In Rе: RACHEL CAPELOTO GUILLEN, Debtor. NANCY J. WHALEY, Plaintiff - Appellant, versus MANUEL GUILLEN as personal representative of Rachel Capeloto Guillen, Defendant - Appellee.
No. 17-13899
United States Court of Appeals, Eleventh Circuit
August 25, 2020
B.C. Docket No. 1:15-bk-64860-JRS
[PUBLISH]
Appeal from the United States District Court for the Northern District of Georgia
Before BRANCH and MARCUS, Circuit Judges, and UNGARO,* District Judge.
This appeal comes to us directly from a bankruptcy court order confirming the modified Chapter 13 plan of debtor Rachel Capeloto Guillen. See
In this case, the bankruptcy court found no requirement in the statutory text that debtors show a change in circumstances before modifying confirmed plans. Neither do we. Nor do we see any reason to add gloss to the statute Congress wrote. Accordingly, we affirm.
I.
Rachel Capeloto Guillen filed a voluntary petition under Chapter 13 of the Bankruptcy Codе,
Shortly thereafter, the bankruptcy court confirmed Guillen‘s Chapter 13 plan. The plan required Guillen to pay her unsecured creditors a total of $20,172. The court‘s confirmation order affirmed that the plan satisfied the requirements of
Guillen‘s plan also provided for the payment of $4,900 in attorney‘s fees, along with any approved fees incurred in connection with an adversary proсeeding. Four months after confirmation, Guillen‘s counsel submitted an application for compensation to the bankruptcy court. He sought $8,295 for post-petition legal services rendered in connection with Guillen‘s adversary proceeding against Wells Fargo. To
Nancy Whaley, the Standing Chapter 13 Trustee for the Northern District of Georgia (the “Trustee“), objected to the modification. She claimed that the modified plan violated the best interests of creditors test. Moreover, she argued that the doctrine of res judicata barred Guillen‘s modification. Thе bankruptcy court disagreed and confirmed Guillen‘s modified plan. The court found that
This timely appeal followed.4
II.
We review de novo the bankruptcy court‘s conclusions of law. In re Tennyson, 611 F.3d 873, 875 (11th Cir. 2010). Title
At the same time,
We begin -- and could well end -- our analysis of
We are confirmed in this interpretation of
Throughout the Bankruptcy Code, when Congress sought to impose a “circumstances” requirement, it said so. Cf. Hamilton v. Lanning, 560 U.S. 505, 514 (2010) (“[W]e need look no further than the Bankruptcy Code to see that when Congress wishes to mandate simple multiplication, it does so unambiguously -- most commonly by using the term ‘multiplied.‘“). To list just a few examples: Debtors who apply for Chapter 13‘s so-called hardship discharge must show “circumstances for which the debtor should not justly be held accountable.”
Indeed, in
The Seventh Circuit reached the same result in In re Witkowski, 16 F.3d 739 (7th Cir. 1994). In Witkowski, the court upheld the trustee‘s modification of the debtor‘s initial Chapter 13 plan. Id. at 740. The first plan provided unsecured creditors with a 10% recovery on their claims. Id. When fewer unsecured creditors filed proofs of claims than expected, the trustee filed a modification, seeking to enlarge the recovery for those unsecured creditors who did file. Id. The debtor opposed the modification and argued that modification under
One of our sister circuits, however, disagrees. In In re Arnold, the Fourth Circuit held that res judicata bars modification unless there has been an unanticipated, substantial change in the debtor‘s financial condition. 869 F.2d 240, 243 (4th Cir. 1989). In Arnold, the debtor experienced a substantial increase in his annual income post-confirmation -- from $80,000 to $200,000 in a two-year period. Id. at 241. So an unsecured creditor sought to modify Arnold‘s plan to increase the amount he owed. Id. The Fourth Circuit upheld the mоdification. After concluding that only unanticipated, substantial changes in the debtor‘s financial condition can avoid the preclusive effect of confirmed plans, the court determined that Arnold‘s change in income was both unanticipated and substantial.6 Id. at 243. The Fourth Circuit reaffirmed this holding more recently in In re Murphy, 474 F.3d 143, 150 (4th Cir. 2007) (requiring a threshold showing of an unanticipated, substantial change in circumstances before permitting modification to proceed).
