657 F.3d 921
9th Cir.2011Background
- Jones, debtor, and her husband filed Chapter 13 in 2002; plan confirmed in 2002; property revested during Chapter 13 and later revested in Jones at plan confirmation; Jones filed a Chapter 7 petition in 2007 and received a discharge in 2008; California Franchise Tax Board (FTB) sought determination that pre-petition tax debt was not discharged under 11 U.S.C. § 727(b) and the lookback period under § 507(a)(8) was suspended; the tax debt arose from 2003 but the lookback period defined by the Chapter 7 petition would normally end in October 2007; the bankruptcy court and BAP held the debt was discharged; the Ninth Circuit reviews de novo and affirms on different grounds.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of the lookback period under § 507(a)(8) | FTB: lookback runs to 2003, tolling possible | Jones: lookback limited to Chapter 7 petition window | Lookback defined with respect to the Chapter 7 petition (October 2004–October 2007) |
| Applicability of the statutory suspension provision | FTB: suspension applies if stay precludes collection | Jones: suspension applies only if precluded from collecting during stay | Suspension applies only if the FTB was precluded from collecting by a stay in a prior case |
| Equitable tolling as basis to extend lookback | FTB: tolling possible due to statutory ambiguity | Jones: tolling not warranted; stayed not precluded from collection | Equitable tolling does not apply; debt discharged |
Key Cases Cited
- Young v. United States, 535 U.S. 43 (U.S. 2002) (lookback tolling when precluded from collection during bankruptcy)
- In re Kagenveama, 541 F.3d 868 (9th Cir. 2008) (three-year lookback tied to petition; plain language governs)
- Leavitt v. Soto (In re Leavitt), 171 F.3d 1219 (9th Cir. 1999) (authority to affirm on alternate grounds; interpretation of statute)
- In re Brawders, 503 F.3d 856 (9th Cir. 2007) (debt dischargeability; standard for reviewing BAP decisions)