UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF KENTUCKY
CASE NO. 94-10441
NICCOLETTE G. VAUGHAN
This matter is before the Court on the objection of the trustee to the claim of Fred P. Olson having been submitted for decision following a hearing on the matter held on June 11, 2001.
The debtors filed their Chapter 11 petition on December 23, 1994. Subsequently, Thomas E. Bulleit, Jr., was appointed trustee herein on March 16, 1995. The claimant filed his proof of claim on April 22, 1999 (claim no. 41) as an unsecured priority claim in the amount of $25,623.60. The basis of the claim is money loaned by the claimant to the debtors and wages claimed due by the claimant from the debtors. The trustee filed his objection to the claim on April 22, 1999. Subsequently, on June 10, 1999 an amended proof of claim (claim no. 42) in the amount of $22,239.12 was filed by the claimant. On June 28, 1999 after a hearing on the trustee=s objection to the claim an Order was entered sustaining the objection and disallowing the claim.
Thereafter, on July 26, 1999, the claimant filed his motion to reconsider the Order disallowing his claim (Doc. no. 534) and the trustee filed a response on September 3, 1999. (Doc. no. 538.) After a hearing on the claimant=s motion to reconsider on September 9, 1999 the Court sustained the motion and an Order was entered on April 17, 2000 (Doc. no. 547).
On February 15, 2001 the claimant by and through his attorney filed a motion for an Order directing the trustee to pay the claimant $3,115.53 claimed due for cash advances made by the claimant for purchases made for the debtor=s farm in 1997 and for certain sums claimed due for wages (Doc. no. 555). The motion also asks that the trustee be directed to pay $5,400.00 for wages claimed due for 1997; $5,700.00 for wages claimed due for 1996; and $3,900.00 for wages claimed due for 1995. (Total claimed for wages: $15,000.00.) Additionally, the motion asks for reimbursement for monies claimed advanced on behalf of the debtor=s farm in October 1994 in the amount of $1,553.35; in November 1994 in the amount of $584.74; in December 1994 in the amount of $443.11; and in January 1995 in the amount of $601.57. (Total claimed for expenses: $3,184.77.) The total amount sought in the motion is $21,300.00. All of the sums claimed by the claimant, except for the expense claims for October through December, 1994, are administrative claims against the estate since they post-date the filing of this proceeding. This total includes the sum of $3,115.53 for cash purchases made by the claimant in 1997 on behalf of the debtors and which has been acknowledged by the trustee as valid reimbursable expenses.
On March 15, 2001 the trustee filed his response objecting to the motion. Additionally, on April 20, 2001 the claimant by and through his attorney filed a third proof of claim (claim no. 45) in the amount of $21,300.30 as an unsecured priority claim. After a hearing on May 10, 2001, where noone appeared in opposition to the motion, an Order was entered on May 21, 2001 (Doc. no. 562) sustaining the claimant=s motion and directing the trustee to pay the sum of $21,300.00 to the claimant=s attorney. Thereafter, on May 25, 2001 the trustee filed his Motion to Reconsider and vacate the Order of May 21, 2001 (Doc. no. 569). A Responsive Affidavit (Doc. no. 572) was filed by counsel for the claimant. After a hearing on the matter the Court entered its Order of June 22, 2001 (Doc. no. 574) vacating the Order entered on May 21, 2001. In its Order of June 22, 2001, the Court granted the trustee additional time in which to file his submission of proof in support of his objection, and granted the claimant time thereafter to file a response. The trustee=s submission (Doc. no. 575) was filed on June 22, 2001. The claimant=s response (Doc. no. 580) was filed on July 6, 2001 and the matter now stands submitted.
In considering the validity of Olson=s claim and the trustee=s objection, the applicable standard is found in In re Allegheny Int=l, Inc., 954 F.2d 167 (3d Cir. 1992),
The burden of proof for claims brought in the bankruptcy court under 11 U.S.C.A '502(a) rests on different parties at different times. 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. It is often said that the objector must produce evidence in equal force to the prima facie case. .... In practice, the objector must produce evidence which, if believed, would refute at least one of the allegations that is essential to the claim=s legal sufficiency. If the objector produces sufficient evidence to negate one or more of the sworn facts in the proof of claim, the burden reverts to the claimant to prove the validity of the claim by a preponderance of the evidence. .... The burden of persuasion is always on the claimant. (Cites omitted.)
At pages 173-174. See also In re Fullmer, 962 F.2d 1463 (10th Cir. 1992). Likewise, this Court has previously followed this standard in determining the validity of a claim in In re Russell Cave Company, Inc., 235 B.R. 815 (Bankr. E.D.Ky. 2000)
Applying this standard to Olson=s claim for $3,184.77 for cash advances made for the debtor=s farm from October 1994 through January 1995, the Court finds that the claimant has not met the threshold requirement of alleging Afacts sufficient to support the claim,@ Alleghany, at 173. That is, the facts alleged by Olson are not sufficient to support a legal liability to him. Specifically, as relates to his claim for monies advanced to the debtor for these periods, the claimant has offered photocopies of numerous receipts from a variety of merchants. Claimant has then grouped these receipts together by date and issued in his own hand a statement which reflects the total amount of the receipts for that period. Without more, these statements made up of the various receipts cannot be found to be sufficient to support a legal liability owed to the claimant by the debtor. In further support of his claim for monies advanced the claimant points to his affidavit in which he avers that he Ashould be reimbursed for cash advances he made for farm expenses for the debtors during the period 1994 thru [sic] 1997.@ (& 4, claimant=s affidavit attached to Document no. 559, claimant=s Re-notice of Motion.) However, nothing further is offered which would support the claim for the $3,184.77 sought for monies advanced during the months of October, November, and December of 1994 and for January of 1995.
