Meyer v. Scholz (In Re Scholz)
447 B.R. 887
9th Cir. BAP2011Background
- Debtors filed a voluntary Chapter 13 petition and proposed a 60-month plan on May 15, 2009.
- Form B22C showed CMI of $3,822.98, consisting of Ms. Scholz's wages and retirement benefits; Scholz's Railroad Retirement Act (RRA) benefits were excluded from CMI by addendum.
- Schedule I showed total average monthly income of $6,799.61, including Mr. Scholz's RRA benefits of $3,709.25; Schedule J showed expenses of $6,361.36 and a $438 monthly plan surplus.
- Trustee objected to excluding Mr. Scholz’s RRA benefits from CMI and argued inclusion would affect median-status and projected disposable income.
- Bankruptcy court ruled RRA benefits were not included in CMI and confirmed the plan over the Trustee’s objection; the decision was published as In re Scholz, 427 B.R. 864 (Bankr. E.D. Cal. 2010).
- On appeal, the Ninth Circuit BAP vacated and remanded, holding that RRA benefits fall within CMI but cannot be used to calculate projected disposable income due to the antianticipation clause in § 231m.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether RRA benefits are included in CMI | Trustee: include RRA benefits in CMI. | Scholz: exclude RRA benefits from CMI. | RRA benefits fall within CMI. |
| Whether RRA benefits may be used in calculating projected disposable income | Trustee: include RRA benefits in projected disposable income. | Scholz: exclude RRA benefits from projected disposable income. | RRA benefits cannot be considered for projected disposable income. |
| Effect of the RRA antianticipation clause on computations | Trustee argued no conflict with antianticipation clause. | Scholz argued policy alignment with antigarnishment clause. | Antianticipation clause prevents including RRA in projected disposable income; does not prevent including in CMI. |
Key Cases Cited
- Lamie v. U.S. Tr., 540 U.S. 526, 540 U.S. 526 (2004) (excludes SSA benefits from CMI; statutory interpretation context)
- Hisquierdo v. Hisquierdo, 439 U.S. 572, 439 U.S. 572 (1979) (antigarnishment/antialienation interpretation governing RRA benefits)
- Blausey v. U.S. Tr., 552 F.3d 1124, 552 F.3d 1124 (9th Cir. 2009) (includes certain income-replacements within CMI; distinguishes from SSA exclusion)
- Hagel v. Drummond (In re Hagel), 184 B.R. 793, 184 B.R. 793 (9th Cir. BAP 1995) (antigarnishment/antialienation context for income in Chapter 13)
- Hamilton v. Lanning, 130 S. Ct. 2464, 130 S. Ct. 2464 (2010) (projected disposable income is forward-looking; can adjust for known changes)
- In re Carpenter, 408 B.R. 244, 408 B.R. 244 (8th Cir. BAP 2009) (antigarnishment/antialienation similar issues for SSA; distinguishable from RRA here)
- In re City of Vallejo, 408 B.R. 280, 408 B.R. 280 (9th Cir. BAP 2009) (de novo review of statutory construction in bankruptcy)