Lead Opinion
OPINION
INTRODUCTION
This appeal is an example of how chapter 13
The creditor filed a secured proof of claim. The chapter 13 plan was silent regarding the secured claim and lien.
When the chapter 13 trustee noticed his intention to pay a 100% distribution to the creditor on its deemed allowed secured claim, unless the debtors objected to the claim within 30 days, the debtors still did not object.
Then, four and one-half years after plan confirmation, the debtors objected to the secured creditor’s claim, seeking disallowance thereof, and turnover of the funds paid to it. The bankruptcy court applied laches
In AFFIRMING on the basis of laches, we also hold that it was the debtors’ burden to challenge a timely filed proof of secured claim, because their plan did not expressly provide that the claim would be treated as unsecured and that the creditor’s lien would be avoided.
FACTS
Jon and Sharon Shook (“Debtors”) filed a chapter 13 bankruptcy petition on January 25, 1996. They listed residential real property worth $100,000, which was fully encumbered by secured debt. Seven secured claims were listed, which totaled $113,200. Also listed were priority tax claims in the approximate sum of $100,000.
In their Statement of Financial Affairs, Debtors indicated that there was a judgment against them held by Contractors Bonding and Insurance Co. (“CBIC”). They listed CBIC as an unsecured nonpriority creditor with a debt of $15,145.66. CBIC was placed on the creditor matrix, and was served with notice of the filing and with a copy of the chapter 13 plan.
CBIC filed a timely proof of secured claim for $11,864.83, for the balance due on the judgment. It was undisputed that the judgment had been recorded almost one year prior to bankruptcy, on February 14, 1995. See Nev.Rev.Stat. 17.150 (West, WESTLAW through 1999 Sess.) (providing that a recorded judgment becomes a lien upon all the debtor’s nonexempt real property in the county where the judgment is recorded).
Debtors proposed a five-year plan designed to pay only the secured and priority tax debt, with no dividend to the unsecured creditors. The plan called for 59 monthly payments, with the 60th and final payment to be made from the proceeds of a sale or refinancing of their residence.
The plan acknowledged an IRS secured claim ($2,335), recorded on December 5, 1995, and the unsecured priority claims of both the IRS ($77,000) and the State of Nevada ($22,000).
CBIC was not acknowledged or otherwise mentioned in the plan provisions, either as a secured or an unsecured creditor. CBIC did not object to the plan.
F. With respect to each allowed secured claim provided [sic] by the plan,4 the holder of such claim either accepted, or was deemed to have accepted, the plan [sic] in the alternative—
a. (i) the plan provides that the holder of such claims retain the lien securing such claims; and
(ii) the value, as the [sic] effective date of the plan, of property to be distributed under the plan on account of such claim is not less than the allowed amount of such claim....
Order Confirming Debtor(s) Plan, March 12,1996.
Paragraph (5)(c) of the confirmation order further set forth the order of payment. After priority claims and trustee fees, the trustee was to pay
Creditors whose claims are timely filed and allowed in such amount and order of preference as may be provided by the plan or as may be required to provide adequate protection of the interest of any entity with an interest in the property of the estate.
Id.
On June 17, 1996, the trustee filed and served a “Notice of Trustee’s Intent to Pay Claims.” Listed first was the CBIC claim for $11,864.83, which the trustee indicated was classified as “SECURED” and would be paid 100% plus interest. The notice advised that the claim would be deemed allowed pursuant to § 502(a), and deemed approved by Debtors for distribution pursuant to the confirmed plan, unless Debtors filed a written objection to the claim within 30 days of the notice date. No objection was filed in response to the notice, and CBIC was thereafter paid a total of $14,242.18.
Approximately four and one-half years later, when Debtors were selling their home in accordance with the confirmed plan, they discovered and maintained that funds “intended for IRS [had been] erroneously paid to CBIC.” Debtors’ Reply to Opposition, Jan. 23, 2001, p. 2. Although CBIC had provided a Satisfaction of Judgment in order to release its lien in connection with the sale, escrow had not closed, apparently, because the IRS had not been paid and its lien still attached.
Therefore, on December 20, 2000, Debtors filed an objection to the CBIC proof of claim on the grounds that it was, in actuality, an unsecured claim, and had been treated as such in the plan. In addition, Debtors sought the return of the money paid to CBIC. Debtors stated that CBIC’s Satisfaction of Judgment, given in connection with the sale, had not yet been recorded and could be returned.
