Joye v. Franchise Tax Board ( 2009 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
In the Matter of: SHELLI RENEE 
JOYE; TERESA M. JOYE,
Debtors,
SHELLI RENEE JOYE; TERESA M.
JOYE, aka Michael Joye, Maria No. 07-15676
Teresa Joye & Maria Mendoza, D.C. Nos.
Plaintiffs-Appellants,  CV-06-02415-SC
01-30495-DM
v.
FRANCHISE TAX BOARD, STATE OF OPINION
CALIFORNIA; SELVI STANISLAUS
Executive Officer of State of
California Franchise Tax Board,
Defendants-Appellees.

Appeal from the United States District Court
for the Northern District of California
Samuel Conti, District Judge, Presiding
Argued and Submitted
October 24, 2008—San Francisco, California
Filed August 21, 2009
Before: J. Clifford Wallace, Sidney R. Thomas and
Susan P. Graber, Circuit Judges.
Opinion by Judge Wallace
Dissent by Judge Graber
11505
IN THE MATTER OF JOYE 11509
COUNSEL
Robert N. Kolb, Antioch, California, for the plaintiffs-
appellants.
Edmund G. Brown, Jr., Attorney General for the State of Cali-
fornia, Randall P. Borcherding, Supervising Deputy Attorney
General, and Kristian D. Whitten, Deputy Attorney General,
San Francisco, California, for the defendants-appellees.
OPINION
WALLACE, Senior Circuit Judge:
Shelli Renee Joye and Teresa M. Joye (the Joyes) filed an
adversary complaint in bankruptcy court against the State of
California Franchise Tax Board and its Executive Director,
Selvi Stanislaus (collectively, the Board), for declaratory and
injunctive relief. The Joyes seek an order declaring that their
state tax obligations from the year 2000 were discharged at
the conclusion of their Chapter 13 bankruptcy proceeding in
2004. They also seek an injunction enjoining the Board from
collecting these outstanding tax liabilities. The Board moved
for summary judgment, and the bankruptcy court denied the
motion. The district court reversed the bankruptcy court, and
entered summary judgment in the Board’s favor. The Joyes
now appeal from the district court’s summary judgment. We
have jurisdiction over this timely appeal pursuant to 28 U.S.C.
§ 158(c)(2). We reverse and remand.
11510 IN THE MATTER OF JOYE
I.
The Joyes filed their Chapter 13 bankruptcy petition on
March 7, 2001. The bankruptcy petition scheduled the Board
as a priority creditor in the estimated amount of $10,000 for
outstanding state income taxes for the year 2000. Pursuant to
11 U.S.C. § 342, official notice of the Joyes’ bankruptcy case
was then sent to all creditors scheduled in the petition. The
notice indicated that the meeting of creditors would take place
on April 19, 2001, and that the claims bar date for govern-
mental claims was set for September 3, 2001. The Board does
not appear to have attended the meeting of creditors, or other-
wise filed objections to the Joyes’ bankruptcy plan. The bank-
ruptcy court confirmed the Joyes’ bankruptcy plan on May
18, 2001. The Board did not file a proof of claim in the Joyes’
case, and the claims bar date for governmental claims elapsed
as scheduled.
On October 15, 2001, the Joyes filed their year 2000 state
income tax return. Although this return was originally due on
April 15, 2001, California law grants taxpayers an automatic
six-month extension of the deadline for filing personal income
tax returns. The Joyes’ year 2000 state tax return was there-
fore timely filed. The return showed the Joyes owing taxes
and penalties totaling $28,178.00. No payment accompanied
the return.
The Joyes successfully completed their bankruptcy plan on
February 7, 2004. On March 4, 2004, the bankruptcy court
discharged the Joyes from bankruptcy pursuant to 11 U.S.C.
§ 1328(a). The discharge order stated that “the debtor is dis-
charged from all debts provided for by the plan or disallowed
under 11 U.S.C. § 502,” subject to a few exceptions not rele-
vant here. The order also stated that “[a]ll creditors are pro-
hibited from attempting to collect any debt that has been
discharged in this case.”
Subsequently, the Board attempted to collect the outstand-
ing taxes reported in the Joyes’ year 2000 state tax return. On
IN THE MATTER OF JOYE 11511
March 22, 2005, the Joyes commenced an adversary proceed-
ing in bankruptcy court, alleging that the Board’s collection
efforts violated the discharge order. The Board filed a motion
for summary judgment, arguing that the outstanding taxes sur-
vived discharge pursuant to 11 U.S.C. § 1305. In the alterna-
tive, the Board argued that barring its collection of these
outstanding taxes would violate the constitutional guarantee
of fundamental fairness to governmental entities.
The bankruptcy court denied the Board’s motion, conclud-
ing that the outstanding taxes were properly discharged. With
respect to the Board’s primary argument, the bankruptcy court
observed that section 1305 was inapplicable to the parties’
dispute because that section “has nothing to do with dis-
charge. It has to do with whether a creditor, such as the
Board, may file a claim, and if so, how that claim is treated.
But that’s not our case . . . . [The Board] didn’t file a claim
and it got notice of the proceeding, and the discharge is a final
order.” The bankruptcy court also rejected the Board’s alter-
native argument regarding the constitutional doctrine of fun-
damental fairness. The bankruptcy court held that the Board
received both adequate notice of the Joyes’ bankruptcy case
and a meaningful opportunity to file a proof of claim for the
outstanding taxes.
