Yet Another Hanging Paragraph Creates a Taxing Situation

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A pair of new opinions suggests that dischargeability of taxes is even more complicated subsequent to BAPCPA. In Matter of McCoy, No. 11-60146 (5th Cir. 1/4/12), which can be found here, the Fifth Circuit found that, under Missisippi law, late filed returns did not constitute "returns" at all and thus were not subject to being discharged. In In re Hernandez, Adv. No. 11-5126 (Bankr. W.D. Tex. 1/11/12), which can be found here, Judge Leif Clark found that returns filed after the IRS made its own assessment on unfiled returns were not subject to discharge either. While these decisions may be consistent with the prevailing sentiment, they are not necessarily rooted on solid legal reasoning.

The Other Hanging Paragraph

One of BAPCPA's legacies will be the hanging paragraph, a piece of text hanging by itself which is not part of a specific subsection. We are reasonably familiar with the hanging paragraph of Section 1325(a)(*) which has to do with the valuation of vehicles in chapter 13 cases. Now, six years after BAPCPA took effect, a new hanging paragraph has been discovered, Section 523(a)(*), having to do with dischargeability of taxes. While dischargeability of taxes is dealt with in Section 523(a)(1), which would have been a logical place to put the additional language, Congress saw fit to add a codicil to Section 523(a)(1) at the end of Section 523(a). The new language states:

For purposes of this subsection the term "return" means a return that satisfies the requirements of applicable nonbankruptcy law (including applicable filing requirements). Such term includes a return prepared pursuant to section 6020(a) of the Internal Revenue Code of 1986, or similar State or local law, or a written stipulation to ajudgment or a final order entered by a nonbankruptcy tribunal, but does not include a return made pursuant to section 6020(b) of the Internal Revenue Code of 1986, or a similar State or local law.

Why do we care about the definition of return? Section 523(a)(1)(B) states that a debt is not dischargeable "with respect to which a return . . . was not filed or given; or" was filed "after two years before the date of the filing of the petition."

Prior to BAPCPA, a return could be filed late but at least two years before bankruptcy and still be dischargeable.

However, under the new jurisprudence, some late returns, even if filed more than two years before the date of the petition, are not returns at all.

Going to Mississippi

Linda McCoy, a resident of Mississippi, filed bankruptcy. Mississippi is one of those states that are not Texas which have a state income tax. (While most states have state income taxes, it is an unwritten law here in Texas that proposing a state income tax is a sacrilege on the same level as urinating on the Alamo). Linda McCoy did not file her state income tax returns for 1998 and 1999 when they were due. She did ultimately file her returns, but she filed them after the date they were due.

The Fifth Circuit held that under Mississippi law, a "return" meant a timely filed return. Therefore, a late return constituted an unfiled return and could not be discharged.

Turning to Texas

A few days later Judge Leif Clark interpreted the hanging paragraph of section 523(a)(*) in the context of federal taxes in Texas. (Have you ever noticed that "taxes" and "Texas" contain most of the same letters. It seems subversive since Texans hate taxes--just ask Rick Perry). The Hernandez decision involved a lot of years of taxes. The Debtor did not file timely returns for 1999 through 2006, although he eventually got them all filed. For the seven years in question, the IRS assessed liability for three years before the Debtor got around to filing returns. For the other four years, the IRS either did not get around to making assessments before the returns were filed or no taxes were due.

The IRS did not contest dischargeability for the years in which the Debtor filed his returns prior to taxes being assessed or where it acknowledged that no taxes were due. However, for the three years in which assessments preceded returns, it contended that the taxes could not be discharged--and the court agreed.

The Rationale

Prior to BAPCPA, the term "return" was not defined. Case law held that "a late filed return that required the government to assess the tax without the tax payer's assistance would not be treated as a return for section 523 purposes." McCoy, at 5. In order to constitute a "return" under prior law, it had to satisfy four requirements:

1. It had to purport to be a return;
2. It had to be executed under penalty of perjury;
3. It must contain sufficient information to allow calculation of the tax; and
4. It must represent an honest and reasonable attempt to satisfy the requirements of the tax law.

The new hanging paragraph replaced the old test with three guidelines:

1. The return must be a "return that satisfies the requirements of applicable nonbankruptcy law (including filing requirements);"
2. It would include a return "prepared pursuant to section 6020(a) of the Internal Revenue Code of 1986, or similar State or local law, or a written stipulation to a judgment or a final order entered by a nonbankruptcy tribunal; and
3. It would not include "a return made pursuant to section 6020(b) of the Internal Revenue Code of 1986, or a similar State or local law.

The Mississippi State Tax Commission argued that under the first factor an untimely return was not "a return that satisfies the requirements of applicable bankruptcy law (including filing requirements)." The Debtor argued that MSTC's construction would read the reference to section 6020(a) out of the statute. As acknowledged by the Fifth Circuit, returns under section 6020(a) involve cases in which the Debtor fails to file an actual return but nevertheless provides the IRS with all of the information necessary to calculate the liability.

The Fifth Circuit adopted MSTC's reasoning stating:

We find MSTC''s interpretation of section 523(a)(*) more convincing. We have previously explained that "the plain language of the [Bankruptcy] Code should rarely be trumped. Although the Code at times is 'awkward, and even ungrammatical . . . that does not make it ambiguous." (citation omitted). The plain language interpretation of section 523(a)(*) comports with this admonition.

McCoy at 8-9. The Court went on to find that returns prepared under section 6020(a) constituted a narrow exception to the rule that late filed returns were not returns. It also referred to other courts which have reached the same result.

The Hernandez Court did not significantly expand upon the Fifth Circuit opinion, stating:

Anticipating consistency on the part of the circuit court, this court concludes that late-filed returns cannot be treated as filed, for purposes of section 523(a)(1), save for returns that comport with the requirements of section 6020(b)(sic) of title 26. The exception is a narrow one, and does not apply on the facts of the case sub judice. [Ed. The correct statutory reference was section 6020(a). The court corrected the cite in an errata to the opinion].

Hernandez at 9.

If Every Other Court Jumped Off a Building Would You Join Them?

The Courts following the majority interpretation of section 523(a)(*) show a lemming-like ability to follow the crowd without careful thought. Section 523(a)(1)(B) provides that taxes are not dischargeable in two instances:

1. Where a return was not "filed or given;" or
2. Where the return "was filed or given after the date on which such return, report, or notice was last due, under applicable nonbankruptcy law or under any extension, and after two years before the date of the filing of the petition.

