In re Nora, BKY 15–41022–KHS
| Decision Date | 26 February 2018 |
| Docket Number | BKY 15–41022–KHS |
| Parties | IN RE: Wendy Alison NORA, Debtor. |
| Court | United States Bankruptcy Courts. Eighth Circuit. U.S. Bankruptcy Court — District of Minnesota |
Wendy Alison Nora, Access Legal Services, Minneapolis, MN, John William Verant, Maple Grove, MN, for Debtor.
This case came on for two days of evidentiary hearing commencing on August 7, 2017, and concluding on September 15, 2017, on the debtor's Motion to Disallow Claim # 2–4, in Part, and Objection to Proof of Claim # 2–4. The debtor, Wendy Alison Nora, appeared in propria persona ; and Michael R. Pahl appeared on behalf of the claimant, Department of the Treasury—Internal Revenue Service. This Court has jurisdiction over this proceeding pursuant to 28 U.S.C. §§ 157(b)(1) & 1334, FED. R. BANKR. P. 7001, and Local Rule 1070–1. This is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2)(B).
Pursuant to this Court's Order entered on October 30, 2017, initial post-hearing briefing was due from both parties on December 15, 2017, and any responses to post-hearing briefs were due on January 5, 2018. All post-hearing briefing has been concluded and the Court took the matter under advisement.1
The legal issue in this case is whether the debtor was entitled to a casualty or theft tax deduction for business records removed from her residence and disposed of after foreclosure. The Court finds that as a factual matter, the debtor has failed to provide sufficient evidence to establish what was destroyed and its value in order to meet her burden to rebut the presumption of validity of the proof of claim. As a legal matter, the debtor has failed to show that the deduction should be allowed as a matter of law under the Internal Revenue Code. Accordingly, the debtor's Motion to Disallow Claim # 2–4, in Part, and Objection to Proof of Claim # 2–4 is denied. Proof of Claim # 2–4 is allowed in the priority and amounts as filed.
Wendy Alison Nora, is the debtor in this case.2
The claimant, the Department of the Treasury—Internal Revenue Service, is a federal agency and filed a proof of claim in this case.
Wendy Alison Nora—Ms. Nora is the debtor and is also an attorney licensed to practice law in Minnesota and Wisconsin. The debtor's law practice is conducted through a d/b/a known as Access Legal Services.
1. This matter has had a long history due to many, many delays. Wendy Alison Nora (the "debtor"), filed her motion objecting to the Department of the Treasury—Internal Revenue Service's (the "IRS") claim on September 19, 2016, and a preliminary hearing was originally scheduled to take place on October 20, 2016. The IRS timely filed a response to the claim objection on October 13, 2016, and the hearing was continued to December 1, 2016.
2. The Court conducted a preliminary hearing on December 1, 2016, and scheduled an evidentiary hearing for March 6, 2017. The debtor sought a continuance of the March 6, 2017, evidentiary hearing after sustaining injuries after falling on ice. The Court converted the March 6th evidentiary hearing date to a status conference. The request for continuance was not opposed. The evidentiary hearing was continued to June 6, 2017.
3. On May 23, 2017, the parties filed another stipulation seeking a continuance of the evidentiary hearing and it was again continued to August 7, 2017.
4. The debtor then filed a series of discovery motions and made additional attempts to delay the start of the evidentiary hearing, including making a motion for sanctions on August 7th at the start of the evidentiary hearing. The debtor alleged that the IRS had obstructed certain depositions.
5. After the debtor presented the motion, the Court took a recess, read the transcripts in question and reviewed the debtor's submissions. The Court then denied the motion for sanctions and the evidentiary hearing commenced. The debtor took the stand to provide testimony.
6. In the middle of her testimony, the debtor abruptly announced in open court that she would be dismissing her bankruptcy case, rendering the claim objection moot. However, on August 11, 2017, the debtor filed a Notice of Withdrawal of Oral Motion to Dismiss Chapter 13 Petition. The Court then entered its order to resume the evidentiary hearing on September 15, 2017.
7. On September 6, 2017, the debtor filed a motion to withdraw the claim objection without prejudice. On September 7, 2017, the Court entered its order stating that the request to withdraw would be heard immediately prior to the recommencement of the evidentiary hearing and further instructed the parties that if the request to withdraw was denied, the hearing would go forward as scheduled.
