United States Court of Appeals
For the First Circuit
No. 03-2451
In re CLARE A. WOODMAN, Debtor
EVERGREEN CREDIT UNION,
Creditor, Appellant,
v.
CLARE A. WOODMAN,
Debtor, Appellee,
PETER C. FESSENDEN,
Trustee, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT
COURT FOR THE DISTRICT OF MAINE
[Hon. D. Brock Hornby, U.S. District Judge]
Before
Torruella, Circuit Judge,
Gibson, Senior Circuit Judge,*
and Lipez, Circuit Judge.
Stanley Greenberg, with whom Greenberg & Greenberg was on the
brief, for creditor, appellant.
Barry Evan Schklair, with whom The Schklair Law Firm, LLC was
on the brief, for debtor, appellee.
Peter C. Fessenden, Standing Chapter 13 Trustee, for trustee,
appellee.
August 11, 2004
________________________
* The Honorable John R. Gibson, of the Eighth Circuit, sitting
by designation.
LIPEZ, Circuit Judge. Evergreen Credit Union, an
undersecured creditor, appeals from the decision of the district
court upholding the bankruptcy court's confirmation of debtor Clare
A. Woodman's First Amended Chapter 13 Plan ("the plan"). Evergreen
objected to the confirmation of the plan on the ground that it did
not meet the requirement set forth in § 1325(b) that debtors devote
all of their "disposable income" to their plans for at least three
years. In particular, Evergreen claimed that Woodman's monthly
purchases of cigarettes, amounting to $136.00, were not "reasonably
necessary" expenses within the meaning of § 1325(b)(2)(A). Thus,
it argued that § 1325(b) required the exclusion of Woodman's
cigarette expenditures from the calculation of her reasonably
necessary expenses, thereby increasing her projected disposable
income and consequently the amount that she would be required to
pay each month into the plan. The bankruptcy court, in a
thoughtful rescript, overruled Evergreen's objection to the
confirmation of the plan. In re Woodman, 287 B.R. 589, 596 (Bankr.
D. Me. 2003). Evergreen appealed, and the district court affirmed
the bankruptcy court's judgment. Adhering to our long-standing
rule that arguments not squarely presented below may not be
advanced for the first time on appeal, we affirm the judgment of
the district court.
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I.
Evergreen contends that the bankruptcy court's analysis
of whether cigarette expenses are disposable income was flawed
because it did not include "a rigorous review" of "objective
factors" relating to the reasonableness of Woodman's asserted need
for cigarettes. Section 1325(b)(2)(A), Evergreen avers, required
the court to consider such factors as
whether the Debtor experiences any ill-health effects
from her smoking, whether her physician has recommended
that she cease smoking, how long she has smoked, the
extent to which her consumption of cigarettes varies, the
brands or brands she smokes, whether she wants to stop
smoking, and the efforts she has made to quit.
Because the bankruptcy court did not consider those factors,
Evergreen argues, it erred as a matter of law in overruling
Evergreen's objection to Woodman's cigarette expenses and
confirming her Chapter 13 plan.
As the bankruptcy trustee points out correctly in its
response brief, Evergreen never asked the bankruptcy court to adopt
the "objective factors" that it now claims should be applied to any
analysis under 11 U.S.C. § 1325(b)(2)(A). Instead, it argued that
Woodman's cigarette expenses were excessive in the context of her
other discretionary expenditures and that it was, furthermore,
unreasonable per se since "there is no redeeming value to smoking,
and [the bankruptcy court] need not tolerate a debtor's behavior
which is not only counterproductive but self-destructive."
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A party's failure to advance an issue before the
bankruptcy court in the first instance forfeits its right to raise
that issue on appeal. See Gannett v. Carp (In re Carp), 340 F.3d
15, 25-26 (1st Cir. 2003) (argument not raised before the
bankruptcy court will not be considered on appeal); LaRoche v.
Amoskeag Bank (In re LaRoche), 969 F.2d 1299, 1305 (1st Cir. 1992)
(same). "That a party may not advance an argument for the first
time on appeal is a virtually ironclad rule in this circuit. . . ."
In re Carp, 340 F.3d at 26 (internal quotation marks omitted). We
find no extraordinary circumstances in the record that would
justify a departure from this well-established prudential rule.
See Nat'l Assoc. of Soc. Workers v. Harwood, 69 F.3d 622, 637 (1st
Cir. 1995) (exceptions to the raise-or-waive principle are "few and
far between"). Having failed to raise its "objective factors"
argument before the bankruptcy court, Evergreen is foreclosed from
advancing it on appeal.1
II.
