Several courts have determined that a claim is unliquidated only when a court can determine the amount of the claim without an evidentiary hearing. See In re Elrod, 178 B.R. 5, 6 (Bankr.N.D.Okla. 1995); In re Hustwaite, 136 B.R. 853, 855 (Bankr.D.Or. 1991). One court stated that courts cannot appropriately determine the existence of liability without an evidentiary hearing where the credibility of witnesses may be decisive.
06[2][c] (March 1997). See also Verdunn, 187 B.R. at 1003 (stating that the concept of liquidation has been variously expressed but the common thread has been ready determination and precision in computation of the amount due); In re Hustwaite, 136 B.R. 853, 855 (Bankr.D.Or. 1991) (found claim to be unliquidated when a complicated evidentiary hearing was necessary to determine existence and amount of liability); In re Lambert, 43 B.R. at 921 (stating that a liquidated debt is one that is certain both as to amount and liability). The bankruptcy court noted that in the majority of cases in which courts included disputed claims when calculating a debtor's eligibility for Chapter 13 protection, "the claim was based on a debt of a contractual nature, where the basis of the dispute was a counterclaim or a set off that the debtor may have had, and where the amount due could be determined with sufficient precision."
A claim is "liquidated," for purposes of Chapter 13 eligibility, only if it is capable of ready determination, i.e., if debtor's liability and amount of claim can be determined on the basis of agreed upon facts without need for evidentiary hearing; neither frivolous factual dispute nor disagreement concerning law as opposed to fact can render a claim unliquidated and, to the extent liability is admitted, the claim is liquidated at least in that amount. In re Harbaugh, 153 B.R. 54 (Bankr.D.Idaho 1993), In re Hustwaite, 136 B.R. 853 (Bankr.D.Or. 1991). "The concept of liquidation has been variously expressed but the common thread . . . has been ready determination and precision in computation of the amount due. . . . Some cases have stated the test as to whether the amount due is capable of ascertainment by reference to and agreement or by simple computation."
The disagreement arises over the issue of whether a claim is liquidated when its value is readily ascertainable, but its legal validity is in dispute. The only cases that hold that a debt is unliquidated if there is a bona fide dispute as to the underlying liability of the debtor are In re Lambert, 43 B.R. 913, 921 (Bankr. D.Utah 1984) and In re Hustwaite, 136 B.R. 853, 855 (Bankr.D.Or. 1991) ("Any [non-frivolous] disagreement as to liability [which is not solely one of law] . . . render[s] a claim unliquidated.")Hustwaite is not good precedent because it overlooked binding contrary authority in the Ninth Circuit. Wenberg v. FDIC (In re Wenberg), 902 F.2d 768 (9th Cir. 1990).
Arguably, the debtor's objection did not render the claim unliquidated on that date. See In re Hustwaite, 136 B.R. 853, 855 (Bankr.D.Or. 1991) (a frivolous objection or one which raises only legal rather than factual issues does not render a claim unliquidated for purposes of ยง 109(e)). However, conversion or dismissal over the debtor's objection must be determined on motion after notice and a hearing.
Therefore, only the amount of taxes for which the debtors admit they are liable is considered. See In re Hustwaite, 136 B.R. 853, 855 (Bankr.D.Or. 1991) (debts are liquidated in at least the amount admitted by the debtor). The amount of $12,014.57, representing $30,598.62 of the amount asserted by the United States minus $18,584.05 of that amount admitted by the debtor, must therefore be deducted from the amount asserted in the United States' proof of claim.