Picture this: You are wrapping up writing a brief, memorandum of law, motion or the like regarding a complex bankruptcy issue. It is a close call, and you are grasping for additional arguments to make to the judge. Now ask yourself: Have I discussed the relevant burden of proof? If not, now ask yourself: Whose burden is it anyway?
Too often, we as lawyers (myself included!) get too excited and want to start making our substantive arguments right out of the gate. We forget to tell the judge exactly who is responsible for making the argument and to what extent that party must prove up that argument (i.e., the standard of proof). While this article will focus on the burden of proof, do not forget to discuss the standard of proof as well (Preponderance of the evidence? Clear and convincing evidence?). How the burden of proof is allocated can often be dispositive of a close-call issue.
Bankruptcy as an area of law is unique in that the burden of proof, encompassing both the burden of production and the burden of persuasion (Yes, those are distinct concepts!), is not always obvious. In the civil context generally, we are all used to the rule that the plaintiff carries the burden on its claims while the defendant carries the burden on its affirmative defenses. That will often be true in an adversary proceeding governed by Federal Rule of Bankruptcy Procedure 7001. For example, under Federal Rule of Bankruptcy Procedure 6001, “Any entity asserting the validity of a transfer under § 549 of the Code shall have the burden of proof.” Similarly, under Federal Rule of Bankruptcy Procedure 4005, “At the trial on a complaint objecting to a discharge, the plaintiff has the burden of proving the objection.” And, under § 547(g) of the Bankruptcy Code, “[T]he trustee has the burden of proving the avoidability of a transfer under subsection (b) . . . and the creditor or party in interest against whom recovery or avoidance is sought has the burden of proving the nonavoidability of a transfer under subsection (c) . . ..”
However, that general rule may not always apply in “contested matters” governed by Federal Rule of Bankruptcy Procedure 9014. Or, at the very least, it is not always clear whether the general rule applies because it is not always clear who is technically the “plaintiff” and who is technically the “defendant.” Sometimes, the Federal Rules of Bankruptcy Procedure or the Bankruptcy Code clearly tells us who has the burden of proof. For example, Federal Rule of Bankruptcy Procedure 4003(c) mandates, “In any hearing under this rule, the objecting party has the burden of proving that the exemptions are not properly claimed.” In addition, § 363(p) of the Bankruptcy Code mandates, “In any hearing under this section[,] (1) the trustee has the burden of proof on the issue of adequate protection; and (2) the entity asserting an interest in property has the burden of proof on the issue of the validity, priority, or extent of such interest.” Likewise, § 362(g) allocates the burden of proof in the relief from stay context. Nonetheless, other times, we have to rely on case law and perhaps even state law. For instance, in Raleigh v. Illinois Department of Revenue, the United States Supreme Court held that in the context of a claim objection under Federal Rule of Bankruptcy Procedure 3007, the burden of proof falls on whichever party would bear that burden outside of bankruptcy.
This is all to say that it is important not to skip over a discussion of the relevant burden of proof in your next brief, memorandum of law, motion or the like. Spend the extra time researching it if need be. That extra time might help you win your case. In other words, remember to ask yourself: Whose burden is it anyway?
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