Latimer v. Lake Cnty. Treasurer (In re Latimer)
| Decision Date | 02 April 2015 |
| Docket Number | ADVERSARY NO.: 13–02188,CASE NO. 13–21345 JPK |
| Citation | 528 B.R. 166 |
| Parties | In re: William Carl Latimer, Debtor. William Carl Latimer, Plaintiff, v. Lake County Treasurer, Defendant. |
| Court | U.S. Bankruptcy Court — Northern District of Indiana |
Kevin Schmidt, Merrillville, IN, for Plaintiff.
John N. Pangere, Crown Point, IN, for Defendant.
J. Philip Klingeberger, Judge United States Bankruptcy Court
This adversary proceeding arises from a complaint filed on October 18, 2013, by the debtor, William Carl Latimer (“Latimer”), against the Lake County Treasurer (“County”). The complaint requests that the court determine whether Latimer can take advantage of the Indiana property tax amnesty statute found at I.C. § 6–1.1–37–10.1. Pursuant to this provision, any interest and penalties added to a delinquent property tax installment prior to January 1, 2012, are waived if the delinquent taxes are paid prior to July 1, 2013.1 Latimer filed his voluntary Chapter 13 petition on April 22, 2013. On that same day, he filed a sixty month plan of reorganization which proposed to pay, in full over the course of the plan, all amounts required to be paid by I.C. § 6–1.1–37–10.1(b). Additionally, the plan provided that all interest and penalties added before January 1, 2012, to the delinquent property tax installments covered by the statute, were to be waived. The problem is that the payment deadline provided by the amnesty statute expired on July 1, 2013. Therefore, the issue is whether Latimer is able to take advantage of the amnesty statute notwithstanding the fact that the time to pay, as provided by the statute, expired three months into his bankruptcy case.
On December 2, 2013, the Lake County Treasurer (“County”) filed an answer to the complaint denying the Debtor's assertion that he is able to take advantage of the amnesty statute since the time to pay had passed. At a preliminary pretrial conference held on January 22, 2014, it was determined that the case should be decided on a stipulated record. An order was entered on January 29, 2014, requiring the parties to file a joint stipulation of facts by February 28, 2014 and briefs by March 31, 2014. Subsequently, each party filed an extension of time to submit the stipulated record and on April 11, 2014, the parties filed their joint stipulation. However, on April 15, 2014, the Lake County Treasurer filed a motion to amend the stipulation. On June 11, 2014, the court held a pre-hearing conference and set a final evidentiary hearing on the motion for August 7, 2014. On August 20, 2014, the court entered an order and notice which established the evidentiary record along with a briefing schedule.2 The final brief in this case was filed on November 24, 2014. The record is now closed. The Court has subject matter jurisdiction over this adversary proceeding pursuant to 28 U.S.C. § 1334(a) and (b), 28 U.S.C. § 157(a) and (b), and N.D.Ind.L.R. 200.1(a). The court has full Constitutional and statutory authority to enter a final judgment.
Pursuant to the court's order of August 20, 2014, the factual record and the issues presented are as follows:
In order for a taxpayer to take advantage of the waiver of interest and penalties under I.C. § 6–1.1–37–10.1(b), the statute requires that the delinquent real estate taxes be paid in full by July 1, 2013. Latimer argues that the automatic stay tolls this statutory time constraint, and that he should therefore be able to utilize the amnesty statute and pay the amount due the County over the course of a Chapter 13 plan. He also argues that 11 U.S.C. § 1322(b)(2) allows him to modify the County's secured claim over the proposed life of the plan. In his view, this includes allowing him to extend the time to pay under the amnesty statute. The County argues that pursuant to 11 U.S.C. § 108(b) Latimer only had until July 1, 2013, to take advantage of the amnesty statute and pay the amount due in full.3
The parties compare the issue before the court to cases in which a debtor is seeking to redeem property taxes through a Chapter 13 plan. In support of their respective positions they cite a surprisingly divergent line of decisions where, on one hand, the debtor was permitted to pay the amount necessary to redeem the property over the life of the plan and on the other hand the debtor was required to pay the redemption amount no later than 60 days after the date of petition. These cases are not on point. Whether or not Latimer can take advantage of the amnesty statute, where payment in full was required on a date certain three months into his bankruptcy case, is a different issue from whether real estate taxes can be redeemed over the life of a Chapter 13 plan.
The cases cited by Latimer simply stand for the proposition that a tax purchaser possesses a secured claim that can be modified pursuant to 11 U.S.C. § 1322(b)(2) —just like any other secured claim—and that the provisions and limitations of § 108(b) do not apply. Without question, the ability to modify a secured claim is controlled by § 1322(b)(2).4 Under § 1322(b)(2) a secured claim can be paid in installments over the course of the plan, the interest rate can be modified and in some circumstances the claim can be adjusted to the extent of the value of the collateral. What is different about this case is that the County's claim depends on whether there is compliance with the amnesty statute. 11 U.S.C. § 1322(b)(2) cannot be used to modify the terms of statutory compliance as established by the state legislature, to wit, the amount due must be paid in full by July 1, 2013. In contrast, the amount owed to the tax purchasers in the redemption cases is the final amount of the claim under state law. What Latimer is attempting to do is not to modify a secured claim under § 1322(b)(2), but to modify the amount of the claim by modifying the amnesty statute. The amount owed to the County is determined exclusively by state law, and the County's claim on the petition date can only be reduced by complying with the amnesty statute.
A claim is a right to payment, and in order to file a claim cognizable under bankruptcy law, a creditor must possess a debt based on either state or federal law which creates a substantive obligation independent of bankruptcy law. 11 U.S.C. § 101(5)(A) ; In Matter of Chicago, Milwaukee, St. Paul and Pacific Ry. Co., 878 F.2d 182, 184 (7th Cir.1989), (citing, Vanston Committee v. Green, 329 U.S. 156, 170, 67 S.Ct. 237, 243, 91 L.Ed. 162 (1946) (Frankfurter, Jr., concurring)).5 The validity of a creditor's claim is determined by...
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Wayman v. Shanklin (In re Shanklin)
...law."); Raleigh v. Illinois Dept. of Revenue, 530 U.S. 15, 20 (2000) (state law governs the substance of claims); In re Latimer, 528 B.R. 166, 170 (Bankr. N.D. Ind. 2015) ("The validity of a creditor's claim is determined by rules of State law, which includes all nonbankruptcy law that crea......