The district court on appeal agreed that the outstanding
taxes were “technically discharged” through the Chapter 13
proceeding because the Board did not file a proof of claim.
However, the district court concluded that the Board was
nonetheless entitled to summary judgment because barring
collection of the outstanding taxes would constitute a denial
of fundamental fairness to the Board. The court held that the
Board did not receive adequate notice of its right to payment
on the outstanding taxes because “California’s income tax
system . . . relies on taxpayers to assess how much they owe
and inform the [Board] of that amount by filing a tax return,”
and the Joyes did not file their state tax return until after the
claims bar date for governmental claims. The court further
11512 IN THE MATTER OF JOYE
held that scheduling the Board as a creditor in the bankruptcy
petition for an estimated amount was insufficient to provide
the Board with constitutionally adequate notice.
Therefore, the district court reversed the bankruptcy court’s
decision, and granted the Board’s motion for summary judg-
ment. Rather than remanding the case to the bankruptcy court
for further proceedings, the district court entered judgment in
favor of the Board. This appeal followed.
II.
We review a district court’s decision on a bankruptcy court
appeal de novo. Dawson v. Wash. Mut. Bank, F.A. (In re
Dawson), 390 F.3d 1139, 1145 (9th Cir. 2004). In doing so,
we review the bankruptcy court’s decision independently, and
give no deference to the district court’s determinations. Id.The bankruptcy court’s factual findings are reviewed for clear
error, and its conclusions of law are reviewed de novo. Id.Summary judgment is appropriate where the evidence demon-
strates that there are no genuine issues of material fact for trial
and the moving party is entitled to judgment as a matter of
law. Barboza v. New Form, Inc. (In re Barboza), 545 F.3d
702, 707 (9th Cir. 2008). A genuine issue of material fact
exists if, viewing all the evidence in the light most favorable
to the nonmoving party, a reasonable fact-finder could decide
in that party’s favor. Id.The Joyes argue that the district court erred in entering
summary judgment in favor of the Board based on the consti-
tutional doctrine of fundamental fairness. The Board defends
the district court’s constitutional determination, but argues in
the alternative that summary judgment should be affirmed on
statutory grounds. Downs v. Hoyt, 232 F.3d 1031, 1036 (9th
Cir. 2000) (“We may affirm on any ground supported by the
record, even if it differs from the district court’s rationale”).
Because we must “avoid reaching constitutional questions in
advance of the necessity of deciding them,” we first address
IN THE MATTER OF JOYE 11513
the parties’ statutory arguments. Lyng v. Nw. Indian Cemetery
Protective Ass’n, 485 U.S. 439, 445 (1988).
A.
Both the bankruptcy court and the district court concluded
that the Joyes’ outstanding tax liabilities for the year 2000
were discharged at the conclusion of their bankruptcy case
pursuant to 11 U.S.C. § 1328(a). In so ruling, the two courts
rejected the Board’s argument that these outstanding taxes
survived the bankruptcy court’s discharge order under 11
U.S.C. § 1305. Indeed, both courts held that section 1305 was
irrelevant to the determination of whether these outstanding
taxes were subject to discharge. The Board disputes this con-
clusion, renewing its argument that section 1305 allows cer-
tain “post-petition” claims to survive a debtor’s Chapter 13
discharge so long as the claimholder elects not to file a proof
of claim. For their part, the Joyes appear to concede that if the
outstanding taxes give rise to a post-petition claim under sec-
tion 1305, the taxes would survive discharge.
We have not addressed whether section 1305 operates to
protect certain claims from a bankruptcy discharge. However,
we need not decide this open question of Ninth Circuit law
because even if section 1305 can be read to shield certain
claims from discharge, its protection extends only to “post-
petition” claims, and we conclude that the Joyes’ outstanding
taxes cannot give rise to such a claim under section 1305. We
therefore agree with the ultimate conclusions of both courts
that these taxes were discharged in the Joyes’ bankruptcy
case.
1.
[1] Section 1305 is entitled “Filing and allowance of post-
petition claims.” Subsection (a) provides that “[a] proof of
claim may be filed by any entity that holds a claim against a
debtor . . . (1) for taxes that become payable to a governmen-
11514 IN THE MATTER OF JOYE
tal unit while the case is pending.” 11 U.S.C. § 1305(a)(1).
The parties do not dispute that the Joyes’ bankruptcy case was
pending from March 7, 2001 to March 4, 2004. Therefore,
whether the Joyes’ outstanding taxes give rise to a post-
petition claim pursuant to section 1305(a)(1) depends on
when these taxes became “payable” for the purpose of that
section.
[2] We have yet to construe the term “payable” as used in
section 1305(a)(1). See In re Savaria, 317 B.R. 395, 401
(B.A.P. 9th Cir. 2004) (recognizing, without resolving, the
split in authority on the meaning of the word). However, the
Court of Appeals for the Fifth Circuit and the Bankruptcy
Appellate Panel for the Tenth Circuit have each addressed this
issue with differing results. In United States v. Ripley (In re
Ripley), 926 F.2d 440 (5th Cir. 1991), the court held that
“taxes that have ‘become payable’ are those that must be paid
now.” Id. at 444. In coming to this conclusion, the court stated
that the word “payable” in “customary usage” means “not
only ‘[c]apable of being paid’ but also ‘justly due’ and
‘legally enforceable.’ ” Id. at 444, quoting Black’s Law Dic-
tionary 1128 (6th ed. 1990). The court then held that “[t]he
latter of these is the only reasonable meaning to be affixed to
the word as it is used in section 1305.” Id. The court appears
to have based its conclusion on the fact that this construction
comports with the law of commercial paper: “When a nego-
tiable instrument is ‘payable’ to bearer or to order, the sum
therein must be paid to the bearer or to the order of the person
therein specified.” Id., citing U.C.C. §§ 3-110, 3-111. The
court acknowledged, however, that the meaning of the word
was not disputed by the parties. Id. at 444 n.14.
