Claims

1.   Definition
2.   502(b)(2)
3    502(b)(6)
4.   502(b)(7)
5.   502(c)–Estimation
6.   502(d)
7.   502(e)(1)(b)
8.   502(h)
9.   502(j)
10. Claims Assignment and Trading
11. Contingent claims--definition
12. Effect of proof of claim; burden of proof; requirements for valid proof of claim; procedure
13. Environmental Claims
14. Informal  and amended proofs of claim; reconsideration of claims
15. Tardily-filed claims; excusable neglect
16. Miscellaneous


1. Definition

In re ZiLOG, Inc., 450 F.3d 996 (9th Cir. 2006)
    1.) Federal law determines when a claim arises under the bankruptcy code; 2.) as is true of environmental claims, sex discrimination claims arise under the bankruptcy code once it is within the “fair contemplation” of the claimant; 3.) summary judgment in favor of the debtor holding that claimants’ postconfirmation claims were not timely filed reversed; bankruptcy abused discretion in not finding excusable neglect for not timely filing prepetition claims.

In re Guastella, 341 B.R. 908 (9th Cir. BAP 2006)
    Creditor had a claim, even though a state court had only made a tentative decision on the lawsuit creditor had against the debtor as of the date of the filing of the petition.
   
In re Cossu, 410 F.3d 591 (9th Cir. 2005)
    Insurance company had a right to payment under indemnity agreement with the debtor for losses sustained as a result of sales of unregistered securities for another company which was not disclosed to company, and may have had such a right  as to lawsuits arising out of these sales.

2. 502(b)(2)

Thrifty Oil Co. v. Bank of America National Trust and Savings Assoc., 322 F.3d 1039 (9th Cir. 2003)
    Termination damages under an interest swap agreement, entered into between a lender and a borrower as part of a larger financing transaction, may not constitute unmatured interest disallowed under § 502(b)(2) of the Bankruptcy Code.

In re Holm, 931 F.2d 620 (9th Cir. 1991)
    Future profits were not unmatured interest excludable from creditor’s claim.  Informal proof of claim standards.

3. 502(b)(6)

In re El Toro Materials Co., Inc., 504 F.3d  978 (9th Cir. 2007), cert denied, 128 S.Ct. 1875 (2008)   
    The cap on damages from termination of a lease of real property does not cap collateral damage to the property.

In re JSJF Corp., 344 B.R. 94 (9th Cir. BAP 2006), aff’d, 277 Fed.Appx. 718 (9th Cir. 2008)
    Section 502(b)(6) only applies to damages from the termination of a lease. A lessor may have an un-capped claim for something other than such damages.

In re AB Liquidating Corp., 416 F.3d 961 (9th Cir. 2005)
    Security deposit on lease should be applied to the capped damages, rather than the gross claim.

In re Mayan Networks Corp., 306 B.R. 295 (9th Cir. B.A.P. 2004)
    A draw upon a letter of credit given as security for a lease will be applied in partial satisfaction of the allowed claim under § 502(b)(6).

In re Arden, 176 F.3d 1226 (9th Cir. 1999)
    §506(b)(6) cap is applicable to lessor’s claim against debtor guarantor.

In re Lomax, 194 B.R. 862 (9th Cir. B.A.P. 1996)
    Mid-Wilshire’s election to terminate the lease as abandoned was an acceptance of the debtor’s offer of surrender, restoring possession of the premises to the lessor, an triggering the limitations of damages to one year and unpaid rent to two months under § 502(b)(6).  The state court’s ruling did not preclude the bankruptcy court’s hearing of these issues.

In re First Alliance Corp., 140 B.R. 531 (9th Cir. B.A.P. 1992)
    § 502(b)(6) - Postpetition rents do not qualify as credits against one year period.  Case seems to hold that one year period runs from the date of rejection.

4. 502(b)(7)

In re Condor Systems, Inc. 296 B.R. 5 (9th Cir. B.A.P. 2003)
    The § 507(b)(7) cap on allowable claims of terminated employees is calculated mechanically as of the date of the filing of the petition and prepetition severance payments and pre-and postpetition draws on letters of credit may affect the amount of the claim but not the § 502(b)(7) cap.

In re Networks Electronics Corp., 195 B.R. 92 (9th Cir. B.A.P. 1996)
    1. 502(b)(7) applies to both executory and nonexecutory contracts.  Here, court finds executory contract even though employee retired nine years prior to bankruptcy
    2. 502(b)(7) limits damages regardless of when termination occurs.

5. 502(c)--Estimation

In re Aquaslide ‘N’ Dive Corp., 85 B.R. 545 (9th Cir. B.A.P. 1987)
      Bankruptcy court had right and duty to estimate personal injury claim brought against debtor.