CBIC opposed the motion on the grounds that Debtors’ objection was untimely. CBIC stated that, at Debtors’ behest, it had already given a Satisfaction of Judgment to a title company so that Debtors could sell or refinance their residence. CBIC asserted that these facts constituted waiver by Debtors.
A hearing on Debtors’ objection took place on January 25, 2001. When asked by the court why Debtors had not objected to CBIC’s claim four years before, their attorney stated that he had “overlooked it.” Transcript, Jan. 25, 2001, p. 3:9.
The bankruptcy court found an absence of a plan provision for CBIC’s secured claim, and that CBIC was therefore entitled to payment on its secured claim because it had filed a proof of secured claim to which no objection had been made. Therefore, the court held that Debtors could not use general plan provisions either to avoid CBIC’s lien or to reclassify CBIC’s claim.
ISSUES
1.Whether CBIC’s secured claim was deemed allowed, so that it was enti-tied to distribution under the chapter 13 plan provisions.
2. Whether Debtors’ chapter 13 plan provisions bound CBIC to unsecured status.
3. Whether the bankruptcy court abused its discretion by denying Debtors’ claim objection on the grounds of laches.
STANDARDS OF REVIEW
The panel reviews issues of law under the de novo standard, and reviews findings of fact for clear error. Otto v. Niles (In re Niles),
We review the bankruptcy court’s decision to bar a claim on the basis of laches for an abuse of discretion. Telink, Inc. v. United States,
DISCUSSION
This case presents several undercurrents of controversy surrounding the claims allowance process in chapter 13, the treatment of secured claims, and the binding effect of a chapter 13 plan.
We begin with the longstanding principle that a secured creditor may bypass a debtor’s bankruptcy proceedings and enforce its lien in the usual way, because unchallenged liens pass through bankruptcy unaffected. See Long v. Bullard,
In this case, CBIC filed a proof of secured claim and was a voluntary participant in the bankruptcy proceedings. See Fed.R.Bankr.P. 3001, 3021; 11 U.S.C. § 502(a). Nevertheless, Debtors contend that their bankruptcy schedules and the confirmed plan determined, without objection from CBIC, that CBIC’s claim was actually an unsecured claim and would be treated as such. They also argue that they were entitled to object to the allowance of the secured claim four and one-half years after confirmation, pursuant to the claims allowance procedures of § 502(b) and Rule 3007.
CBIC argues, in counterpoint, that its hen could not be avoided by the plan provisions alone, and that any objection to its properly filed proof of secured claim was barred by the confirmed plan. Alternatively, it maintains that Debtors waited an unreasonably long time before “discovering” the fact of the trustee’s payment and the filing of their claim objection.
A. CBIC’s Secured Claim was Deemed Allowed
1. Section 502
To be paid from the estate, a claim must be “allowed” under § 502 in one of three ways: “first, a proof of claim is filed or deemed filed and no party objects; second, a claim is allowed by the court after an objection is filed; and third, a claim is estimated by the court under the provisions of section 502(c).” 4 Collier on Bankruptcy ¶ 502.01, p. 502-9 (Lawrence P. King et al. eds., 15th ed. rev.2002). The CBIC claim fell into the first category, and was “deemed” allowed.
Generally, absent a written objection from a party in interest, a claim is “deemed allowed” upon the filing of a timely proof of claim. 11 U.S.C. §§ 501(a), 502(a); Fed.R.Bankr.P. 3002. See Fireman’s Fund Mortgage Corp. v. Hobdy (In re Hobdy),
Although a claim may initially be deemed allowed, it may thereafter be disallowed, in full or in part, following affirmative action by the debtor or trustee and by court order.
CBIC filed a proof of secured claim. Prior to plan confirmation, Debtors did not object to the claim, either pursuant to the claims objection process, or by initiating an adversary proceeding to determine the extent and validity of CBIC’s lien. Merely listing the claim as unsecured in their schedules was not enough to divest the CBIC claim of its status as a deemed valid claim and hen interest. 11 U.S.C. § 502(a).
Therefore, we hold that at the time of plan confirmation, CBIC’s proof of claim was deemed to be an allowed secured claim, and was entitled to distribution from the estate.
