In re Rogers

• Decision Date: 21 July 2008
• Docket Number: Adversary No. 08-1011.,Bankruptcy No. 07-11293.
• Citation: 391 B.R. 317
• Parties: In re Stephen Douglas ROGERS, Julie Kelly Rogers, Debtors. Stephen Douglas Rogers, Julie Kelly Rogers, Plaintiffs v. B-Real, L.L.C., Defendant.
• Court: U.S. Bankruptcy Court — Middle District of Louisiana

391 B.R. 317

In re Stephen Douglas ROGERS, Julie Kelly Rogers, Debtors Stephen Douglas Rogers, Julie Kelly Rogers, Plaintiffs v. B-Real, L.L.C., Defendant.

Bankruptcy No. 07-11293.

Adversary No. 08-1011.

United States Bankruptcy Court, M.D. Louisiana.

July 21, 2008.

COPYRIGHT MATERIAL OMITTED

J. David Andress, Baton Rouge, LA, for Debtors.

Ashley S. Burch, McNew, King, Mills, Burch & Landry, LLP, Monroe, LA, for Defendant.

MEMORANDUM OPINION

DOUGLAS D. DODD, Bankruptcy Judge.

Debtors Stephen and Julie Rogers sued B-Real, L.L.C. ("B-Real") to recover damages resulting from B-Real's filing of three time-barred proofs of claim. B-Real moved to dismiss the complaint for failure to state a claim upon which relief can be granted.

The complaint's second, fourth, and sixth claims for relief, and the damages requests in the first and third claims, fail to state a claim as a matter of law and will be dismissed. B-Real's motion to dismiss other claims in the complaint will be denied because those claims allege sufficient facts to state a claim for relief.

Facts

The debtors filed a chapter 13 petition on September 18, 2007, and the court confirmed their plan on February 19, 2008.

On January 14, 2008, defendant B-Real, L.L.C. ("B-Real") filed three proofs of claim as assignee of NCO Portfolio Management, Inc. ("NCO") (claim numbers 16, 17 and 18) for $145.00, $121.80 and $130.00, respectively. The original claimants were Sterling ER Physicians ("Sterling") (claims 16 and 17) and Arkansas EM-1 Gatewood ER Services ("Arkansas EM") (claim 18). No proof of the assignment of the claims to NCO, or thereafter to Real, accompanies any of the claims. The debtors' schedule F lists several debts for medical expenses, none of them to NCO, Sterling or Arkansas EM.

The debtors did not object to claims 16, 17 or 18. Rather, on January 29, 2008, they filed the complaint initiating this proceeding.

The plaintiffs allege among other facts that B-Real's proofs of claim are not supported by proper documentation and in any event are prescribed under Louisiana law.¹ The debtors further contend that B-Real an experienced debt collector, engages in a pattern and practice of filing proofs of claim for time-barred debts. They point to eleven other bankruptcy cases in this court in which B-Real's claims were either disallowed or withdrawn upon the request of debtors' counsel.

Allegations of Complaint

The first claim for relief in the debtors' complaint seeks disallowance of claims 16, 17 and 18 as prescribed, and seeks damages from B-Real under 11 U.S.C. § 105 for the filing the claims.

The complaint's second claim for relief is for damages under Bankruptcy Code section 105 for B-Real's allegedly intentional failure to attach supporting documentation to any of the three claims, as Fed. R. Bankr.P. 3001 requires.

The third claim for relief again seeks disallowance of claims 16, 17 and 18 as prescribed, but also seeks judgment barring B-Real from amending the proofs of claim. It also prays for cancellation and discharge of the underlying debts, "whether or not the debtor receives a[sic] Order of Discharge in the chapter 13 case." Complaint, 1137.

In fourth claim for relief of the complaint, the debtors seek damages under 11 U.S.C. § 362 for B-Real's filing of the claims.

The fifth claim for relief seeks damages for alleged violations of the Fair Debt Collection Practices Act ("FDCPA"), specifically 15 U.S.C. §§ 1692d, 1692e and 1692f.² Plaintiffs contend that B-Real used false, deceptive, misleading, unfair and unconscionable means to collect a debt and that its actions constituted harassment and abuse.

The sixth claim for relief seeks damages for the same conduct under the Louisiana Unfair Trade Practices and Consumer Protection Law ("UTPCPL"), La. R.S. 51:1401 et seq.

Finally, the debtors' prayer for relief includes a request that the court order Real to show cause why the filing of claims 16, 17 and 18 did not violate Fed. R. Bankr.P. 9011.

