James B. Angell v. Stubbs & Perdue, P.A.
Filing
PUBLISHED AUTHORED OPINION filed. Originating case number: 7:14-cv-00079-F,10-00809-8-SWH. [999741412]. [15-1316]
Appeal: 15-1316
Doc: 36
Filed: 01/26/2016
Pg: 1 of 18
PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 15-1316
In Re:
HENRY LONDON ANDERSON, JR.,
Debtor.
------------------------STUBBS & PERDUE, P.A.,
Appellant,
v.
JAMES B. ANGELL, Chapter 7 Trustee,
Trustee – Appellee,
and
UNITED STATES OF AMERICA,
Appellee.
Appeal from the United States District Court for the Eastern
District of North Carolina, at Wilmington. James C. Fox, Senior
District Judge. (7:14-cv-00079-F; 10-00809-8-SWH)
Argued:
December 9, 2015
Decided:
January 26, 2016
Before WILKINSON, KEENAN, and HARRIS, Circuit Judges.
Affirmed by published opinion. Judge Harris wrote the opinion,
in which Judge Wilkinson and Judge Keenan joined.
Appeal: 15-1316
Doc: 36
Filed: 01/26/2016
Pg: 2 of 18
ARGUED:
Trawick Hamilton Stubbs, Jr., STUBBS & PERDUE, P.A.,
New Bern, North Carolina, for Appellant.
Paul Andrew Allulis,
UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C.; James B.
Angell, HOWARD, STALLINGS, FROM, HUTSON, ATKINS, ANGELL & DAVIS,
P.A., Raleigh, North Carolina, for Appellees. ON BRIEF: Joseph
Z. Frost, STUBBS & PERDUE, P.A., Raleigh, North Carolina, for
Appellant.
Caroline D. Ciraolo, Acting Assistant Attorney
General, Thomas J. Clark, Tax Division, UNITED STATES DEPARTMENT
OF JUSTICE, Washington, D.C.; Thomas G. Walker, United States
Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Raleigh, North
Carolina; Nicholas C. Brown, HOWARD, STALLINGS, FROM, HUTSON,
ATKINS, ANGELL & DAVIS, P.A., Raleigh, North Carolina, for
Appellees.
2
Appeal: 15-1316
Doc: 36
Filed: 01/26/2016
Pg: 3 of 18
PAMELA HARRIS, Circuit Judge:
Stubbs
&
Perdue,
P.A.
(“Stubbs”)
represented
Henry
L.
Anderson, Jr. (the “Debtor”) in bankruptcy proceedings, and is
owed
approximately
representation.
$200,000
in
legal
fees
from
that
But the Debtor also is subject to nearly $1
million in secured tax claims, and the estate has insufficient
funds to pay both Stubbs’s fees and the tax claim.
In practical
terms, this case is about which of those claims takes priority
in a Chapter 7 liquidation under the Bankruptcy Code.
The answer is found in § 724(b)(2) of the Bankruptcy Code,
11 U.S.C. § 724(b)(2).
And under the version of § 724(b)(2) in
effect when the bankruptcy court rendered its decision, it is
clear that the secured tax claim takes priority over Stubbs’s
claim
to
fees.
Stubbs
argues,
however,
that
application
of
current law to its claim would have an impermissible retroactive
effect,
and
that
it
can
prevail
under
the
§ 724(b)(2) that should govern this case.
court
and
the
district
court,
we
prior
version
of
Like the bankruptcy
disagree,
and
we
therefore
affirm the judgment of the district court.
I.
A.
On February 3, 2010, the Debtor filed a voluntary petition
for
relief
under
Chapter
11
of
3
the
Bankruptcy
Code,
which
Appeal: 15-1316
Doc: 36
governs
Filed: 01/26/2016
reorganizations
of
Pg: 4 of 18
debtors’
estates.
Shortly
thereafter, the bankruptcy court approved Stubbs to serve as the
Debtor’s counsel.
