Proof Of Claim: Itemization Of Fees, Expenses, And Charges Means Itemization (Or Else)

In re Jimenez, 487 B.R. 543 (Bankr. D. Colo. 2013) -

A mortgage lender filed a proof of claim in a chapter 13 bankruptcy claiming total secured debt of $132,945.08, including $14,327.60 in prepetition expenses that were identified as $2,231.93 in late charges and $12,095.67 in attorney fees. The debtors objected, claiming that (1) the lender failed to properly itemize prepetition expenses, and (2) the attorney fees were unreasonable.

Under Bankruptcy Rule 3001(f) a proof of claim filed in accordance with the rules is prima facie evidence of the validity and amount of the claim. Rule 3001 was amended in 2011 to add special requirements for a proof of claim filed in an individual debtor case (such as a chapter 13 case). Among other things, under Rule 3001(c)(2)(A):

If, in addition to its principal amount, a claim includes interest, fees, expenses or other charges incurred before the petition was filed, an itemized statement of the interest, fees, expenses, or charges shall be filed with the proof of claim.

Further, Rule 3001(c)(2)(C) provides: "If a security interest is claimed in property that is the debtor's principal residence, the attachment prescribed by the appropriate Official Form shall be filed with the proof of claim." The relevant official form is the "Mortgage Proof of Claim Attachment." It includes a section for itemization of prepetition fees, expenses, and charges that lists more than a dozen specific categories of items.

Although the lender used the standard form attachment and properly identified late charges as a separate line item, its claim included only $7,868.90 in attorney fees, but it lumped over $4,000 in appraisal costs, title fees, public trustee fees, and filing fees with these fees. As a result, it listed $12,095.67 on the line for attorney fees - notwithstanding that there were separate lines for expenses such as appraisal fees, title costs and recording fees. Consequently, the court concluded that the lender failed to comply with the requirement that the proof of claim include an itemized statement of pre-petition expenses.

With respect to the reasonableness of the attorney fees, the fees were incurred by the lender in connection with initiating foreclosure proceedings on three separate occasions prior to the bankruptcy. (In each case, the foreclosure was dismissed after the debtors cured the delinquency.) The fees were collectible under the deed of trust and other loan documents.

The debtors presented testimony...