UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 93-2070
IN THE MATTER OF: FRED AUGUST QUENZER and JAMIE QUENZER,
Debtors.
FRED AUGUST QUENZER and
JAMIE QUENZER,
Appellants,
versus
UNITED STATES OF AMERICA,
Appellee.
Appeal from the United States District Court
for the Southern District of Texas
(CA H 92 905)
(November 30, 1993)
Before POLITZ, Chief Judge, and HIGGINBOTHAM, Circuit Judge, and
DAVIDSON*, District Judge.
POLITZ, Chief Judge:**
Fred August Quenzer and Jamie Quenzer appeal an adverse
*
District Judge of the Northern District of Mississippi,
sitting by designation.
**
Local Rule 47.5 provides: "The publication of opinions that
have no precedential value and merely decide particular cases on
the basis of well-settled principles of law imposes needless
expense on the public and burdens on the legal profession."
Pursuant to that Rule, the Court has determined that this opinion
should not be published.
summary judgment affirming a ruling by the bankruptcy court that
certain taxes, penalties, and interest were not discharged.
Concluding that the government's action is time barred we reverse
and render judgment in favor of the Quenzers.
Background
The essential facts are not in dispute. In September 1986 the
Quenzers filed a Chapter 13 petition which was converted to a
Chapter 7 and voluntarily dismissed in March 1988. In March 1990
they filed a Chapter 7 petition in bankruptcy and their discharge
was entered in July 1990.
The instant dispute involves the dischargeability of the
Quenzers' 1984 and 1985 tax return liability. The record reflects
stipulations regarding all other tax, interest, and penalty
claims.1 The bankruptcy court found all assessments and penalties
nondischargeable. On the appeal to the district court the
government conceded that the penalties and interest thereon for the
1984 and 1985 returns were dischargeable. The district court
inadvertently overlooked this and ruled that these were
nondischargeable. The government candidly concedes that these
penalties, and the interest thereon, are dischargeable as arising
from events occurring more than three years prior to the filing of
1
In the bankruptcy court the parties stipulated that: (1) all
tax, interest, and penalties for 1979 and 1980 were dischargeable;
(2) the tax return assessments for 1981-1983 were dischargeable;
(3) the audit deficiency assessments for 1981-1984 were not
dischargeable; and (4) the penalties and interest on penalties
based upon the return assessments for 1981-1983 were dischargeable.
2
the subject petitions. 11 U.S.C. § 523(a)(7).
Analysis
This appeal focuses on the tax deficiencies for 1984 and 1985.
In the district court the government successfully relied on the
suspension provision in section 108(c) of the Bankruptcy Code as
the basis for tolling the priority period for the collection of
taxes during the prior bankruptcy proceedings. Under the plain
language of section 108(c), however, that suspension applies only
to nonbankruptcy law and nonbankruptcy proceedings. Absent some
other basis for tolling the section 507 time limit, the Quenzers'
tax liability for the years 1984 and 1985 must be discharged.
In apparent recognition that the plain language of 11 U.S.C.
§§ 507 and 108(c) gives no support to the rulings a` quo, the
government urges us to exercise the equitable tolling powers
granted by section 105(a) of the Bankruptcy Code and extend the
period for its collection efforts. In support of this suggestion
the government invites our review of Dandridge v. Williams,2 which
holds that a prevailing party may urge legal grounds for a ruling
that were not relied on by the trial court. A close reading of
Dandridge reflects that the arguments presented to the Supreme
Court had been "fully argued . . . in the district court."3 That
is not the case herein.
Typically, we will not consider on appeal matters not
2
397 U.S. 471, 90 S.Ct. 1153, 25 L.Ed.2d 491 (1970).
3
397 U.S. at 475 n.6.
3
presented to the trial court.4 The Supreme Court recently
"decline[d] to consider § 105(a)" of the Bankruptcy Code because it
was raised in disregard of the fabric of this rubric.5 This
principle applies with even more force when we address questions of
the proper exercise of the equitable powers of the court, either
inherent or statutorily granted.
Equitable considerations are largely fact-driven. "The
essence of equity jurisdiction has been the power of the Chancellor
to do equity and to mould each decree to the necessities of the
particular case."6 Full development and examination of the facts
and the relative positions of the parties are imperative in the
exercise of the court's equitable powers. Necessarily, "[i]n
shaping equity decrees the trial court is vested with broad
discretionary power; appellate review is correspondingly narrow."7
Determining equities in the first instance is seldom fit grist for
the appellate mill.
The record before us is devoid of any factual findings by the
bankruptcy or district courts which would justify the exercise of
4
See Singleton v. Wulff, 428 U.S. 106, 121, 49 L.Ed.2d 826,
837, 96 S.Ct. 2868 (1976); In re Gilchrist, 891 F.2d 559, 561 (5th
Cir. 1990).
5
In Taylor v. Freeland & Kronz, 112 S.Ct. 1644, 1649 (1992),
a debtor suggested equitable tolling under section 105(a) for the
first time in his opening brief to the Court. The issue was not
properly before the Court since it was not raised in a lower court
and was not set forth in the petition for certiorari. Id.
6
Hecht Co. v. Bowles, 321 U.S. 321, 329-30 (1944)
(Douglas, J.).
7
Lemon v. Kurtzman, 411 U.S. 192, 200 (1973).
4
equitable powers to extend the time for the government's tax
collection efforts. We decline, therefore, the government's
invitation that we base an affirmance thereon.
The judgment of the district court is REVERSED and judgment in
favor of the Quenzers is RENDERED declaring the questioned taxes,
interests, and penalties to be discharged in bankruptcy.
5