Opinion
Case No. 88-21938-K (cb).
April 16, 1990
James W. Surprise, Esq., Memphis, TN, Attorney for Debtor.
Mr. Phillip Brooke, Jackson, MS. U.S. Trustee, Memphis, TN.
ORDER RE DEBTOR'S OBJECTION TO THE PROOF OF CLAIM FILED BY MR. PHILLIP BROOKE
This core proceeding arises out of the Bankr. Rule 3007 objection filed by the above-named reorganized debtor, T.G.S., Ltd., a Mississippi Partnership dba The Residences ("Debtor") to the proof of claim filed by Mr. Phillip Brooke ("Mr. Brooke"). This matter came on for trial at Memphis, Tennessee, on March 26, 1990. The following shall constitute findings of fact and conclusions of law in accordance with Bankr. Rule 7052.
The relevant background facts may be very briefly summarized as follows. Debtor filed its original chapter 11 petition in this Judicial District on March 16, 1988. Thereafter, on March 1, 1989, Mr. Brooke filed his proof of claim in the asserted amount of $158,000.00 which allegedly arose out of unpaid legal services rendered or to be rendered to the debtor from October, 1985 through February, 1989. Debtor objected to Mr. Brooke's claim in its entirety.
At the trial Mr. Seabrook, one of the general partners of the debtor, testified, inter alia, that he and Mr. Brooke had known each other for in excess of 20 years; that Mr. Brooke had done some legal work for him only during the early 1970's; and that the families of Mr. Brooke and him were friends. Mr. Seabrook also testified that beginning in October, 1985 as a family friend, he provided Mr. Brooke with a free place to live (for 1 1/2 years in the Chatam Village Apartments and thereafter in the Residences Apartments located in Jackson, Mississippi), yet did not retain any legal services of Mr. Brooke. There was testimony that Mr. Brooke was paid approximately $20.00 per week for trimming shrubs and sweeping parking lots. Additional evidence indicated that Mr. Brooke was evidently declared mentally incompetent in 1972 and 1973, which was about the same time period in which he underwent post-divorce counseling. Pursuant to Federal Rule of Evidence 803, a copy of a certified order suspending Mr. Brooke's license to practice law in Tennessee was introduced to the court over the objection of Mr. Brooke.
According to the testimony of both Mr. Seabrook and Mrs. Alderman, the resident manager of both the Chatam Village and the Residences apartments, Mr. Brooke rendered no professional services to give rise to the subject proof of claim.
See Interrogatory #6 and answer thereto.
A properly filed proof of claim constitutes prima facie evidence of the validity of the claim. Bankr. Rule 3001(f); 11 U.S.C. § 502(a); Whitney v. Dresser, 200 U.S. 532 (1906). Cf. Rule 301, F.R. of Evd. The burden is on the objecting party to go forward with evidence establishing the basis of the objections. If the objecting party succeeds in overcoming the prima facie case, the claimant-creditor has the burden of persuasion to prove the validity of the claim by a preponderance of the evidence. See, e.g., In re Central Rubber Products, Inc., 31 B.R. 865 (Bankr. Ct. Conn. 1983).
See Bankr. Rule 3007 entitled "Objections To Claims".
Under a totality of the particular facts and circumstances and having considered, inter alia, that there were no written employment agreements, credibility and demeanor of all the parties and witnesses who testified, the debtor has overcome the prima facie case and Mr. Brooke has not carried the ultimate burden of persuasion to prove the validity of his asserted claim by a preponderance of the evidence.
Based on the foregoing, IT IS ORDERED that the debtor's objection to the claim of Mr. Brooke is granted.