In July of 2011, the IRS filed a proof of
claim against the estate in the amount of $997,551.80, of which
$987,082.88 was secured by the Debtor’s property interests.
During the pendency of the Debtor’s Chapter 11 case, the
bankruptcy court entered five orders approving compensation to
Stubbs for legal services, for a total of slightly more than
$200,000.
The allowance of Stubbs’s fees, as the “actual” and
“necessary”
expenses
of
preserving
the
Debtor’s
estate,
gave
Stubbs an unsecured claim for “administrative expenses” against
the estate.
See 11 U.S.C. §§ 330(a), 503(b).
The Bankruptcy
Code establishes a hierarchy of unsecured creditors like Stubbs,
and as an administrative expense claimant, Stubbs holds secondpriority status under § 507(a)(2) of the Code.
See 11 U.S.C.
§ 507(a)(2).
On
November
demonstrate
that
17,
he
2011,
could
after
the
effectuate
Debtor
a
failed
final
to
plan
of
reorganization under Chapter 11, the Debtor’s bankruptcy case
converted to one under Chapter 7, which governs liquidations.
The
bankruptcy
court
then
appointed
James
B.
Angell
(the
“Trustee”) as the Chapter 7 Trustee.
The
Trustee
was
able
to
accumulate
distribution to the estate’s creditors.
4
$702,630.25
for
He estimated that total
Appeal: 15-1316
Doc: 36
Filed: 01/26/2016
Pg: 5 of 18
Chapter 7 administrative expenses would amount to $278,921.42,
leaving the Debtor’s estate with just $423,708.83 – far short of
what would be required to satisfy the IRS’s secured tax claim of
nearly
$1
million
and
Stubbs’s
unsecured
Chapter
administrative expense claim of roughly $200,000. 1
11
So unless
Stubbs’s unsecured claim took priority over the secured claim of
the IRS, Stubbs would not collect its fees.
Whether Stubbs
could “subordinate” the IRS’s claim in this manner was governed
by 11 U.S.C. § 724(b)(2), and that provision is the focus of
this case.
B.
The general rule in bankruptcy is that secured claims are
satisfied from the collateral securing those claims prior to any
distributions to unsecured claims.
See 11 U.S.C. §§ 506, 725;
In re Midway Airlines, Inc., 383 F.3d 663, 669 (7th Cir. 2004).
Secured
claims,
in
other
words,
take
priority.
Under
that
general rule, the IRS’s claim in this case would be paid first
and nothing
would
be
left
for
payment
on
Stubbs’s
unsecured
claim for administrative expenses incurred during the Chapter 11
proceeding.
1
Stubbs’s
total
allowed
compensation
amounted
to
$213,408.06. But because the Debtor paid $27,977.85 of Stubbs’s
fees, Stubbs is now owed $185,430.21.
5
Appeal: 15-1316
Doc: 36
Filed: 01/26/2016
Pg: 6 of 18
But in Chapter 7 liquidations, there is a limited exception
to this norm.
Under § 724(b)(2) of the Bankruptcy Code, certain
unsecured creditors may “step into the shoes” of secured tax
creditors in Chapter 7 liquidation proceedings, so that when the
collateral
securing
the
creditors are paid first.
tax
claims
is
sold,
the
unsecured
If Stubbs’s claim for Chapter 11
administrative expenses was among the unsecured claims covered
by § 724(b)(2), then — and only then — could it recover from the
estate.
Because the history of § 724(b)(2) is directly relevant to
this case, we cover it in some detail.
Until 2005 (and before
any of the events at issue here), § 724(b)(2) was relatively
uncomplicated, providing all holders of administrative expense
claims, like Stubbs, with the right to subordinate secured tax
creditors in Chapter 7 liquidations.
See 11 U.S.C. § 724(b)(2)
(2000).
