In Re McCoy
MEMORANDUM OPINION
This mаtter comes before the Court on the objection of Robert McCoy (the “Debt- or”) to Claim Nos. 8 and 9 filed by Mutual Bank and Claim No. 10 filed by Mary E. Dik. For the reasons set forth herein, the Court overrules and denies, in part, the Debtor’s objection to these claims. Claim Nos. 8 and 9 of Mutual Bank are duplicаte claims, and thus, Claim No. 9 is hereby disallowed. Claim No. 8 is allowed. Claim No. 10 filed by Mary E. Dik is allowed.
I. JURISDICTION AND PROCEDURE
The Court has jurisdiction to decide this matter pursuant to 28 U.S.C. § 1334 and Internal Operating Procedure 15(a) of the United States District Court for the Northern District of Illinois. It is a core proceeding under 28 U.S.C. § 157(b)(2)(B).
II. FACTS AND BACKGROUND
On October 4, 2005, the Debtor filed a Chapter 13 bankruptcy petition. The Debtor’s plan was confirmed on December 21, 2005. The plan provides for a ten percent distribution to general unsecured creditors.
On January 30, 2006, Mutual Bank filed two proofs of claim, each in the amount of $111,701.11, which were designated Claim Nоs. 8 and 9. 1 On May 1, 2006, Mary E. Dik filed a proof of claim in the amount of $111,701.11, which was designated Claim No. 10. Mary E. Dik’s claim was filed after the claims bar date. 2
III. APPLICABLE STANDARDS
Pursuant to Federal Rule of Bankruptcy Procedure 3001(f), “[a] proof of claim executed and filed in accordance with these rules shall constitute prima fa-cie evidence of the validity and amount of the claim.” Fed. R. BankR. P. 3001(f);
see also
11 U.S.C. §§ 501 and 502(a). Claim objectors carry the initial burden to produce some evidence to overcome this re-buttable presumption.
In re O’Malley,
IV. DISCUSSION
The Debtor contends that the claims of Mutual Bank and Mary E. Dik are for reimbursement or contribution of an entity that is liable with the Debtor pursuant to 11 U.S.C. § 502(e)(1). Specifically, the Debtor maintains the claims are based on liability that may exist to Bonnie McCoy based on her allegation that the Debtor forged her signature on the loan documents. Further, the Debtor argues that the claim of Bonnie McCoy is deemed disallowed because she was properly scheduled and did not timely file a claim, and therefоre, her claim is disallowed as defined in § 502(e)(1)(A). The Debtor contends that the claims are contingent as defined in § 502(e)(1)(B). According to the Debtor, the claims of Mutual Bank and
Mutual Bank and Mary E. Dik argue that the Debtor’s reference to §§ 502(e) and 509 is not germane to the claims at issue. Accоrding to Mutual Bank and Mary E. Dik, the Debtor’s repeated contentions that the claims at bar are for reimbursement and contribution are incorrect. Rather, the claimants argue that Bonnie McCoy’s complaint against them and Mutual Bank’s complaint against the Debtor show that Mutual Bank and Mary E. Dik are pursuing claims that are direct in nature, e.g., fraud, negligence, breach of contract, and breach of warranty.
The Debtor objects to the claims of Mutual Bank and Mary E. Dik under 11 U.S.C. § 502(e)(1) which provides as follows:
(e)(1) Notwithstanding subsections (a), (b) and (c) of this section and paragraph (2) of this subsection, the court shall disallow any claim for reimbursement or contribution of an entity that is liable with the debtor on or has secured the claim of a creditor, to the extent that—
(A) such creditor’s claim against the estate is disallowed;
(B) such claim for reimbursement or contribution is contingent as of the time of allowance or disallowanсe of such claim for reimbursement or contribution; or
(C) such entity asserts a right of sub-rogation to the rights of such creditor under section 509 of this title.
11 U.S.C. § 502(e)(1).
First, the Debtor argues that the claim of Bonnie McCoy is deemed disallowed because she was properly scheduled as a creditor and did not timely file a claim. Therefore, according to the Debtor, her claim is disallowed as defined in § 502(e)(1)(A). The Debtor maintains that the alleged disallowance of Bonnie McCoy’s claim is sufficient to bar the claims of Mutual Bank and Mary E. Dik. The Court rejects this contention. A claim must be filed before it сan be allowed or disallowed. The failure of a scheduled creditor to file a claim by the deadline date does not mean that the unfiled claim is disallowed. Indeed, Bonnie McCoy never filed a claim in this bankruptcy case. Therefore, she did not have a claim that could bе either allowed or disallowed. Thus, the Debtor’s argument that Bonnie McCoy’s unfiled claim has been disallowed under § 502(e)(1)(A) fails. Accordingly, the Debtor has not established that Claim No. 8 of Mutual Bank and Claim No. 10 of Mary E. Dik should be disallowed under § 502(e)(1)(A).
Next, in order to disallow a claim for reimbursement of or cоntribution to an entity that is co-liable with the debtor under § 502(e)(1)(B), three factors must be established: (1) the claim must be one for reimbursement or contribution; (2) the party asserting entitlement to reimbursement or contribution must be liable with the debtor on the underlying claim; and (3) the claim must be contingent at the time of its allowance or disallowance.
