Ransom v. FIA Card Services, N. A., 562 U.S. 61 (2011)
OCTOBER TERM, 2010
RANSOM V. FIA CARD SERVICES, N.&NBSP;A.
SUPREME COURT OF THE UNITED STATES
RANSOM v. FIA CARD SERVICES, N. A., fka MBNA AMERICA BANK, N. A.
certiorari to the united states court of appeals for the ninth circuit
No. 09–907. Argued October 4, 2010—Decided January 11, 2011
Chapter 13 of the Bankruptcy Code uses a statutory formula known as the “means test” to help ensure that debtors who can pay creditors do pay them. The means test instructs a debtor to determine his “disposable income”—the amount he has available to reimburse creditors—by deducting from his current monthly income “amounts reasonably necessary to be expended” for, inter alia, “maintenance or support.” 11 U. S. C. §1325(b)(2)(A)(i). For a debtor whose income is above the median for his State, the means test indentifies which expenses qualify as “amounts reasonably necessary to be expended.” As relevant here, the statute provides that “[t]he debtor’s monthly expenses shall be the debtor’s applicable monthly expense amounts specified under the National Standards and Local Standards, and the debtor’s actual monthly expenses for the categories specified as Other Necessary Expenses issued by the Internal Revenue Service [IRS] for the area in which the debtor resides.” §707(b)(2)(A)(ii)(I).
The Standards are tables listing standardized expense amounts for basic necessities, which the IRS prepares to help calculate taxpayers’ ability to pay overdue taxes. The IRS also creates supplemental guidelines known as the “Collection Financial Standards,” which describe how to use the tables and what the amounts listed in them mean. The Local Standards include an allowance for transportation expenses, divided into vehicle “Ownership Costs” and vehicle “Operating Costs.” The Collection Financial Standards explain that “Ownership Costs” cover monthly loan or lease payments on an automobile; the expense amounts listed are based on nationwide car financing data. The Collection Financial Standards further state that a taxpayer who has no car payment may not claim an allowance for ownership costs.
When petitioner Ransom filed for Chapter 13 bankruptcy relief, he listed respondent (FIA) as an unsecured creditor. Among his assets, Ransom reported a car that he owns free of any debt. In determining his monthly expenses, he nonetheless claimed a car-ownership deduction of $471, the full amount specified in the “Ownership Costs” table, as well as a separate $388 deduction for car-operating costs. Based on his means-test calculations, Ransom proposed a bankruptcy plan that would result in repayment of approximately 25% of his unsecured debt. FIA objected on the ground that the plan did not direct all of Ransom’s disposable income to unsecured creditors. FIA contended that Ransom should not have claimed the car-ownership allowance because he does not make loan or lease payments on his car. Agreeing, the Bankruptcy Court denied confirmation of the plan. The Ninth Circuit Bankruptcy Appellate Panel and the Ninth Circuit affirmed.
Held: A debtor who does not make loan or lease payments may not take the car-ownership deduction. Pp. 6–18.
(a) This Court’s interpretation begins with the language of the Bankruptcy Code, which provides that a debtor may claim only “applicable” expense amounts listed in the Standards. Because the Code does not define the key word “applicable,” the term carries its ordinary meaning of appropriate, relevant, suitable, or fit. What makes an expense amount “applicable” in this sense is most naturally understood to be its correspondence to an individual debtor’s financial circumstances. Congress established a filter, permitting a debtor to claim a deduction from a National or Local Standard table only if that deduction is appropriate for him. And a deduction is so appropriate only if the debtor will incur the kind of expense covered by the table during the life of the plan. Had Congress not wanted to separate debtors who qualify for an allowance from those who do not, it could have omitted the term “applicable” altogether. Without that word, all debtors would be eligible to claim a deduction for each category listed in the Standards. Interpreting the statute to require a threshold eligibility determination thus ensures that “applicable” carries meaning, as each word in a statute should.
This reading draws support from the statute’s context and purpose. The Code initially defines a debtor’s disposable income as his “current monthly income … less amounts reasonably necessary to be expended.” §1325(b)(2). It then instructs that such reasonably necessary amounts “shall be determined in accordance with” the means test. §1325(b)(3). Because Congress intended the means test to approximate the debtor’s reasonable expenditures on essential items, a debtor should be required to qualify for a deduction by actually incurring an expense in the relevant category. Further, the statute’s purpose—to ensure that debtors pay creditors the maximum they can afford—is best achieved by interpreting the means test, consistent with the statutory text, to reflect a debtor’s ability to afford repayment. Pp. 6–9.
(b) The vehicle-ownership category covers only the costs of a car loan or lease. The expense amount listed ($471) is the average monthly payment for loans and leases nationwide; it is not intended to estimate other conceivable expenses associated with maintaining a car. Maintenance expenses are the province of the separate “Operating Costs” deduction. A person who owns a car free and clear is entitled to the “Operating Costs” deduction for all driving-related expenses. But such a person may not claim the “Ownership Costs” deduction, because that allowance is for the separate costs of a car loan or lease. The IRS’ Collection Financial Standards reinforce this conclusion by making clear that individuals who have a car but make no loan or lease payments may take only the operating-costs deduction. Because Ransom owns his vehicle outright, he incurs no expense in the “Ownership Costs” category, and that expense amount is therefore not “applicable” to him. Pp. 9–11.