Thus, section 523(a)(1)(B) has two components to it: a substantive one and a temporal one. If no return was filed, then the tax cannot be discharged. However, if the return was filed at least two years before bankruptcy, even if it was not timely filed, it could be discharged (assuming that the other requirements for dischargeability are met).

The McCoy decision does not state when the returns were actually filed. However, In Hernandez, the Court's finding of fact explicitly recite that the returns for 1999, 2003 and 2004 were each filed more than two years before the petition date. Thus, Hernandez raises the Catch-22 situation in which a return filed at least two years before bankruptcy may be subject to discharge but a return filed one day late is not a return at all.

To be blunt, McCoy and Hernandez obliterate section 523(a)(1)(B)(ii) by stating that late-filed returns, much like disgraced party members in the former Soviet Union, are non-returns. (In the Soviet Union, party members who had fallen from favor would be erased from photographs and treated as though they had never existed). Why would the statute allow for returns filed more than two years prior to bankruptcy to be considered when all late filed returns would necessarily be considered non-returns? The obvious answer is that the hanging paragraph was meant to address the question of whether the document submitted was sufficient to constitute a return rather than whether it was a timely return. The reference to "filing requirements" in the hanging paragraph is best understood as a reference to whether the document was filed rather than when it was filed.

The language of the hanging paragraph reinforces the interpretation that it was meant to be a substantive rather than a temporal requirement. Under the hanging paragraph, "a written stipulation to a judgment or final order entered by a nonbankruptcy tribunal" would constitute a return. Thus, if a Debtor who filed nothing and waited for the taxing authority to initiate suit , but then agreed to the assessment would have been deemed to have filed a return. On the other hand, if the debtor filed his return one day late and the ever-vigilant taxing authority made its assessment in the intervening hours, the return would cease to exist. This makes no sense.

I may be missing something profound or obvious. However, these decisions appear to be just plain wrong.

Hat tip to Michael Baumer who got the word out on these decisions on the State Bar of Texas Bankruptcy Section listserve. Michael is a smart guy and caught the importance of these opinions before I did.

The Pro Se Problem

A report from the Administrative Office of the U.S. Courts highlights a disturbing trend: since the adoption of the Bankruptcy Abuse Prevention and Consumer Protection Act in 2005, pro se filings have grown dramatically. You can read the report here. In the past five years, filings by attorneys have increased by 98%, while pro se filings increased by 187% over the same period. During the twelve months ending June 30, 2011, there were 130,086 pro se cases filed accounting for 9% of the total filings in bankruptcy. During 2011, pro se filings accounted for 8% of chapter 7 cases and 10% of chapter 13 filings.

Pro se filings were most common in the Western United States, Florida and Georgia. In the Central District of California, pro se cases made up a staggering 27.1% of the total filings. Pro se filings were more modest in Texas. The Northern, Eastern and Western Districts of Texas had pro se filing levels in the range of 2.1% to 4.0% while the Southern District fell in the range of 4.1% to 8.0%.

The surge in pro se filings has two important consequences for the court system. One is that pro se filings are much less likely to succeed than filings by represented debtors. According to data presented by Professors Katie Porter and Jay Westbrook at the National Conference of Bankruptcy Judges, nearly 90% of pro se chapter 13 debtors had their cases dismissed prior to confirmation of a plan and only 4% still had a case pending after four years. Among pro se chapter 7 debtors, a 2001 sample showed that 100% received a discharge. A 2007 sample showed that 17.6% of pro se chapter 7 debtors had their cases dismissed for technical problems as compared to just 1.9% of represented debtors.

When people file for bankruptcy but are unable to obtain relief from the court system, they are likely to become angry, frustrated and cynical. It would not be surprising to see unhappy pro se debtors manning the barricades of the Occupy movement or acting out their frustrations in court.

Another problem identified by the Administrative Office is that pro se filings are frequently accompanied by filing fee waivers. According to the report:

Filing fees supply a significant amount of revenue to the courts, so a decline in bankruptcy fees collected will affect the resources available to the Judiciary at a time when they are needed to address an increase in workload.

While the Administrative Office report did not specifically identify the cause of the rise in pro se filings (other than noting a rise in districts where the foreclosure crisis is acute), one answer seems to be that BAPCPA has created a class of debtors who are too broke to file bankruptcy. By increasing the complexity of bankruptcy, Congress both increased the cost to file and made it more difficult to file pro se. This is a cause for concern.

Congressman Hinojosa's Bankruptcy Plan Appears to Violate Bankruptcy Code, Including BACPA Provisions He Voted For

Congressman Ruben Hinojosa was one of many representatives who voted for the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. As a chapter 11 debtor, he will now be tested to see whether must follow the same rules he voted for, as well as those previously in place. In re Ruben Hinojosa, Case No. 10-70900, pending in the United States Bankruptcy Court for the Southern District of Texas.

Special Treatment?

Congressman Hinojosa has represented Texas's 15th Congressional District since 1996. On December 18, 2010, he filed a petition for chapter 11 relief after receiving an unfavorable arbitration award in a proceeding brought by Wells Fargo Bank. His bankruptcy case initially raised concerns about preferential treatment when the United States Trustee signed an agreed order exempting the Congressman from closing his pre-petition bank accounts and providing that he did not need to include the notation "Debtor-in-Possession" on his checks. When he inadvertently included copies of his 2009 federal tax return and his financial disclosure statement on his petition and amended petition, he filed a motion to seal those documents. Bankruptcy lawyer and blogger Alexander Wathen unsuccessfully opposed this motion and has filed an appeal. Wathen v. Hinojosa, No. 7:11cv141, pending in the United States District Court for the Southern District of Texas. You can read about it on Alex's blog here, here and here.

The Plan and Disclosure Statement Make for Interesting Reading

On July 15, 2011, debtor-in-possession Hinojosa filed his plan and disclosure statement which appear to contain flagrant violations of the Bankruptcy Code and at least one violation of BAPCPA.

The Congressman's Disclosure Statement is largely a puff piece for his service in Congress. Most of the 67 pages discuss his Congressional career, while nearly all of the substantive material that would normally be contained in a disclosure statement is buried in exhibits. To put it charitably, the information contained in the disclosure statement is confusing and contradictory.