[3] In Dixon v. IRS (In re Dixon), 218 B.R. 150 (B.A.P.
10th Cir. 1998), the Bankruptcy Appellate Panel for the Tenth
Circuit construed the term differently. The panel construed
Ripley as addressing “payable” in the context of “the last per-
missible time to pay [one’s taxes] before the [given taxing
authority] can commence forcible collection activities.” Id. at
IN THE MATTER OF JOYE 11515
152. The panel observed, however, that “[t]he Bankruptcy
Code . . . generally attempts to deal with debtors’ payment
obligations at an earlier time.” Id. Reading the word “pay-
able” in conjunction with the Bankruptcy Code’s definitions
for “claims” and “debts,” respectively, the panel reasoned that
the word is best construed to refer “to a time before the last
permissible day for paying taxes.” Id. This construction is
confirmed, the panel held, by the legislative history of the
Bankruptcy Code, which contains the statement, “Section
1305(a) provides for the filing of a proof of claim for taxes
and other obligations incurred after the filing of the chapter
13 case.” Id. at 153, quoting S. Rep. No. 95-989, at 140
(1978), reprinted in 1978 U.S.C.C.A.N. 5787, 5926 (empha-
sis added in Dixon).
[4] The reasoning of the Tenth Circuit Bankruptcy Appel-
late Panel is persuasive. As the court in Ripley acknowledged,
the word “payable” is susceptible to more than one interpreta-
tion. Ripley, 926 F.2d at 444 (stating that “payable” can mean
either “capable of being paid” or “justly due” and “legally
enforceable”). The panel in Dixon therefore correctly
reviewed the statutory scheme of the Bankruptcy Code to dis-
cern Congress’ intent. United States v. Daas, 198 F.3d 1167,
1174 (9th Cir. 1999) (“To determine the plain meaning of a
particular statutory provision, and thus congressional intent,
the court looks to the entire statutory scheme”).
[5] In that regard, the panel in Dixon rightly stated that
Chapter 13 of the Code is generally concerned with satisfying
or discharging “claims” against a given debtor. Dixon, 218
B.R. at 152, citing 11 U.S.C. §§ 1322, 1325 & 1328. A
“claim” is broadly defined as the “right to payment, whether
or not such right is reduced to judgment, liquidated, unliqui-
dated, fixed, contingent, matured, unmatured, disputed, undis-
puted, legal, equitable, secured, or unsecured.” 11 U.S.C.
§ 101(5)(A). This broad definition supports Dixon’s conclu-
sion that the term “payable,” which is used to define a certain
11516 IN THE MATTER OF JOYE
class of claims, refers to a time before the creditor’s right to
payment matures into a legally enforceable prerogative.
Further examination of the statutory scheme confirms this
interpretation. Like section 1305(a)(1), section 502(i) of the
Code also addresses tax claims held by governmental entities.
This section provides that “[a] claim [for certain tax liabilities
owed to governmental units] that does not arise until after the
commencement of the case . . . shall be determined, and shall
be allowed . . . the same as if such claims had arisen before
the date of the filing of the petition.” 11 U.S.C. § 502(i). Rec-
onciling section 502(i) with section 1305(a)(1), Collier on
Bankruptcy concludes that the “taxes covered by [section
502(i)] are those which are incurred prepetition that do not
come due until after the petition is filed. If a tax is incurred
postpetition, it can be treated . . . only as a postpetition claim
under section 1305.” 8 Collier on Bankruptcy ¶ 1300.71[10]
(Alan N. Resnick & Henry J. Sommer eds., 15th ed. rev.)
(emphasis added); see also In re Flores, 270 B.R. 203, 208
(Bankr. S.D. Tex. 2001) (holding that a post-petition claim
under section 1305 “is a liability that arises postpetition and
relates only to postpetition activity”) (emphasis added); 4
Keith M. Lundin, Chapter 13 Bankruptcy § 302.1, at 302-1
(3d ed. 2000 & 2004 Supp.) (“Section 1305 deals only with
debts that arise after the petition”) (emphasis added). There-
fore, only taxes incurred post-petition may be treated as post-
petition claims under section 1305(a).1
1
The dissent faults us for “equat[ing]” section 1305 with section 502(i)
because the former refers to “taxes that become payable,” whereas the lat-
ter refers to a “claim” that “arise[s].” However, the phrase “taxes that
become payable” in section 1305 defines one type of post-petition
“claim,” so the two provisions are more alike than the dissent asserts. 28
U.S.C. § 1305(a). Furthermore, our reliance on “scholarly interpretations,”
which harmonize these two provisions, is but a straightforward application
of the well-established canon of statutory interpretation in pari materia,
that similar provisions in the same statute should be interpreted in a simi-
lar manner unless legislative history or purpose suggests material differ-
ences. Erlenbaugh v. United States, 409 U.S. 239, 244 (1972).
