FILED
United States Court of Appeals
Tenth Circuit
July 14, 2009
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
In re: PATRICIA M. KIRKLAND,
Debtor.
_______________________________
MICHAEL J. CAPLAN, Trustee,
Appellant,
v. No. 08-2017
B-LINE, LLC, Successor in interest to
Next Card; PATRICIA M.
KIRKLAND,
Appellee.
APPEAL FROM THE UNITED STATES BANKRUPTCY APPELLATE
PANEL OF THE TENTH CIRCUIT
(BAP No. NM-07-021)
Michael K. Daniels, Albuquerque, New Mexico, appearing for Appellant.
Linh K. Tran, B-Line, LLC, Seattle, Washington, appearing for Appellee.
Before TACHA, TYMKOVICH, and GORSUCH, Circuit Judges.
TACHA, Circuit Judge.
Patricia Kirkland (the “Debtor”) filed for bankruptcy, and a predecessor to
the Appellee, B-Line, LLC (“B-Line”) submitted a proof of claim. After the
Appellant (“the Trustee”) objected to the claim, the bankruptcy court sustained
the objection and disallowed the claim. A divided Bankruptcy Appellate Panel
(“BAP”) reversed the bankruptcy court’s decision. We conclude that the
bankruptcy court properly disallowed B-Line’s claim. Exercising jurisdiction
under 28 U.S.C. § 158(d), 1 we REVERSE the BAP’s judgment and REINSTATE
the bankruptcy court’s order disallowing B-Line’s claim.
I. BACKGROUND
On August 22, 2001, the Debtor filed a voluntary Chapter 13 bankruptcy
petition in the United States Bankruptcy Court for the District of New Mexico.
The Debtor’s schedule of unsecured creditors included a $5,004 credit card debt
associated with an account number ending with 2787. On September 25, 2001,
NextBank, N.A./B-Line, LLC (“NextBank/B-Line”) filed a proof of claim for a
1
The BAP’s order does not explicitly instruct the bankruptcy court to either
allow or disallow the claim. In assessing whether we have jurisdiction over this
appeal, we look to the practical effect of the BAP’s order. See In re Tri-Valley
Distrib., Inc., 533 F.3d 1209, 1214 (10th Cir. 2008) (“In determining whether an
order from the BAP is final . . . we look to the order of the BAP itself,
determining whether it is final by considering the effect that the order will have in
the context of the particular appeal.”) If the BAP’s order requires “significant
further proceedings in the bankruptcy court,” then the order is not final, and this
court does not have jurisdiction over an appeal. Id. At oral argument, the Trustee
stated that the BAP’s decision left the bankruptcy court with no option other than
to enter judgment in favor of B-Line. B-Line agreed. We therefore conclude that
the BAP’s order did not require “significant further proceedings” in the
bankruptcy court. The BAP’s order was final, and we have jurisdiction over this
appeal under 28 U.S.C. § 158(d).
-2-
$5,328.19 credit card debt associated with an account number ending with 2787.
NextBank/B-Line did not include supporting documentation.
That same day, the Debtor converted her case to Chapter 7; then she later
reconverted it back to Chapter 13. The Chapter 13 trustee reported a claim by
“B-Hold, LLC” for $5,328.19, the identical amount listed on NextBank/B-Line’s
proof of claim. After the Debtor’s attempt to restructure her debt failed, she
reconverted her case back to Chapter 7 on May 20, 2005. On June 22, 2006, the
Trustee filed an objection to NextBank/B-Line’s claim in bankruptcy court,
asserting that NextBank/B-Line had failed to include supporting documentation
for its proof of claim, as required under Rule 3001 of the Federal Rules of
Bankruptcy Procedure. Soon thereafter, B-Line filed a notice indicating that the
claim had been transferred to B-Line. The notice listed the value of the claim as
$5328.19 and listed its source as an account number ending with 2787. B-Line
did not include supporting documentation.
