F OR P UBLICATION



### UNIT E D ST AT E S CO URT O F APPE AL S FO R T H E NINT H CIRCUIT

I N R E C A R O L Y N L

. D A V I S , Debtor

.

C A R O L Y N L

. D A V I S , Appellant
,

v

.

U.S. B A N K , N.A.; O N E W E S T B A N K ; and E L I Z A B E T H F

. R O J A S , A ppellees

. N o. 12-60069

B AP No. 11-1692

OPI NI ON

Appeal from the Ninth Circuit B ankruptcy

Appellate Panel Kirscher, Markell, and Dunn, B ankruptcy J udg es, Presiding

Arg ued and Submitted D ecember 12, 2014—Pasadena, California

F iled F ebruary

17, 2015

B efore: Susan P. Graber, Ronald M. Gould, and Consuelo M. Callahan, Circuit J udg es.

Opinion by

J udg e GraberI N R E C A R O L Y N L

. D A V I S 2

SUMMARY *

Bankruptcy

On appeal from a decision of the B ankruptcy Appell a te Panel, the panel affirmed the bankruptcy court’s dismissal o f a petition under chapter 12 of the B ankruptcy Code.

The panel held that the a ppellant was inelig ible to be a chapter 12 debtor beca u s e her “ag g reg ate debts” ex ceeded the statutory limitation of $ 3 ,792,650. The panel held that appellant’s “ag g reg a te debts” included u n secured portions of creditors’ claim s , even thoug h those liabilities had been discharg ed in an earlier chapter 7 p r o c eeding
, because a creditor’s claim r emains a “debt” so long as it is enforceable
ag ainst either the debtor or the debtor’s property

.

COUNSEL

Richard L

. Antog nini (arg ued), L aw Offices of Richard L

. Antog nini, L incoln, California, for Appellant.

Richard W

. E sterk i n (arg ued), Morg a

n , L ewis & B o ckius L L P, L o s Ang eles, C alifornia; and J oshua A. del Castillo (arg ued) and David R. Z aro, Allen M a t k i ns L eck Gamble Mallory & Natsis L L P, L os A ng eles, Ca l i f o rnia, for Appellees.

* T h is su m m ary co n stitu

tes n o part o f th e o p in io n o f th e co u rt. It h as b een p rep ared b y

co u rt staf

f f o r th e co n v en i en ce o f

th e read er.I N R E C A R O L Y N L

. D A V I S 3

OP INION

GRAB ER, Circuit J udg e:

Deb tor Caroly

n L

. Davis appeals f

rom a decision of the B ankruptcy Appellate Panel ( “B AP”) affirming an order o f the bankruptcy court that dismissed h er voluntary p e t ition under c h a p t er 12 of the B ankruptcy Code. The bankruptcy

co u r t dismissed Davis’ petition because her “ag g reg ate debts”

ex c e eded $3,792,650, the statuto r y limitation for chapter 12

e l i g ibility in e ffect at the time that Davis filed her p etition

. See 11 U.S.C. § 101(18)(A) (2010). The B AP affirmed,

c o ncluding that Davis’ “ ag g reg a te debts” included her liabilities f

or the unsecured portions of her creditors’ claims,

even thoug h those liabilities h ad b een d ischarg ed in an earlier chapter 7 proceeding

. Davis v

. B a n k of Am., N.A. ( In re Davis)
, No. CC-11-1692-MkDKi, 2 012 WL 3205431 (B .A.P. 9th Cir. 2012) (unpublished). We ag r ee a nd, therefore, affirm the dismissal of Davis’ petition because s h e is statutorily inelig ible to be a chapter 12 debtor.

Davis owns parcels of real property in California, three o f which a re relevant to this appeal. According to the schedules that she attached to her chapter 1 2 p e t i t ion, Davis owns a 110-acre ranch in Paso Robles, a residence in Cay ucos, a nd

a triplex in Paso Robles. Each of those p r o p e r ties is encumbered by a deed of trust (and, with respect to the ranch and the residence, an equity line of credit) in a n a m ount

ex c e eding the property ’s appraised value. Davis manag e s the operations on her properties and, in 1997, u ndertook to establish a viney ard on the ranch. I n 2006, howev er, her efforts failed, and she defaulted on each of the three loans.I N R E C A R O L Y N L

. D A V I S 4

I n J uly 2010, Davis f i l e d a voluntary p etition under chapter 7 of the B ankruptcy Code. Thereafter she received a discharg e, which released her from personal l iability for the unsecured c laims associat e d with the properties. See 11 U.S.C. § 727(b). The “ E x planation o f B ank r u p t cy D i s charg e” issued by the bankruptcy c ourt “ prohibits any attempt [ by

a creditor] to collect from the debtor” any of the discharg ed debts

. But the creditors retained the “rig h t to enforce a valid lien, such as a mortg ag e or security interest,
ag ainst the debtor’s property after the bankruptcy

