Memorandum and Order
Pending before the Court is appellant, eCast Settlement Corp.’s, appeal from an order of the United States Bankruptcy Court for the Southern District of Texas disallowing the claims of eCast Settlement Corp. against appellee, Teresa Tran. (Dkt.# 6). Having considered the issues presented to the court, the applicable law, and for the reasons that follow, the Court is of the opinion that the order of the bankruptcy court should be AFFIRMED.
I. Background
Teresa Tran, appellee-debtor, sought bankruptcy protection under Chapter 13 of the Bankruptcy Code on August 16, 2005. Court Record (CR) 1. ECast, appellant-creditor and assignee of three banks which allegedly issued credit cards to Tran, filed Proofs of Claim on December 20 and 22, 2005 against Tran’s estate. CR 6-8. Tran, in turn, filed objections to each of eCast’s proofs of claim declaring that eCast was a stranger and therefore she owed them no money. CR 13-15. ECast timely responded to Tran’s objections producing further evidence supporting its proofs of claim against her. CR 15. ECast’s additional evidence consisted primarily of general assignment agreements between eCast and the three banks from which they contend Tran’s credit cards were issued. Id. However, eCast’s assignment agreements do not specifically identify Tran or her respective accounts. Id. Judge Karen Brown for the United States Bankruptcy Court for the Southern District of Texas held an evidentiary hearing one month later during which eCast was assigned the burden to overcome Tran’s objections. CR 20, Hearing Transcript (TR) 18:14-20. ECast attempted to introduce evidence supporting its proofs of claim, but the assignments were excluded as hearsay. TR 39:21-40:3. ECast also conducted a direct examination of Ms. Tran. TR 20:18-41:17. On September 6, 2006, Judge Brown issued an order disallowing eCast’s claims against Tran. CR 17. The court found that eCast failed to file a proper proof of claim based upon a writing and thus its proofs of claim were not entitled to prima facie validity. CR 17, pg. 38. Therefore, the court found Tran had no evidentiary burden to overcome in objecting to eCast’s claims. Id. Furthermore, the court found that eCast failed to satisfy its evidentiary burden of proving the validity and amounts of its claims under Texas law. Id. at 40. Twelve days after the lower court issued its opinion, eCast filed this appeal.
ECast moves this court to reverse the order of the lower court disallowing eCast’s claims against Tran. Dkts. 1-4. ECast specifically asserts that the lower court improperly applied the law in ruling: *315 i) eCast failed to satisfy its evidentiary burden of proving the validity and amount of its claims; ii) eCast was required to prove it was the transferee of the claims it filed against Tran; iii) eCast’s claims are disallowed even though they are not explicitly excepted by statute; and iv) eCast was not entitled to a continuance to amend its claims. Dkt. 3. Both sides have fully briefed the issues on appeal and the case is ripe for consideration. Dkts. 6, 9-10. Appellants request oral argument. Dkt. 6. The issues presented in this appeal are sources of confusion permeating nearly every circuit in the United States. However, the Fifth Circuit has taken a clear position on the issue and for the reasons that follow the decision of the lower court should be affirmed as it is consistent with Fifth Circuit law.
II. Jurisdiction and Standard op Review
The court has jurisdiction over this appeal pursuant to 28 U.S.C. § 158(a)(1), and in reviewing the findings of a bankruptcy court, a district court acts in an appellate capacity.
See Perry v. Dearing,
III. Analysis
ECast Settlement Corporation designated themselves as an unsecured creditor with respect to the estate of Teresa Tran. See CR 6-8 (electing “unsecured nonpriority claim” on Official Form 10). The ordinary procedure by which an unsecured creditor files a claim against a debtor under bankruptcy protection begins with filing a proof of claim. See Fed. R. Bankr. P. 3002. The rules further require that:
[w]hen a claim ... is based on a writing, the original or a duplicate shall be filed with the proof of claim. If the writing has been lost or destroyed, a statement of. the circumstances of the loss or destruction shall be filed with the claim.
Fed. R. Bankr. P. 3001(c). “A proof of claim executed and filed in accordance with these rules [Federal Rules of Bankruptcy Procedure] shall constitute prima facie evidence of the validity and amount of the claim.” Fed. R. Bankr. P. 3001(f).
