Opinion
CIVIL ACTION NO. 02-CV-8888
March 15, 2004
MEMORANDUM ORDER
Appellant Angelina Steadman ("Appellant") appeals from the bankruptcy court's October 8, 2002 order overruling Appellant's objection to the amended proof of claim filed by Washington Mutual Bank, FA, successor in interest to Washington Home Loans, Inc., successor in interest by merger to Fleet Mortgage Corp. (collectively, "Washington Mutual"). In her appeal, Appellant argues that the bankruptcy court erred in finding that she failed to rebut the prime fade effect of Washington Mutual's amended proof of claim.
I. Factual Background and Procedural History
On August 26, 1977, the Debtor-in-Possession, Bruce E. Steadman ("Debtor"), and his wife, Appellant, Angelina Steadman (collectively, the "Steadmans"), executed a mortgage note in the principal sum of $28,000 for the property located at 120-122 West Washington Lane, Philadelphia, Pennsylvania 19144 (the "Property"). On June 8, 1990, Washington Mutual instituted an action in mortgage foreclosure against the Steadmans for their failure to make the required monthly payments of principal, interest and other collectible charges and, on May 10, 1991, a default judgment was entered against the Steadmans in the amount of $32,090.72.
On December 28, 2001, Debtor filed for bankruptcy protection under Chapter 13 of the Bankruptcy Code. This was the first time Debtor had filed for bankruptcy. Appellant, on the other hand, had filed six Chapter 13 bankruptcy petitions, all of which were dismissed. On January 30, 2002, Washington Mutual filed a proof of claim in the amount of $42,449.22. On February 11, 2002, Debtor filed an objection to that claim. In the interim, Washington Mutual filed a Motion to Dismiss Debtor's bankruptcy case on the basis of Appellant's serial filings.
Debtor and Washington Mutual subsequently settled their differences and entered into a stipulation — approved by the bankruptcy court on April 2, 2002 — whereby Washington Mutual agreed to reduce its proof of claim from $42.449.22 to $39,310.73 and Debtor agreed that should his bankruptcy case be dismissed for any reason, he and his wife would be barred from filling another bankruptcy petition for a period of 180 days. Pursuant to the stipulation, Debtor filed an amended Chapter 13 plan in which he agreed to pay Washington Mutual its claim of $39,310.73 in full. The bankruptcy court confirmed the amended plan on May 17, 2002.
On April 15, 2002, Appellant proceeding pro se filed her own objection to Washington Mutual's amended proof of claim. According to the bankruptcy court, attached to the objection was "an uncatalogued jumble of documentation . . . which [Appellant] proffered for the ostensible purpose of demonstrating that the amended claim of Washington Mutual was still too high because it failed to reflect proper credit for various monies tendered over the years to Washington Mutual by [Appellant] and/or [Debtor]." Order at 2. Through his counsel, Debtor wrote a letter to the bankruptcy court, stating that he did not want Appellant's objection to affect his bankruptcy case, as he was satisfied with the stipulation he entered into with Washington Mutual.
The bankruptcy court scheduled a hearing with respect to Appellant's objection for May 15, 2002. During the hearing, it was learned that Washington Mutual failed to serve its Motion to Dismiss on Appellant. On this basis, Appellant objected to the entry of an order barring her from filing another bankruptcy petition for a period of 180 days. Ultimately, the hearing was adjourned because the parties expressed a desire to attempt to negotiate a settlement.
Settlement efforts proved fruitless, however, and the hearing was rescheduled for August 15, 2002. At the hearing, Appellant testified as to her belief that Washington Mutual's amended proof of claim was too high, in that it failed to reflect payments made to Washington Mutual. She also proffered documents purporting to support her testimony. According to the bankruptcy court, these documents were "impossible to analyze . . . in any meaningful way" because they did not correlate to Washington Mutual's amended proof of claim. Order at 3.
After concluding that Appellant had standing to object to Washington Mutual's amended proof of claim, the bankruptcy court held that she failed to overcome the prima facie validity of Washington Mutual's claim and, as a result, overruled Appellant's objection. The court also vacated that portion of the stipulation Debtor entered into with Washington Mutual, barring Appellant from filing another bankruptcy petition for a period of 180 days.
Federal Rule of Bankruptcy Procedure 3001(f) provides that a proof of claim executed and filed in accordance with the rules of procedure constitutes prima facie evidence of the validity and amount of the claim. See Amatex Corp. v. Aetna Cas. Sur. Co., 107 B.R. 856, 870 (E.D. Pa. 1989), affd, 908 F.2d 961 (3d Cir. 1990): In re Wall to Wall Sound Video. Inc., 151 B.R. 700, 701 (Bankr. E.D. Pa. 1993). Where an objection is filed, the objecting party bears the initial burden of presenting sufficient evidence to overcome the presumed validity and amount of the claim.In re Allegheny Int'l, Inc., 954 F.2d 167, 173 (3d. Cir. 1992) ("The objector must produce evidence which, if believed, would refute at least one of the allegations that is essential to the claims legal sufficiency."). If the objecting party overcomes the prima facie effect of the claim, then the burden of persuasion shifts to the claimant. Id. at 174.