Evergreen further argues that the bankruptcy court
committed a legal error by failing to aggregate all of Woodman's
1
Evergreen did raise its "objective factors" argument before
the district court, which rejected it on the merits. That the
district court chose to address this issue, however, does not
preserve it for appeal to this court. See In re Carp, 340 F.3d at
21 ("Notwithstanding the fact that we are the second-in-time
reviewers, we cede no special deference to the district court
determinations. Rather our review directly addresses the
bankruptcy court's decision.") (citation omitted).
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discretionary expenditures and assess the reasonable necessity of
that total sum. It argues that the court should have applied the
methodology adopted by the bankruptcy court in In re Gonzales, 157
B.R. 604 (Bankr. E.D. Mich. 1993). The Gonzales court explained
that its task was
to identify how much of the Debtors' anticipated expenses
are discretionary in nature and to weigh them on this
scale. If the discretionary expenses in the aggregate
allow the Debtors to exceed their basic needs, including
a reasonable reserve for recreation and exigencies (the
reasonable "cushion"), then their plan cannot be
confirmed.
Id. at 609. According to Evergreen, "[t]he Bankruptcy Court below
did not use this methodology . . . despite being urged to do so by
Evergreen, and thereby committed an error of law." Applying this
aggregating methodology to Woodman's discretionary expenses,
Evergreen contends, leads to the "inescapable" conclusion that
"Woodman has reserved too much discretionary income for herself,
and too little disposable income to the Plan, due principally to
the inclusion of her expenditure for cigarettes and the lack of any
meaningful sacrifice in pre-petition levels of discretionary
consumption."
We do not agree that Evergreen urged the Bankruptcy Court
to assess whether Woodman's aggregate discretionary expenses
allowed her to exceed her basic needs including a reasonable
cushion for recreation and exigencies. As Evergreen acknowledges
elsewhere in its brief, its "objection to confirmation [of
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Woodman's plan] was limited to the 'expense of cigarettes issue.'"
While Evergreen's memorandum of law in support of its objection to
confirmation noted that Woodman had "already expend[ed] a
sufficient amount on so-called 'lifestyle' items," it did not claim
that her aggregate discretionary expenditure was unreasonable.
Rather, as previously noted, it singled out Woodman's cigarette
expenses, arguing that in light of her other discretionary
expenditures, "[a]ny additional amount for cigarettes is excessive"
and "must be eliminated." It also "urge[d] the [Bankruptcy] Court
to go further to adopt a per se rule that any expenditure by a c.13
debtor for cigarettes is not 'reasonably necessary' for support and
maintenance." Evergreen did not argue, as it does here, that the
bankruptcy court was required as a matter of law to aggregate
Woodman's discretionary expenses and assess the reasonableness of
that total figure in light of Woodman's basic needs and the monthly
dividends paid to her unsecured creditors.2 Nor did Evergreen
2
The bankruptcy court rejected Evergreen's per se argument,
which Evergreen does not challenge on appeal, as well as its claim
that taking into account other discretionary expenditures,
Woodman's cigarette expenditures were excessive. In doing so, the
court adopted an approach that was similar to Gonzales's case-by-
case analysis, explaining that
if the trustee or a creditor comes forward with evidence
that the debtor is not committing all available projected
disposable income to the plan as required by §
1325(b)(1), the court, without the aid of arbitrary,
bright line formulae, must scrutinize the debtor's budget
in view of the debtor's particular circumstances, and use
its best judgment to determine whether expenses other
than those that are "reasonably necessary" have been
improperly included in the disposable income calculus.
Applying that approach, the bankruptcy court questioned whether
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advance that claim in its appeal to the district court, choosing
instead to raise only the new "objective factors" claim of error.
Consequently, the argument is twice forfeited. See In re Carp, 340
F.3d at 25-26; Advanced Testing Tech., Inc. v. Desmond (In re
Computer Eng'g Assoc., Inc., 337 F.3d 38, 45 (1st Cir. 2003)
(creditor trustee "forfeited its right to appeal the bankruptcy
court's determination by failing to raise it on appeal to the
district court").
Affirmed.
Evergreen had produced sufficient evidence to require Woodman to
establish the reasonableness of her expenses by a preponderance of
the evidence but concluded that, in any event, Woodman had met that
burden.
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