In re O'Dell
| Decision Date | 02 August 2000 |
| Docket Number | No. 99-43337-JSS-13.,99-43337-JSS-13. |
| Citation | 251 BR 602 |
| Parties | In re Michael J. O'DELL, and Linda A. O'Dell, Debtors. |
| Court | U.S. Bankruptcy Court — Northern District of Alabama |
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Earl P. Underwood, Jr., Rice, Adams, Underwood & Associates, Anniston, Alabama, for debtor.
James H. Greer, Pelham, Alabama, D. Alexander Barnes, Alane A. Beckett, Beckett & Lee, LLP, Melvern, Pennsylvania, for Max Flow Corporation.
Mavis Willingham, Anniston, Alabama, for Chapter 13 Standing Trustee.
The above captioned Chapter 13 case under title 11 of the United States Code comes before this Court on the Debtors objection to claim, a response filed thereto, and the Debtors motion to strike that response. As the initial Hearing set on the Debtors' objection was held one day subsequent to the Debtors' motion to strike the response, this Court continued the hearing to afford the parties adequate time and further requested the parties to submit briefs upon the issues presented by the Debtors' objection, motion to strike, and the response. The issues presented on briefs were whether the respondent is a party in interest and has standing to defend an objection to claim, and whether the proof of claim identifies the actual creditor or is filed in the name of the respondent.
Upon the parties' submission of briefs, this Court held a final hearing on these matters. Present at that hearing on June 13, 2000 was Earl P. Underwood, Jr., the Debtors' attorney, James H. Greer, the attorney for Max Flow Corporation, the respondent, and Mavis Willingham, the Chapter 13 Standing Trustee.1 Upon conclusion of the hearing, based upon the pleadings, briefs, and presentation of evidence and arguments at the hearing, this Court took these matters under advisement. After a review of the docket, evidence, arguments, statutory, and case law this Court holds that an authorized agent may file a proof of claim for a creditor when the creditor is clearly identified, but an agent may not address the merits of the claim or the rights of the creditor and renders this memorandum opinion and a separate rulings on the matters.
Pursuant to the General Order of Reference, July 16, 1984, entered by the United States District Court for the Northern District of Alabama and 28 U.S.C. § 157(a), this Court possesses original and exclusive jurisdiction over this objection to claim pursuant to 28 U.S.C. §§ 1334(a), 1334(e), and 157(b)(1). In accordance with 28 U.S.C. §§ 157(b)(2)(A), and 157(b)(2)(B), these matters constitute a core proceeding. Venue in these matters is governed by 28 U.S.C. § 1048(1). Neither personal jurisdiction nor venue have been contested in this title 11 case or these specific matters. Therefore, this Court concludes that subject matter, in personam, and in rem jurisdiction exists and venue is proper.
Further, the Debtors seek an order striking the pleading of Max Flow Corporation responding to their objection to the claim filed by Max Flow Corporation on behalf of MBNA America Bank, N.A. on the ground that Max Flow Corporation is not a proper party in interest. Such motion invokes this Court's inherent power to enforce federal rules and procedures, the court's own rules, orders or procedures and to impose appropriate sanctions upon the failure to comply. Link v. Wabash R. Co., 370 U.S. 626, 630 n. 1, 82 S.Ct. 1386, 1389 n. 1, 8 L.Ed.2d 734 (1962). That inherent power possessed by the Court is wielded to protect the orderly administration of justice and to preserve the dignity of the tribunal. Roadway Express, Inc. v. Piper, 447 U.S. 752, 764-64, 100 S.Ct. 2455, 2463, 65 L.Ed.2d 488 (1980). Upon such precedence, this Court concludes it possesses inherent original and exclusive jurisdiction over this matter and can enter appropriate orders, rulings, and judgments pursuant to 11 U.S.C. § 105; Fed. R.Bankr.P. 9011, 9020; Fed.R.Civ.P. 11; and Bankr.L.R.2090-2, 2091-1.
The Debtors filed a Chapter 13 petition on November 12, 1999. The Debtors scheduled an unsecured claim of MBNA America ("MBNA" or "Creditor"). On February 22, 2000, the alleged creditor, Max Flow Corporation, filed a proof of claim for $4,489.15. That proof of claim lists "Max Flow Corp. on Behalf of MBNA America Bank, N.A. and Its Assigns" as the designated creditor. The Debtors filed an Objection to Claim on the ground that Max Flow is not a party in interest. Max Flow Corporation, ("Max Flow" or "Claimant"), filed a Response asserting that it is the agent of MBNA and that the claim it filed was filed for MBNA America Bank, a proper party in interest. The Debtors subsequently filed a motion to strike the response alleging that Max Flow is not a party in interest and citing as authority, In re Morgan, 225 B.R. 290 (Bankr.E.D.N.Y. 1998).