In support of his claim for the $3,115.53 sought for monies advanced for the year 1997, the claimant points to his affidavit as well as the affidavit of the debtor, Niccolette Vaughan, in which the debtor acknowledges this sum. As noted previously the trustee has not disputed this portion of the claim and the Court finds that it should be allowed. The claimant cannot, however, rely on the debtor=s acknowledgment of the sums advanced in 1997 to boot-strap the sums allegedly advanced in the 1994-1995 period into a valid claim. The standard for legitimacy is clear. Only where the claimant alleges facts sufficient to support a legal liability to the claimant will he satisfy his initial obligation of going forward. As such, the Court cannot find that the claimant has alleged facts sufficient to support his claim for the $3,184.77 claimed for the 1994-1995 period and this portion of his claim is hereby disallowed.
In addressing the validity of Olson=s claim for the amount of $9,500.00 claimed due as wages ($3,900.00 claimed due for 1995; $5,700.00 claimed due for 1996; and $5,400.00 claimed due for 1997), the Court finds that Olson has not met his burden of proof sufficient to support the validity of his claim. Particularly, Olson alleges that in 1995 he was paid for 39 weeks and is therefore owed for an additional 13 weeks for 1995, and that in 1996 he was paid for 33 weeks and is therefore owed for an additional 19 weeks for 1996. There is no disagreement that Olson was paid a salary of $300.00 per week for any week in which he worked. Olson=s claim for wages is based on his assertion that he was a year round full time employee of the debtors. (& 1, Olson=s affidavit, attached to Document no. 559.) This claim of year round employment is disputed by the debtor, Niccolette Vaughan, who has averred in her affidavit that Olson Awas paid for every week he worked in 1995 and 1996.@ (& 2, Vaughan Affidavit, exhibit no. 1 to claimant=s affidavit, attached to doc. no. 559. Emphasis added.) In support of his claim for wages for the periods 1995 and 1996, Olson relies on accounting sheets attached to the trustee=s submission (Document no. 575) which reflect that Olson was paid for 40 weeks for 1995. From that, Olson asserts he is therefore owed wages for the remaining weeks of the year 1995. For the year 1996 the trustee=s accounting reflects Olson was paid for 33 weeks. From that, Olson asserts he is therefore owed wages for the remaining weeks of 1995. The Court cannot find that such assertions are factually sufficient to support the validity of Olson=s claim for wages for the years 1995 and 1996 which will lead to a finding that Olson=s claim for this period is prima facie valid. In further support of his claim for wages for the 1995-1996 periods, Olson relies on the affidavit of the debtor, Niccolette Vaughan, but the averments contained in the debtor=s affidavit offer no support for Olson=s claim. Rather, as stated above, Vaughan=s affidavit avers that Olson was paid for every week he worked. This can only suggest that Olson was not employed for the entire year. As pointed out by the trustee in his submission, the trustee would have been a party to any such engagement of an employee. Further, the trustee indicates in his submission that the debtors would advise the trustee as to how many weeks Olson had worked and the trustee would then pay Olson for those periods worked. There is nothing offered by Olson in support of his claim that suggests he was not in agreement with this arrangement or that he ever made objection to it. Thus, the Court cannot find that Olson has come forward with facts sufficient to support his claim for wages for the additional wages claimed for 1995 and 1996. That is, Olson has not alleged facts sufficient to support a legal liability owed to him for these wages and the court finds that these amounts, $3,900.00 claimed for 1995 and $5,700.00 claimed for 1996, are disallowed.
In support of his claim for the amount of $5,400.00 as additional wages owed for 1997, Olson again relies on the accounting filed by the trustee and on the affidavit of Niccolette Vaughan. Vaughan=s affidavit states that AMr. Olson worked from March 1, 1997 until he was laid off in September 1997.@ (& 1, affidavit of Niccolette Vaughan.) The trustee=s accounting indicates that during this period Olson was paid for 10 weeks. From this, Olson asserts he is therefore owed wages for an additional 18 weeks for 1997. Yet, neither of these offer facts sufficient to support Olson=s claim for additional wages for 1997. Vaughan=s affidavit indicates that Olson was paid for every week he worked. As with the 1995-1996 period, this comports with the arrangement whereby the trustee would pay Olson after being advised by the debtors as to how many weeks Olson had worked and as previously stated, this practice had continued throughout the employment of Olson without objection. The Court therefore cannot find that Olson has alleged facts which support his claim sufficient to create a legal liability for wages owed for the 1997 period and the Court finds that the $5,400.00 amount claimed as additional wages for 1997 is hereby disallowed.
An Order allowing the claim of Fred P. Olson to the extent of $3,115.53 as reimbursable expenses for 1997, and disallowing the claim for $3,184.77 for expenses sought for October 1994, November 1994, December 1994, and January 1995, and disallowing the claim for wages in the amounts of $3,900.00 for 1995, $5,700.00 for 1996, and $5,400 for 1997 will be entered separately.
By the Court:
Attorney for claimant