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longer make their payments under the plan and converted the case to a Chapter 7 case . During the Chapter 13 case , the debtor ’ s home had appreciated by an estimated $ 200,000 , and it was this value that came into question upon conversion . The Ninth Circuit concluded “ that the plain language of § 348 ( f )( 1 )( A ), coupled with this circuit ’ s previous interpretation of § 541 ( a ), compel the conclusion that any appreciation in the property value and corresponding increase in equity belongs to the estate upon conversion .” Id . at 1055 . Looking first at the expansive definition of property of the estate under Section 541 and the interpretation of this section in prior case law , the Ninth Circuit stated : “ In this circuit , we have likewise concluded that the broad scope of § 541 ( a ), and especially § 541 ( a ) ( 6 ), means that post-petition ‘ appreciation [ i ] nures to the bankruptcy estate , not the debtor .’” Id . at 1056 . The Court adds : “ There is no textual support for concluding that § 541 ( a ) has a different meaning upon conversion from Chapter 13 .” Id . Acknowledging that other courts have come to a different conclusion based on the legislative history , the Ninth Circuit noted that “ because we conclude the language of § 348 ( f ), when read in conjunction with the remainder of the Bankruptcy Code , is not ambiguous , we do not look to legislative history for guidance .” Id . at 1057 .
The Ninth Circuit also rejected reliance on “ the implicit operation of § 1327 ( b )” which vests property in the debtor upon confirmation of a Chapter 13 plan , finding the lack of a cross reference in either Section 541 or 348 ( f ) to this section fatal . Id . There is a comprehensive dissenting opinion written in this case , however , finding that the conclusion of creating a circuit split and punishing the debtors for their good
faith efforts to try to pay creditors through a Chapter 13 plan “ is not the best reading of the Bankruptcy Code or our precedents .” Id . at 1058 . The dissent noted that “[ b ] y limiting the converted estate to the property a debtor had at the time of the initial petition , § 348 ( f ) ‘ put [ s ] the debtor where he would have been , had he filed in Chapter 7 initially ’.” Id . at 1059 ( internal citation omitted ).
The dissent criticizes the majority opinion which it says , “ sacrifices the text of the bankruptcy statutes on the altar of simplicity .” Id . at 1060 . The dissent acknowledges that the majority ’ s determination that appreciation becomes part of the estate in a Chapter 7 case , which is also true in a Chapter 13 case , is a simple interpretation of Section 348 ( f ) without reading it in the context of the statute as a whole . Agreeing with the reasoning and result of the Tenth Circuit , the dissent cites to Section 1327 ( b ) which vests all property of the estate in the debtor upon confirmation of a Chapter 13 plan and acknowledges the length of Chapter 13 plans as opposed to the quick liquidation process of Chapter 7 as a difference that invites an inequitable result not consistent with the Bankruptcy Code . The dissent argues that the appreciation of the home should be property of the debtors . The dissent also takes a careful look at the legislative history , which it finds clear on this interpretation , and chides the majority for its failure to consider this statutory intent because of its conclusion on this “ heavily divided ” issue that the text is unambiguous . Id . at 1063 . The dissent notes that even the trustee at oral argument conceded that the statute “ is poorly drafted ” and “ there is no way to reconcile ” the text of § 348 ( f ) with § 541 ( a ). Id . While acknowledging that legislative history is often unhelpful in
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