House of Wines, Inc.

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF COLUMBIA
In re
HOUSE OF WINES, INC.,
Debtor.
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Case No. 06-00127
(Chapter 7)
(Not for Publication in
West’s Bankruptcy Reporter)
MEMORANDUM DECISION REGARDING CHAPTER 7
TRUSTEE’S OBJECTION TO PROOF OF CLAIM OF SUBURBAN PROPANE
The chapter 7 trustee has filed an objection (Docket Entry
No. 64) to the proof of claim (Claim No. 34) filed on September
21, 2006, on behalf of Suburban Propane in the amount of
$1,663.72. 	Suburban Propane has not filed an opposition.
I
The proof of claim attached a “Transaction Report” showing
recurring charges relating to 39.50 “Units” entailing “Ppu”
(presumably meaning propane per unit) of either 4.6319 or 4.0000,
with corresponding dollar amounts of, respectively, $190.86 and
$165.90. 	The Transaction Report shows that each such charge
(plus an applicable “regulatory fee”) was paid in full before the
The decision below is signed as a decision of
the court.
Signed: June 26, 2007.
_____________________________
S. Martin Teel, Jr.
United States Bankruptcy Judge
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1 	Each of the recurring charges (of either $190.86 or
$165.90) is described as “ENGINE/FORKLIFT-CYL EXC,” with “CYL
EXC” presumably meaning cylinder exchange, and there is a
separate line for the associated “REGULATORY FEE” of the same
date.
2 	The Transaction Report lists four additional
“ENGINE/FORKLIFT-CYL EXC” events with event dates of July 3, 10,
and 17, 2006, and August 14, 2006 (all after the bankruptcy case
commenced), but lists no “Units” and lists no charges for those
events. 	I thus treat these entries as meaningless.
3 	The Transaction Report includes a final entry of
08/21/2006 of “DOUBTFUL” with a negative amount charged to the
account equal to the outstanding balance, but this presumably was
a write-off of the account for accounting purposes as of doubtful
collectability.
2
debtor incurred the next such charge. 1 	This is not a pattern of
cash on delivery (“COD”) as the trustee asserts in contending
that all bills had been paid, but rather is a requirement that
the previous delivery be paid in full before the next delivery
would be made. 	The Transaction Report shows that on May 1, 2006,
nine days before this bankruptcy case commenced, the debtor
incurred a charge of this nature in the amount of $190.86, and a
related regulatory fee of $2.86, for a total charge of $193.72. 2
The Transaction Report also shows that this amount was never
paid. 3
The trustee’s objection to the proof of claim states his
belief that the claim is for unreturned propane cylinders:
Propane 	charges 	generally 	were 	paid 	by 	the
Debtor on a COD basis and were around $190 per
delivery. 	The Trustee will withdraw or amend
the 	objection 	as 	appropriate 	if 	the 	claimant
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3
provides him satisfactory evidence that all or
a portion of the claim is for propane.
(Obj. n.1.) 	As discussed above, the claim on its face shows that
at least $193.72 of the claim was for the type of recurring
propane charges that had been incurred in the past, and that the
$193.72 was not paid COD. 	The trustee has not filed an affidavit
to rebut the prima facie validity of the proof of claim in this
regard. 	Accordingly, I will require the trustee to supplement
his objection to this $193.72 of the claim.
II
The Transaction Report lists an additional charge of
$1,470.00, under “Event Date” date of July 19, 2006, more than a
month after this bankruptcy case commenced. 	The charge is
described as “Labor,” but does not explain what the labor was.
As already noted, the trustee believes the entire claim is based
on unreturned propane cylinders. 	The trustee states:
The 	Debtor’s 	general 	manager 	notified 	the
claimant that it should pick up all cylinders
prior to the vacating of the Debtor’s premises
(which 	occurred 	as 	of 	June 	30, 	2006) 	and 	was
told 	that 	pick 	up 	would 	be 	made, 	but 	pick 	up
did not in fact occur. In addition, on August
4, 	2006[,] 	the 	Trustee 	notified 	the 	claimant
in writing of the name and phone number of the
landlord 	so 	that 	the 	claimant 	could 	find 	out
if 	any 	cylinders 	still 	remained 	on 	the
premises. 	Based on the foregoing, the Trustee
believes 	that 	the 	claimant 	was 	afforded 	a
reasonable 	opportunity 	to 	pick 	up 	unreturned
cylinders and does not have a valid claim for
any charges due to unreturned cylinders.
(Obj. 1.) 	However, the proof of claim, taken at face value,
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4 	If the charge was instead for unreturned propane
cylinders, the court would have to resolve the difficult issue of
whether the claim is an administrative expense pursuable by way
of motion or a right to payment arising prepetition, which must
be pursued by way of proof of claim.