Motion to Dismiss

B-Real moved to dismiss the debtors' complaint under Fed. R. Bankr.P. 7012(b)(6). It argues that:

(1) The debtors lack standing because the proper procedure for seeking relief was objecting to B-Real's claims under Fed. R. Bankr.P. 3007;

(2) B-Real's failure to comply with Fed. R. Bankr.P. 3001(c) means only that the claims are not entitled to prima facie validity, and therefore may be disallowed if appropriate under 11 U.S.C. § 502(b)(1)(9);

(3) The sole remedy under Louisiana law for filing a time-barred claim is dismissal of the claim (presumably meaning its disallowance in a bankruptcy), and that the debtors are not entitled to recover damages;

(4) Merely filing a proof of claim cannot be a violation of the automatic stay because Bankruptcy Code § 501 specifically provides for filing claims (5) The FDCPA does not apply to the proof of claim process; and

(6) The United States Bankruptcy Code preempts state law, and therefore Louisiana consumer protection laws do not apply to the filing of a proof of claim in bankruptcy court.³

The court may not dismiss a complaint under Bankruptcy Rule 7012(b)(6) "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-6, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). It accepts the well-pled allegations of the complaint as true and views them in the light most favorable to the plaintiff. Kane Enterprises v. MacGregor (USA) Inc., 322 F.3d 371, 374 (5th Cir.2008); Ramming v. United States, 281 F.3d 158, 161 (5th Cir.2001).

1. Adversary Process and Standing

a. Plaintiffs Properly Initiated an Adversary Proceeding

B-Real cites Fed. R. Bankr.P. 3007 in support of its argument that the debtors lack standing to make their claims. Real argues that the proper method for seeking disallowance of claims 16, 17 and 18 was through the claims objection process and not through an adversary proceeding.⁴

Rule 3007 specifically states that "[i]f an objection to a claim is joined with a demand for relief of the kind specified in Rule 7001, it becomes an adversary proceeding." The debtors' request for damages in connection with most of the claims in their complaint falls neatly under Rule 3007. See e.g. In re Moi, 381 B.R. 770, 771-72 (Bankr.S.D.Cal.2008) (complaint objecting to claim and seeking contempt damages properly was adversary proceeding); In re Dean, 359 B.R. 218, 222 (Bankr.C.D.Ill.2006) (action seeking damages for violation of automatic stay could be brought as adversary proceeding); In re Irby, 321 B.R. 468, 470-71 (Bankr. N.D.Ohio 2005) (debtor's claims for injunctive relief and punitive damages dismissed without prejudice, to be refiled as adversary proceeding under Rule 7001).

b. Plaintiffs Have Standing

B-Real also contends that the plaintiffs lack standing to bring this action. It argues that the debtors have suffered no harm, and therefore have no standing, because under their confirmed plan nothing has been paid yet on the debts represented by unsecured claims 16, 17 and 18.

The debtors undeniably have standing to object to B-Real's claims. See Adair v. Sherman, 230 F.3d 890, 894 n. 3 (7th Cir. 2000) (under 11 U.S.C. § 502(a), a party in interest can object to a claim and this includes, "not only the debtor, but anyone who has a legally protected interest that could be affected by a bankruptcy proceeding").

Moreover, as to the plaintiffs' demand for relief under the FDCPA, the FDCPA does not require proof of actual damages as a condition to the recovery of statutory damages. See Keele v. Wexler, 149 F.3d 589, 593-94 (7th Cir.1998), citing Bartlett v. Heibl, 128 F.3d 497, 499 (7th Cir.1997). See also Baker v. G.C. Services Corp., 677 F.2d 775, 781 (9th Cir.1982) ("[Statutory damages are available without proof of actual damages" under the FDCPA). In other words, the FDCPA "is blind when it comes to distinguishing between plaintiffs who have suffered actual damages and those who have not." Keele, 149 F.3d at 593-94.

A determination of the plaintiffs' standing to make the other claims is unnecessary because of the court's ruling on those aspects of B-Real's motion.

2. Debtors Have No Private Right of Action under 11 U.S.C. § 105 for a Creditor's Failure to Comply with Bankruptcy Rule 3001

B-Real urges the court to dismiss the complaint's second claim because debtors are not entitled to recover damages when a creditor fails to attach documentation to its proof of claim. B-Real failed to attach to the proofs of claim documentation regarding the underlying debts, as well as evidence of the assignment of the claims to B-Real.

The claimant has the initial burden of alleging facts to support a proof of claim. Bankruptcy Rule 3001(a) requires the creditor to file a written statement that sets forth the claim substantially conforming to the form prescribed by the Judicial Conference of the United States, Official Form BIO.⁵ For a claim based on writing, Bankruptcy Rule 3001(c) directs the claimant to file with the claim the original or a duplicate of the writing on which the claim is based.

A proof of claim executed and filed in accordance with the Bankruptcy Rules, and specifically Rule 3001 (and by implication Official Form B 10), is prima facie evidence of the claim's validity and amount. Fed. R. Bankr.P. 3001(f).

Failure to attach supporting documentation to a proof of claim when the bankruptcy rules require it is not grounds for disallowing the claim. Claims may be disallowed solely on grounds set forth in 11 U.S.C. § 502(b). See e.g. In re Kirkland, 379 B.R. 341, 354 (10th Cir. BAP 2007); In re Dove-Nation, 318 B.R. 147, 152 (8th Cir. BAP 2004); In re Kincaid, 388 B.R. 610, 613-14 (Bankr.E.D.Pa.2008); and In re Burkett, 329 B.R. 820, 828 n. 2 (Bankr.S.D.Ohio 2005) (collecting cases). A proof of claim lacking necessary facts or supporting documents simply is not entitled to a presumption of prima facie validity. Kin...