So why impose this requirement when the text of
We remain unpersuaded. For one, these general policy concerns cannot overcome the plain language of the statute. See Astoria, 501 U.S. at 108 (noting courts lack “free rein to impose rules of preclusion, as a matter of policy, when the interpretation of a statute is at hand“). Moreover, as we see it, these concerns -- the same ones the Trustee raises in this appeal -- are overstated. Congress built ample safeguards into
For starters, only a limited universe of parties may seek to modify confirmed Chapter 13 plans. The statute resеrves this opportunity for debtors, trustees, and unsecured creditors alone; secured creditors
Moreover, the modified plan must still satisfy the requirements of
Even where modified plans satisfy these express limits, the statute reserves to the discretion of the bankruptcy court whether to confirm a modified plan. The bankruptcy court “shall confirm” a Chapter 13 plan if it meets the requirements of
At oral argument, the Trustee claimed we resolved the question we answer today in In re Hoggle. We disagree. Nothing we have said today is contrary to our holding in Hoggle. There, the debtors in three consolidated cases lived in mobile homes purchased with financing from Green Tree Acceptance, Inc. Id. at 1009. Their Chapter 13 plans proposed to satisfy past-due payments owed to Green Tree. Id. After confirmation, each debtor failed once again to make a payment to Green Tree. Id. The lender then petitioned the bankruptcy court for relief from the automatic stay, but the court rejected the motion. Id. Instead, the court permitted the debtors to modify their plans to cure the post-confirmation defaults. Id.
The legal issue we resolved in Hoggle was diffеrent from the one we face today. We interpreted a different statute,
It remains true that an unforeseen change in circumstances is a good reason to permit a modification that otherwise satisfies
That‘s just what the bankruptcy court did here. In this case, Guillen sought to modify her plan, not to enrich herself at the expense of her creditors, but to pay her attorney‘s fees. These fees were incurred by her counsel in the conduct of a successful adversary proceeding against Wells Fargo -- an adversary proceeding that was the sine qua non of the unsecured creditors’ recovery in this case. And the bankruptcy court determined it would be preferable to modify the plan than to either (a) compel Guillen, a fixed-income debtor, tо pay an additional $8,295 over the life of her plan; or (b) deprive her counsel of the fees he had earned in the prosecution of a vital adversary proceeding.
Finally, in her reply brief (and only in her reply brief), the Trustee argues that the bankruptcy court improperly included Guillen‘s attorney‘s fees in its calculation of the best interests of creditors test, and that the amount of those fees was not modifiable post-confirmation. The Trustee hаs abandoned these claims. As we have made clear, “[w]hen an appellant fails to challenge properly on appeal one of the grounds on which the [bankruptcy] court based its judgment, he is deemed to have abandoned any challenge of that ground.” Sapuppo v. Allstate Floridian Ins. Co., 739 F.3d 678, 680 (11th Cir. 2014). We have stressed too that “an appellant must directly challenge each of the [bankruptcy] court‘s grounds in his initial brief; challenges that аre merely hinted at or that first appear in a reply brief do not merit consideration.” Hi-Tech Pharm., Inc. v. HBS Int‘l Corp., 910 F.3d 1186, 1194 (11th Cir. 2018); see also Access Now, Inc. v. Sw. Airlines Co., 385 F.3d 1324, 1330 (11th Cir. 2004) (“[T]he law is by now well settled in this Circuit that a legal claim or argument that has not been briefed before the court is deemed abandoned and its merits will not be addressed.“). Here, the Trustee didn‘t just omit these claims from her opening brief. She told this Court -- and, for that matter, the appellee -- that the bankruptcy court‘s calculatiоn of the best interests of creditors test was not “the issue on appeal.” We decline the Trustee‘s invitation to consider her belated objections at this late stage.
*
The bankruptcy court concluded that
AFFIRMED.
Notes
shall confirm a plan if . . . the value, as of the effective date of the plan, of property to be distributed under the plan on account of each allowed unsecured claim is not less than the amount that would be paid on such claim if the estate of the debtor were liquidated under chapter 7 of this title on such date.
At any time after confirmation of the plan but before completion of payments under such plan, the plan may be modified, upon request of the debtor, the trustee, or the holder of an allowed unsecured claim, to --
(1) increasе or reduce the amount of payments on claims of a particular class provided for by the plan;
(2) extend or reduce the time for such payments;
(3) alter the amount of the distribution to a creditor whose claim is provided for by the plan to the extent necessary to take account of any payment of such claim other than under the plan; or
(4) reduce amounts to be paid under the plan by the actual amount expended by the debtor to purchase health insurance for thе debtor (and for any dependent of the debtor if such dependent does not otherwise have health insurance coverage) [subject to certain requirements not applicable here].