After considering Appellant's objection, the documents attached to it, her testimony at the August 2002 hearing, and the exhibits she introduced at that hearing, the bankruptcy court concluded that Appellant did not rebut the prima facie validity of Washington Mutual's amended proof of claim. Specifically, Judge Raslavich found that Appellant failed to explain the significance of the documents she submitted to the bankruptcy court and that her testimony "did little, if anything, to illuminate the matters of which she complain[ed]. . . ." Order at 4-5.
On July 17, 2003, Appellant filed an appeal from the October 8, 2002 order of the bankruptcy court, arguing that the bankruptcy court erred in finding that Appellant only contributed $1,700 towards mortgage payments in the years 1993, 1994 and 1995, in failing to consider the "uncontroverted evidence that Washington Mutual . . . failed to account for in excess of $8,700.00 in Bankruptcy Trustee payments," and in "concluding that certain money order payments were recently made to Washington Mutual , when they were actually made between 1997 and 2001." Brief of Appellant Angelina Steadman ("Appellant's Br.") at 1-2. In support of her argument, Appellant attaches to her brief a disbursement report, which Washington Mutual contends is not part of the record on appeal. Id., Ex. C.
II. Jurisdiction
This court has jurisdiction pursuant to 28 U.S.C. § 158(a).
III. Standard of Review
A district court reviews a bankruptcy court's findings of fact findings of fact for clear error and applies a plenary standard to its conclusions of law. See Am. Flint Glass Workers Union v. Anchor Resolution Corp., 197 F.3d 76, 80 (3d Cir. 1999). The district court must accept the bankruptcy court's factual determination "unless that determination either is completely devoid of minimum evidentiary support displaying some hue of credibility or bears no rational relationship to the supportive evidentiary data." Hoots v. Pennsylvania. 703 F.2d 722, 725 (3d Cir. 1983) (citing Krasnov v. Dinan, 465 F.2d 1298, 1302-03 (3d Cir. 1972)). Mixed questions of fact and law require the district court to accept the bankruptcy court's "finding of historical or narrative facts unless clearly erroneous, but exercise `plenary review of the trial court's choice and interpretation of legal precepts and its application of those precepts to the historical facts.'" Mellon Bank N.A. v. Metro Communications, Inc., 945 F.2d 635, 642 (3d Cir. 1991) (quoting Universal Minerals, Inc. v. C.A. Hughes Co., 669 F.2d 98, 10102 (3rd Cir. 1981)).
III. Analysis
The Court must first determine whether it is permitted to consider the disbursement report Appellant attached to her brief as evidence of Washington Mutual's "fail[ing] to account for in excess of $8,700.00 in Bankruptcy Trustee payments." Appellant's Br. at 1. As noted above, a district court has jurisdiction to hear appeals from final judgments and orders of bankruptcy judges. See 28 U.S.C. § 158(a). When reviewing a bankruptcy judge's ruling, the district court sits as an appellate court. It is hornbook law that appellate courts generally cannot consider evidence that was not before the court below. See Drexel v. Union Prescription Centers. Inc., 582 F.2d 781, 784 n. 4 (citing Sound Ship Bldg. Corp. v. Bethlehem Steel Co., 533 F.2d 96, 1001 n. 3 (3d Cir. 1976), cert. denied, 429 U.S. 860, 97 S.Ct. 161, 50 L.Ed.2d 137 (1976) and 2 Charles A. Wright Arthur R. Miller, Federal Practice and Procedure § 2716, at 650 (1983)).
Appellant designated the following items be made a part of the record on appeal:
(1) the bankruptcy court's opinion and accompanying order; (2) the August 2002 hearing transcript; and (3) exhibits S-l and S-2, and exhibits F-l through F-7, which were introduced at the hearing. Appellant failed to designate the disbursement report as an item to be included in the record. Accordingly, the Court cannot consider the report in deciding this appeal.
The Court now turns to the merits of Appellant's appeal. After reviewing the record, there is nothing to suggest that the bankruptcy court committed the errors ascribed to it by Appellant. First, the bankruptcy court did not rely on, or adopt, a typographical error in the hearing transcript in concluding that Appellant failed to overcome the prima facie validity of Washington Mutual's claim. Indeed, nowhere in his opinion does Judge Raslavich find that Appellant only "contributed $1,700 towards mortgage payments in the years 1993, 1994, and 1995. . . ." Order at 2. Second, neither the documents Appellant submitted to the bankruptcy court nor her testimony at the August 2002 hearing demonstrate that Washington Mutual failed to account for in excess of $8,700 in bankruptcy trustee payments. The documents are, as the bankruptcy court described them, difficult to understand, and Appellant does not explain their significance in her brief. As for Appellant's generalized testimony, it did not pinpoint a specific instance where Washington Mutual failed to apply a payment. Finally, the bankruptcy court appropriately described money order receipts from 1997-2001 as "recent" compared to mortgage account statements from 1989-1995.
ACCORDINGLY, this day of March 2004, upon consideration of Appellant Angelina Steadman's appeal of the Bankruptcy Court's Order in Bankruptcy No. 01-37900 SR (Dkt. No. 9), IT IS HEREBY ORDERED that said Order is AFFIRMED.