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In re Barker

United States Court of Appeals, Ninth Circuit

October 27, 2016

In re Marcella Lee Barker, AKA Marci Barker, AKA Marci Vanni Barker, Debtor, Spokane Law Enforcement Federal Credit Union, Appellant,
v.
Marcella Lee Barker; Robert Drummond, Chapter 13 Trustee; Ocwen Loan Servicing, LLC, Appellees.

         Appeal from the Ninth Circuit Bankruptcy Appellate Panel Pappas, Kurtz, and Jury, Bankruptcy Judges, Presiding BAP No. 13-1393

          Argued and Submitted October 3, 2016 Seattle, Washington

          Quentin M. Rhoades (argued) and Francesca di Stefano, Sullivan Tabaracci & Rhoades P.C., Missoula, Montana, for Appellant.

          Robert Drummond (argued), Great Falls, Montana; Kraig C. Kazda, Kazda Law Firm P.C., Great Falls, Montana; for Appellees.

          Before: William A. Fletcher, Ronald M. Gould, and N. Randy Smith, Circuit Judges.

         SUMMARY[*]

         Bankruptcy

         The panel affirmed the Bankruptcy Appellate Panel's affirmance of the bankruptcy court's decision to disallow a creditor's late-filed claims in a Chapter 13 proceeding.

         Agreeing with the Seventh Circuit, the panel held that if a creditor wishes to participate in the distribution of a debtor's assets under a Chapter 13 plan, it must file a timely proof of claim under Federal Rule of Bankruptcy Procedure 3002. The debtor's acknowledgment of debt owed to the creditor in a bankruptcy schedule does not relieve the creditor of this affirmative duty.

          OPINION

          N.R. SMITH, Circuit Judge

         If a creditor wishes to participate in the distribution of a debtor's assets under a Chapter 13 plan, it must file a timely proof of claim. The debtor's acknowledgment of debt owed to the creditor in a bankruptcy schedule does not relieve the creditor of this affirmative duty.

         BACKGROUND FACTS

         On September 6, 2012, debtor Marcella Lee Barker filed a Chapter 13 bankruptcy petition in the United States Bankruptcy Court for the District of Montana. Later that day, in response to the filed petition, the bankruptcy court issued an Official Form B9I, titled "Notice of Chapter 13 Bankruptcy Case, Meeting of Creditors, & Deadlines" ("Notice"). The Notice stated that the deadline for creditors[1]to file a proof of claim was January 8, 2013. On September 8, 2012, the Bankruptcy Noticing Center sent the Notice to the Appellee, Spokane Law Enforcement Federal Credit Union ("Credit Union"), by first class mail. On September 19, 2012, Barker timely filed her Chapter 13 plan with the bankruptcy court.[2] According to her attached certificate of mailing filed with the court, the plan was also sent to the Credit Union that day via first class mail.

         On September 19, 2012, Barker also properly filed schedules of her assets and liabilities.[3] In these schedules, Barker listed the Credit Union as a secured creditor holding a $6, 646.00 purchase money security interest in a 2004 Ford F-150. Barker also listed the Credit Union as an unsecured creditor holding a $47, 402.00 claim that had previously been secured by an unidentified automobile, which Barker's ex-husband had sold.

         Barker moved to amend and modify the Chapter 13 plan several times over the next few months. Each time such a motion was filed, Barker sent a notice to the Credit Union. In addition, each time the bankruptcy court entered an order confirming the amended plan, the Bankruptcy Noticing Center notified the Credit Union.

         On May 30, 2013, more than four months after the deadline to file a proof of claim expired, the Credit Union filed three claims with the bankruptcy court: a secured claim for $5, 490.78 and unsecured claims for $28, 293.94 and $24, 587.47.[4] In accordance with the Local Bankruptcy Rules for the United States Bankruptcy Court for the District of Montana, the Trustee sent a "Notice of Late Filed Claims" to the Credit Union on June 7, 2013.[5] On June 10, 2013, the Credit Union requested a hearing "to contest the tardy response." In this request, the Credit Union asserted that the claims were belated, because a "disgruntled employee" failed to timely file the claim. On July 31, 2013, the Credit Union filed a formal motion with the bankruptcy court requesting the court to allow the three claims. The court held a hearing on the matter on August 2, 2013. The court denied the Credit Union's motion and disallowed the claims because the proofs of claims were not timely filed.

         On August 12, 2013, the Credit Union filed a notice of appeal with the bankruptcy court, and the appeal was taken to the Ninth Circuit Bankruptcy Appellate Panel ("BAP"). On March 28, 2014, the BAP affirmed the bankruptcy court's decision to disallow the late filed claims. On ...


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