Court Opinion

ID: 4514530
Source: CourtListenerOpinion
Date Created: 2020-03-11 00:00:57.940294+00
Date Added: 2024-06-11T09:24:56.490238
License: Public Domain

FILED
                                                                     DEC 31 2019
                                                                 SUSAN M. SPRAUL, CLERK
                                                                   U.S. BKCY. APP. PANEL
                                                                   OF THE NINTH CIRCUIT

            UNITED STATES BANKRUPTCY APPELLATE PANEL
                      OF THE NINTH CIRCUIT

In re:                                        BAP No. NV-18-1351-FBH

RICHARD L. BLACK,                             Bk. No.   2:14-bk-12402-ABL

                    Debtor.

RICHARD L. BLACK,

                    Appellant,

v.                                            OPINION

KATHLEEN A. LEAVITT, Chapter 13
Trustee,

                    Appellee.

                  Argued and Submitted on November 21, 2019
                            at Las Vegas, Nevada

                           Filed – December 31, 2019

                Appeal from the United States Bankruptcy Court
                          for the District of Nevada

         Honorable August Burdette Landis, Bankruptcy Judge, Presiding
Appearances:        Christopher Burke argued on behalf of appellant Richard
                    L. Black; Sarah E. Smith argued on behalf of appellee
                    Kathleen A. Leavitt, Chapter 13 Trustee.

Before: FARIS, BRAND, and HERCHER,* Bankruptcy Judges.

FARIS, Bankruptcy Judge:

                                INTRODUCTION

      Debtor Richard L. Black obtained confirmation of a chapter 131 plan

that required him to pay $45,000 to his creditors when he sold or

refinanced his rental property. About three years later, he sold the property

for $107,000. He proposed to pay $45,000 to his creditors and to retain the

excess sale proceeds for himself. Chapter 13 trustee Kathleen A. Leavitt

(“Trustee”) moved to modify Mr. Black’s confirmed plan to require him to

pay the excess sale proceeds to his unsecured creditors. The bankruptcy

court approved the modified plan.

      Mr. Black appeals, arguing that he was not required to commit the

excess proceeds to his plan payments. He also argues that the Trustee’s

motion was untimely and that the modified plan did not meet the statutory

      *
       The Honorable David W. Hercher, U.S. Bankruptcy Judge for the District of
Oregon, sitting by designation.
      1
        Unless specified otherwise, all chapter and section references are to the
Bankruptcy Code, 11 U.S.C. §§ 101-1532, and all “Rule” references are to the Federal
Rules of Bankruptcy Procedure.

                                           2
requirements for plan confirmation.

      We hold that the Trustee’s modified plan was timely and complied

with the applicable statutes. But we agree with Mr. Black that he was

entitled to retain the excess sale proceeds. Accordingly, we REVERSE.

                          FACTUAL BACKGROUND

A.    Mr. Black’s bankruptcy case

      On April 9, 2014, Mr. Black filed a chapter 7 bankruptcy petition that

he prepared with the assistance of a bankruptcy petition preparer. He

scheduled real property located in Las Vegas, Nevada (the “Property”),

valued at $52,300. He claimed a $52,300 homestead exemption in the

Property.2

      The chapter 7 trustee objected to Mr. Black’s claimed homestead

exemption in the Property, which he did not live in, but rented out at $850

per month. He also moved for turnover of the rental proceeds as

nonexempt assets.

      Mr. Black received his chapter 7 discharge. Shortly thereafter,

Mr. Black (through counsel) moved to convert his chapter 7 case to one

under chapter 13. Among other reasons, he stated that, when he initially

filed his chapter 7 petition, he did not realize that he could lose the

Property. The chapter 7 trustee opposed the motion to convert.

      2
        Mr. Black also scheduled a second residential property in Las Vegas and
similarly claimed a homestead exemption.

                                          3
      Before ruling on the motion to convert, the bankruptcy court

sustained the chapter 7 trustee’s objection to the claimed homestead

exemption in the Property and granted the motion for turnover. The

bankruptcy court later granted Mr. Black’s motion to convert.

      Mr. Black filed amended schedules. He identified the Property as a

rental property and decreased its value to $44,000.

B.    The chapter 13 plan

      Mr. Black filed his proposed chapter 13 plan in which he proposed

paying $250 per month for fifty-nine months, totaling $14,750. He proposed

an additional payment of $41,000 in the fourth year upon sale or

refinancing of the Property.