. ”

I n Marc h 2 011, D avis filed a second voluntary petition, this t i m e u n der chapter 12 of the Code, which contains special prov i s ions for family farmers whose “ag g reg ate debts” do not ex cee d a statutory dollar amount. See 1 1 U.S.C. §§ 101(18)(A), 109(f). At the time of th e s e c o n d petition, the statutory limit was $3,792,650, a nd the appraised value of D avis’ p roperties totaled about $1.6 million, but the
amount of the liens encumbering the p r operties totaled about $4.1 million. Thus, o n the schedules that she a ttached to her petition, Davis listed debts of $4.1 mil l i o n; of that amount, $2.5 million was unsecured.

The bankruptcy court dismissed Davis’ petition o n the
g round that she h ad “ag g reg ate d ebt s ” of $4.1 million,

ex c e eding the statutory limitation for chapter 12 e lig ibility

. Davis appealed to th e BA P
, arg uing that the unsecured portion of each of her secured creditor’s c laims should not be i ncluded in her “ag g reg ate debts” and, therefore, should n o t bar chapter 12 elig ibility
, because her p ersonal liability for those c laims had been d ischarg ed in her earlier ch a p ter 7

case. A ccording to Davis, because the secured portions of her creditors’ claims w ere li m i t ed to the value of the secured collateral, the value of her “ag g reg ate debts” fell well belowI N R E C A R O L Y N L

. D A V I S 5

the statutory limitation for chapter 12 elig ibility

. The BAP affirmed. Apply i ng our d ecision in Quintana v

. Commissioner (

In r e Q uintana) (“ Quintana II ”), 915 F .2d 513 ( 9 th Cir. 1990), the B AP concluded that “obliga tions enforceable ag ainst the d eb t o r’s p roperty but for which the debtor has no personal liability are nonetheless ‘claims’ a nd

‘ d ebts’ within the meaning of the B ankruptcy Code.” I n r e Davis , 2012 W L 3205431, at *5.

Da v i s t imely appeals. W e review de novo the B AP’s decision and “apply the same standard of review that the B AP applied to the bankrup t c y court’s r uling .” AmeriCredit Fin. Servs., I nc. v. Penrod (

In re P enrod)
, 611 F

. 3 d 1 158, 1160 (9th Cir. 2010) (internal quotation marks omitted).

Under 11 U.S.C. § 109(f), “ [ o ] nly a family farmer

. . . with reg ular annual income may b e a d ebtor under chapter 12.” E ven assuming that D avis, b y operating her viney ard, qualified as a “farmer” who had “reg ula r a n n u al income,” § 101(18)(A) further limits her elig ibility to be a ch a p t er 12 debtor by mandating that her aggregate debts not ex c eed $3

, 792,650 and that those debts arise mostly out of the farming operation. 11 U.S.C. § 101(18)(A) (2010) (emphasis added). 1 Our c ases h ave not y et addressed the precise question presented here: whether the term “ag g reg ate debts” in § 101(18)(A) includes the unsecured portion of a creditor’s

1 T h e v ersio n o f § 10 1 (1 8 )(A ) cu rren tly in ef f ect li m i t s c h a p ter 1 2 elig ib i lity to in d iv id u als w ith ag g reg ate d eb ts n o t ex ceed in g $ 4 ,0 3 1 ,5 7 5

. T h e statu to ry lim itatio n ch an g es p erio d i c ally p u rsu an t t o 1 1 U.S.C. § 1 04 (a); th e cu rren t lim itatio n to o k ef f ect in A p ril 2 0 1 3

. S

ee Rev i sio n of Certain Do llar A m o u n ts in t h e B an k ru p tcy Co de, 7 8 Fed

. R eg

. 1 2 ,0 8 9

- 0 1
, 1 2 ,0 9 0 (Feb . 1 2, 2 0 1 3 ).I N R E C A R O L Y N L

. D A V I S 6

claim from which the debtor has b een d ischarg ed in an earlier chapter 7 bankruptcy

proceeding

.

