Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_07-cv-00564/USCOURTS-casd-3_07-cv-00564-0/pdf.json

Nature of Suit Code: 422
Nature of Suit: Bankruptcy Appeals Rule 28 USC 158
Cause of Action: 28:0158 Notice of Appeal re Bankruptcy Matter (BAP)

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1 Plaintiff is an attorney but no longer practices law. Plaintiff’s status with the State

Bar of California since 1991 is “not eligible to practice law.” 

07CV564

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

In re: A TRUCKING CRANE RENTAL

& REPAIR CO., 

Debtor. 

ALBERT O’ROURKE,

 Appellant,

v.

GERALD DAVIS, Chapter 7 Trustee,

 Appellee.

 

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Civil No. 07-CV-564-L(AJB)

Bankruptcy No. 05-7432-PB7

ORDER AFFIRMING THE

BANKRUPTCY COURT’S ORDER;

DISMISSING THE APPEAL WITH

PREJUDICE AND DIRECTING

ENTRY OF JUDGMENT

Appellant Albert O’Rourke (“O’Rourke” or “appellant”) appearing pro se,

1

 filed the

above-captioned bankruptcy appeal on March 27, 2007. Appellant challenges the bankruptcy

court’s denial of his $1.1 billion dollar claim against the bankruptcy estate. The appeal has been

fully briefed. For the reasons set forth below, the decision of the bankruptcy court will be

affirmed in its entirety and the appeal dismissed with prejudice.

/ / /

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2 Federal Rule of Bankruptcy Procedure 8013 provides in relevant part : “findings of fact,

whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous, and due

regard shall be given to the opportunity of the bankruptcy court to judge the credibility of the

witnesses.” 

2 07CV564

I. ISSUE PRESENTED

Did the bankruptcy court err when it disallowed appellant’s Proof of Claim by sustaining

appellee’s objection to the claim.

II. STANDARD OF REVIEW 

An appellant may petition the district court for review of a bankruptcy court's decision.

FED. R. BANKR.P. 8013.2

 The applicable standard of review is identical to that employed by

circuit courts of appeal in reviewing district court decisions. See Heritage Ford v. Baroff (In re

Baroff), 105 F.3d 439, 441 (9th Cir. 1997). Legal conclusions are reviewed on a de novo basis,

and factual determinations are assessed under a “clearly erroneous” standard. Murray v.

Bammer (In re Bammer), 131 F.3d 788, 792 (9th Cir. 1997)(en banc). 

The test for clear error is not whether the appellate court would make the same findings,

but whether the reviewing court, on the entire evidence presented, has a definite and firm

conviction that a mistake was made. Anderson v. City of Bessemer City, 470 U.S. 564, 573-74

(1985). Therefore, a reviewing court may not overturn a decision, even if it would have weighed

the evidence in a different manner, so long as the trial court's view of the evidence is plausible in

light of the entire record. Id. In applying the clearly erroneous standard of review, the appellate

court views the evidence in the light most favorable to the party who prevailed below. Lozier v.

Auto. Owners Ins. Co., 951 F.2d 251, 253 (9th Cir. 1991).

III. PROCEDURAL BACKGROUND

An involuntary Chapter 7 petition was filed against A Trucking Rental and Repair Co.

dba A.T.C. Rentals and Repairs, Inc. (“ATC”) on August 12, 2005, in the United States

Bankruptcy Court for the Southern District of California (“bankruptcy court”) . The case was

converted to a voluntary Chapter 11 case and a trustee appointed for the ATC bankruptcy estate

(“Estate”). Thereafter, the court ordered that the case be reconverted to a Chapter 7 case.

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3 ATC is not a party to the alleged Sublease agreement and therefore, does not and

would not have the original Sublease document.

4 The Sublease document was initially presented as an exhibit to appellant’s Proof of

Claim.

3 07CV564

One of the assets of the ATC estate is real property located at 2995 Commercial Street,

San Diego, California 92113 (the “Property”). Appellant O’Rourke filed an unsecured nonpriority Proof of Claim in the amount of $1.1 billion based upon his alleged sub-tenancy interest

in a brick building on ATC’s Property.3

Gerald Davis, the Chapter 7 Trustee and appellee (“Trustee” or “appellee”), filed his

objection to the claim on August 10, 2006. Appellant requested a hearing that was rescheduled

several times. The bankruptcy court held an evidentiary hearing on March 15, 2007. The

Trustee provided various exhibits and the testimony of four witnesses during the hearing. 

Appellant offered no witnesses on his behalf but provided his own testimony during the hearing

and offered a copy of a one-page document dated November 2, 1994, to support his claim that is

entitled: “Assignment of Sub-Lease and Tenancy to Jeff Pease and Al O’Rourke by Master

Tenant Ralph Hughes, with a Retained interest by Hughes (‘the Sublease’).”4

 Based upon the

Sublease document, appellant argued he held a sub-tenancy interest in a brick building located

on the Property that Ralph Hughes (“Hughes”) allegedly subleased to appellant. The bankruptcy

judge sustained the Trustee’s objection to the claim at the end of the evidentiary hearing. The

Court issued a written order that was filed on April 3, 2007. Appellant filed his Notice of

Appeal on March 23, 2007.

