In re Haacke, 10–62849–13.

• Decision Date: 27 December 2011
• Docket Number: No. 10–62849–13.,10–62849–13.
• Citation: 465 B.R. 564
• Parties: In re RICKY J. HAACKE, Jody J. Haacke, Debtors.
• Court: U.S. Bankruptcy Court — District of Montana

465 B.R. 564

In re RICKY J. HAACKE, Jody J. Haacke, Debtors.

No. 10–62849–13.

United States Bankruptcy Court, D. Montana.

Dec. 27, 2011.

Harold V. Dye, Missoula, MT, for Debtors.

MEMORANDUM OF DECISION

RALPH B. KIRSCHER, Bankruptcy Judge.

Pending in this Chapter 13 case is the Debtors' Objection (DocketNo. 81) to the secured claim asserted on Proof of ClaimNo. 15 filed by Gail H. Goheen, P.C.(“Goheen”) based on a statutory attorney's lien claimed under MONT. CODE ANN.(“MCA”)§ 37–61–420, and on confirmation ¹ of Debtors' Second Amended Chapter 13 Plan (“Plan”)(Dkt. 65).The Chapter 13Trustee objects to confirmation on the grounds the Plan does not provide for Goheen's secured claim as required under 11 U.S.C. § 1325(a)(5).Debtors' Objection requests that the Court disallow Goheen's secured claim and allow Claim 15 as an unsecured nonpriority claim, without prejudice to Goheen's ability to assert the lien against property awarded to Debtor Jody J. Haacke(“Jody”) which is not committed to the Plan.After a hearing on these matters and review of parties' pleadings and applicable law, the Court overrules Debtors' Objection to Goheen's secured claim under 11 U.S.C. § 502(b), and on procedural grounds for Debtors' failure to commence an adversary proceeding to determine the validity and extent of Goheen's lien under F.R.B.P. Rule 7001(2) which provides that an adversary proceeding is “a proceeding to determine the validity, priority, or extent of a lien....”Because Debtors' Objection is overruled confirmation of their Plan must be denied, and Debtors are granted a limited period of time to file a further amended plan and other proceedings to bring this matter to a conclusion.

Hearing on these matters was held at Missoula on November 10, 2011.Debtors were represented at the hearing by attorney Harold V. Dye(“Dye”) of Missoula.Goheen appeared pro se.No testimony or exhibits were admitted.The Court heard argument of counsel, and at the conclusion of the argument the Court took the matter under advisement.

This Court has exclusive jurisdiction of this case under 28 U.S.C. § 1334(a).These contested matters are core proceedings concerning allowance or disallowance of claims against the estate and confirmation of a plan under 28 U.S.C. § 157(b)(2)(B) and (L).

FACTS

The facts are not in dispute, and the parties agree that the Objection to Goheen's secured claim is a matter of law.Goheen represented Debtor Jody J. Haacke(“Jody”) in the parties' divorce case until Goheen withdrew.There has been no decree of dissolution entered in the divorce case, and thus there has been no division of marital property.Goheen claims an attorney's charging lien against the marital property pursuant to MCA § 37–61–420(2).Although no division of marital property has occurred in the divorce case, Dye agreed with the Court at the hearing that Goheen may still be secured depending on the division of assets.

Debtors filed their joint Chapter 13 petition on December 14, 2010, and filed their Schedules and Statement of Financial Affairs on January 5, 2011.Debtors list two homes in Hamilton and Corvallis, Montana, both of which are jointly owned and both of which Debtors claim homestead exemptions.Personal property is mostly owned by one or the other of the Debtors.Goheen is listed on Schedule F as a creditor holding an unsecured nonpriority claim against Jody in the amount of $29,232.14.

Schedule I shows that both Debtors are employed and earn income for payment under a Chapter 13 plan.The Statement of Financial Affairs lists the parties divorce case in Ravalli County, Montana, CauseNo. DR–08–18 which has been pending since 2008.The parties agreed at the hearing that no decree and property division has been entered in the divorce case, but otherwise no explanation was given regarding the status of the divorce and the delay.

Goheen filed Proof of ClaimNo. 15 on April 12, 2011.Claim 15 asserts a claim in the amount of $28,965.13 secured by a statutory attorney lien on property valued at $986,500.00.The attachment to Claim 15 provides an itemized accounting.Debtors filed their Objection to Goheen's secured claim on August 9, 2011, on the grounds that Jody has not been awarded anything in the divorce, and that Claim 15 extends to Ricky Haacke's interest in the marital property.

Debtors' amended plan was confirmed, but the Chapter 13Trustee filed a motion to vacate confirmation, in part because of Goheen's secured claim which was not provided for as required by § 1325(a)(5).Confirmation was vacated with the Debtors' consent.Debtors' Second Amended Plan continues to omit any provision for Goheen's secured claim.

