495 B.R. 823
Bankr. E.D. Tenn.2013Background
- Debtors object to Claim No. 11 filed by Resurgent Capital Services for LVNV Funding, LLC (assignee of Capital One) on a consumer MasterCard debt.
- Claimant's proof shows a balance of $365.06 for an account ending 6639 with charge-off date Jan 5, 1999; no clear chain of title or assignment attached.
- Statement attached to the claim lacks a signature and does not define 'assignor'; ownership of the claim is unclear.
- Debtors assert statute of limitations, lack of ownership documentation, and absence of a power of attorney as bases for disallowance.
- Trustee has paid $52.16 on the unsecured claim under a modified plan; no payments to Claimant while objection pending.
- Court recognizes competing views on disallowance for lack of documentation but ultimately concludes the sole basis—lack of documentation—does not justify disallowance; Debtors may amend or renew grounds or provide supporting affidavit.
- Hearing details: objection filed 12/19/2012; hearing held 3/14/2013; Claimant did not respond; Debtors withdrew all objections except lack of documentation; supplemental brief highlights pattern of similar filings by this creditor.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether lack of ownership documentation justifies disallowance under 502(b). | Rucker’s view supports exclusive rule; lack of docs undermines standing. | Debtors argue failure to attach docs defeats claim validity. | No disallowance solely for lack of documentation; objection insufficient. |
| Whether failure to attach a power of attorney violates Rule 3001(b). | Servicing agent can execute claim without power of attorney. | Power of attorney required by form language; authority uncertain. | Failure to attach power of attorney not required under Rule 9010; prima facie evidence remains. |
| Whether Rule 3001(c)(1) or (c)(3) governs; retroactivity concerns. | Apply the pre-2012 rule (c)(1) to determine prima facie status. | Open-end accounts post-2012 have substituted information under (c)(3). | Apply Rule 3001(c)(1) as in effect when claim filed; not retroactive to 2012 exception. |
| Whether the objection supports entry of default judgment or requires amendment. | Objection focused on documentation; insufficient factual dispute. | Debt existence and ownership contested; need a factual dispute to proceed. | Default judgment not warranted; Debtors may amend/renew ground or provide affidavit. |
| Is there a valid basis to disallow the claim given potential open issues (statute of limitations, dispute over debt, assignment). | Dispute over debt and statute of limitations; lack of documentation raises standing concerns. | Court should consider merits; lack of docs alone not enough; burden remains with objector. | No valid basis for disallowance under 502(b) based solely on lack of documentation; amendment permitted. |
Key Cases Cited
- B-Line, LLC v. Wingerter (In re Wingerter), 594 F.3d 931 (6th Cir. 2010) (exclusive view supports that lack of documentation is not itself a disallowance ground)
- In re Heath, 331 B.R. 424 (9th Cir. BAP 2005) (lack of documentation not a basis for disallowance; evidentiary sanctions may apply for nonresponse)
- In re Kirkland, 572 F.3d 838 (10th Cir. 2009) (nonexclusive view recognized at circuit level, later contrasted by Sixth Circuit trend)
- In re Rehman, 479 B.R. 238 (Bankr. D. Mass. 2012) (addressing authority to file proofs and standing context)