IN THE MATTER OF JOYE 11517
Moreover, as stated in Dixon, the legislative history of the
Bankruptcy Code indicates that section 1305(a) was meant to
address taxes “incurred after the filing of the chapter 13
case.” Dixon, 218 B.R. at 153, quoting S. Rep. No. 95-989,
at 140 (1978), reprinted in 1978 U.S.C.C.A.N. 5787, 5926
(emphasis added in Dixon). Although resort to legislative his-
tory is generally discouraged in statutory construction and
certainly unnecessary where the meaning of a statute is plain,
we have the option of turning to it for insight into congressio-
nal intent where, as here, the statutory language is ambiguous.
Daas, 198 F.3d at 1174 (“If the statute is ambiguous — and
only then — courts may look to its legislative history for evi-
dence of congressional intent”).
[6] Reviewing the statutory scheme of the Bankruptcy
Code and the relevant legislative history, we conclude that
Congress meant section 1305(a)(1) to refer to taxes that were
incurred by the debtor during the pendency of the debtor’s
bankruptcy case. We would frustrate this congressional intent
were we to construe the word “payable” to refer to only those
taxes that have become “legally enforceable” or “justly due.”
Ripley, 926 F.2d at 444. Rather, as the court in Ripley stated,
payable can also describe amounts that are simply “capable of
being paid.” Id.; see also Black’s Law Dictionary (8th ed.
2004) (“An amount may be payable without being due. Debts
are commonly payable long before they fall due”). This con-
struction of “payable” better comports with Congress’ intent
to cover a debtor’s tax liability at a time prior to the point
when that liability becomes legally actionable.2 Therefore,
2
The dissent argues that the narrower definition of “payable” more
accurately reflects congressional intent because it would enable tax collec-
tion in this case, whereas the broader definition we adopt prevents collec-
tion. However, as discussed above, the relevant statutory scheme and
legislative history of section 1305 evince a specific congressional intent to
allow post-petition claims for those tax obligations that were incurred
while a bankruptcy petition is pending. To take the dissent’s approach
would be to ignore this legislative directive in favor of a general congres-
sional preference for tax collection, unmoored from the particular provi-
sion at issue.
11518 IN THE MATTER OF JOYE
because “[t]he purpose of statutory construction is to discern
the intent of Congress,” Daas, 198 F.3d at 1174, we hold that
taxes become “payable” for purposes of section 1305(a)(1)
when they are capable of being paid.3
[7] Applying this construction here, we hold that the Joyes’
outstanding state taxes for the year 2000 cannot give rise to
a post-petition claim pursuant to section 1305(a)(1). Under
California law, personal taxes are calculated based on the
given taxpayer’s income earned “for each taxable year.” Cal.
Rev. & Tax. Code § 17041(a)(1). A “taxable year” is in turn
defined as a calendar year. Cal. Rev. & Tax. Code § 17010.
Thus, the Joyes could have technically determined and paid
their year 2000 taxes on the day after the close of the corre-
sponding calendar year. Although the Joyes were not required
to pay these taxes until April 15, 2001 (or at the latest October
15, 2001), their tax liability to the state for the year 2000 was
nonetheless capable of being paid, and thus payable, as of
January 1, 2001.
[8] Because this date fell prior to the date the Joyes filed
their bankruptcy petition on March 7, 2001, these taxes can-
not give rise to a post-petition claim under section 1305(a)(1).
Therefore, even if section 1305 shields post-petition claims
from discharge (which we do not decide), it would not operate
to protect the Board’s claim to the Joyes’ outstanding taxes
from discharge. These taxes were thus properly discharged at
the conclusion of Joyes’ bankruptcy case.4
3
We acknowledge that our decision creates a circuit split with the Fifth
Circuit. Respectfully, however, we are not bound by its decision. To the
extent that the dissent argues that we are also not bound by the Tenth Cir-
cuit Bankruptcy Appellate Panel’s decision in Dixon, we agree. Nonethe-
less, we conclude that the bankruptcy panel’s analysis is persuasive, and
adopt its interpretation as our own for the reasons discussed in this opin-
ion.
4
The dissent argues that our holding “assumes that a taxpayer can do
nothing to alter her tax obligations between January 1 and April 15.” But
IN THE MATTER OF JOYE 11519
2.
The Board presents an array of internally inconsistent, and
ultimately unsuccessful, arguments against adopting the
broader definition of “become payable” suggested in Dixon.
First, the Board appears to argue that the Ninth Circuit has
adopted the “same analysis [as Ripley] to determine when
taxes become payable.” On this point, the Board mentions
that it believes that Ripley interprets “payable” under the
Internal Revenue Code. Yet, later in the Board’s brief, the
Board attempts to distinguish Dixon on the same grounds,
arguing that, “[i]n this case, the issue is not when taxes
‘become payable’ under the Internal Revenue Code, but when
they ‘become payable’ under the California [Revenue and Tax
Code].”
To the extent that the Board argues that cases interpreting
“payable” under the Internal Revenue Code are not particu-
larly instructive, we agree. As aptly stated in Dixon, “words
used in the Bankruptcy Code do not necessarily mean the
same thing they might mean in the Internal Revenue Code.”