2. Section 506(a) — Valuation and the Secured Claim
The Code contains a separate procedure to determine whether sufficient value exists in the collateral which secures a claim to support an in rem right. Although there was no pledged collateral in this case, nevertheless CBIC’s claim could only be secured to the extent it attached to nonexempt equity in Debtors’ residence.
Section 506(a)
Section 506 does not determine the allowance or disallowance of a claim, but rather governs the amount and treatment of secured claims. 4 Collier on Bankruptcy, supra, ¶ 506.01. This section “was intended to facilitate valuation and disposition of property in the reorganization chapters of the Code.” Oregon v. Lange
Rule 3012 implements the substantive rights of § 506(a). 9 Collier on Bankruptcy, supra, ¶ 3012.01, at 3012-1. It provides that the bankruptcy court may determine the value of a secured claim, upon motion of a party in interest, and after a hearing on notice to the holder of the secured claim. Such a motion commences a contested matter pursuant to Rule 9014. However, if the valuation is part of an effort to determine the validity, priority or extent of a lien, then an adversary proceeding is required, pursuant to Rule 7001(2). Id. at 3012-4.
Indisputably, Debtors did not move to determine whether their residence had sufficient value to secure CBIC’s lien, nor did they commence an adversary proceeding, prior to plan confirmation, to determine the extent of CBIC’s lien. On appeal, they contend that the plan provisions, together with their bankruptcy schedules, determined CBIC’s secured claim to be unsecured and thereby stripped off its lien. See 11 U.S.C. § 506(d) (providing, with exceptions, that “[t]o the extent that a lien secures a claim against the debtor that is not an allowed secured claim, such lien is void”). We disagree with Debtors’ argument because CBIC’s claim was “deemed allowed” and the plan did not “provide for” CBIC’s secured claim and lien. See Dewsnup,
B. To be Adversely Affected, an Allowed Secured Claim Must be “Provided for” in the Chapter IB Plan
Section 1327 provides that “[ejxcept as otherwise provided in the plan or the order confirming the plan, the confirmation of a plan vests all of the property of the estate in the debtor” and “the property vesting in the debtor ... is free and clear of any claim or interest of any creditor provided for by the plan.” 11 U.S.C. § 1327(b) and (c) (emphasis supplied). Section 1328(a) mandates that a debtor shall be granted a discharge of “all debts provided for by the plan or disallowed under § 502 of this title.” 11 U.S.C. § 1328(a) (emphasis added).
The phrase “provided for in the plan,” means that a plan “ ‘makes a provision’ for, ‘deals with,’ or even ‘refers to’ a claim.” Rake v. Wade,
Under § 1327(a), the provisions of a confirmed plan “bind the debtor and each creditor, whether or not the claim of such
The extent to which chapter 13 plan provisions themselves can constitute an “objection to” or “valuation of’ a secured claim, or alone can mandate avoidance of the lien, is unsettled. Bankruptcy courts have typically taken one of three approaches: (1) chapter 13 plan confirmation prevails over the claims process; (2) the claims process prevails over plan confirmation; or (3) a middle-of-the-road approach based on due process concerns. See generally In re Basham,
We have approved a line of cases which holds that the lien of a participating or nonparticipating creditor cannot be extinguished except through a formal claim objection or lien avoidance action, rather than through an uncontested plan confirmation hearing. See Hobdy,
The “middle-of-the-road” approach, which has emerged in the case law subsequent to Hobdy, focuses on the sufficiency of the notice and considers the totality of the circumstances. Those courts hold that a debtor can bypass the claims allowance and adversary rules and, instead, “object” to a creditor’s claim through plan provisions which modify such debt and lien. See Piedmont Trust Bank v. Linkous (In re Linkous),
We now acknowledge that a plan can effectively determine value and/or avoid a lien only if the creditor receives clear notice that the plan will do so. A plan that is silent about the fate of a secured claim provides no notice of what will happen to the secured claim and therefore cannot effectively avoid a lien or determine its value. See Great Lakes Higher Ed. Corp. v. Pardee (In re Pardee),
Debtors’ plan in this case did not “provide for” CBIC’s secured claim by any of the required methods. Debtors listed the CBIC debt as unsecured in their bankruptcy schedules, but did not refer to it in the plan. The plan treated all unsecured claims similarly, by paying them nothing. Nothing in the plan alerted CBIC that Debtors intended simultaneously to avoid its lien and pay it nothing. Debtors nevertheless contend that CBIC either consented to its treatment as an unsecured claimant or was bound to such status by the confirmed plan, even though the plan nowhere acknowledged or treated CBIC’s secured claim or lien. We hold that such “treatment” did not meet the due process requirements for the discharge of a secured debt, pursuant to § 1328(a).