      The Trustee objected to confirmation of the plan. Among other

things, she argued that “[t]he Plan fails to meet liquidation value [11 USC

§ 1325(a)(4)] based on the following non-exempt property: $44,000 Rental

property.”

      In response, Mr. Black filed an amended plan to address concerns not

relevant to this appeal. He still proposed to pay $250 per month for fifty-

nine months. But he increased to $45,000 the lump sum payment upon sale

or refinancing of the Property.

      As a below-average-income debtor, his applicable commitment

period was three years. The plan provided:

      Monthly payments must continue for the entire commitment

                                      4
      period unless all allowed unsecured claims are paid in full in a
      shorter period of time, pursuant to § 1325(b)(4)(B). If the
      applicable commitment period is 3 years, Debtor may make
      monthly payments beyond the commitment period as
      necessary to complete this plan, but in no event shall monthly
      payments continue for more than 60 months.

      The plan also provided that “[a]ny property of the estate scheduled

under § 521 shall vest in Debtor upon confirmation of this Plan.”

      The Trustee did not object to the amended plan, and the court

confirmed the plan. Mr. Black faithfully made his monthly plan payments

for several years.

C.    The sale of the Property

      About three years later, Mr. Black filed a motion to sell the Property

(“Motion to Sell”). He stated that he intended to sell the Property for

$107,000, pay $45,000 to his unsecured creditors, and retain $50,689 (the

remaining amount after costs of sale) for himself.

      The Trustee opposed the Motion to Sell. She stated that she did not

object to the sale of the Property but objected to Mr. Black retaining any of

the proceeds of the sale. She argued that the proceeds were property of the

chapter 13 estate under § 541 as “property that the debtor ‘acquires after

commencement of the case but before the case is closed, dismissed, or

converted’” under § 1306(a)(1). She stated that Mr. Black did not claim an

exemption in the Property, so he must turn over all funds stemming from

                                      5
the sale of the Property to the Trustee for distribution to creditors.

      The bankruptcy court found that the Property was property of the

estate and that the sale was a reasonable exercise of Mr. Black’s business

judgment. It granted the Motion to Sell (“Sale Order”) and ordered that

$49,000 should be paid to the Trustee and that the remaining funds should

be held by Mr. Black’s attorney pending further order of the court.

D.    The Trustee’s motion to modify the plan

      The Trustee filed Modified Chapter 13 Plan #3 (“Modified Plan”),

which amended Sections 1.08, 1.09, and 1.10 of the confirmed plan to

commit the additional $52,000 sale proceeds to the plan. As such, the estate

would receive: (1) the fifty-nine monthly payments of $250 per month,

(2) $49,000 from the sale of the Property pursuant to the Sale Order, and

(3) the additional $52,000 sale proceeds. She stated that the Modified Plan

would require Mr. Black to “pay all disposable income to the Plan for the

plan term as well as turn over non-exempt property of the estate. The

increased payment will result in an additional distribution to filed and

allowed non-priority general unsecured creditors.”

      Mr. Black objected to the Modified Plan. He argued that the Modified

Plan did not comply with §§ 1329, 1322, and 1325 because it “does not

propose a new plan payment or plan length. It only adds or adjusts a few

sections of the plan. In other words, a debtor could not propose a

modification in this way and have it confirmed.”

                                       6
      He also argued that the proposed modification was untimely,

because he had completed his plan payments. He was only required to

complete a 36-month plan under § 1322(d)(2)(A) but agreed to a 59-month

plan. He was forty-eight months into his plan term when he sold the

Property and paid the Trustee the remaining balance due under the plan

from the sale proceeds. Thus, he completed his plan, and the Trustee

cannot modify a completed plan.

      Finally, he argued that, under McDonald v. Burgie (In re Burgie), 239

B.R. 406 (9th Cir. BAP 1999), the sale proceeds were not disposable income

that he must commit to the plan, and he cannot be compelled to use the

proceeds of the postpetition sale of prepetition real estate to pay creditors

under a chapter 13 plan.

      In response, the Trustee argued that the Modified Plan satisfied

§§ 1329, 1322, and 1325 because it only amended three sections and

incorporated the rest of the confirmed plan.

      She also argued that the Modified Plan was timely because she filed

it before the end of the 59-month plan term. Even though Mr. Black paid off

the dollar amount due under the plan, the plan was still subject to

modification during the full plan term.