Norpak Corp. v. Eagle-Picher Indus., Inc.,
Mutual Bank and Mary E. Dik rely on the legislative history of § 502(e)(1) and contend that their claims are not of the kind subject to disallowance under this section. The legislative history of § 502(e)(1) speaks to the claims of “codebt- or, surety or guarantor” and states as fоllows:
[Section 502(e)], also derived from present law, requires disallowance of the claim for reimbursement or contribution of a codebtor, surety or guarantor of an obligation of the debtor, unless the claim of the creditor on such obligation has been paid in full. The provision prevents competition between a creditor and his guarantor for the limited proceeds in the estate.
S. Rep. No. 95-989, at 65 (1978),
reprinted in
1978 U.S.C.C.A.N. 5787, 5851, 6310; H.R. Rep. No. 95-595, at 354 (1977),
reprinted in
1978 U.S.C.C.A.N. 5787, 5851, 6310. One court noted that “[s]eetion 502(e)(1)(B) is also designed to prevent double payment by an estate for the same underlying liability. ‘The section is not intended to immunize debtors from contingent liability,’ but instead protects debtors from multiple liability on contingent debts.”
Farley,
In addition to codebtor situations created by contract, § 502(e)(1)(B) applies to disallow contingent reimbursement or contribution claims created by statute.
See, e.g., Syntex Corp. v. The Charter Co. (In rе The Charter Co.),
Although section 502(e)(1)(B) may have been devised primarily with contract-based codebtor relationships in mind (e.g., guaranties, suretyships), however, its language (“liable with”) has been found too plain and inclusive to exempt “joint and several” tort-based obligations from disallowance, and the Bankruptcy Code elsewhere carves out no exception for this variety of co-obligation.
Juniper Dev. Group v. Kahn (In re Hemingway Transp., Inc.),
The Court finds that the Debtor has not established that Claim No. 8 of Mutual Bank and Claim No. 10 of Mary E. Dik should be disallowed pursuant to § 502(e)(1)(B). First, the claims must be for reimbursement or contribution. “A claim for indemnification, as well as contribution, has been considered to be for ‘reimbursement’ within § 502(e)(1)(B).”
In re Pettibone Corp.,
Next, the Debtor has not established the second element necessary to disallow a claim under § 502(e)(1)(B). The Debtor must show that the party asserting entitlement to reimbursеment or contribution must be “liable with” the Debtor on the underlying claim. The phrase “liable with the debtor” has been interpreted to be broad enough to encompass any type of liability shared with a debtor.
A & H,
The Court finds that there was no evidence proffered with the objection to the claims to show that either Mutual Bank or Mary E. Dik acted in concert with the Debtor or agreed to his now admitted forgery of Bonnie McCoy’s signature on the mortgage. Thus, the Court cannot find on this limited record that either claimant was a joint tortfeasor with the Debtor. Their separate liability arises frоm Mary E. Dik’s improper and negligent acts as a notary vis-á-vis Bonnie’s McCoy’s signature and Mutual Bank’s alleged liability as a principal for its agent’s improper acts as a notary with respect to the forged signature. Thus, the Debtor has not shown that he is liable with the claimants.
Finally, the Debtor has not shown that the claims are contingent at the time of their allowance or disallowance. The Seventh Circuit Court of Appeals has stated that “the concept of contingency involves the nature or origin of liability. More precisely, it relates to the time or circumstancеs under which the liability arises.”
In re Knight,
The Court finds that the claims of Mutual Bank and Mary E. Dik are not contingent. All events that gave rise to their claims arose pre-petition. Hence, as long as all of the events that gave rise tо the Debtor’s liability occurred prior to the filing of the bankruptcy case, the claims of Mutual Bank and Mary E. Dik are noncon-tingent.
See Knight,
Finally, the Court finds that the Debtor has not shown that the claims should be disallowed pursuant to § 502(e)(1)(C). The claims of Mutual Bank and Mary E. Dik are independent of Bonnie McCoy’s claims against the Debtor and are not subject to subrogation. There is no showing that either claimant has paid Bonnie McCoy anything on her claims against them and taken by way of subrogation her claims against the Debtor for his forgery of her signature.
V. CONCLUSION
For the foregoing reasons, the Court overrules and denies, in part, the Debtor’s objection to the claims filed by Mutual Bank and Mary E. Dik. Claim Nos. 8 and 9 of Mutual Bank are duplicate claims, and thus, Claim No. 9 is hereby disallowed. Claim No. 8 is allowed. Claim No. 10 filed by Mary E. Dik is allowed.
This Opinion constitutes the Court’s findings of fact and conclusions of law in accordance with Federal Rule of Bankruptcy Procedure 7052. A separate order shall be entered pursuant to Federal Rule of Bankruptcy Procedure 9021.
Notes
. Mutual Bank concedes that Claim Nos. 8 and 9 are duplicate claims. Thus, Claim No. 9 is hereby disallowed.
. The Debtor asserts that this claim was allowed to be filed late. This assertion is not correct. On June 14, 2006, the Court denied Mary E. Dik’s motion to deem her claim timely filed. Nevertheless, the Debtor does not object to Mary E. Dik’s claim on the basis of timeliness.