Opinion ID: 2999727
Heading Depth: 3
Heading Rank: 4

Heading: Burden of Proof/Ultimate Valuation

Text: The bankruptcy court held that the debtor in a Chapter 13 case “has the burden of establishing each of the elements for confirmation of a plan and if there is an objection, it puts the debtor to his proof of each of those elements.” The bankruptcy court also ultimately held that Salem had equity in the property, which meant that Neshewat’s default judgment from New York was secured rather than unsecured. Salem argues that the bankruptcy court erred by placing the burden of proof on him to prove an absence of equity in the house. Instead, he contends, Neshewat should have been required to produce some evidence before the burden of proof shifts back to him. He also argues that the court clearly erred in its ultimate conclusion on the value of the house. The allocation of the burden of proof has been the subject of some debate. Federal Rule of Bankruptcy Procedure 3001(f) makes a proper proof of claim with the accompanying documents “prima facie evidence of the validity and amount of the claim.” The Supreme Court observed in Raleigh v. Illinois Department of Revenue, 530 U.S. 15 (2000), that “the burden of proof is an essential element of the claim itself; one who asserts a claim is entitled to the burden of proof that normally comes with it.” Id. at 21. “The legislative history indicates that the burden of proof on the issue of establishing claims was left to the Rules No. 05-1914 19 of Bankruptcy Procedure.” Id. at 22 n.2. The Court observed that the rules are “silent on the burden of proof for claims”; although Rule 3001(f) provides that the claim itself is prima facie evidence, the Rules are silent as to what to do when a trustee, or in this case the debtor, “disputes a claim.” Id. This open question has two obvious potential answers. One is that the submission of the claim itself, with proper supporting documentation, shifts the burden of production to the debtor to provide evidence why the claim is invalid, leaving the burden of persuasion with the creditor. The alternate is that once the claim is filed, both the burdens of production and persuasion shift to the debtor. Interesting though the question may be, we need not resolve it here, because in the end it makes no difference. Either way, the bankruptcy court did not clearly err in finding equity in the Gellatly Drive house. See, e.g., In re Schoonover, 331 F.3d 575, 577 (7th Cir. 2003). With his initial objection, Neshewat produced records showing that the judgment was attached to this house, as well as evidence about the value of the house including Salem’s own bankruptcy schedule valuing the house at $170,000. Thus, under Rule 3001(f), Neshewat made a prima facie case. Then, at the hearing, Neshewat presented the expert testimony of his appraiser, while Salem presented his. The court evaluated all the testimony before coming to an ultimate valuation. Its conclusion, in turn, established that Neshewat’s judgment was secured.