According to the liquidation analysis, creditors in a chapter 7 liquidation would receive $560,613.56, which would yield a distribution of 20%. The liquidation analysis represents that creditors would receive at least 20% on their claims under the Plan. However, this is NOT what the Plan provides. The Plan states that unsecured creditors will receive sixty payments totaling 0.00009% of their claims. The Congressman's projections indicate that he intends to pay his unsecured creditors (who total nearly $3 million) $250.00 per month. Meanwhile, the Congressman will be spending $3,000.00 a month on rent, $2,244.75 on insurance, $1,154.58 on "college fund and school expenses" and $500.00 per month for "vehicle replacement expense." As a chapter 11 debtor owing primarily business debts, the Congressman is not subject to the means test applicable to consumer debtors in chapters 7 and 13. However, if he were, he clearly would not be allowed to save for his children's college education and for a new vehicle at the expense of his creditors.

The Plan also provides for "sale of all or a portion of the non-exempt assets of the Estate which sums amount to an unknown percentage of the Allowed Unsecured Claims." Under the Means for Implementation section of the Plan, it states that the Congressman will liquidate his real estate holdings. However, going back to the liquidation analysis, the Congressman has only one real estate holding--a property valued at approximately $72,000. Neither the Plan nor the Disclosure Statement say when or how the Congressman will liquidate "some or all" of his non-exempt assets so that the promise of liquidation is so vague as to be unenforceable.

Another outrageous feature of the Plan concerns the discharge. Under BAPCPA, which Rep. Hinojosa voted for, individual chapter 11 debtors do not receive a discharge until they complete their plan payments. 11 U.S.C. Sec. 1141(d)(5). However, Congressman Hinojosa's Plan states:

IT IS THE INTENTION OF THIS PLAN THAT ONCE CONFIRMATION OCCURS, THE DEBTOR WILL BE FULLY, FINALLY AND COMPLETELY DISCHARGED FROM ALL LIABILITIES INCLUDING CLAIMS AND DEBTS AND SHALL BE REVESTED WITH ALL PROPERTY OF THE ESTATE AS HEREIN PROVIDED.

It seems like the Congressman was not paying attention the day he voted on BAPCPA. Otherwise, he never would have allowed his lawyers to insert this provision into the Plan.

A Final Question

At a minimum, it appears that this Plan violates the chapter 7 liquidation test and the absolute priority rule and probably is not proposed in good faith. Creditors will probably not find much to like about this Plan. However, the big question is what will the U.S. Trustee do? In the Western District of Texas, which has the same U.S. Trustee as the Southern District of Texas, the U.S. Trustee nitpicks thoroughly reviews every minor detail of a plan. Will the same standard apply to Rep. Hinojosa? I hope that the U.S. Trustee will fulfill its role as a watchdog. rather than being a lapdog. (Ed.: Poor choice of words in original posting).

Bankruptcy, BAPCPA and the Social Contract

Once upon a time, I had a client tell me that he loathed bankruptcy because bankruptcy was socialism and he only believed in market solutions. While his use of terminology was imprecise, it is beyond dispute that bankruptcy represents government changing the terms of privately negotiated contracts. If you substitute government action for socialism and substitute private contract for the market, his point is well taken but wrong.

Government Intervention in Private Decision Making: It Cuts Both Ways

While bankruptcy constitutes government interference with private contracts, private contracts would be of limited enforceability without the assistance of government. We are so accustomed to the idea that contracts may be enforced through government action, whether it be through suit on a promissory note or laws governing secured credit, that it is easy to forget that enforceability of contracts depends on the collective agreement that contracts should be enforced against the will of the non-complying party.

It is possible to imagine a contract regime which operated entirely without the intervention of government. In that instance, credit would only be extended based on trust or force. If a debtor did not pay, the creditor's recourse would be limited to not extending any more credit in the future, social pressure such as shunning or in the extreme case, violence. Alternatively, credit could be extended based on the creditor taking possession of collateral and not giving it back until the debt was paid.

While you can imagine a contract system that functioned without the help of government it would be inefficient. As a result, we have laws allowing enforcement of contracts and recognizing secured transactions because they facilitate the extension of credit, encourage economic growth and avoid violence as a means of contract enforcement. In other words, laws enforcing contracts improve the general welfare.

The Social Contract (No, It's Not the Movie About Facebook)

Collective action to enforce contracts is an example of the social contract. The framers of the Constitution were inspired by the social contract theories of Hobbes, Locke and Rousseau. According to Hobbes, life would be "nasty, brutish and short" absent political authority. Under social contract theory, people band together and surrender some of their autonomy in return for security, protection of property rights and the general welfare.

Because enforcement of contracts is a creature of the social contract, government will not blindly enforce all contracts. You cannot go to court and enforce a contract to put a hit on someone or sell a child. In Texas at least, the courts will not enforce a gambling debt. While we believe generally in freedom of contract, there are some contracts which should not be enforced because they are bad. There are also some methods of enforcing contracts which are not allowed. Shakespeare notwithstanding, you cannot secure a debt with a pound of flesh or other body part. The reason is simple. If you could use a writ of execution to actually execute someone , the state would be implicated in using violence to enforce private contracts. Generally we think that is a bad idea.

Bankruptcy Laws and the Social Contract

Bankruptcy laws are an example of the state saying we will enforce private contractual rights but only so far. The power to enact uniform bankruptcy laws is one of the enumerated powers granted to Congress, but it is not a power which must be utilized or utilized in any particular form. For the first hundred years of the nation, bankruptcy laws were utilized to respond to specific crises and were often focused on punishing debtors rather than helping them. It was not until the Bankruptcy Act of 1898 that we had a permanent law which placed limits on how debts could be enforced.

The discharge and fresh start are based on the idea that a person who is faced with crippling levels of debt will not be a productive member of society and will not be able to take care of his or her family. Reorganization laws benefit society by preserving jobs, equitably distributing insufficient assets and minimizing loss of going concern value. Bankruptcy laws are not an example of government interfering with the right of private contract, but a limitation on the extent to which government will facilitate the right of private contract.

So, my argument is that bankruptcy is no more socialist than opening the courthouse to breach of contract suits. In either case, the state is lending its power to the enforcement of private agreements within defined limits.

That brings us to BAPCPA. How well does BAPCPA fulfill the social contract? I would argue that substantively, BAPCPA is a perfectly appropriate drawing of the boundaries of the social contract. The Means Test, limits on homestead exemptions and treatment of 910 vehicles are all ways in which lines are drawn in favor of more personal responsibility. However, there are many parts of BAPCPA which add burdens on the system with no corresponding benefits. Credit counseling and the Debt Relief Agency rules were intended to serve a consumer protection function, but do not in practice. The means test is so ambiguously worded that even the Supreme Court has difficulty figuring out what it means. It also encourages gamesmanship to arrive at a desired result. Sections 362 and 523 have had so many exceptions and clauses grafted onto them that it is impossible to read through them in one sitting.

