Danielson v. Flores (In Re Flores)
692 F.3d 1021
9th Cir.2012Background
- Debtors Cesar and Ana Flores filed a Chapter 13 petition proposing a 36‑month plan with $122 monthly payments.
- Trustee objected, arguing a 60‑month minimum plan was required under § 1325(b) and Ninth Circuit precedent.
- Debtors are above median income; current monthly income exceeds local median, but disposable income is negative.
- Plan sought to pay only 1% to unsecured creditors; the Trustee sought to enforce the 5‑year period under § 1325(b)(4).
- Bankruptcy Court confirmed a 60‑month plan; BAP certified issue for direct appeal to the Ninth Circuit.
- Key issue is whether § 1325(b) requires a five‑year period when there is no projected disposable income.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Lanning overrules Kagenveama on ACP for zero PDI | Flores rely on Kagenveama that ACP does not apply without PDI | Trustee argues Lanning supersedes Kagenveama and imposes ACP | Lanning not clearly irreconcilable with Kagenveama; ACP remains applicable |
| Whether ACP serves as a monetary multiplier or a temporal duration for above‑median debtors | Kagenveama treats ACP as non‑applicable without PDI | Lanning and other authorities favor a forward‑looking framework with ACP relevance | Text and framework support ACP as a temporal term under Kagenveama, when PDI exists |
| Whether a debtor with negative projected disposable income must have a five‑year plan | Kagenveama allows zero PDI to yield no ACP requirement | Lanning and policy concerns require protection of creditors through an ACP | Court reverses on the grounds that Kagenveama controls and not clearly overruled by Lanning |
| Impact of Lanning on plan duration requirements for above‑median debtors with no PDI | Lanning undermines any fixed duration when PDI is zero | Lanning yields forward‑looking results but does not mandate a minimum length for all | Lanning does not clearly overrule Kagenveama’s ACP logic; remand advised |
Key Cases Cited
- In re Kagenveama, 541 F.3d 868 (9th Cir. 2008) (mechanical projection of PDI and ACP framework; later partially overruled by Lanning)
- Hamilton v. Lanning, 130 S. Ct. 2464 (Supreme Court 2010) (forward‑looking approach to projected disposable income; rejects mechanical PDI)
- Baud v. Carroll, 634 F.3d 327 (6th Cir. 2011) (discusses ACP interpretation; recognizes split among circuits and relevance of Lanning)
- Tennyson, 611 F.3d 873 (11th Cir. 2010) (ACP interpreted as temporal minimum in some circuits; discusses senseless results)
- Fuger, 347 B.R. 94 (Bankr. D. Utah 2006) (illustrates plan duration considerations related to ACP and PDI)