But that statutory scheme was criticized on the ground
that
created
it
debtors
and
perverse
their
incentives,
representatives
encouraging
to
incur
Chapter
11
administrative
expenses even where there was no real hope for a successful
reorganization, to the detriment of secured tax creditors when
Chapter 7 liquidation ultimately proved necessary.
K.C.
Mach.
&
Tool
Co.,
816
F.2d
(Merritt, J., dissenting).
6
238,
248
(6th
See In re
Cir.
1987)
Appeal: 15-1316
Doc: 36
In
2005,
Filed: 01/26/2016
Congress
Pg: 7 of 18
responded
with
a
fix.
Under
the
Bankruptcy Abuse Prevention and Consumer Protection Act of 2005,
Pub. L. No. 109–8, 119 Stat. 23 (the “BAPCPA”), Congress sought
to
limit
the
class
of
administrative
expenses
covered
by
§ 724(b)(2), excluding claims for the expenses incurred during
prior Chapter 11 proceedings.
In other words, in order “to
provide greater protection for holders of tax liens . . . from
erosion
of
their
claims’
status
by
expenses
incurred
under
chapter 11 of the Bankruptcy Code,” H.R. Rep. No. 109–31(I), at
100 (2005), unsecured Chapter 11 administrative expense claims
would no longer take priority over secured tax claims in Chapter
7 liquidations.
Thanks to a drafting error, however, it is not clear that
Congress accomplished what it set out to do.
The Bankruptcy
Code is complicated, and the original version of § 724(b)(2)
covered
claims
for
unsecured
administrative
expenses
through
cross reference to 11 U.S.C. § 507(a)(1), a provision that gave
such claims first priority as among other unsecured claims.
11
U.S.C.
§ 507(a)(1)
(2000).
So
when
Congress
See
amended
§ 724(b)(2) to exclude Chapter 11 administrative expenses, it
did so by clarifying that subordination rights would extend “to
any holder of a claim of a kind specified in section 507(a)(1)”
— that is, administrative expenses — “(except that such expenses
. . . shall be limited to expenses incurred under chapter 7 of
7
Appeal: 15-1316
Doc: 36
Filed: 01/26/2016
Pg: 8 of 18
this title and shall not include expenses incurred under chapter
11 of this title).”
added).
11 U.S.C. § 724(b)(2) (2006) (emphasis
And it would have worked — except that in a separate
amendment, the BAPCPA simultaneously altered the § 507 priority
scheme
for
unsecured
claims,
dropping
administrative
expense
claims from first to second and moving them from § 507(a)(1) to
§ 507(a)(2).
that
the
See § 212, Pub. L. No. 109-8.
exclusion
of
Chapter
11
The end result was
expenses
inserted
into
§ 724(b)(2), read literally, did not apply to the administrative
expenses that were its target, but instead to the new set of
claims now enumerated under § 507(a)(1).
That was the state of affairs when the Debtor filed his
initial Chapter 11 petition in February of 2010.
At the time,
none of this was of particular importance, because § 724(b)(2)
applies only in Chapter 7 liquidations and not in Chapter 11
reorganizations.
while
the
See 11 U.S.C. § 103(b).
Debtor’s
case
remained
in
And ten months later,
Chapter
11,
Congress
corrected its error with the Bankruptcy Technical Corrections
Act of 2010, Pub. L. No. 111-327, 124 Stat. 3557 (the “BTCA”).
The BTCA made “technical” changes to the Bankruptcy Code, see
id., necessitated by a “number of technical drafting errors” in
the BAPCPA.
See 156 Cong. Rec. H7161 (daily ed. Sept. 28, 2010)
(statement of Rep. Scott) (“This bill before us today is simply
a technical cleanup of the [BAPCPA].”).
8
In particular, the BTCA
Appeal: 15-1316
Doc: 36
Filed: 01/26/2016
Pg: 9 of 18
coupled the parenthetical excluding Chapter 11 expenses with a
cross-reference
to
administrative
Chapter
11
§ 507(a)(2),
expenses
are
now
administrative
where
unsecured
enumerated,
expense
to
clarifying
claimants
subordination rights under § 724(b)(2).
claims
do
that
not
hold
See § 2(a)(27), Pub. L.