Trying to Make Sense of An Imperfect Essay

I don't think that I have completely succeeded in tying the social contract ideas of Hobbes, Locke and Rousseau to private contracts and bankruptcy. However, I hope that I have at least suggested the following points:

1. Enforcement of private contracts does not involve man in a state of nature unhindered by the state, but rather involves the state intervening in the private affairs of men to further the common good.

2. Just as the state can act to enforce private contracts, so can the state place limits on the extent to which it will enforce private contracts.

3. When the state acts to limit the freedom of private contract, it does so based on improving the general welfare at the expense of some individuals.

4. Bankruptcy laws further the social contract when they advance some aspect of the general welfare, such as encouragement of risk taking, support of the family unit, preserving economic value or promoting individual responsibility.

5. Bankruptcy laws hinder the social contract when they impose costs without corresponding benefits or reward the use of resources to get around the policies that the laws were intended to promote.

Supreme Court Rules That "Projected Disposable Income" Is Forward Looking

In an 8-1 decision, the Supreme Court ruled today that “projected disposable income” under Chapter 13 may take into account “changes in the debtor’s income or expenses that are known or virtually certain at the time of confirmation.” Hamilton v. Lanning, 560 U.S. ___ (June 7, 2010). The opinion drew a spirited dissent from Justice Scalia, who argued that merely because Congress chose a poor measure for predicting future income did not give the court license to ignore the statutory text.

The Issue

Stephanie Kay Lanning’s trip to the Supreme Court began when she filed for chapter 13 in October 2006. During the six months prior to filing, Ms. Lanning had received a one-time buyout from her former employer. This inflated her "current monthly income" (an amount calculated by averaging her income for the six months prior to bankruptcy) $5,343.70, even though her actual income at the time of filing was only $1,922.00. If she was required to make plan payments based on the historical average, her payment would have been $756 per month, while her actual income would have required a payment of $144 per month.

This raised the issue of whether the Bankruptcy Court was required to use the historical but outdated income amount or the current amount in confirming a plan. The Bankruptcy Court, the Tenth Circuit BAP and the Tenth Circuit all agreed that the Debtor was not required to make payments based upon a one-time occurrence which was not going to recur. The Tenth Circuit found that the court should start with the presumption that the historical number was the correct amount but that this figure could be rebutted by evidence of a substantial change in the debtor’s circumstances.

“Words, Words, Words”—Hamlet, Act II, Scene 2.

The issue in the case arises from the use of the words “projected disposable income” in 11 U.S.C. Sec. 1325(b)(1)(B). In the face of an objection, a chapter 13 debtor must pay the lesser of the allowed unsecured claims or the debtor’s “projected disposable income” for a defined period of time. The term “projected disposable income” was already used in the statute prior to BAPCPA. It relied in turn upon a definition of “disposable income.” The definition of “disposable income” was changed by BAPCPA. However, neither version of the law defined “projected.”

Prior to BAPCPA, “disposable income” referred to the debtor’s income less amounts necessary for the maintenance or support of the debtor and the debtor’s dependents as well as business expenses. BAPCPA made two changes to this definition. First, it replaced the term “income” with the defined term “current monthly income.” The term “current monthly income” was defined as the average of the debtor’s income during the six months prior to bankruptcy. 11 U.S.C. Sec. 101(10A). Second, the expenses allowed to be deducted for maintenance or support of the debtor would be determined under the chapter 7 means test if the debtor’s “current monthly income” exceeded the median income.

Thus, the revised statute included a new formula for determining both income and expense as components of “disposable income” but did not expressly define “projected disposable income.”

Two lines of cases developed. The “mechanical approach” applied “projected disposable income” to mean “disposable income” multiplied by the number of months of the “applicable commitment period.” The “forward looking approach” started with “disposable income,” but allowed the court to make adjustments based upon changes in income or expenses which are known or virtually certain to occur.

The Majority Opinion

Eight Justices agreed that the “forward looking approach” was the best way to give meaning to the term “projected disposable income.” Justice Alito noted that when words are not defined, that they are given their usual meaning.

“When terms used in a statute are undefined, we give them their ordinary meaning.” (citation omitted) . Here, the term “projected” is not defined, and in ordinary usage future occurrences are not “projected” based on the assumption that the past will necessarily repeat itself. For example, projections concerning a company’s future sales or the future cash flow from a license take into account anticipated events that may change past trends. (citations omitted). On the night of an election, experts do not “project” the percentage of the votes that a candidate will receive by simply assuming that the candidate will get the same percentage as he or she won in the first few reporting precincts. And sports analysts do not project that a team’s winning percentage at the end of a new season will be the same as the team’s winning percentage last year or the team’s winning percentage at the end of the first month of competition. While a projection takes past events into account, adjustments are often made based on other factors that may affect the final outcome. (citation omitted).

Hamilton v. Lanning, slip op., pp. 6-7.

The majority also noted that it could not find any other federal statutes in which the word "projected" referred to a mechanical calculation and stated that its use of the word "projected" was consistent with the manner in which it had been used prior to BAPCPA.

The majority opinion also argued that the structure of Sec. 1325(b)(1)(B) was forward-looking. It refers to "income to be received" and dictates that the determination be made "as of the effective date of the plan." Additionally, projected disposable income "will be applied to make payments." The Court noted that "when, as of the effective date of a plan, the debtor lacks the means to do so, this language is rendered a hollow command." Slip Opinion, at 12.

The majority opinion is also noteworthy for its recognition of the practical realities of bankruptcy. In rejecting an argument that a debtor whose income was artificially inflated could simply wait six months to file, the court quoted from Keith Lundin's treatise on chapter 13 as follows:

“Potential Chapter 13 debtors typically find a lawyer’s office when they are one step from financial Armageddon: There is a foreclosure sale of the debtor’s home the next day; the debtor’s only car was mysteriously repossessed in the dark of last night; a garnishment has reduced the debtor’s take-home pay below the ordinary requirements of food and rent. Instantaneous relief is expected, if not necessary.” K. Lundin & W. Brown, Chapter 13 Bankruptcy §3.1[2] (4th ed. rev.2009), http: // www.ch13online.com / Subscriber / Chapter _13_ Bankruptcy_4th_Lundin_Brown.htm.

See also id. , §38.1 (“Debtor’s counsel often has little discretion when to file the Chapter 13 case”).

