In re R.G. FISHER CONSTRUCTORS, a California corporation, aka Robert G. Fisher Company, Inc., Constructors Supply Company, and Fisher/CM, Debtor.
Bankruptcy No. 185-00394-B-7.United States Bankruptcy Court, E.D. California, Fresno Division.
March 5, 1990.*727 David F. Levi, U.S. Atty., Sacramento, Cal.
Charles M. Duffy, Trial Atty., Tax Div., U.S. Dept. of Justice, Washington, D.C., for Internal Revenue Service.
Riley C. Walter, Ryder & Walter, Fresno, Cal., for Chapter 7 Trustee.
MEMORANDUM OF DECISION AND ORDER GRANTING TRUSTEE'S MOTION FOR SUMMARY JUDGMENT AND DISALLOWING CLAIM
BRETT J. DORIAN, Bankruptcy Judge.
The file in this case indicates that this proceeding was commenced by the filing of a petition under Chapter 7 of the Bankruptcy Code on February 15, 1985. A meeting of creditors pursuant to 11 U.S.C. section 341(a) was scheduled for and held on April 3, 1985. Under Bankruptcy Rule 3002(c) and as stated in the notice of the creditors' meeting, proofs of claim were to be filed within 90 days after the date set for that meeting, thus establishing a bar date of July 2, 1985.
On July 2, 1985, claimant United States, Department of the Treasury, Internal Revenue Service ("IRS") filed a claim in the amount of $1,250.13 for unpaid penalty arising from employer taxes reported on Form 941 for the fourth quarter of 1984. As the claim was not for payment of the tax itself, but only a penalty related to the tax, the claim (in the court's view) would be entitled to priority under 11 U.S.C. section 726(a)(4),[1] a priority following that of general unsecured creditors. It is undisputed that this claim was timely filed.
On December 13, 1989, (nearly four and one-half years after the bar date) IRS filed a proof of claim labeled "Amendment # 1 to proof of claim dated 07-01-85" for $206,362.40 for federal unemployment tax (commonly referred to as "FUTA" taxes or Form 940 taxes), plus $1,381.54 in interest and $52,840.73 in penalty. The first two amounts, if allowed, would have priority over general unsecured creditors, while the penalty portion would be junior to such creditors. The Chapter 7 trustee has objected to the allowance of this claim on the grounds that it was untimely filed and that even if deemed an amendment to a timely filed claim, its allowance at this late date in this proceeding would be prejudicial to other parties.
The bulk of the arguments submitted by the parties involves the allowable amendment issue of whether the claims meet the "same generic origin" test and thereby support a ruling that the latter proof of claim constitutes an allowable amendment to the original timely filed claim. Menick v. Hoffman, 205 F.2d 365 (9th Cir.1953). However, determination of this issue is not required as the court finds that the equities present in this case require a ruling that the latter claim filed by IRS should not be allowed for the following reasons:
1. Nearly four and one-half years elapsed between the claims bar date and the filing of the latter claim.
2. The filing of the initial claim indicates that the matter of the debtor's bankruptcy filing was timely known to IRS and that a review of the debtor's tax liability was undertaken.
3. IRS has neither offered nor suggested any mitigating reason for its tardy filing of a claim for Form 940 taxes; it relies solely on an "oops" defense.
4. The claims file alone in this case covers thirteen volumes, and the trustee has already devoted nearly two and a half *728 years to litigating various matters having to do with the filed claims.
5. Absent the filing of the subject claim, the trustee was in a position to proceed with distribution of nearly $390,000.00.
6. Allowance of the claim could deprive unsecured creditors who timely filed claims of possibly $208,000.00 if the IRS has correctly estimated the amount of the tax.[2]
7. This case is now nearly five years old; to allow IRS to amend its claim at this late date (assuming that amendment should otherwise be permitted) would require that distribution of assets and termination of this case be delayed for an additional substantial period of time as IRS has not as yet taken steps to fix with certainty the amount of the tax due but is merely relying at this point on an estimate of the debtor's liability.
8. Permitting an amendment so long after the bar date without a showing of good cause undermines the clear requirement of Bankruptcy Rule 3002(c) that claims be promptly filed and interferes with the need for the finality which a Chapter 7 trustee must have in order to move forward with the administration of a case.
9. The creditor register on file with the clerk indicates that approximately 150 creditors did file timely claims.
Both IRS and the Chapter 7 trustee have quoted statements from this court's opinion in In re Bajac Construction, 100 B.R. 524 (Bkrtcy.E.D.Cal.1989), in which an amendment filed by IRS fourteen months after the claims bar date was allowed. Suffice it to say that in Bajac the amended claim merely added one additional quarter of 941 taxes to claims for quarters prior to and subsequent to the added quarter and that there was essentially no showing of prejudice caused by the delay in filing the amendment.
In determining for the reasons stated above that the latter claim filed by IRS will not be allowed, the court neither states nor suggests what the ruling in this matter would have been had the latter claim been filed with substantially less delay; nor is the court deciding that as a matter of law any attempted amendment of a claim four and one-half years after the bar date will be rejected.
In accordance with the foregoing,
IT IS ORDERED that the motion of the trustee for summary judgment is granted and that the claim of IRS filed herein on December 13, 1989, is disallowed.
NOTES
[1] In its response to the objection filed December 14, 1989, IRS states that the claim would be entitled to priority under 11 U.S.C. section 507(a)(7)(G), a position the court questions but is not deciding at this time.
[2] Although the filed claim exceeds $260,000.00 a question exists as to whether or not the nearly $53,000.00 in penalty would have a higher priority than that of general unsecured creditors.