IV. DISCUSSION

A. Legal Standard re: Proof of Claim

A proof of claim filed under 11 U.S.C. § 501 constitutes “prima facie evidence of the

validity and amount of the claim,” see BANKR. R. 3001(f), and is deemed allowed unless a party

in interest objects. 11 U.S.C. § 502(a). The evidentiary burden of Bankruptcy Rule 3001(f)

requires the objector to come forward with evidence contradicting the validity or amount of the

claim. Global Western Dev. Corp. v. Northern Orange County Credit Serv., Inc., 759 F.2d 724,

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5 The Court notes that appellant has not offered a designation of record for this

appeal.

4 07CV564

727 (9th Cir. 1985). If the objector produces sufficient evidence to overcome the prima facie

effect of the proof of claim, the ultimate burden will revert to the claimant. In re Holm, 931 F.2d

620, 623 (9th Cir. 1991) (citing L. KING, 3 COLLIER ON BANKRUPTCY ¶ 502.02, at 502-22 (15th

ed. 1991)) (proof of claim is strong enough to carry over mere formal objection). As the Ninth

Circuit Bankruptcy Appellate Panel has explained, the burdens of proof with respect to a

bankruptcy proof of claim are as follows:

Initially, the claimant must allege facts sufficient to support the claim. If the

averments in his filed claim meet this standard of sufficiency, it is prima facie

valid. In other words, a claim that alleges facts sufficient to support a legal

liability to the claimant satisfies the claimant's initial obligation to go forward. The

burden of going forward then shifts to the objector to produce evidence sufficient

to negate the prima facie validity of the filed claim. . . . The burden of persuasion

is always on the claimant.

In re Consolidated Pioneer Mortgage, 178 B.R. 222, 226 (9th Cir. BAP 1995) (quoting In re

Allegheny International Inc., 954 F.2d 167, 173-74 (3rd Cir.1992)). 

Under California law, a party claiming an equitable interest in property has the burden of

proof to show due and sufficient notice of matters outside the record title. In re Yepremian, 116

F.3d 1295 (9th Cir. 1997). Further, under the Bankruptcy Code, “the entity asserting an interest

in property has the burden of proof on the issue of the validity, priority or extent of such

interest.” 11 U.S.C. § 363(o)(2).

B. Evidence Submitted 

1. Appellant’s Proof of Claim

As noted above, appellant’s evidence in support of his Proof of Claim consists of his own

testimony and declaration (Exh. 5 to Counter Designation of Record (“CD”)),5

 and the purported

Sublease document which appellant contends demonstrates he has a sublease interest in the

building at 2995 Commercial Street. The Sublease sets forth: 

To whom it may concern, and to the parties to this agreement

Master tenant Ralph Hughes, herein grants for a valuable consideration of $150

per month to Jeff Pease and Al O’Rourke, a sub-tenancy on the portion of the 2995

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5 07CV564

Commercial Ave. San Diego Property leased or owned by Hughes. Hughes

reserves unto himself a retained interest the benefit of Hughes’ three daughters

Heather, Heidi, and Ashley Hughes, and for Rita Winton, the right of use (of said

sub-leased property to Pease and O’Rourke (who acknowledge such by this

document) and any third party claimants against Pease or O’Rourke). This

agreement is to run month to month and is terminable upon 30 days notice by mail

notice.

So agreed and executed, this Nov. 2, 1994 at San Diego CA.

(Exh. 11 to CD).

The Sublease has signature lines, O’Rourke’s signature and the alleged signatures of 

Hughes and Jeff Pease (“Pease”). Id.

2. Appellee’s Objection to Proof of Claim

a. Authenticity of the Sublease Document

Appellee contends that O’Rourke failed to properly authenticate the Sublease document

which defeats his claim that a sublease actually existed. Federal Rule of Evidence 901(a) 

provides in relevant part:

The requirement of authentication or identification as a condition precedent to

admissibility is satisfied by evidence sufficient to support a finding that the matter

in question is what its proponents claim.

FED. R. EVID. 901.

In support of his objection to O’Rourke’s Proof of Claim, appellee presented the

testimony and declaration of Hughes, an alleged signatory to the Sublease document. Hughes

testified that he had neither seen nor executed the Sublease document, and there never had been

a written or oral agreement to lease or sublet any portion of the Property to O’Rourke. (Exh. 4

to CD, Reporter’s Transcript of the Evidentiary Hearing (“Tr.”) 32-33). In his declaration,

Hughes states, under penalty of perjury, that: 

I have never seen the Assignment Document nor have I ever executed this

document as indicated therein. This is a fraudulent document containing false

signature(s).” . . . Additionally, to the best of my knowledge, Mr. O’Rourke has

never been on the property . . . . Furthermore, there was never an agreement with

Mr. O’Rourke regarding this property as stated in the Agreement Document.

