In Re Davis
452 B.R. 610
Bankr. E.D. Mich.2011Background
- Debtor filed Chapter 13 on Sept 2, 2008.
- BAC predecessor filed a proof of claim Oct 14, 2008 secured by the Debtor's home with $169,664.50; arrearage listed as $10,397.53.
- Plan provided to keep the residence, continue mortgage payments, and pay arrearage over the life of the plan; plan confirmed Dec 6, 2008.
- On Feb 9, 2011 the Debtor filed two motions against BAC alleging stay violations and failure to provide an accounting under Local Bankruptcy Rule 3001-2.
- BAC and Debtor reached a stipulation on Mar 28, 2011 resolving the motions; BAC amended its claim on Apr 1, 2011.
- May 16, 2011 the UST moved for a Rule 2004 examination of BAC for alleged stay violations, accounting issues, and claim practices; BAC objected; hearing held Jun 28, 2011; court granted the motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the UST has standing to seek a Rule 2004 examination. | UST argues § 307 and § 586 confer standing as a "party in interest". | BAC contends UST lacks standing; Rule 2004 allows motions by a party in interest. | UST has standing to file a Rule 2004 examination. |
| Whether the UST is a party in interest for Rule 2004 purposes. | UST is a party in interest under § 307 and § 586 and case law. | BAC argues UST is not a party in interest for Rule 2004. | UST is a party in interest for Rule 2004 purposes. |
| Whether good cause exists to authorize a Rule 2004 examination of BAC. | Post-confirmation conduct violating stay and Rule 3001-2 shows good cause. | Not specifically argued; implied lack of necessity. | Good cause established given stay violations and related proceedings. |
| Whether the examination is unduly burdensome or improperly scoped. | Examination limited to BAC's documents and policies relating to the Debtor's account. | Examination could be burdensome and overly broad. | Examination is not unduly burdensome; scope properly tailored to Debtor's account. |
| Whether Rule 2004 examination usurps the Chapter 13 trustee's role. | UST's duties differ from trustee; no interference with §1302 duties. | Examination could encroach on trustee duties. | No usurpation; UST and trustee duties are distinct. |
Key Cases Cited
- In re Countrywide Home Loans, Inc., 384 B.R. 373 (Bankr. W.D. Pa. 2008) (UST standing to pursue Rule 2004 examination under §307 and related authority)
- Morgenstern v. Revco D.S., Inc., 898 F.2d 498 (6th Cir. 1990) (UST watchdog role and appellate standing under §307)
- United States Trustee v. Columbia Gas Systems, Inc., 33 F.3d 294 (3d Cir. 1994) (statutory intent to confer broad standing to UST)
- In re Youk-See, 450 B.R. 312 (Bankr. D. Mass. 2011) (cases recognizing UST authority to move for Rule 2004 examination)
- In re Michalski, 449 B.R. 273 (Bankr. N.D. Ohio 2011) (followed Countrywide approach to UST standing)
- In re Wilson, 413 B.R. 330 (Bankr. E.D. La. 2009) (UST authority to seek Rule 2004 examination)