In re: CF&I FABRICATORS OF UTAH, INC., Reorganized Debtor. UNITED STATES TRUSTEE, Appellee, v. CF&I FABRICATORS OF UTAH, INC.; PUEBLO METALS COMPANY; PUEBLO RAILROAD SERVICE COMPANY; COLORADO & WYOMING RAILWAY COMPANY; DENVER METALS COMPANY; COLORADO & UTAH LAND COMPANY; CF&I FABRICATORS OF COLORADO, INC.; KANSAS METALS COMPANY; ALBUQUERQUE METALS COMPANY; CF&I STEEL CORPORATION, collectively “debtors“, Appellants.
No. 97-4079
United States Court of Appeals, Tenth Circuit
June 30, 1998
PUBLISH
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH (D.C. No. 96-CV-920-C)
Bruce G. Forrest (Martha L. Davis, General Counsel, Paul Bridenhagen, and William Kanter, with him on the briefs) Attorneys, Appellate Staff, Department of Justice, Washington, D.C., for Appellee.
Before PORFILIO, MCKAY, and TACHA, Circuit Judges.
PORFILIO, Circuit Judge.
In this case, we are asked to determine the effect of Congress’ amendment of
In 1990, CF&I Fabricators of Utah, Inc. and nine related entities (Debtors) filed a petition for Chapter 11 reorganization primarily because they could not fund their employer-sponsored pension plans. The bankruptcy proceedings culminated in a reorganization plan (Plan) which the bankruptcy court confirmed on February 12, 1993.
In addition to the filing fee paid to the clerk, a quarterly fee shall be paid to the United States trustee, for deposit in the Treasury, in each case under chapter 11 of title 11 for each quarter (including any fraction thereof) until a plan is confirmed or the case is converted or dismissed, whichever occurs first.
(emphasis added).
Mirroring the statute in effect at the time, the Plan provided for payment of UST fees until confirmation. In addition, the Plan established numerous deadlines for filing additional claims, including a specific deadline for filing “Administrative Claims” -- a term defined to include the UST fees. Pursuant to the statute, the UST charged and collected its quarterly fee until the Plan was confirmed at which time the UST no longer assessed the fees.
On January 26, 1996, long after all deadlines for filing additional claims had passed and after the Plan had been substantially consummated, Congress amended
The conference agreement includes section 111 as proposed in the House and Senate bills, which extends the quarterly fee payments for debtors under Chapter 11 of the Bankruptcy Code to include the period from when a reorganization plan is confirmed by the Bankruptcy Court until the case is
converted or dismissed. The conferees intend that this fee will apply to both pending and new cases.
H.R. Conf. Rep. No. 104-378 (1995).
In response to the amendment, the UST assessed the next quarterly fee against Debtors. Although they paid the fee, Debtors subsequently moved for an order directing the UST to refund the fees. The bankruptcy court granted Debtors’ motion reasoning, “[t]he UST essentially asserts claims arising after the expiration of all applicable bar dates, against funds already allocated to creditors with allowed claims.” In re CF&I Fabricators, Inc., 199 B.R. 986, 991 (Bankr. D. Utah 1996). The court believed the UST was seeking a modification to an already confirmed reorganization plan. The court noted only proponents of the plan or the reorganized debtor may modify a confirmed plan and only before substantial consummation.1 See
Three weeks later, Congress enacted a further clarification of
Section 101(a) of Public Law 104-91, as amended by section 211 of Public Law 104-99, is further amended by inserting “: Provided further, That, notwithstanding any other provision of law, the fees under
28 U.S.C. 1930(a)(6) shall accrue and be payable from and after January 27, 1996, in all cases (including, without limitation, any cases pending as of that date), regardless of confirmation status of their plans....”
On appeal, the district court reversed the bankruptcy court‘s decision holding “[t]he clarifying amendment leaves no doubt, if there was any before, that Congress intended that
I.
Debtors first argue, under the express language of
In support of their argument, Debtors rely primarily upon In re Gryphon, 204 B.R. 460 (Bankr. W.D. Pa. 1997), a case reversed on other grounds after submission of briefs
As now enacted,
§ 1930(a)(6) requires payment of the quarterly fee until the case is converted or dismissed. Many chapter 11 cases are neither converted nor dismissed but are closed in the ordinary course after entry of a final decree........