Dixon, 218 B.R. at 152. And as described earlier, there are
ample clues provided by the plain language, statutory scheme,
and legislative history of section 1305 for us to divine con-
gressional intent without recourse to interpretations of a
wholly different statute. See, e.g., Sherman v. United States
Parole Comm’n, 502 F.3d 869, 874-78 (9th Cir. 2007)
(declining to adopt the interpretation of a certain statute pro-
vided in a prior case, in construing a similar phrase used in
a different statute, because the prior case “dealt with an
we assume nothing of the sort. There may be a case where, as the dissent
describes, “[a] taxpayer . . . contribute[s] to an Individual Retirement
Account (“IRA”) between January 1 and April 15, 2009, and deduct[s]
that contribution from her 2008 income when she files her 2008 tax
return.” That case, however, is not before us. There is no evidence, or even
allegation, that the Joyes engaged in transactions, which significantly
altered their year 2000 tax liability after the close of the tax year.
11520 IN THE MATTER OF JOYE
entirely separate statutory scheme”); accord United States ex
rel. Chicago, New York & Boston Refrigerator Co. v. Inter-
state Commerce Comm’n, 265 U.S. 292, 295 (1924)
(“[B]ecause words used in one statute have a particular mean-
ing they do not necessarily denote an identical meaning when
used in another and different statute”).
For similar reasons, we also reject the Board’s argument
that “payable” under section 1305(a)(1) should be construed
by reference to the California Revenue and Tax Code. On this
issue, the Board confuses the substantive determination to be
made under section 1305(a)(1) with the task of construing the
statutory provision in the first instance. True, under Raleigh
v. Ill. Dep’t of Revenue, 530 U.S. 15, 20 (2000), “the ‘basic
federal rule’ in bankruptcy is that state law governs the sub-
stance of claims.” Id., quoting Butner v. United States, 440
U.S. 48, 57 (1979). However, before we can determine
whether the Joyes’ outstanding taxes became payable under
California law during the pendency of their bankruptcy case,
we must first decide what the Bankruptcy Code means by the
term “payable” in section 1305(a)(1). For that initial determi-
nation, we rely on the traditional canons of statutory interpre-
tation, not the substantive tax law of California.
The Board also suggests that this circuit in Pan American
Van Lines v. United States, 607 F.2d 1299 (9th Cir. 1979) has
already determined that “payable” refers to the tax return
deadline. We do not agree. In that case, the court determined
“whether taxpayer’s liability for the restricted interest was
‘legally due and owing[‘] within three years preceding bank-
ruptcy” under Section 17(a) of the Bankruptcy Act. Id. at
1301. Thus, Pan American interpreted a completely different
statutory provision than the one at issue here, and in no way
speaks to the interpretation of the term payable under section
1305(a)(1). To the extent that the Ninth Circuit Bankruptcy
Appellate Panel in Savaria held that Pan American Van Lines
stands for the proposition that taxes “become payable when
IN THE MATTER OF JOYE 11521
the final tax return for the tax year is required to be filed,” we
disagree with the panel. Savaria, 317 B.R. at 401.
The other cases relied on by the Board are also unhelpful.
In Schatz v. Franchise Tax Board, 81 Cal. Rptr. 2d 719 (Cal.
Ct. App. 1999), a case also relied upon by the dissent, the
court held that a state income tax deficiency is “assessed” for
the purposes of federal bankruptcy laws “when the assessment
contained in a notice of proposed deficiency assessment
becomes final.” Id. at 720. Schatz did not, however, address
when taxes become “payable” under California law for pur-
poses of section 1305(a)(1). The tax return deadline may be
the “date when the State formally act[s] to finally fix the tax
deficiencies for those years,” but that does not preclude the
conclusion that the taxes owed are capable of being paid at a
point before the State’s formal action. Id. at 724.
The same reasoning distinguishes Franchise Tax Board v.
Bracey (In re Bracey), 77 F.3d 294 (9th Cir. 1996). Like
Schatz, this case dealt with the issue of when a tax deficiency
is “assessed” under California law for purposes of rendering
the assessment nondischargeable in federal bankruptcy pro-
ceedings. Id. at 295. The moment when a tax deficiency
assessment becomes final is plainly different than when
income taxes become payable for purposes of section
1305(a)(1).
For these reasons, we disagree with the Board’s argument
that the Joyes’ outstanding taxes “became payable” on the
date their state tax return was due. As described above, those
taxes “became payable” at the close of the year 2000 taxable
year. Because the date the taxes became payable fell before
the date the Joyes filed their bankruptcy petition, the taxes
were properly discharged in their bankruptcy case.
B.
[9] Having concluded that the Board is not entitled to sum-
mary judgment on statutory grounds, we are now required to
11522 IN THE MATTER OF JOYE
address the parties’ constitutional arguments. We must decide
whether barring the Board from collecting the Joyes’ out-
standing taxes would constitute a denial of fundamental fair-
ness in state proceedings guaranteed by the Constitution. In
Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306,
314 (1950), the Supreme Court held that “[a]n elementary and
fundamental requirement of due process in any proceeding
which is to be accorded finality is notice reasonably calcu-
lated, under all the circumstances, to apprise interested parties
of the pendency of the action and afford them an opportunity
to present their objections.” In City of New York v. New York,
New Haven & Hartford R.R. Co., 344 U.S. 293, 296-97
(1953), the Court extended this constitutional guarantee to
governmental entities.
