In re Tessier

• Decision Date: 08 December 1995
• Docket Number: Bankruptcy No. 94-31615-13.
• Citation: 190 BR 396
• Parties: In re Darrell Lee TESSIER, and Sharon Yvonne Tessier, Debtors.
• Court: U.S. Bankruptcy Court — District of Montana

190 B.R. 396 (1995)

In re Darrell Lee TESSIER, and Sharon Yvonne Tessier, Debtors.

Bankruptcy No. 94-31615-13.

United States Bankruptcy Court, D. Montana.

December 8, 1995.

Nancy K. Moe, Harold V. Dye, Missoula, Montana, for the Debtors.

Doug James, Billings, Montana, Special Counsel for Debtors.

Marc D. Stern, American Jewish Congress, New York City (Oliver S. Thomas, Special Counsel, National Council of Churches, Maryville, TN, J. Brent Walker, Baptist Joint Committee on Public Affairs, Washington, DC, Steven T. McFarland, Center for Law and Religious Freedom, Christian Legal Society, Annandale, VA, Richard Stone, Aaron Raskas, Union of Orthodox Jewish Congregations of America, New York City, Michael Farris, Home School Defense Association, Paeonian Springs, VA, Samuel Rabinove, Richard Foltin, American Jewish Committee, New York City, Elliot Mincberg, People for the American Way, Washington, DC, Steven R. Shapiro, American Civil Liberties Union, New York City, David Zwiebel, Agudath Isreal, New York City, of counsel), for Amici Curiae.

Robert G. Drummond, Great Falls, Montana, Chapter 13 Standing Trustee.

Frank W. Hunger, Assistant Attorney General, Sherry Scheel Matteucci, United States Attorney, Victoria L. Francis, Assistant U.S. Attorney, Billings, Montana, Dennis G. Linder, Theodore C. Hirt, Janis C. Kestenbaum, U.S. Department of Justice, Civil Division, Washington, DC, for United States.

ORDER

JOHN L. PETERSON, Chief Judge.

In this Chapter 13 case, Debtors Darrell Lee Tessier and Sharon Young Tessier ("the Tessiers") filed on February 28, 1995, a Chapter 13 Plan ("the Plan") which included a charitable contribution to their church of $100.00 per month. The Chapter 13 Trustee ("the Trustee") objected to the Plan on June 26, 1995, for, inter alia, not committing 100% of the Tessiers' disposable income to the Plan, as required for confirmation under 11 U.S.C. § 1325(b)(1)(B) and In re Lees, 192 B.R. 756, 14 Mont.B.R. 181 (Bankr.D.Mont. 1994). In a response filed June 30, 1995, the Tessiers aver the Religious Freedom Restoration Act ("RFRA" or "the Act"), Pub.L.No. 103-141, 107 Stat. 1488 (1993), codified at 42 U.S.C. § 2000bb, and the Free Exercise Clause of the First Amendment of the U.S. Constitution, except their contributions from the holding set forth in Lees that religious offerings are not proper disposable net income expense items.

After respective positions on these issues were briefed, the Trustee filed notice, pursuant to 28 U.S.C. § 2403(a) and F.R.Civ.P. Rule 24(c) of an intention to challenge the constitutionality of RFRA. Subsequently, on September 8, 1995, hearing on the factual issues in question was held, in which Sharon Young Tessier appeared represented by counsel and offered testimony supporting the sincerity of the Tessiers' religious beliefs, the centrality of the Tessiers' religious contributions to the exercise of their beliefs, and the burden a ruling preventing them from their giving to their church would inflict. On September 25, 1995, the United States Attorney for the Department of Justice ("USA") filed a notice of the Justice Department's intention to defend the constitutionality of RFRA. The Coalition for the Free Exercise of Religion ("CFER"), submitted through counsel on September 29, 1995, a brief amicus curiae on the constitutionality issue. Finally, on October 30, 1995, the USA filed its brief in intervention.

Memoranda having thus been filed by the parties on the allowance in Chapter 13 of charitable religious contributions, on the application of RFRA and on the issue of RFRA's constitutionality, the Trustee's objection stands ripe for decision. The Court finds that the rule of Lees applies to the facts at bar, and that although application of RFRA would nullify the Lees rule, RFRA violates the central holding of Employment Div., Dept. of Human Resources of Oregon v. Smith, 494 U.S. 872, 110 S.Ct. 1595, 108 L.Ed.2d 876 (1990), and the constitutional doctrine of separation of powers, and is therefore void. Consequently, the Chapter 13 Trustee's objection to the Tessiers' charitable giving as in violation of the disposable income requirements of Chapter 13 Plan confirmation is sustained.