Due process is the linchpin to determining the rights of secured creditors in chapter 13,
In Gregory, an undisputedly unsecured creditor complained that a confirmed plan which provided for zero payment to the unsecured class had not provided for its claim. The Ninth Circuit Court of Appeals rejected that argument, holding that a plan which proposes to pay nothing on a claim does indeed “provide for” the claim. Gregory,
However, there is a significant difference between a plan which provides for zero payment to unsecured creditors and
In our Circuit, a creditor with express notice of its proposed treatment in the plan is required to object to the plan, or it will be bound by it. Pardee,
We presaged this policy in Hobdy, when, although the case could have been decided solely on statutory grounds, we expressed due process concerns. See Hobdy,
On appeal, we reversed, and held that the creditor’s claim, which was deemed allowed, had been compromised without requisite notice and due process. We held that the debtor could not alter the amount of the claim, nor trump the creditor’s right to defend its claim, without first bringing a contested claim allowance procedure. Id. at 321.
When a plan is ambiguous, the Ninth Circuit’s approach puts the risk of challenging the claim upon the debtor-drafter. Id. See also Deutchman v. Internal Revenue (In re Deutchman),
Debtors cite In re Harnish,
Simply by assuming that the CBIC claim would be classified with the other unsecured claims, Debtors in the case at bar did not “provide for” CBIC’s allowed secured claim and lien, and thus, the plan could not bind CBIC to an unsecured status. Therefore, CBIC could rightly rely on the conclusion that its unchallenged lien would pass through the bankruptcy unaffected, consistent with well-established law. See In re Beard,
C. Debtors’ Claim Objection was Barred by Laches
CBIC’s deemed allowed secured claim had been paid in full. Four and one-half years after plan confirmation and payment, Debtors sought to have the court disallow the CBIC secured claim. Applying laches, the bankruptcy court denied Debtors’ motion, finding that the objection came too late. We agree.
1. No Limitations Period for Claim Objections
Debtors contend that neither the Bankruptcy Code nor Rules specify a limitations period for objecting to the allowance of proofs of claim, and that laches did not apply because CBIC was not prejudiced by the delay.
As we explained above, the order confirming the chapter 13 plan did not conclu
To date, there has been no case law in the Ninth Circuit prohibiting postconfirmation claim objections. Rule 3007 does not provide a time limit for objections to proofs of claims, and such an objection may be filed at any time. Bitters v. Networks Elec. Corp. (In re Networks Elec. Corp.),
Other circuits have viewed postconfirmation claim objections as prohibited collateral attacks upon the final plan confirmation order. The Fifth Circuit in Simmons held that §§ 506(a) and 1325(a)(5) require that a proof of secured claim must be acted upon — either allowed or disallowed — or be deemed an allowed secured claim under § 502(a) for purposes of the plan, before plan confirmation, and that an objection is thereafter barred by § 1327(a). See Simmons,
We are not inclined to make such a blanket ruling. Where the amount stated in the proof of claim differs from the amount proposed for payment under the plan, we have opined that “[s]ections 502(a) and 1327(a) may be harmonized by interpreting § 1327(a) as dictating that the plan binds the parties to the amount the trustee will distribute under the plan, but is not binding as to the amount of the claim.” Hobdy,
In their objection, Debtors argued that there was no nonexempt equity in their residence to secure CBIC’s claim and lien. While such an objection questioned whether CBIC’s claim was thus enforceable, a grounds for objection enumerated in § 502(b)(1), Debtors’ objection also raised a valuation issue concerning the amount of nonexempt equity in the residence. Although a claim may be allowed as a valid secured claim, whether it is fully secured is a valuation question, which may not have been determined by either the plan provisions or the confirmation order. Such are the circumstances of our case. CBIC did not value Debtor’s residence in its proof of claim, nor did the plan purport to value it.