6. 502(d)

In re MicroAge, Inc., 291 B.R. 503 (9th Cir. B.A.P. 2002)
    § 502(d) may be used to bar payment of administrative claims (such as the reclamation claim in this case), but not after the administrative claim has been allowed.

In re America West Airlines, Inc., 217 F.3d 1161 (9th Cir. 2000)
    When a city fails to relinquish an avoidable tax lien, § 502(d) acts to disallow its claim, even if an avoiding action would have been barred by the § 546 statute of limitations.

In re KF Dairies, Inc., 143 B.R. 734 (9th Cir. B.A.P. 1992)
    Time-bar statute inapplicable to defensive objections to avoidable transfers.  § 546 does not prevent use of § 502(d) as a defense to claims, even where transfer has not been avoided.


7. 502(e)(1)(B).

In re Dant & Russell, Inc., 853 F.2d 700 (9th Cir. 1988)

8. 502(h)

In re Laizure, 349 B.R. 204 (9th Cir. BAP 2006)
    Embezzlement claim that was paid off prior to bankruptcy was not revived once claimant paid trustee for preference recovery, and thus claimant had no § 523(a)(4) cause of action against debtor.   § 502(h) gives a creditor a claim against the estate only, not the debtor.

9. 502(j)--Reconsideration

In re Wylie, 349 B.R. 204 (9th Cir. BAP 2006)
    Failure to respond to objection to its claim,and failure to establish an excuse for this failure, justified denial of the claim other than on the merits.  Once ten days has passed, claimant’s right to seek reconsideration under § 502(j) is gone.  He is left to seek reconsideration under Rule 60(b), but is limited to the narrow grounds set forth in the rule.  Claimant did not establish prerequisites for relief under Rule 60(b)(1), (b)(3), or (b)(6).

In re Cleanmaster Industries, Inc., 106 B.R. 628 (9th Cir. B.A.P. 1989)
    § 502(j).  Motion to reconsider is same as Fed.R.Bankr.P. 9024/FRCP 60(b) motion, where appeal time has run.

In re James E. O’Connell Co., Inc., 893 F.2d 1072 (9th Cir. 1990)
    § 506(j).  Recovery of expenses from Trustee - Burden of Proof.

In re Levoy, 182 B.R. 827 (9th Cir. B.A.P. 1995)
    Motion to reconsider denial of a claim under Fed.R.Bankr.P. 3008 is timely, even though filed over one year after default.

10. Claims Assignment and Trading

In re Burnett, 306 B.R. 313 (9th Cir. B.A.P. 2004), aff’d on other grounds, 435 F.3d 971 (9th Cir. 2006)
    “We hold that in the bankruptcy case of an individual consumer debtor, the transferee’s refusal to disclose its purchase price for acquiring an account does not warrant disallowance of an otherwise valid claim.”

In re Beugen, 99 B.R. 961 (9th Cir. B.A.P. 1989), aff’d, 930 F.2d 27 (9th Cir. 1991)
    Claims may not be purchased for an improper purpose.

11. Contingent claims--definition

In re Seko Investment, Inc., 156 F.3d 1005 (9th Cir. 1998), cert. denied, 526 U.S. 1066 (1999)
    Claims are contingent as to liability when the debtor’s duty to pay arises only upon the occurrence of a future event that was contemplated by the parties at the time of the contract’s execution. See In re Sims, 994 F.2d at 220, cert. denied, 510 U.S. 1049 (1994) (citing In re All Media Properties, Inc., 5 B.R. 126, 132 (Bankr. S.D. Tex. 1980), aff’d, 646 F.2d 193 (5th Cir. 1981)).

12. Effect of proof of claim; burden of proof; requirements for valid proof of claim; procedure

In re Garvida, 347 B.R. 697 (9th Cir. BAP 2006)
    Objection to proof of claim of secured creditor in chapter 13 case was correctly sustained, where creditor was given numerous opportunities to provide the debtor with an accounting of how their claim was calculated, but failed to do so, and the debtor provided evidence as to the correct amount of the claim.

In re Campbell, 336 B.R. 430 (9th Cir. BAP 2005)
    Interpreting In re Heath, infra, the BAP held that a chapter 13 debtor’s objections to claims which did not actually contest the debtor’s liability or the amount of the claims were properly overruled, even if the claims were not supported by documentation as required by Bankruptcy Rule 3001(c).

In re Heath, 331 B.R. 424 (9th Cir. BAP 2005)
    “When a creditor files a proof of claim, that claim is deemed allowed under sections 501 and 502(c).  A proof of claim that lacks the documentation required by Rule 3001(c) does not qualify for the evidentiary benefit of Rule 3001(f)–it is not prima facie evidence of the validity and amount of the claim–but that by itself is not a basis to disallow the claim.”  Claims here were credit card claims.