A. Validity of eCast’s Proofs of Claim.
ECast’s first point of error is that the lower court erroneously concluded that eCast failed to satisfy its evidentiary burden of proving the validity of its claims against Tran. As part and parcel of this inquiry the court concluded: i) eCast’s claims were not prima facie valid; ii) Tran properly objected to eCast’s claims thus shifting the burden upon eCast to prove its underlying claims were valid; and iii) eCast failed to prove its underlying claims were valid and enforceable against Tran.
i. Prima Facie Validity.
a. ECast’s Argument
ECast argues that the lower court erred in finding their proofs of claim failed to meet the requirements to enjoy
prima fa-cie
validity. Dkt. 6, p. 10. They assert the court improperly reversed the burdens
*316
of proof by requiring that their proofs of claim be evinced by proof of transfer or assignment.
Id.
at 14. The crux of eCast’s argument rests on the interplay among the provisions set forth in Rule 3001. ECast cites voluminous case law from several circuits other than the Fifth Circuit to this effect. Dkt. 6, pp. 13-16. The case law eCast cites stands for the proposition that a creditor’s failure to comply with Rule 3001(c) should not alone serve as the basis for disallowance of their claim.
See e.g. Heath v. American Express Travel Related Services Co., Inc.,
b. Tran’s Argument
Tran argues that failure to comply with Rule 3001(c) deprives a creditor’s claim of
prima facie
validity. Dkt. 9, p. 12. Tran controverts eCast’s argument by citing Ninth Circuit case law to support its argument.
See In re Holm,
c. The Lower Court’s Reasoning
The court below held that the prerequisite for a proof of claim to enjoy
prima facie
validity depended upon satisfaction of the elements of Rule 3001. CR 17, p. 7. Rule 3001(c) requires a creditor to satisfy at least one of two requirements in filing a proof of claim based on a writing.
See
Rule 3001(c). The creditor “shall” either: i) file the writing upon which the claim is based; or ii) provide a statement of the circumstances under which the writing cannot be filed.
See id.
To determine whether eCast’s claim was based upon a writing, the lower court first looked to United States Supreme Court law setting forth the rule that state law creates the obligation a debtor owes a creditor. The “ ‘basic federal rule’ in bankruptcy is that state law governs the substance of claims ....”
Raleigh v. Ill. Dep’t of Revenue,
d. Conclusion
Under Rule 3001, a “proof of claim executed and filed in accordance with these rules [Federal Rules of Bankruptcy Procedure] shall constitute prima facie evidence of the validity and amount of the claim.” Fed. R. Bankr. P. 3001(f). As discussed above, eCast did not comply with Rule 3001(c). ECast drafted its boilerplate language discussed above to comply with the Proof of Claim form as evidenced by eCast including the following language in its statement: “Pursuant to paragraph 9 Official Bankruptcy Form 10, Proof of Claim____” CR 6-8. While the foregoing boilerplate language may satisfy the requirement of Form 10, it certainly does not appear to provide the explanation mandated by Rule 3001(c) as discussed above. In light of eCast’s failure to comply with Rule 3001(c), eCast does not meet the requirements of Rule 3001(f) and thus their proofs of claim should not enjoy prima facie validity.
ii. Burden Shifting.
a. ECast’s Argument
ECast argues that the court improperly shifted the burden upon them to prove the underlying validity of their claims. ECast argues that to overcome the validity of a proof of claim requires more than an unsubstantiated objection to form.
See In re Fid. Holding Co.,
b. Tran’s Argument
Tran argues the lower court correctly placed the burden upon eCast to prove the validity of its claim because the claims were not prima facie valid. Tran argues that the lower court’s allocation of burdens was correct pursuant to Rule 3001.
c. The Lower Court’s Reasoning
The court found that failure to file a proof of claim in compliance with the Federal Rules of Bankruptcy Procedure merely deprives the proof of claim of
prima facie
validity.
See
Fed. R. Bankr. P. 3001(f). Finding that eCast’s proof of claims did not comply fully with Rule 3001(c) — and thus did not enjoy
prima fa-cie
validity — the court then applied Fifth Circuit law to determine its next step in the analysis. The court held that in objecting to a proof of claim, the debtor has the burden to overcome the
prima facie
validity of the claim.
See McGee v. O’Con-
*318
nor,
d. Conclusion
“One who asserts a claim is entitled to the burden of proof that normally comes with it.”