No. 111-327.
Congress enacted the corrected BTCA version of § 724(b)(2)
in December 2010.
It was not until eleven months later, in
November 2011, that the Debtor’s bankruptcy case converted from
Chapter 11 to Chapter 7, implicating § 724(b)(2) for the first
time.
Now
in
§ 724(b)(2)’s
a
Chapter
exception
to
7
proceeding,
the
general
Stubbs
rule
could
that
invoke
unsecured
claims like its own take a back seat to secured claims like the
IRS’s
—
but
only
if
its
claim
to
Chapter
11
administrative
expenses was covered by the governing version of § 724(b)(2).
C.
For guidance on this question, the Chapter 7 Trustee filed
a Motion in Aid of Distribution before the bankruptcy court.
The Trustee, with the support of the United States, took the
position that the version of § 724(b)(2) then in effect — the
corrected
provision,
BTCA
there
version
is
no
—
controlled,
question
but
and
that
that
under
Stubbs’s
that
unsecured
claim to Chapter 11 administrative expenses is excluded.
And
even under the prior BAPCPA version of § 724(b)(2), the Trustee
9
Appeal: 15-1316
Doc: 36
Filed: 01/26/2016
Pg: 10 of 18
and the United States argued, it is clear enough that Stubbs is
not entitled to subordinate the IRS’s secured tax claim.
Stubbs filed an objection.
no
subordination
§ 724(b)(2).
the
plain
rights
It did not dispute that it had
under
the
current
BTCA
version
But it argued that regardless of Congress’ intent,
language
of
the
prior
version
of
§ 724(b)(2)
entitle it to subordinate the IRS’s secured tax claim.
according
of
to
Stubbs,
application
of
the
new
and
did
And
corrected
version of § 724(b)(2) would have an impermissible retroactive
effect,
cutting
administrative
off
its
expenses
right
to
incurred
recover
before
for
Congress
Chapter
fixed
11
its
drafting error.
The bankruptcy court agreed with the Trustee and dismissed
Stubbs’s objection.
In re Anderson, No. 10-00809-8-RDD, 2014 WL
590481 (Bankr. E.D.N.C. Feb. 14, 2014).
It held, first, that
the BTCA version of § 724(b)(2) governs this case, under the
normal rule that “a court is to apply the law in effect at the
time it renders its decision.”
Sch.
Bd.
of
Richmond,
416
Id. at *2–3 (quoting Bradley v.
U.S.
696,
711
(1974)).
The
presumption against retroactivity described in Landgraf v. USI
Film Products, 511 U.S. 244 (1994), the court reasoned, has no
bearing here:
The BTCA version of § 724(b)(2) already was in
effect when the case converted to Chapter 7, so application of
current law would have no retroactive effect on Stubbs’s right
10
Appeal: 15-1316
Doc: 36
Filed: 01/26/2016
Pg: 11 of 18
to subordinate tax liens in a Chapter 7 proceeding.
2014 WL
590481, at *3.
In the alternative, the bankruptcy court found that even
under the BAPCPA version of § 724(b)(2), Stubbs would hold no
right to subordinate the IRS’s secured tax claim.
“the
passage
legislative
court
of
the
history
thought
it
BTCA,
of
its
[the
“clear
legislative
BAPCPA]
that
history,
Section
Congress
Analyzing
and
the
724(b)(2),” the
intended
to
exclude
Chapter 11 professional expenses when a case is converted to
Chapter 7.”
Id. at *4.
The district court affirmed the decision of the bankruptcy
court.
(E.D.N.C.
district
In
re
Feb.
court
Anderson,
No.
