Professor Ned Waxman files amicus curiae brief in the United States Supreme Court
Mason School of Business Professor Ned W. Waxman is the sole author of a brief filed on January 28, 2010, in the case of Hamilton, Chapter 13 Trustee v. Lanning pending in the Supreme Court. This case concerns the most controversial issue in bankruptcy law and one that has divided every level of federal courts. The brief was filed as an amicus curiae ("friend of the Court"), who is a non-party academic seeking to bring to the attention of the Court relevant matter that was not already raised by the parties, and that might be of considerable help to the Court.
The case involves the interpretation of "projected disposable income," a term in the United States Bankruptcy Code that is undefined and that is the subject of six differing approaches, one of which is Professor Waxman’s novel "Non-Presumptive Starting Point Approach." The Bankruptcy Code requires that, in a Chapter 13 repayment case of an individual debtor, all of the debtor's projected disposable income to be received during the Chapter 13 plan period will be applied to make payments to the unsecured creditors. The question arises because Congress defined "disposable income" in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) based on pre-filing income and expense figures that often differ from the debtor's actual income and expenses during the five-year plan period for an above-median debtor.
Most courts have adopted a forward-looking interpretation of "projected disposable income" that reads a presumption into the law that requires using Congress' historically based definition of "disposable income" as a starting point, but then adjusting to the debtor’s actual income and expenses if they differ significantly during the Chapter 13 plan period. On the other hand, the minority approach simply multiplies the artificially determined figure for "disposable income" over the number of months in the debtor’s plan, which according to the majority view often produces absurd results that deny Chapter 13 relief to debtors who have the actual ability to repay creditors.
Professor Waxman’s amicus curiae brief and his recent Article at 46 Houston Law Review 867 (2009) emphasize Congress' clear intent in BAPCPA (1) to prevent bankruptcy abuse, (2) to make certain that debtors repay creditors the maximum that they can afford, and (3) to shift can-pay debtors from a Chapter 7 liquidation to a Chapter 13 repayment plan. While he agrees with a forward-looking approach to "projected disposable income" that starts with Congress' new definition of "disposable income," he points out that relying on a presumption that Congress never intended, expressly or impliedly, is an erroneous legal conclusion. Instead, he reaches the same result based on two sound legal theories. One applies a Supreme Court canon of statutory interpretation that has long-recognized two exceptions to the "plain meaning rule" when it would produce results that are absurd or “"demonstrably at odds with the intentions of its drafters." The other is Bankruptcy Code § 105(a), which grants the bankruptcy court the power "to carry out the provisions of [the Bankruptcy Code]." Thus, under Professor Waxman’s novel approach, the bankruptcy court may reconcile the backward-looking term "disposable income" with the forward-looking term "projected disposable income" in a manner that is consistent with Congress’ intent to ensure that debtors repay creditors the maximum they can afford.
The Supreme Court will hear oral arguments in Hamilton Chapter 13 Trustee v. Lanning, No. 08-998, on March 22, 2010.
Professor Waxman joined the faculty of the College of William and Mary’s [Mason] School of Business in 1982, and he teaches both undergraduate and MBA students. He earned a B.S. in Economics at the Wharton School, University of Pennsylvania, and a J.D. from the Emory School of Law. He has authored numerous articles in highly ranked law reviews and in nationally acclaimed practitioner journals, and he was the sole author of the first five editions of, and six supplements to, the Gilbert Bankruptcy Summary (Harcourt Brace Legal and Professional Publications/The Barbri Group (1990 – 2004), which was a reference used primarily by law students nationwide as well as some judges, attorneys, and professors. He generally is considered to be the foremost scholar on bankruptcy law among professors teaching law in American business schools.