In re Sylvester, BAP No. CC-81-1058HKV.
| Decision Date | 09 February 1982 |
| Docket Number | BAP No. CC-81-1058HKV. |
| Citation | 19 BR 671 |
| Parties | In re Richard Russell SYLVESTER and Irene Lehman Sylvester, Debtors. Richard Russell SYLVESTER and Irene Lehman Sylvester, Appellants, v. DOW JONES AND COMPANY, INC., Financial Collection Agencies Ltd. of California, and Tait Appraisal Company, Appellees. |
| Court | U.S. Bankruptcy Appellate Panel, Ninth Circuit |
Richard R. Sylvester, Culver City, Cal., for appellants.
Marshall Goldberg, Tilles, Greenberg & Webb, Los Angeles, Cal., for Tait Appraisal.
Rex S. Heinke, Gibson, Dunn & Crutcher, Los Angeles, Cal., for Dow Jones and Co., Inc.
Before HUGHES, KATZ and VOLINN, Bankruptcy Judges.
Richard Sylvester appeals from two orders, one determining the amount of a claim and other finding him ineligible for relief under Chapter 13 of the Bankruptcy Code. He does not challenge the fact his case was converted to Chapter 7 rather than dismissed. We affirm both orders.
In seeking relief under Chapter 13, Mr. Sylvester conceded he had non-contingent and liquidated unsecured debt of $93,311 in addition to "unliquidated and disputed" debt of $307,057. He also conceded that he would be ineligible for Chapter 13 relief if his non-contingent, liquidated unsecured debt exceeded $100,000 as of the commencement of his case. 11 U.S.C. § 109(e).
After considering a series of defenses, counter-claims and cross claims, the bankruptcy court fixed the claim held by the assignee of Dow Jones and Company, Inc., publisher of the Wall Street Journal, in the amount of $105,688. By a separate order, the court found Sylvester ineligible for Chapter 13. Sylvester appeals both orders.
As to the second order, he argues: 1. The Dow Jones claim was unliquidated on the date of filing of the petition because it was disputed and because it was subject to offsets and counterclaims. 2. The order establishing the amount of Dow Jones' claim liquidated the debt as of the date of the order, not the date of filing. We turn first to the appeal of this order.
The controlling statutory provision is 11 U.S.C. § 109(e):
Although the Code does not define either contingent or liquidated, it does define claim in 11 U.S.C. § 101(4)(A) as a "right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured . . ." A debt is the liability on a claim. 11 U.S.C. § 101(11).
It is thus apparent that, under the Bankruptcy Code and for purposes of Chapter 13 eligibility, (1) the words disputed, contingent and unliquidated have different meanings, and (2) that disputed unsecured debt is not excluded when determining whether the $100,000 limitation is exceeded. Put differently, the quoted sections evidence Congressional intent to make individuals who owe, at the commencement of the case, unsecured debt in excess of $100,000 ineligible for Chapter 13 even though the debtor disputes all or part of that indebtedness. Only contingent or unliquidated debt is excluded from the computation.
It is also apparent that the court must determine the liquidated amount of any disputed claim prior to making the computation required by section 109(e). Otherwise, the federal court jurisdiction would depend on the accuracy and good faith of both creditors and debtors. Experience teaches that accuracy, at least, is elusive.
This, of course, is what the trial court did and, in our view, the only thing it could do.
Sylvester argues, however, that the fact the judge had to take evidence demonstrates that, until then, the claim was unliquidated. This argument has superficial appeal because it is customary to speak of a trial as liquidating a claim. However, there are different uses of the term by the courts, particularly in the field of bankruptcy. A meaning that is consistent with the Code is found in a Bankruptcy Act case, In re Bay Point Corp., 1 B.C.D. 1635 (D.N.J.1975):
The concept of liquidation has been variously expressed. The common thread . . . has been ready determination and precision in computation of the amount due. . . . Some cases have stated the test as whether the amount due is capable of ascertainment by reference to an agreement or by simple computation.
Under this approach, contract debts (even though disputed) are considered liquidated and tort claims are not. "The theory on which claims have been held insufficient is that they were open, unliquidated claims (e.g., tort or quantum meruit claims requiring proof as to liability, reasonable value, damages, etc.) which by their very nature are not fixed until juridical award to fix liability and amount." Denham v. Shellman Grain Elevator, Inc., 444 F.2d 1376, 1380 (5th Cir. 1971).
Dow Jones' claim was readily ascertainable in at least three ways: first, from the underlying contract coupled with knowledge of the orders placed; second, from the invoices; and third from the cumulative monthly billings, which the court found to be an account stated. We conclude that the claim was liquidated on the date of bankruptcy even though disputed.
Sylvester also urges that this counter claim against the assignee for abuse of process and against Dow Jones for violation of...
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