Harchar v. United States (In Re Harchar)
694 F.3d 639
6th Cir.2012Background
- Harchar filed Chapter 13; IRS was a creditor for pre-petition taxes.
- Plan confirmed August 1998; provided 5% payout on unsecured claims and regular payments to IRS over the plan.
- June 2000, Harchars filed adversary about IRS ‘freezing’ refunds and delaying 1999 refund pending plan modification.
- IRS sought modification of the plan; refund was later issued with interest after amendments.
- Bankruptcy court granted summary judgment for IRS on stay violations; district court affirmed; plan/due process claims dismissed.
- Court held no private right of action for plan-violation under §1327; 106(b) sovereign-immunity issues addressed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Plan-violation claim viability | Harchar asserts IRS violated plan terms. | IRS argues no plan-violation actionable damages under §1327. | Plan-violation claim properly dismissed; no private right of action under §1327. |
| Automatic stay: 362(a)(3) and 362(a)(6) violations | Harchar claims IRS froze refund and delayed turnover in bad faith. | IRS actions were permissible processing; no stay violation given facts. | Summary judgment for IRS upheld; no stay violation proven. |
| Due process immunity under §106(b) | IRS waived immunity by filing a proof of claim. | Claim did not arise from same transaction; no waiver. | No waiver; due process claim properly dismissed. |
| IRS cross-appeal dissolution | N/A | Cross-appeal preserved certain arguments but later sought dismissal. | Cross-appeal granted/dismissed as moot. |
Key Cases Cited
- Gordon Sel-Way, Inc. v. United States (In re Gordon Sel-Way, Inc.), 270 F.3d 280 (6th Cir. 2001) (test for 'same transaction' under §106(b) relies on Rule 13 logic)
- Rebel Coal Co. (In re Rebel Coal Co.), 944 F.2d 320 (6th Cir. 1991) (Rule 13 transactional relationship guidance)
- Freeman v. Schulman (In re Freeman), 86 F.3d 478 (6th Cir. 1996) (tax refunds in Chapter 13 disposable income context)
- In re Burrow, 36 B.R. 960 (Bankr. D. Utah 1984) (IRS timing and control material to stay analysis)
- In re Myles, 395 B.R. 599 (Bankr. M.D. La. 2008) (private right of action and §1327 implications)