IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 10-31048

In the Matter of: CARL MITCHELL PIERROTTI,

Debtor

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CARL MITCHELL PIERROTTI, also known as Carl Mitchell B. Pierrotti,

Appellant

v.

UNITED STATES OF AMERICA INTERNAL REVENUE SERVICE,

Appellee

Appeal from the United States Bankruptcy Court

for the Western District of Louisiana

Before KING, WIENER, and CLEMENT, Circuit Judges.

PER CURIAM:

In his proposed Chapter 13 bankruptcy plan, Debtor-Appellant Carl

Mitchell Pierrotti sought to “modify” the Internal Revenue Service’s secured

claims for long-overdue tax deficiencies into a long-term debt payable over a

period of fifteen years. We hold that he may not do so, because those tax

deficiencies are not debts whose pre-bankruptcy payment terms include a final

payment date that falls beyond the five-year term of Pierrotti’s Chapter 13 plan.

United States Court of Appeals

Fifth Circuit

F I L E D

June 22, 2011

Lyle W. Cayce

Clerk

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No. 10-31048

FACTUAL AND PROCEDURAL BACKGROUND

Pierrotti lives in a house that is encumbered by two security interests: a

senior mortgage lien in favor of Evangeline Bank & Trust Company, and a junior

lien in favor of the Internal Revenue Service (“IRS”), which secures Pierrotti’s

tax deficiencies. Pierrotti defaulted on his mortgage payments and filed for

bankruptcy under Chapter 13 of the Bankruptcy Code in order to prevent

foreclosure on his home.

The IRS filed a proof of claim asserting federal income tax liabilities in the

amount of $35,012.38, representing unpaid taxes, penalties, and interest for

1994, 2000, 2001, 2003, 2005, 2006, 2007, and 2009. Of that amount,

$18,000—representing tax liabilities from tax years 1994 and 2000—is

comprised of claims secured by filed liens, including the lien on Pierrotti’s home.

The remainder consists of unsecured priority and non-priority claims that are

not at issue in this appeal.

In his Chapter 13 plan, Pierrotti proposed to pay the IRS’s secured claims

for $18,000 in equal monthly installments over a period of fifteen years. The IRS

objected to this provision because the proposed payment period was longer than

the five-year term of the bankruptcy plan. The bankruptcy court denied

confirmation of Pierrotti’s plan, concluding that it did not “satisfy the

confirmation requirements contained in § 1325 of the Bankruptcy Code,” and

ordered Pierrotti to file an amended plan. The court later stayed the case upon

certifying a direct appeal to the Fifth Circuit, which we accepted.

DISCUSSION

The sole issue before us on appeal is whether a proposed Chapter 13 plan

may modify a secured claim for a tax deficiency into a long-term debt payable

over a period longer than the Bankruptcy Code–mandated term of a Chapter 13

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plan. We review this question of law de novo. Morrison v. W. Builders of

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Amarillo, Inc. (In re Morrison), 555 F.3d 473, 480 (5th Cir. 2009).

Pierrotti argues that 11 U.S.C. § 1322(b)(2) may be read together with

§ 1322(b)(5) to permit him to “modify” the period of time over which he must pay

the IRS’s secured claims. Those sections provide that a Chapter 13 bankruptcy

plan may:

(2) modify the rights of holders of secured claims, other than a claim

secured only by a security interest in real property that is the

debtor’s principal residence . . . ;

. . .

(5) notwithstanding paragraph (2) of this subsection, provide for the

curing of any default within a reasonable time and maintenance of

payments while the case is pending on any unsecured claim or

secured claim on which the last payment is due after the date on

which the final payment under the plan is due . . . .

11 U.S.C. § 1322(b)(2), (b)(5).

Pierrotti thus seeks to combine his ability to modify a secured claim

pursuant to § 1322(b)(2) with his ability to “cure and maintain” a long-term debt

pursuant to § 1322(b)(5). Because the IRS’s secured claims are secured by more

than just its lien on Pierrotti’s home, Pierrotti argues that, under § 1322(b)(2),

he may “modify” those claims from past due, lump sum debts into a long-term

debt that may be repaid in installments over the course of fifteen years. This

unilateral “modification” effectively creates a new debt whose last payment is

due long after the end of his five-year Chapter 13 plan, thus allowing Pierrotti

to pay off that debt on his own newly created terms under § 1322(b)(5).

The IRS, on the other hand, contends that § 1322(b) does not allow

Pierrotti to evade the separate and independent restrictions that “the plan may

The Government asserts multiple other objections to the confirmability of Pierrotti’s 1

plan, but as Pierrotti appeals only this single issue, the Government’s other objections are

properly addressed to the bankruptcy court on remand.

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not provide for payments over a period that is longer than 5 years,” 11 U.S.C.