      Finally, the Trustee argued that the sale proceeds were property of

the estate under § 1306 that should be turned over to the Trustee. She

stated that Mr. Black originally valued the Property at $44,000, but later

                                       7
acquired additional value in the property. When granting the Motion to

Sell, the bankruptcy court held that the sale proceeds were property of the

estate, so she contended that they must be turned over to the estate for

distribution. She distinguished Burgie, arguing that in Burgie we considered

whether the sale proceeds were disposable income, which was not the case

here.

        In his reply brief, Mr. Black argued that the Trustee’s Modified Plan

did not comply with the applicable statutes, because it failed to account for

his future earnings; to prove that he will be able to make all plan payments;

to estimate payments to general unsecured creditors; and to account for the

increased trustee fee.

        He also argued that the Modified Plan was untimely because it was

proposed outside of the “temporal window” of the 36-month applicable

commitment period.

        Finally, Mr. Black argued that the confirmed plan provided that the

property of the estate would vest in the debtor at confirmation.

Additionally, the Property was acquired prepetition, so it was not after-

acquired property contemplated by § 1306.

        After a hearing, the bankruptcy court approved the Modified Plan. It

first held that the Modified Plan was timely. It acknowledged that the

confirmed plan had a “payment term of 59 months from and after May 9,

2014, thus in the context of Section 1329(c), the Court has already approved

                                        8
a plan payment term that exceeds the 36-month applicable commitment

period, which is a temporal minimum.” However, it held that “a

bankruptcy court may modify a plan at any time after plan confirmation so

long as the modification occurs before the completion of payments under

the plan.” It then concluded that the payments under the confirmed plan

had not yet been completed: “Payments under a plan have to continue for

the duration provided for in the initial plan, absent modification, before

being considered ‘complete’ for purposes of modification and discharge.”

      Second, the court held that the Modified Plan complied with §§ 1329,

1322, and 1325. It held that the Modified Plan “incorporates by reference

and leaves unaffected the bulk of the terms of the debtor’s confirmed plan.

It modifies only Sections 1.08, 1.09, and 1.10 . . . . It contains the same

59-month planned payment requirement imposed by the confirmed plan.

And it requires the same $250 monthly plan payment.” Moreover, it noted

that the Modified Plan properly provided for distribution of the sale

proceeds, “[a]nd it states that the increased payment will result in an

additional distribution to all filed and allowed non-priority, general,

unsecured claims.”

      Finally, the court held that the sale proceeds must be turned over to

the Trustee:

      Turnover of the proceeds from the sale of the Washington
      Avenue property to the Trustee is warranted. Those proceeds
      are not exempt property of the bankruptcy [e]state under 11

                                        9
      U.S.C. Section 541(a). The Court has considered the balance of
      the arguments made and the authority cited by the debtor,
      including without limitation In re Burgie, 239 B.R. 406, Ninth
      Circuit Bankruptcy Appellate Panel decision from 1999, and
      finds them unavailing and/or indistinguishable [sic] from the
      issues that are presented here.

      The bankruptcy court entered an order (“Confirmation Order”)

confirming the Modified Plan. It held that “[t]urnover of the proceeds from

the sale of property . . . to the Trustee is appropriate because the proceeds

are not exempt property of the bankruptcy estate under 11 U.S.C. § 541(a).”

      Mr. Black timely appealed.

                                JURISDICTION

      The bankruptcy court had jurisdiction pursuant to 28 U.S.C. §§ 1334

and 157(b)(2)(A), (L). We have jurisdiction under 28 U.S.C. § 158.

                                     ISSUE

      Whether the bankruptcy court erred in confirming the Modified Plan.

                         STANDARDS OF REVIEW

      “The confirmation of a modified plan is reviewed for an abuse of

discretion.” Profit v. Savage (In re Profit), 283 B.R. 567, 572 (9th Cir. BAP

2002) (citing Max Recovery, Inc. v. Than (In re Than), 215 B.R. 430, 433 (9th

Cir. BAP 1997)); see Dernham-Burk v. Mrdutt (In re Mrdutt), 600 B.R. 72, 76

(9th Cir. BAP 2019) (“Modification under § 1329 is discretionary and is

reviewed for an abuse of discretion.” (citing Powers v. Savage (In re Powers),

                                        10
202 B.R. 618, 623 (9th Cir. BAP 1996))).

