Maximino Santos v. Kathy A. Dockery

FILED
NOT FOR PUBLICATION SEP 17 2013
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: MAXIMINO A. SANTOS and No. 12-55145
GLORIA S.L. SANTOS,
D.C. No. 2:11-cv-03260-SVW
Debtors,
MEMORANDUM*
MAXIMINO A. SANTOS and GLORIA
S.L. SANTOS,
Appellants,
v.
KATHY A. DOCKERY, Chapter 13
Trustee and U.S. TRUSTEE,
Appellee.
Appeal from the United States District Court
for the Central District of California
Stephen V. Wilson, District Judge, Presiding
Argued and Submitted August 26, 2013
Pasadena, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Before: O’SCANNLAIN and CHRISTEN, Circuit Judges, and COGAN, District
Judge.**
Maximino and Gloria Santos appeal the district court’s decision to affirm a
bankruptcy court order establishing their ineligibility for Chapter 13 bankruptcy.
This court reviews de novo a district court’s decision on appeal from a bankruptcy
court. In re Focus Media, Inc., 387 F.3d 1077, 1081 (9th Cir. 2004). We have
jurisdiction pursuant to 28 U.S.C. § 158(d)(1), and we affirm.
The Santoses argue that they are eligible for Chapter 13 bankruptcy relief
pursuant to 11 U.S.C. § 109(e) because they are seeking to discharge less than the
statutory maximum in unsecured debt. We disagree. Chapter 13 eligibility is
determined “by the debtor’s originally filed schedules, checking only to see if the
schedules were made in good faith.” In re Scovis, 249 F.3d 975, 982 (9th Cir.
2001). Under Scovis, debts are defined as “secured” or “unsecured” for Chapter 13
eligibility purposes by applying the standard set out in 11 U.S.C. § 506(a). Id. at
983. Under § 506(a), the Santoses’ three junior liens are readily categorized as
unsecured because the property securing those debts is worth less than even the
senior lien on the property. As such, the Santoses’ total unsecured debt, including
junior liens, is more than the maximum permitted by statute.
**
The Honorable Brian M. Cogan, District Judge for the U.S. District
Court for the Eastern District of New York, sitting by designation.
2
The Santoses argue that their case is distinguishable from Scovis. We are
not persuaded that the distinction between voluntarily incurred and involuntarily
incurred liens distinguishes this case from Scovis, or that the voluntarily incurred
nature of the Santoses’ debt otherwise changes the outcome.
The Santoses raise several public policy arguments regarding disparities
between junior creditors and Chapter 13 debtors and between similarly-situated
debtors. We leave these issues for Congress to decide.
Finally, because we find that the Santoses are ineligible for Chapter 13
relief, we decline to reach the issue of whether they are eligible for a repayment
plan shorter than 60 months.
AFFIRMED.
3