Drew Nomellini v. Irs

• Court: Court of Appeals for the Ninth Circuit
• Decided: December 28, 2018
• Docket: 17-17212
• Status: Unpublished

Opinion

FILED NOT FOR PUBLICATION DEC 28 2018 UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

In re: DREW NOMELLINI, No. 17-17212 ______________________________ D.C. No. 5:15-cv-04122-EJD DREW NOMELLINI,

Appellant, MEMORANDUM*

v.

UNITED STATES INTERNAL REVENUE SERVICE,

Appellee.

Appeal from the United States District Court for the Northern District of California Edward J. Davila, District Judge, Presiding

Submitted December 18, 2018** San Francisco, California

Before: CALLAHAN, N.R. SMITH, and MURGUIA, Circuit Judges.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). Drew Nomellini appeals the district court’s order, affirming the bankruptcy

court’s grant of the IRS’s motion to dismiss and denial of Nomellini’s motion for

summary judgment. We affirm.

Confirmation of a Chapter 13 bankruptcy plan vests the property of the

estate in the debtor “free and clear of any claim or interest,” unless otherwise

provided for in the plan. 11 U.S.C. § 1327(c). “Claim” refers to debts that would be

discharged under § 1328, while “interest” refers to any liens or interests that would

be unaffected by a discharge. Brawders v. Cty. of Ventura (In re Brawders), 503

F.3d 856, 872 (9th Cir. 2007). Generally, a secured creditor’s lien will “pass

through bankruptcy unaffected, regardless whether the creditor holding that lien

ignores the bankruptcy case, or files an unsecured claim when it meant to file a

secured claim, or files an untimely claim after the bar date has passed.” Id. at 867-

68. For a debtor to avoid a creditor’s lien or otherwise modify the creditor’s in rem

rights, the debtor’s confirmed plan must do so explicitly and provide the creditor

with adequate notice that its interests may be impacted. Id. at 873. Any ambiguity

in the plan will be interpreted against the debtor. Id. at 867.

Here, the IRS debt was secured by a perfected pre-petition lien attached to

Nomellini’s real property. Nomellini’s confirmed Chapter 13 bankruptcy plan

recognized the IRS’s secured claim. The plan did not avoid the tax lien. In fact, it

2 made no reference to the IRS’s tax lien nor did it make any indication of

Nomellini’s intent to avoid that lien.1 Because the plan did not explicitly avoid the

IRS’s tax lien nor otherwise attempt to modify the IRS’s in rem rights, that lien

passed through bankruptcy unaffected and remained in full force and effect at the

time Nomellini sought to sell his home. Per the stipulated agreement between

Nomellini and the IRS, the home was sold free and clear, and the tax lien attached

to the proceeds of the sale. The district court did not err in affirming the

bankruptcy court’s decision that the IRS was entitled to have the remaining debt

fully paid from the sale proceeds.

Additionally, the bankruptcy court did not err in allowing the IRS to

facilitate the collection of its lien by filing an amended claim. Nomellini entered

into a stipulated agreement with the IRS that the sale proceeds would be held in

escrow pending the court’s determination of the continued validity and extent of

the tax lien. When the bankruptcy court determined that the IRS’s tax lien had

passed through bankruptcy unaffected, the court allowed the IRS to amend its

claim to the full remaining unpaid debt. Allowance of the amended claim was not

reviewed separately, but rather treated as a ministerial matter to allow the

1 Significantly, the confirmed plan explicitly stated Nomellini’s intent to value and avoid the liens of two other creditors. However, the IRS tax lien was not mentioned. 3 bankruptcy trustee to disperse funds in accordance with the bankruptcy court’s

order. Nomellini does not argue that allowance of the amended claim was an

improper procedural vehicle; instead, Nomellini again argues that the IRS is not

entitled to payment beyond what it was provided in the confirmed plan. However,

because we have already determined that the IRS is entitled to the full value of the

lien, this argument is unavailing.

AFFIRMED.