment period" toward payments to unsecured creditors. Section 1325(b)(2) then defines the income portion of "disposable income" by reference to "current monthly income." "Current monthly income" in turn is defined in Section 101(10A) as the debtor's average monthly income earned during the six month period ending on the first of the month in which the debtor files his or her petition.⁸ For above-median debtors, such as Mr. Slusher, allowable expenses are then determined in accordance with Sections 707(b)(2)(A) & (B). See 11 U.S.C. § 1325(b)(3)I

Form B22C attempts to restate the standards set forth in these subparagraphs to arrive at an initial determination of disposable income. But the form can be no more precise than the statute on which it is based. While Section 1325(b)(2) defines "disposable income," the relevant language in Section 1325(b)(1) is "projected disposable income." This distinction predates BAPCPA's adoption, and intensifies the question of whether Congress intended to differentiate between the pre-existing term with a new definition—"disposable income"—and the undefined, existing, composite term "projected disposable income." See Anderson v. Satterlee (In re Anderson), 21 F.3d 355, 357 n. 4 (9th Cir.1994).

This raises significant questions of statutory interpretation, a topic about which this court has previously written. In re Trejos, 352 B.R. 249, 254-259 (Bankr.D.Nev.2006); In re Kane, 336 B.R. 477 (Bankr.D.Nev.2006). To summarize this court's view, the starting point for all issues of statutory interpretation is the presumption that Congress intended the accepted and plain meaning of the words it used in the statute. As the Supreme Court has said:

The starting point in discerning congressional intent . . . is the existing statutory text ... and not the predecessor statutes. It is well established that "when the statute's language is plain, the sole function of the courts—at least where the disposition required by the text is not absurd—is to enforce it according to its terms."

Lamie v. United States Trustee, 540 U.S. 526, 534, 124 S.Ct. 1023, 157 L.Ed.2d 1024 (2004), quoting Hartford Underwriters Ins. Co. v. Union Planters Bank, N.A., 530 U.S. 1, 6, 120 S.Ct. 1942, 147 L.E d.2d 1 (2000) (internal quotation marks omitted), in turn quoting United States v. Ron Pair Enterprises, Inc., 489 U.S. 235, 241, 109 S.Ct. 1026, 103 L.Ed.2d 290(1989), in turn quoting Caminetti v. United States, 242 U.S. 470, 485, 37 S.Ct. 192, 61 L.Ed. 442 (1917).

In determining the sense of the words Congress chose, it is appropriate to investigate the contexts in which English generally and the Bankruptcy Code specifically employ the same or similar words. E.g., Rousey v. Jacoway, 544 U.S. 320, 326-27, .125 S.Ct. 1561, 161 L.Ed.2d 563 (2005) (looking at use of "on account of" in provisions of the Bankruptcy Code other than the one at issue). Put another way, the meaning of statutory language is best revealed by examining not only the general usage in English of the chosen words, but also through a coordinate review of any specialized use of those terms in the code in which they are found. Id.; see also John F. Manning, What Divides Textualists From Purposivists?, 106 COLUM. L.REV. 70, 79-80 (2006).

With respect to the general use of the words used, this examination may include dictionaries, etymologies, and guides to grammar and common usage such as the...