# United Stat es Court of Appeals For the First C ircuit

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 . StanleyGreenberg , with whom Greenberg & Greenberg was on the brief, for creditor, appellant. BarryEvan 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.-2- LIPEZ, Cir cui t Judge . Evergreen Credit Union, an undersecuredcreditor, 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 objectedto 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 he r reasonably necessaryexpenses, thereby increasing her projected disposable income and consequently the amount that she would be required to payeach month into th e 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 advanc edfo r the first time on appeal, we affirm the judgment of the district court.-3- I. Evergreen contends that the bankruptcy court's analysis of whether cigarette expenses are disposable inc ome was flawed because it did n ot 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. B ecau se 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 shouldbe 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 discr etion ary expenditures and that it was, furthermore, unreasonable per se since "there is no redeeming value to smoking, and[th e bank ruptcy court] need not tolerate a debtor's behavior which is not only counterproductive but self-destructive."1 Evergreen did raise its "objective factors" argum ent 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-ti m e review ers, w e cede no special deference to the district court d eterminations. Rather our review directly addresses th e bankruptcy court's decision.") (citation omitted).

-4- Aparty's failure to advance an issu e before the bankruptcycourt 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 r ais ed before the bankruptcycourt 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 findno extraordinary circ umst ances in the record that would justify a departur e 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 committeda legal error by failing to aggregate all of Woodman's-5-

discretionary expenditures and assess the reasonable necessity of that total sum. It argues that the court should have applied the methodologyadopted 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' anticipatedexpenses are discr etionary in nature and to weigh them on this scale . If the discretionary expenses in the aggregate allow the Debtors to exceedtheir basic needs, including a re asonable 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 didnot 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 "ine scapable" conclusion that "Woodman has reserved too much discretionary inc ome for herself, andtoo 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 all owedher to exceed her basic needs including a reasonable cushion for recreation and exigencies. As Evergreen acknowledges elsewhere in its brief, its "objection to conf irma tion [of2 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-bycase analysis , explaining that if the trustee or a creditor comes forwardwith evidence that the debtor is not committing all available projected disposable income to the plan as required by § 1325(b)(1), the court, withou t 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 d e termine whether expenses other than those that are "reasonably necessary " hav e been improperly included in the disposable income calculus. Applying that approach, the bankruptcy c o urt questioned whether -6- Woodman's plan] was limited to the 'expense of cigarettes issue.'" While Evergreen's memorandum of law in support of its objection to

con firmation 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, ar guin g 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 bankruptcycourt 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 unse cured creditors. 2 Nor did EvergreenEv ergr een had produced sufficient evidence to require Woodman to

establish the reasonableness of her expenses by a preponderance of the evidence but concludedthat, in any event, Woodman had met that burden. -7- 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.3dat 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 .