Joseph William Fish

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1 ORDERED PUBLISHED AUG 03 2011
2 SUSAN M SPRAUL, CLERK
U.S. BKCY. APP. PANEL
OF THE NINTH CIRCUIT
3 UNITED STATES BANKRUPTCY APPELLATE PANEL
4 OF THE NINTH CIRCUIT
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In re: BAP No. CC-11-1059-BPaMk
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JOSEPH WILLIAM FISH, JR. Bk. No. LA 10-34705 Va
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Debtor,
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9] PACIFIC RESOURCE CREDIT UNION,

10 Appellant,
OPINION
l1liv.

12 |} JOSEPH WILLIAM FISH, JR.;}
NANCY K. CURRY, Chapter 13
13 || Trustee’,

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14 Appellees.
15

Argued and submitted on July 21, 2011
16 at Pasadena, California
1? Filed - August 3, 20911
18 Appeal from the United States Bankruptcy Court

for the Central District of California
19

Honorable Vincent P. Zurzolo, Bankruptcy Judge, Presiding
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21 || Appearances: A. Lysa Simon argued for appellant Pacific
Resource Credit Union. Thomas B. Ure, III, argued
22 for appellee Joseph William Fish, Ur.
23
Before: BRANDT’, PAPPAS, and MARKELL, Bankruptcy Judges.
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25
26 ;
+ The trustee neither briefed nor argued in this appeal.
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2 Hon. Philip H. Brandt, Bankruptcy Judge for the Western

28] District of Washington, sitting by designation.

AUTHENTICATE
US. GOVERNMENT
INFORMATION

GPO

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BRANDT, Bankruptcy Judge:

The bankruptcy court sustained Debtor’s objection to
appellant’s proof of claim as untimely filed, rejecting
appellant’s argument that its filings with the court prior to the
deadline were an informal proof of claim.

We REVERSE, and publish te highlight the continuing
viability of the informal proof of claim doctrine in the Ninth

Circuit.

I. FACTS

Debtor Joseph William Fish, Jr. filed a chapter 13°
bankruptcy petition on 17 June 2010. The claims bar date was set
for 1 November 2010.

Debter had three loans from Pacific Resource Credit Union
(“PRCU”), secured by a 2007 Chevrolet Silverado, 2005 Carrera
boat and trailer, and a 1994 GMC truck. His schedules indicated
an intent to surrender the GMC truck and the boat and trailer.
The chapter 13 plan provided for payments on the Silverado but
not on the other collateral.

On 20 July 2010 PRCU filed two motions for relief from stay.

One motion was filed for the two (cross-collateralized) loans

secured by the GMC truck and the boat and trailer. The form

motion indicated a “total claim as of 7/19/10" of $14,112.80 for

3Unless otherwise indicated, all code, chapter, and section
references are to the Bankruptcy Code, 11 U.S.c. §§ 101-1330.
“Rule” references are to the Federal Rules of Bankruptcy
Procedure.

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the GMC truck loan, and $76,207.57 for the boat and trailer loan.
The motion included a description of the loans, including
interest rates, and attached copies of the loan agreements and
titles to the collateral. The memorandum in support of the
motion included the following language: “The Credit Union is
entitled to relief from the automatic stay and to file a proof of
claim for the deficiency, once the vehicles are recovered and
liquidated.”

The other motion for relief from stay on the loan secured by
the 2007 Silverado indicated a “total claim as of 7/19/10" of
$34,468.99 and also included details of the loan and
documentation. The memorandum contained identical language
regarding PRCU’s entitlement to file a proof of claim for the
deficiency.

The bankruptcy court granted both motions by orders entered
6 August 2010 and 12 August 2010. PRCU proceeded to pursue its
state law remedies, repossessing its collateral and beginning the
process of liquidating it.