[10] We assessed the constitutional adequacy of the official
notice provided in bankruptcy proceedings in Matter of Greg-
ory, 705 F.2d 1118 (9th Cir. 1983). There, a creditor argued
that its claim in bankruptcy should not be discharged because
it had received inadequate notice of the debtor’s bankruptcy
plan. Id. at 1120. It was undisputed, however, that the creditor
had received official notice of the bankruptcy case and the
scheduled meeting of creditors. Id. We rejected the creditor’s
constitutional challenge, holding that “[w]hen the holder of a
large, unsecured claim [in bankruptcy] . . . receives any notice
from the bankruptcy court that its debtor has initiated bank-
ruptcy proceedings, it is under constructive or inquiry notice
that its claim may be affected, and it ignores the proceedings
to which the notice refers at its peril.” Id. at 1123. We added
that “[i]f [the creditor] had made any inquiry following
receipt of the notice, it would have discovered that it needed
to act to protect its interest.” Id.; see also Espinosa v. United
Student Aid Funds, Inc., 545 F.3d 1113, 1122 (9th Cir.),
amended by 553 F.3d 1193 (2008) (holding that Gregory is
“entirely consistent with Mullane and the more than a half
century of due process caselaw that follows it”).
[11] Gregory controls here. The Joyes filed their bank-
ruptcy petition on March 7, 2001. The petition scheduled the
IN THE MATTER OF JOYE 11523
Board as a priority creditor in the estimated amount of
$10,000. The bankruptcy court then sent the Board official
notice of the petition. The notice indicated that the meeting of
creditors would be held on April 19, 2001, and that the claims
bar date for governmental claims was September 3, 2001. The
parties do not dispute that this notice complied with the
requirements of the Bankruptcy Code. Moreover, the Board
does not contend that it did not receive this official notice.
Therefore, like the creditor in Gregory, the Board received
constitutionally adequate notice of its right to payment — in
the form of the official notice mandated by the Bankruptcy
Code — and it ignored the Joyes’ bankruptcy proceeding “at
its peril.” Gregory, 705 F.2d at 1123.
The Board argues that even though it received this official
notice, it could not determine the Joyes’ actual tax liability
until after October 15, 2001 because California’s income tax
system relies on taxpayers to assess how much they owe and
inform the Board of that amount through a tax return. But this
does not change the fact that the Board received actual notice
of the Joyes’ bankruptcy petition, which had scheduled the
Board as a priority creditor for an estimated $10,000.
Although this estimate was below the actual amount owed,
the estimate certainly put the Board on notice that it may be
entitled to some amount of payment from the Joyes’ Chapter
13 estate. Cf. In re Coastal Alaska Lines, Inc., 920 F.2d 1428,
1431 (9th Cir. 1990) (holding that an unscheduled creditor
had constitutionally adequate notice of the bankruptcy pro-
ceedings because it had sufficient information to evaluate
whether to participate in the case and protect its interests); In
re Kragness, 82 B.R. 553, 555 (Bankr. D. Or. 1988) (holding
that “the operative fact is whether or not the creditor has
notice of the debtor’s bankruptcy proceeding in time to file a
timely proof of claim”).
[12] Moreover, as the Joyes correctly point out, if the
Board had doubts about the tax estimate, it could have either
requested an extension of time in which to file a claim, or
11524 IN THE MATTER OF JOYE
filed an estimated claim in any amount, and then sought an
amendment of that claim prior to the distribution. See, e.g.,
Lompa v. Price (In re Price), 871 F.2d 97, 99 (9th Cir. 1989)
(holding that a creditor who had received actual notice of a
bankruptcy proceeding through his counsel did not suffer a
due process violation because he had notice “in time to file a
complaint, or at least to file a timely motion for an extension
of time”). Yet the Board does not explain why it did not
inquire further into the Joyes’ bankruptcy proceeding. Instead,
the Board argues that the Joyes should not be allowed to
“game” the system by setting the claims bar date before the
date on which they are required to file their tax returns. How-
ever, there is no evidence of bad faith on the Joyes’ part; it
is undisputed that the Joyes were legally entitled to file their
tax returns on October 15.
Our decision in Manufacturers Hanover v. Dewalt (In re
Dewalt), 961 F.2d 848 (9th Cir. 1992) does not alter our con-
clusion. In that case, we ruled that a creditor did not receive
adequate notice because the debtor negligently listed an incor-
rect address for the debtor in her bankruptcy plan. Id. at 849.
The creditor therefore “did not receive any notice from the
court regarding” the claim schedules in bankruptcy. Id. The
case before us is wholly distinguishable. As described above,
no one disputes that the Board received actual notice of the
Joyes’ bankruptcy case. Moreover, there is no evidence that
the Joyes acted negligently in filing their tax returns after the
claims bar date.
Similarly, Ellett v. Stanislaus, 506 F.3d 774 (9th Cir. 2007)
is of no help to the Board. In that case, we held that a taxing
authority did not receive adequate notice of the debtor’s
Chapter 13 bankruptcy because the debtor provided an incor-
rect social security number in his bankruptcy filings. Id. at
781. Although we observed that the burden of providing ade-
quate notice is generally on the debtor, our decision in that
case turned on the fact that the debtor provided “incorrect
identifying information” to the tax authority. Id. We held that
IN THE MATTER OF JOYE 11525
“due to [the debtor’s] negligence in listing an erroneous
[social security number] on his bankruptcy petition and sec-
tion 341(a) notice, proper notice was not provided to the [tax-
ing authority].” Id. (emphasis added). In this case, it is
undisputed that the Joyes provided their correct social security
numbers in their bankruptcy filings. The Board nevertheless
argues that it did not have the Joyes’ social security numbers
in its own records prior to the tax return deadline. But Ellett
does not stand for the proposition that the bankruptcy court’s
official notice is constitutionally inadequate simply because
the creditor’s records are incomplete through no fault of the
debtor.