(c) Ransom’s arguments to the contrary—an alternative interpretation of the key word “applicable,” an objection to the Court’s view of the scope of the “Ownership Costs” category, and a criticism of the policy implications of the Court’s approach—are unpersuasive. Pp. 11–18.
577 F. 3d 1026, affirmed.
Kagan, J., delivered the opinion of the Court, in which Roberts, C. J., and Kennedy, Thomas, Ginsburg, Breyer, Alito, and Sotomayor, JJ., joined. Scalia, J., filed a dissenting opinion.
OPINION OF THE COURT
RANSOM V. FIA CARD SERVICES, N.&NBSP;A.
562 U. S. ____ (2011)
SUPREME COURT OF THE UNITED STATES
JASON M. RANSOM, PETITIONER v. FIA CARD SERVICES, N. A., fka MBNA AMERICA BANK, N. A. on writ of certiorari to the united states court of appeals for the ninth circuit [January 11, 2011] Justice Kagan delivered the opinion of the Court. Chapter 13 of the Bankruptcy Code enables an individual to obtain a discharge of his debts if he pays his creditors a portion of his monthly income in accordance with a court-approved plan. 11 U. S. C. §1301 et seq. To determine how much income the debtor is capable of paying, Chapter 13 uses a statutory formula known as the “means test.” §§707(b)(2) (2006 ed. and Supp. III), 1325(b)(3)(A) (2006 ed.). The means test instructs a debtor to deduct specified expenses from his current monthly income. The result is his “disposable income”—the amount he has available to reimburse creditors. §1325(b)(2). This case concerns the specified expense for vehicle-ownership costs. We must determine whether a debtor like petitioner Jason Ransom who owns his car outright, and so does not make loan or lease payments, may claim an allowance for car-ownership costs (thereby reducing the amount he will repay creditors). We hold that the text, context, and purpose of the statutory provision at issue preclude this result. A debtor who does not make loan or lease payments may not take the car-ownership deduction. I A “Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA or Act) to correct perceived abuses of the bankruptcy system.” Milavetz, Gallop & Milavetz, P. A. v. United States, 559 U. S. ___, ___ (2010) (slip op., at 1). In particular, Congress adopted the means test—“[t]he heart of [BAPCPA’s] consumer bankruptcy reforms,” H. R. Rep. No. 109–31, pt. 1, p. 2 (2005) (hereinafter H. R. Rep.), and the home of the statutory language at issue here—to help ensure that debtors who can pay creditors do pay them. See, e.g., ibid. (under BAPCPA, “debtors [will] repay creditors the maximum they can afford”). In Chapter 13 proceedings, the means test provides a formula to calculate a debtor’s disposable income, which the debtor must devote to reimbursing creditors under a court-approved plan generally lasting from three to five years. §§1325(b)(1)(B) and (b)(4).[Footnote 1] The statute defines “disposable income” as “current monthly income” less “amounts reasonably necessary to be expended” for “maintenance or support,” business expenditures, and certain charitable contributions. §§1325(b)(2)(A)(i) and (ii). For a debtor whose income is above the median for his State, the means test identifies which expenses qualify as “amounts reasonably necessary to be expended.” The test supplants the pre-BAPCPA practice of calculating debtors’ reasonable expenses on a case-by-case basis, which led to varying and often inconsistent determinations. See, e.g., In re Slusher, 359 B. R. 290, 294 (Bkrtcy. Ct. Nev. 2007). Under the means test, a debtor calculating his “reasonably necessary” expenses is directed to claim allowances for defined living expenses, as well as for secured and priority debt. §§707(b)(2)(A)(ii)–(iv). As relevant here, the statute provides: “The debtor’s monthly expenses shall be the debtor’s applicable monthly expense amounts specified under the National Standards and Local Standards, and the debtor’s actual monthly expenses for the categories specified as Other Necessary Expenses issued by the Internal Revenue Service [IRS] for the area in which the debtor resides.” §707(b)(2)(A)(ii)(I). These are the principal amounts that the debtor can claim as his reasonable living expenses and thereby shield from creditors. The National and Local Standards referenced in this provision are tables that the IRS prepares listing standardized expense amounts for basic necessities.[Footnote 2] The IRS uses the Standards to help calculate taxpayers’ ability to pay overdue taxes. See 26 U. S. C. §7122(d)(2). The IRS also prepares supplemental guidelines known as the Collection Financial Standards, which describe how to use the tables and what the amounts listed in them mean. The Local Standards include an allowance for transportation expenses, divided into vehicle “Ownership Costs” and vehicle “Operating Costs.”[Footnote 3] At the time Ransom filed for bankruptcy, the “Ownership Costs” table appeared as follows:
SCALIA, J., DISSENTING
RANSOM V. FIA CARD SERVICES, N.&NBSP;A.
