In re Hughes

• Decision Date: 18 August 2004
• Docket Number: No. 03-65944.,03-65944.
• Citation: 313 B.R. 205
• Parties: In re Shelly A. HUGHES, Debtor.
• Court: U.S. Bankruptcy Court — Eastern District of Michigan

Page 205

313 B.R. 205

In re Shelly A. HUGHES, Debtor.

No. 03-65944.

United States Bankruptcy Court, E.D. Michigan, Southern Division.

August 18, 2004.

Terri J. Sutton, for Debtor.

John Kapitan, Local Counsel for eCAST.

Becket & Lee, LLP, Counsel for eCAST.

David Wm. Ruskin, Chapter 13 Trustee.

OPINION OVERRULING DEBTOR'S OBJECTIONS TO PROOF OF CLAIMS FILED BY eCAST SETTLEMENT CORPORATION

MARCI BETH MCIVOR, Bankruptcy Judge.

This matter came before the Court at a hearing on July 15, 2004 on Debtor's objections to the proofs of claims filed by eCAST Settlement Corporation (eCAST). The Court OVERRULES Debtor's objections and ALLOWS the claims as filed by eCAST in their entirety.

I JURISDICTION

This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1334 and 157(a) and by referral of the U.S. District Court for the Eastern District of Michigan pursuant to Local District Court Rule 83.50(a)(1). This is a core proceeding under 28 U.S.C. § 157(b)(2)(B).

II FACTUAL BACKGROUND

On September 19, 2003, Shelly A. Hughes (Debtor) commenced this Chapter 13 bankruptcy case. Debtor filed a "Schedule F (Creditor's Holding Unsecured NonPriority Claims)" (Schedule F) disclosing claims totaling $ 28,156.00. Debtor's Schedule F lists, among others, credit card indebtedness to the following entities:

                Creditor                        Account No.                 Amount
                Chase Mastercard                5260 3160 8002 3900         $2,415.00
                P.O. Box 15919
                Wilmington, DE 19850-5919
                The Associates                  4621 2011 6791 3974         $2,154.00
                c/o Citibank
                P.O. Box 6531
                The Lakes, NV 88901-6531
                

Neither creditor as listed by Debtor in her Schedule F filed proof of claims. Instead, proof of claims were timely filed by eCAST as either an agent or assignee of Debtor's creditors. The proof of claims filed by eCAST indicate that the basis of its claims are for credit card debt and also contain the following information:

                Creditor                      Account No.            Amount
                Chase Manhattan Bank          5260 3160 8002 3900    $2,663.90
                USA, NA, by eCAST
                Settlement Corporation
                as its agent*
                P.O. Box 35480
                Newark, NJ 07193-5480
                eCAST Settlement              4621 2011 6791 3974    $2,153.88
                Corporation, assignee of
                Associates National Bank
                P.O. Box 35480
                Newark, NJ 07193-5480
                

In support of its claims, eCAST attached documentation. To the claim it filed as an agent of Chase Manhattan Bank, eCAST attached a summary of the relevant information related to Debtor's Chase Mastercard. The Clerk of the Court has designated this claim as Claim No. 4 (Claim No. 4). The summary attached to eCAST's Claim No. 4 contains the Debtor's name, address, and social security number as well as the credit card account number and alleged account balance. In addition, the summary contains two statements. The first statement discloses that the information contained in the summary "was derived from the information contained in the account database of Chase Manhattan Bank USA, NA" along with other sources. See Claim No. 4, un-numbered p. 3. The second statement indicates that the "balances recorded" have been verified by Chase Manhattan Bank, USA, NA. Id. The summary is not signed.

Also attached to eCAST's Claim No. 4 is an unsigned page containing the following short typed paragraph:

*By written agreement between Creditor and eCAST Settlement Corporation, eCAST Settlement Corporation has been authorized to file this proof of claim as agent for Creditor pending the Creditor's charge-off of the account and the transfer of the title to the account to eCAST Settlement Corporation. Creditor has further authorized eCAST Settlement Corporation to receive notices and payments with respect to this claim on Creditor's behalf, to be allocated pursuant to the terms of such agreement.

See Claim No. 4, un-numbered p. 2.

The documentation attached to the claim filed by eCAST as assignee of Associates National Bank (Associates) is similar to the documentation attached to eCAST's Claim No. 4. The Clerk of the Court has designated this claim as Claim No. 5 (Claim No. 5). The summary attached to eCAST's Claim No. 5 contains two minor differences from the summary attached to eCAST's Claim No. 4. First, the information contained in the summary pertains to Debtor's credit card account with Associates. Second, it includes a statement that the alleged account balance does not include any interest or fees that may have accrued post-petition. Once again, the summary attached to eCAST's Claim No. 5 is unsigned.

On June 9, 2004, Debtor filed objections to the claims filed by eCAST. On July 1, 2004, eCAST filed a response to Debtor's objections. A hearing on Debtor's objections was held on July 15, 2004. After the parties presented their arguments, the Court took the matter under advisement.