(Exh. 4 to CD).

Moreover, on January 26, 2997, ATC’s predecessor-in-interest, Lyman Schroeder, agreed

to lease a building on the Property to Hughes but in November of 1994 – at the time the

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6 Although Jeff Pease testified that the signature on the document appeared to be his,

he did not remember signing the document and opined that someone may have “cut and pasted”

his signature on the document. (T. at 38)

6 07CV564

Sublease was allegedly signed – Hughes had no interest in the Property to sublease to Appellant.

(Exh. 6 to CD; Tr. 10, 26, 32).

Jeff Pease also testified that he never had a sublease of the Property with O’Rourke from

Hughes and had no recollection of signing the Sublease document. (Tr. 38).6

Appellee also notes that O’Rourke never sought to obtain the original purported Sublease

agreement through subpoena or any other judicial means. 

b. Access to the Property 

 Hughes testified that he regularly was on the Property and had not seen O’Rourke there. 

(Tr. 92-93). Hughes further testified that O’Rourke never asked to have access to the subject

brick building on the Property or for a key to the Property. (Tr. 93-94). Additionally, Kim

Schroeder (“Schroeder”), an employee of ATC since 1996 or 1997 and who was familiar with

the boundaries of the ATC Property, testified that “during business hours the gate was always

unlocked, and you could access any part of the yard through, you know, that gate there, because

there were three gates, you know along Commercial Street.” (Tr. 81). In response to the

question of whether he had ever seen O’Rourke on the premises, Schoeder responded: “Not that

I can recall, no.” Id.

O”Rourke also testified that he had not been on the property since approximately 2000

(Tr. 56-57). O’Rourke did not testify that he had ever sought access to the building or keys to

the Property from Hughes.

3. The Bankruptcy Court’s Discussion of Evidence and Conclusion

In considering the Trustee’s motion in limine prior to the evidentiary hearing on his

objection, the Bankruptcy Court found:

[B]ased upon the evidence presented so far, that the trustee has carried its burden

of rebutting the prima facie validity of the proof of claim submitted by Mr.

O’Rourke, and the burden is upon Mr. O’Rourke to prove by a preponderance of

evidence that there’s a factual basis to support the claim.

(Tr. 47)

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7 07CV564

After hearing the testimony of Hughes (Tr. 4-37; 92-100); Pease (Tr. 37-44); O’Rourke

(Tr. 48-79); Schroeder (Tr. 80-92); and William Klees (Tr. 101-103), the bankruptcy judge

entered his oral order. 

The bankruptcy court found that O’Rourke “failed to carry his burden of proof that there

is in fact a sublease of 1994,” (Tr. 115-116) and noted that there was “absolutely no evidence

before the Court that in 1994 Mr. Hughes had anything that he could convey in terms of an

interest in real property as a leasehold or as a sublease with respect to 2995 Commercial. No

evidence whatsoever.” (Tr. 116). The court further pointed out that the 30-day notice recently

given to O’Rourke and Pease did not establish the authenticity of the purported sublease but was

a legally appropriate alternative means of terminating a tenancy if the court found that such a

tenancy existed. (Tr. 115). Additionally, the court noted that O’Rourke did not testify that he

ever received a key to the space he claimed was subject to the Sublease which suggests that a

sublease did not exist. (Tr. 119-120). The court found that O’Rourke provided no evidence “of

any damages sustained by his alleged denial of possession or of access to the property.” (Tr.

121). As a result of the evidence presented at the evidentiary hearing, the bankruptcy court

concluded that “[t]he claim will be denied on the grounds that there was no sublease, and even if

there was a sublease, there was no damage and no interference with right of possession.” (Tr.

112). 

V. CONCLUSION

As discussed above, both of the other alleged parties to the Sublease agreement

disavowed seeing or signing the document before this dispute arose. It is also undisputed that

Hughes had no interest in the property at the time the Sublease document was purportedly

signed. There is no evidence that O’Rourke had his alleged right to access the Property impeded

during business hours or that he ever requested a key for entry to the Property. Having carefully

reviewed the Proof of Claim, the testimony and documentary evidence introduced during the

hearing, the Court sustains the findings and conclusions of the bankruptcy court as plausible in

light of the entire record. Indeed, this Court has a definite and firm conviction that a mistake

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was not made in this case. 

Based on the foregoing, the decision of the Bankruptcy Court is AFFIRMED in its

entirety. The Clerk of the Court is directed to enter judgment in accordance with this Order. 

IT IS SO ORDERED.

DATED: January 23, 2008

M. James Lorenz

United States District Court Judge

COPY TO: 

HON. ANTHONY J. BATTAGLIA

UNITED STATES MAGISTRATE JUDGE

HON. PETER W. BOWIE

UNITED STATES BANKRUPTCY JUDGE

ALL COUNSEL/PARTIES

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