Court Opinion

ID: 9686331
Source: CourtListenerOpinion
Date Created: 2023-08-24 15:42:49.675833+00
Date Added: 2024-06-11T18:18:17.893021
License: Public Domain

PERRIS, Bankruptcy Judge,
concurring:
The issue, as stated in the majority opinion, is whether appellant’s due process rights were violated when its secured claim was reduced by the confirmed Chapter 13 plan. Framing the issue in such a manner assumes that the effect of confirmation was to reduce the secured claim. Since I disagree that the allowed secured claim was reduced as a result of confirmation, I would not reach the constitutional question of whether due process rights were violated. On appeal, courts should avoid passing upon a constitutional question if there is an alternative basis for determining the case. See Ashwander v. Tennessee Valley Authority, 297 U.S. 288, 347, 56 S.Ct. 466, 483, 80 L.Ed. 688 (1936) (Brandeis, J. concurring); In re American Bicycle Association, 895 F.2d 1277, 1279 (9th Cir.1990); In re Brown Family Farms, Inc., 872 F.2d 139, 142 (6th Cir.1989).
The issue is whether the court erred in denying the creditor’s motion for an order allowing the secured claim. Determination of that issue requires the resolution of two seemingly conflicting statutes. The creditor filed a proof of claim in a certain amount which was not objected to and was therefore deemed allowed under § 502(a). However, that provision appears to conflict with § 1327(a), which states that the plan (which listed a different amount for the claim) is binding.
Two principles of statutory construction guide the resolution of the matter. First, statutory provisions should be read as consistent when possible. In re Caster, 77 B.R. 8,13 (Bankr.E.D.PA.1987). If the two provisions may not be harmonized, then the more specific will control over the general. See Green v. Bock Laundry Machine Co., 490 U.S. 504, 524, 109 S.Ct. 1981, 1992, 104 L.Ed.2d 557 (1989).
*322Sections 502(a) and 1327(a) may be harmonized by interpreting § 1327(a) as dictating that the plan binds the parties to the amount the trustee will distribute under the plan, but is not binding as to the amount of the claim. See In re Stein, 63 B.R. 140 (Bankr.D.Neb.1985) (proof of claim controls over confirmed plan despite local practice to the contrary). Under that interpretation, a debtor who completed payments in the amount specified in a plan could not compel satisfaction of the lien until payment of the full amount of the secured claim deemed allowed under § 502. If the debtor or trustee disagreed with the amount claimed by the creditor as secured, the debtor could file an objection to that claim. If the claim were ultimately allowed in the amount claimed by the creditor, then either the debtor, creditor or trustee may seek modification of the plan under § 1329 to conform to the amount of the allowed claim.
Harmonizing § 1327(a) and 502(a) in such a manner is also compelled by § 1322(b)(10), which prohibits confirmation of a plan which is not consistent with Title 11. It is inconsistent with Title 11 for a plan to effectively determine the amount of a secured claim. That is because such a result would be inconsistent with § 502(a) and rule 3007 regarding objections to claims. See In re Simmons, 765 F.2d 547, 553 (5th Cir.1985); In re Stein, 63 B.R. at 145 (the Code and Rules do not contemplate the use of a plan as a means for objecting to proofs of claim); In re Mikrut, 79 B.R. 404, 406 (Bankr.W.D.Wis.1987) (characterization of a secured claim in a confirmed plan does not bind the secured creditor, even if the secured creditor has failed to object to the plan’s treatment of its claim).
If § 1327 and § 502 are not harmonized as above, then the two provisions appear to conflict concerning the issue of allowance of a claim provided for in a confirmed plan. If the statutes are interpreted as conflicting, then § 502 should control questions of claims allowance, as it is the more specific statute. Therefore, regardless of whether § 502(a) and 1327(a) are interpreted as in harmony or in conflict, the amount of the creditor’s allowed secured claim in the instant case is controlled by the proof of claim.
I am aware of authority which, relying upon § 1327, holds that the amount of a secured claim is determined with reference to the confirmed chapter 13 plan. See, e.g., In re Hebert, 61 B.R. 44 (Bankr.W.D.La.1986). I do not find such authority persuasive, as it does not discuss or satisfactorily reconcile the interplay between sections 502 and 1327. I believe that such an analysis is necessary to adequately address the legal issues presented.
CONCLUSION
While concurring that the amount of the creditor’s secured claim is not determined by the confirmed plan, I believe that the issue may and should be decided on the basis that section 502 controls issues of claims allowance. Since the debtor failed to object to the creditor’s timely filed proof of claim, that claim is deemed allowed. Accordingly, I believe that the bankruptcy judge erred in denying the creditor’s motion for an order allowing the claim, and would REVERSE.