895 F.3d 633
9th Cir.2018Background
- Goudelock owned a condominium subject to a recorded Declaration that made the association (Sixty‑01) able to charge monthly assessments and to enforce unpaid assessments via (1) an in rem lien/foreclosure and (2) an in personam suit against the unit owner.
- She stopped paying assessments in 2009, moved out, and filed Chapter 13 in March 2011; her Chapter 13 plan surrendered the unit and Sixty‑01 filed a claim for pre‑petition arrears and ongoing monthly assessments.
- Post‑petition assessments continued to accrue through February 2015, when the mortgagee foreclosed; Goudelock completed plan payments and received a Chapter 13 discharge under 11 U.S.C. § 1328(a) on July 24, 2015.
- Sixty‑01 sought a determination that the post‑petition assessments (accrued while the petition was pending) remained personally collectible and were not discharged; bankruptcy and district courts ruled for Sixty‑01.
- The Ninth Circuit reversed, holding the association’s personal‑obligation claim to post‑petition assessments arose pre‑petition and was dischargeable under § 1328(a); the association retained its in rem lien/foreclosure rights.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether personal obligation for assessments that accrue post‑petition is dischargeable under Chapter 13 § 1328(a) | Goudelock: the in personam obligation to pay future assessments arose when she acquired title (pre‑petition) and is a dischargeable debt under § 1328(a) | Sixty‑01: post‑petition assessments arise from continued ownership and are not pre‑petition debts, so they survive discharge | Court held the in personam obligation arose pre‑petition (fair‑contemplation) and is dischargeable under § 1328(a) |
| Effect of § 523(a)(16) (post‑petition assessments exception) on Chapter 13(a) discharge | Goudelock: Congress omitted § 523(a)(16) from § 1328(a) intentionally; absence means post‑petition assessments not excepted from § 1328(a) discharge | Sixty‑01: Congress’s silence may be an oversight; § 523(a)(16) should inform dischargeability in Chapter 13 | Court concluded Congress’s omission was purposeful or controlling; § 523(a)(16) does not except these debts from a § 1328(a) discharge |
| Takings Clause challenge | Goudelock: discharge of personal obligation does not eliminate association’s in rem lien; no taking | Sixty‑01: discharging personal liability is a taking of a property right without compensation | Court held no Fifth Amendment violation because the creditor retains its in rem property interest; only in personam liability was discharged |
| Equity/fairness of debtor residing post‑petition without paying | Goudelock: equitable considerations do not override Code’s text | Sixty‑01: discharge leads to unfair "free rent" and inequity | Court held equitable concerns cannot override statutory discharge; policy changes must come from Congress |
Key Cases Cited
- Rosteck v. Margulies, 899 F.2d 694 (7th Cir. 1990) (held future condominium assessments were an unmatured pre‑petition debt and dischargeable)
- Rosenfeld v. IZQ, 23 F.3d 833 (4th Cir. 1994) (held cooperative assessments arose during post‑petition ownership and were not dischargeable)
- Johnson v. Home State Bank, 501 U.S. 78 (1991) (distinguished discharge of in personam obligations from retention of in rem property interests)
- Pa. Dep’t of Pub. Welfare v. Davenport, 495 U.S. 552 (1990) (interpreted Congress’s omission of certain § 523 exceptions from § 1328(a) to allow broader Chapter 13 discharge)
- Grogan v. Garner, 498 U.S. 279 (1991) (discussed fresh‑start policy of bankruptcy discharge)
- United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260 (2010) (noted Chapter 13 discharge can be broader than other chapters)
- In re SNTL Corp., 571 F.3d 826 (9th Cir. 2009) (explained the "fair contemplation" test for when a claim arises)
- In re Devers, 759 F.2d 751 (9th Cir. 1985) (advised liberal construction of the Code in favor of debtors)