In re White

• Decision Date: 23 June 1994
• Docket Number: Bankruptcy No. 93-50382.
• Court: U.S. Bankruptcy Court — District of Connecticut
• Parties: In re Darwin E. WHITE, Debtor.

168 B.R. 825 (1994)

In re Darwin E. WHITE, Debtor.

Bankruptcy No. 93-50382.

United States Bankruptcy Court, D. Connecticut.

June 23, 1994.

COPYRIGHT MATERIAL OMITTED

Darwin E. White, pro se.

Deirdre A. Martini, Asst. U.S. Atty., Bridgeport, CT, for respondent I.R.S.

MEMORANDUM AND ORDER ON OBJECTION TO PROOF OF CLAIM

ALAN H.W. SHIFF, Bankruptcy Judge.

The debtor objects to a proof of claim for income taxes filed by the Department of the Treasury, Internal Revenue Service (the "Service"). Because I find that the debtor has offered no evidence to rebut the prima facie validity of that claim, and because I find the debtor's legal arguments as to the invalidity of the claim to be without merit, the debtor's objection is overruled.

BACKGROUND

This chapter 13 case was commenced February 3, 1993. A proposed chapter 13 plan and schedules were filed February 18, 1993. Schedule E listed the Service as holding an unsecured priority claim in the amount of $12,000.00. Although the proposed plan stated that the $12,000.00 debt to the Service would be fully paid in 60 monthly payments, it also stated that the amount of the claim was disputed and that the debtor would object to any proof of claim filed by the Service.

On March 4, 1993, the Service filed a Proof of Claim for Internal Revenue Taxes, a copy of which is annexed hereto for reference (the "Proof"). The Proof, designated as Form 6338(C), was signed by R.J. Nadeau, Chief, Special Procedures Function. Paragraph 1 provides that Nadeau "is the agent of the Service, and is authorized to make this proof of claim on behalf of the United States." Paragraph 4 states claims for unpaid income taxes in three categories. The first category is for "Secured Claims" in the aggregate amount of $59,716.72 for taxes assessed on July 15, 1985 for the period ending December 31, 1981. The Proof states the date and location of the filing of the notice of tax lien, but the notice itself is not attached. The second category is for "Unsecured Priority Claims" for the years 1989 through 1992 totalling $133,220.91. The entry for 1989 taxes states "Assessment Stayed," taxes due — $30,394.88, and interest to petition date — $11,641.39. The entries for taxes for 1990 through 1992 are each in the amount of $30,394.88 and state that the claims are an "estimated liability." No interest is claimed for those years. The third category is for "Unsecured General Claims" for taxes for the years 1986 through 1988 aggregating $62,125.16, with specific amounts of taxes and interest claimed for each year. The entry for each year indicates: "Asmt Prohibited B/C." Also included as unsecured general claims are penalties totalling $16,877.43.

Page 2 of the Proof contains the following explanation for the estimation of taxes due for the years 1990 through 1992:

ESTIMATED TAX CLAIMS HAVE BEEN FILED BECAUSE THE DEBTOR HAS FAILED TO FILE THE RETURN(S) FOR THE ESTIMATED PERIODS. AS SOON AS THE DEBTOR FILES THE RETURN(S) WITH THE I.R.S. AS REQUIRED BY LAW, THIS CLAIM WILL BE ADJUSTED AS NECESSARY.

Page 3 of the Proof contains the following explanation of the term "Assessment Stayed" used to describe the 1989 tax claim:

ESTIMATED TAX CLAIMS HAVE BEEN FILED BECAUSE OF A PROPOSED ADDITIONAL ASSESSMENT TO THE TAX MADE BY AN EXAMINATION OF THE DEBTORS TAX RETURN FOR THE PERIOD ESTIMATED.

As predicted in his proposed plan, on August 18, 1993, the debtor filed an objection to the Proof. He also filed a memorandum, detailing several objections to the form of the Proof. At an October 15, 1993 hearing on the debtor's objection, he appeared pro se but offered no evidence. He conceded that he had filed no tax returns for the years 1990 through 1992, but nevertheless argued that it was improper for the Service to have estimated its claims for those years. The Service countered that, based on information it had received from the taxpayer and his employer, it had estimated tax liabilities where necessary due to the debtor's failure to file returns; that the Proof was in proper form; and that the debtor's objections were insufficient as a matter of law to rebut the Proof.

DISCUSSION¹

Section 501(a) provides in relevant part:

A creditor . . . may file a proof of claim.

Section 502 provides in relevant part:

(a) A claim or interest, proof of which is filed under section 501 of this title, is deemed allowed, unless a party in interest . . . objects.

(b) If such objection to a claim is made, the court, after notice and a hearing, shall determine the amount of such claim as of the date of the filing of the petition, and shall allow such claim in lawful currency of the United States in such amount, except to the extent that —

(1) such claim is unenforceable against the debtor and property of the debtor, under any agreement or applicable law for a reason other than because such claim is contingent or unmatured; . . .