On November 15, 2006, the bankruptcy court held a hearing on the
Trustee’s objection. In re Kirkland, 361 B.R. 199, 200 (Bankr. D.N.M. 2007).
Neither B-Line nor the Trustee presented any evidence at the hearing. Id.
Pursuant to B-Line’s request, however, the bankruptcy court took judicial notice
of the schedules and statements the Debtor had filed with her petition. Id.
Following the hearing, the court determined that B-Line had failed to meet its
burden to substantiate the claim because it had failed to produce any evidence
-3-
supporting it. Id. at 205. Accordingly, the Court disallowed the claim. Id. B-
Line appealed to the BAP, which reversed the bankruptcy court’s decision by a
vote of two to one. B-Line, LLC v. Kirkland (In re Kirkland), 379 B.R. 341, 354
(B.A.P. 10th Cir. 2007). The Trustee timely appeals.
II. DISCUSSION
“In our review of BAP decisions, we independently review the bankruptcy
court decision.” In re Albrecht, 233 F.3d 1258, 1260 (10th Cir. 2000). Neither
side has contested the bankruptcy court’s factual findings. Because the issues on
appeal are limited to questions of statutory interpretation, our review is de novo.
Hamilton v. Lanning (In re Lanning), 545 F.3d 1269, 1274 (10th Cir. 2008).
The bankruptcy court appropriately determined that because B-Line bore
the burden of proof for its claim and failed to meet its burden, its claim was
disallowed. See In re Kirkland, 361 B.R. at 205. The plain language of the
Bankruptcy Code and its associated procedural rules support the court’s ruling.
The Bankruptcy Code provides that “[a] creditor . . . may file a proof of claim.”
11 U.S.C. § 501(a). Because the code does not define “proof of claim,” we look
to the Federal Rules of Bankruptcy Procedure. “A proof of claim is a written
statement setting forth a creditor’s claim. . . . [It] shall conform substantially to
the appropriate Official Form.” Fed. R. Bankr. P. 3001(a). The relevant form is
Official Form 10, which requires a claimant to “[a]ttach redacted copies of any
documents that support the claim, such as promissory notes, purchase orders,
-4-
invoices, itemized statements of running accounts, contracts, judgments,
mortgages, and security agreements.” Fed. R. Bankr. P. Official Form 10. Form
10 also instructs a claimant that “[i]f the documents are not available, please
explain.” Id. When a proof of claim is executed and filed in accordance with the
provisions of Rule 3001 (including Official Form 10), it “constitutes prima facie
evidence of the validity and amount of the claim.” Fed. R. Bankr. P. 3001(f).
B-Line has failed to produce a single document to support its proof of
claim. B-Line has also failed to explain its failure to provide supporting
documentation. Although the bankruptcy court took judicial notice of the
Debtor’s appended schedules of unsecured creditors, it correctly determined that
the schedules were of no evidentiary value against the Trustee. Therefore, B-Line
has failed to present “prima facie evidence of the validity and amount of the
claim.” Id. In response to the Trustee’s objection, the bankruptcy court held an
evidentiary hearing. Even then, B-Line produced no evidence in support of its
claim and no explanation for its failure to do so. On this record, we conclude that
the bankruptcy court appropriately disallowed B-Line’s claim. Had the
bankruptcy court allowed B-Line’s claim despite B-Line’s failure to provide
either supporting evidence or an explanation for its failure to provide supporting
evidence, the burden would have improperly rested with the Trustee to disprove
an unsubstantiated claim. See Agricredit Corp. v. Harrison (In re Harrison), 987
F.2d 677, 680 (10th Cir. 1993) (“[A] proper claim timely filed stands, absent
-5-
objection. If objection is made to the proof of claim, the creditor has the ultimate
burden of persuasion as to the validity and amount of the claim.”) (citation and
quotations omitted).
III. CONCLUSION
For the foregoing reasons, we REVERSE the judgment of the BAP and
REINSTATE the bankruptcy court’s order disallowing B-Line’s claim.
-6-