      To determine whether the bankruptcy court has abused its discretion,

we conduct a two-step inquiry: (1) we review de novo whether the

bankruptcy court “identified the correct legal rule to apply to the relief

requested” and (2) if it did, whether the bankruptcy court’s application of

the legal standard was illogical, implausible, or without support in

inferences that may be drawn from the facts in the record. United States v.

Hinkson, 585 F.3d 1247, 1262-63 & n.21 (9th Cir. 2009) (en banc).

      To the extent the bankruptcy court based its decision to modify a

plan on statutory interpretation, “whether the bankruptcy court was

correct in its interpretation of the applicable statutes is reviewed de novo.”

In re Mrdutt, 600 B.R. at 76 (citing Mattson v. Howe (In re Mattson), 468 B.R.

361, 367 (9th Cir. BAP 2012)). “De novo review requires that we consider a

matter anew, as if no decision had been made previously.” Francis v.

Wallace (In re Francis), 505 B.R. 914, 917 (9th Cir. BAP 2014) (citations

omitted).

                                DISCUSSION

A.    The bankruptcy court did not err in holding that the Modified Plan
      was timely.

      Mr. Black argues that the bankruptcy court erred in allowing the plan

modification, because the time to seek modification expired when he

completed his plan payments early. We disagree.

                                       11
      Section 1329(a) provides that, “[a]t any time after confirmation of the

plan but before the completion of payments under such plan, the plan

may be modified” to “increase or reduce the amount of payments on

claims of a particular class provided for by the plan[.]” § 1329(a) (emphasis

added). At issue is the meaning of “completion of payments.” Mr. Black

argues that he completed his plan payments early when he made the extra

$4,000 lump-sum payment with funds that he realized through the sale of

the Property. Conversely, the Trustee argues that the fifty-nine months in

his plan term had not yet expired and Mr. Black had not sought to modify

the plan term, so her Modified Plan was timely.

      We have not squarely addressed this exact question, but our previous

decisions are instructive. We have held that, as a general proposition,

payments are not “complete” when the debtor pays them early, unless the

debtor modifies the plan pursuant to § 1329 to shorten its term:

            A debtor desiring to prepay a chapter 13 plan and obtain
      an early discharge without paying allowed unsecured claims
      in full must follow the § 1329 modification procedure
      prescribed by Rule 3015(g). In exchange for a § 1328(a)
      discharge of more debts than can be discharged in chapter 7,
      the debtor’s increases in income are exposed to the risk of being
      captured by way of § 1329 modifications proposed by the
      trustee or an unsecured creditor. The debtor cannot
      short-circuit that exposure merely by prepayment, but rather
      must obtain a § 1329 plan modification after having given the

                                      12
       notice required by Rule 3015(g).3

Fridley v. Forsythe (In re Fridley), 380 B.R. 538, 544 (9th Cir. BAP 2007)

(footnote omitted) (emphases added).

       We have also rejected a chapter 13 plan with an indefinite duration,

which would have allowed the debtor to “complete” his plan whenever he

paid off all priority and secured claims. In re Escarcega, 573 B.R. 219 (9th

Cir. BAP 2017). Construing Fridley, we stated that “payments under a plan

have to continue for the duration provided for in the initial plan, absent

modification, before being considered ‘complete’ for purposes of

modification and discharge.” Id. at 239 (citing In re Fridley, 380 B.R. at 543-

44).

       Therefore, Mr. Black’s plan payments were not “complete” when he

made the lump-sum payment, because he did not modify his plan to

shorten its duration.

       Mr. Black argues that he was only required to complete a 36-month

plan and cannot be compelled to satisfy the full term of his 59-month plan.

He is wrong.

       Because Mr. Black’s income is less than the applicable median, his

“applicable commitment period” was thirty-six months. In other words, a

three-year plan term would have satisfied § 1322(d)(2)(A). But he proposed

       3
       Current Rule 3015(h) requires that the proponent of the plan modification give
twenty-one days’ notice to the debtors, trustee, and creditors.

                                          13
a fifty-nine month term, probably because he could not afford a larger

monthly payment and therefore needed more time to generate plan

funding sufficient to meet other confirmation requirements.

      Mr. Black’s argument is flawed because the statute does not tie the

plan modification time limit to the “applicable commitment period.”