Slip Op., p. 15.

As a result, the Supreme Court concluded that a one-time aberration in income would not require a chapter 13 debtor to propose a plan based on projections of non-existent income. However, the forward-looking approach cuts both ways. The Supreme Court cited the Fifth Circuit's opinion in In re Nowlin, 576 F.3d 258 (5th Cir. 2009) with approval. In Nowlin, the Fifth Circuit held that a debtor would be required to increase his chapter 13 payments when a permissible expense would terminate during the period of a plan. Under the same logic, a debtor whose contract provided for guaranteed increases in pay could be required to devote these sums to the plan.

The Testament of the Textualist

Not content with the reasoning of his other eight colleagues, Justice Scalia wrote a 14 page dissent which argued that the court was not being faithful to the words used by Congress.

He argued that the word "projected" did not give the court latitude to "fiddle" with the formula provided by Congress, since the use of a formula provided the means for the projection.

This definition of “disposable income” applies to the use of that term in the longer phrase “projected disposable income” in §1325(b)(1)(B), since the definition says that it applies to subsection (b). Cf. §1129(a)(15)(B) (referring to “the projected disposable income of the debtor (as defined in section 1325(b)(2))”). The puzzle is what to make of the word “projected.”

In the Court’s view, this modifier makes all the difference. Projections, it explains, ordinarily account for later developments, not just past data. (citation omitted). Thus, the Court concludes, in determining “projected disposable income” a bankruptcy court may depart from §1325(b)(2)’s inflexible formula, at least in “exceptional cases,” to account for “significant changes” in the debtor’s circumstances, either actual or anticipated. (citation omitted).

That interpretation runs aground because it either renders superfluous text Congress included or requires adding text Congress did not. It would be pointless to define disposable income in such detail, based on data during a specific 6-month period, if a court were free to set the resulting figure aside whenever it appears to be a poor predictor. And since “disposable income” appears nowhere else in §1325(b), then unless §1325(b)(2)’s definition applies to “projected disposable income” in §1325(b)(1)(B), it does not apply at all.

The Court insists its interpretation does not render §1325(b)(2)’s incorporation of “current monthly income” a nullity: A bankruptcy court must still begin with that figure, but is simply free to fiddle with it if a “significant” change in the debtor’s circumstances is “known or virtually certain.” (citation omitted). That construction conveniently avoids superfluity, but only by utterly abandoning the text the Court purports to construe. . . . The Court, in short, can arrive at its compromise construction only by rewriting the statute.

Dissent, at 2-4.

Next, he argued that projections could be made solely on historical data if that is how Congress said to do it.

The only reasonable reading that avoids deleting words Congress enacted, or adding others it did not, is this: Setting aside expenses excludable under §1325(b)(2)(A) and (B), which are not at issue here, a court must calculate the debtor’s “projected disposable income” by multiplying his current monthly income by the number of months in the “applicable commitment period.” The word “projected” in this context, I agree, most sensibly refers to a calculation, prediction, or estimation of future events, see Brief for United States as Amicus Curiae 12–13 (collecting dictionary definitions); see also Webster’s New International Dictionary 1978 (2d ed. 1957). But one assuredly can calculate, predict, or estimate future figures based on the past. And here Congress has commanded that a specific historical figure shall be the basis for the projection.

The Court rejects this reading as unrealistic. A projection, the Court explains, may be based in part on past data, but “adjustments are often made based on other factors that may affect the final outcome.” (citation omitted). Past performance is no guarantee of future results. No gambler would bet the farm using “project[ions]” that are based only on a football team’s play before its star quarterback was injured. And no pundit would keep his post if he “projected” election results relying only on prior cycles, ignoring recent polls. So too, the Court appears to reason, it makes no sense to say a court “project[s]” a debtor’s “disposable income” when it considers only what he earned in a specific 6-month period in the past. (citation omitted).

Such analogies do not establish that carrying current monthly income forward to determine a debtor’s future ability to pay is not a “projection.” They show only that relying exclusively on past data for the projection may be a bad idea. One who is asked to predict future results, but is armed with no other information than prior performance, can still make a projection; it may simply be off the mark. Congress, of course, could have tried to prevent that possibility by prescribing, as it has done in other contexts, that a debtor’s projected disposable income be determined based on the “best available evidence,” (citation omitted) or “any … relevant information,” (citation omitted). But it included no such prescription here, and instead identified the data a court should consider. Perhaps Congress concluded that other information a bankruptcy court might consider is too uncertain or too easily manipulated. Or perhaps it thought the cost of considering such information outweighed the benefits. (citation omitted). In all events, neither the reasons for nor the wisdom of the projection method Congress chose has any bearing on what the statute means.

The Court contends that if Congress really meant courts to multiply a static figure by a set number of months, it would have used the word “multiplied,” as it has done elsewhere—indeed, elsewhere in the same subsection, (citation omitted)—instead of the word “projected.” (citation omitted). I do not dispute that, as a general matter, we should presume that Congress does not ordinarily use two words in the same context to denote the same thing. But if forced to choose between (A) assuming Congress enacted text that serves no purpose at all, (B) ascribing an unheard-of meaning to the word “projected” (loaded with made-to-order restrictions) simply to avoid undesirable results, or (C) assuming Congress employed synonyms to express a single idea, the last is obviously the least evil.

* * *

In short, a debtor’s projected disposable income consists of two parts: one (current monthly income) that is fixed once for all based on historical data, and another (the enumerated expenses) that at least arguably depends on estimations of the debtor’s future circumstances. The statute thus requires the court to predict the difference between two figures, each of which depends on the duration of the commitment period, and one of which also turns partly on facts besides historical data. In light of all this, it seems to me not at all unusual to describe this process as projection, not merely multiplication.

Dissent, at 4-7 (emphasis added).

He also responded to the majority's criticism of the mechanical approach.

The Court’s remaining arguments about the statute’s meaning are easily dispatched. A “mechanical” reading of projected disposable income, it contends, renders superfluous the phrase “to be received in the applicable commitment period” in §1325(b)(1)(B). (citation omitted). Not at all. That phrase defines the period for which a debtor’s disposable income must be calculated ( i.e. , the period over which the projection extends), and thus the amount the debtor must ultimately pay his unsecured creditors.

