Nathan Paul Bricker and Denise Lynette Bricker

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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA

IN RE: )
)
NATHAN PAUL BRICKER, and ) Case No, 08-340
DENISE PAUL BRICKER )
)
Debtors. ) Chapter 13
MEMORANDUM OPINION

TCIF REO GMC, LLC (“TCIF”) has a security interest in the principal residence of Nathan
and Denise Bricker (the “Debtors’”}. When the Debtors’ filed their Chapter 13 bankruptcy petition,
they claimed to owe an arrearage of $6,084 to TCIF. According to TCIF, however, this arrearage
is actually $26,055, and on that basis, TCIF objects to the Debtors’ proposed Chapter 13 plan. In
turn, the Debtors object to TCIF’s filed proof of claim “insofar as the amount of arrearage claimed,”
and they request a full accounting of their payment history together with any fees charged to their
mortgage account. TCIF requests that the Debtors’ objection to its proof of claim be overruled on
the basis that the Debtors failed to provide evidence sufficient to overcome the Fed. R. Bankr. P.
3001{f) prima facie presumption as to the validity and amount of its proof of claim.

Pursuant to 11 U.S.C. § 501, a creditor may file a proof of claim in a bankruptcy case. As
stated in § 502(a), “[a] claim or interest, proof of which is filed under § 501 of this title, is deemed
allowed, unless a party in interest... objects.” To execute a proof of claim, Fed. R. Bankr. P.
3001 (a) directs that the proof of claim be “a written statement setting forth a creditor's claim,” and
that it “shall conform substantially to the appropriate Official Form.” When a claim is executed and
filed in accordance with the Bankruptcy Rules, then Rule 3001(f) provides that the proof of claim
“shall constitute prima facie evidence of the validity and amount of the claim.” When the Rule

3001(f presumption arises, the Bankruptcy Code establishes a burden shifting framework for the

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allowance or disallowance of that claim:

The creditor's filing of a proof of claim constitutes prima facie evidence of the

amount and validity of the claim. The burden then shifts to the debtor to object to the

claim. The debtor must introduce evidence to rebut the claim's presumptive validity.

If the debtor carries its burden, the creditor has the ultimate burden of proving the

amount and validity of the claim by a preponderance of the evidence.

Stancill v. Harford Sands Inc. (In re Harford Sands Inc.), 372 F.3d 637, 640 (4" Cir 2004). See also
11 U.S.C. § 502(b) (providing nine grounds on which to disallow a proof of claim), Travelers Cas.
& Sur. Co. of Am. v. PG&E, 549 U.S. 443 (2007) (“[The court ‘shall allow’ the claim “except to the
extent that’ the claim implicates any of the nine exceptions enumerated in § 502(b).”).

The strength of a proof of claim’s presumption as to validity and amount is described as
“some evidence,’” and as “‘strong enough to carry over a mere formal objection without more.”
Wright vy. Holm (In re Holm), 931 F.2d 620, 623 (9"" Cir. 1991) (citation omitted). The party
objecting to the proof of claim has the burden of going forward to “*meet, overcome, or, at
minimum, equalize the valid claim.’” FDIC v. Union Entities (Inre Be-Mac Transport Co.), 83 F.3d
1020, 1025 (8" Cir. 1996) (citation omitted). The amount of evidence necessary to overcome the
objection “must be sufficient to demonstrate a true dispute and must have probative force equal to
the contents of the claim.” 9 Collier on Bankruptcy § 3001.9[2] (Alan N. Resnick & Henry J.
Sommer, eds. 15" ed. rev. 2008). Although the Court of Appeals for the Fourth Circuit “has not
previously addressed how the bankruptcy rules allocate the burden of proof for purposes of
establishing the amount and validity of a claim... . [its] reading of the bankruptcy tules... is in
accord with [its] sister circuits that have addressed the issue.” Stancil!, 372 F.3d at 640 n.2 (citing.
inter alia, In re Hemingway Transp., 993 F.2d 915, 925 (1* Cir. 1993) (“The interposition of an
objection does not deprive the proof of claim of presumptive validity unless the objection is
supported by substantial evidence.”); In re Allegheny Int'l, Inc., 954 F.2d 167, 173-74 (3d Cir. 1992)
(“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.”)).

