Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_18-cv-05241/USCOURTS-cand-3_18-cv-05241-0/pdf.json

Nature of Suit Code: 422
Nature of Suit: Bankruptcy Appeals Rule 28 USC 158
Cause of Action: 28:0158 Notice of Appeal re Bankruptcy Matter (BAP)

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

MCCLURE,

Plaintiff,

v.

STATE OF CALIFORNIA FRANCHISE 

TAX BOARD,

Defendant.

Case No. 18-cv-05241-VC 

ORDER AFFIRMING DECISION OF 

BANKRUPTCY COURT

The California Franchise Tax Board is not barred from collecting McClure’s tax debt as

the claim was neither discharged nor waived during McClure’s Chapter 13 bankruptcy 

proceedings. McClure’s tax debt falls under section 523(a)(1)(B)(ii) of the Bankruptcy Code 

because the corresponding tax returns were filed late and less than two years before McClure 

filed for bankruptcy. Therefore, the debt is not dischargeable. See 11 U.S.C. §§ 523(a)(1)(B)(ii), 

1328(a)(2). 

McClure relies on two cases to support his contention that a bankruptcy plan can have 

preclusive effect even if it purports to – contrary to the bankruptcy code – discharge a nondischargeable debt. See United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260 (2010); In re 

Pardee, 193 F.3d 1083 (9th Cir. 1999). For one, it’s not clear that those cases, which pertain to 

student loan debt, would apply to non-dischargeable tax debts. See Espinosa, 559 U.S. at 273 

n.10. Whereas section 523(a)(8) dictates that student loan debt is dischargeable if the debt would 

cause undue hardship, there are no exceptions to a qualifying tax debt’s non-dischargeabililty.

See id.; 11 U.S.C. § 523(a)(1). But even if they did, the Board didn’t have sufficient notice that 

its rights were in jeopardy for the plan to have preclusive effect. Cf. In re Enewally, 368 F.3d 

Case 3:18-cv-05241-VC Document 9 Filed 07/01/19 Page 1 of 2
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1165, 1173 (9th Cir. 2004). The plan contains only boilerplate language regarding “general 

unsecured claims,” it doesn’t specifically mention the Board’s claim. Compare Dkt. No. 4-1, at 

31, with Espinosa, 559 U.S. at 264; In re Pardee, 193 F.3d at 1085-86; see also In re Reuland, 

591 B.R. 342, 350 (Bankr. N.D. Ill. 2018). What’s more, the Bankruptcy Court’s Order 

Confirming the Plan certified that the plan complied with Chapter 13 of the Bankruptcy Code, 

and the discharge order clarified that not all debts are discharged by the order, including “certain 

types of taxes specified in 11 U.S.C. [§ 523(a)(1)(B)] . . . .” Dkt. No. 4-1, at 39, 44. These 

assurances and disclaimers would reasonably have assured the Board that, pursuant to section 

523(a)(1)(B)(ii), its claims would remain intact at the conclusion of McClure’s bankruptcy 

process. Cf. In re Reuland, 591 B.R. at 351.

Therefore, the Bankruptcy Court’s decision to grant summary judgment to the Board is 

affirmed.

IT IS SO ORDERED.

Dated: July 1, 2019

______________________________________

VINCE CHHABRIA

United States District Judge

Case 3:18-cv-05241-VC Document 9 Filed 07/01/19 Page 2 of 2