In re French

• Decision Date: 13 February 2009
• Docket Number: Bankruptcy No. 08-34530.,Adversary No. 08-3166.
• Parties: In re Phyllis T. FRENCH a/k/a Phyllis T. Boatman-French a/k/a Phyllis T. Boatman, Debtor. Phyllis T. French, Plaintiff v. American General Financial Services, Defendant.
• Court: United States Bankruptcy Courts. Sixth Circuit. U.S. Bankruptcy Court — Eastern District of Tennessee

401 B.R. 295

In re Phyllis T. FRENCH a/k/a Phyllis T. Boatman-French a/k/a Phyllis T. Boatman, Debtor Phyllis T. French, Plaintiff v. American General Financial Services, Defendant.

Bankruptcy No. 08-34530.

Adversary No. 08-3166.

United States Bankruptcy Court, E.D. Tennessee.

February 13, 2009.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Brackett & Strunk, PLLC, Justin A. Brackett, Esq., Knoxville, TN, Attorneys for Plaintiff/Debtor.

Husch Blackwell & Sanders LLP, Jeffrey S. Norwood, Esq., Laura F. Ketcham, Esq., Chattanooga, TN, Attorneys for Defendant.

MEMORANDUM ON MOTION TO DISMISS

RICHARD STAIR JR., Bankruptcy Judge.

This adversary proceeding is before the court upon the Complaint Seeking Injunctive Relief, Damages, Disallowance of Claim and Other Relief in a Core Adversary Proceeding (Complaint) filed by the Plaintiff on November 14, 2008, asking the court to (1) disable public access to the proof of claim filed by the Defendant in the Plaintiff's bankruptcy case; (2) find the Defendant in civil contempt for filing a proof of claim without redacting certain privacy protected information of the Plaintiff; (3) strike and disallow the Defendant's claim, and declare the underlying debt cancelled; (4) assess sanctions against the Defendant for intentionally or negligently releasing privacy protected information; (5) award damages for intentional and/or negligent infliction of emotion distress; and (6) award compensatory and punitive damages and attorney's fees. On December 17, 2008, the Defendant filed a Motion to Dismiss and corresponding Brief, to which the Plaintiff filed the Plaintiff's Response to Defendant's Motion to Dismiss and Memorandum of Law (Response) on January 6, 2009.

This is a core proceeding. 28 U.S.C. § 157(b)(2)(A), (B), (O) (2006). To the extent non-core but related issues are impacted, the parties have consented to the entry of final orders or judgment by the bankruptcy judge. 28 U.S.C. § 157(c)(2) (2006).¹

I

The Plaintiff filed the Voluntary Petition commencing her Chapter 13 bankruptcy case on October 10, 2008. The Defendant was listed among the Plaintiff's unsecured creditors in Schedule F-Creditors Holding Unsecured Nonpriority Claims as the holder of an undisputed, liquidated, non-contingent claim for a "personal loan" in the amount of $7,088.95. On October 31, 2008, the Defendant filed a nonpriority, unsecured claim in the Plaintiff's bankruptcy case in the amount of $4,889.79 (Proof of Claim), which was scanned through the court's electronic case filing (ECF) system to the Claims Register. Attached to the Proof of Claim were copies of the official Notice of Chapter 13 Bankruptcy Case, Meeting of Creditors & Deadlines sent out to creditors by the bankruptcy court clerk and the Note signed by the Plaintiff in favor of the Defendant evidencing, inter alia, the Plaintiff's social security number and date of birth, respectively.

On November 14, 2008, the Plaintiff filed a motion in the Debtor's case entitled "Debtor's Ex Parte, Emergency Motion to Restrict Public Access to Claim or in the Alternative to Delink, Disable, or Remove Proof of Claim # 1 Filed By American General Financial Services" (Motion to Restrict Public Access), asking the court to restrict public access to the Proof of Claim due to the inclusion of her birth date and social security number on the attachments. That same date, the court entered an "Order Granting Debtor's Ex Parte Motion to Restrict Public Access to Claim # 1 By American General Financial Services," directing the Clerk of the Court to "remove all attachments to Claim no. 1 filed by American General Financial Services on October 31, 2008, in the amount of $4,889.79, without prejudice to this creditor to file an amended claim containing appropriate redactions of privacy protected matters." Pursuant to the November 14, 2008 Order, all attachments to the Proof of Claim were immediately removed from the court's ECF system and were no longer accessible to ECF users after that date.

The Debtor also filed the Complaint initiating this adversary proceeding on November 14, 2008, in which she alleges that the Defendant, by filing its Proof of Claim without redacting her privacy protected information, intentionally made such information public to any and all parties with internet access, opening the door for identity theft. The Plaintiff avers that the Proof of Claim should be removed from public access, disallowed and cancelled, and argues that the Defendant should be held in contempt and appropriately sanctioned for failing to redact the Plaintiff's privacy protected information, asserting violations of The Gramm-Leach-Bliley Act, the E-Government Act of 2002, the Bankruptcy Code, and the Federal Rules of Bankruptcy Procedure. The Complaint also alleges intentional and/or negligent infliction of emotional distress under Tennessee law, seeking compensatory and punitive damages and attorney's fees.