26,
2015).
held
that
7:14-cv-00079-F,
Like
the
law
the
in
2015
bankruptcy
effect
at
WL
892363
court,
the
time
the
of
decision — the BTCA version of § 724(b)(2) — governs the case.
Because
Stubbs
had
no
vested
right
to
subordinate
under
§ 724(b)(2) “until the case was converted to one under Chapter
7,
some
eleven
months
after
Congress
had
already
passed
the
BTCA,” the court reasoned, application of current law would have
no retroactive effect within the meaning of Landgraf.
*3.
and
Id. at
Having found that the BTCA version of § 724(b)(2) applies
precludes
Stubbs’s
claim
to
subordination,
the
district
court did not decide whether the same result would follow under
the BAPCPA version of § 724(b)(2).
11
Appeal: 15-1316
Doc: 36
Filed: 01/26/2016
Pg: 12 of 18
This timely appeal followed.
II.
A.
This court reviews the judgment of a district court sitting
in review of a bankruptcy court de novo.
Jacksonville Airport,
Inc. v. Michkeldel, Inc., 434 F.3d 729, 731 (4th Cir. 2006).
We
review the bankruptcy court’s findings of fact for clear error
and its conclusions of law de novo.
Id.
Whether § 724(b)(2)
empowers Stubbs to subordinate the IRS’s secured tax claim is a
pure question of law.
B.
The Supreme Court has identified two rules for interpreting
statutes that, like § 724(b)(2), do not specify their temporal
reach.
See Landgraf, 511 U.S. at 264.
The first is that, as a
general rule, “a court is to apply the law in effect at the time
it renders its decision.”
Id. (quoting Bradley, 416 U.S. at
711); see Velasquez-Gabriel v. Crocetti, 263 F.3d 102, 108 (4th
Cir. 2001) (“[N]ormally a court is to apply the law in effect at
the
time
quotation
it
renders
marks
its
decision.”
omitted)).
exception to the first:
The
(citation
second
is
and
internal
effectively
an
Because retroactivity is disfavored, a
court should not apply the law currently in effect if it would
have
a
“retroactive
effect”
on
12
conduct
predating
the
law’s
Appeal: 15-1316
Doc: 36
Filed: 01/26/2016
Pg: 13 of 18
enactment, “absent clear congressional intent favoring such a
result.”
Landgraf, 511 U.S. at 280.
Combined, these principles
dictate that a court apply the law in effect at the time it
renders
its
retroactively
decision,
without
unless
clear
that
congressional
law
would
operate
authorization.
See
Gordon v. Pete’s Auto Serv. of Denbigh, Inc., 637 F.3d 454, 458
(4th Cir. 2011) (describing Landgraf framework for analysis).
The bankruptcy and district courts concluded that this is
the ordinary case, in which the law in effect at the time of
decision — here, the BTCA version of § 724(b)(2) — applies.
Stubbs,
on
exception,
the
other
because
hand,
argues
application
that
of
this
the
BTCA
case
is
the
version
of
§ 724(b)(2) to its claim for Chapter 11 administrative fees,
incurred and approved prior to enactment of the BTCA, would have
an
impermissible
retroactive
effect. 2
We
agree
with
the
bankruptcy and district courts, and conclude that Stubbs’s claim
is governed and foreclosed by the BTCA version of § 724(b)(2).
A rule that courts should apply the law in effect when they
render their decisions has the advantage of being clear and easy
2
On appeal, Stubbs limits its retroactivity challenge to
the $105,783.08 in Chapter 11 legal fees approved by the
bankruptcy court prior to the BTCA’s enactment date of December
22, 2010. Before the district court, Stubbs had argued that the
BTCA version of § 724(b)(2) could not be applied to a total of
$153,471.86 in unpaid fees, which included fees incurred before
the BTCA was enacted but approved only after enactment.
