Holloway v. Am. Infosource, LP (In re Holloway)

• Decision Date: 08 September 2015
• Docket Number: Adv. Pro. No. 15–8038–WRS,Case No. 14–80660–WRS
• Citation: 538 B.R. 137
• Parties: In re Shemekia Holloway, Debtor Shemekia Holloway, Plaintiff v. American Infosource, LP and Atlas Acquisitions LLC, Defendant
• Court: U.S. Bankruptcy Court — Middle District of Alabama

538 B.R. 137

In re Shemekia Holloway, Debtor

Shemekia Holloway, Plaintiff

v.American Infosource, LP and Atlas Acquisitions LLC, Defendant

Case No. 14–80660–WRS

Adv. Pro. No. 15–8038–WRS

United States Bankruptcy Court, M.D. Alabama.

Signed September 8, 2015

Filed September 9, 2015

Anthony B. Bush, The Bush Law Firm, LLC, Montgomery, AL, for Plaintiff.

American Infosource, LP, Irving, TX, pro se.

Leonard N. Math, Chambless & Math, Montgomery, AL, Defendant.

MEMORANDUM DECISION

William R. Sawyer, United States Bankruptcy Judge

This matter is before the Court on Defendant Atlas Acquisitions, LLC's motion to dismiss Plaintiff Shemekia Holloway's complaint. The Plaintiff asserts that the Defendant violated the FDCPA by filing time-barred proofs of claim in her Chapter 13 bankruptcy. For the reasons set forth below, the Defendant's motion is DENIED.

I. FACTS & PROCEDURAL HISTORY

Plaintiff Shemekia Holloway (“Holloway”) filed Chapter 13 bankruptcy on May 30, 2014. (Case No. 14–80660). On July 2, 2014, Defendant Atlas Acquisitions, LLC (“Atlas”) filed a proof of claim on a debt acquired from Advance America. (Case No. 14–80660, Claim 7). Atlas's proof of claim stated that the date of the last payment on the underlying debt was December 3, 2008.

On July 10, 2014, the Eleventh Circuit held that the filing of a proof of claim in bankruptcy on a facially time-barred debt violates §§ 1692e and 1692f of the Fair Debt Collection Practices Act (“FDCPA”). See Crawford v. LVNV Funding, LLC, 758 F.3d 1254, 1261 (11th Cir.2014).

Holloway initiated this adversary proceeding against Defendants American Infosource, L.P. and Atlas on June 23, 2015, objecting to the Defendants' proofs of claim and asserting that they violate the FDCPA because the underlying debts are barred by Alabama's 3–year statute of limitations.¹ (Doc. 1). Atlas has filed a motion to dismiss. (Doc. 5). Atlas argues that Holloway's FDCPA claims are precluded by the Bankruptcy Code, that the Eleventh Circuit's decision in Crawford should not be applied retroactively, that Atlas's filing was a bona-fide error, and that Holloway has failed to state a claim under the FDCPA. Holloway has filed a response in opposition. (Doc. 8).

II. LAW

This Court has jurisdiction under 28 U.S.C. §§ 157(b)(1) and 1334(b), and the district court's General Order of Reference dated April 25, 1985. Holloway's objections to claims are core proceedings. 28 U.S.C. § 157(b)(2)(B). Her FDCPA claims are non-core. 28 U.S.C. § 157(c)(1). A denial of a motion to dismiss is not a final order.

A. Standard of Review on a Motion to Dismiss

Rule 12(b)(6) of the Federal Rules of Civil Procedure, as incorporated by FED. R. BANKR. P. 7012(b), authorizes the Court to dismiss complaints that fail to “state a claim upon which relief can be granted.” The Court's analysis of a complaint in the context of a motion to dismiss is a two-step process. First, the Court must identify, and cull, pleadings that are mere legal conclusions or “[t]hreadbare recitals of the elements of a cause of action,” for such pleadings “are not entitled to the assumption of truth.” Ashcroft v. Iqbal, 556 U.S. 662, 678–79, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Second, “[w]hen there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Id. at 679, 129 S.Ct. 1937.

“[S]tating such a claim requires a complaint with enough factual matter (taken as true)” “to raise a right to relief above the speculative level,” i.e., the complaint must be “plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555–56, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. A “well-pleaded complaint may proceed even if it strikes a savvy judge that the actual proof of those facts is improbable, and ‘that a recovery is very remote and unlikely.’ ” Twombly, 550 U.S. at 556, 127 S.Ct. 1955.

B. The Bankruptcy Code Does Not Preclude the FDCPA

Atlas's primary argument in support of its motion to dismiss is that the Bankruptcy Code precludes the FDCPA. Specifically, Atlas contends that the Bankruptcy Code expressly allows the filing of proofs of claim on stale debt, and that the interpretation of the FDCPA in Crawford irreconcilably conflicts with the Bankruptcy Code's claims allowance process.