Similarly insubstantial is the Court’s claim regarding the requirement that the plan provide that the debtor’s projected disposable income “will be applied to make payments” toward unsecured creditors’ claims, §1325(b)(1)(B). The Court says this requirement makes no sense unless the debtor is actually able to pay an amount equal to his projected disposable income. (citation omitted). But it makes no sense only if one assumes that the debtor is entitled to confirmation in the first place; and that assumption is wrong. The requirement that the debtor pay at least his projected disposable income is a prerequisite to confirmation. The “will be applied” proviso does not require a debtor to pay what he cannot; it simply withholds Chapter 13 relief when he cannot pay.

Dissent, at 7 (emphasis added).

Justice Scalia also found that the ability to modify a chapter 13 plan provided an answer to the problem which concerned the majority.

In any event, the effects the Court fears are neither as inevitable nor as “senseless” as the Court portrays. The Court’s first concern is that if actual or anticipated changes in the debtor’s earnings are ignored, then a debtor whose income increases after the critical 6-month window will not be required to pay all he can afford. (citation omitted). But as Lanning points out, (citation omitted), Chapter 13 authorizes the Bankruptcy Court, at the request of unsecured creditors, to modify the plan “[a]t any time after confirmation” to “increase … the amount of payments” on a class of claims or “reduce the time for such payments.” (citation omitted). The Court offers no explanation of why modification would not be available in such instances, and sufficient to resolve the concern.

The Court also cringes at the prospect that a debtor whose income suddenly declines after the 6-month window or who, as in this case, receives a one-off windfall during that window, will be barred from Chapter 13 relief because he will be unable to devote his “disposable income” (which turns on his prior earnings) to paying his unsecured creditors going forward. (citation omitted). At least for debtors whose circumstances deteriorate after confirmation, however, the Code already provides an answer. Just as a creditor can request an upward modification in light of postconfirmation developments, so too can a debtor ask for a downward adjustment. (citation omitted).

Moreover, even apart from the availability of modification it requires little imagination to see why Congress might want to withhold relief from debtors whose situations have suddenly deteriorated (after or even toward the end of the 6-month window), or who in the midst of dire straits have been blessed (within the 6-month window) by an influx of unusually high income. Bankruptcy protection is not a birthright, and Congress could reasonably conclude that those who have just hit the skids do not yet need a reprieve from repaying their debts; perhaps they will recover. And perhaps the debtor who has received a one-time bonus will thereby be enabled to stay afloat. How long to wait before throwing the debtor a lifeline is inherently a policy choice. Congress confined the calculation of current monthly income to a 6-month period (ordinarily ending before the case is commenced), but it could have picked 2 or 12 months (or a different end date) instead. Whatever the wisdom of the window it chose, we should not assume it did not know what it was doing and accordingly refuse to give effect to its words.

Dissent, at 9-10.

Justice Scalia's modification argument may cut against his position. If a plan could be modified immediately after confirmation to reflect changed circumstances, why is it unreasonable to give effect to those circumstances at confirmation?

In conclusion, Justice Scalia noted the importance of following the language used by Congress even when that appears that Congress was mistaken.

Underlying the Court’s interpretation is an understandable urge: Sometimes the best reading of a text yields results that one thinks must be a mistake, and bending that reading just a little bit will allow all the pieces to fit together. But taking liberties with text in light of outcome makes sense only if we assume that we know better than Congress which outcomes are mistaken. And by refusing to hold that Congress meant what it said,(citation omitted), we deprive it of the ability to say what it means in the future. It may be that no interpretation of §1325(b)(1)(B) is entirely satisfying. But it is in the hard cases, even more than the easy ones, that we should faithfully apply our settled interpretive principles, and trust that Congress will correct the law if what it previously prescribed is wrong.

Dissent, at 13-14.

Final Thoughts

I have admittedly given more space to Justice Scalia's words than to those of the majority. While the majority's view is the law and provides the more workable solution for bankruptcy practitioners, Justice Scalia's words have a seductive quality. The majority wants the Bankruptcy Code to make sense. Justice Scalia is willing to be a minority of one for the proposition that when Congress passes laws that are foolish or just plain wrong, that the courts have an obligation to throw their words back at them and yield a foolish judgment. As an agile advocate, he did include multiple arguments for why his view of what Congress said is not foolish (particularly in sections that I did not quote). However, he is at his most eloquent when he argues that Congress should be allowed to, in the words of the Talking Heads, "Stop Making Sense."

The problem here is that Justice Scalia may well have the better argument for what Congress meant. However, the language they used didn't completely do the job. Congress intended to replace the court's discretion with an objective formula. In the case of Sec. 1325(b)(1)(B), Congress inserted the objective look-back provision in the definition of "disposable income" but not "projected disposable income." Additionally, taking away discretion on initial confirmation but leaving it in place for modification seems to be an invitation to reintroducing discretion in general.

Hamilton v. Lanning provides a practical solution which does not do obvious violence to the text, Justice Scalia notwithstanding. However, it is also a prime example of the imprecision with which BAPCPA was drafted.

Supreme Court to Decide Whether Means Test Allows Ownership Expense Deduction for Vehicle Owned Free and Clear

This article appears in the June 2010 edition of the American Bankruptcy Institute Journal.

“(T)he code is more what you’d call ‘guidelines’ than actual rules.”(1)

The Supreme Court has agreed to hear a case which raises the issue of whether the collection standards contained within the IRS Financial Analysis Handbook (2), as incorporated into the Chapter 7 Means Test (3), are more of a code than a guideline(4). Three circuits and a Bankruptcy Appellate Panel have held that under a “plain meaning” reading of the Code, a debtor may claim an ownership expense deduction under the Means Test regardless of whether there is a debt or lease payment with regard to the vehicle (5), while the Ninth Circuit, adopting what is known as the IRM approach, has reached a contrary result (6). However, another way to describe the split is whether the IRS Collection Standards (hereafter IRS Standards)(7) as incorporated into the Means Test are more of a Code (the plain language approach) or a guideline (the IRM approach)(8). This article will examine how the search for an objective standard may lead to unintended consequences.

The Search for an Objective Standard

Prior to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), a debtor’s bankruptcy case could only be dismissed based on a finding of “substantial abuse,”(9) a standard which was not defined in the statute. BAPCPA changed this standard to one of “abuse” and provided for a presumption of abuse based on a formula that has become known as the Means Test (10). The purpose of the Means Test “is to determine if the debtors can repay a portion of their debt” (11). The Means Test applies to debtors with primarily consumer debts whose “current monthly income” exceeds the median income for a family of their size (12).

