In re Thompson, Bankruptcy No. 88 B 04637 J
| Decision Date | 14 July 1992 |
| Docket Number | 90-18264 RJB.,Bankruptcy No. 88 B 04637 J |
| Citation | 142 BR 961 |
| Parties | In re Jerry Wayne THOMPSON and Martha Rebecca Thompson, Debtors. In re David Royal BARBER, Debtor. |
| Court | U.S. Bankruptcy Court — District of Colorado |
Melissa McCue, Castle Rock, Colo., for debtors Jerry Wayne Thompson and Martha Rebecca Thompson.
Ellen R. Welner, Englewood, Colo., for debtor David Royal Barber.
John A. Weeda, Special Asst. U.S. Atty., Denver, Colo., for the I.R.S.
THESE CASES came on for hearing on June 25, 1992, on the Motions for Relief from Automatic Stay filed by the Internal Revenue Service ("IRS") seeking authority to exercise its administrative and judicial collection remedies to collect post-petition taxes from property of the debtor and property of the estate. There is a confirmed Chapter 13 Plan in both cases.
The Thompson case was filed April 13, 1988, and the Debtors filed their proposed Plan and Motion to Confirm on June 10, 1988. The Motion to Confirm was not served upon the Attorney General of the United States nor upon the United States Attorney for the District of Colorado. The Debtors did serve the IRS at the following address:
IRS-C:TOC:T 1050 17th Street Denver, CO 80265
The IRS filed a Proof of Claim on July 11, 1988, for $5,214.15 due for income taxes for the calendar year 1986. The Plan was confirmed October 3, 1988. The IRS seeks to collect federal income taxes for the years 1988, 1989, and 1990, in the amount of $19,884.37.
The Barber case was filed November 30, 1990. (The Debtor's previous Chapter 13 case was dismissed on October 13, 1989.) The Debtor filed his proposed Chapter 13 Plan on November 30, 1990, and his Motion to Confirm on January 11, 1991. The Motion to Confirm was not served upon the Attorney General of the United State nor upon the United States Attorney for the District of Colorado. The Debtor did serve the IRS at the following address:
IRS-Special Procedures Staff Attn: 5020,600 17th Street Denver, CO 80202
The IRS filed a Proof of Claim on January 8, 1991, for income taxes for the calendar years 1984, 1985, 1987, and 1989, in the total sum of $23,566.57. On February 7, 1991, the IRS filed an Amended Proof of Claim correcting an earlier typographical error from "12/31/08" to "12/31/89." The claim for 1989 income taxes was estimated as the Debtor had not yet filed his tax return for that year. The IRS had filed Notices of Federal Tax Liens (NFTL) for the years 1984, 1985, and 1987 on December 23, 1988. The Debtor had provided in his Plan for payment of $10,150.00, capitalized at 10%, for a total priority claim of the IRS in the sum of $18,566.57.
Prior to and after, the filing of the petition in Barber, the Debtor was president of Interstate Carpentry Contractors, Inc. ("ICC"). As such, and the Debtor admitted at the hearing, the Debtor was a "responsible person" for ICC. ICC accrued employment taxes for the periods ending December 31, 1990, March 31, 1991, and June 30, 1991, for which the Debtor is liable as a "responsible person." It is this $51,109.87 for employment taxes under 26 U.S.C. § 6672 that the IRS seeks to collect at this time.
The IRS takes the position that relief from the automatic stay is not necessary to collect post-petition taxes and cites In re Petruccelli, 113 B.R. 5 (Bankr.S.D.Cal. 1990), and In re Lambright, 125 B.R. 733 (Bankr.N.D.Tex.1991). However, out of caution, the IRS seeks relief from the automatic stay under 11 U.S.C. § 362(d)(1), "for cause."
Both confirmed plans herein provided that the debtor submits to the supervision and control of the Trustee all or such portions of the Debtor's future earnings or other income as is necessary for the execution of the Plan and then specified that future earnings of a given amount each month were to be paid to the Trustee. Each plan also provided that property of the estate shall vest in the debtor at the time of confirmation.
As pointed out in In re Petruccelli, supra, the automatic stay provided for in § 362 operates in three specific ways. It bars actions against the (1) debtor which actions could have been brought prepetition; (2) property of the debtor in an effort to collect prepetition debts; and (3) property of the estate regardless of whether the debt arose before or after the filing of the bankruptcy petition. Here, because we are concerned only with post-petition debts, the first two prohibitions are not at issue. What is at issue is the interplay between 11 U.S.C. §§ 1306(a)(2) and 1327(b). Section 1306(a)(2) provides as follows:
Section 1327(b) states:
(b) Except as otherwise provided in the plan1 or the order confirming the plan, the confirmation of a plan vests all of the property of the estate in the debtor.
The Petruccelli and Lambright courts have concluded that § 1327(b) controls and that upon confirmation of the plan, the property of the estate becomes vested in the debtor, and that there is no longer any property of the estate upon which § 362 can operate. However, as pointed out in dicta by this court in In re Root, 61 B.R. 984 (Bankr.Colo.1986), there must be some estate remaining after confirmation for the Chapter 13 Trustee to administer and upon which the Trustee makes a final report. In Root, this court concluded that after confirmation the "estate consists of the property and future earnings of the debtor dedicated to fulfillment of the Chapter 13 Plan." This court adheres to that conclusion.
To decide that § 1327(b) means that there is no property of the estate after confirmation would require that no meaning or effect be given to the language of § 1306(a)(2), something even the Lambright, court acknowledged was improper when it stated:
Chapter 13 of the Code must be read as a whole giving effect to the plain meaning of all its provisions. The statute must not be read in a manner that would render a provision superfluous or insignificant. In re Lambright, supra, at 734.
Congress did not say in § 1306(a)(2) that post-petition earnings of the debtor are property of the estate until the Chapter 13 Plan is confirmed. Rather, it said that such earnings are property of the estate until the case is closed, dismissed, or converted. Yet that is how the Petruccelli and Lambright courts have re-written § 1306(a)(2).
Such an interpretation also ignores the language of § 1306(b) which provides:
(b) Except as provided in a confirmed plan or order confirming a plan, the debtor shall remain in possession of all property of the estate.
If there is no longer any property of the estate upon confirmation, then § 1306(b) has no meaning. That subsection can have no applicability until confirmation, and if at that time there...
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