There are several contentious issues in this case. The prime issue presented is what authority Max Flow possesses. Upon that determination, if Max Flow is an agent or servicing agent for the creditor, MBNA, the next issue is whether a servicing agent has authority to file a proof of claim on behalf of the principal creditor. Then, if a servicing agent has the authority to file a proof of claim, in whose name is such proof of claim to be filed. Next, this Court will determine whether the servicing agent has the legal authority to file a response to the Debtors' Objection to Claim. Finally, the Court will discuss any sanctionable actions and activities.
This Court finds that the status of MBNA, as a general unsecured creditor of the Debtors and the Debtors' estate, is uncontested by the parties. See, Sched. F, Doc. No. 1; Am. Sched. F, Doc. No. 33; Resp't Resp., para. 5, Doc. No. 22; Dbtr. Br., pg. 3, Doc. No. 36; and Resp't Br., pp. 2-3, Doc. No. 34. The status of MBNA however is not the basis of the issues before this Court. The status at issue is that of Max Flow. It is on that status that this Court also finds the matter uncontested. The parties concede the fact that Max Flow is an agent or servicing agent for the creditor, MBNA.2 See, Sched. F; Am. Sched. F; Resp't Resp., para. 7; Dbtr. Br., pg. 3; and Resp't Br., pp. 3-5.
The Debtors' objection to claim and Max Flow's response thereto raise the issue of the authority of Max Flow as an agent of the creditor, MBNA. To determine the authority Max Flow possesses as an agent, this Court must look to state and common law principles of business organizations, contracts, and agency principal relationships.
Max Flow admits and concedes to being an agent of MBNA for the purpose of filing a proof of claim as agent of MBNA. See, Resp't. Resp. para. 7. In Court, Max Flow was pressed to disclose its full authority as an agent of MBNA. Max Flow rested its position only on authority to file claims for its principal, MBNA America. Although the attorney present for Max Flow raised the contention that Max Flow would have the authority to represent MBNA in an objection to the claim; Max Flow did not present any contract, power of attorney, or other document tending to show that it held the authority to act beyond filing a claim. Max Flow did attach to its response to the Debtors' objection to claim an affidavit made by a Mr. Kevin Matyniak, an employee of the creditor, MBNA America, and employed as a "Manager of the Bankruptcy Department." See, Resp't Resp., Ex. A, Doc. No. 22. That affidavit stated the extent of Max Flow's authority as follows:
The affidavit is silent as to any other authority authorized by MBNA America Bank. Without evidentiary support for any other or additional authority, this Court finds that Max Flow, as agent or servicing agent of MBNA America, possesses the authority only to file claims as agent for its principal and the Creditor, MBNA America. Max Flow does not possess the authority to act in any other capacity, undertake any other actions, reduce any claim unto settlement, compromise a claim, claim any right to collect, represent its principal in any manner, or otherwise act either on behalf of or as agent for MBNA America save for the filing of a claim.
An additional finding of fact is that the local attorney present for Max Flow, as well as the law firm of Beckett & Lee, L.L.P., which appears to be national counsel for Max Flow, have submitted all pleadings, briefs, responses, and even the proof of claim for and on behalf of Max Flow Corporation. See, POC # 15, Resp't Resp., Resp't Br. This Court finds that it is Max Flow that has entered into and holds an attorney-client relationship with both local and national counsel. Although the documents are all submitted unto the Court by "counsel for Max Flow Corp., on behalf of MBNA America Bank," see, Resp't Resp., Resp't Br., such language does not indicate, and this Court refuses to draw an unsubstantiated inference that MBNA possesses an attorney-client relationship regarding these matters with the two attorney-at-law, legal firms submitting these pleadings. Consequently, only Max Flow is being represented in these judicial proceedings. MBNA America Bank is not represented by its agent or servicing agent, Max Flow.3
The authority to execute a proof of claim is governed by Fed.R.Bankr.P. 3001(b), which states that "a proof of claim shall be executed by the creditor or the creditor's authorized agent." Max Flow contends that because it is an agent of MBNA, it can therefore file a proof of claim under Bankruptcy Rule 3001(b). The Debtors contend that filing a proof of claim constitutes the unauthorized practice of law because the claim is not owned by Max Flow and it has no genuine interest in the bankruptcy case. Moreover, the Debtors challenge Max Flow's...
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