In re Irby, 04-3364.

• Decision Date: 22 February 2005
• Docket Number: No. 04-3364.,04-3364.
• Citation: 321 B.R. 468
• Parties: In re Dale/Brenda IRBY, Debtors. Dale/Brenda IRBY, Plaintiffs, v. Mr. Money Finance Co., Defendant.
• Court: U.S. Bankruptcy Court — Northern District of Ohio

321 B.R. 468

In re Dale/Brenda IRBY, Debtors.

Dale/Brenda IRBY, Plaintiffs, v. Mr. Money Finance Co., Defendant.

No. 04-3364.

United States Bankruptcy Court, N.D. Ohio.

February 22, 2005.

Donald R. Harris, Sandusky, OH, for plaintiffs.

Daniel L. McGookey, Sandusky, OH, for defendant.

DECISION AND ORDER

RICHARD L. SPEER, Bankruptcy Judge.

This cause is before the Court on the Motion of the Creditor, Mr. Money Finance Co., to Dismiss or, in the alternative, for Summary Judgment. This action is brought in response to the Motion of the Debtors, Dale and Brenda Irby, for Injunctive Relief and Punitive Damages. After having had the opportunity to consider the merits of its position, the Court, for the reasons set forth herein, finds that the Creditor's Motion to Dismiss has merit, and thus an appropriate order will be entered.

ISSUE

The Creditor's Motion to Dismiss is predicated primarily on a procedural deficiency: the Debtors having captioned/commenced their action against the Creditor by way of a motion as opposed to an adversary proceeding.

DISCUSSION

Bankruptcy law seeks to resolve the competing interests between creditors and debtors. Chemetron Corp. v. Jones, 72 F.3d 341 (3rd Cir.1995). When, as often occurs, a dispute arises between these parties, the Bankruptcy Rules provide for two avenues of resolving the dispute: (1) through the commencement of an adversary proceeding; or (2) by initiating a contested matter through the filing of a motion. Bankruptcy Rules 7001; 9014. An adversary proceeding may be distinguished from a contested matter through the use of formal pleadings—e.g., a complaint and answer—and its reliance on the federal rules of procedure. On the other hand, and while to some extent contested matters necessarily adopt the same procedures used in an adversary proceeding, motion practice is generally less formal, relying to a greater extent on local rules and customs for its application. 10 Collier on Bankruptcy at 7000-1 (15th ed. rev. 2001). Accord In re Farced, 262 B.R. 761, 765 (Bankr.N.D.Ill.2001).

As for which procedural avenue is the proper method to bring a dispute before a bankruptcy court, Bankruptcy Rule 7001 lists 10 specific actions which are deemed to be adversary proceedings. By default then, any action not listed as an adversary proceeding is treated as a contested matter.

In this case, the Debtor's request for Injunctive Relief and Punitive Damages falls squarely within the realm of those actions which require the commencement of an adversary proceeding; Bankruptcy Rule 7001(7) sets forth that an adversary proceeding will include "a proceeding to obtain an injunction or other equitable relief..." As for the implications of an action, such as that presented here, that does not conform to an applicable rule of procedure, each situation, when set against a motion to dismiss, must be weighed individually, with an eye toward the purpose of the procedural rule.

The delineation between an adversary proceedings and contested matters has, as its underpinnings, concerns over due process. In more detail, and while not true in every situation, the delineation between these two procedural methods for resolving disputes is predicated upon the general assumption that certain controversies in bankruptcy will involve more complex issues and affect greater substantial rights, thereby requiring the greater procedural protections afforded by the Federal Rules of Procedure. While other matters in bankruptcy will involve relatively uncomplicated disputes that can be adjudicated summarily, thereby making motion practice a better tool for judicial economy.¹ In re Riding, 44 B.R. 846, 858-59 (Bankr. D.Utah 1984).

Being, therefore, simply a procedural safeguard, as opposed to a substantive right afforded by the Bankruptcy Code, a party may waive their right to contest a deficiency in the...