OPINION
The bankruptcy court concluded that certain malpractice claims, though time-barred under the applicable statute of limitations, should be considered in determining whether the aggregate unsecured debts exceed the $100,000.00 limitation imposed by 11 U.S.C. § 109(e). The court dismissed the case and debtor appealed. We reverse and remand.
I. FACTS
Debtor was a professional tax preparer who occasionally advised his clients regarding tax shelters. In 1983 and 1984 he suggested to 86 of his clients that they invest in a certain aggressive tax shelter. That shelter ultimately failed both as an investment and as a tax shelter. All of the investors knew of the failure of the investment by late 1985.
In 1989, debtor filed a chapter 13 petition listing the 86 investors as disputed claimants. He valued most of their claims at zero. Most of the claimants had not filed suit or otherwise pursued their claims. One claimant had a judgment for $18,814 against debtor arising from the failed tax shelter and two others had lawsuits pending.
Ten of the 86 investors filed proofs of claim alleging losses from the tax shelter scheme. Debtor objected to all of them, principally alleging that they were barred
At the time of the confirmation hearing, the court found that the total liquidated claims exceeded $100,000.00, that those claims were unsecured, and therefore denied confirmation of the plan. The court included the face amount of the disputed investor’s claims in determining the amount of debt. The court also found that the petition was filed in bad faith.
II. STANDARD OF REVIEW
The meaning of the terms “contingent” and “unliquidated” as used in 11 U.S.C. § 109(e) is a conclusion of law which we review
de novo. In re Wenberg,
III. DISCUSSION
11 U.S.C. § 109(e) forbids chapter 13 relief if the debtor has greater than $100,000.00 in noncontingent, liquidated unsecured debts
2
. A debt is noncontingent if all events giving rise to liability occurred prior to the filing of the bankruptcy petition. As explained in
In re Fostvedt,
A tort claim ordinarily is not contingent as to liability; the events that give rise to the tort claim usually have occurred and liability is not dependent on some future event that may never happen. It is immaterial that the tort claim is not adjudicated or liquidated, or that the claim is disputed, or indeed that it has any of the many other characteristics of claims under the Code.
Because the advice that gave rise to these claims has already been given and acted upon, these claims are noncontingent.
The question now turns to the issue of liquidation. In
In re Sylvester,
The concept of liquidation has been variously expressed. The common thread ... has been ready determination and precision in computation of the amount due.... Some cases have stated the test as to whether the amount due is capable of ascertainment by reference to an agreement or by simple computation. Id.
Therefore, whether a debt is liquidated or not for purposes of 11 U.S.C. § 109(e) does not depend strictly on whether the claim sounds in tort or in contract, but whether it is capable of ready computation. For the same reason, whether a debt is liquidated does not depend on whether it is disputed.
3
Thus, a disputed debt which is capable of ready determination is liqui
[t]he definition of ‘ready determination’ turns on the distinction between a simple hearing to determine the amount of a certain debt, and an extensive and contested evidentiary hearing in which substantial evidence may be necessary to establish amounts or liability.
It is not entirely clear where the line must be drawn between a simple hearing and a complex one, but this case does not require that we do so. From the record now before us, it appears that many of the claimants will readily admit that their claims have been barred by the statute of limitations. Accordingly, it appears that only the briefest of hearings will be needed. Since the investors’ claims are capable of ready determination and computation, they are liquidated for purposes of 11 U.S.C. § 109(e).
Since the amount of the liquidated debt owed to many of the tax shelter claimants may be zero, the debtor may have less than $100,000 in unsecured, noncontingent, liquidated debts. It appears that the bankruptcy court misapplied the law in concluding that the full amount of these disputed claims must be included as the liquidated debt for the purposes of section 109(e). For that reason, we remand for a redeter-mination of eligibility consistent with this decision.
The court also dismissed the ease on the basis that the petition was filed in bad faith. Dismissal for a lack of good faith is a matter left to the sound discretion of the bankruptcy court.
In re Stolrow’s Inc.,
IV. CONCLUSION
The court improperly concluded that it must include the full amount of liability asserted by the tax clients in applying 11 U.S.C. § 109(e). The amount of the debt owed to investors is capable of ready determination. The liquidated amount of debt for most of them appears to be zero.
Because the bankruptcy court also afforded some weight to the conclusion that debtor was ineligible when it dismissed for bad faith, it must reevaluate that decision consistent with this opinion. The order of dismissal is reversed and the matter remanded.
Notes
. The statute of limitations for tort claims under California law is three years. California Code of Civil Procedure § 338.
. Some courts have placed great emphasis on the supposed distinction between "claims” and "debts”. See,
In re Lambert,
.The Panel has previously held that the word "debt” includes all legal obligations "no matter how remote or contingent_”
In re Quintana,
The Panel has also previously held that the "disputed unsecured debt is not excluded when determining whether the $100,000 limitation is exceeded.”
In re Sylvester,
Though the rule cited from Sylvester and the language from Quintana above appear rigid, the task at hand is not a purely mechanical exercise. As the Sylvester court also noted:
It is also apparent that the court must determine the liquidated amount of any disputed claim prior to making the computation required by section 109(e). Otherwise, the federal court jurisdiction would depend on the accuracy and good faith of both creditors and debtors. Experience teaches that accuracy, at least, is elusive.
That determination, at the outset of the case, ensures that the ineligible debtor does not linger long under the shelter of Chapter 13 by merely claiming that a substantial dispute exists and that the eager creditor does not deprive the eligible debtor of his relief by asserting an inflated or dubious claim.