United States of America et al v. Walton et al

Filing 81

MEMORANDUM AND ORDER. (see order for details) IT IS HEREBY ORDERED that Plaintiff's Motion to Reopen Case [ECF No. 78 ] is GRANTED. IT IS FURTHER ORDERED that Defendants Motion to Dismiss [ECF No. 79 ] is DENIED. Signed by District Judge E. Richard Webber on 08/27/2012. (CBL)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION

UNITED STATES OF AMERICA,
Plaintiff,
vs.
ELBERT A. WALTON, JR., et al.,
Defendants.

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Case No. 4:07CV01988 ERW

MEMORANDUM AND ORDER
This matter comes before the Court on Plaintiff United States’ (“Plaintiff”) Motion to
Reopen Case, filed June 19, 2012 [ECF No. 78].
I.

BACKGROUND AND PROCEDURAL HISTORY
On November 17, 2008, Elbert A. Walton, Jr., et al., (“Defendants”) filed for Chapter 13

bankruptcy protection.

In re Walton, Jr., Case No. 08-49185-399 (2008). At that time,

Defendants had outstanding federal income tax liabilities. This Court entered judgment on those
liabilities June 2, 2009, in the amount of $40,442.23. United States v. Walton et al., Case No.
4:07CV01988 ERW (2009). In June 2011, Defendants converted their Chapter 13 plan to a
Chapter 7 and obtained a discharge on October 12, 2011.
On June 19, 2012, Plaintiff filed a Motion to Reopen Case for Defendants’ failure to repay
outstanding federal income tax liability for year 2005 [ECF No. 78]. Defendants filed a response
June 20, 2012, stating that the debt claimed by Plaintiff had been relieved by his October 12, 2011
discharge [ECF No. 79]. Plaintiff filed its reply June 25, 2012 [ECF No. 80].

II.

DISCUSSION
Under 11 U.S.C. § 523(a)(1)(A), “[a] discharge under section 727 . . . of this title does

not discharge an individual debtor from any debt . . . for a tax or a customs duty . . . of the kind
and for the periods specified in section 507(a)(3) or 507(a)(8) of this title, whether or not a claim
for such tax was filed or allowed.” 11 U.S.C. § 507(a)(8) identifies unsecured government claims
for certain prior income taxes as one type of nondischargeable debt.
As Plaintiff notes, Defendants identified their federal tax liabilities as § 507 priority claims
in their Chapter 13 Plan, First Amended Chapter 13 Plan, and Second Amended Chapter 13 Plan.
In re Walton [ECF Nos. 2, 23, 111]. As well, Defendants’ own discharge paperwork, included as
an exhibit in his Motion Opposing Reopening the Case, notes that it does not cover “debts
incurred to pay nondischargeable taxes.” [ECF No. 79-1 at *2].
Defendants received their discharge under § 727 on October 12, 2011 [ECF No. 79-1].
Pursuant to § 523(a)(1)(A), that discharge did not relieve Defendants of their priority tax
liabilities, including those liabilities Plaintiff now claims are owed.
Accordingly,
IT IS HEREBY ORDERED that Plaintiff’s Motion to Reopen Case [ECF No. 78] is
GRANTED.
IT IS FURTHER ORDERED that Defendant’s Motion to Dismiss [ECF No. 79] is
DENIED.
Dated this 27th Day of August, 2012.

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E. RICHARD WEBBER
SENIOR UNITED STATES DISTRICT JUDGE