Raleigh,
iii. Underlying Validity of ECast’s Proofs of Claim.
a.ECast’s Argument
ECast argues that the lower court misapplied the Bankruptcy Code and erred by applying Texas law in finding their claims unenforceable against Tran. ECast cites the United States Constitution requiring that bankruptcy laws be uniform throughout the nation.
See
Dkt. 6, p. 16 (citing U.S. Const. art. I, § 8, cl. 4). ECast again cites case law from several circuits other than the Fifth Circuit to support its argument.
See Butler v. NationsBank, N.A.,
b. Tran’s Argument
Tran’s argument tracks that of the lower court and therefore is inherently addressed below.
c. The Lower Court’s Reasoning
The court found that the validity of eCast’s underlying claim is governed by state law.
See Ford v. Durkay (In re Ford),
A credit card creditor’s claim is based upon a written contract.
See Tully v. Citibank, (South Dakota) N.A.,
ECast had the opportunity to introduce evidence during the evidentiary hearing held June 20, 2006 before Chief United States Bankruptcy Judge Karen Brown to support its claim beyond what was attached to its proofs of claim. TR 1. As discussed above, eCast introduced evidence and examined Teresa Tran at that hearing. The court found that there were several key documents, any of which could have satisfied eCast’s burden of proof had they been entered into evidence. An affidavit from the custodian of records: i) authenticating the credit card agreement; ii) authenticating monthly statements; or iii) certifying the unpaid balance and balance due could have met eCast’s burden.
See Hay v. Citibank, (South Dakota) N.A.,
d. Conclusion
Pursuant to the Federal Rules of Bankruptcy Procedure and Texas law governing breach of contract, eCast’s claims *320 are not valid, are unenforceable, and therefore should be disallowed. As such, the court below was correct in disallowing eCast’s claims against Teresa Tran.
B. ECast Was Not Required to Prove It Was the Transferee of the Claims.
In its second point of error, eCast asserts the lower court improperly required it to prove it was the assignee of the claims it filed against Tran. As discussed above and exemplified in the lower court’s order, eCast was not required to show it was the transferee or assignee of the claims at issue. CR 17, p. 10. Tran argues this point of error is nothing more than a red herring. The court is not led down this path which is both unnecessary and off-point. In fact, had eCast produced the specific assignments of each claim from the respective banks, it still would not have carried its burden because, as discussed above, it was assigned the burden to prove the validity of its claim under state contract law. It was not assigned the burden to prove it rightfully acquired the claim. There are specific elements that eCast must establish to show an enforceable contract. The lower court cited case law setting forth three different ways eCast could have made that evidentiary showing. However, eCast was not required to produce assignments or transfer documents, and doing so would not alone have established a valid and enforceable claim under Texas law.
C. Disallowance of Claims Not Excepted By Statute.
In its third point of error, eCast argues the court disallowed a claim based on grounds not explicitly authorized by statute. § 502(b) sets forth nine explicit provisions that serve as exceptions to the rule that the court must allow a claim. 11 U.S.C. § 502(b). In other words, courts must generally allow a properly filed claim, but if one of the nine statutory provisions governs, then the court may summarily disallow the claim. See 11 U.S.C. § 502(b).
i. ECast’s Argument
ECast argues that the lower court erred in disallowing claims that are not explicitly excepted by statute; a point related to their first point of error. As discussed above, eCast relies on Ninth Circuit law stating that a creditor’s failure to comply with Rule 3001(c) should not alone serve as the basis for disallowance of their claim.
See e.g. Heath v. Am. Express Travel Related Servs. Co.,
ii. Tran’s Argument
Tran first argues that eCast failed to fully brief this point of error and therefore it is waived. Tran then argues that even if the issue is not waived, eCast’s argument is clearly false in light of 11 U.S.C. § 502(b)(1) specifically providing that a claim that is unenforceable under state law is excepted by statute. See 11 U.S.C. § 502(b)(1). Tran argues that because eCast’s claim is unenforceable under Texas contract law, it does in fact fall under the statutory exception provided in 11 U.S.C. § 502(b)(1).
*321 iii. The Lower Court’s Reasoning
The court agreed with Tran under the plain language of 11 U.S.C. § 502:
[T]he court, after notice and a hearing, shall determine the amount of such claim in lawful currency of the United States as of the date of the filing of the petition, and shall allow such claim in such amount, except to the extent that&emdash; (1) such claim is unenforceable against the debtor and property of the debtor, under any agreement or applicable law.