Section 1329(a) cuts off the right to modify a plan upon “completion of

payments under such [i.e., the original] plan.” If Congress meant to

terminate the modification right upon expiration of the applicable

commitment period, it could and would have said exactly that.

      Accordingly, Mr. Black had not yet “completed” his plan payments,

and the Trustee’s Modified Plan, filed within the 59-month plan term, was

timely.

B.    The bankruptcy court did not err in holding that the Modified Plan
      otherwise met the requirements of §§ 1329, 1322, and 1325.

      Mr. Black argues that the Modified Plan failed to satisfy the statutory

requirements of §§ 1329, 1322, and 1325. We again disagree.

      Section 1329(b)(1) provides that “Sections 1322(a), 1322(b), and

1323(c) of this title and the requirements of section 1325(a) of this title

apply to any modification under subsection (a) of this section.”

§ 1329(b)(1). These requirements are “mandatory plan provisions.” In re

Profit, 283 B.R. at 575.

      Mr. Black argues that the Modified Plan failed to comply with these

                                       14
statutes because it: (1) did not provide the specific date of turnover of the

proceeds; (2) did not have a specific provision for a § 1325(a)(4) liquidation;

(3) did not provide a new payment amount or new length; and (4) did not

provide proof that Mr. Black will be able to make all plan payments under

§ 1325(a)(6).

      Mr. Black’s arguments boil down to the assertion that a party

proposing a postconfirmation plan modification must submit a complete

plan. He says that it is not sufficient for a proponent to state only the

provisions that are to be modified and incorporate (either implicitly or

explicitly) the unmodified provisions of the original plan.

      We agree with the bankruptcy court that the Trustee’s Modified Plan

was proper in form. It only changed three sections of the confirmed plan

and incorporated the rest of the confirmed plan by reference. Mr. Black

provides no authority for his argument that the Trustee’s incorporation of

the balance of the confirmed plan was improper.4

      Therefore, the bankruptcy court did not err in holding that the

Modified Plan satisfied the relevant statutory requirements.5

      4
         We do not mean to preclude bankruptcy courts from requiring a complete plan
in a particular case or in all cases as a matter of local policy. Such a policy might be
particularly appropriate for preconfirmation modifications.
      5
         Mr. Black also argues that the Modified Plan was actually a motion for
reconsideration. This argument is meritless. A proposed plan modification under § 1329
is not the same as a motion for reconsideration of the original confirmation order.

                                           15
C.    The bankruptcy court erred in holding that all of the sale proceeds
      of the Property must be committed to the plan.

      Mr. Black contends that the bankruptcy court erred in confirming the

Modified Plan, which required him to turn over to the Trustee the sale

proceeds in excess of the $45,000 specified in the original plan. He contends

that the property of the estate revested in him upon plan confirmation, so

any additional value of the Property belonged to him. We agree.

      The parties’ respective positions underscore the tension between

§ 1327 on the one hand and § 1306 and § 541(a)(6) on the other. Mr. Black

relies on § 1327(b), which provides that “the confirmation of a plan vests all

of the property of the estate in the debtor.” § 1327(b). Subsection (c)

provides that “the property vesting in the debtor under subsection (b) of

this section is free and clear of any claim or interest of any creditor

provided for by the plan.” § 1327(c).

      The Trustee relies on two sections stating that property acquired

postpetition and proceeds from the sale of estate property are property of

the estate. Property of the estate includes “all property of the kind specified

in such section [541] that the debtor acquires after the commencement of

the case but before the case is closed, dismissed, or converted . . . .”

§ 1306(a)(1) (emphasis added). Similarly, the estate includes “[p]roceeds,

product, offspring, rents, or profits of or from property of the estate,

except such as are earnings from services performed by an individual

                                        16
debtor after the commencement of the case.” § 541(a)(6) (emphases added).

      Our decision in Burgie applies. In that case, the bankruptcy court

confirmed the debtors’ chapter 13 plan. A few days later, they sought to

sell their homestead property; the chapter 13 trustee did not object. The

debtors sold their property, paid off their first and second mortgages, and

received net proceeds of $63,000. The chapter 13 trustee moved to modify

the plan to require the debtors to surrender some of the sale proceeds to

increase payments to general unsecured creditors. The bankruptcy court

denied the motion, and the trustee appealed. Subsequently, the debtors

purchased a new homestead using $43,000 and stated that they intended to

use the remaining $20,000 to support themselves and complete their plan

payments. 239 B.R. at 408.

