528 B.R. 835
Bankr. M.D. Ala.2015Background
- Critten filed a Chapter 13 petition on May 21, 2014; Quantum3 filed an unsecured claim on July 7, 2014 for $2,558.33 on Galaxy Portfolios, LLC’s debt, with Quantum acting as Galaxy’s agent.
- Critten objected to Quantum’s claim on July 8, 2014, arguing statute of limitations; Quantum failed to timely respond under LBR 3001-1; the Court sustained the objection by default on August 13, 2014.
- Quantum moved for reconsideration of the default order on October 15, 2014; the Court denied the motion on November 25, 2014.
- An adversary proceeding was filed on July 18, 2014; Critten amended the complaint on October 5, 2014; Quantum answered and then moved for judgment on the pleadings (Doc. 27).
- The Court applies Rule 8 and Iqbal/TwIqbal standards to evaluate the Amended Complaint and considers Counts I–III separately.
- The Court sua sponte notes mootness and lack of private right of action for Rule 3001 violations; the relief sought is not supported by the governing authorities.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Count I is moot and properly dismissed | Critten seeks disallowance of Quantum's claim due to Rule 3001 violations. | Count I is moot after prior disallowance and fails to plead specific Rule 3001 violations. | Count I moot and fails to state a Rule 3001 violation. |
| Whether Count I sufficiently pleads Rule 3001 violation | Quantum failed to comply with Rule 3001; supporting facts exist in the amended complaint and attached materials. | Critten does not allege specific Rule 3001 subparts or facts showing noncompliance; claim is vague. | Count I fails to state a plausible Rule 3001 violation. |
| Whether Count II creates an independent private right of action for Rule 3001 violations | There is a private right of action for Rule 3001 violations. | There is no independent action; remedy is non-disallowance or expenses, not damages. | No independent private right of action; Count II dismissed. |
| Whether Count III creates a private right of action for signing Official Form B10 | Failure to properly sign Form B10 could support a private action. | No private right of action for failure to strictly comply with Rule 3001 or Form B10; remedies are within the claim process. | No private right of action; Count III dismissed. |
| Whether the overall complaint should be dismissed with prejudice | Plaintiff seeks relief for Rule 3001 violations and contempt. | Courts have repeatedly held there is no private action for Rule 3001 violations or contempt based on procedural rules. | Amended complaint dismissed with prejudice. |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (plausibility standard for pleading a claim)
- In re Reynolds, 470 B.R. 138 (Bankr. D. Colo. 2012) (Rule 3001 remedies do not include disallowance outside enumerated remedies)
- In re McLean, 515 B.R. 841 (M.D. Ala. 2014) (discusses Rule 3001; not support for independent private action)
- Florida Board of Bus. Reg. v. NLRB, 605 F.2d 916 (5th Cir. 1979) ( mootness and live controversy principles)
- IT T Rayonier Inc. v. U.S., 651 F.2d 343 (5th Cir. 1981) (mootness principles for live controversy requirement)