13
Appeal: 15-1316
to
Doc: 36
Filed: 01/26/2016
Pg: 14 of 18
And
especially
administer.
bankruptcy context.
that
is
important
in
the
Chapter 7 trustees have a fiduciary duty to
make already-complex calculations in an expeditious manner, see
In re Thompson, 965 F.2d 1136, 1145 (1st Cir. 1992), and we have
recognized “a public policy interest in reducing the number of
ancillary suits that can be brought . . . so as to advance the
swift and efficient administration of the bankrupt’s estate,” In
re Richman, 104 F.3d 654, 656–57 (4th Cir. 1997).
Requiring
Chapter 7 trustees to distinguish between and apply different
versions
of
complicate
the
Bankruptcy
the
process
Code,
on
the
significantly,
other
hand,
necessitating
would
an
additional level of discovery and analysis.
The result would be
the
administration
potential
for
substantial
delays
in
and
increased exposure for bankruptcy trustees, who are subject to
personal liability on claims for improper distribution.
Cf.
Yadkin Valley Bank & Trust Co. v. McGee, 819 F.2d 74, 76 (4th
Cir. 1987) (trustee subject to liability for negligently failing
to reduce the assets of the estate to money as expeditiously as
possible).
Stubbs argues, however, that it would be unjust to apply
the
BTCA
payment
version
on
Landgraf,
its
511
of
§ 724(b)(2)
unsecured
U.S.
at
265
claim
retroactively
for
Chapter
(presumption
11
against
to
fees.
See
retroactivity
flows from “[e]lementary considerations of fairness”).
14
disallow
Prior to
Appeal: 15-1316
Doc: 36
Filed: 01/26/2016
Pg: 15 of 18
the BTCA, Stubbs contends, it was entitled to subordinate the
IRS’s secured claim under § 724(b)(2); denying it that right as
to Chapter 11 administrative expenses approved before the BTCA’s
passage would have an impermissible “retroactive effect” under
Landgraf.
We disagree.
The problem with Stubbs’s argument is its premise: that
Stubbs held subordination rights under § 724(b)(2) before the
BTCA was enacted in December 2010.
Before the BTCA was enacted,
§ 724(b)(2) had no application to the Debtor’s case at all.
It
afforded Stubbs no entitlement to subordinate the IRS’s secured
tax claim for the threshold reason that it simply did not apply
in the Chapter 11 proceedings that began in this case in early
2010 and did not end until November 2011, eleven months after
the BTCA’s passage.
The pre-BTCA version of § 724(b)(2) that
Stubbs invokes, in other words, never controlled this case.
the
time
the
case
converted
to
Chapter
7
in
November
By
2011,
implicating § 724(b)(2) for the first time, the BAPCPA version
of § 724(b)(2) had been superseded already by the corrected BTCA
version.
Like
the
bankruptcy
and
district
courts,
2015
WL
892363, at *3; 2014 WL 590481, at *3, we think this sequence of
events is dispositive of Stubbs’s retroactivity argument.
We
recognize,
§ 724(b)(2)
is
incurrence
and
being
of
course,
applied
approval
of
in
that
the
this
case
legal
15
fees
in
BTCA
to
version
conduct
the
—
Chapter
of
the
11
Appeal: 15-1316
Doc: 36
Filed: 01/26/2016
Pg: 16 of 18
proceeding — that predates the provision’s enactment.
the
Supreme
Court
has
made
clear,
that
by
But as
itself
trigger Landgraf’s presumption against retroactivity.
does
not
Landgraf,
511 U.S. at 269 (statute does not operate retroactively “merely
because it is applied in a case arising from conduct antedating
the statute’s enactment”); see Gordon, 637 F.3d at 459.
does
application
retroactive
of
effect
a
new
under
statute
to
Landgraf
expectations based in prior law.”
old
conduct
whenever
it
511 U.S. at 269.
Nor
have
a
“upsets
Before
enactment of the BTCA, Stubbs may have expected that if the
Debtor’s Chapter 11 bankruptcy case at some point converted to
Chapter 7, then it would acquire a right to subordinate the
IRS’s secured claim under § 724(b)(2). 3
But such an inchoate
expectation is not the kind of “vested right[] acquired under
existing laws” that, if frustrated, gives rise to retroactivity
concerns.