The current version‘s language lends itself to the interpretation that the quarterly fee is due in perpetuity if the case is not converted or dismissed. Another interpretation is that Congress intended to have no fee paid when a case is closed without having been converted or dismissed after the chapter 11 plan was confirmed.
Id. at 468. We do not find this dicta particularly puissant and instead espouse the reasoning of another court confronted with the same argument.
The Court next finds that payment of UST fees in the instant case will terminate upon closing of the case.... The Court does not find convincing the argument that quarterly UST fees are payable only in “aborted” or “unsuccessful” Chapter 11 cases, i.e., cases that have been converted or dismissed.... First, the Amendment plainly states that quarterly fees “shall be paid to the United States trustee, for deposit in the Treasury, in each case under chapter 11 ...”
28 U.S.C. § 1930(a)(6) (emphasis added). Because the Amendment requires payment of quarterly fees “in each case,” and does not read “in each unsuccessful or aborted case,” the Court finds that the Amendment is applicable to successful and unsuccessful Chapter 11 cases alike.... In addition, because a “case” no longer exists once it is closed, the Court finds that the obligation to pay UST fees terminates upon closure, dismissal, or conversion of a Chapter 11 case, and will not be paid ad infinitum.
In re A.H. Robins Co., 219 B.R. 145, 149 (Bankr. E.D. Va. 1998); see also In re Harness, 218 B.R. 163, 165 (D. Kan. 1998) (“If a case is closed, we submit it is unreasonable to consider it a ‘case under chapter 11.‘“); In re McLean, 201 B.R. at 443
Moreover, when Congress amended
We believe
II.
The court may direct the debtor and any other necessary party to execute or deliver or to join in the execution or delivery of any instrument required to effect a transfer of property dealt with by a confirmed plan, and to perform any other act, including the satisfaction of any lien, that is necessary for the consummation of the plan.
According to Debtors, this provision limits the court‘s jurisdiction post-confirmation to perform only those acts listed in the statute. They argue because the Plan does not provide for post-confirmation fees, the bankruptcy court does not have jurisdiction to enforce payment of the fees.
As the sole authority to support their position, Debtors once again rely upon the bankruptcy court‘s decision in In re Gryphon. Unfortunately for Debtors, however, this is precisely the point upon which the bankruptcy court was reversed. As the district court stated:
Section 1142(b) is a grant of authority to the bankruptcy court that channels, but does not abrogate, the bankruptcy court‘s jurisdiction post-confirmation. Rather, “post-confirmation jurisdiction is appropriate when the matter is ‘related-to’ the bankruptcy case.” [Citation omitted.] For example, courts will exercise jurisdiction over post-confirmation disputes if the matter sufficiently affects creditors’ recoveries under a plan of reorganization. [Citation omitted.]
Because an action by the United States Trustee seeking to collect quarterly fees will affect creditors’ recovery if the United States Trustee is successful, the matter is sufficiently “related to” the bankruptcy case for the bankruptcy court to hear the matter.
III.
Debtors next argue assessment of the UST fees would have an impermissibly retroactive effect because Congress did not expressly manifest a retroactive intent. See Landgraf v. USI Film Prods., 511 U.S. 244, 270 (1994) (“Since the early days of this Court, we have declined to give retroactive effect to statutes burdening private rights unless Congress had made clear its intent.“).
There are at least two problems with Debtors’ argument. First, the statute is not retroactive. See, e.g., In re Richardson, 210 B.R. at 334 (holding statute did not have retroactive effect because “[t]he amendment only triggers prospective assessment of fees from the amendment‘s effective date until entry of the final decree.” (emphasis added)). Second, assuming the statute were retroactive, Congress, in the clarifying amendment, has clearly evinced its intent
IV.
Debtors also argue the only mechanism under which the UST could assess and collect the fees would be through modification of the Plan. However, as Debtors note, a plan can only be modified by a plan proponent or reorganized debtor and only before substantial consummation. See
Although admitting Debtors’ basic premise, the UST insists it is not attempting to modify the Plan, but merely trying to collect post-confirmation obligations of a debtor. We agree. Again, we find the reasoning of In re A.H. Robins persuasive:
[T]he Court does not agree with those cases denying payment of UST fees on the ground that the Amendment improperly modifies debtors’ plans.... [Citation omitted.] Post-confirmation liability for UST fees is an “administrative expense attendant to an open case,” In re McLean Square Assocs., 201 B.R. at 441, and such fees are no different from taxes arising post confirmation, or any similar post-confirmation expenses not specified in the plan.... [Citation omitted.] Otherwise, “a plan would in effect immunize a debtor from any new assessments or increases in taxes or fees occurring post confirmation. This argument must fail ...” In re
Richardson Serv. Corp., 210 B.R. at 332. The Court finds it ludicrous that some courts would allow the payment of UST fees only if the debtor‘s plan provided for such payments, [citation omitted] as debtors having plans confirmed before passage of the Amendment could not possibly have had the prescience to ascertain Congress’ actions months, or as in the instant case, years, in advance.