562 U. S. ____ (2011)
SUPREME COURT OF THE UNITED STATES
JASON M. RANSOM, PETITIONER v. FIA CARD SERVICES, N. A., fka MBNA AMERICA BANK, N. A. on writ of certiorari to the united states court of appeals for the ninth circuit [January 11, 2011] Justice Scalia, dissenting. I would reverse the judgment of the Ninth Circuit. I agree with the conclusion of the three other Courts of Appeals to address the question: that a debtor who owns a car free and clear is entitled to the car-ownership allowance. See In re Washburn, 579 F. 3d 934 (CA8 2009); In re Tate, 571 F. 3d 423 (CA5 2009); In re Ross-Tousey, 549 F. 3d 1148 (CA7 2008). The statutory text at issue is the phrase enacted in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), “applicable monthly expense amounts specified under the National Standards and Local Standards,” 11 U. S. C. §707(b)(2)(A)(ii)(I). The Court holds that the word “applicable” in this provision imports into the Local Standards a directive in the Internal Revenue Service’s Collection Financial Standards, which have as their stated purpose “to help determine a taxpayer’s ability to pay a delinquent tax liability,” App. to Brief for Respondent 1a. That directive says that “[i]f a taxpayer has no car payment,” the Ownership Cost provisions of the Local Standards will not apply. Id., at 3a. That directive forms no part of the Local Standards to which the statute refers; and the fact that portions of the Local Standards are to be disregarded for revenue-collection purposes says nothing about whether they are to be disregarded for purposes of Chapter 13 of the Bankruptcy Code. The Court believes, however, that unless the IRS’s Collection Financial Standards are imported into the Local Standards, the word “applicable” would do no work, violating the principle that “ ‘we must give effect to every word of a statute wherever possible.’ ” Ante, at 8 (quoting Leocal v. Ashcroft, 543 U. S. 1, 12 (2004)). I disagree. The canon against superfluity is not a canon against verbosity. When a thought could have been expressed more concisely, one does not always have to cast about for some additional meaning to the word or phrase that could have been dispensed with. This has always been understood. A House of Lords opinion holds, for example, that in the phrase “ ‘in addition to and not in derogation of ’ ” the last part adds nothing but emphasis. Davies v. Powell Duffryn Associated Collieries, Ltd.,  A. C. 601, 607. It seems to me that is the situation here. To be sure, one can say “according to the attached table”; but it is acceptable (and indeed I think more common) to say “according to the applicable provisions of the attached table.” That seems to me the fairest reading of “applicable monthly expense amounts specified under the National Standards and Local Standards.” That is especially so for the Ownership Costs portion of the Local Standards, which had no column titled “No Car.” Here the expense amount would be that shown for one car (which is all the debtor here owned) rather than that shown for two cars; and it would be no expense amount if the debtor owned no car, since there is no “applicable” provision for that on the table. For operating and public transportation costs, the “applicable” amount would similarly be the amount provided by the Local Standards for the geographic region in which the debtor resides. (The debtor would not first be required to prove that he actually operates the cars that he owns, or, if does not own a car, that he actually uses public transportation.) The Court claims that the tables “are not self-defining,” and that “[s]ome amount of interpretation” is necessary in choosing whether to claim a deduction at all, for one car, or for two. Ante, at 14–15. But this problem seems to me more metaphysical than practical. The point of the statutory language is to entitle debtors who own cars to an ownership deduction, and I have little doubt that debtors will be able to choose correctly whether to claim a deduction for one car or for two. If the meaning attributed to the word by the Court were intended, it would have been most precise to say “monthly expense amounts specified under the National Standards and Local Standards, if applicable for IRS collection purposes.” And even if utter precision was too much to expect, it would at least have been more natural to say “monthly expense amounts specified under the National Standards and Local Standards, if applicable.” That would make it clear that amounts specified under those Standards may nonetheless not be applicable, justifying (perhaps) resort to some source other than the Standards themselves to give meaning to the condition. The very next paragraph of the Bankruptcy Code uses that formulation (“if applicable”) to limit to actual expenses the deduction for care of an elderly or chronically ill household member: “[T]he debtor’s monthly expenses may include, if applicable, the continuation of actual expenses paid by the debtor that are reasonable and necessary” for that purpose. 11 U. S. C. §707(b)(2)(A)(ii)(II) (emphasis added). Elsewhere as well, the Code makes it very clear when prescribed deductions are limited to actual expenditures. Section 707(b)(2)(A)(ii)(I) itself authorizes deductions for a host of expenses—health and disability insurance, for example—only to the extent that they are “actual . . . expenses” that are “reasonably necessary.” Additional deductions for energy are allowed, but again only if they are “actual expenses” that are “reasonable and necessary.” §707(b)(2)(A)(ii)(V). Given the clarity of those limitations to actual outlays, it seems strange for Congress to limit the car-ownership deduction to the somewhat peculiar category “cars subject to any amount whatever of outstanding indebtedness” by the mere word “applicable,” meant as incorporation of a limitation that appears in instructions to IRS agents.*