§ 1322(d)(1), and that “the value, as of the effective date of the plan, of property

to be distributed under the plan on account of [a secured] claim [not be] less than

the allowed amount of such claim,” 11 U.S.C. § 1325(a)(5)(B)(ii).

We agree with the IRS’s position. Although the Fifth Circuit has not yet

addressed the precise question at issue here, our interpretation of § 1322(b)(5)

in Grubbs v. Houston First American Savings Association, 730 F.2d 236 (5th Cir.

1984) (en banc), makes clear that § 1322(b)(5) applies only to long-term debts,

such as home mortgages, whose original payment terms establish a final

payment date after the conclusion of a Chapter 13 plan’s statutorily mandated

term. See id. at 244–45; see also 8 Alan N. Resnick & Henry J. Sommer, Collier

on Bankruptcy ¶ 1322.09[1] at 34 (16th ed. 2011) (hereinafter “Collier”) (“Section

1322(b)(5) is concerned with relatively long-term debt, such as a security interest

or mortgage debt on the residence of the debtor.”).

The tax deficiencies at issue here are not long-term debts, nor do they have

“original terms” (or, indeed, any terms) that allow for monthly payments.

Individual taxpayers like Pierrotti must pay their federal tax obligations for

each taxable year in full on or before April 15th of the following calendar year.

26 U.S.C. §§ 6072(a), 6151(a). The due dates for Pierrotti’s income taxes for 1994

and 2000, at issue here, have clearly passed, and those tax deficiencies are

therefore debts that have already fully matured and were immediately due and

payable before he even filed for bankruptcy. Section 1322(b)(5) is thus not

applicable here. See Seidel v. Larson (In re Seidel), 752 F.2d 1382, 1383 (9th Cir.

1985) (holding that the “cure” provision of § 1322(b)(5) is “inapplicable when a

debt has reached its maturity date in the absence of acceleration, prior to the

filing of the Chapter 13 petition”).

Furthermore, it is “a cardinal principle of statutory construction that a

statute ought, upon the whole, to be so construed that . . . no clause, sentence,

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or word shall be superfluous, void, or insignificant.” TRW Inc. v. Andrews, 534

U.S. 19, 31 (2001) (citation and internal quotation marks omitted). If we

endorsed Pierrotti’s reading of § 1322(b), then § 1322(d) (capping a Chapter 13

plan’s lifetime at three or five years, depending on the monthly income of the

debtor and the debtor’s spouse) would never apply to a secured claim modifiable

under § 1322(b)(2) because the debtor could always “modify” the length of time

for payments on the existing debt and then claim to “maintain” payments

according to that modification under § 1322(b)(5). We decline to interpret

§ 1322(b) in a way that would render § 1322(d) null and void as to such modified

claims.

Finally, Pierrotti argues that public policy supports his position because

his plan will allow him to keep his home while paying the taxes he owes to the

IRS. He also argues that, from a practical standpoint, the IRS is unlikely to

recover anything on its lien if a foreclosure sale occurs because Evangeline Bank

& Trust Company holds a senior mortgage lien on the house. However, Congress

intentionally imposed a maximum five-year term in Chapter 13 bankruptcies in

order to end what it termed “the closest thing there is to indentured servitude,”

where some debtors are put “under court supervised repayment plans for seven

to ten years.” H.R. Rep. No. 95-595, at 117 (1977), reprinted in 1978

U.S.C.A.N.N. 5963, 6078; 8 Collier ¶ 1322.18[2] at 60. We decline to substitute

our judgment for Congress’s in this matter.

We interpret § 1322(b)(5) to apply only to a debt whose pre-bankruptcy

terms establish that the final payment is not due until after the end of a Chapter

13 plan’s maximum term. We therefore reject Pierrotti’s attempt to bootstrap

§ 1322(b)(2) and (b)(5) into a vehicle for extending payment of the IRS’s secured

claims, which were due and payable before he even filed for bankruptcy, past the

maximum term for a Chapter 13 plan. Cf. Enewally v. Wash. Mut. Bank (In re

Enewally), 368 F.3d 1165, 1172 (9th Cir. 2004) (holding that “a [C]hapter 13

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debtor may not invoke both a modification of a secured creditor’s claim under

§ 1322(b)(2) and the right to ‘cure and maintain’ beyond the plan term as

authorized under § 1322(b)(5)” by dividing the claim into secured and unsecured

portions and then satisfying the secured portion of the claim beyond the life of

the Chapter 13 plan).

CONCLUSION

For the reasons stated above, we AFFIRM the challenged portion of the

order of the bankruptcy court denying confirmation and remand this case to the

bankruptcy court for further proceedings not inconsistent with this opinion.

AFFIRMED.

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