ERIC L. FRANK, Chief Bankruptcy Judge.
Presently before the court is the Debtor's Objection to Proof of Claim No. 5 of PECO Energy Company ("the Objection"). The claim is in the amount of $11,024.22. In the Objection, the Debtor asserts that the claim should be disallowed in whole or in substantial part because, under applicable nonbankruptcy law, the statute of limitations has expired or, alternatively, the Debtor is not liable for a significant portion of utility service bill upon which the claim is based.
For the reasons explained below, the Objection will be overruled and the claim will be allowed in its entirety.
The Debtor filed the Objection on March 15, 2017. A hearing on the Objection was held on May 23, 2017. Neither party presented any witnesses. The only evidence offered by the Debtor was a written decision of the Pennsylvania Public Utility Commission issued by an administrative law judge,
At the conclusion of the hearing, a schedule for post-hearing memoranda was established at parties' request. PECO Energy Company ("PECO") filed a memorandum in support of its position on June 6, 2017. The Debtor did not submit a memorandum.
Under the Bankruptcy Code, a proof of claim "is deemed allowed, unless a party in interest . . . objects." 11 U.S.C. §502(a). If there is an objection, the parties' shifting burdens play a key role in the determination whether the claim will be allowed.
The Federal Rules of Bankruptcy Procedure provide that a proof of claim filed in accordance with the rules establishes the
Once the claimant has made out a prima facie claim, the burden of production shifts to the objector to negate the claim's
In this matter, the Debtor does not assert that PECO's proof of claim failed to satisfy the requirements of the Federal Rules of Bankruptcy Procedure. Thus, the claim is
Based on the Debtor's representations in the Objection and in court, as well as the findings of the PUC Decision, the following facts are not in dispute.
PECO's claim is based on utility service provided at two (2) addresses: 7134 Seaford Road, Upper Darby, PA 19082 ("Seaford Road") and 6685 Church Lane ("Church Lane").
The Debtor's son opened the Seaford Road account in May 2006. It remained in his name until February 26, 2012. On February 27, 2012, the next day, the Debtor became the primary customer on the Seaford Road account. The Debtor entered into a payment agreement with PECO in March 2012, requiring her to pay $1,378.75 per month plus the current bill. Based on the necessity of entering into that payment agreement, I infer that when the Debtor applied for service at Seaford Road, PECO transferred the balance due on her son's account to the Debtor's Seaford Road account. I will refer to that amount as "the Son's Seaford Road Balance."
On July 31, 2012, the Debtor opened a second PECO account for utility service at Church Lane. The Seaford Road account was closed in September 2012. On October 8, 2012, PECO transferred the final balance on the Seaford Road account, $8,440.28, to the Debtor's Church Lane account. The Debtor disputes her liability for this $8,440.28.
On December 23, 2013, the Debtor filed a complaint with the Pennsylvania Public Utilities Commission ("the PUC") asserting that: (1) she was not responsible for the Son's Seaford Road Balance and (2) she had not been offered appropriate payment arrangement terms on her undisputed liability. However, prior to the P.U.C. hearing, the Debtor withdrew her complaint regarding the Son's Seaford Road Balance and limited her dispute to the payment arrangement issue.
I will address the Debtor's contentions in reverse order, first considering the challenge to her actual liability and then addressing the statute of limitations defense.
The Debtor's theory in contesting her liability to PECO is based on the undisputed fact, established at the hearing, that the account balance transferred from Seaford Road to Church Lane was largely comprised of the Son's Seaford Road Balance.
The Pennsylvania Public Utility Code defines "customer" as
66 Pa. C.S. §1403 (emphasis added).
The regulations of the Public Utility Commission ("the PUC") also define customer as including "an adult occupant whose name appears on the mortgage, deed or lease of the property for which residential utility service is requested." 52 Pa. Code § 56.2.
When the Debtor applied for service at Seaford Road, it appears that PECO conditioned her status as a new customer upon the transfer of the Son's Seaford Road Balance to her new account. The precise issue raised by the Debtor is whether it was permissible for PECO to transfer the Son's Seaford Road Balance to her account when she opened her account at Seaford Road.
The PUC regulations provide support for PECO's position. 52 Pa. Code §56.35 states:
To summarize, on its face, 52 Pa. Code §56.35(b) authorizes PECO to condition the furnishing of service if either: (1) the applicant was legally responsible for the bill as a customer or (2) the applicant resided at the property at which service is requested while the prior bill accrued. In reported administrative adjudications, the PUC has applied the plain language of 52 Pa. Code §56.35.
Presumably, PECO invoked §56.35 when the Debtor requested service in her own name at Seaford Road in February 2012.
In this contested matter, in which PECO's proof of claim is
To meet her burden of production, the Debtor needed to offer evidence that she did not reside at that property for some or all of the four (4) year period preceding her application for customer status at Seaford Road, see 52 Pa. Code §56.35 (and possibly also that her name was not on the deed, mortgage or lease for the property, see 66 Pa. C.S. §1403; 52 Pa. Code § 56.2). The Debtor produced no evidence regarding these material facts. Therefore, she did not meet her burden of production in contesting the allowance of PECO's claim and her objection on this ground must be overruled.
If a claim is time-barred under applicable nonbankruptcy law when a bankruptcy case is commenced a proof of claim based on that claim will be disallowed upon objection by a party in interest.
In this case, the Debtor's objection based on the expiration of the statute of limitation is based on the theory that her disputed liability for service provided at Church Lane arose in February 2012, more than four (4) years before her September 2016 bankruptcy filing. Therefore, according to the Debtor, Pennsylvania's four (4) year statute of limitations expired, requiring disallowance of PECO's claim.
The Debtor's theory is flawed because there is ample evidence that the statute of limitations has not expired by virtue of the acknowledgment doctrine.
The acknowledgment doctrine provides that the statute of limitations recommences upon the unequivocal promise to pay or an actual payment.
In this case, three (3) facts coalesce to make the acknowledgment doctrine applicable.
First, the Son's Seaford Road Balance was transferred to the Debtor's own PECO account at Seaford Road (and later re-transferred to the Debtor's Church Lane PECO account) and has been included in the Debtor's account statements since 2012. Thus, the Debtor has had one (1) PECO account for over five (5) years, which included the Son's Seaford Road Balance.
Second, the Debtor acquiesced to the consolidation of the Seaford Road and Church Lane accounts in the PUC proceedings in 2015. The Debtor acknowledged her liability by withdrawing that portion of her PUC complaint relating to the imposition of her liability for the Son's Seaford Road Balance. She contests that liability now, but even if she is not bound by her action in accepting her liability in 2015, there is nothing in the record to suggest that her acceptance of the liability was anything other than unequivocal.
Third, based on the account records attached to PECO's proof of claim, there is no dispute that the Debtor made payments on the consolidated account as recently as September 25, 2016, less than one (1) year before commencing this bankruptcy case.
These facts together establish that the Debtor made a payment sufficient to recommence the statute of limitations pursuant to the acknowledgment doctrine well within the four (4) year limitations period. As a result, the Debtor's statute of limitations objection is without merit.
For the reasons set forth above, the Debtor's Objection to PECO's proof of claim will be overruled.
66 Pa. C.S. § 1403; 52 Pa. Code § 56.2.