In re A.H. Robins, 219 B.R. at 148.
Moreover, even if the imposition of UST fees did conflict with Code provisions such as
V.
The Debtors argue the amendment to
Debtors’ argument, however, only has merit if the Plan must be modified to assess the fees. As we have already held, this contention is meritless. Because the UST fee is a mere “administrative expense attendant to an open case,” the separation of powers doctrine is not implicated.2
VI.
The Debtors also maintain the fees would constitute a taking of property without just compensation. To determine whether a taking has occurred, we examine “the character of the governmental action, its economic impact, and its interference with reasonable investment-backed expectations.” Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1005 (1984) (quotations and citations omitted).
Here, the Debtors maintain a confirmed plan becomes a binding contract which creates vested substantive property rights; that the creditors who were parties to the Plan had reasonable expectations of receiving their allocated monies under the Plan; and imposition of fees would reduce their allocations and violate the “contract.” In addition,
In response, the UST argues the governmental action here is merely an “expansion of a generally-applicable user fee [not] historically equated with the condemnation-type governmental actions that typify public takings.” In addition, the UST maintains $100,000 is a “relatively minor” amount and a “fraction of the disbursements involved.” Finally, the UST insists any expectation new fees would not be assessed is patently unreasonable in an on-going bankruptcy case.
We believe this last point is dispositive. To have a taking, one must have interference with reasonable expectations. Here, the purported expectations consist of monetary disbursements from the Debtors’ estate. In a bankruptcy case as complex as this, we believe it would be patently unreasonable to expect no variability in the final amount available to plan distributees. Accordingly, in the absence of a reasonable expectation of a fixed final distribution, we cannot conclude the statute works an unconstitutional taking.
VII.
Finally, Debtors argue the United States was a party to a “contract,” the Plan, and imposition of the fees is contrary to the terms of that contract. In particular, Debtors note under the Plan the UST fees terminated upon confirmation. The Plan also provided a
[A]ll Persons ... in consideration for the obligations of the Debtors under the Plan, will be deemed to have forever waived, released, and discharged all rights or Claims, whether based upon tort, fraud, contract or otherwise, which they heretofore, now or hereafter possess or may possess against any of the Debtors.
(emphasis added). The Plan defined “Person” to include “governmental unit, government (or agency or political subdivision thereof).” According to the Debtors, imposition of the fees based upon a statute would, therefore, constitute a breach of this “contract” or, at least, a conflict with its terms. This, they maintain, is prohibited under the teachings of United States v. Winstar Corp., 518 U.S. 839 (1996), where a plurality of the Court concluded in certain instances the United States cannot legislate itself out of contracts without breaching those contracts.
We do not dispute a reorganization plan has some indicia of a contract. For instance, the interested parties negotiate and draft the document, reach mutual agreement, and consideration is exchanged. Yet, it is also clear a confirmed plan is much more than a contract. For example, once confirmed, a plan is enforceable as a court order against parties who did not even agree to its terms. See
To the extent Debtors’ argument relies upon
In Holywell, the trustee argued, because the reorganization plan in question did not provide for payment of taxes upon post-confirmation sale of certain assets, the trustee did not have to pay them. The trustee maintained
Even if §1141(a) binds creditors of the corporate and individual debtors with respect to claims that arose before confirmation, we do not see how it
can bind the United States or any other creditor with respect to postconfirmation claims. Cf. 11 U.S.C. § 101(10) (1988 ed., Supp. II) (defining “creditor” as used in§ 1141(a) as an entity with various kinds of preconfirmation claims.).
Id. at 58-59. Here, as in Holywell,
Debtors attempt to distinguish Holywell by insisting the Code treats taxes such as those at issue in Holywell differently than UST fees. In particular, they note imposition of post-confirmation UST fees would conflict with
AFFIRMED.