In re Consolidated Pioneer Mortg., BAP No. SC-94-1452-RHJ. Bankruptcy No. 91-00214-M11.
| Decision Date | 27 February 1995 |
| Docket Number | BAP No. SC-94-1452-RHJ. Bankruptcy No. 91-00214-M11. |
| Citation | 178 BR 222 |
| Parties | In re CONSOLIDATED PIONEER MORTGAGE, a.k.a., Pioneer Liquidating Corporation, a.k.a., Pioneer Mortgage Corporation, Debtor. Burk N. ASHFORD, and Theresa T. Ashford, Appellants, v. CONSOLIDATED PIONEER MORTGAGE, and Pioneer Liquidating Corporation, Appellees. |
| Court | U.S. Bankruptcy Appellate Panel, Ninth Circuit |
Burk N. Ashford and Theresa T. Ashford, appellants in pro. per.
Roy L. Carlson, Cardiff by the Sea, CA, for appellees.
Before RUSSELL, JONES and HAGAN, Bankruptcy Judges.
The appellants filed a proof of claim based on § 365(j).1 The reorganized debtor/appellee filed an objection to the appellants' claim alleging, inter alia, that no amount was owed to the appellants. After several hearings, the bankruptcy court disallowed the claim in full. We AFFIRM.
On June 6, 1992, the appellants, Burk N. and Theresa T. Ashford ("Ashfords") filed a proof of claim based upon damages arising under § 365(j).2 The Ashfords assert that the damages arose when the debtor, Consolidated Pioneer Mortgage Entities ("Pioneer")3 rejected a purported executory contract which gave the Ashfords the right to purchase real property from Pioneer.
On October 8, 1993, the appellee/reorganized debtor, Pioneer Liquidating Corporation ("PLC"), the successor in interest to Pioneer, filed an objection to the Ashfords' claim. PLC based its objection chiefly on the ground that there was no executory contract and therefore no claim.
In August 1988, the Ashfords offered to purchase real property located at 29200 Miller Road, Valley Center, California ("real property") from Naimco, Inc. ("Naimco"), a subsidiary of Pioneer. At first, the Ashfords requested a twelve month lease on the real property at a monthly rental rate of $1,250. In lieu of rental payments until November 1988, the Ashfords offered to prepare the real property for habitation.
The president of Naimco was Gary F. Naiman ("Naiman"), who approved the lease and agreed to convert the lease to a sales contract at the end of a one year term upon a $20,000 cash down payment. There was no evidence offered by the Ashfords that they ever made the $20,000 down payment. The purchase price for the real property was set at $275,000.
In November 1988, a purported contract for the sale of the real property was drafted by Naimco. PLC contends that this contract was never executed. The Ashfords base their claim on this contract.
One year later, the Ashfords requested a six month extension of the real property lease until May 1, 1990.
On January 9, 1991, Naimco and five other affiliated debtor-entities of Pioneer filed a voluntary chapter 11 petition. On May 29, 1991, the first lienholder on the real property, Wesley D. Waters ("Waters") filed a motion for relief from the automatic stay in order to foreclose on the real property.
On October 28, 1991, the bankruptcy court granted Pioneer's motion to reject the Ashfords' purported executory sales contract. The bankruptcy court carefully concluded that it was not making a ruling on whether or not the sales contract had actually existed between the Ashfords and Naimco. However, if the executory contract existed, it was deemed rejected.
On March 26, 1992, the bankruptcy court granted Waters' motion for relief from the automatic stay.
On June 5, 1992, the Ashfords filed a proof of claim (Claim No. 7685/4208) ("claim"). The Ashfords classified their claim as a secured lien pursuant to § 365(j), in the amount of $49,794.33.
On June 19, 1992, the bankruptcy court confirmed the joint plan proposed by Pioneer and the Official Creditors' Committee. Pursuant to the plan, the appellee PLC was created as the reorganized debtor. One of its duties was to examine all proofs of claim and raise objections to certain claims.
On July 16, 1992, Waters completed his foreclosure on the real property, leaving the Ashfords with no security for their alleged claim. On September 8, 1993, the bankruptcy court held an ex parte hearing to consider the Ashfords' request to be listed as a secured creditor. The bankruptcy court ruled that since the underlying real property had been foreclosed upon, the Ashfords' proof of claim would be classified as unsecured. The bankruptcy court further allowed PLC thirty days to review the claim and file any objection. The Ashfords did not appeal this ruling.
On October 8, 1993, PLC filed its objection to the Ashfords' proof of claim. The grounds for the objection were: (1) that there was insufficient supporting documentation attached to the claim; and (2) that the amount of the claim represented the amount the Ashfords owed for rent of the real property from Naimco and not the alleged sales price.
