In re Express One Intern., Inc.
| Citation | 229 BR 129 |
| Decision Date | 05 January 1999 |
| Docket Number | Bankruptcy No. 95-41189. |
| Parties | In re EXPRESS ONE INTERNATIONAL, INC., Debtor. |
| Court | United States Bankruptcy Courts. Fifth Circuit. U.S. Bankruptcy Court — Eastern District of Texas |
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David Parham, Strasburger & Price, LLP, Dallas, TX, John F. McCarthy, Jr., Littler, Mendelson, Fastiff, Tichy & Mathiason, P.C., Dallas, TX, for debtor.
Hal Gillespie, Gillespie, Rozen, Tanner & Watsky, P.C., Dallas, TX, for Ray J. Sweeney, Harvey Thurber, and the International Brotherhood of Teamsters.
NOW before the Court for consideration are the Objections of Express One International, Inc., to Claims Numbered 458, 459 and 460 Filed respectively by Harvey Thurber, Ray J. Sweeney and the International Brotherhood of Teamsters. At the conclusion of the consolidated hearing, the matters were taken under advisement. This opinion constitutes the Court's findings of fact and conclusions of law required by Fed.R.Bankr. Proc. 7052 and disposes of the issues before the Court.
This Court has jurisdiction over the within proceeding pursuant to 28 U.S.C. §§ 157(a) and 1334. This is a core proceeding under 28 U.S.C. §§ 157(b)(1) and (b)(2)(B).
On June 5, 1995, Express One International, Inc. ("Debtor"), filed for relief under Title 11, Chapter 11 of the U.S. Bankruptcy Code. The Debtor retained control of its assets and operates its business as a debtor-in-possession pursuant to 11 U.S.C. §§ 1107 and 1108. The Debtor is in business as an air carrier, transporting cargo and mail. On or about August, 1993, Ray J. Sweeny (hereinafter "Sweeny") and Harvey Thurber (hereinafter "Thurber") were hired by the Debtor as pilots. Sweeny's employment was terminated on or about January 12, 1994. Thurber's employment was terminated on or about January 18, 1994. Thereafter, in December, 1994, Harvey and Thurber, together with the International Brotherhood of Teamsters, AFL—CIO (hereinafter "IBT") initiated a case in the U.S. District Court for the Northern District of Texas, Dallas Division, styled International Brotherhood of Teamsters, AFL—CIO, Harvey Thurber and Ray J. Sweeney, Jr., v. Express One International, Inc., and assigned Civil Action No. 3:94-CV-465-H. Thurber, Sweeney and the International Brotherhood of Teamsters' Second Amended Complaint and Jury Demand (hereinafter the "Complaint") alleges that Thurber and Sweeney were wrongfully terminated as a response to their union organizing activities and that the Debtor engaged in anti-union activities unlawful under the Railway Labor Act ("R.L.A."). The Complaint seeks among other things, compensatory damages and punitive damages, lost wages and benefits, both past and future, reinstatement, injunction (abandoned pursuant to a Joint Pre-Trial Order filed in the case), pre and post judgment interest, costs of suit and attorneys fees. The Debtor denied the allegations.
The automatic stay provided in 11 U.S.C. § 362 became effective upon entry of this Court's June 5, 1995, Order for Relief under Title 11 of the U.S.Code. On July 24, 1995, Thurber, Sweeny and IBT (the "Claimants") filed unsecured proofs of claims in this case. All three claims, designated Claims 458, 459 and 460, were filed as unliquidated. The basis of the claims as reflected on the face of each is "wrongful termination of Harvey Thurber & Ray J. Sweeny, Jr., killing union drive in violation of 45 U.S.C. Sec. 152, plus attorneys fees." No itemization setting forth any of the amounts sought, including the "lost wages and benefits" or even of the attorneys fees to the date of filing, was attached either to the Complaint or to the proofs of claims. The claimants supported each proof of claim by attaching and adopting the Complaint filed in the Federal District Court proceeding. The District court proceeding was not removed to this Court.
The Debtor filed an Objection to all three Claims (referred to cumulatively hereinafter simply as the "Objection"). The Objection seeks disallowance of the Claims on the grounds that they have no basis in fact or in law and no documentation or factual support justifying the amounts claimed. In addition, the Objection asserts that the claims should be disallowed because they seek punitive damages and other categories of damages which do not represent actual pecuniary losses. The Objection to the IBT Claim also asserts that IBT has no standing to assert claims on behalf of Sweeny and Thurber, given that the U.S. District Court entered an order dismissing IBT as a plaintiff for lack of standing finding that the union had no standing to assert claims on behalf of individual pilots whom it was not certified to represent.1 At the time of the hearing, this Court deferred ruling on the issue of standing until after hearing the evidence. The Debtor also asserted in its Objection that allowance of any claim should be limited only to the amount of actual pecuniary loss that the claimants can prove they suffered, allowing for mitigation of damages. Finally, the Debtor asserts in the Objection that the attorneys fees sought are without proper legal basis. This Court orally disallowed the claim for punitive damages at the beginning of the hearing.