The Defendant filed the Motion to Dismiss on December 17, 2008, contending that the Complaint does not state a claim upon which relief can be granted for the following reasons: (1) because the Plaintiff has not pled any basis for disallowance of its Proof of Claim pursuant to the Bankruptcy Code; (2) because neither The Gramm-Leach-Bliley Act nor the E-Government Act of 2002 provides a private, civil cause of action for an alleged violation; and (3) because the alleged intentional and/or negligent infliction of emotional distress claims are not supported by the facts averred by the Plaintiff. On January 6, 2009, the Plaintiff filed her Response, arguing that she has, in fact, sufficiently pled facts to survive the Motion to Dismiss and asks the court to deny it so that this adversary proceeding may proceed to trial.

II

Pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, made applicable to adversary proceedings by Rule 7012(b) of the Federal Rules of Bankruptcy Procedure, a defendant may file a motion to dismiss a complaint for "failure to state a claim upon which relief can be granted." FED.R.CIV.P. 12(b)(6). When contemplating a motion to dismiss under Rule 12(b)(6), the court should "construe the complaint in the light most favorable to the plaintiff, accept all the factual allegations as true, and determine whether the plaintiff can prove a set of facts in support of its claims that would entitle it to relief." Bovee v. Coopers & Lybrand, C.P.A., 272 F.3d 356, 360 (6th Cir.2001). Nevertheless, notwithstanding that all factual allegations are deemed to be true, the court is not required to accept legal conclusions or unwarranted factual inferences as true. Mich. Paytel Joint Venture v. City of Detroit, 287 F.3d 527, 533 (6th Cir.2002).

Instead, the focus should be upon "whether the plaintiff has pleaded a cognizable claim[,]" Marks v. Newcourt Credit Group, Inc., 342 F.3d 444, 452 (6th Cir. 2003), and whether the complaint contains "either direct or inferential allegations respecting all the material elements to sustain recovery under some viable legal theory." League of United Latin Am. Citizens v. Bredesen, 500 F.3d 523, 527 (6th Cir. 2007) ("Though decidedly liberal, the standard does require more than bare assertions of legal conclusions[, and a plaintiff's] obligations to provide the `grounds' of ... entitlement to relief requires more than labels and conclusions or a formulaic recitation of the elements of the cause of action.") (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1969, 167 L.Ed.2d 929 (2007)). Additionally, the court should not rely upon any documents other than the pleadings, although it may rely upon public records or other documents appropriately encompassed by judicial notice set forth in Rule 201 of the Federal Rules of Evidence.² Perry v. EMC Mortgage Corp. (In re Perry), 388 B.R. 330, 334 (Bankr.E.D.Tenn.2008); see also New England Health Care Employees Pension Fund v. Ernst & Young, LLP, 336 F.3d 495, 501 (6th Cir.2003).

III

In her Complaint, the Plaintiff alleges that the Defendant "has intentionally communicated or otherwise made available to the general public the personal, sensitive and private data of the Plaintiff in direct violation of [the] standard of care set by The Gramm-Leach-Bliley Act, 15 U.S.C. § 6801 et seq., The E-Government Act of 2002, 44 U.S.C. § 3500 et seq., 11 U.S.C. § 107(c), Federal Rule of Bankruptcy Procedure 9037, Federal Rule of Civil Procedure 5.2, and others[,]" COMPL. at ¶ 14, has invaded the Plaintiff's privacy, and subjected her to intentional and/or negligent infliction of emotional distress. In relief, the Plaintiff seeks disallowance of the Proof of Claim, injunctive relief, contempt of court, actual damages, and punitive damages.³

A FIRST CAUSE OF ACTION

(Complaint — Paragraphs 18 through 22)

For her First Cause of Action (Count One), the Plaintiff avers that the Defendant "has intentionally revealed to the general public the Debtor's [sic] private and sensitive data and nonpublic information in violation of 11 U.S.C. § 107(c) and Federal Rule of Bankruptcy Procedure 9037." COMPL. at ¶ 19. As a result, she seeks the following relief: (1) removal of the Proof of Claim from the court's ECF and Pacer systems; (2) disallowance of the Proof of Claim; (3) cancellation of the underlying debt owed to the Defendant, whether or not a discharge is entered in her bankruptcy case; and (4) assessment of sanctions against the Defendant in the form of attorney's fees and expenses.

Section 107 of the Bankruptcy Code, entitled "Public access to papers," was enacted in 1978 and "establishes a broad right of public access, subject only to limited exceptions set forth in the statute, to all papers filed in a bankruptcy case." Neal v. Kan. City Star (In re Neal), 461 F.3d 1048, 1053 (8th Cir.2006) (quoting Gitto v. Worcester Telegram & Gazette Corp. (In re Gitto Global Corp.), ...