      On appeal, we considered whether the debtors could retain the

$20,000 or whether they had to turn it over to the trustee to increase the

dividend to general unsecured creditors. Id.

      We first rejected the trustee’s argument that the $20,000 constituted

disposable income that the debtors needed to commit to the plan. We

stated that “[t]he proceeds of the sale of a debtor’s real estate in a chapter

13 case never become disposable income for the purposes of chapter 13. . . .

While a debtor may voluntarily use such proceeds to make payments to

creditors under a chapter 13 plan, a debtor cannot be compelled to use the

proceeds for this purpose.” Id. at 409.

                                       17
      We explained the interplay between the “chapter 13 deal” and the

sale of a prepetition asset:

             An examination of the basic structure of chapter 13 makes
      it clear that the debtors cannot be compelled to use the
      proceeds from the sale of prepetition real estate to pay
      creditors under a confirmed chapter 13 plan.

            In place of liquidating non-exempt assets to pay creditors
      under chapter 7 of the Bankruptcy Code, Congress gave
      individuals with regular income the option of adjusting their
      debts pursuant to a plan under chapter 13. The chapter 13 deal
      permits a debtor to retain all prepetition property, including
      earnings, assets, money in the bank and real estate. In exchange
      for keeping all of these assets, the debtor must commit all
      postpetition disposable income to the payment of creditors
      under a chapter 13 plan for a period of three to five years. If the
      debtor makes all of the payments required under the plan, all of
      the debtor’s dischargeable debts are discharged, and the debtor
      keeps all of the prepetition assets.

           Postpetition disposable income does not include
      prepetition property or its proceeds. This is the chapter 13
      debtor’s bargain. Creditors of a chapter 13 debtor have no
      claim to any of these assets.

Id. at 410 (footnote omitted) (emphases added). We further held that,

“[a]fter confirmation of a chapter 13 plan, a debtor may volunteer to pay

creditors from capital assets, and thereby relieve future income from the

obligations under the plan. However, a chapter 13 debtor cannot be

compelled to do so.” Id. at 411 (citations omitted).

                                      18
      Finally, we noted that this rule applied regardless whether the

property at issue was exempt: “Whether prepetition property, sold by the

debtor after plan confirmation, is exempt is not directly relevant to the

foregoing analysis. Under a chapter 13 plan, the debtor is entitled to keep

all of the debtor’s prepetition property, whether or not it qualifies under

the applicable exemption laws.” Id.

      Burgie is on point.6 The Panel considered whether prepetition

property liquidated postconfirmation must be committed to the chapter 13

plan. The Panel concluded that, so long as the debtors commit all of their

postpetition disposable income to the plan and meet the other plan

confirmation requirements, they get to retain their capital assets and

creditors cannot reach the proceeds of such. Accordingly, so long as

Mr. Black satisfies the terms of his confirmed plan, he does not have to

commit the excess proceeds from the sale of the Property to pay his general

      6
         Mr. Black argues that Burgie is binding on all bankruptcy courts in the circuit
and that the bankruptcy court erred by failing to follow it. The Ninth Circuit has never
held that our decisions are binding (under stare decisis principles) on any court. See,
e.g., Bank of Maui v. Estate Analysis, Inc., 904 F.2d 470, 472 (9th Cir. 1990). We view
ourselves as bound by our prior published decisions. Salomon N. Am. v. Knupfer (In re
Wind N’ Wave), 328 B.R. 176, 181 (9th Cir. BAP 2005) (“[W]e regard ourselves as bound
by our prior decisions, and ‘will not overrule our prior rulings unless a Ninth Circuit
Court of Appeals decision, Supreme Court decision or subsequent legislation has
undermined those rulings.’” (citations omitted)); 9th Cir. BAP R. 8024-1(c)(1) (also
acknowledging ability of Panel to modify or reverse itself sitting en banc). We will
follow Burgie, and we need not decide whether stare decisis also obliged the bankruptcy
court to do so.

                                          19
unsecured creditors.

       The Trustee attempts to distinguish Burgie by arguing that the Panel

focused on the characterization of the proceeds as disposable income.7

While the Panel held that the sale proceeds were not disposable income,

the Panel stated its holding more broadly: “debtors cannot be compelled to

use the proceeds from the sale of prepetition real estate to pay creditors

under a confirmed chapter 13 plan.” Id. at 410.

