In re Sacko
| Decision Date | 17 September 2008 |
| Docket Number | No. 07-11239ELF.,07-11239ELF. |
| Citation | 394 B.R. 90 |
| Parties | In re Moussa SACKO, Debtor(s). |
| Court | U.S. Bankruptcy Court — Eastern District of Pennsylvania |
David A. Scholl, Regional Bankruptcy Center of SE PA, Law Office of David A. Scholl, Newtown Square, PA, for Debtor.
William C. Miller, Chapter 13 Trustee, Philadelphia, PA, Trustee pro se.
Moussa Sacko ("the Debtor") filed this chapter 13 bankruptcy case on March 2, 2007. In his chapter 13 plan, he proposes to cure a prepetition delinquency on his residential mortgage.1 The holder of the mortgage is Aurora Loan Services ("Aurora").
Presently at issue is the amount of the prepetition arrears on the Aurora mortgage ("the Mortgage"). Aurora has filed a proof of claim asserting that the arrears total $19,363.69. The Debtor has filed an objection to Aurora's proof of claim.
For the reasons explained below, I determine the arrears to be $11,660.79.
The Debtor is the owner of the real property located at 7234 Paschall Avenue, Philadelphia, PA 19142 ("the Property"). He purchased the Property in April 2005. The financing for the purchase was provided by Aurora's predecessor-in-interest. The Debtor granted a mortgage to the lender in the transaction.
In September 2005, the Debtor left the United States to return to his native country, Guinea, to help care for his mother, who was ill at the time. While he was out of the country, he did not make any mortgage payments.
On January 24, 2006, Aurora filed a mortgage foreclosure action against the Debtor in the Court of Common Pleas, Philadelphia County ("the CP Court"), docketed at No. 3303 January Term 2006 ("the CP Action"). On June 8, 2006, Aurora obtained a default judgment in the CP Action. Aurora subsequently caused the Property to be sold at a sheriff's sale conducted on October 3, 2006 ("the 1st Sheriff's Sale").
On October 13, 2006, the Debtor filed a Motion to Set Aside Sheriff's Sale ("the Motion"). In the Motion, the Debtor asserted that he had been given false assurances that Aurora would enter into a forbearance agreement that lulled him into permitting the sale to take place. Based on these allegations, he appealed to the equitable power of the CP Court to set aside the sale. See Exhibit D-4, at ¶¶ 6-12. On November 14, 2006, the CP Court granted the Motion. The CP Court did not issue an opinion explaining the reasons for its decision.
Thereafter, based on its default mortgage foreclosure judgment, the validity of which was not affected by the Order setting aside the 1st Sheriff's Sale, Aurora scheduled another sheriff's sale ("the 2nd Sheriff's Sale") for March 6, 2007. The 2nd Sheriff's Sale was stayed by the filing of this bankruptcy case on March 2, 2007.
On August 6, 2007, the Debtor filed a Proof of Claim on behalf of Aurora, see Fed. R. Bankr.P. 3004, asserting a secured claim of $50,000.00 with $5,000.00 in prepetition arrearages. See Exhibit D-2 (hereinafter "the Debtor's Proof of Claim"). The Debtor's Proof of Claim was docketed on the Claims Register as Claim No. 7.
On August 23, 2007, Aurora, acting through its servicing agent Mortgage Electronic Registration Systems, Inc. ("MERS"), filed a proof of claim (docketed on the Claims Register as Claim No. 8), asserting a secured claim of $51,766.11 with $19,363.69 in prepetition arrears. Attached to Claim No. 8 were documents titled "Fixed/Adjustable Rate Note" ("the Note") and "Mortgage." Five (5) days later, on August 28, 2007, again acting through MERS, Aurora: (1) withdrew Claim No. 8 and (2) filed another proof of claim that it designated as an amendment to the Debtor's Proof of Claim ("the Amended Claim"). See Exhibit D-3. The Amended Claim is designated as Claim No. 7-2 on the Claims Register. In content, the Amended Claim was identical to the withdrawn Claim No. 8, except that it did not include the Note and Mortgage as attachments.
The Debtor filed an Objection to the Amended Claim on September 7, 2007 ("the Objection") (Docket Entry No. 60). In the Objection, the Debtor requested that the entire claim for arrears be stricken.
The hearing on the Objection was initially scheduled for October 23, 2007. That hearing and the next five (5) hearings scheduled were continued by agreement of the parties. On March 31, 2008, the hearing on the Objection was held and concluded. At that hearing, the Debtor testified in support of the Objection and both parties offered several documents that were admitted into evidence.
Aurora attached to the Amended Claim the following itemization of its claim for prepetition mortgage arrears:
19 Monthly Payments at $409.62 $ 7,782.78
Late charges 159.25
Escrow/Impound Advance 1,682.89
Property Inspections 144.00
Appraisals/Preservation 270.00
Property Preservation 194.28
Foreclosure Attorney Fees 1,550.00
Foreclosure Attorney Costs 7,580.49
TOTAL $19,363.69
In the Objection, the Debtor disputed the entire $19,363.69 in asserted arrears. Specifically, the Debtor disputed whether "all payments made were properly credited" and alleged that the remaining charges listed were "not clearly itemized, unclear and appear excessive." Debtor's Objection to Proof of Claim ¶¶ 3,4.
Fed. R. Bankr.P. 3002(c) provides that a proof of claim in a chapter 13 case is timely "if it is filed not later than 90 days after the first date set for the meeting of creditors called under § 341(a) of the Code." In this case, that deadline expired on August 14, 2007, two (2) weeks before Aurora filed the Amended Claim.