On 22 July 2010 PRCU filed an cbjection to confirmation of
Debtor’s chapter 13 plan, again providing details of ali three
loans, including the amounts due. The section of the objection
entitled “Standing” contained the following language:

The Debtor’s Schedule D indicates that each of the

three (3) loans is undersecured. According to the

Debtor’s Schedule “D,” the three (3) loans are

undersecured in excess of the sum of $55,000. The

Credit Union is an unsecured creditor for the amounts

owed in excess of the liquidated value of the

collateral.

On 28 October 2010 PRCU filed a supplemental objection to

confirmation based on Debtor’s lack of cooperation in the

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discovery process. Paragraph 31 of that supplemental objection
reads in part: “The Debtor’s Plan provides for virtually no
payments to the unsecured creditors, in which class the Credit
Union is a member.”

PRCU also participated in the case by filing a request for
disclosure of Debtor’s federal income tax returns and annual
statement of income and expenditures. PRCU thereafter deposed
Debtor and requested production of documents, which were not
provided; on 22 October 2010 PRCU moved to compel production. On
4 October 2010 PRCU moved to extend the deadline for filing a
complaint to determine nondischargeability.

On 10 November 2010, ten days after the deadline for filing

proofs of claim set cut in the notice of the bankruptcy case, as
required by Rule 3003{c)(3)4, PRCU filed a formal “amended” proof
of claim for $85,701.11, indicating that the document was
intended to amend its informal proof of claim consisting of the
motions for relief from stay and objections te Debtor’s plan.
PRCU attached a memorandum of points and authorities explaining
why those decuments qualified as informal proofs of claim, The
memorandum alse indicated that all three items of collateral had
either been liquidated ocr were in the process of being
liquidated, and that the amended ciaim was for the deficiency

balances on each loan.

4 Which provides in pertinent part:

{3) Time for filing.
The court shall fix and for cause shown may extend the

time within which proofs of claim or interest may be
filed.

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Debter filed an cbjection to claim under Rule 3007,
objecting to PRCU’s claim as late-filed. PRCU responded that its
prior filings were an informal proof of claim which its formal
claim was amending. After a hearing, the bankruptcy court
sustained Debtor’s objection, ruling without further findings or
elaboration:

It’s the burden on [PRCU] to establish that these

informal proofs of claim gave adequate notice to the

moving party of the existence of the claim and the

amount of the claim so they could adequately take inte

account that a claim indeed is being asserted. That

burden hasn't been carried.

Transcript, 10 January 2011, page 5, lines 8-13.

PRCU timely appealed.

II. JURISDICTION
The bankruptcy court had jurisdiction via 28 U.S.C. $ 1334
and $ 157 (b) (1) and (b) (2) (B), and we do under 28 U.S.C.

§ 158(c).

Which provides:
(a) Objections to Claims

An objection to the allowance of a claim shall be in
writing and filed. A copy of the objection with notice
of the hearing thereon shall be mailed or otherwise
delivered to the claimant, the debtor or debtor in
possession, and the trustee at least 30 days prior to
the hearing.

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III. ISSUE
Whether the bankruptcy erred in ruling that PRCU had not
established that its filings prior to the claims deadline

constituted an informal proof of claim.

IV. STANDARD OF REVIEW
Debtor argues for an abuse of discretion standard, which is
correct for rulings on allowing amendments to proofs of claim

generally. In re Sambo’s Restaurants, Inc., 754 F.2d 811i, 816-1?

(9th Cir. 1985); In re JSJF Corp., 344 B.R. 94, 99 (Sth Cir. BAP

2006), aff'd and remanded, 277 Fed. App’x 718 (9th Cir. 2008).

But the discrete issue of whether the documents a creditor filed,
considered in conjunction with the creditor’s conduct, constitute
an amendable informal proof of claim is an issue of law which we

review de novo. In re Pizza of Hawaii, Inc., 761 F.2d 1374, 1377

(9th Cir. 1985} (citing Sambo’s Restaurants, 754 F.2d at 815).