The Means Test is based on an elaborate formula found at 11 U.S.C. §707(b)(2). A bankruptcy filing is presumed to be abusive if the debtor can afford to pay the lesser of 25% of his nonpriority unsecured debts or $7,025, whichever is greater, or $11,725 (13). The Means Test determines this ability to pay by taking the debtor’s “current monthly income” and deducting categories of allowed expenses and multiplying by 60 (14). Like prior case law under the substantial abuse test, the Means Test looks at the debtor’s ability to pay his debts (15). However, the Means Test does not rely on the debtor’s current monthly income and expense. Instead, it uses an average of the debtor’s income for the preceding six months (16) and subtracts certain defined expenses.

Among other things, the Means Test allows deduction of

. . . the debtor's applicable monthly expense amounts specified under the National Standards and Local Standards, and the debtor's actual monthly expenses for the categories specified as Other Necessary Expenses issued by the Internal Revenue Service for the area in which the debtor resides. . . . Notwithstanding any other provision of this clause, the monthly expenses of the debtor shall not include any payments for debts.(17)

Separate provisions of the Means Test allows the debtor to deduct payments for secured debts scheduled to come due during the 60 months after the petition date as well as priority claims divided by 60(18).

The Means Test represents an attempt to replace the subjective “substantial abuse” test with a more objective standard. The IRS standards refer to such sources as Census Bureau and Bureau of Labor Statistics data (19). However, as used by the IRS, they are more of a guideline than a code (20). According to the Financial Analysis Handbook:

The standard amounts set forth in the national and local guidelines are designed to account for basic living expenses. In some cases, based on a taxpayer's individual facts and circumstances, it may be appropriate to deviate from the standard amount when failure to do so will cause the taxpayer economic hardship (see Note below bullet list). The taxpayer must provide reasonable substantiation of all expenses claimed that exceed the standard amount.(21)

The National and Local standards consist of tables of data. However, they are used in the context of the Financial Analysis Handbook which provides guidelines as to how they should be applied.

Furthermore, the standards consist of aggregate amounts for categories, including debt payments(22). However, the Means Test considers secured debts separately. This means that a debtor with a high mortgage payment or car payment could be allowed to deduct more than the amount allowed under the standards.

The Problem of Vehicle Ownership Expenses

Vehicle ownership expenses pose a potential conflict between the language of the Means Test and the IRM. Under the Means Test, the debtor may deduct

the debtor's applicable monthly expense amounts specified under the National Standards and Local Standards, and the debtor's actual monthly expenses for the categories specified as Other Necessary Expenses. . . . (23)

The Local Standards include both ownership and operating expenses (24). The IRM specifies that in determining a taxpayer’s ability to pay "[t]axpayers will be allowed the local standard or the amount actually paid, whichever is less."(25) In the specific case of vehicle payments, the IRM states "(i)f a taxpayer has a car, but no car payment [sic] only the operating cost portion of the transportation standard is used to figure the allowable transportation expense."(26)

The conflict arises because the statute refers to the Local Standards. The Local Standards consist of a table of expenses broken down by number of vehicles owned (27). Furthermore, under the Means Test, ownership costs and debt payments are separate allowances. Thus, since ownership costs and debt amounts are distinct allowances, it would be possible to have an ownership costs without a debt payment. However, the purpose of the Means Test is to "to ensure that debtors repay creditors the maximum they can afford."(28) The IRS standards have a similar purpose. Since the IRM would not allow an expense which was not an “actual” expense, neither should the Means Test.

What Expenses Are Applicable?

Both approaches seek to apply the plain meaning of the statute, particularly the word “applicable.”(29)

The Ninth Circuit quoted its Bankruptcy Appellate Panel as stating:

The ordinary, common meaning of "applicable" further impels us to this conclusion. "Applicable," in its ordinary sense, means "capable of or suitable for being applied."(Citation omitted). Given the ordinary sense of the term "applicable," how is the vehicle ownership expense allowance capable of being applied to the debtor if he does not make any lease or loan payments on the vehicle? In other words, how can the debtor assert a deduction for an expense he does not have? If we granted the debtor such an allowance, we would be reading "applicable" right out of the Bankruptcy Code (30).

In contrast, the Seventh Circuit applied “applicable” to mean:

707(b)(2)(A)(ii)(I) is more strongly supported by the language and logic of the statute. In order to give effect to all the words of the statute, the term "applicable monthly expense amounts" cannot mean the same thing as "actual monthly expenses." Under the statute, a debtor's "actual monthly expenses" are only relevant with regard to the IRS's "Other Necessary Expenses;" they are not relevant to deductions taken under the Local Standards, including the transportation ownership deduction. Since "applicable" cannot be synonymous with "actual," applicable cannot reference what the debtor's actual expense is for a category, as courts favoring the IRM approach would interpret the word. We conclude that the better interpretation of "applicable" is that it references the selection of the debtor's geographic region and number of cars.(31)

Thus, two circuits have reached diametrically opposed views of what the word “applicable” means in the applicable statute.

Going Beyond Applicable

If the plain meaning of the word “applicable” is not sufficient to resolve the debate, what other factors might illuminate the issue?

The courts taking the “plain meaning” approach add several other arguments in favor of their position. Among them, a prior version of the bankruptcy reform legislation included an express reference to the Internal Revenue Manual, a provision which was not included in the final bill (32); the Internal Revenue Manual itself includes a disclaimer that it is only to be used for tax collection purposes and not for purposes of bankruptcy (33); that it would be prudent to allow a debtor with no car payment to save for a new vehicle (34); that it would be absurd to allow a debtor with $1 in debt against the vehicle to take the ownership expense while denying it to a debtor without a car payment (35); and that the Bankruptcy Code provided for both an ownership expense and a secured debt deduction as separate items (36).

On the other hand, the Ninth Circuit looked to the purpose of the deduction. It quoted its Bankruptcy Appellate Panel as stating:

Congress has deemed the expense of owning a car to be a basic expense that debtors can deduct in calculating what they can afford to pay to their creditors. However, in making that calculation, what is important is the payments that debtors actually make, not how many cars they own, because the payments that debtors make are what actually affect their ability to make payments to their creditors.

The statute is only concerned about protecting the debtor's ability to continue owning a car, and if the debtor already owns the car, the debtor is adequately protected . . . . When the debtor has no monthly ownership expenses, it makes no sense to deduct an ownership expense to shield it from creditors. (37)

It also looked to the general purpose of BAPCPA.

This approach also is arguably supported by Congress's intent in implementing the means testing as part of BAPCPA--"to ensure that debtors repay creditors the maximum they can afford." (38)

Finally, it questioned the wisdom of allowing a debtor to subtract a “fictitious expense not incurred by the debtor” under the Means Test (39).

