Opinion ID: 220798
Heading Depth: 5
Heading Rank: 1

Heading: all property of the kind specified in such sec-

Text: tion that the debtor acquires after the commencement of the case but before the case is closed, dismissed, 9390 IN RE: JONES or converted to a case under Chapter 7, or 11, or 12 of this title, whichever occurs first[.] Read in conjunction with § 541, § 1306 implies that all property held before the filing of the petition—as well as all property acquired between the Chapter 13 petition filing date and the date the case is closed, dismissed, or converted—is property of the estate. [8] Our inquiry would end there, and we would conclude that there was an automatic stay in place which precluded the FTB from collecting on the debt until the Joneses’ Chapter 13 case closed, if not for § 1327(b), which provides: Except as otherwise provided in the plan or the order confirming the plan, the confirmation of a plan vests all of the property of the estate in the debtor. Under § 1327(b), property of the estate revests in the debtor upon confirmation of a Chapter 13 plan, but § 1306(a)(1) does not include confirmation of the plan as one of the events defining the time period in which property acquired by the debtor becomes estate property. We have not had occasion to address the interplay between §§ 1306(a) and 1327(b). As the First Circuit has noted in harmonizing the two sections, “the status of the property of the estate after the confirmation of a Chapter 13 plan is a controversial issue.” Barbosa v. Solomon, 235 F.3d 31, 36 (1st Cir. 2000). It is our task, however, to give meaning to each of these sections. See Dumont v. Ford Motor Credit Co. (In re Dumont), 581 F.3d 1104, 1111 (9th Cir. 2009) (“[A] statute ought, upon the whole, to be so construed that, if it can be prevented, no clause, sentence, or word shall be superfluous[.]” (internal quotation marks and citation omitted)). The bankruptcy courts and other circuits have developed four approaches to harmonizing these sections and determining whether and to what extent property of the estate revests IN RE: JONES 9391 in the debtor at plan confirmation. Three of the approaches are based on the principle that property of the estate revests in the debtor upon plan confirmation, unless the plan provides otherwise. These approaches are known as the modified estate preservation, estate transformation, and estate termination approaches. Under the modified estate preservation approach, estate property vests in the debtor upon plan confirmation, but property acquired after confirmation becomes property of the estate pursuant to § 1306(a). See Barbosa, 235 F.3d at 36-37. The estate transformation approach holds that § 1327(b) vests estate property in the debtor upon confirmation, retaining estate property only to the extent necessary to carry out the plan. See Telfair v. First Union Mortg. Corp., 216 F.3d 1333, 1339-40 (11th Cir. 2000); Black v. U.S. Postal Serv. (In re Heath), 115 F.3d 521, 524 (7th Cir. 1997). Finally, the estate termination approach, adopted by the bankruptcy court and the BAP in this case, holds that § 1327(b) revests all property of the estate in the debtor upon plan confirmation, and any property acquired after confirmation likewise vests in the debtor unless the plan or confirmation provides otherwise. See In re Petruccelli, 113 B.R. 5, 15 (Bankr. S.D. Cal. 1990). Under any one of these approaches, estate property would have vested in Jones at plan confirmation, and that property would not have been subject to an automatic stay. See 11 U.S.C. §§ 362(a)(3), 362(a)(4). The fourth approach, known as the estate preservation approach, holds that although property of the estate “vests” in the debtor upon plan confirmation under § 1327(b), the property does not become property of the debtor. Instead, the estate remains fully intact and protected by the automatic stay until the case is closed, dismissed, or converted. See In re Aneiro, 72 B.R. 424, 429 (Bankr. S.D. Cal. 1987). No circuit has adopted the estate preservation approach, and we affirmatively decline to do so here. Although the BAP in this case read the Eighth Circuit’s decision in Sec. Bank of Marshalltown, Iowa v. Neiman, 1 F.3d 687 (8th Cir. 1993), as adopting the estate preservation approach, we read it to provide only 9392 IN RE: JONES that the Chapter 13 estate continues to exist