4
states instead a charge of $1,470.00 for “labor” occurring on
July 19, 2006. 4 	Because the labor occurred postpetition, the
charge appears to be administrative in character, and if it
indeed is an administrative claim, it ought to be pursued via a
motion for allowance of an administrative claim, and not via a
proof of claim (the use of which is limited, in relevant part, to
assertion of claims that arose prepetition).
Rule 3001(a) requires that a proof of claim conform
substantially to the applicable Official Form. 	That Official
Form requires a statement of the basis of the claim. 	Here, the
proof of claim indicated that it was based on goods sold, and
attached the Transaction Report without setting forth a basis for
treating the postpetition event of “labor” as a claim that arose
prior to the petition date.
A claim that was contingent on the petition date, or that
arises from the postpetition rejection of an executory contract
or lease, is entitled to be treated as a prepetition claim, and
should be pursued via a proof of claim, not a motion for payment
of an administrative claim. 	Here, however, the proof of claim
gives no basis for viewing “labor” on the postpetition “event
date” of July 19, 2006, as somehow a claim that was contingently
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in existence on the petition date or as arising from rejection of
an executory contract or lease.
All we know is that Suburban Propane provided postpetition
services (“labor”), and the proof of claim provides no basis for
treating that as a part of a prepetition obligation. 	Without the
proof of claim stating a basis in accordance with the Official
Form that would support treating the claim as a prepetition
claim, I do not believe that the proof of claim has been filed in
accordance with Rule 3001(a). 	The trustee is entitled to treat
postpetition services as a claim not arising prepetition unless
the claimant’s proof of claim (or evidentiary proof) states a
basis for treating the claim as arising prepetition.
A claim is entitled to a presumption of validity under Rule
3001(f) only when the proof of claim is “executed and filed in
accordance with these rules.” 	Accordingly, the “labor” claim is
not entitled to a presumption of validity because the proof of
claim sets forth no basis for treating it as a prepetition claim.
That does not provide a basis for disallowing the claim, but it
does rob the claim of any presumptive validity. 	Once robbed of
the presumption of validity, the trustee is not put to the burden
of adducing evidence to rebut the proof of claim, and the proof
of claim can be disallowed based on the failure of Suburban
Propane to respond to the objection to claim. 	Unless the proof
of claim were amended to show a basis for treating the claim as a
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5 	A proof of claim for a claim based on a writing must be
accompanied by a copy of the writing giving rise to the claim (or
a statement describing the circumstances of the loss or
destruction of the writing). 	Fed. R. Bankr. P. 3001(c). 	If the
proof of claim does not comply with Rule 3001(c), then the claim
is not entitled to a presumption of validity. 	If there was a
written lease or written executory contract that gave rise to the
claim, or other written terms governing the relationship and
giving rise to the claim, the writing should be attached to the
proof of claim.
6
prepetition claim, I would sustain the trustee’s objection to the
claim based on the foregoing.
However, Suburban Propane was not given notice that its
claim for labor would be disallowed on that basis, and, although
it failed to respond to the objection to its labor claim, it may
have assumed that the labor claim was entitled to a presumption
of validity and that before disallowing the labor claim, the
court would require proof by the trustee showing that no claim
was owed. 	Accordingly, before I finally enter an order
disallowing the claim for labor, I will give Suburban Propane
thirty days to file an amended proof of claim setting forth the
basis of its claim in greater detail to demonstrate that the
claim should be treated as a prepetition claim. 5 	(Before the
case is closed, Suburban Propane may alternatively file a motion,
through counsel, seeking payment of an administrative claim if
the claim is instead administrative in character.)
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III
For the reasons set forth above, I will enter an order
(1) directing the chapter 7 trustee to supplement his objection
with respect to Suburban Propane’s $193.72 claim for
“ENGINE/FORKLIFT-CYL EXC” and related “REGULATORY FEE” (or
otherwise show cause in writing why the court ought not overrule
that portion of his objection), and (2) directing Suburban
Propane to file an amended proof of claim clarifying the nature
and timing of its $1,470.00 claim for “LABOR” (or otherwise show
cause why the court ought not sustain the trustee’s objection
with respect to that portion of its claim).
[Signed and dated above.]
Copies to: Kevin R. McCarthy, Trustee; Office of U.S. Trustee;
Debtor; Debtor’s Attorney; and:
Suburban Propane
Attention: T. Brewster
Credit & Collections (Account No. 1112-450205)
P.O. Box 206
Whippany, NJ 07981
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