III LAW ON ALLOWANCE OF CLAIMS

The Bankruptcy Code permits a creditor to file a proof of claim either executed by the creditor, or by the creditor's authorized agent. 11 U.S.C. § 501(a); Fed. R. Bankr.P.3001(b). A proof of claim is deemed allowed unless an objection is filed. 11 U.S.C. § 502(a). If an objection is filed, a hearing is held by the bankruptcy court to determine whether the claim should be allowed or disallowed and the amount of the claim. 11 U.S.C. § 502(b); See Pension Benefit Guar. Corp. v. Belfance, (In re CSC Industries, Inc.), 232 F.3d 505, 509 (6th Cir.2000) ("bankruptcy courts have the statutory authority to determine the allowability and amount of" claims).

During the claims allowance process, the burden of proof shifts between the parties. Initially, a creditor bears the burden of establishing its claim. See Fed. R. Bankr.P. 3001(f). If a claim is based on a writing, a copy of the writing is to be filed along with the proof of claim. Fed. R. Bankr.P.3001(c). Once a creditor properly executes and files a proof of claim in accordance with the Federal Rules of Bankruptcy Procedure, its proof of claim is considered "prima facie evidence of the validity and amount of the claim." Fed. R. Bankr.P. 3001(f); In re Stoecker, 5 F.3d 1022, 1028 (7th Cir.1993); Ashford v. Consolidated Pioneer Mortgage, (In re Consolidated Pioneer Mortgage), 178 B.R. 222 (9th Cir. BAP 1995). Generally, courts have held that when a proof of claim fails to comply with the requirements of Rule 3001(c), the claim will not be considered prima facie valid as to the claim or amount. See In re Henry, 311 B.R. 813, 817 (Bankr.W.D.Wash.2004) (citations omitted).

If a party objects to the claim, the objecting party carries the burden of going forward with evidence to overcome the prima facie validity and amount of the claim. See In re Dow Corning Corp., 250 B.R. 298, 321 (Bankr.E.D.Mich.2000) (citing Juniper Dev. Group v. Kahn, 993 F.2d 915, 925 (1st Cir.1993) and In re Holm, 931 F.2d 620, 623 (9th Cir.1991)). If the objecting party produces evidence to refute at least one of the allegations essential to the claim's legal sufficiency, the burden of persuasion shifts back to the claimant. Id. (quoting In re Allegheny Int'l, Inc., 954 F.2d 167, 173-74 (3d Cir.1992)). The claimant ultimately bears the burden of proving the validity of the claim by a preponderance of the evidence. Id.; accord In re Hollars, 198 B.R. 270, 271 (Bankr.S.D.Ohio 1996).

IV ANALYSIS

A. Parties' Arguments

The basis of Debtor's objections is that the documents attached by eCAST to its proof of claims are insufficient to establish its claims. Debtor contends that such documents fail to either prove eCAST's role as an assignee or agent of Debtor's original creditors. In addition, Debtor contends that eCAST did not attach any documentation from Debtor's original creditors. As a result, Debtor alleges that she cannot be assured that when she receives her discharge that it will be effective against her original creditors. Debtor seeks the disallowance of eCAST's claims.

In response, eCAST contends that it is not required under the Bankruptcy Code or the Federal Rules of Bankruptcy Procedure to provide Debtor with proof of either its role as an agent of Chase Manhattan Bank or assignee of Associates. Despite its argument, eCAST attached exhibits to its response to Debtor's Objection to eCAST's claims. These exhibits consist of documents entitled "Assignment of Accounts" (Assignments) that were executed by Chase Manhattan Bank and Associates. See Exhibits D and E to "Response of ECAST Settlement Corporation to Debtor's Objection to Proof of Claims" (Doc. No. 34) (eCAST's Response).

eCAST contends that Fed. R. Bankr.P. 3001(e)(1) governs its Claim No. 5. In accordance with this procedural rule, eCAST filed a notice of transfer of the claim from Chase Manhattan Bank to eCAST, which is attached to its response as Exhibit B (Doc. No. 25). In this document, Chase Manhattan Bank, as transferor, consents to the notice of transfer filed by eCAST and waives its right to notice and the opportunity to object as provided by Fed. R. Bankr.P. 3001(e)(2).

At the hearing, Debtor argued that the Assignments provided by eCAST failed to specifically refer to Debtor's credit card accounts. In addition, Debtor stated that the dates of the Assignments pre-date her bankruptcy case and that she continued to receive account statements from Chase Mastercard and Associates until immediately prior to her bankruptcy case. Debtor also contends that the provisions of Fed R. Bank. P.3001(e) do not apply to disputed claims.

B. Claim No. 4 and Claim No. 5 as Originally Filed by eCAST Do Not Meet Requirements of Fed. R. Bank. P. 3001(f)

The Court initially considers eCAST's argument that neither the Bankruptcy Code or the Federal Rules of Bankruptcy Procedure require it to prove its relationship to Debtor's original creditors. The Court rejects eCAST's argument because eCAST ignores the requirements of the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure for filing a proof of claim.

Bankruptcy Rule 3001(f) establishes that a...