Miller v. Elansari (In re Williams)

• Decision Date: 22 April 2022
• Docket Number: 21-10106,Adv. Pro. 21-02006
• Parties: In re: Tawana Williams, Debtor. v. Amro Elansari and The Law Lian, LLC, Defendants. William P. Miller, U.S. Bankruptcy Administrator, Plaintiff,
• Court: U.S. Bankruptcy Court — Middle District of North Carolina

In re: Tawana Williams, Debtor.

William P. Miller, U.S. Bankruptcy Administrator, Plaintiff, v. Amro Elansari and The Law Lian, LLC, Defendants.

No. 21-10106

Adv. Pro. No. 21-02006

United States Bankruptcy Court, M.D. North Carolina, Greensboro Division

April 22, 2022

NOT FOR PUBLICATION

Chapter 7

MEMORANDUM OPINION DENYING MOTIONS TO DISMISS

BENJAMIN A. KAHN UNITED STATES BANKRUPTCY JUDGE

Amro Elansari ("Defendant") appears in this matter pro se. On July 26, 2021, Defendant filed his Answer and New Matter ("Answer"). ECF No. 14. In his Answer Defendant asserts the affirmative defense under Fed.R.Civ.P 12(b)(6), made applicable to this adversary proceeding by Fed.R.Bankr.P. 7012, that the Complaint fails to state a claim upon which relief may be granted. After filing his Answer, Defendant further filed his Defendant's Motion to Dismiss Pursuant to 12(b)(6), ECF No. 63 (the "Second Motion to Dismiss"), and the Motion to Dismiss Pursuant to Article III Constitution/Unconstitutionality of the Instant Action, ECF No. 79 (the "Constitutional Challenge").

For the following reasons, the defense for failure to state a claim will be overruled, and the Motion to Dismiss will be denied. For the avoidance of doubt, and because the other filings contain overlapping, similar, and sometimes identical arguments, the Second Motion to Dismiss, as defined below, similarly will be denied.

I. JURISDICTION AND AUTHORITY

The Court has jurisdiction over the subject matter of this case under 28 U.S.C. § 1334(a) and over this proceeding under 28 U.S.C. § 1334(b). The United States District Court for the Middle District of North Carolina has referred this case and this proceeding to this Court under 28 U.S.C. § 157(a), by its Local Rule 83.11. This is a core proceeding under 28 U.S.C. § 157(b), in which this Court has statutory authority to enter final judgments. See e.g., In re Spence, 515 B.R. 369, 372 (Bankr. M.D. Fla. 2014); In re Farris, 598 B.R. 411, 414 (Bankr. W.D. La. 2019). The Court has constitutional authority to enter final judgment in this proceeding.

II. BACKGROUND

A. Factual Background.^[1]

The Law Lion, LLC ("Law Lion") is a Pennsylvania limited liability company created on December 18, 2020.^[2] Defendant is the Law Lion, LLC's organizer. As part of Tawana William's ("Debtor") bankruptcy filing, Debtor paid or agreed to pay Defendant to help fill her bankruptcy forms. Debtor was referred to Defendant by family members but contacted him through an advertisement on the "legal services" section of the website craigslist.com. That advertisement read, in part:

SUE ANYONE-$120 + Court Fees Someone giving you a problem? Lawyer Too Busy?

SUE 'EM-it's just a few forms I can fill out and type up-

I am a paralegal that does a lot of legal writing-I write the lawsuit for you

We file it and SUE 'EM

Housing Issue? SUE 'EM Business Issue? SUE 'EM

You have the right to sue people if you need help with an issue-just a few forms at your local court.

$120-I write the paperwork for you legal style-we file it and serve it and GET THEM IN COURT.

Using the questionnaire and a credit report, Defendants completed Debtor's petition, schedules, and statements. Debtor paid Defendants $120.00 for the services. Defendants did not Debtor filed the Official Form 119, Bankruptcy Petition Preparer's Notice, Declaration, and Signature. The Form 119 identifies Defendants as bankruptcy petition preparers and provides their address. The Form did not include an identifying number for either Defendants or a signature.

B. Procedural Background

On June 9, 2021, William P. Miller, Bankruptcy Administrator for the Middle District of North Carolina ("Bankruptcy Administrator"), commenced the above-captioned adversary proceeding by filing his Complaint of the United States Bankruptcy Administrator for Forfeiture of Compensation, Damages, and Injunctive Relief Pursuant to 11 U.S.C. §§ 110 and 526 against Defendants Amro Elansari and The Law Lion, LLC. ECF No. 1 ("Complaint"). The Bankruptcy Administrator alleges, among other things, Defendants violated 11 U.S.C. §§ 110, 526, and 528 while acting as bankruptcy petition preparers and as a debt relief agency in the Chapter 7 case of Tawana Williams. The Bankruptcy Administrator seeks forfeiture and turnover of fees, damages, injunctive relief, and fines against Defendants for these alleged violations.