Vv. DISCUSSION
The Ninth Circuit has long recognized the informal proof of

claim doctrine, In re Edelman, 237 B.R. 146, 154 (9th Cir. BAP

1999), consistently applying “the so-called rule of liberality in
amendments to creditors’ proofs of claim so that the formal claim
relates back to a previously filed informal claim.” In re Holm,

931 F.2d 620, 622 (9th Cir. 1991) (quoting In re Anderson-Walker

Indus., Inc., 798 F.2d 1285, 1287 (9th Cir. 1986) (internal

quotation marks omitted); In re Franciscan Vineyards, Inc., 597

F.2d i81, 182 (9th Cir. 1979) (per curiam)}). This is consistent

with the Circuit’s broader rule on amendments to proofs of claim:

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In the absence of prejudice to an opposing party, the
bankruptcy courts, as courts of equity, should freely
allow amendments to proofs of claim that relate back to
the filing date of the informal claim when the purpose
is to cure a defect in the claim as filed cr to
describe the claim with greater particularity.

Sambo’s Restaurants, 754 F.2d at 816-17 (citation omitted).

Under the doctrine, a timely informal proof of claim may be
amended after the bar date by the filing of a formal proof of
claim. Edelman, 237 B.R. at 154. “For a document to constitute
an informal proof of claim, it must state an explicit demand
showing the nature and amount of the claim against the estate,
and evidence an intent to hold the debtor liable.” Holm, 931
F.2d at 622 (citation omitted). We have articulated the
requirements:

(1) presentment of a writing;

(2) within the time for the filing of claims;

(3) by or on behalf of the creditor;

(4) bringing to the attention of the court;

(5) the nature and amount of a claim asserted against the

estate.

Edelman, 237 B.R. at 155,

Various documents have been held to be informal proofs of
claim, including a disclosure statement, Holm, 931 F.2d at 622-
23; a complaint for relief from the automatic stay with

attachments, Pizza of Hawaii, 761 F.2d at 1381-82; a district

court complaint combined with the creditor’s correspondence with
debtor’s counsel, and her joint motion with the debtor to

transfer the case to the bankruptcy court, Sambo’s Restaurants,

754 F.2d at 815-16; and a letter to the bankruptcy trustee, even

Desc

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though it had not been filed with the bankruptcy court.

Franciscan Vineyards, 597 F.2d at 182-83.

In all these cases the courts focused not on the type of
decument, but on its contents and the creditor’s conduct. For

example, in Holm, the disclosure statement (1) was filed with the

court, (2} made an explicit demand against the estate and
indicated the creditor intended to hold the debtor liable for the
debt, and (3) stated that the nature of the claim was a state
court judgment in the amount of $232,960. The Ninth Circuit held
this sufficient for an informal proof of claim. Holm, 931 F.2d
at 623.

In Pizza of Hawaii, the complaint for relief from stay

stated the creditor's desire to join the debtor as a defendant in
the civil case, which the court held evidenced intent to hold the
estate liable. The exhibits attached to the complaint detailed
the nature and contingent amount of the claim. Further, the
Circuit held that the complaint satisfied the requirements for an
informal proof of claim even though it did not quantify all of
the amounts sought, because the nature of the claims were such
that damages could not be fully ascertained without extensive
evidence. 761 F.2d at 1381. The court also noted that the
creditor’s objections to debtor’s disclosure statement and plan
evidenced the intent to hold debtor liable. Id. at 1381 n.12.

Here, PRCU filed written motions for relief from stay
clearly setting forth the amounts due on each loan and PRCU's
intent to hold the Debtor liable for the deficiencies. They were
Filed before the deadline, described the nature of the

obligations and attached the loan documentation and vehicle

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titles, and stated the total amounts of the claims. The
documents contained the essential elements: writing(s) filed by
the creditor before the claims deadline with explicit demands,
showing the nature and amount of the claims against the estate,
and evidencing the intent to hold Debtor liable. Holm, 931 F.2d
at 622. Further, PRCU noted in its cbjection to confirmation,
also filed before the claims deadline, that according to the
Debtor’s schedules there was a deficiency of $55,000, rendering
it an unsecured creditor. PRCU also stated in the objection that
it considered itself a member of the class of unsecured
creditors.

