United States Court of Appeals
For the First Circuit
No. 01-9001
IN RE: EDMOND E. ROBERTS AND SHARON ROBERTS,
Debtors,
EDMOND E. ROBERTS AND SHARON L. ROBERTS,
Appellants,
v.
JOHN BOYAJIAN, TRUSTEE, ET AL.,
Appellees.
APPEAL FROM THE BANKRUPTCY APPELLATE PANEL
OF THE FIRST CIRCUIT
Before
Torruella, Circuit Judge,
Cyr, Senior Circuit Judge,
and Lipez, Circuit Judge.
Peter G. Berman and Raskin & Berman on brief for appellants.
John Boyajian and Boyajian, Harrington & Richardson on brief
for appellee John Boyajian.
February 8, 2002
CYR, Senior Circuit Judge. After appellants Edmond and
Sharon Roberts, husband and wife, filed their chapter 13
petition in 1993, the bankruptcy court confirmed their joint
plan calling for (i) monthly payments of $474, to the chapter 13
trustee, extending over a five-year period; (ii) a $9,000
distribution to the Internal Revenue Service (IRS) on its
priority prepetition income tax claim; and (iii) a ten percent
dividend on all allowed unsecured claims. Several years later,
IRS submitted supplemental claims asserting that Edmond Roberts
had continued to incur additional income tax obligations after
the chapter 13 proceeding was commenced, amounting to $15,000 by
1996 and more than $53,000 by 1999. The chapter 13 trustee
thereupon successfully moved to dismiss the chapter 13
proceeding due to the debtors' failure to make payments
sufficient to fund the confirmed plan, see Bankruptcy Code
§ 1307(c)(6); 11 U.S.C. § 1307(c)(6), thereby effectively
precluding appellants from obtaining discharges of their debts.
In re Roberts, 247 B.R. 592, 594 (Bankr. D.R.I. 2000).
An order allowing a motion to dismiss pursuant to
Bankruptcy Code § 1307 is reviewed only for abuse of discretion.
See Blaise v. Wolinsky (In re Blaise), 219 B.R. 946, 949-50
(B.A.P. 2d Cir. 1998). We review the Bankruptcy Appellate Panel
decision directly. See Brandt v. REPCO Printers &
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Lithographics, Inc. (In re Healthco Int'l., Inc.), 132 F.3d 104,
107 (1st Cir. 1997).
Appellants contend on appeal that the Bankruptcy Code
entitles them to a chapter 13 discharge, see 11 U.S.C. § 1328(a)
("As soon as practicable after completion by the Debtor of all
payments under the plan . . . the court shall grant the Debtor
a discharge . . . .") (emphasis added), due to the fact that
they had paid the chapter 13 trustee the entire $28,440 required
under their confirmed plan ( i.e., sixty installments at $474 per
month), a commitment which the chapter 13 trustee and the
bankruptcy court repeatedly reaffirmed even after the amount due
the IRS on its tax claims surpassed the $9,000 in cumulative
payments required by the confirmed plan.
Appellants can cite no authority for their contention,
since the courts uniformly have held that a confirmed chapter 13
plan provision requiring a fixed percentage return to unsecured
creditors takes precedence over a companion provision
prescribing the aggregate payments to be made to the chapter 13
trustee. See In re Carr, 159 B.R. 538, 543 (D. Neb. 1993); In
re Delmonte, 237 B.R. 132, 137-38 (Bankr. E.D. Tex. 1999); In re
Goude, 201 B.R. 275, 277 (Bankr. D. Ore. 1996); In re Guernsey,
189 B.R. 477, 479 (Bankr. D. Minn. 1995); In re Rivera, 177 B.R.
332, 335 (Bankr. C.D. Cal. 1995); In re Phelps, 149 B.R. 534,
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537 (Bankr. N.D. Ill. 1993).1 More importantly, given these
unanimous authorities, appellants were not justified in
construing any alleged representation by the chapter 13 trustee
and/or the bankruptcy court as a concession that their
completion of the payment schedule prescribed in their confirmed
plan relieved them of their clear responsibility to comply with
the other provisions in the plan, including their obligation to
pay all priority tax claims and a ten percent dividend on
allowed unsecured claims.
Lastly, Sharon Roberts appeals from another bankruptcy
court order which denied her request for a so-called "hardship
discharge." See 11 U.S.C. § 1328(b)(1) ("[T]he court may grant
a discharge . . . if [t]he debtor's failure to complete such
1 Although the circumstances involved in these decisions
differ slightly, each involved the same basic rationale; viz.,
that the plain language of section 1328(a) (like the provision
for plan modification in § 1329) entitles the debtor to a
discharge only "after completion . . . of all payments under the
plan." 11 U.S.C. § 1328(a) (emphasis added). See, e.g., In re
Carr, 159 B.R. at 542 (noting that debtor did not "complete"
payments where plan required payment "in full" on all priority
claims, and where the scheduled payments under the plan proved
insufficient to achieve that end); In re Delmonte, 237 B.R. at
137 ("A Chapter 13 debtor has a two-fold obligation under a
confirmed plan. It [sic] 'must make the plan payments required
of it [sic] and those payments must be sufficient to do what the
plan proposes.'") (emphasis added; citation omitted). Further,
such generic plan provisions (e.g., proposals to pay all
priority claims in full) are necessary, since the proofs of
claims often are not filed until after the plan is confirmed.
See In re Carr, 159 B.R. at 540-41.
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payments is due to circumstances for which debtor should not
justly be held accountable . . . ."). Her request for a
"hardship discharge" represented that the postpetition tax
penalties, which ultimately totaled more than $53,000, were
incurred by her husband only, and even though she and her
husband had filed a joint chapter 13 petition, no order for
consolidated administration was ever entered by the bankruptcy
court. Thus, she argues, the bankruptcy court was obliged to
accord separate treatment to their respective credit
obligations.
Rulings on applications for discharge under Bankruptcy
Code § 1328 are reviewed only for abuse of discretion. See
Bandilli v. Boyajian (In re Bandilli), 231 B.R. 836, 838 (B.A.P.
1st Cir. 1999). The ultimate evidentiary burden to establish an
entitlement to a hardship discharge under Bankruptcy Code
§ 1328(b)(1) rested upon Sharon Roberts. See id. at 839.
All the authorities she cites are inapposite, however,
relating instead to the entirely different matter as to whether
each debtor in a joint proceeding is entitled to an independent
homestead exemption. See, e.g., Cheesman v. Nachman, 656 F.2d
60, 64 (4th Cir. 1981) (relying upon Bankruptcy Code § 522(m),
which expressly empowers each debtor, in a joint case, to assert
a separate exemption claim). Thus, the bankruptcy court plainly
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did not abuse its discretion by denying the request for a
hardship discharge under Bankruptcy Code § 1328(b)(1),
particularly in light of (i) Sharon Roberts' election to
proceed, with her husband, under a joint chapter 13 petition and
plan, and (ii) her full awareness of the rapidly accruing
postpetition IRS tax obligations, combined with her subsequent
failure to move for severance.
The judgment is affirmed; costs to be assessed against
appellants. SO ORDERED.
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