In this case, the Debtors do not dispute that TCIF’s proof of claim is entitled to the Fed. R.

Bankr, P. 3001(f) presumption as to its claim’s validity and amount. Therefore, the Debtors’

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objection must be more than merely formal, and they must come forward with — at a minimum —
enough evidence to equalize TCIF’s valid claim. Considering that TCIF’s proof of claim only
attaches a summary of its belief as to the amount of the Debtors’ arrearage.' the threshold
requirement for equalizing the contents of its proof of claim is low.

If the court were to view the Debtor’s objection to TCIF’s proof of claim in isolation, the
Debtors may not have met even this low threshold needed to equalize TCIF’s proof of claim. In fact.
it is questionable whether the Debtor’s objection asserts any basis for disallowing TCIF’s claim:

NOW COMES DEBTORS... and object to claim #1 filed by creditor TCIF

_. insofar as to the amount of arrearage claimed. Debtors request a full accounting

of the payment history to said creditor, as well as any fees charged to this account.
(Document No. 40).

No assertion exists in the objection that the Debtors do not owe the arrearage, and the court
is left to guess exactly what the Debtors’ objection might be, and how that objection may result in
disallowance of the claim under the standards of 11 U.S.C. § 502(b). See, e.g., Jn re Simms, No. 06-
1206, 2007 Bankr. LEXIS 4134 at *7 (Bankr, N.D.W. Va. Dec. 17, 2007) (refusing to disallow a

proof of claim when the objection did not state a grounds for disallowance based on § 502(b)).

‘In support of TCIF’s $26,055 arrearage claim, it attached to its proof of claim a copy of
its deed of trust, and the promissory note executed by the Debtors. In addition, TCIF attached a
summary sheet of the arrearage:

Nineteen (19) payment(s) @ $924.71 = $17,569.67
(09/06 through 03/08)

Accrued Late Charges = 832.14
Property Inspection Fees = 124.10
Corporate Advance(s) = 180.00
Expense Advance(s) = 2,095.50
Escrow Shortage = 5,253.72
Total = $26,055.13

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Based on the circumstances of this case. however, the court is not viewing the Debtors’
objection to TCIF’s filed proof of claim in isolation. Importantly, the Debtors’ objection to TCIF’s
proof of claim is closely linked to TCIF’s objection to the Debtors’ proposed Chapter 13 plan. In
their plan, the Debtors have sworn under penalty of perjury that they believe the amount of the
arrearage owed to TCIF is only $6,084. Viewed in the context of the whole case, the Debtors’ exact
objection is clear. They believe that TCIF has overstated their arrearage by $19,971, and they are
requesting the court disallow TCIF’s proof of claim to that extent. Accordingly, under § 502(b)(1).
the Debtors have alleged that TCIF’s arrearage claim is unenforceable against them to the extent of
$19,971, and they have therefore raised a legitimate objection to TCIF’s proof of claim.

Regarding the quantum and quality of proof needed to — at a minium — equalize the Fed. R.
Bankr. P. 3001(f) presumption afforded to TCIF’s proof of claim, the Debtors have met their burden.
In its proof of claim TCIF asserted, in a summary fashion, that the Debtors have a pre-petition
arrearage of $26,055. To counter this proof, the Debtors have asserted, also in a summary fashion,
that they only owe a pre-petition arrearage of $6,084. Under the circumstances of this case, the
Debtors’ objection demonstrates a true dispute and it has a probative force equal to the contents of
TCIF’s proof of claim.

Therefore, the court will overrule TCIF’s motion to dismiss the Debtors’ objection to its filed

proof of claim. A separate order will be entered pursuant to Fed. R. Bankr. P. 9021.

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