The Claimants filed Responses to the Objection prior to the hearing requesting that their claims be allowed in full, opining that Debtor's objection was premature given a pending Motion for Relief From the Automatic Stay to resume the District Court action. The Response alleges that it would be impossible for Sweeny and Thurber to produce further documentation supporting their claims until a final judgment could be rendered in the Federal District Court and reasserted the propriety of their claims for punitive damages and attorneys' fees. With respect to IBT's dismissal from the Federal District Court proceeding, IBT merely stated that it "desired to request" reconsideration or to appeal. Inasmuch as the Court had denied the Motion for Relief from Automatic Stay, the plea of prematurity was overruled and all matters were set for hearing.
Prior to the hearings on the Debtor's Objection, the claim amounts were quantified through the Trial Brief of Creditors IBT, Thurber and Sweeny filed with the Court on June 12, 1996. The Brief sets damages for Thurber at $36,121.00 and for Sweeny at $50,768.00. IBT sets forth a calculation of its claim for damages in its Supplemental Trial Brief filed with the Court. Those amounts, as of the dates of the trial, were $338,256.00 in lost dues, $66,762.73 for attorneys' fees and $8,159.00 in expenses. At trial, Claimants' counsel gave testimony which increased attorneys' fees sought to $100,335.00. IBT fails to distinguish between costs of District Court litigation and costs of Bankruptcy Court litigation. As further support of their claims, after the conclusion of the hearings on the Objections, the Debtor and Claimants filed a pleading stipulating as to Sweeny's post-petition earnings. The Trial Brief of Claimants provides information as to Thurber and Sweeny's base rates of pay and identifies the number of months without income or with reduced income. The Court makes no finding as to the accuracy of these claimed amounts. At the conclusion of a three day trial, the parties were instructed to file briefs after which the matters would be under advisement.
Whether Claimants adduced sufficient evidence to prove the validity of their claims for damages arising from wrongful termination and for expenses by a preponderance of the evidence standard?
Federal Rule of Bankruptcy Procedure 3001(f) gives the following evidentiary effect to the filing of a proof of claim—"A proof of claim executed and filed in accordance with the rules shall constitute prima facie evidence of the validity and amount of the claim." An objecting party must produce evidence rebutting the claimant, or the claimant will prevail. In re WHET, Inc., 33 B.R. 424, 437 (Bkrtcy.D.Mass.1983). The traditional standard of proof imposed upon a creditor seeking to have its claim allowed is by a preponderance of the evidence. In re Koch, 83 B.R. 898, 17 B.C.D. 449 (Bkrtcy.E.D.Pa. 1988). Although the burden of production shifts to the objecting party, the burden of persuasion by a preponderance of the evidence remains with the claimant: "If, however, evidence rebutting the claim is brought forth, then the claimant must produce additional evidence to `prove the validity of the claim by a preponderance of the evidence'". California State Board of Equalization v. The Official Unsecured Creditors' Committee (In the Matter of Fidelity Holding Co., Ltd.), 837 F.2d 696, 697 (5th Cir.1988). See also: In re WHET, Inc., 33 B.R. 424, 437 (Bkrtcy. D.Mass.1983).
"Preponderance of the evidence" means: "Evidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not." Braud v. Kinchen, 310 So.2d 657, 659 (La. App. 1st Cir.1975). It is evidence which is more credible and convincing than the other evidence brought. The standard is more than a "scintilla" of evidence and less than "clear and convincing". A preponderance of the evidence means "by the greater persuasive force thereof, and not the greater volume thereof, or the greater number of witnesses testifying thereto". Liechti v. Roche, 198 F.2d 174, 177 (5th Cir.1952). Accordingly, it is incumbent upon Claimants, whose claims have been objected to by the Debtor, to prove the extent and validity of their claims by a preponderance of the evidence. Likewise, the standard of proof in an action for wrongful discharge outside the bankruptcy court is a preponderance of the evidence standard. N.L.R.B. v. Transportation Management Corp., 462 U.S. 393, 103 S.Ct. 2469, 76 L.Ed.2d 667 (1983).
It is uncontroverted that Thurber and Sweeny...
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