The timeliness of a valuation determination under Rule 3012 depends “on the purpose for which it is sought.” See 9 Collier on Bankruptcy, supra, ¶ 3012.01, at 3012-2. In this case, the valuation motion should have been brought before CBIC was paid the full amount of its secured claim, and Debtors’ untimely motion was subject to denial based on the equities of the case and the consideration of the totality of the circumstances.
2. Equitable Time Limits for Objection
Generally, when an action is not subject to a statute of limitations, the equitable doctrine of laches may alternatively limit the time within which the action must be brought. Russell v. Todd,
To succeed on its affirmative defense of laches, CBIC was required to present evidence of an inexcusable delay in the exercise of a known right, and that it was thereby prejudiced. See Stevens Tech. Servs., Inc. v. S.S. Brooklyn,
In this case, the evidence of Debtors’ delay in bringing the objection must be viewed in the context of the progression of the chapter 13 case. Debtors’ five-year plan had been confirmed and nearly completed. Administratively, the claims against the estate had been determined years before for purposes of distribution— at the latest, at the time of the trustee’s notice. The trustee’s notice clearly stated that CBIC would be paid 100% of its secured claim, and gave a time period for filing written objections to the proposed allowance and payment. Debtors did nothing.
Granted, the trustee’s notice of payment was not a motion, and no court order allowing the claims as noticed was issued. Compare In re Macias,
Although they received the notice, Debtors failed to object, and CBIC’s claim was paid in full. Four and one-half years later, Debtors finally objected to the allowance of CBIC’s secured claim, with the weak explanation that counsel had “overlooked” this clearly important matter.
Debtors contend that they did not discover the payment to CBIC until they attempted to sell their residence. We
Debtors contend that CBIC was not prejudiced by the four-year delay because CBIC’s Satisfaction of Judgment had not yet been recorded, and as a bonding company, CBIC could easily return the money. We disagree.
As we have said, prejudice is presumed from delay. Further, CBIC presented evidence that it had changed its legal position by virtue of the release of its lien, notwithstanding that the written document had not yet been recorded. The fact that CBIC could have returned the money does not mean that it would not be prejudiced if it were ordered to disgorge the payment. The evidence showed that CBIC released its hen in rebanee upon its deemed allowed secured claim, the terms of the confirmed plan, and the payment of its claim by the trustee years before. Indeed, full payment of the secured claim extinguished CBIC’s lien. Debtors’ argument is insufficient, therefore, to rebut the presumption of prejudicial delay.
An undue delay in acting may place “an unwarranted burden on the court” as well as on the parties. See Adams v. Gould Inc.,
In summary, Debtors’ argument that CBIC was not prejudiced unfairly narrows the scope of the many changes that have taken place, all due to Debtors’ own actions, or more accurately, their inactions. Debtors simply waited too long to object to CBIC’s secured claim. The bankruptcy court properly determined that the reorganization process should not be undermined because of Debtors’ voluntary inactivity and long-dormant inattention to detail. Therefore, the bankruptcy court did not abuse its discretion by denying relief to Debtors, and applying the equitable doctrine of laches.
CONCLUSION
Debtors had ample opportunities to timely object, but they failed to do so. CBIC filed a timely proof of claim that was deemed ahowed. Debtors’ chapter 13 plan neither provided for the CBIC secured claim, nor gave CBIC sufficient notice of Debtors’ intent to treat its unchallenged claim as unsecured.
When, shortly after confirmation, the trustee gave clear notice that he proposed to pay the CBIC allowed secured claim in full unless Debtors objected within 30 days, Debtors did nothing. Once the trustee had paid the CBIC claim in full and CBIC had released its hen, Debtors’ objection was barred by laches.
Notes
. Unless otherwise indicated, all references to "chapter" or "section” are to the Bankruptcy Code, 11 U.S.C. §§ 101-1330. "Rule” references are either to the Federal Rules of Bank
. Laches is an equitable doctrine which "may apply when there is an unreasonable or unexcused delay by the party asserting the claim and the defending party is prejudiced by the lack of diligence.” Greenwell v. Carty (In re Carty),
. The plan did not mention the State of Nevada’s secured proof of claim for a tax lien in the amount of $29,636.30. See Notice of Trustee’s Intent to Pay Additional Claim, July 29, 1996.
. Section 1325(a)(5) uses the term of art "provided for by the plan.” 11 U.S.C. § 1325(a)(5).