To a nswer that question
, we fi rst turn to the tex t of the B ankruptcy Code. F

ireman’s F

u n d Ins. Co. v. Plant Insulation Co. (

In re Plant Insulation Co.)
, 734 F .3d 900, 910 ( 9th Cir. 2013), cert. denied
, 134 S. Ct. 1901 (201 4 )

. A s noted, at the time Davis filed her chapter 12 petition the Code limited chapter 12 elig ibility to f amily farmer s “ wh ose ag g r eg ate debts do not e x c e e d $ 3,792,650.” 1 1 U .S.C. § 101(18)(A) (2010). A “debt” i s “ l i ability on a claim.” 11 U.S.C. § 101(12). The term “claim” means—

(A) rig ht to pay

ment, whether or not such rig ht is reduced to judg ment, liquidated, unliquidated, fix ed, conting ent, matured,

unm a tured, disputed, undisputed, leg a l, equitable, secured, or unsecured; or

(B ) rig ht to an e q u itable remedy for breach of performance if such breach gives rise to a rig ht of pay

ment, whether or not such rig ht to an equ i t able remedy is reduced to j u d g m e n t , f

i x e d
, c o n t i n g e n t , m a t u r e d
, unmatured, disputed, undisputed, secured, o r unsecured.

11 U

. S.C. § 101(5). “The p lain meaning of a ‘ rig ht to pay ment’ is nothing more nor less than a n enforceable oblig ation, reg ardless o f the objectives [ soug ht] in imposing the oblig a tion.” Davenport
, 495 U.S. a t 559. I n lig ht o f those definitions, the Supreme Court has noted that “ the meaning s of ‘ d e b t’ and ‘claim’ [ w ere intended by Cong ress to] be

coex tensive.” Pa. Dep’t of Pub. W elfare v. D a ve nport ,I N R E C A R O L Y N L

. D A V I S 7

4 9 5 U

. S

. 552, 558 (1990) (citing 11 U.S.C. § 101(12); H.R

. Rep. N o. 9 5-595, a t 3 1 0 ( 1 9 7 7); S. Rep. No. 95-989, at 23 (1978)). The Code does not define the term “ag g r eg a te.”

I n J ohnson v. Home State Bank , 501 U.S. 78 (1991), the Supreme Court considered the related question of whether a debtor must include a m o rtg a g e lien in a chapter 13
reorg aniz ation plan after the oblig ation secured by the mortga ge h ad b een discharg ed in an earlier chapter 7 proceeding

. Rely ing on the tex t and leg islative history of the Code, the Court characteriz ed the definition of the word “claim” in § 101(5) as “the broadest available definition.” Id.

a t 8 3 (citing D avenport , 495 U.S. at 558, 563–64); see also Davenport
, 495 U.S. a t 558 (noting the “ex pansive lang uag e” that Cong ress used in the definition of the word “claim”); H.R. Rep. No. 95-595, at 309 (describing the definition o f “claim” as the “broadest possible ” a n d noting : “ B y this broadest possible definition, and by t h e use of the term throug hout t i t l e 11,

. . . the bill contemplates that all leg al oblig ations o f the debtor, no matter how remote o r conting ent, will be able to be dealt w i t h i n the bankruptcy

case. I t permits the broadest possible r elief in the bankruptcy court.”). Apply ing D avenport , the Court had “no tr ouble concluding that a mortg ag e interest that survi v e s t he discharg e of a debtor’s personal liability is a ‘claim’ within the terms of § 101(5).” Johnson
, 501 U.S. at 84. A ccording
to the C ourt, a “claim” can be an enforceable oblig ation
ag ainst either

the debtor or

the debtor’s property :

Even after the debto r’s personal oblig ations have been ex ting uished
, the mortg ag e holder still r etains a “rig ht to pay ment” in the f

orm o f i t s r i ght to the proceeds from the sale of th e d e b t o r ’ s p r o p e r t y

. A l t e r n a t i v e l y , t h eI N R E C A R O L Y N L

. D A V I S 8

c r editor’s surviving rig ht to foreclose on th e mortg ag e c a

n be viewed as a “righ t t o an equitable remedy” f

or the debtor’s default on the underly ing ob l ig ation. E ither way , there

c an b e no d oubt that the surviving mortg age interest corresponds to an “enforceable oblig ation” of the debtor.

Id.

Johnson and Davenport teach that the meaning of “debt” is coex tensive with the meaning of “claim” and, in turn, that “claim” is broadly defined to include a ny rig h t to pay

ment o r any rig h t to an equitable remedy g iving rise t o a rig ht o f
pay ment

. A c reditor retains a rig ht to pay ment, enforceable in rem , on the unsecured po r t i o n of a loan for which in
personam liability may

have been discharg ed. W e therefore
ag ree with the B A P that Davis’ “ag g reg ate debts” include the unsecured portions of the undersecured mortg ag e loans that remain enforceable ag ainst Davis’ property , even thoug h the loans are not enforceable ag ainst Davis personally

.

