Court Opinion

ID: 1041029
Source: CourtListenerOpinion
Date Created: 2013-09-17 20:07:30.533412+00
Date Added: 2024-06-11T12:49:53.930215
License: Public Domain

FILED
                            NOT FOR PUBLICATION                             SEP 17 2013

                                                                        MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

In re: MAXIMINO A. SANTOS and                    No. 12-55145
GLORIA S.L. SANTOS,
                                                 D.C. No. 2:11-cv-03260-SVW
              Debtors,

                                                 MEMORANDUM*
MAXIMINO A. SANTOS and GLORIA
S.L. SANTOS,

              Appellants,

  v.

KATHY A. DOCKERY, Chapter 13
Trustee and U.S. TRUSTEE,

              Appellee.

                    Appeal from the United States District Court
                        for the Central District of California
                    Stephen V. Wilson, District Judge, Presiding

                      Argued and Submitted August 26, 2013
                              Pasadena, California

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Before: O’SCANNLAIN and CHRISTEN, Circuit Judges, and COGAN, District
Judge.**

      Maximino and Gloria Santos appeal the district court’s decision to affirm a

bankruptcy court order establishing their ineligibility for Chapter 13 bankruptcy.

This court reviews de novo a district court’s decision on appeal from a bankruptcy

court. In re Focus Media, Inc., 387 F.3d 1077, 1081 (9th Cir. 2004). We have

jurisdiction pursuant to 28 U.S.C. § 158(d)(1), and we affirm.

      The Santoses argue that they are eligible for Chapter 13 bankruptcy relief

pursuant to 11 U.S.C. § 109(e) because they are seeking to discharge less than the

statutory maximum in unsecured debt. We disagree. Chapter 13 eligibility is

determined “by the debtor’s originally filed schedules, checking only to see if the

schedules were made in good faith.” In re Scovis, 249 F.3d 975, 982 (9th Cir.

2001). Under Scovis, debts are defined as “secured” or “unsecured” for Chapter 13

eligibility purposes by applying the standard set out in 11 U.S.C. § 506(a). Id. at

983. Under § 506(a), the Santoses’ three junior liens are readily categorized as

unsecured because the property securing those debts is worth less than even the

senior lien on the property. As such, the Santoses’ total unsecured debt, including

junior liens, is more than the maximum permitted by statute.

       **
             The Honorable Brian M. Cogan, District Judge for the U.S. District
Court for the Eastern District of New York, sitting by designation.

                                          2
      The Santoses argue that their case is distinguishable from Scovis. We are

not persuaded that the distinction between voluntarily incurred and involuntarily

incurred liens distinguishes this case from Scovis, or that the voluntarily incurred

nature of the Santoses’ debt otherwise changes the outcome.

      The Santoses raise several public policy arguments regarding disparities

between junior creditors and Chapter 13 debtors and between similarly-situated

debtors. We leave these issues for Congress to decide.

      Finally, because we find that the Santoses are ineligible for Chapter 13

relief, we decline to reach the issue of whether they are eligible for a repayment

plan shorter than 60 months.

      AFFIRMED.

                                           3