Although PRCU’s filings did not state the ultimate amount of

the unsecured claim, here, as in Pizza of Hawaii, that amount

could not be determined before the deadline for filing proofs of
claim. The bankruptcy court erred in ruling that the documents
were inadequate to put Debtor on notice of PRCU’s unsecured
claim, and it is not clear from the record whether the bankruptcy
court considered PRCU’s conduct.

Debtor misses the point in arguing that @ bankruptcy court
has no discretion to allow a late filed claim, citing In re

Osborne, 76 F.3d 306 (9th Cir. 1996) and In re Tomlan, 102 B.R.

790 (E.D. Wash. 1989), aff’d per curiam, 907 F.2d 114 (9th Cir.

1990). PRCU does not contend otherwise; rather the issue here is
whether its filings and conduct before the bar date sufficed as
an informal proof of claim. Debtor also argues that PRCU slept
on its rights by not filing a formal claim prior to the bar date.
To the contrary, PRCU’s active participation in the case and its

multiple filings evidence vigorous assertion of its rights, not

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disregard of them or procrastination. In virtually all the cases
where documents were found to be informal proofs of claim, the
creditors had notice of the proceedings and, as here, actively
participated but failed to file formal proofs of claim before the
bar dates. That occurred here, and neither the bankruptcy
court’s conclusory ruling nor Debtor’s briefs specify in what
respect PRCU’s filings and conduct fell short.

Debtor also argues that other creditors were prejudiced by
PRCU’s delay. Debtor’s counsel filed a declaration with the
objection to claim in which he stated that he had filed a second
amended plan proposing 100% payment of all claims filed by the
deadline, and that PRCU’s proof of claim filed twe days later
rendered the plan infeasible, delaying proposed payments to
creditors that timely filed claims. Notably, Debtor did not

allege any prejudice to an “opposing party.” See Sambo’s

Restaurants, 754 F.2d at 816-17. The bankruptcy court made no

finding on this issue, and Debtor’s standing to raise such an
argument is suspect (although the Debtor does have standing to
bring this appeal: his counsel represented at argument, without
contradiction, that his projected disposable income over the life
of the plan exceeds the total of the other claims). The
assertion that other creditors were prejudiced is speculative,
and Debtor has not pointed to any evidence in the record showing
that he was prejudiced: “{[P]rejudice requires more than simply
having to litigate the merits of, or to pay, a claim - there must
be some legal detriment to the party opposing.” JS5dF, 344 B.R.
at 102.

Beyond bare assertion in his brief that the bankruptcy court

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.

did not abuse its discretion in finding PRCU had not established
an informal proof of claim, Debtor simply does not address the
legal standard. He does not even cite, much less distinguish,

Franciscan Vineyards, Sambo’s Restaurants, Pizza of Hawaii, or

Edelman. He does not identify any missing information or

articulate how the circumstances would differ had PRCU filed
timely (and amendable) formal proofs of claim before realization
on its collateral.

Nor does Debtor make any pertinent argument except that
neither he nor other creditors could determine the total claims,
and thus the amount necessary for full payment, or percentage of
claims to be paid. The latter is a policy argument - that one
should be able to determine the universe of claims by checking
the claims register (separate from, but linked to, the docket)
the day after the claims deadline. That contention would have
more force if made by an unsecured creditor. Here, Debtor had
ample and timely notice of PRCU’s unsecured claim, as did the
trustee (which may explain her not participating in this appeal).
In any event, it is not our prerogative to disregard controlling
Circuit authority on the basis of a policy argument.

We hold as a matter of law that PRCU’s filings and conduct

met the requirements for informal proofs of claim.

VI. CONCLUSION
The bankruptcy court erred in its ruling that the documents
filed by PRCU and its conduct did not rise to the level of an

informal proof of claim. As this is an issue of law, we REVERSE.

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