Law Lion did not respond to the Complaint. On July 26, 2021, Defendant filed several documents, including the Answer. In his Answer, Defendant responded to the individual allegations of the Complaint and asserted a Counterclaim against the Bankruptcy Administrator and Sarah D. Bruce ("Counterclaims"). Defendant also asserts various defenses, including that the Court lacks subject matter jurisdiction and that each cause of action fails to state a claim for relief. ECF No. 14, pp. 15-16.

On October 20, 2021, Defendant filed Defendant Motion to Dismiss Pursuant to 12(b)(6), ECF No. 63 (the "Second Motion to Dismiss"), and the accompanying Brief in Support of Defendant Motion to Dismiss Pursuant to 12(b)(6), ECF No. 64 (the "Brief"). The Court entered an Order on November 5, 2021 "constru[ing] the brief in support of the untimely [Second Motion to Dismiss] in support of the defense in the Answer." ECF No. 68. Plaintiff had 30 days from the November 3, 2021 hearing to respond to Defendant's brief. Id. On December 3, 2021, Plaintiffs filed Plaintiff's Response in Opposition to Defendant's Brief in Support of Rule 12(b)(6) Defense. ECF No. 83 ("Plaintiff's Response").

In his Second Motion to Dismiss, Defendant argues that "Plaintiff failed to claim material defects of foul play . . . [and] [t]he Plaintiff failed to show proof of actual misconduct such communication where the Defendant advises or informs anyone of anything." ECF No. 63, pp. 1-2. Further, Defendant argues that Plaintiff failed to mitigate damages and that they committed fraud in filing the instant matter. Id. at p. 2. Finally, Defendant contends that he does not qualify as a bankruptcy petition preparer. Id. The Brief solely focused on whether Defendant was a bankruptcy petition preparer and the limited services that Defendant provided to Debtor.

On December 2, 2021, Defendant filed a third motion to dismiss, the Motion to Dismiss Pursuant to Article III Constitution/Unconstitutionality of the Instant Action, ECF No. 79 (the "Constitutional Challenge"), and the Brief in Support of Motion to Dismiss Pursuant to Article III Constitution/Unconstitutionality of the Instant Action, ECF No. 80 (the "Brief in Support of the Constitutional Challenge"). In the Constitutional Challenge, Defendant alleges that 11 U.S.C § 110 is unconstitutional because it limits freelance writers and unconstitutionally infringes on their right to contract. Defendant claims that he was merely a scrivener or free-lance writer, and § 110 unconstitutionally infringes on his right to contract with Debtor for writing services.

On January 7, 2022, Defendant filed two additional documents pertinent to the Motion to Dismiss.^[3] Defendant filed the Supplemental Brief in Support of Motion to Dismiss Pursuant to Article III Constitution/Unconstitutionality and the Reply Brief in Support of Motion to Dismiss pursuant to Article III Constitution/Unconstitutionality. ECF Nos. 92 & 93, respectively. Both briefs challenge the constitutionality of 11 U.S.C § 110 under a theory that the statute violates Defendant's freedom of contract under the due process clause of the Fifth Amendment to the Constitution, as determined in Lochner v. New York, 198 U.S. 45 (1905).

III. STANDARD OF REVIEW

Defendant contends that the Complaint should be dismissed under Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted. Instead, and because Defendant has already filed an answer, the appropriate avenue to bring an affirmative defense arguing a deficiency in the claim for relief is through Rule 12(c). Walker v. Kelly, 589 F.3d 127, 139 (4th Cir. 2009) ("Because the Commonwealth filed its answer to Walker's petition and its motion to dismiss simultaneously, it technically should have filed the motion under Rule 12(c) as one for judgment on the pleadings.")(considering the motion to dismiss despite the procedural deficiency). Whether the motion to dismiss is under Rule 12(b)(6) or 12(c), the standards are the same.

A motion for judgment on the pleadings under Rule 12(c) is assessed under the same standards as a motion to dismiss under Rule 12(b)(6). . . . A motion to dismiss tests the sufficiency of a complaint. To survive such a motion, the complaint must contain facts sufficient to raise a right to relief above the speculative level and state a claim to relief that is plausible on its face. Although a motion pursuant to Rule 12(b)(6) invites an inquiry into the legal sufficiency of the complaint, not an analysis of potential defenses to the claims set forth therein, dismissal nevertheless is appropriate when the face of the complaint clearly reveals the existence of a meritorious affirmative defense.

Columbia v. Haley, 738 F.3d 107, 115-16 (4th Cir. 2013)(internal citations and quotations omitted).

As stated by the Fourth Circuit, the standards set forth in Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), guide the Court in determining whether to dismiss a complaint. A complaint should survive a motion to dismiss if it contains "sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570).

A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the

...