8. On September 15, 2017, just prior to the commencement of the proceedings, the debtor attempted to submit another motion directly to the Court, along with her medical records, requesting yet another continuance of the evidentiary hearing. The Court refused to allow the last minute filing of the motion for continuance or the submission of the medical records finding that the debtor's alleged inability to go forward with the evidentiary hearing was not credible. The debtor had prepared numerous filings in the week leading up to the evidentiary hearing and had driven from Madison, Wisconsin for the hearing. Her voice was strong, she had no trouble standing when she was making arguments on the proposed continuance motion and the pending motion to withdraw the claim objection. The debtor appeared to the Court to be fit to proceed with the evidentiary hearing.
9. The Court denied the motion to withdraw the claim objection without prejudice. The Court told the debtor that, because the evidentiary hearing had already commenced, she could withdraw the claim objection with prejudice or proceed with hearing. The debtor chose to proceed with evidentiary hearing. The hearing lasted the full day and was concluded on September 15, 2017.
10. Since the time of her fall in the winter of 2017, the debtor has complained of headaches, anxiety, diabetes and other ailments that she alleges would necessitate accommodations under the Americans with Disabilities Act (the "ADA") during the evidentiary hearing on the claim objection. During the course of the evidentiary hearing on September 15, 2017, the Court provided every accommodation requested by the debtor including: (a) allowing the debtor to remain seated at counsel table both to make arguments and testify; (b) allowing the debtor to take frequent breaks (approximately every 45 minutes) as requested; (c) allowing the debtor to eat and drink in the courtroom throughout the duration of the evidentiary hearing; and (d) provided staff from the clerk's office to assist the debtor with courtroom technology.
11. At the end of evidentiary hearing, the debtor requested that briefing be delayed as she was going to undergo treatment for her ailments and would be taking a 60 or 90 day leave of absence. The Court allowed briefing to be stayed until she was done with her treatment. The debtor notified the Court in October 2017, that she was well enough to complete post-hearing briefing. The Court entered an order dated October 30, 2017, setting the briefing schedule as stated above.
12. On March 27, 2015, the debtor filed a voluntary petition for relief under Chapter 13 of the Bankruptcy Code.
13. On July 22, 2015, the debtor moved to convert her case to a case under chapter 11. An order granting that motion was entered on August 13, 2015.
14. The deadline for governmental units to file proofs of claim was September 23, 2015.
15. On June 2, 2015, the IRS timely filed Proof of Claim # 2–1 asserting an unsecured priority claim of $32,114.22 and an unsecured general claim in the amount of $4,098.83 for a total claim of $36,213.05 for "taxes owing".
16. The IRS filed three amendments to its proof of claim and its current Claim # 2–4 asserts an unsecured priority claim of $12,226.37 for income tax owing for tax years 2012 and 2013; and an unsecured general claim of $6,430.63 for interest on FUTA taxes and 2005 income taxes.
17. On April 15, 2016, the debtor filed her Motion and Alternative Motion to Re–Convert Chapter 11 Proceedings to Proceedings Under Chapter 13.
18. On August 26, 2016, an order granting the motion to reconvert to a case under chapter 13 was entered.
19. As discussed above, the debtor filed her motion objecting to the IRS's claim on September 19, 2016.
20. On November 17, 2016, the debtor's Chapter 13 Plan of Reorganization was confirmed.
21. The evidentiary hearing on the claim objection concluded on September 15, 2017.
22. Prior to filing her bankruptcy case, the debtor owned residential real property, a condominium or townhouse, located at 6931 Old Sauk Road, Madison, Wisconsin 53717 (the "Madison Property").
23. In 2009, Residential Funding Co. LLC ("Residential Funding") sued the debtor and alleged that she failed to make payments on the mortgage for the Madison Property. The debtor aggressively litigated that suit but ultimately lost and a judgment was entered on March 3, 2010. That judgment is final.
24. On January 25, 2011, a foreclosure sale was conducted and a sheriff's report of sale was filed.
25. The sheriff's sale was confirmed at a hearing on March 1, 2011, pursuant to Wisconsin Stat. § 846.165.
26. A writ of assistance was entered on March 15, 2011, to aid the purchaser at the foreclosure sale in obtaining possession of the Madison Property.3 According to the debtor's testimony, she was evicted sometime between August 2011, and November 2011. The debtor produced no documentary evidence establishing the actual date of eviction.
27. The debtor did not reside at or visit the Madison Property between August 2011 and November 2, 2011. When she arrived at the Madison Property on or about November 2, 2011, the locks had been changed and her personal property had been removed. The...
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Doe v. State
...evidence that defendant committed the alleged violation; but there was not a ‘preponderance’ of evidence."); see also In re Nora , 581 B.R. 870, 879 (1) (USBC D Minn. 2018) (explaining, in the context of tax matter using the preponderance of the evidence standard, that "[a] court is not req......