Our own p recedent likewise supports that reading of the B ankruptcy Cod e

. I n Quintana v. Commissioner ( In re Quintana) (“ Quintana I

”), 107 B .R. 2 34, 235–36 (B .A.P. 9th Cir. 1989), aff’d
, Quintana II
, 9 15 F .2d 513, the debtors h ad borrowed $1 million, which w as s e cured by real property valued at $600,000. T he debtors defaulted on the loan, so the creditor broug ht an action in I daho state court f or a decree o f foreclosure and a n o rd e r of sale. Id. a t 235. I n that action, the creditor waived its r ig ht to seek a p ost-sa l e d e f iciency j u d gm ent. Id. at 236. The state court entered summ a r y judg ment in favor of the creditor, and the debt o rs subsequently

filed a chapter 12 petition. Id.I N R E C A R O L Y N L

. D A V I S 9

The question for the B AP in Quintana I
, t h e n , w a s whether the c re ditor’s decision to waive its rig ht to seek a deficiency judg ment had the effect of limiting the value of the debtors’ “ag g reg ate debts” to the value of the sec ured col l a teral. Id. The B AP held that it did not, reasoning that the word “ claim” shoul d b e construed broadly to include all rig hts to pay

ment, id. at 2 3 7, and that “ [ a] lthoug h, as a practical matter, [ the creditor] will only be able to collect the value of the property , it has the rig ht to pay ment of the entire oblig ation i f u nder some c ircumstance, the property is sold for more than its present valu e , ” i d

. a t 239. W e ag r eed, noting furth er that, “[ u] pon the sale of the property , . . . [ the c] reditor w ill be entitled to al l s al e p roceeds up to the [ amount of the loan]
, plus costs of foreclosure and sale; [ the c] reditor w ill not be limited to the $675,000 scheduled value of the p roperty

. . . . T h e r e fore,

. . . the a mount of the debt is the full $1,527,861.89 of adjudg e d indebtedness.” Quintana II , 915 F .2d at 516 (citations omitted).

Our decision in Quintana II thus confirms the d istinction, established in Johnson and Davenport
, between in rem and in
personam liability in this contex t, and likewise compels us to conclude that a creditor’s c l a im remains a “debt” so long a s it is enforceable ag ainst e i t h e r the debtor or the debtor’s property

. A ccording ly
, the debtor’ s “ ag g reg ate debts” include the amount of that claim, even after a prior discharg e from personal liability

under chapter 7.

Our decision in S

c o v i s v. Henrichsen (

In re S covis)
, 249 F .3d 975 (9th Cir. 2001), is not to the contr a ry

. I n Scovis
, we resolved issues t hat we had avoided in Quintana II —namely
, whether and to what ex tent t h e s c hedules attached to a bankruptcy p etition should be used to determine
t h e d e btor’s elig ibility for relief. 249 F .3d at 981. T h eI N R E C A R O L Y N L

. D A V I S 10

debtors in Scovis had petitioned for chapter 13 bankruptcy

. W e held, among other thing s, that a d ebtor’s elig ibility under chapter 13 “should nor mally be determined by the debtor’s orig inally f

iled sched ules, checking only to see if the schedules were made in g ood faith.” I d. at 982.

Davis relies on Scovis to a r gu e that her orig inally filed schedules demons t r a t e her elig ibility under chapter 1 2. A s noted, those schedules list t h e t o tal “ amount of claim[ s] without de d u c ting value o f the collateral” as $4.1 million. Th i s am o unt is also r eferred to on her schedules a s her “liabilities.” The schedules g o on to list th e “ u nsecured portion” of Davis’ total d ebts as $2.5 million. According to Davis, those f

ig ures demonstrate that h er secured debts total only $1.6 million, well below the statutory limitation for chapter 12 elig ibility

. That may b e t r ue but, as w e have

ex p lained, for the purposes of chapt er 12 elig ibility the
amount of a debtor’s “ ag g reg ate debts” i ncludes the entire
amount o f h er creditors ’ claims, whether secured o r unsecured, and whether e nforceable a g ainst the debtor or only
ag ainst the debtor’s property

.

Davis’ schedules list claims (liabilities) totaling $ 4

. 1 million, w hich is a b o ve the cap for chapter 12 e lig ibility in effect at the time that Davis filed her petition. See 11 U .S.C. § 101(18)(A) (2010). As in Scovis
, we rely on the schedules. They show that Davis is n ot elig ible to be a chapter 12 debtor. The bankruptcy

court properly

dismissed Davis’ petition.

AF F IRMED.