In re Flick, Bankruptcy No. 80-02035T(13)
| Decision Date | 29 October 1981 |
| Docket Number | Bankruptcy No. 80-02035T(13),Adv. No. 81-0282. |
| Citation | 14 BR 912 |
| Parties | In re Robert R.J. FLICK a/k/a Robert R. Flick, Debtor. COMMONWEALTH of PENNSYLVANIA by its Attorney General Harvey Bartle, III, Plaintiff, v. Robert R. FLICK, Defendant. |
| Court | U.S. Bankruptcy Court — Eastern District of Pennsylvania |
Mitchell W. Miller, Philadelphia, Pa., for debtor.
Michael F. Butler, Allentown, Pa., for the Commonwealth of Pennsylvania.
Presently before us in this case are two matters which are closely related, and which can be disposed of by one opinion and order. One matter concerns objections to confirmation of debtor's Chapter 13 plan; the other matter concerns relief from the automatic stay imposed by 11 U.S.C. § 362 (1979). For reasons more fully given below, we will dismiss both the objections to debtor's plan, and the complaint for relief from the stay.1
The facts of this rather complex case are as follows:2
The debtor in this case is Robert R. Flick hereinafter, the debtor. The only other major party is the Commonwealth of Pennsylvania, by the Bureau of Consumer Protection hereinafter, the Commonwealth.
In 1973, and again in 1974, the debtor entered into consent decrees in settlement of legal action taken against him by the Commonwealth for alleged violations of the Pennsylvania unfair trade practices law.3 In 1976, The Lehigh County Court of Common Pleas determined that the debtor had violated the terms of the consent decrees, and entered an order assessing civil penalties against the debtor in the amount of $34,000.
Debtor appealed the above order; the Commonwealth Court affirmed the Common Pleas judgment,4 and the Pennsylvania Supreme Court denied further appeal. Following the supreme court's refusal to hear the appeal, the Lehigh County Court of Common Pleas entered an order directing the debtor to pay the $34,000 or face arrest for contempt.
Scant hours before his arrest would have occurred, debtor filed a voluntary petition seeking relief under Chapter XIII of the now repealed Bankruptcy Act hereinafter, the Act. The Commonwealth thereafter actively resisted the debtor's attempt to obtain relief under the bankruptcy laws; they objected to the confirmation of his Chapter XIII plan, and, as a result, Flick was adjudicated a bankrupt by this court in December of 1978. The Commonwealth then sought relief from the automatic stay, and that relief was granted by this court in August, 1980. In re Flick, 5 B.R. 637 (E.D. Pa.1980).
Debtor then began an appeal of our order in that case. However, on August 18, 1980, only four days after the entry of our order granting the Commonwealth relief from the stay, the debtor filed a petition seeking relief under Chapter 13 of the Bankruptcy Code. 11 U.S.C. §§ 101-1330 (1979) hereinafter, the Code. The appeal of the order granting relief from the stay was abandoned by the debtor shortly thereafter.5
On October 1, 1980, the debtor filed a plan which listed the $34,000 judgment as the debtor's only liability, and which provided for 36 payments of $200 each as the adjustment of that debt.6 Debtor began making payments under that plan to the standing Chapter 13 trustee.
On February 23, 1981, the Commonwealth filed a document titled "In the Alternative: Motion to Dismiss: Complaint for Declaratory Judgment: Motion for Vacation of Stay" hereinafter referred to as, the Complaint. The Complaint contained alternative causes of action: Count I was titled "In the nature of objections to confirmation of the plan and a motion to dismiss the debtor's petition;" Count II was titled "In the nature of a declaratory judgment;" Count III was titled "Alternative relief requesting relief from the stay." The Complaint contained a prayer for relief which requested that this court reject the debtor's plan or dismiss the debtor's petition, or alternatively, enter a declaratory judgment to the effect that neither the automatic stay nor any other provision of the Code prohibits the Commonwealth from enforcing the still outstanding order of the Common Pleas Court directing debtor to pay the $34,000 or face arrest, or, in the alternative, that this court lift the stay to permit enforcement of the above mentioned order.
On May 25, 1981, the meeting of creditors was held pursuant to 11 U.S.C. § 341 (1979). The debtor was examined by the Commonwealth and the standing Chapter 13 trustee. The trustee thereafter filed his report as required by 11 U.S.C. § 1302(b)(1) (1979); the report requests that the debtor's plan be confirmed, as the plan has (in the trustee's opinion) met the requirements of 11 U.S.C. § 1322 (1979) and 11 U.S.C. § 1325 (1979).