In re State Line Hotel, Inc., 323 B.R. 703 (9th Cir. BAP 2005), vacated and remanded as moot, 242 Fed.Appx. 460 (9th Cir. 2007)
    Service of an objection to a proof of claim is governed by Bankruptcy Rule 3007, not 7004.  Service of the objection on the person designated on the proof of claim as the notice recipient was sufficient.

In re Olshan, 356 F.3d 1078 (9th Cir. 2004)
            IRS (and presumably other claimants) is not required to fix the amount of its claim in its proof of claim.

In re Dynamic Brokers, Inc., 293 B.R. 489 (9th Cir. B.A.P. 2003)
    “Deemed allowed” claim may only be challenged over creditor’s opposition by filing a claim objection.

Lundell v. Anchor Const. Specialists, Inc., 223 F.3d 1035 (9th Cir. 2000)
    Debtor did not meet his production burden to rebut prima facie validity of proof of claim.

In re King Street Investments, Inc., 219 B.R. 848 (9th Cir. B.A.P. 1998)
    “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, the prima facie establish the claim.  Should objection be taken, the objector is then called upon to produce evidence and show facts tending to defeat the claim by probative force equal to that of the allegations of the proofs of claim themselves.”

In re Medina, 205 B.R. 216 (9th Cir. B.A.P. 1996)
    IRS entitled to rely on presumptive validity of filed proof of claim

In re MacFarlane, 83 F.3d 1041 (9th Cir. 1996), cert. denied, 117 S.Ct 1243 (1997)
    Taxing authority has ultimate burden of proving its claim in bankruptcy proceeding

In re Los Angeles International Airport Hotel Associates, 196 B.R. 134 (9th Cir. B.A.P. 1996), aff’d, 106 F.3d 1479 (9th Cir. 1997)
    Rule 3001(c) provides that “[w]hen 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.”  The failure to attach such a writing, when required, does not automatically invalidate, the claim; it does, however, deprive the claim of prima facie validity under Rule 3001(f).  In re Stoecker, 5 F.3d 1022, 1027-28 (7th Cir. 1993); Ashford v. Consolidated Pioneer Mortgage (In re Consolidated Pioneer Mortgage), 178 B.R. 222, 226-27 (9th Cir. B.A.P. 1995).

In re Consolidated Pioneer Mortgage, 178 B.R. 222 (9th Cir. B.A.P. 1995), aff’d. 91 F.3d 151 (9th Cir. 1996)
    1.  Objecting party must produce evidence tending to defeat the claim that is of a probative force equal to that of the creditor’s proof of claim.
    2.  Failure to attach writings to claim is not basis for denying it.  Merely gives claim no prima facie validity.

In re Lowenschuss, 67 F.3d 1394 (9th Cir. 1995),   cert. Denied by Lowenschuss v. Resorts Intern., Inc., 517 U.S. 1243 , 116 S.Ct. 2497 (U.S. 1996)
    Error not to allow conditional withdrawal of claim.

13. Environmental Claims

In re Jensen, 995 F.2d 925 (9th Cir.1993)
    Origination for state agency’s clean up of hazardous waste claim based on debtors’ conduct rather than time of payment.

14. Informal  and amended proofs of claim; reconsideration of claims

In re JSJF Corp., 344 B.R. 94 (9th Cir. BAP 2006), aff’d and remanded, 277 Fed.Appx. 718 (9th Cir. 2008)
    1) In considering an objection to an amended claim, the objecting party must  “show more than simply having to litigate the merits of, or to pay, a claim–there must be some legal detriment to the party opposing.”  2) Motion for reconsideration may not present new legal theories or arguments that could have been raised in the original claims proceedings.

In re Wheatfield Business Park, LLC, 308 B.R. 463 (9th Cir. B.A.P. 2004)
    Under Bankruptcy Rule 5005, creditor timely filed informal proof of claim by delivering claim documents to United States trustee.

Civic Center Square, Inc. v Ford (In re Roxford Foods, Inc.), 12 F.3d 875 (9th Cir. 1993)
    Trustee’s Right to Notice of Adversary Proceeding
    After Chapter 11 case converted to Chapter 7, plaintiff commenced an adversary proceeding against the trustee and two other creditors.  The trustee was served but did not respond.  Default judgment was entered against the trustee.  Thereafter, plaintiff moved for summary judgment but did not serve trustee based on prior entry of default.  Held, Trustee’s motion to vacate summary judgment was granted based on failure to serve trustee.  Trustee’s informal contacts with plaintiff in the main bankruptcy case, where the same disputes were at issue, demonstrated a clear purpose to defend the adversary proceeding and were deemed to be an “appearance” under Fed.R.Civ.P. 55(b)(2).