postconfirmation. Id. at 689 (“The only issue before this court is whether the Chapter 13 estate existed after confirmation of the Chapter 13 plan[.]”). Significantly, Neiman explicitly noted that “[t]he estate can continue to exist as a legal entity after confirmation even if it holds no property.” Id. at 690 (emphasis added). [9] Resolution of this case does not require us to adopt one of the other specific approaches. Regardless of whether and to what extent the estate continues as a legal entity postconfirmation, we hold that, at the very least, some estate property revests in the debtor at confirmation. This interpretation gives meaning to § 1327(b), which provides that the estate property vests in the debtor upon confirmation unless provided otherwise in the plan. 11 U.S.C. § 1327(b). The statute does not define the term “vests,” but “[w]hen terms used in a statute are undefined, we give them their ordinary meaning.” Hamilton, 130 S. Ct. at 2471 (internal quotation marks and citation omitted). The common definition of vest is “[t]o confer ownership (of property) upon a person” and “[t]o invest (a person) with the full title to property.” BLACK’S LAW DICTIONARY (9th ed. 2009).5 [10] In sum, we hold that under the plain language of § 1327(b), the property of the estate revests in the debtor upon plan confirmation, unless the debtor elects otherwise in the plan. Because Jones did not elect otherwise, she once again became the owner of her property at confirmation, except as to those sums specifically dedicated to fulfillment of the plan. Accordingly, the FTB was not precluded from collecting the post-petition tax debt from property that revested in Jones 5 This is consistent with our prior holding that “revesting” in § 349(b)(3) means “ ‘to restore all property rights to the position in which they were found at the commencement of the case.’ ” In re Nash, 765 F.2d 1410, 1414 (9th Cir. 1985) (quoting S. REP. NO. 95-989 (1978), reprinted in 1978 U.S.C.C.A.N. 5787, 5835). IN RE: JONES 9393 upon plan confirmation. See 11 U.S.C. § 362(c)(1). Since the tax debt arose after plan confirmation, the FTB could have collected on the debt during the gap period between the due date of the debt and the second bankruptcy filing, and the lookback period is not statutorily suspended. See id. § 507(a)(8). C. EQUITABLE TOLLING DOES NOT APPLY. [11] Because the FTB could have collected on the debt at any time after the tax came due, the principles of Young do not apply in this case, and we will not equitably toll the lookback period. The debt is accordingly discharged. Cf. Young, 535 U.S. at 50 (tolling the lookback period where “the IRS was disabled from protecting its claim during the pendency of the Chapter 13 petition”). The FTB argues that the unresolved issue of how to interpret §§ 1306(a) and 1327(b) effectively precluded it from attempting collection and therefore weighs in favor of equitable tolling. Any uncertainty in the statutes did not impede the FTB’s other options. For example, the FTB could have sought relief from the stay under § 362 or moved to dismiss the Joneses’ case for failure to pay post-petition taxes. As the bankruptcy court noted here, no court has imposed sanctions on a party attempting to determine the viability of its claim using either of these means. [12] It also bears noting that the FTB had more than one year after the dismissal of the Joneses’ Chapter 13 case during which it could have collected on the debt without any fear whatsoever of sanctions.6 Instead, the FTB did not take any action to protect its claim until 2009, six years after the debt arose. This inaction creates the appearance that, rather than exercising caution in light of uncertainty, the FTB simply did 6 The bankruptcy court dismissed the Chapter 13 case in September 2006, and Jones did not file her Chapter 7 petition until October 2007. 9394 IN RE: JONES not pursue its claim until the opportunity to do so had passed. Equitable tolling is not appropriate where a party takes no timely step to preserve its claim and, in fact, faces no prohibition on asserting its claim during the limitations period. See Young, 535 U.S. at 47 (noting that the policies underlying statutes of limitations include the elimination of stale claims and a guarantee of certainty for both parties regarding their rights and potential liabilities). AFFIRMED.