Morris v. Quigley (In re Quigley)

Summarized by Jennifer Lyday , Waldrep Wall Babcock & Bailey PLLC
13 years 11 months ago

Citation:

Morris v. Quigley (In re Quigley), Case No. 5:08-cv-00126-FPS, 2012 U.S. App. LEXIS 4732 (4th Cir. March 7, 2012).

Tag(s):

Ruling:

Guided by the decision of the United States Supreme Court in Hamilton v. Lanning, 130 S. Ct. 2464 (2010), the 4th Circuit reversed the decision of the district court and held that the Debtor should not have deducted the amount of the payments of the all-terrain vehicles from her projected disposable income because, at the time of confirmation, it was known or virtually certain that she would not be making those payments in the future. The Debtor attemped to distinguish Lanning because it concerned a change in income rather than a change in expenses, but the Fourth Circuit did not find this argument persuasive. Instead, the Fourth Circuit decided to follow decisions from the Sixth Circuit (Darrohn v. Hildebrand (In re Darrohn), 615 F.3d 470, 477 (6th Cir. 2010)) and the Seventh Circuit (In re Turner, 574 F.3d 349, 356 (7th Cir. 2009) that concerned virtually identical facts. The Debtor also argued that even though it was known that she would not have to make the all-terrain vehicle payments during the plan period, her case did not present "exceptional" circumstances, such that, according to Lanning, the bankruptcy court would have discretion to take them into account. Alternatively, the Debtor argued that the bankruptcy court was not required to consider that she would not actually be making the payments on the all-terrain vehicles. The Fourth Circuit disagreed with both arguments.

Procedural context:

Appeal from the United States District Court for the Northern District of West Virginia, at Wheeling. The Trustee appealed a district court order affirming the bankruptcy court ruling that in calculating projected disposable income, the Debtor could deduct the monthly payments that she would not in fact be required to make going forward. The 4th Circuit reversed and remanded by published opinion.

Facts:

The Debtor filed a Chapter 13 bankruptcy petition on January 11, 2008. On her Schedule B, she listed two all-terrain vehicles. As stated on her Schedule D, both vehicles were collateral for promissory notes she executed. In her plan, she stated that she would be surrendering both vehicles to the secured creditors. Thus, she would no longer be required to make the payments on the vehicles. Also on her Schedule B, the Debtor listed a 2004 Ford truck for which her former boyfriend was making the payments. On her statement of currently monthly income, calculation of commitment period, and calculation of disposable income (Form B22C), the Debtor listed the payments owed on the two all-terrain vehicles and the Ford truck as expense deductions. According to her calculations, she had no disposable income to pay to unsecured creditors. The Trustee objected to the proposed plan on the theory that the Debtor had understated her projected disposable income by deducting the amount of the payments of the three vehicles as expenses, when the Debtor would not actually be making any of those payments once the plan was implemented. Regarding the Ford truck, the bankruptcy court agreed with the Trustee and held that because the Debtor's former boyfriend was already making her payments, the Debtor's then-current income should have been increased to account for that. Regarding the all-terrain vehicles, however, the bankruptcy court disagreed with the Trustee and held that the Bankruptcy Code requires that projected disposable income be based only on expenses and income from the six-month period preceding a bankruptcy filing and that the court was statutorily precluded from considering even known changes in the Debtor's future expenses. The Trustee appealed. The district court affirmed the decision of the bankruptcy court. The Trustee appealed to the Fourth Circuit. The Fourth Circuit reversed.

Judge(s):

Before Chief Judge William B. Traxler, Judge Diana Gribbon Motz, and Dennis W. Shedd. Chief Judge Traxler wrote the opinion, in which Judge Motz and Judge Shedd joined.

ABI Membership is required to access the full summary. Please Sign In using your ABI Member credentials. Not a Member yet? Join ABI now - it is absolutely worth it!