       The Trustee urges us to focus on the characterization of the sale

proceeds as property of the estate under § 541(a)(6). It is true that the

Property was property of the estate when Mr. Black commenced his case.

But when the bankruptcy court confirmed the plan, the Property was

revested in Mr. Black.8 The confirmed plan provided that “[a]ny property

       7
       If anything, the 2005 amendments to the Bankruptcy Code strengthen Burgie’s
view that proceeds of post-petition asset sales are not included in disposable income.
The term “disposable income” now means “current monthly income” less certain
expenses. § 1325(b)(2). “Current monthly income” in turn means the debtor’s average
monthly income during a six-month prepetition period. § 101(10A).
       8
          In its Sale Order, the bankruptcy court stated that “THE COURT FINDS that the
property is property of the estate . . . .” The Trustee states that Mr. Black did not appeal
from the Sale Order and implies that it is too late for him to take issue with the court’s
ruling that the Property was property of the estate. But Mr. Black was the prevailing
party on the Motion to Sell. He cannot be compelled to appeal from the Sale Order, even
if it contained, in part, an unfavorable finding. See Camreta v. Greene, 563 U.S. 692, 703-04
(2011) (“As a matter of practice and prudence, we have generally declined to consider
cases at the request of a prevailing party, even when the Constitution allowed us to do
so. Our resources are not well spent superintending each word a lower court utters en
route to a final judgment in the petitioning party’s favor.” (citations omitted)); Deposit
                                                                                (continued...)

                                             20
of the estate scheduled under § 521 shall vest in Debtor upon confirmation

of this Plan.” Section 1322(b)(9) expressly permits such revesting: the plan

may “provide for the vesting of property of the estate, on confirmation of

the plan or at a later time, in the debtor or in any other entity.” Revesting

means that Mr. Black owned the property outright, free of his creditors’

claims. See Cal. Franchise Tax Bd. v. Jones (In re Jones), 420 B.R. 506, 515 (9th

Cir. BAP 2009) (holding that the estate terminates upon plan confirmation

and concluding “that ‘vests’ [under § 1327(b)] means absolute ownership,

not mere possession”); In re Niles, 342 B.R. 72, 75 (Bankr. D. Ariz. 2006)

(“[T]he intervening plan confirmation fundamentally changes the ‘property

of the estate’ landscape. Here, the plan was confirmed and the property

      8
        (...continued)
Guar. Nat’l Bank, Jackson, Miss. v. Roper, 445 U.S. 326, 333 (1980) (“Ordinarily, only a
party aggrieved by a judgment or order of a district court may exercise the statutory
right to appeal therefrom. A party who receives all that he has sought generally is not
aggrieved by the judgment affording the relief and cannot appeal from it.” (citations
omitted)).

        Moreover, the court’s finding was unnecessary. Section 5.04(a) of the confirmed
plan required Mr. Black to seek court authorization to sell real property valued at over
$5,000. Because this plan provision is not limited to property of the estate, the
bankruptcy court did not need to decide whether the property belonged to the estate.
An unnecessary finding has no preclusive effect on subsequent litigation. See United
States v. Good Samaritan Church, 29 F.3d 487, 489 (9th Cir. 1994) (“Determinations which
are immaterial to the judgment below have no preclusive effect on subsequent
litigation, especially if they cannot be appealed. The judgment was entirely favorable to
appellants so we have no jurisdiction over the appeal. To the extent that the district
court order was not favorable to appellants, it does not bind them in subsequent
litigation.” (citation omitted)).

                                            21
revested in Debtor at that time.”).

        The Trustee argues that, even though Mr. Black owned the Property

prepetition, the appreciation of its value (from $45,000 to $107,000) is

property that he acquired postpetition under § 1306. She cites a First Circuit

case, Barbosa v. Soloman, 235 F.3d 31 (1st Cir. 2000), for the proposition that

the appreciation in value of prepetition property is property that the estate

acquired postconfirmation, despite the vesting provision in the chapter 13

plan.

        We acknowledge that there is a split in authority on this point.

