In re Brigance, Bankruptcy No. 97-32566-L

• Decision Date: 13 March 1998
• Docket Number: 97-32181-L.,97-31345-L,97-30834-L,Bankruptcy No. 97-32566-L
• Citation: 219 BR 486
• Parties: In re Mary BRIGANCE, In re Kisha Lavae BROWN, In re Adam B. CHANDLER, In re Joy Zella ECHOLS, Debtors.
• Court: U.S. Bankruptcy Court — Western District of Tennessee

219 B.R. 486 (1998)

In re Mary BRIGANCE In re Kisha Lavae BROWN In re Adam B. CHANDLER In re Joy Zella ECHOLS, Debtors.

Bankruptcy Nos. 97-32566-L, 97-30834-L, 97-31345-L, 97-32181-L.

United States Bankruptcy Court, W.D. Tennessee, Western Division.

March 13, 1998.

COPYRIGHT MATERIAL OMITTED

William M. Gotten, Memphis, TN, for Mary Brigance.

Brian W. Lynn, Germantown, TN, for Kisha Lavae Brown.

Melinda Benham, Memphis, TN, for Adam B. Chandler.

Sidney Feuerstein, Memphis, TN, for Joy Zella Echols.

George W. Stevenson, Memphis, TN, Chapter 13 Trustee.

Holly Schumpert, Memphis, TN, for EZ Cash 1, LLC.

F. Michael Bursi, Memphis, TN, for Cash in a Flash.

MEMORANDUM OPINION

JENNIE D. LATTA, Bankruptcy Judge.

In each of these cases, the debtor used a deferred presentment service provider¹ to obtain a cash advance in exchange for a personal check. In each case, a bankruptcy petition was filed before the cash advance was repaid by the debtor, and in each of these cases, the debtor and the creditor submitted to the court for entry a proposed consent order creating a special class for the treatment of the claim of the deferred presentment service provider. The court was unable to determine from the information provided in the proposed consent orders whether approval of the proposed settlement was appropriate and thus set the matters for hearing. Because these cases raise common patterns of fact and common issues of law, consolidated hearings were held on January 21, 28, and February 13, 1998.

FACTS

A. Mary Brigance

The parties stipulated to the following facts: Mary Brigance delivered her personal check in the amount of $248.00 to EZ Cash 1, LLC on August 9, 1997. In return, she received a check from EZ cash in the amount of $200.00. She signed a written agreement on August 9, 1997, that provided as follows:

EZ CASH

PAYROLL ADVANCE

CUSTOMER AGREEMENT CONTRACT

I UNDERSTAND THAT CHECK NUMBER 293, DRAWN ON MY PERSONAL CHECKING ACCOUNT, WILL BE DUE ON 8-23-97. I UNDERSTAND THAT I MUST PICK UP MY CHECK BY THIS DUE DATE. I UNDERSTAND THAT I HAVE THE OPTION TO RENEW MY CONTRACT BY PAYING THE RENEWAL FEE BY THIS DUE DATE. FURTHERMORE, I UNDERSTAND THAT I CAN RECEIVE A DISCOUNT IF CONTRACT IS PAID OR RENEWED BEFORE MY DUE DATE.

IF THE FUNDS ARE NOT IN MY PERSONAL CHECKING ACCOUNT ON THE DUE DATE, A $20.00 N.S.F. CHARGE AND THE FOLLOWING ACTIONS AND PENALTIES WILL TAKE PLACE.

UNDER THE LAW OF THE STATE OF TENNESSEE, IT IS A CRIMINAL ACT TO ISSUE A WORTHLESS CHECK. I UNDERSTAND THAT I CANNOT STOP PAYMENT, WITHDRAW THE FUNDS OR CLOSE THE ACCOUNT TO PREVENT COLLECTION.

EZ CASH HAS THE RIGHT TO SEEK TREBLE DAMAGES (THREE TIMES THE AMOUNT OF THE CHECK) IF THE CHECK IS NOT GOOD. I UNDERSTAND EZ CASH CAN SEEK COL-

LECTION THROUGH THE LEGAL SYSTEM INCLUDING THE ISSUANCE OF A CRIMINAL WARRANT IF THE CHECK IS NOT GOOD. FURTHERMORE, I AUTHORIZE EZ CASH TO UTILIZE OTHER COLLECTION SYSTEMS INCLUDING MERCHANT NOTIFICATION.²

Brigance Trial Exhibit 1.

Ms. Brigance did not redeem her check on August 23, 1997. Ms. Brigance filed a voluntary petition under Chapter 13 of the Bankruptcy Code on August 28, 1997. EZ Cash did not present the Brigance check for payment prior to the filing of her petition. EZ Cash filed a proof of claim in the amount of $298.00. Ms. Brigance did not appear at the scheduled hearing to consider the proposed classification and treatment of the claim of EZ Cash but was represented by Holly Schumpert, attorney. EZ Cash was represented by William M. Gotten, attorney. Melinda Thompson testified on behalf of EZ Cash.

The plan filed with Ms. Brigance's petition treated the claim of EZ Cash as a general unsecured claim to be repaid a percentage of its claim as determined by the Chapter 13 trustee upon the expiration of the 90 day bar date for filing proofs of claim. EZ Cash filed an objection to confirmation of the Brigance plan on the basis that its claim was secured and the debtor's plan proposed to pay less than the allowed amount of the claim. Ms. Schumpert and Mr. Gotten submitted to the court a proposed "Agreed Order Modifying Plan Before Confirmation and Withdrawing Objection of EZ Cash 1, LLC," on or about November 20, 1997, in which the parties sought to modify the debtor's plan "to reflect that because the debtor made this debt within 45 days of the filing of her Voluntary Petition, the claim of EZ Cash 1, LLC should be classified as a Class 1 unsecured to receive $20.00 per month on its claim of $298.00 which includes an attorney fee of $50.00. . . ."