Id. (citation omitted); see Jaghoori v. Holder, 772
3
Even that expectation, we note, would rest on the
contested proposition that because of a drafting error, the
BAPCPA version of § 724(b)(2) cannot be read to effectuate
Congress’ undisputed intent to exclude Chapter 11 expenses from
subordination rights.
We need not decide that question of
statutory interpretation, given our holding that it is the BTCA
version of § 724(b)(2), and not the BAPCPA version, that applies
to this case. But given the confusion and flux surrounding the
BAPCPA iteration of § 724(b)(2), any expectation Stubbs may have
had that it could prevail under that provision should the
Debtor’s case convert to Chapter 7 was doubly contingent.
Cf.
Velasquez-Gabriel, 263 F.3d at 108–09 (likelihood of success
under prior statute may inform retroactivity analysis).
16
Appeal: 15-1316
F.3d
Doc: 36
764,
Filed: 01/26/2016
771–72
(4th
Pg: 17 of 18
Cir.
2014)
(finding
impermissible
retroactive effect where application of new statute “takes away
or impairs vested rights acquired under existing laws” (citation
omitted)).
For its argument to the contrary, Stubbs relies primarily
on In re J.R. Hale Contracting Co., 465 B.R. 218 (Bankr. D.N.M.
2011),
in
which
a
bankruptcy
court
held
impermissibly
retroactive the application of the BTCA version of § 724(b)(2)
to a claim for Chapter 11 administrative expenses incurred prior
to the BTCA’s enactment.
Id. at 224–25.
But on the single fact
most critical to our holding — that the pre-BTCA version of
§ 724(b)(2) was at no time applicable to this case — J.R. Hale
is not on point.
In J.R. Hale, unlike this case, the underlying
bankruptcy case converted from Chapter 11 to Chapter 7 almost
two
years
before
enactment
of
the
BTCA,
so
that
the
BAPCPA
version of § 724(b)(2) did in fact govern the case for a period
of time before the BTCA correction.
See id. at 219.
That
distinction is fundamental to our analysis.
As
we
have
emphasized,
the
retroactivity
inquiry
is
a
particularized one, asking “not whether the statute may possibly
have
an
impermissible
specifically
whether
retroactive
applying
effect
the
in
statute
any
to
case,
the
but
person
objecting would have a retroactive consequence in the disfavored
sense.”
Gordon,
637
F.3d
at
17
459
(emphasis
in
original)
Appeal: 15-1316
Doc: 36
Filed: 01/26/2016
Pg: 18 of 18
(citations and internal quotation marks omitted).
We need not
decide
version
here
whether
application
of
the
BTCA
of
§ 724(b)(2) in a case that converted to Chapter 7 while the
prior version still controlled, as in J.R. Hale, would have an
impermissible
purposes
retroactive
that
retroactivity
which
the
J.R.
as
“to
pre-BTCA
effect.
Hale
the
is
no
person
version
It
is
authority
objecting”
of
§
enough
for
in
724(b)(2)
for
present
finding
this
case,
never
had
in
any
controlling effect.
Accordingly, and like the district court, we hold that the
bankruptcy
court
properly
applied
the
BTCA
version
§ 724(b)(2) in effect when it rendered its decision.
provision,
subordinate
it
the
is
clear
IRS’s
that
secured
Stubbs
tax
is
claim
not
in
of
Under that
entitled
favor
unsecured claim to Chapter 11 administrative expenses.
of
to
its
Whether
the same result would have obtained under the pre-BTCA version
of § 724(b)(2), as urged by the Trustee and the United States,
is a question we need not reach.
III.
For the foregoing reasons, we affirm the judgment of the
district court.
AFFIRMED
18
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?