. To establish waiver, a party must show an intentional relinquishment of a known right. See McKellar v. McKellar,
CBIC alternatively argued, in bankruptcy court, that it held a nondischargeable priority tax claim. The basis for CBIC's judgment was Debtors’ failure to indemnify it, as surety, under the parties' business indemnity agreement. Debtors had promised to reimburse CBIC for loss and expense incurred under CBIC's bond. The Nevada Department of Taxation made a claim for sales tax on the bond, and CBIC paid out $13,800. The State then assigned its claim to CBIC to the extent of the payment. The bankruptcy court did not resolve the issue of whether CBIC was a priority creditor, and we need not reach this issue, since our disposition affirms the bankruptcy court's ruling on the basis of CBIC's secured status.
. Additionally, the court found there was a lack of valuation evidence to support Debtors’ allegation that the claim was unsecured. We do not need to reach the merits of Debtors’ objection, however, because we affirm on alternate grounds.
Moreover, Debtors did not move for lien avoidance, pursuant to § 522(f)(1), nor did they cite this code provision until their reply brief in this appeal. Therefore, we decline to consider any issues concerning lien avoidance which were not first presented to the bankruptcy court. Fla. Partners Corp. v. Southeast Co. (In re Southeast Co.),
. Rule 3007 provides that if an objection to a claim "is joined with a demand for relief of the kind specified in Rule 7001, it becomes an adversary proceeding.” Fed.R.Bankr.P. 3007. Rule 7001 states that a proceeding "to determine the validity, priority, or extent of a lien or other interest in property” is an adversary proceeding. Fed.R.Bankr.P. 7001(2).
. Section § 506(a) provides:
(a) An allowed claim of a creditor secured by a lien on property in which the estate has an interest, or that is subject to setoff under section 553 of this title, is a secured claim to the extent of the value of such creditor’s interest in the estate's interest in such property, or to the extent of the amount subject to setoff, as the case may be, and is an unsecured claim. to the extent that the value of such creditor's interest or the amount so subject to setoff is less than the amount of such allowed claim. Such value shall be determined in light of the purpose of the valuation and of the proposed disposition or use of such property, and in conjunction with any hearing on such disposition or use or on a plan affecting such creditor’s interest.
11 U.S.C. § 506(a).
. Section 1322(b) provides that the plan can modify the rights of holders of secured claims (other than a claim secured only by a security interest in real property that is the debtor's principal residence). 11 U.S.C. § 1322(b)(2). The anti-modification provision does not apply to a judicial lien, which is not considered to be a security interest. See In re Williams,
. Judge Keith M. Lundin has explained the due process aspects of chapter 13 plan treatment of secured debt:
The issue is not, which procedure trumps another? The issue is, did the creditor have sufficient notice of the plan and opportunity to object such that confirmation has the effects described in § 1327(a), (b) and (c)?
Procedural due process can be satisfied in several ways without violating any fundamental principles of bankruptcy law. Describing in a Chapter 13 plan the treatment of a secured claim and determining the allowed amount of a secured claim for purposes of § 506(a) inevitably involve some of the same questions of fact and law. Valuation of collateral is often at the heart of both. There is no reason under the Bankruptcy Code or Rules why the overlapping issues can't be decided in either context— during a hearing on confirmation of the plan or as part of a hearing before or after confirmation on an objection to a claim. If notice is adequate, the value of a secured claim holder's collateral can be determined on a motion in advance of confirmation under Bankruptcy Rule 3012, at the confirmation hearing as part of the trial of a contested plan, or at a hearing on an objection to the creditor’s claim. The outcome of each of these procedures is the same for purposes of the effects of confirmation in § 1327 — if notice was adequate and the procedural due process rights of the secured claim holder are respected, a bankruptcy court order fixing the value of collateral, determining the allowed amount of a secured claim or defining what the secured claim holder will receive in satisfaction of its lien rights is binding on all parties without regard to the label on the process.
3 Keith M. Lundin, Chapter 13 Bankruptcy § 233.1, at 233-43 to 233-44 (3d ed.2000).
. Hamish followed the line of cases which holds that the plan confirmation process is paramount to the claims objection process. These cases put the burden of objecting to an ambiguous plan upon the creditor. See In re Pence,
. Debtors have raised a new issue on appeal, that CBIC was unjustly enriched by the payment. We do not consider this argument, which was not presented to, nor addressed by the bankruptcy court. See Berg v. Barth (In re Berg),
. Although the parties briefed the issue of whether Debtors showed "cause” for reconsideration of an allowed claim, pursuant to § 502(j) and Rule 3008, we need not reach this issue, first because Debtors did not move under that section, and second, because there was no final order allowing the claim to trigger reconsideration under § 502(j).