Finding an Answer

The ownership deduction cases illustrate the practical difficulties in using the IRS Standards as the basis for calculating an above median income debtor’s eligibility for chapter 7 or determining the amount that an above median debtor must pay under a chapter 13 plan. While the reference to tables of data based upon Census Bureau and Bureau of Labor Statistics figures appears objective and therefore practical to apply, the Internal Revenue Manual within which they appear is full of nuances. To further complicate the matter, Congress included numerous modifications to the IRS Standards within the text of Section 707(b). It is safe to say that Congress created ambiguity when it sought to graft a guideline into a Code.

In the conclusion to its opinion, the Ninth Circuit recognized the difficulty of the issue and suggested that Congress take action to clarify the legislation.

The "correct" answer to the question before us, which the courts have been struggling with for years--at the unnecessary cost of thousands of hours of valuable judicial time--depends ultimately not upon our interpretation of the statute, but upon what Congress wants the answer to be. We would hope, in this regard, that we the judiciary would be relieved of this Sisyphean adventure by legislation clearly answering a straightforward policy question: shall an above-median income debtor in chapter 13 be allowed to shelter from unsecured creditors a standardized vehicle ownership cost for a vehicle owned free and clear, or not? Because resolution of this issue rests with Congress, we have taken the unusual step of directing the Clerk of the Court to forward a copy of this opinion to the Senate and House Judiciary Committees.(40)

The Ninth Circuit makes a good point. While Congress may have intended the more parsimonious approach adopted in Ransom, numerous courts have concluded that the language they used does not accomplish that result. Thus, the unintended consequence of seeking an objective standard is that in this one case, debtors may receive a more generous allowance than they would have been granted under the Internal Revenue Manual or prior bankruptcy law.

Pending an answer from Congress, the Supreme Court will have to untangle the legislative knot. On April 19, 2010, the Supreme Court agreed to consider the following question:

Whether, in calculating the debtor's "projected disposable income" during the plan period, the bankruptcy court may allow an ownership cost deduction for vehicles only if the debtor is actually making payments on the vehicles.(41)

While this will be the third case that the Supreme Court has accepted with regard to BAPCPA, it will likely not be the last(42).
____________________________________________________

1. Pirates of the Caribbean: The Curse of the Black Pearl, quoted at http://www.imdb.com/title/tt0325980/quotes. The quote originally appears near the beginning of the movie when Elizabeth Swann invokes the Code of the Brethren to Captain Barbossa. Throughout the movie, characters use the guideline reference as a rationale to disregard the Code.
2. Internal Revenue Manual, §5.15.1, found at www.irs.gov/irm.
3. 11 U.S.C. §707(b).
4. In re Ransom, 577 F.3d 1026 (9th Cir. 2009), cert granted, 2010 U.S. LEXIS 3359 (2010).
5. In re Washburn, 579 F.3d 934 (8th Cir. 2009)(with dissenting opinion); Tate v. Bolen, 571 F.3d 423 (5th Cir. 2009); In re Ross-Tousey, 549 F.3d 1148 (7th Cir. 2008); In re Kimbro, 389 B.R. 518 (6th Cir. BAP 2008).
6. In re Ransom, supra.
7. The Collection Standards consist of the National Standards, Local Standards and Other Necessary Expenses.
8. The two approaches are described in more detail below.
9. In re Rudler, 576 F.3d 76 (1st Cir. 2009).
10. “The heart of the bill’s consumer bankruptcy reforms consists of the implementation of an income/expense screening mechanism (‘‘needs-based bankruptcy relief’’ or ‘‘means testing’’), which is intended to ensure that debtors repay creditors the maximum they can afford.” Report on the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, H.R. Rept. 109-31, 109th Cong., 1st Sess. (April 8, 2005).
11. Tate v. Bolen, at 425.
12. The requirement that debts be primarily consumer debts is found in 11 U.S.C. §707(b)(1), while exclusion for below median income debtors is contained in §707(b)(7).
13. 11 U.S.C. §707(b)(2)(A)(i). These amounts are adjusted for inflation and were most recently adjusted on April 1, 2010.
14. Id.
15. In re Goble, 401 B.R. 261 (Bankr. S.D. Ohio 2009).
16. 11 U.S.C. §101(10A) containing definition of “current monthly income.”
17. 11 U.S.C. §707(b)(2)(A)(i)(I).
18. 11 U.S.C. §707(b)(2)(A)(iii) and (iv).
19. IRM, §5.15.1.7.
20. http://www.irs.gov/individuals/article/0,,id=96543,00.html.
21. IRM, §5.15.1.7.6.
22. For example, the standards for housing state:

Housing and Utilities. Housing expenses include: mortgage (including interest) or rent, property taxes, necessary maintenance and repair, homeowner's or renter's insurance, homeowner dues and condominium fees. The utilities include gas, electricity, water, heating oil, bottled gas, trash and garbage collection, wood and other fuels, septic cleaning, telephone and cell phone.

IRM, §5.15.1.9.1.A
23. 11 U.S.C. §707(b)(2)(A)(i)
24. IRM §5.15.1.
25. IRM §5.15.1.7.
26. Id.
27. In re Kimbro, at 527.
28. H.R. Rep. 109-31(I), at 1.
29. In re Ransom, at 1030 ("As did our BAP, we decide this issue not on the IRS's manual, but instead on the "statutory language, plainly read."); In re Ross-Tousey, at 1158 ("To analyze this issue, we begin with the language of the statute. When the language is plain, the sole function of the courts is to enforce the statute according to its terms.”).
30. In re Ransom, at 1030-31.
31. In re Ross-Tousey, at 1158.
32. In re Ross-Tousey, at 1159; Tate v. Bolen, at 427.
33. In re Kimbro, at 527.
34. Tate v. Bolen, at 428; In re Ross-Tousey, at 1160.
35. In re Ross-Tousey, at 1161.
36. In re Kimbro, at 523.
37. In re Ransom, at 1030-31.
38. In re Ransom, at 1030.
39. In re Ransom, at 1030.
40. In re Ransom, at 1031-32.
41. http://www.supremecourt.gov/qp/09-00907qp.pdf.
42. The others are Milavetz, Gallop & Milavetz, P.A. v. United States, 559 U.S. __ (2010) and In re Lanning, 545 F.3d 1269 (10th Cir. 2009), cert. granted, 2009 U.S. LEXIS 7655 (2009).