(c) There shall be estimated for purpose of allowance under this section —

(1) any contingent or unliquidated claim, the fixing or liquidation of which, as the case may be, would unduly delay the administration of the case. . . .

11 U.S.C.A. §§ 501, 502 (West 1993). Rule 3001 Fed.R.Bankr.P. provides in relevant part:

(a) FORM AND CONTENT. A proof of claim is a written statement setting forth a creditor\'s claim. A proof of claim shall conform substantially to the appropriate Official Form.

(b) WHO MAY EXECUTE. A proof of claim shall be executed by the creditor or the creditor\'s authorized agent except as provided in Rules 3004 and 3005.

(c) CLAIM BASED ON A WRITING. When a claim, or an interest in property of the debtor securing the claim, is based on a writing, the original or a duplicate shall be filed with the proof of claim. . . .

(d) EVIDENCE OF PERFECTION OF SECURITY INTEREST. If a security interest in property of the debtor is claimed, the proof of claim shall be accompanied by evidence that the security interest has been perfected.

. . . . .

(f) EVIDENTIARY EFFECT. A proof of claim executed and filed in accordance with these rules shall constitute prima facie evidence of the validity and amount of the claim.

Rule 9009 Fed.R.Bankr.P. provides in relevant part:

The Official Forms prescribed by the Judicial Conference of the United States shall be observed and used with alterations as may be appropriate. Forms may be combined and their contents rearranged to permit economies in their use. . . . The forms shall be construed to be consistent with these rules and the Code (emphasis added).

I. Prima Facie Case and Burden of Proof

The plain language of the code and rules states that a properly executed and filed proof of claim is allowed unless objected to by a party in interest. If there is such an objection that raises factual issues "the objecting party has the initial burden of producing sufficient evidence to rebut the claimant's prima facie case." In re G. Marine Diesel Corp., 155 B.R. 851, 853 (Bankr. E.D.N.Y.1993). Cf. S.E.C. v. Unifund SAL, 910 F.2d 1028, 1037 (2d Cir.1990) ("`Prima facie case' has a clear meaning: evidence of an amount and quality sufficient to send a case to the trier of fact."). The objecting party may not rebut the prima facie case merely by stating that the amount of taxes claimed by the Service is not correct; the objecting party must produce some evidence to support that statement. Bakst v. United States (In re Katz), 168 B.R. 781, 787-89 (Bankr.S.D.Fla.1994) (where testimony of debtor and trustee's expert demonstrated "significant flaws" in the Service's deficiency calculations, prima facie validity of Service's claim was overcome and Service had burden to come forward with credible evidence to support its claim); Bonapfel v. United States (Matter of All Am. of Ashburn, Inc.), 156 B.R. 696, 703 (Bankr.N.D.Ga.1993); In re Dakota Indus., Inc., 131 B.R. 437, 444-45 (Bankr.D.S.D.1991); In re Crosier, Bankr. L.Rep. P74,111, 1991 WL 353282, at *3 (Bankr.C.D.Cal.1991) (the fact that the debtor scheduled the Service's claim in an amount less than shown on the Service's proof of claim did not rebut the Service's prima facie case where the debtor put forth no evidence in support of its figure). That evidence must have probative force at least equal to that of the proof of claim. In re Rasbury, 130 B.R. 990, 1003 (Bankr.N.D.Ala. 1991), aff'd, 141 B.R. 752 (N.D.Ala.1992); see Juniper Dev. Group v. Kahn (In re Hemingway Transport, Inc.), 993 F.2d 915, 925 (1st Cir.) (an objection must be supported by "substantial evidence"), cert. denied, ___ U.S. ___, 114 S.Ct. 303, 126 L.Ed.2d 251 (1993); 3 Lawrence P. King, ed., Collier on Bankruptcy ¶ 502.01, at p. 502-16 (15th ed. 1994) ("Unless the . . . objector . . . introduces evidence as to the invalidity of the claim or the excessiveness of its amount, the claimant need offer no further proof of the merits the claim."). Further, "when the taxpayer introduces evidence that refutes the government's proof of claim in a bankruptcy proceeding, any burden shifting to the government of coming forward with relevant evidence involves only those elements that the taxpayer has challenged." Gran v. Internal Revenue Serv. (In re Gran), 964 F.2d 822, 828 (8th Cir.1992). Moreover, if a debtor files an affirmative defense, the debtor has the burden of proof as to that defense. In re Rasbury, supra, 130 B.R. at 1003 (taxpayers had burden of proving safe harbor affirmative defense to withholding liability); In re Clark, 106 B.R. 602, 603 (Bankr.E.D.Mo. 1989) (innocent spouse defense to tax liability); In re Ousley, 92 B.R. 278, 282-83 (Bankr.S.D.Ohio 1988) (duress defense to contractual liability). A defense is affirmative if the absence of the defense is not an element that the plaintiff must prove in order to establish a prima facie case. United States v. Continental Illinois Nat'l Bank and Trust Co. of Chicago, 889 F.2d 1248, 1253 (2d Cir.1989). If the debtor sustains that initial burden, the ultimate burden of persuasion is upon the creditor. Central...