Opinion ID: 78126
Heading Depth: 2
Heading Rank: 1

Heading: Mr. Waldron's Claims Are Property of the Estate.

Text: Sections 1306(a) and 1327(b) of the Code define property of the estate in a proceeding under Chapter 13. Section 1306(a), on the one hand, expansively defines property of the estate to include all property acquired by the debtor after a case commences and until it ends or is converted: Property of the estate includes, in addition to the property specified in section 541 of this title (1) all property of the kind specified in such section that the debtor acquires after the commencement of the case but before the case is closed, dismissed, or converted to a case under chapter 7, 11, or 12 of this title, whichever occurs first; and (2) earnings from services performed by the debtor after the commencement of the case but before the case is closed, dismissed, or converted to a case under chapter 7, 11, or 12 of this title, whichever occurs first. 11 U.S.C. § 1306(a). Section 1327(b), on the other hand, returns some property of the estate to the debtor upon confirmation of the plan: 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. Id. § 1327(b). The question presented is whether Mr. Waldron's claims for underinsured-motorist benefits, which arose after confirmation of the Waldrons' plan to pay their creditors, are property of the estate under section 1306(a) or whether those claims are vested in Mr. Waldron under section 1327(b). The Waldrons argue that, upon confirmation, all of the property of the bankruptcy estate `revested' in the Waldrons by operation of Section 1327(b) and Mr. Waldron's claims, which are not part of the Waldrons' plan, did not become property of the estate. The trustee responds that Mr. Waldron's claims are property of the estate under section 1306(a). We conclude, based on the plain language of section 1306(a), that Mr. Waldron's claims are property of the estate. Mr. Waldron acquired his claims for underinsured-motorist benefits after the commencement of the Waldrons' bankruptcy case but before their case was dismissed, closed, or converted. Section 1306(a) does not mention the confirmation of the debtor's plan as an event relevant to what assets are property of the estate, see Sec. Bank v. Neiman, 1 F.3d 687, 689-91 (8th Cir.1993), and section 1327(b) does not address assets acquired after confirmation. Section 1327(b) does not, as the Waldrons argue, automatically vest in the debtor assets acquired after confirmation. If Congress had intended for confirmation to so dramatically affect the expansive definition of property of the estate found in [section] 1306, it knew how to draft such a provision. Id. at 691 (quoting Riddle v. Aneiro (In re Aneiro), 72 B.R. 424, 429 (Bankr. S.D.Cal.1987)) (internal quotation marks omitted). Our analysis is not, as the Waldrons argue, governed by the estate transformation approach that we adopted in Telfair v. First Union Mortgage Corp., 216 F.3d 1333 (11th Cir.2000). We adopted that approach to resolve the tension between sections 1306(a) and 1327(b) regarding property interests that existed at confirmation: We ... read the two sections, 1306(a)(2) and 1327(b), to mean simply that while the filing of the petition for bankruptcy places all the property of the debtor in the control of the bankruptcy court, the plan upon confirmation returns so much of that property to the debtor's control as is not necessary to the fulfillment of the plan. Id. at 1340 (quoting Black v. U.S. Postal Serv. (In re Heath), 115 F.3d 521, 524 (7th Cir.1997)). The debtor in Telfair sought to avoid liability for costs incurred in the collection of mortgage payments owed by the debtor outside his plan. The debtor argued that the mortgage payments were property of the estate protected by the automatic stay and could not be applied to pay the collection costs of the mortgagee, but the obligation to make those payments existed at confirmation and had been disclosed to the bankruptcy court, which allowed the payments to occur outside the debtor's plan. The debtor's assets used to make those mortgage payments were vested in the debtor at confirmation. We did not address in Telfair entirely new property interests acquired by the debtor after confirmation and unencumbered by any preexisting obligation. We instead stated that confirmation returns so much of that property to the debtor[ ], and that property referred to the property of the debtor placed in the control of the bankruptcy court when the debtor filed his petition. Id. New assets that a debtor acquires unexpectedly after confirmation by definition do not exist at confirmation and cannot be returned to him then. We are not alone in our reading of sections 1306(a) and 1327(b). The First Circuit also has concluded that assets acquired after confirmation are property of the estate. Barbosa v. Soloman, 235 F.3d 31, 36-37 (1st Cir.2000). After their Chapter 13 plan was confirmed, the debtors in Barbosa sold their investment property for a price greater than the value stated in their initial schedules of assets. Id. at 33. The trustee then moved to modify the plan to increase the debtors' payments to the unsecured creditors. Id. at 33-34. The First Circuit agreed with the argument of the trustee that, after confirmation, the estate continues to be funded by the Debtors' regular income and post-petition assets as specified in section 1306(a). Id. at 37. The court reasoned that this approach harmonizes two apparent inconsistent sections, 1306(a) and 1327(b); allows for meaningful plan modification under section 1329; and is consistent with the ability-to-pay policy underlying Chapter 13. Id. Numerous district and bankruptcy courts have reached the same conclusion. See, e.g., United States v. Harchar, 371 B.R. 254, 268 (N.D.Ohio 2007) (postconfirmation tax refund); Woodard v. Taco Bueno Rests., Inc., No. 4:05-CV-804-Y, 2006 WL 3542693, at -11 (N.D.Tex. Dec. 8, 2006) (postconfirmation claim for employment discrimination); In re Drew, 325 B.R. 765, 770 (Bankr.N.D.Ill. 2005) (proceeds of a mortgage refinancing completed postconfirmation); In re Pitts, No. 04-81133, 2005 Bankr.LEXIS 490, at  (Bankr.C.D.Ill. Mar. 30, 2005) (life insurance proceeds acquired postconfirmation); In re Grogg, 295 B.R. 297, 302 (Bankr.C.D.Ill.2003) (same); In re Nott, 269 B.R. 250, 257-58 (Bankr.M.D.Fla.2000) (postconfirmation inheritance); Annese v. Kolenda (In re Kolenda), 212 B.R. 851, 855 (W.D.Mich.1997) (automobile acquired with postconfirmation loan); In re Koonce, 54 B.R. 643, 645 (Bankr.D.S.C.1985) (lottery winnings acquired postconfirmation). As one court has explained, some property of the estate is vested in the debtor at confirmation, under section 1327(b), but property acquired later vests in the estate, under section 1306(a), until the case ends or is converted: While the case is pending, the post-petition property ... [is] added to the estate until confirmation, the event that triggers [section] 1327(b) and vests the property of the estate in the debtor. That is, the property interests comprising the pre-confirmation estate property are transferred to the debtor at confirmation, and this vesting is free and clear of the claims or interests of creditors provided for by the plan, [section] 1327(b), (c). Finally, the property of the estate once again accumulates property by operation of [section] 1306(a) until the case is closed, dismissed, or converted. City of Chicago v. Fisher (In re Fisher), 203 B.R. 958, 962 (N.D.Ill.1997). This interpretation is consistent with the language of sections 1306(a) and 1327(b), and avoids creating a distinction among types of post-confirmation estate property where there exists no textual basis to do so. Id. at 962-63. We affirm the decision that Mr. Waldron's claims are property of the estate.