On October 15, 1993, the Ashfords filed their opposition to the objection and requested a hearing. A hearing was held on November 15, 1993. On December 9, 1993 the bankruptcy court held another hearing on the issue. After the second hearing, the bankruptcy court took the matter under submission.
On December 29, 1993, the bankruptcy court entered its notice of intended decision to disallow the Ashfords' claim in full based upon its finding that the Ashfords failed to present adequate evidence that a contract for the sale of the real property existed. On January 14, 1994, a final order was entered which disallowed the Ashfords' claim in full.
On January 24, 1994, the Ashfords filed a motion for reconsideration, arguing that they were not given an opportunity to address the issues of proof to support their claim. On March 11, 1994, the bankruptcy court denied the Ashfords' motion for reconsideration. An order denying the motion was entered on April 4, 1994. The Ashfords timely filed their notice of appeal.
A. Whether PLC's objection to the Ashfords' proof of claim was timely filed.
B. Whether the bankruptcy court's denial of the Ashfords' claim in full was clearly erroneous.
C. Whether the bankruptcy court abused its discretion in denying the Ashfords' motion for reconsideration.
The BAP reviews questions of statutory interpretation de novo. In re Pikush, 157 B.R. 155, 156 (9th Cir. BAP 1993), aff'd, 27 F.3d 386 (9th Cir.1994).
Whether there was compliance with Rule 3007 is a question of fact reviewed under the clearly erroneous standard. In re Cleanmaster Indus., Inc., 106 B.R. 628, 631 (9th Cir. BAP 1989). Similarly, compliance with Rule 3001 is also a question of fact reviewed for clear error.
A bankruptcy court's denial of a motion for reconsideration of an allowance or disallowance of a claim under § 502(j) and Rule 3008 is reviewed for an abuse of discretion. In re Int'l Yacht & Tennis, Inc., 922 F.2d 659, 662 (11th Cir.1991); Cleanmaster, 106 B.R. at 630.
A. Timeliness of PLC's Objection to the Ashford's Proof of Claim
Section 502(a) provides that any proof of claim "is deemed allowed, unless a party in interest . . . objects." Whitney v. Dresser, 200 U.S. 532, 534-35, 26 S.Ct. 316, 317, 50 L.Ed. 584 (1906) (). Unlike a proof of claim, which must be filed before the bar date, an objection to a proof of claim may be filed at any time. In re Thompson, 965 F.2d 1136, 1147 (1st Cir.1992); In re Kolstad, 928 F.2d 171, 174 (5th Cir.), cert. denied, 502 U.S. 958, 112 S.Ct. 419, 116 L.Ed.2d 439 (1991).
The procedure for filing objections to the allowance of claims is established in part by Rule 3007. Rule 3007 provides that an objection shall be in writing and filed with the bankruptcy court, and a copy of the objection with notice of a hearing shall be mailed to the claimant at least 30 days prior to the hearing.
The Ashfords, relying on Local Rule 3007-4 of the United States Bankruptcy Court for the Southern District of California ("Local Rule"), argue in their opening brief that PLC was "prohibited from objecting to a Claim after 30 days' from the filing of the Claim. . . ."
Local Rule 3007-4(b) provides that "the party objecting to a claim shall give no less than thirty (30) days' notice of the objection to the claimant, . . ., in a format prescribed by Local Form CSD 2015. . . ." Local Form CSD 2015 is a form titled "Objection to Claim and Notice Thereof."
PLC responds, correctly, that Local Rule 3007-4(b) requires thirty days' notice of the objection to the claimant and does not require thirty days to file an objection, as the Ashfords argue.
PLC's objection to the Ashfords' claim was filed on October 8, 1993. The Ashfords filed their opposition to the objection and request for a hearing on October 15, 1993. The bankruptcy court did not schedule the hearing until November 15, 1993. Because more than thirty days had elapsed since the filing of PLC's objection, the Ashfords were afforded the 30 days' notice required by Local Rule 3007-4(b).
B. Disallowance of the Ashfords' Claim
A proof of claim filed in bankruptcy is prima facie valid under § 502(a). Rule 3001(c) requires a creditor to attach a writing to its proof of claim if the creditor bases its claim on a writing. Similarly, Rule 3001(d) requires a creditor to accompany a proof of claim with evidence that the creditor perfected a security interest if it claims a security interest in property of the debtor. Rule 3001(f) provides that "a proof of claim executed and filed in accordance with these rules shall constitute prima facie evidence of the validity and amount of the claim."
Upon the filing of an objection, the objecting party "must produce evidence tending to defeat the claim that is of a...
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