In re Holm, 931 F.2d 620 (9th Cir. 1991)
    Future profits were not unmatured interest excludable from creditor’s claim.  Informal proof of claim standards.

15. Tardily-filed claims; excusable neglect

In re ZiLOG, Inc., 450 F.3d 996 (9th Cir. 2006)
    1.) Federal law determines when a claim arises under the bankruptcy code; 2.) as is true of environmental claims, sex discrimination claims arise under the bankruptcy code once it is within the “fair contemplation” of the claimant; 3.) summary judgment in favor of the debtor holding that claimants’ postconfirmation claims were not timely filed reversed; bankruptcy abused discretion in not finding excusable neglect for not timely filing prepetition claims.

Pioneer Inv. Services Co. v Brunswick Assocs. Ltd Partnership, 507 U.S. 380(1993)
    4 part test to determine whether circumstances surrounding the party’s omission constitutes “excusable neglect” (weakens In re Hammer’s holding re “culpable conduct”):
1. Danger of prejudice to the debtor
2. The length of the delay and its potential impact on judicial proceedings
3. The reason for the delay, including whether it was within the reasonable control of the movant
4. Whether the movant acted in good faith.

In re Gardenhire, 209 F.3d 1145 (9th Cir. 2000)
    Statutory deadline for filing of IRS proof of claim was not equitably tolled, even though there was an improper dismissal of the case resulting from clerical error.

In re Osbourne, 76 F.3d 306 (9th Cir. 1996)
    Tardily filed claims in chapter 13 cases are to be disallowed not merely given lower priority.

United States v. Towers (In re Pacific Atlantic Trading Co.), 33 F.3d 1064 (9th Cir. 1994)
    The I.R.S. received timely notice of the bar date for filing claims in a Chapter 7 case but filed its § 507(a)(7) priority tax claim after the bar date.  Th court held that the claim retained its priority status even though it was filed after the bar date.  The court reasoned that subsection 726(a)(1), unlike subsections 726(a)(2) and (3), makes no distinction between timely and late claims, and that Congress intended priority claims to receive first distribution regardless of whether a proof of claim was filed timely or late. 

In re Coastal Alaska Lines, Inc., 920 F.2d 1428 (9th Cir. 1990)
    Relief denied to creditor who had knowledge of debtor’s bankruptcy but did not file claim.

16. Miscellaneous

In re Lopez, 372 B.R. 40 (9th Cir. BAP 2007)
    Both pre- and post-BAPCA, debtor is permitted to make direct payments on notes secured by deeds of trust on his residence directly to creditors, while simultaneously allowing him to pay his prepetition arrears on those notes via the trustee.

In re Ritter Ranch Development, L.L.C., 255 B.R. 760 (9th Cir. B.A.P. 2000)
    Community development bondholders  were not “creditors” of developer.

 In re Gerwer, 253 B.R. 66  (9th Cir. B.A.P. 2000)
    Estate distribution was an involuntary payment, thus prohibiting the debtor from directing that distribution be applied first to the nondischargeable portion of a debt.  Creditor had the right to apply payment from estate to the dischargeable portion of the debt.

In re Cogar, 210 B.R. 803 (9th Cir. B.A.P. 1997)
    Bank’s unexercised rights as senior lienholder of property owned by third party do not make bank creditor of bankruptcy estate of junior lienholder

In re Smith, 205 B.R. 226 (9th Cir. B.A.P. 1997)
    Debtor not entitled to jury trial in adversary proceeding to contest IRS tax claim

In re Irizarry, 171 B.R. 874 (9th Cir. B.A.P. 1994)
    Equitable remedies of cancellation of grant deed and liens and recovery of property are not claims subject to discharge.  State court litigation not barred by § 362 or 524.

Ratanasen v. State of California, Dept. of Health Services, 11 F.3d 1467 (9th Cir. 1993)
    State filed claim against debtor-doctor, alleging Medi-Cal over billing.  Claimant’s use of a random sample audit of 300 files to prove claims arising from 8,761 total actual files was held valid.  Each file did not have to be examined to prove amount of claim.  Court upholds as a matter of law the use of statistical sampling and extrapolation, in publicly-funded reimbursement programs.

In re Riverside-Linden Investment Co., 99 B.R. 439 (9th Cir. B.A.P. 1989), aff’d, 925 F.2d 320 (9th Cir. 1991)
    General partner’s partnership interest is not a claim.

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