On June 25, 1981, the debtor filed an answer to the Commonwealth's objections to confirmation. The debtor has also filed pleadings which relate to the remaining substantive claims contained in the Complaint. Specifically, the debtor has filed a document labeled "Motion for a More Definite Statement, Motion to Strike, and/or Motion to Dismiss."
The preliminary and final hearings on both the Commonwealth's objections to confirmation and debtor's preliminary motions were consolidated, and held together on May 11, 1981. That hearing was continued until June 25, 1981, at which time both hearings were concluded, and both matters taken under advisement. Both parties have submitted several briefs on the issues in both matters.
As stated above, the first count of the Complaint is in the nature of objections to confirmation and a motion to dismiss the case. Because our resolution of this initial matter could obviate the need for us to consider the adversary matter and the substantive claims therein regarding the automatic stay, we will consider the objections to confirmation first.
Preliminarily, we feel it necessary to discuss a matter, only tangentially considered by the parties, which we feel is extremely important to our resolution of the issues before us. That matter is the allocation of the burden of proof.
The general rule in civil litigation is that the moving party has the ultimate burden of proving the allegations upon which he bases his action. See, e.g. R.Bankr.P. 407, Advisory Committee Notes; House Rep. No. 95-595, at 308, U.S.Code Cong. & Admin.News 1978, p. 5787.
Although we have found no statutes or cases which bear directly on the issue of the burden of proof regarding objections to confirmation of a Chapter 13 plan,7 we see no reason why the rule in this instance should be any different from the general rule for other civil litigation. Therefore, we conclude that the party objecting to the confirmation of a Chapter 13 plan has the ultimate burden of proving allegations, such as these, upon which he bases his objections. We further conclude that this burden includes an initial burden of going forward with evidence to support those allegations. We recognize that in some instances the burden of producing evidence may shift from opponent to opponent, Sabatino v. Curtiss Nat. Bank of Miami Springs, 446 F.2d 1046 (5th Cir. 1971); In re Tomeo, 1 B.R. 673 (E.D.Pa.1980), but that general proposition does not affect the more specific burden of proof in this case.
The gravamina of the Commonwealth's objections are: 1) that debtor is ineligible for relief under Chapter 13 because he is not "an individual with regular income;" 2) that the debtor's petition and plan were not proposed, nor filed, in good faith; and 3) that Section 403(a) of Title IV of Public Law 95-598, (the Savings Provision), prohibits the filing of a Code 13 petition while an Act Chapter VII case remains open.
The debtor answered and denied the above allegations, and demanded proof at the hearing on the objections. We will consider the objections seriatim.
The Commonwealth claims that the debtor is not an individual with regular income, and thus not eligible for relief under Chapter 13, see, 11 U.S.C. § 109(e) (1979).8 At the hearings on this matter, the Commonwealth presented no evidence to suggest that debtor is not eligible for an adjustment of his debts under Chapter 13 of the Code.
Debtor, however, offered as evidence the trustee's report. The report states, inter alia, that the debtor was examined by the standing trustee, that in the standing trustee's opinion the plan meets the requirements of 11 U.S.C. § 1325 and all other applicable sections of title 11, and that the trustee has no information or belief that the discharge should be denied. The debtor argues that these statements are evidence that the debtor is eligible to file a Chapter 13 petition.
In the absence of any evidence to the contrary, we have no hesitation in finding that the debtor is an individual with regular income and thus eligible to file a Code Chapter 13 petition and plan. The Commonwealth relies upon bare allegation, unsupported by any evidence, in its claim of ineligibility.
The Commonwealth's contention in this respect is that the debtor's filing was not for the purpose of adjusting his debts, but to subvert this court's order lifting the stay in the then pending Act Chapter VII case. The Complaint lists the entire history of the debtor's legal battles with the Commonwealth, in this Court and others, and implies that this history demonstrates debtor's bad faith. The Complaint also reminds the court of the purposes of the provisions of the Bankruptcy Code and the policy they serve.
However, we cannot say that debtor has proposed his plan in bad faith, because we have no evidence with which to support the Commonwealth's allegations. Again the Commonwealth has offered no testimony or other evidence to prove that what they say is true.
Debtor again offers the trustee's report as evidence of the trustee's belief that the plan was filed in good faith. Debtor again argues that after examination by the trustee, the...
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