Having fully reviewed the briefs, the array of arguments asserted therein, and the record in its entirety, the Court finds that it must address the following dispositive issues to reach its conclusion. First, may the Tessiers' charitable religious contributions be excluded from disposable income under the Court's construction of 11 U.S.C. § 1325(b)(1)(B) and (b)(2),¹ as articulated in Lees, when the Tessiers propose to contribute $100.00 per month to their church as reasonable family maintenance, while under their Plan, unsecured creditors receive nothing whatsoever? Second, if the Plan fails under Lees, does RFRA have any effect on that outcome? Third, if RFRA does allow the Tessiers to exclude their religious donations from disposable income, does RFRA pass the constitutional test?

The Court findings on these issues may be outlined thus:

(1) The Tessiers\' sincere religious beliefs dictate they must make offerings to their church;

(2) Under Lees, the Tessiers\' religious contributions prevent confirmation of their Plan;

(3) Under RFRA, denial of Plan confirmation constitutes a substantial burden on the Tessiers\' religious practice;

(4) Furthermore, under RFRA, while the government has an important interest in the Bankruptcy Code as enforced by Lees, its interest is not compelling when weighed against the Tessiers\' religious exercise interest;

(5) RFRA therefore overrules Lees; however,

(6) RFRA violates the Supreme Court\'s holding in Smith, 494 U.S. 872, 110 S.Ct. 1595, by ignoring the decision\'s conclusion that it lacks the institutional competence to apply the Sherbert test; and (7) RFRA violates the separation of powers doctrine articulated in Baker v. Carr, 369 U.S. 186, 82 S.Ct. 691, 7 L.Ed.2d 663 (1962) and INS v. Chadha, 462 U.S. 919, 103 S.Ct. 2764, 77 L.Ed.2d 317 (1983) by attempting to force the courts to use a judicially unmanageable test;

(8) RFRA is therefore void, the holding of Lees stands, and under 11 U.S.C. § 1325(b), the Tessiers\' Plan cannot be confirmed.

I.

The Tessiers filed a voluntary Chapter 7 petition on November 10, 1994, together with complete Schedules and Statement of Affairs. On January 31, 1995, upon motion by the Tessiers, the Court ordered the matter converted to a Chapter 13 bankruptcy. The Tessiers filed their Plan June 30, 1995, proposing 60 monthly payments of $300.00 per month, with no proposed payment to unsecured creditors.

The Tessiers own exempt real property worth $10,200.00, and chiefly exempt personal property worth $18,845.00, all of which they will retain under their Plan. Their Schedules also show priority and general unsecured claims of $63,745.59 arising from a variety of governmental, consumer, medical and business creditors. The Tessiers list a combined net monthly income of $1,610.00 per month. Their Schedules originally included as current monthly expenses a home mortgage payment of $236.56 per month on real property worth $10,200.00, and a payment on a snowmobile used in Darrell Tessier's work as a hunting guide of $116.22. These the Tessiers subsequently paid, leaving a total of $1,785.39 per month in living expenses. The Tessiers spend only $200.00 per month on food, and nothing whatsoever on entertainment, recreation or cable television. They have no telephone or electrical utility service. Nor do they carry health or life insurance. Frugal as their personal living expenses may be, however, the Tessiers have consistently made, since 1981, charitable contributions to the Cabinet Mountain Bible Church ("CMBC"), and they propose to continue to make offerings of $100.00 per month for the duration of their Chapter 13 Plan.²

At hearing Sharon Young Tessier ("Sharon") testified to the religious conviction which causes the couple to give money to the CMBC as an integral part of their worship and membership there. Although Sharon indicated that the church would welcome and fully accept the Tessiers' membership with or without their monetary offerings, the Tessiers sincerely believe it is their biblically commanded duty to donate a portion of their income to the church as part of the exercise of their religious faith. The Tessiers have acted upon their convictions in this way since first attending the church in 1981, and they profess that their faithful adherence to the word of their God is "contingent" upon giving money to their church. The Court finds Sharon's testimony sincere, heartfelt and fully credible, and the Trustee presented no evidence to dispute it.

II.

A. In the Chapter 13 bankruptcy case of In re Lees, the Court faced the issue of whether debtors' charitable contributions to their churches constitute disposable income under 11 U.S.C. § 1325(b). Lees, supra, 14 Mont.B.R. 181 (Bankr.D.Mont.1994). In Lees, the debtors wished to pay $150.00 per month on a plan that failed to pay 100% of the unsecured creditors' claims, and yet contribute $200.00 per month to their church. In denying the debtors' plan, the Court held that where unsecured creditors are to receive nothing or substantially less than the amount of their claims, allowing charitable contributions under a Chapter 13 plan violated § 1325(b), concluding charitable contributions, religious or nonreligious, "should not be considered a reasonable living expense." Id. at 185. To hold otherwise would compel creditors "to make de facto contributions" to the benefitted charity, and undermine the equity, "integrity and credibility of Chapter 13 reorganization." Id. (quoting In re Packham, 126 B.R. 603, 610 (Bankr.D.Utah 1991)).

In reaching its conclusion, the Court found that the debtors' church did not require regular donations or tithes as a condition of membership in good standing. Yet, the debtors' sincere belief and long-standing practice...