B. Kisha Lavae Brown

Kisha Lavae Brown did not appear at the scheduled hearing but was represented by Brian W. Lynn, attorney. Ms. Brown obtained deferred presentment services from Cash in a Flash, which appeared by its attorney, F. Michael Bursi. Dwight Blake, Elaine Blake, and Patricia Clark testified on behalf of Cash in a Flash. Ms. Clark is the Collection Manager for Cash in a Flash. She testified that Ms. Brown held accounts at two Cash in a Flash stores. Her first transaction with Cash in a Flash occurred on April 11, 1997. She last issued two checks payable to Cash in a Flash on July 5, 1997, one in the amount of $238.00 and the other in the amount of $207.00. According to Ms. Clark, Ms. Brown's accounts were handled satisfactorily from April to July, 1997. On May 10, 1997, Ms. Brown signed a document which provides as follows:

CASH IN A FLASH CHECK ADVANCE, L.L.C.

1791 FRAYSER BLVD.

MEMPHIS, TENNESSEE 38127

358-4646

TERMS AND CONDITIONS

The customer agrees to be bound by the laws of the States of Tennessee and specifically at the time is presented, if it is dishonored, agrees to be bound by the Tenn.Code Ann. 47-29-101.

The consideration for these terms and conditions is the agreement of Cash in a Flash Check Advance not to present this check to a financial institution for payment until 14 days after the date of the check.

These terms and conditions constitute the entire agreement of the parties. The parties hereto have read these terms and conditions before signing and agree that no verbal statement, remark, agreement, or understanding oral or written not contained herein will be binding upon Cash in a Flash Check Advance.

Upon presentment of the customer\'s check for collection, if said check is not payable for any reason whatsoever, this matter shall be placed with an attorney for collection of any and all monied due and owing Cash in a Flash Check Advance all reasonable and necessary costs and expenses of collection, specifically included, but not limited to reasonable attorney fees and other damages as set forth in Tenn.Code Ann. 47-29-101.

Customer agrees, certifies, and warrants that said check will be paid upon presentment to the financial institution upon which said check is drawn after 14 days from the date thereon.

Customer agrees that notice of dishonor of customer\'s check shall be considered as having been given at the time said notice was deposited in the regular United States mail at the address printed on the check or at the address given by the customer in writing to Cash in a Flash Check Advance.

THE UNDERSIGNED HEREBY ACKNOWLEDGES THAT HE OR SHE HAS READ AND FULLY UNDERSTANDS THE TERMS AND CONDITIONS OF THE ABOVE AGREEMENT. THE UNDERSIGNED HEREBY AGREES THAT BY SIGNING THIS DOCUMENT HE OR SHE BECOMES A PARTY TO SAID AGREEMENT AND HEREBY AGREES TO BE BOUND BY ALL TERMS, CONDITIONS AND OBLIGATIONS CONTAINED THEREIN.

Brown Trial Exhibit 1.

On July 28, 1997, Ms. Brown filed a voluntary Chapter 13 petition. She listed Cash in a Flash on Schedule F-Creditors Holding Unsecured Nonpriority Claims as an unsecured creditor holding a claim in the amount of $442.00. The plan filed with the debtor's petition treated the claim of Cash in a Flash as a general unsecured claim to be repaid a percentage of its claim as determined by the Chapter 13 trustee upon the expiration of the 90 day bar date for filing proofs of claim. Cash in a Flash filed a proof of claim in the amount of $1,593.33. On September 3, 1997, Cash in a Flash filed an objection to confirmation of Ms. Brown's plan on the basis that "the debtors' proposed plan does not comply with the provisions of 11 U.S.C. Sections 361, 362, 365, 1301, 1325, and 109." Mr. Lynn and Mr. Bursi submitted a proposed "Consent Order Withdrawing Objection to Confirmation of Cash in a Flash" on or about October 14, 1997, whereby the parties sought to modify the debtor's plan "to transfer a portion of the claim of Cash in a Flash, in the amount of $445.00, to Class I, unsecured status, to be paid at the rate of $10.00 per month, with the balance of the claim, if any, to be paid as a general, unsecured creditor — based on the debtor's issuance to said creditor of two worthless checks within 90 days prior to the filing of the instant petition herein."

C. Adam B. Chandler

Adam B. Chandler did not appear at the scheduled hearing, but was represented by Melinda Benham, attorney. Chandler also obtained deferred presentment services from Cash in a Flash. Ms. Clark, the Collection Manager, testified that Mr. Chandler's first transaction with Cash in a Flash occurred on April 29, 1997. He last issued a check payable to Cash in a Flash on May 31, 1997, in the amount of $238.00. According to Ms. Clark, Mr. Chandler delivered four checks to Cash in a Flash during the period from April 29 through May 31, 1997.

On August 6, 1997, Mr. Chandler filed a voluntary Chapter 13 petition. He listed Cash in a Flash on Schedule F — Creditors Holding Unsecured Nonpriority Claims as an unsecured creditor holding a claim in the amount of $165.00. The plan filed with the debtor's petition treated the claim of Cash in a Flash as a general unsecured claim to be repaid 100% of its claim over approximately 60 months. Cash in a Flash filed a proof of claim in the amount of $817.33. On September 10, 1997, Cash in a Flash filed an objection to confirmation of Mr. Chandler's plan on the basis that "the debtors' proposed...