DISCUSSION

No contention arises that Goheen's Proof of ClaimNo. 15 was not filed in accordance with F.R.B.P. Rules 3001 or 3002.Under Rule 3001(f), 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.”The Ninth Circuit Bankruptcy Appellate Panel(“BAP”) in Litton Loan Servicing, LP v. Garvida(In re Garvida),347 B.R. 697, 706–07(9th Cir. BAP2006), discussed clarification provided by the United States Supreme Court decisionRaleigh v. Ill. Dep't of Revenue,530 U.S. 15, 120 S.Ct. 1951, 147 L.Ed.2d 13(2000), regarding the “prima facie evidence” language in Rule 3001(f):

The Supreme Court has clarified that the Rule 3001(f)“prima facie evidence” language does not address the burden of proof in an objection to claim proceeding.Raleigh,530 U.S. at 22 n. 2, 120 S.Ct. 1951.

It follows that, after Raleigh,Rule 3001(f) cannot be construed as allocating the burden of proof and, instead, operates merely as an evidentiary presumption that is rebuttable.

The evidentiary presumption of a prima facie case operates to shift the burden of going forward but not the burden of proof.[Garner v. Shier(In re Garner),246 B.R. 617, 622(9th Cir. BAP2000) ];Diamant v. Kasparian(In re So. Cal. Plastics, Inc.),165 F.3d 1243, 1248(9th Cir.1999)(although the creditor bears the ultimate burden of persuasion, the debtor must come forward with evidence to rebut the presumption of validity); 9 [COLLIER ON BANKRUPTCY ¶ 3007.01[1](Alan N. Resnick & Henry J. Sommer eds.15th ed. rev. 2006) ](“once this burden of going forward to overcome the presumption is met, the ultimate burden is on the claimant”).Hence, at best, Litton's $33,435.46 proof of claim was entitled to the Rule 3001(f) evidentiary presumption, which is capable of being rebutted.

Assuming, without deciding, that the evidentiary presumption did apply, the mechanics of what it takes to rebut the Rule 3001(f) presumption are driven by the nature of the presumption as “prima facie” evidence of the claims validity and amount.Garner, 245[246] B.R. at 621–22.The proof of claim is more than “some” evidence; it is, unless rebutted, “prima facie” evidence.Id.One rebuts evidence with counter-evidence.Id.

347 B.R. at 706–07.

The burden to overcome the prima facie presumption under Rule 3001(f) is on the Debtors.In Garvida the objecting debtors satisfied their burden of going forward by proferring evidence at a hearing proving they made payments, and as a result the burden shifted to the creditor to prove the validity and amount of its claim, which it failed when it failed to provide an accounting.347 B.R. at 702, 707.In the instant case the Debtors offered no evidence at the hearing on their Objection to Goheen's claim, other than the agreed fact that no decree has been interest in their divorce case, which commenced in 2008.

Debtors argue that since no decree has been entered no legal basis exists for Goheen to claim an attorney lien on Ricky Haacke's interest in marital property.Goheen argues that her attorney lien claimed under MCA § 37–61–420(2) attached from the commencement of the Debtors' divorce case, and that since they chose to file this joint Chapter 13 case her lien attaches to the entirety of their undivided interest in the estate property.

This Court does not decide the extent of Goheen's lien in the instant contested matter because the Debtors have not followed proper procedure.Under Rule 7001(2), an adversary proceeding is required to determine the validity, priority or extent of a lien or other interest in property.Debtors' Objection is not an adversary proceeding, and thus the validity and extent of Goheen's attorney lien is not before the Court in the manner required by the Rule.Further, Debtor's Objection states that it is filed pursuant to Rule 3007.Rule 3007(b), F.R.B.P., provides:

DEMAND FOR RELIEF REQUIRING AN ADVERSARY PROCEEDING.A party in interest shall not include a demand for relief of a kind specified in Rule 7001 in an objection to the allowance of a claim, but may include the objection in an adversary proceeding.

Because of this procedural defect, Debtors' Objection is overruled to the extent it seeks a determination of the validity or extent of Goheen's attorney lien.

Turning to the attorney lien statute, this CourtIn re O'Connell,167 B.R. 928, 929–30(Bankr.D.Mont.1994) construed Montana's attorney charging lien statute:

Montana has provided under § 37–61–420 as follows:

Judgment Lien for Compensation.(1) the compensation of an attorney and counsel for his services is governed by agreement, express or implied, which is not restrained by law.

(2) from the commencement of an action or the service[s] of an answer containing a counterclaim, the attorney who appears for a party has a lien upon the client's cause of action or counterclaim which attaches to a verdict, report, decision or judgment in his client's favor and the proceeds thereof in whose hands they may come.Such lien cannot be affected by any settlement between the parties before or after judgment.

The language of [§ ] 37–61–420(2) was slightly amended in 2009 to read:

(2) from the commencement of an action or the service of an answer containing a...