Ryan v. United States (In Re Ryan)
725 F.3d 623
| 7th Cir. | 2013Background
- Patrick J. Ryan filed a voluntary Chapter 13 petition after accruing federal income tax liabilities for 2006–2010 and the IRS recorded a federal tax lien (2006–2009).
- At bankruptcy filing Ryan listed only $1,625 in personal property value.
- Ryan conceded the IRS’s secured claim for plan-confirmation purposes was limited to $1,625 under 11 U.S.C. § 506(a).
- He sued to “determine nature and extent of federal tax lien,” arguing under 11 U.S.C. § 506(d) that the lien amount exceeding $1,625 should be voided (i.e., lien-stripped).
- The bankruptcy court granted judgment on the pleadings for the United States, holding Dewsnup v. Timm precludes voiding the lien under § 506(d).
- Ryan appealed, arguing Dewsnup’s interpretation should not apply in Chapter 13 cases.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 506(d) allows lien-stripping of a federal tax lien in Chapter 13 where collateral value is less than the claim | Dewsnup was Chapter 7–specific; § 506(d) should allow stripping in Chapter 13 to effectuate reorganization and repayment | Dewsnup controls: “allowed secured claim” in § 506(d) is defined by § 502 allowance and state-law enforceable lien, so § 506(d) does not permit strip-down | Court affirmed: Dewsnup interpretation applies to Chapter 13; lien not voided beyond the $1,625 secured portion |
| Whether the same statutory term in § 506(d) should be given different meanings in Chapters 7 and 13 | § 506(d) should be interpreted in light of Chapter 13 policies (reorganization) | § 103(a) makes § 506(d) applicable to Chapters 7 and 13; uniform meaning required; courts may not invent different meanings by context | Court held uniform interpretation required; Clark v. Martinez principle supports same meaning across applications |
Key Cases Cited
- Dewsnup v. Timm, 502 U.S. 410 (1992) (held § 506(d)’s “allowed secured claim” is defined by § 502 allowance and state-law enforceable lien, not by § 506(a) valuation)
- In re Wright, 492 F.3d 829 (7th Cir. 2007) (explains § 506(a) valuation process dividing secured and unsecured claims)
- In re Howard, 597 F.3d 852 (7th Cir. 2010) (describes how bankruptcy court determines collateral value and secured portion under § 506(a))
- In re Woolsey, 696 F.3d 1266 (10th Cir. 2012) (concluded Dewsnup applies in Chapter 13; rejected differing interpretations across chapters)
- Clark v. Martinez, 543 U.S. 371 (2005) (statutory language that applies across categories must be given a consistent meaning)