Summary
overruling objection to claim based on debtor's alleged preference action against creditor because preference had not been adjudicated
Summary of this case from In re Orion Refining Corp.Opinion
99-108 (MFW) through 99-127 (MFW) (Jointly Administered Under Case No. 99-108 (MFW))
November 22, 2000.
OPINION
While not written in prose, Our holding's still true. This opinion is a conclusion of law Under Rule seventy-fifty-two.
'Twas the month before Christmas and inside the Court, Debtors filed an omnibus objection which appears to purport
That we should disallow certain claims under 502(d), because pre-petition those creditors received preferred money.
The Debtors' objection included Exhibits F and G, which seek to deny claims in whole, or partially.
In Court, we originally stated that we did not agree that a preference action should be granted under 502(d).
Without complaint filed, Debtors wish to proceed to deny creditor claims, despite Rules they must heed.
Though their motion was noticed, and received no reply, in Court, we told Debtors' counsel this motion we would deny.
Despite our stance from the bench that denied such relief, we permitted Debtors' counsel to file their brief.
In their memorandum, Debtors now urge us to grant their omnibus motion to which they've received no dissent.
Adversaries are unneeded do these Debtors say; disallowance of claims are permitted a different way.
The Debtors have supplied us with five case references, in which courts have denied claims based on alleged preferences.
See America's Shopping Channel, Inc., 110 B.R. 5 (Bankr. S. D. Cal. 1990); In re Stoecker, 143 B.R. 118 (Bankr. N. D. Ill. 1992); In re Eye Contact, Inc., 97 B.R. 990 (Bankr. W. D. Wisc. 1989); In re Larson, 80 B.R. 784 (Bankr. E. D. Va. 1987); Churchill Nut Co., 251 B.R. 143 (Bankr. N. D. Cal. 2000).
After reviewing those cases, we make the following finding: those Courts' opinions, while grand, upon us, are not binding.
Instead, we agree with a Florida decision penned by the wise Judge Paskay which, in our opinion, points out the right way.
See Woolley's Parkway Ctr., Inc., 147 B.R. 996 (Bankr. M. D. Fla. 1992).
In Woolley's, a creditor tried to disallow other creditor votes by setting off "possible" preferences, so the Court wrote.
Id. at 999.
The Court denied the objection because it was insufficient; relying on such a "possibly" rendered it fatally deficient.
Id. at 999-1000.
Section 502(d) permits disallowing a claim from whom money is due, but to determine the creditors' liability the Debtors must first sue.
Before we may pronounce that a claimant is liable, Debtors must commence an adversary complaint which is triable.
As always, we are mindful that statutory construction is not pliable. Therefore, there must be a judgment to find these creditors "liable."
See United States v. Ron Pair Enterprises, Inc., 489 U.S. 235, 240 (1989)(" The task of resolving the dispute over the meaning of [a statute] begins where all such inquiries must begin: with the language of the statute itself."); Connecticut Nat'l Bank v. Germain, 503 U.S. 249, 253-54(1992)(" In interpreting a statute a court should always turn first to one cardinal canon before all others. . . . Courts must presume that a legislature says in a statute what it means and means in a statute what it says there").
See Creditors of Melon Produce, Inc. v. Braunstein, 112 F.3d 1232, 1327 (1st Cir. 1997)(" the key phrase in this inquiry is 'the amount . . . for which such entity or transferee is liable'").
After doing some research, we found other such cases, which made similar findings in far away places.
See Campbell v. United States (In re Davis), 889 F.2d 658, 662 (5th Cir. 1989) (Section 502(d) "is designed to be triggered after a creditor has been afforded reasonable time in which to turn over amounts adjudicated to belong to the bankruptcy estate"); In re Mountaineer Coal Co., Inc., 247 B.R. 633, 641 (Bankr. W. D. Va. 2000)("[Section 502(d)] would not appear applicable unless and until a finding under one of the cited sections had been made and then the claimant had failed to comply with such ruling").
If interests in property Debtors wish to dissect, they must proceed by Rule 7001 et seq.
See Committee of Unsecured Creditors v. Interfirst Bank Dallas, N. A. (Wood and Locker Inc.), 868 F.2d 139, 142 (where Debtor and Committee sought to recover a preference through a claim objection under 502(d), Court held the Debtor and Committee "were compelled by Rule 7001 to file an adversary proceeding to which Part VII of the Bankruptcy Rules applies.")
The Debtors assert 502(d) is such a tool, but we disagree — it would unwrite the Rule.
For the preceding reasons we deny Debtor's presumption, although we would permit the objections upon the resumption
Where a creditor has filed a properly filed and supported proof of claim, it is deemed prima facie valid, and the burden is on the Debtor to "produce evidence which, if believed, would refute at least one of the allegations that is essential to the claim's legal sufficiency." In re Allegheny Int'l, Inc., 954 F.2d 167, 173-74 (3d Cir. 1992).
By filing complaints to recover those amounts which then disallow claims, minus avoided discounts.
There is no problem in law, fact, or procedurally with Debtor's Omnibus objection, save Exhibits F and G.
On November 7, 2000, we entered an Order which granted Debtors' omnibus objection, except as it related to offsetting claims against avoidable, but not yet avoided, transfers.
Though Debtors received no objection, no one hemmed, hawed, or cried, the Code and Rules mandate — Debtors' MOTION DENIED.
O R D E R
AND NOW, this 22ND day of NOVEMBER, 2000, upon consideration of the Debtors' Fifth Omnibus Objection to Claims, and consistent with this Court's November 7, 2000, Order, for the reasons set forth in the accompanying Opinion, it is hereby
ORDERED that the Debtors' request to setoff prepetition section 502(d) claims, is DENIED.