Source: https://www.georgiabankruptcyblog.com/eleventh-circuit-cases/chapter-13-plan-binds-chapter-13-trustee-says-eleventh-circuit
Timestamp: 2019-04-21 06:19:58+00:00

Document:
The specific question before the Court was “whether a confirmed Chapter 13 plan which gives a creditor a secured position is binding on a trustee who, aware of defects in that creditor’s security interest, does not assert any objections to, and affirmatively recommends confirmation of, the plan.” In June 2010, the debtor had purchased a vehicle and financed it through Acorn, but Acorn failed to properly perfect its security interest when it delivered its application for certificate of title to the Georgia Department of Revenue. A few weeks later the debtor filed a Chapter 13 petition, and Acorn subsequently perfected its security interest in the vehicle six days after the Bankruptcy petition was filed. The Bankruptcy Court found that the Trustee was aware of the defect more than 30 days before the confirmation hearing, but took action on Acorn’s claim. Meanwhile, the debtor proposed a Chapter 13 plan that treated Acorn as a secured creditor. The Chapter 13 Trustee recommended confirmation, and the plan was confirmed in September 2010. A few days later, the Trustee filed an adversary proceeding to avoid Acorn’s lien as a preferential transfer. The Bankruptcy Court granted summary judgement to Acorn, the District Court affirmed and the Trustee appealed to the Eleventh Circuit.
The Trustee argued that she was not bound by the plan because §1327(a) does not specifically include trustees as being bound.
She points out that several other provisions of Chapter 13 specifically mention trustees, and reasons that the exclusion of trustees from § 1327(a) was not a mere legislative oversight. See Russello v. United States, 464 U.S. 16, 23 (1983) (“[W]here Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.”) (internal quotation marks and citation omitted). She also notes our previous refusal, in the bankruptcy context, to add (or read in) missing statutory language. See Myers v. Toojay’s Management Corp., 640 F.3d 1278, 1284-86 (11th Cir. 2011) (explaining, in part, that we are not “licensed to practice statutory remodeling”).
The Court also discussed the need for some finality at confirmation.
Pursuant to 11 U.S.C. § 1302(b)(1), one of the duties of a Chapter 13 trustee is to “examine proofs of claims and object to the allowance of any claim that is improper.” 11 U.S.C. § 704(a)(5). And the Bankruptcy Code provides that a Chapter 13 trustee “shall,” among other things, “appear and be heard at a hearing that concerns . . . confirmation of a plan.” 11 U.S.C. § 1302(b)(2)(B). These provisions, taken together, generally require a Chapter 13 trustee to object to the confirmation of a plan if a claim is invalid or improperly characterized…If a trustee, like a debtor or creditor, is obliged to make a timely objection to the confirmation of a plan, and foregoes an objection she is aware of, it is difficult to see why the trustee, like a debtor or creditor, would not also be bound by confirmation.
Finally, the Court found that virtually all federal courts that had addressed similar issues found that the Chapter 13 Trustee was bound by the terms of the plan. The Court, however, did make it clear that the holding was limited to the issue before it.
Our holding, therefore, is a narrow one, necessarily limited by the facts before us: a Chapter 13 trustee who is aware, prior to confirmation, about the defects in a creditor’s security interest and who, despite that knowledge, does not object to the creditor’s claim and affirmatively recommends confirmation of a proposed plan in which the creditor is given a secured position. We need not, and do not, address a scenario where the trustee is unaware of the defects in the creditor’s security interest until after confirmation…. Where, as here, the Chapter 13 trustee is aware of defects in a creditor’s security interest well before confirmation, chooses not to object to the creditor’s claim, and affirmatively recommends to the bankruptcy court that it confirm a proposed plan in which the creditor is given a secured position, the bankruptcy court’s confirmation of the plan binds the trustee and precludes a post-confirmation avoidance action against the creditor.
The Court, therefore, affirmed the holdings of the Bankruptcy Court and District Court.

References: §1327
 § 1327
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 § 1302
 § 704
 § 1302