After Atlas filed its motion in this case, this Court rejected an identical argument in a different case with nearly identical facts to those here. See Feggins v. LVNV Funding, LLC (In re Feggins), 535 B.R. 862, 864–74 (Bankr.M.D.Ala.2015). The analysis in Feggins is equally applicable to this case, and on that basis the Court rejects Atlas's preclusion argument.

C. This Court Lacks Discretion to Apply Crawford Non–Retroactively

Atlas next argues that the Eleventh Circuit's holding in Crawford should not be applied retroactively, and directs the Court's attention to the test set out in Chevron Oil Co. v. Huson, 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971). As mentioned above, Atlas filed its proof of claim before the Eleventh Circuit decided Crawford. Supra Part I.

“ ‘Generally, new rules of law are applied retroactively as well as prospectively.’ ” Glazner v. Glazner, 347 F.3d 1212, 1216 (11th Cir.2003) (en banc) (quoting Wagner v. Daewoo Heavy Indus. Am. Corp., 314 F.3d 541, 544 (11th Cir.2002) (en banc)). In the realm of civil law, however, courts may sometimes choose not to apply a new rule of law retroactively. A court must look at three factors in determining whether to apply a new rule purely prospectively:

First, the decision to be applied nonretroactively must establish a new principle of law, either by overruling clear past precedent ... or by deciding an issue of first impression whose resolution was not clearly foreshadowed [.] Second, [a court] must weigh the merits and demerits in each case by looking to the prior history of the rule in question, its purpose and effect, and whether retrospective operation will further or retard its operation. Finally, [a court must] weigh [ ] the inequity imposed by retroactive application, for where a decision ... could produce substantial inequitable results if applied retroactively, there is ample basis in our cases for avoiding the “injustice or hardship” by a holding of nonretroactivity.

Chevron Oil Co., 404 U.S. at 106–07, 92 S.Ct. 349 (internal citations, quotation marks, ellipsis, and parentheses omitted). There is, however, a gaping caveat to the Chevron Oil test that Atlas ignores, and that forecloses its non-retroactive application argument:

When [a court] applies a rule of federal law to the parties before it, that rule is the controlling interpretation of federal law and must be given full retroactive effect in all cases still open on direct review and as to all events, regardless of whether such events predate or postdate [the court's] announcement of the rule.

Harper v. Va. Dep't of Taxation, 509 U.S. 86, 97, 113 S.Ct. 2510, 125 L.Ed.2d 74 (1993) ; see also James B. Beam Distilling Co. v. Georgia, 501 U.S. 529, 540, 111 S.Ct. 2439, 115 L.Ed.2d 481 (1991) (holding that because the Supreme Court in Bacchus Imports, Ltd. v. Dias, 468 U.S. 263, 104 S.Ct. 3049, 82 L.Ed.2d 200 (1984), had applied the legal rule it announced to the litigants in that case, courts were precluded from determining that Bacchus could be applied purely prospectively on the basis of Chevron Oil ). In light of Harper , a court's discretion of non-retroactive application in civil cases where the conduct at issue preceded the announcement of a new rule is reduced to the following summarization:

Only a court announcing a new rule of law may choose not to apply that rule retroactively under Chevron Oil, and if it so chooses it must not apply the new rule to the litigants before it. If a court is not announcing a new rule of law, but rather is following an existing rule, it must apply that rule retroactively if the court that announced the rule applied it to the litigants before it.

This summarization does not conflict with Glazner. In that case, the Eleventh Circuit reiterated that a court still has discretion to apply new legal rules purely prospectively under the Chevron Oil test and undertook that analysis. Glazner, 347 F.3d at 1220. However, the Eleventh Circuit had discretion to consider non-retroactive application when it decided Glazner because it actually announced a new legal rule. See id. at 1216 (overruling Simpson v. Simpson, 490 F.2d 803 (5th Cir.1974) ).² By comparison, this Court is not traversing unknown terrain here; rather, the Court is following Crawford. If the Eleventh Circuit applied its holding in Crawford to the litigants in that case, this Court must apply Crawford retroactively to the parties here. See Harper, 509 U.S. at 97, 113 S.Ct. 2510.

It is clear from the disposition of Crawford that the Eleventh Circuit applied its holding to the litigants retroactively. The procedural posture was an appeal from an order granting the defendants' motion to dismiss for failure to state a claim under the FDCPA. Crawford, 758 F.3d at 1257. After holding that the plaintiff had stated such a claim based on the stale proof of claim the defendants had filed, id. at 1261, the Eleventh Circuit “vacate[d] the district court's dismissal of [the plaintiff]'s complaint and remand[ed] for further proceedings.” Id. at 1262. Vacating the dismissal order and remanding the case would have been unnecessary if the Eleventh Circuit only intended its holding in Crawford to apply prospectively. Because it took the steps of vacating and remanding, however, the Crawford court necessarily applied...