[13] Finally, we address the district court’s observation that
recent amendments to the Bankruptcy Code evidence Con-
gress’ concern that situations like this case “could result in the
denial of fundamental fairness to taxing authorities.” These
amendments were enacted in 2005, and were therefore inap-
plicable at the time the Joyes filed their bankruptcy petition.
In Gardenhire v. IRS (In re Gardenhire), 209 F.3d 1145, 1148
(9th Cir. 2000), we held that “[c]lose adherence to the text of
the relevant statutory provisions and rules is especially appro-
priate in a highly statutory area such as bankruptcy.” We heed
that advice here. As described above, the official notice pro-
vided to the Board complied with all the requirements of the
Bankruptcy Code as enacted at the time. The Board has not
provided adequate reason to disregard the clear import of the
statutory scheme on the otherwise equitable grounds of funda-
mental fairness.
III.
In conclusion, we hold that the Joyes’ outstanding taxes for
the year 2000 were properly discharged pursuant to 11 U.S.C.
§ 1328(a). Those taxes do not give rise to a post-petition
claim under 11 U.S.C. § 1305(a)(1); therefore, the Board can-
not rely on that provision to save its claim to these taxes from
discharge. We also hold that the Board received constitution-
11526 IN THE MATTER OF JOYE
ally adequate notice of its right to payment on these outstand-
ing taxes. Thus, barring the Board from collecting these taxes
would not constitute a denial of fundamental fairness.
We acknowledge that the Board has the unenviable task of
maintaining complete and accurate records for the millions of
taxpayers in the State of California. But we are not at liberty
to rework the Bankruptcy Code in order to lighten its burden.
The Joyes did all that was required of them to provide the
Board with notice of their tax liabilities. Accordingly, we
reverse the summary judgment of the district court, and
remand this case for proceedings consistent with this opinion.
REVERSED and REMANDED.
GRABER, Circuit Judge, dissenting:
I respectfully dissent.
Shelli Renee and Teresa M. Joye concede that, if their out-
standing taxes for 2000 gave rise to a post-petition claim, the
taxes would survive their discharge in bankruptcy. Under 11
U.S.C. § 1305(a)(1), the government may file a proof of claim
“for taxes that become payable to a governmental unit while
the case is pending.” The question, then, is whether the taxes
in this case “bec[a]me payable” while the Joyes’ bankruptcy
case was pending.
As the majority acknowledges, the term “payable” in this
statute is ambiguous. See maj. op. at 11513-16. “Payable”
could mean “calculable” or “fixed,” or it could mean “must
be paid now” or “legally enforceable.” I would read it, as did
the Fifth Circuit, to mean “must be paid now” or “legally
enforceable.” United States v. Ripley (In re Ripley), 926 F.2d
440, 444 (5th Cir. 1991). As the Ripley court explained,
Black’s Law Dictionary states that a sum of money normally
IN THE MATTER OF JOYE 11527
is said to be “payable” when a person is obliged to discharge
the debt at once. Id. So read, the statute entitles the Franchise
Tax Board to collect taxes from the Joyes for the year 2000
because the taxes became payable (“must be paid now” or “le-
gally enforceable”) on April 15, 2001; the Joyes had filed
their bankruptcy case on March 7, 2001, and their bankruptcy
case remained pending on April 15, 2001. I come to this inter-
pretation for four main reasons.
First, the fundamental purpose of this particular subsection
is to permit governmental units to collect taxes as part of a
bankruptcy plan. The Bankruptcy Code is concerned primar-
ily with pre-petition debts, as a bankruptcy plan attempts to
release the debtor “from pre-petition debts so that she can be
given a ‘fresh start.’ ” Boeing N. Am., Inc. v. Ybarra (In re
Ybarra), 424 F.3d 1018, 1026 (9th Cir. 2005). Claims that
arise after the filing of the bankruptcy petition, or post-
petition claims, generally are not part of the bankruptcy case
(though they may be collected outside the bankruptcy pro-
ceedings). 8 Collier on Bankruptcy ¶ 1305.01 (Alan N. Resn-
ick & Henry J. Sommer eds., 15th ed. rev.). But Congress has
crafted a few statutory exceptions to that rule, one of which
is relevant here. In enacting 11 U.S.C. § 1305, titled “Filing
and allowance of postpetition claims,” Congress allowed a
governmental unit to which taxes “become payable” while a
bankruptcy case is pending to file an otherwise impermissible
post-petition claim with the bankruptcy court, id.§ 1305(a)(1).
Our task in construing a statute is to discern congressional
intent. See Dole v. United Steelworkers of Am., 494 U.S. 26,
35 (1990). To do so, we “look to the provisions of the whole
law, and to its object and policy.” Id. (internal quotation
marks omitted). That Congress chose to allow governmental
units to participate in bankruptcy proceedings as creditors—
even as to claims that ordinarily would have to be collected
separately—manifestly evinces a strong intent to allow for
collection of taxes as part of the bankruptcy plan. If one plau-
11528 IN THE MATTER OF JOYE
sible reading cuts off tax liability, while another does not, we
should adopt the reading that comports with Congress’ overall
intent.
The majority opinion is also flawed because it equates
§ 1305(a)(1) with § 502(i), maj. op. at 11516, even though
those sections employ substantially different formulations.