11 U.S.C. § 502(b). The court noted that eCast’s claim was found invalid and unenforceable under Texas contract law. Section 502(b) enables courts to disallow claims found unenforceable under state law. The court therefore found that Tran’s contention that she owed no money to eCast adequately stated an objection and the claim was disallowed under § 502(b)(1).
iv. Conclusion
The lower court clearly gave full effect to the plain language of the statute. Furthermore, even if the statutes were not clear, the Congressional Record reveals that in drafting the language of the specific section at issue, Congress intended that “claims for usurious interest or which could be barred by an agreement between the creditor and the debtor would be disallowed.” 124 Cong. Reo. H11093-H11095, H11110 (daily ed. Sept. 28, 1978) (remarks of Rep. Edwards introducing the House amendments). The intent behind the enactment of § 502(b) is particularly relevant in light of this case because one could not determine if their estate is being charged usurious interest if no breakdown of the interest charged is provided to the debtor in the first place. Allowing eCast to file a claim against Tran’s estate without showing the interest charged thereto would effectively gut 11 U.S.C. § 502(b) of its intended purpose in light of the Congressional Record above. Furthermore, as the discussion above reveals, Texas law is applicable to eCast’s underlying claim. Also shown above, eCast’s claim is unenforceable against Tran as they have simply failed to establish the validity of their claim. Therefore, the clear language of 11 U.S.C. § 502(b) provides an exception allowing the court to disallow eCast’s claim. See § 502(b) (stating that the “court ... shall allow such claim ... except to the extent that&emdash;(1) such claim is unenforceable against the debtor and property of the debtor, under any agreement or applicable law”). The plain language of the statute supports the lower court’s finding.
E. ECast was Not Entitled to Amend Its Claims.
In its fourth and final point of error, eCast alleges it was denied its right to amend its claim to comply with the court’s requirements discussed at the evidentiary hearing.
i. ECast’s Argument
ECast argues one final point of error. At the end of the evidentiary hearing, Judge Brown denied eCast’s request for a continuance to submit a business records affidavit as discussed above. Once again eCast cites a slew of case law from several circuits other than the Fifth Circuit. The single relevant case cited by eCast is a United States Supreme Court case that easily resolves the argument.
See
Dkt. 6, p. 31. “[T]he grant or denial of an opportunity to amend is within the discretion of the District Court, but outright refusal to grant the leave without any justifying reason appearing for the denial is not an exercise of discretion.”
Foman v. Davis,
*322 ii. Tran’s Argument
Tran argues that eCast never sought leave to amend, but instead sought a continuance after fully presenting all of its evidence. Tran argues in equity that allowing a party to ask for a “do over” after losing a contested matter would bring about an inequitable result.
iii. The Lower Court’s Reasoning
The transcript of the hearing at which eCast’s request for a continuance was denied reveals that the court sustained opposing counsel’s objection to eCast’s request for a continuance. TR 42:6-9. The court held that the hearing was “long-scheduled ... and I’m [Judge Brown] not going to continue it.” TR 42:7-9.
iv. Conclusion
ECast cited a case that is directly on point and dispositive on this issue. One of the justifying reasons for denial of leave to amend is undue delay.
Foman,
IV. Conclusion
In light of the discussion and analysis above, the lower court was correct in disallowing eCast’s claims. The application of Texas law to assess the validity and enforceability of eCast’s underlying substantive claims resolves most of the issues on appeal. Pursuant to both statutory and case law analysis, eCast failed to comply with Rule 3001 in filing their proofs of claim. The rule therefore did not grant those claims a presumption of prima facie validity. Therefore, Teresa Tran’s objection pursuant to 11 U.S.C. 502(a) was valid as it need not overcome any presumption of validity. Subsequently, eCast simply failed to meet their burden to prove their underlying claim under governing state law. The lower court disallowed their claims and that decision is clearly supported by Fifth Circuit law.
As a matter of equity, eCast could have easily met their burden of proof. They had several opportunities, but inexcusably failed to meet their burden of proof each time. Their appeal is based more on equity than on law. However, the principles of equity do not weigh in their favor.
After reviewing the issues on appeal, the applicable law, and for the reasons above, the order of the United States Bankruptcy Court for the Southern District of Texas disallowing eCast Settlement Corp.’s claims against Teresa Tran is AFFIRMED.