Prior to the commencement of the evidentiary portion of the hearing on the Objection, the Debtor asserted that the Amended Claim should be disallowed as untimely under Fed. R. Bankr.P. 3002(c). Presumably, the Debtor believes that the disallowance of the Amended Claim as untimely filed would restore the vitality of the Debtor's Proof of Claim.2
Before receiving evidence on the Objection, I rejected the Debtor's argument. Below, I briefly explain my reasons.
A number of courts have held that they have the discretion to allow a creditor to amend a claim a debtor has filed on the creditor's behalf under Fed. R. Bankr.P. 3004, even after the expiration of the deadline for the creditor to file a claim on its own behalf under Rule 3002(c). See In re Kolstad, 928 F.2d 171 (5th Cir.1991); In re McNichols, 255 B.R. 857 (Bankr.N.D.Ill. 2000); In re Bishop, 122 B.R. 96 (Bankr. E.D.Mo.1990); see also In re Frascatore, 98 B.R. 710, 722 n. 11 & 723 (Bankr. E.D.Pa.1989) ().3
I agree with the decisions cited above. As Judge Sigmund concisely explained in dictum in In re Hill, 286 B.R. 612, 620 (Bankr.E.D.Pa.2002):
Where a creditor who opts to remain outside the bankruptcy process is subsequently pulled in when the debtor files a proof of claim on its behalf, there must be some flexibility to mitigate the unfairness of binding the creditor to that filed claim because of the passage of the bar date.
In this case, after the Debtor filed a claim on Aurora's behalf, Aurora acted promptly to assert its rights as a secured claimant. The Debtor has suffered no prejudice due to Aurora's failure to file its claim during the initial period provided by Rule 3002(c). I will therefore, allow Aurora to amend the claim the Debtor filed on its behalf.
Allocation of the burden of proof in this proceeding requires consideration of 11 U.S.C. § 502(a) and Fed. R. Bankr.P. 3001(f).
Section 502(a) provides that a filed proof of claim "is deemed allowed" unless a party in interest objects. The Court of Appeals has summarized the parties' respective evidentiary burdens in a contested matter involving an objection to a proof of claim in the following oft-quoted passage:
[A] claim that alleges facts sufficient to support a legal liability to the claimant satisfies the claimant's initial obligation to go forward. The burden of going forward then shifts to the objector to produce evidence sufficient to negate the prima facie validity of the filed claim. It is often said that the objector must produce evidence equal in force to the prima facie case. In practice, the objector must produce evidence which, if believed, would refute at least one of the allegations that is essential to the claim's legal sufficiency. If the objector produces sufficient evidence to negate one or more of the sworn facts in the proof of claim, the burden reverts to the claimant to prove the validity of the claim by a preponderance of the evidence.
In re Allegheny Int'l, Inc., 954 F.2d 167, 173-74 (3d Cir.1992) (citations omitted); accord In re Gimelson, 2004 WL 2713059, at *13 (E.D.Pa. Nov.23, 2004); In re Galloway, 220 B.R. 236, 243-4 (Bankr.E.D.Pa. 1998); see also In re Patton, 388 B.R. 629, 633 (Bankr.E.D.Pa.2008).
Notably, in the above-quoted passage, the Third Circuit cited the Ninth Circuit's discussion in In re Holm, 931 F.2d 620, 623 (9th Cir.1991) which describes the burdens of proof this way:
Inasmuch as Rule 3001(f) and section 502(a) provide that a claim or interest as to which proof is filed is "deemed allowed," the burden of initially going forward with the evidence as to the validity and the amount of the claim is that of the objector to the claim. In short, the allegations of the proof of claim are taken as true. If those allegations set forth all the necessary facts to establish a claim and are not self-contradictory, they prima facie establish the claim. Should...
To continue reading
Request your trial
-
Benner v. Bank of Am., N.A.
...lender sought to collect $144 in property inspection fees as part of a debtor's Chapter 13 reorganization plan. In re Sacko, 394 B.R. 90, 104 (Bankr.E.D.Pa.2008). In analyzing the lender's claim, the court first looked to the mortgage agreement, noting the mortgage language was “broad enoug......
-
Bernadin v. U.S. Bank Nat'l Ass'n (In re Bernadin)
...remains with the claimant. E.g., In re Henry, 546 B.R. 633, 634–35 (Bankr. E.D. Pa. 2016) (citing authorities); In re Sacko, 394 B.R. 90, 97–98 (Bankr. E.D. Pa. 2008) (same).24 As discussed in Bernadin I, in some cases the debtor's options may be circumscribed by 11 U.S.C. § 1322(b)(2).25 I......
-
In re MDC Sys., Inc.
...Wells, 463 B.R. 320, 326 (Bankr.E.D.Pa.2011) (internal quotations and citations omitted); see alsoFed. R. Bankr.P. 3001; In re Sacko, 394 B.R. 90, 98 (Bankr.E.D.Pa.2008). In this case, the State Court Judgment that is the basis for the Claim was attached to Brandywine's proof of claim and G......
-
McElwee v. Scarff Bros., Inc. (In re McElwee)
...the amount of the claim. This evidentiary presumption remains in force even after an objection to the claim is filed. In re Sacko, 394 B.R. 90, 98 (Bankr.E.D.Pa.2008); In re Kincaid, 388 B.R. 610, 613 (Bankr.E.D.Pa.2008). A creditor's claims in bankruptcy arise in the first instance from th......