We are cognizant of Ninth Circuit law which holds that a claim that is deemed allowed, and to which no objection has been filed, is final for claim preclusion purposes once the chapter 7 bankruptcy case has been closed. Siegel v. Fed. Home Loan Mortgage Corp.,
Siegel and Los Gatos Lodge do not govern the conclusiveness of a chapter 13 plan confirmation order in relation to a deemed allowed secured claim, particularly where, as here, the plan did not provide for the claim and the challenge came years after payment.
. The bankruptcy court for the Northern District of Illinois harmonized the holding of Adair with Rule 3007, which does not contain a time limit for claim objections. In In re Fareed, 262 B.R. 761 (Bankr.N.D.Ill.2001), the court distinguished a claim objection under § 502 and a "claim objection” that is a disguised valuation motion under § 506. Id. at 770-71. The court concluded that Adair concerned only a collateral valuation, and held that where a proof of claim also contains a valuation of the collateral (referring to Official Bankruptcy Form 10), the value of the secured claim for purposes of § 506(a) will be conclusively determined by the confirmed plan, if no challenge has been made. Id.
Similarly, in Fareed, the debtor objected to the creditor’s claim postconfirmation, asserting a lower collateral value. Id. at 762. The debtor’s plan provided for payment of "the value of [the] security” but did not specify the value. Id. at 770. Nor had the debtor challenged the creditor's claim or valuation. The court held that the plan was ambiguous and would be construed against the debtor in favor of the creditor’s proof of claim. Id. at 770. Thus, it denied the debtor’s postconfir-mation "claim objection.” Id. at 771.
. Another reason for flexibility in allowing claim objections postconfirmation is that the bankruptcy court for the District of Nevada apparently allows the filing of proofs of claim after plan confirmation, as evidenced by the claims bar date in this case. Therefore, the claims allowance process may not be complete at the time of plan confirmation. This may be a distinguishing factor among the various decisions. See Marlow v. Sweet Antiques (In re Marlow),
. Debtors raise two additional challenges, concerning the trustee, which can be readily disposed of. First, Debtors contend that the trustee improperly modified the plan by treating CBIC as a secured creditor. However, the trustee's payment notice did not fall within the provisions of § 1329(a) as a motion to modify the plan. Instead, the trustee simply gave Debtors clear notice of his intent to pay CBIC’s allowed and unchallenged secured claim. Because Debtors did not object, CBIC's claim was thereafter treated under the general provisions for allowed secured claims.
Debtors also maintain that they have a right to object because the trustee paid CBIC's claim before the priority tax claims. Even if the trustee erred in this regard, which the bankruptcy court did not find and we do not suggest, Debtors, by their silence and failure to timely respond to the Notice of Trustee’s Intent to Pay Claims, are estopped from asserting that the trustee’s payment of CBIC’s deemed allowed secured claim was improper.
. Debtors are also estopped from seeking disgorgement from CBIC by their voluntary request for CBIC's release of its lien based upon the payment of its claim by the trustee. See 11 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 2858, at 282 (2d ed.1995) (voluntary action may estop a party from seeking relief on the ground of mistake or excusable neglect).
Concurrence Opinion
concurring.
I agree that the confirmed chapter 13 plan in this case did not extinguish CBIC’s lien and that the bankruptcy court did not abuse its discretion in applying laches to bar debtors’ objection to CBIC’s claim. Confirmation of a plan that does not mention a secured creditor’s claim in any way cannot affect that creditor’s lien under either the approach approved in Fireman’s Fund Mortg. Corp. v. Hobdy (In re Hobdy),
Under either approach, the fact that debtors’ plan did not mention CBIC’s claim precludes confirmation of that plan from extinguishing CBIC’s lien. Because the approach taken does not alter the outcome, in my opinion this case is not the appropriate vehicle for deciding whether to depart from our prior holding in Hobdy and adopt a new test. Accordingly, I concur in the outcome, but do not join in part B. of the Discussion section of the opinion, which adopts the sufficiency of notice/totality of circumstances approach.