Compare Barbosa, 235 F.3d at 37, and In re Suratt, Case No. 95-6183-HO, 1996

WL 914095, at *3 (D. Or. Jan. 10, 1996) (allowing modification of chapter 13

plan to account for postconfirmation appreciation in property), with In re

Smith, 514 B.R. 464, 472 (Bankr. N.D. Tex. 2014) (“Even if the

post-confirmation appreciation in value was property of the estate, the

appreciation is not disposable income [that could be made available to

creditors in the analogous chapter 12 context.]”), and In re Niles, 342 B.R. at

75 (when considering whether property is property of the estate upon

conversion from chapter 13 to chapter 7, “the value of the estate’s interest

in the [postpetition appreciation] proceeds from Debtor’s sale of the

property does not include any of the nonexempt sales proceeds”).

        In our view, the revesting provision of the confirmed plan means that

the debtor owns the property outright and that the debtor is entitled to any

                                       22
postpetition appreciation. When the bankruptcy court confirmed

Mr. Black’s plan, the Property revested in Mr. Black. See In re Jones, 420 B.R.

at 515. As such, it was no longer property of the estate, so the appreciation

did not accrue from estate property. Cf. Schwaber v. Reed (In re Reed), 940

F.2d 1317, 1323 (9th Cir. 1991) (“No doubt Debtor’s argument that

appreciation enured to him would have merit if his entire interest in the

residence had been set aside or abandoned to him; it was not.”(emphasis

added)).9

       Moreover, we have already considered and rejected the framework

underpinning Barbosa. The First Circuit reasoned that, despite the language

in the plan revesting property with the debtor upon plan confirmation,

“[t]he estate does not cease to exist however, and it continues to be funded

by the Debtors’ regular income and post-petition assets as specified in

section 1306(a).” 235 F.3d at 37. Accordingly, postconfirmation appreciation

of real property could be used to increase the payout to unsecured

creditors.

       However, we squarely rejected Barbosa’s approach in Jones. We

       9
         If the plan did not vest the Property in Mr. Black, the result would likely be
different. See Klein v. Chappell (In re Chappell), 373 B.R. 73, 83 (9th Cir. BAP 2007), aff’d sub
nom. Gebhart v. Gaughan (In re Gebhart), 621 F.3d 1206 (9th Cir. 2010) (In a chapter 7 case,
where property does not revest in the debtor, “[u]nder well-settled Ninth Circuit law,
any postpetition appreciation in value in the residence in excess of the maximum
amount permitted by the exemption statute invoked inures to the benefit of the
estate.”); § 541(a)(6) (a bankruptcy estate includes “[p]roceeds, product, offspring, rents,
or profits of or from property of the estate . . . .”).

                                               23
acknowledged Barbosa’s “modified estate preservation approach,” 420 B.R.

at 513, but opted instead for the “estate termination approach,” which

provides that “all property of the estate vests in the debtor at

confirmation[,]” id. at 514. On appeal from our decision, the Ninth Circuit

affirmed, holding 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 [the debtor] 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.” Cal.

Franchise Tax Bd. v. Kendall (In re Jones), 657 F.3d 921, 928 (9th Cir. 2011) (but

declining to adopt a particular approach to determine when and to what

extent property revests with the debtor).

       Finally, the Trustee’s argument and the Barbosa decision are hard to

square with the wording of § 1306(a)(1). In normal speech, one would not

say that, when a person’s assets increase in value, that person “acquires”

an additional interest in the asset.

       We must follow the Ninth Circuit’s decisions and our own published

decisions, rather than the First Circuit’s decision in Barbosa.10 At most, the

       10
         Barbosa also differs from the present case in that the bankruptcy court and First
Circuit were both concerned that the debtors had under-reported the value of their
homestead in order to strip off a second mortgage. The bankruptcy court characterized
the debtors’ scheme as “unsavory” and a “manipulation of the [Bankruptcy] Code.”
Barbosa, 235 F.3d at 34-35 (quoting In re Barbosa, 236 B.R. 540, 551-52 (Bankr. D. Mass.
                                                                               (continued...)

                                             24
$45,000 of sale proceeds that Mr. Black promised to his creditors remained

property of his estate.

                                   CONCLUSION

      The bankruptcy court erred in requiring Mr. Black to dedicate the

excess sale proceeds of the Property to his unsecured creditors. We

REVERSE the Confirmation Order.

      10
         (...continued)
1999)). The First Circuit noted that the debtors realized “appreciation in value of almost
215% of the stipulated value of the property,” and stated that the debtors’ tactics were
“antithetical to the bankruptcy system.” Id. at 41. Here, the Property was
unencumbered, and there is no evidence that Mr. Black either artificially undervalued
the Property or engaged in manipulative tactics.

                                            25