627 B.R. 158
Bankr. D. Nev.2021Background
- Debtor Antonia Andrade-Garcia filed bankruptcy (Ch. 7) on Sept 29, 2017 and converted to Chapter 13 on Dec 6, 2017.
- Creditor LVNV Funding, LLC filed three proofs of claim on Feb 13, 2018 for accounts showing charge-off/last-transaction dates in 2002–2006.
- Debtor objected on Jan 7, 2020, arguing the claims were time-barred under Nevada’s statutes of limitations (NRS 11.190); LVNV’s own claim attachments confirmed the old dates.
- LVNV’s replies conceded the claims were time-barred and cited Midland Funding; the Chapter 13 trustee did not object to the claims.
- The bankruptcy court sustained Debtor’s objections, disallowed all three claims under 11 U.S.C. § 502(b)(1), and held Debtor was the prevailing party.
- The court awarded fee-shifting relief under Nevada’s NRS 18.010(2)(b) and ordered Debtor’s counsel to file a declaration of fees for a subsequent award order.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Were LVNV’s proofs of claim barred by Nevada’s statute of limitations? | Claims were time-barred based on charge-off/last-transaction dates in LVNV’s own attachments and NRS 11.190. | LVNV conceded the claims were time-barred. | Yes — claims were patently time-barred when filed; objections overcome prima facie validity. |
| Should the time-barred claims be disallowed under 11 U.S.C. § 502(b)(1)? | § 502(b)(1) requires disallowance of claims unenforceable under applicable state law. | LVNV offered no evidence to overcome the objections. | Yes — all three claims disallowed in full under § 502(b)(1). |
| May a Nevada fee-shifting statute (NRS 18.010(2)(b)) be applied in bankruptcy to shift fees incurred litigating proof-of-claim disputes? | State law governs the enforceability of claims under § 502(b)(1); Ninth Circuit precedent permits application of state fee statutes when state law decides the substantive claim. | LVNV relied on Midland Funding (an FDCPA case) but did not contest applicability of NRS 18.010 on the same grounds. | NRS 18.010(2)(b) applies here because the claim validity was resolved under Nevada law; Johnson and related authority support applying state fee rules in proof-of-claim litigation. |
| Is Debtor entitled to recover attorney’s fees under NRS 18.010(2)(b)? | Debtor, as prevailing party, is entitled to fees because LVNV filed and maintained objectively frivolous/time-barred claims that shift the burden to debtors to object. | LVNV asserted Midland Funding but did not dispute time-bar or otherwise justify fee denial. | Yes — court awarded fee-shifting under NRS 18.010(2)(b) and directed counsel to submit a fee declaration. |
Key Cases Cited
- Midland Funding, LLC v. Johnson, 137 S. Ct. 1407 (2017) (Supreme Court FDCPA decision; majority and notable dissent discussed regarding filing stale claims)
- Johnson v. Righetti (In re Johnson), 756 F.2d 738 (9th Cir.) (state law governs validity of proofs of claim; supports applying state fee rules)
- Wright v. Holm (In re Holm), 931 F.2d 620 (9th Cir. 1991) (burden of persuasion remains on claimant in proof-of-claim litigation)
- Travelers Casualty & Surety Co. v. Pacific Gas & Electric Co., 549 U.S. 443 (2007) (American Rule; federal vs. state law application for fee awards)
- Heath v. American Express Travel Related Servs. Co. (In re Heath), 331 B.R. 424 (9th Cir. BAP 2005) (proof-of-claim evidentiary effect and supporting documentation)
- Dale v. Maney (In re Dale), 505 B.R. 8 (9th Cir. BAP 2014) (statutory interpretation and plain-text enforcement in bankruptcy context)