463 B.R. 190
Bankr. D. Mass.2012Background
- Debtor filed Chapter 13 on June 30, 2010; LVNV filed two proofs of claim (Nos. 6 and 7) totaling $1,733.47 and $1,224.30, respectively.
- Claim 6 shows LVNV purchased from Tri-Cap Investment Partners; debt charged off March 26, 1993.
- Claim 7 shows LVNV purchased from GE Capital; debt charged off January 7, 1997.
- On December 7, 2010, Debtor objected to three claims, none of which were LVNV’s; in May 2011 Debtor filed the adversary and sought sanctions.
- Debtor alleged LVNV violated the FDCPA and Rule 9011 by filing stale, unenforceable debts; LVNV sought dismissal and opposed sanctions.
- Court held that FDCPA does not apply to proofs of claim in bankruptcy and sanctions safe harbor requirements were not satisfied by Debtor
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FDCPA applies to proofs of claim in bankruptcy | Claudio: FDCPA applies to time-barred debts asserted in bankruptcy | LVNV: FDCPA does not apply to filing proofs of claim in bankruptcy | FDCPA inapplicable to proofs of claim in bankruptcy |
| Whether filing stale debts as proofs of claim violates the FDCPA | Claudio: stale debts violate FDCPA | LVNV: no FDCPA violation from filing; debt unenforceable, not invalid | No FDCPA violation from filing stale claims |
| Whether a stale claim can be unenforceable yet still permissible under §502 and state law | Claudio: statute of limitations bars enforcement | LVNV: still a claim unless objected; unenforceable under state law | Stale claims may be unenforceable but not invalid; objections required to disallow under §502 |
| Whether sanctions under Rule 9011 were proper given safe harbor requirements | Claudio: seeks Rule 9011 sanctions | LVNV: safe harbor under Rule 9011(c)(1)(A) not satisfied | Sanctions denied due to failure to satisfy 21-day safe harbor |
Key Cases Cited
- Randolph v. IMBS, Inc., 368 F.3d 726 (7th Cir. 2004) (FDCPA not applicable to filing of invalid claims in bankruptcy (inapposite))
- Simmons v. Roundup Funding, LLC, 622 F.3d 93 (2d Cir. 2010) (FDCPA not applicable to proofs of claim in bankruptcy)
- Johnson v. Home State Bank, 501 U.S. 78 (Sup. Ct. 1991) (broad definition of 'claim' in bankruptcy under 11 U.S.C. § 101(5))
- Butner v. United States, 440 U.S. 48 (Sup. Ct. 1979) (state law defines validity of claims in bankruptcy)
- In re Andrews, 394 B.R. 384 (Bankr.E.D.N.C. 2008) (statute of limitations defense as affirmative defense in bankruptcy)