Although the Third Circuit held that confirmation of a chapter 13 plan can be set aside only for fraud after the time for appeal has run, a district court in Oregon interpreted Ninth Circuit authority more flexibly to mean that a final confirmation order can be revoked only “in cases of fraud, court mistake of fact or clerical error, or due process violation.”

The holding by District Judge Ann Aiken of Portland, Ore., arose from a case where the debtor’s chapter 13 plan provided for vesting title of real property in the lender. Although the lender had abundant notice of the chapter 11 filing, the plan and confirmation of the plan, the lender never objected to the plan due to a clerical error.

Less than six months after the confirmation order, the lender filed a motion under Rule 60(b) to set aside confirmation. The lender argued that district court authority in Oregon precludes vesting title to property in a lender absent the lender’s consent. The bankruptcy judge denied the motion to revoke, and Judge Aiken affirmed on March 17.

The outcome turned on the interplay between Bankruptcy Rule 9024, Rule 60(b) and Section 1330. Rule 9024 makes Rule 60 applicable, except that a “complaint” to revoke confirmation “may be filed only with the time allowed by” Section 1330. On a motion made within 180 days of confirmation, Section 1330 allows the court to revoke confirmation “if such order was procured by fraud.”

Judge Aiken framed the issue by laying out two possible interpretations of the statute and Rules: (1) Motions to revoke confirmation must be made within 180 days and must be based on allegations of fraud, or (2) Section 1330 only limits the time for motions to revoke on the ground of fraud “without speaking at all to the subject of other potential grounds for revocation.”

The judge said that the “weight of authority” follows the Third Circuit, which held that fraud is the only ground for revoking confirmation in chapter 13. Judge Aiken, on the other hand, saw Ninth Circuit precedent as more flexible by reaffirming “a court’s inherent power to correct its own clerical mistakes.”

The lender, according to Judge Aiken, alleged neither fraud nor mistake of fact or clerical error. Therefore, violation of due process, she said, could have been the only ground for setting aside confirmation. Since the lender received more than constitutionally adequate notice of the plan, the bankruptcy court was correct in denying the motion to revoke confirmation.

The same principles would seem to apply in chapter 11 cases under Section 1144.