Section 1305(a)(1) pertains to “taxes that become payable,”
while § 502(i) refers to a “claim” that “arise[s].” A “claim” is
not the same as “taxes,” and a claim for taxes may “arise”
before it “become[s] payable.” When interpreting statutes, we
presume that Congress meant to convey different concepts
when it used different words. See, e.g., SEC v. McCarthy, 322
F.3d 650, 656 (9th Cir. 2003) (“It is a well-established canon
of statutory interpretation that the use of different words or
terms within a statute demonstrates that Congress intended to
convey a different meaning for those words.”). The majority
therefore errs in concluding, because of the text and scholarly
interpretations of § 502(i), that only taxes incurred post-
petition may be treated as post-petition claims under
§ 1305(a). See maj. op. at 11516.
Second, because of the importance of national uniformity
in administering the Bankruptcy Code, we should interpret
§ 1305(a), if possible, the same way as our sister circuits have
interpreted it. As noted, the Fifth Circuit reads the statute as
I do.
The majority relies heavily on a Bankruptcy Appellate
Panel (“BAP”) case from the Tenth Circuit, Dixon v. IRS (In
re Dixon), 218 B.R. 150 (B.A.P. 10th Cir. 1998). Maj. op. at
11514-16. But there has been no circuit split until today. Only
the Fifth Circuit has ruled on what “payable” means in
§ 1305(a)(1). A BAP opinion is equivalent only to an opinion
from a federal district court in another circuit. The Tenth Cir-
cuit’s BAP (like our own Ninth Circuit BAP) consists of a
group of non-Article III judges appointed by a federal circuit
court to hear appeals from the bankruptcy courts. In circuits
IN THE MATTER OF JOYE 11529
that do not have BAPs, bankruptcy court decisions are
appealed to federal district courts. See 28 U.S.C. § 158(a). We
should not, therefore, give the Tenth Circuit’s BAP decision
any more weight than that of a district court from another cir-
cuit. Cf. Rosson v. Fitzgerald (In re Rosson), 545 F.3d 764,
772 n.10 (9th Cir. 2008) (“BAP opinions are not binding on
this court . . . .”); Bank of Maui v. Estate Analysis, Inc., 904
F.2d 470, 472 (9th Cir. 1990) (declining to rule on the author-
itative effect of a BAP decision, but noting that “BAP deci-
sions cannot bind the district [and circuit] courts themselves.
As article III courts, the district [and circuit] courts must
always be free to decline to follow BAP decisions and to for-
mulate their own rules within their jurisdiction.”). To the
extent that the question is one of federal law, if it is reason-
able to do so we should harmonize our holding with that of
the Fifth Circuit, which is the only other federal court of
appeals to have decided the question before us.1
Third, the majority’s view assumes that a taxpayer can do
nothing to alter her tax obligations between January 1 and
April 15. That assumption is not accurate. A taxpayer may,
for example, contribute to an Individual Retirement Account
(“IRA”) between January 1 and April 15, 2009, and deduct
that contribution from her 2008 income when she files her
2008 tax return, as long as she specifies that the contribution
is to be attributed to 2008. See 26 U.S.C. § 219(a), (f)(3) (not-
ing that deductible contributions can be made up to the date
the tax return is due); State of California Franchise Tax Board
Publication 1005, Pension and Annuity Guidelines 4 (“The
California Treatment of IRAs is generally the same as the fed-
eral treatment.”). So her tax liability cannot be truly “fixed”
or “calculable” until April 15, because she can alter her
income (for tax purposes) until that date each year.
1
Moreover, in Dixon, the agency conceded that the claim was pre-
petition. 218 B.R. at 151. That concession was key to the court’s holding
that the taxes became payable at the close of the tax year. There is no such
concession here.
11530 IN THE MATTER OF JOYE
Fourth, as the majority recognizes, we turn to state law to
determine whether the Joyes’ taxes became payable under
California law during the pendency of their bankruptcy case.
Maj. op. at 11520; see Raleigh v. Ill. Dep’t of Revenue, 530
U.S. 15, 20 (2000) (“The ‘basic federal rule’ in bankruptcy is
that state law governs the substance of claims . . . .” (citation
omitted)). California’s Revenue and Taxation Code governs
the Joyes’ obligations to the Franchise Tax Board. Section
19001 of the California code provides that taxes “shall be paid
at the time and place fixed for filing the return (determined
without regard to any extension of time for filing the return).”
Under that text, “the time . . . fixed for filing the return” in
the absence of an extension of time for filing the return is
April 15. Even if the tax is capable of calculation on January
1, the Franchise Tax Board would have no authority under
state law to initiate a collection action before April 15. At
least one California appellate case supports this interpretation
as well. In Schatz v. Franchise Tax Board, 81 Cal. Rptr. 2d
719, 724 (Ct. App. 1999), the California Court of Appeal con-
cluded that the date on which the Franchise Tax Board
accepts a return is the “date when the State formally act[s] to
finally fix the tax.” Thus, to the extent that the question here
pertains to the substance of the tax claim and thus to Califor-
nia law, the Franchise Tax Board’s proposed interpretation is
more persuasive. The Joyes filed for bankruptcy on March 7,
2001; the taxes became payable on April 15, 2001, during the
pendency of the bankruptcy proceeding.
For these reasons, I would hold that, under 11 U.S.C.
§ 1305(a)(1), the Joyes’ 2000 taxes were post-petition.
Accordingly, I would affirm the decision of the district court.