443 B.R. 225
Bankr. M.D. Ga.2010Background
- Debtor Dixie D. Stephens filed three objections to proofs of claim filed by Capital Recovery III, LLC, alleged assignee of three debts.
- Capital Recovery III, LLC (fourth in the chain) provided only account data and a generic Form 10 paragraph rather than full assignment documents.
- Debtor asserted no attached assignment or supporting documentation proving a valid chain from original creditor to Capital Recovery III, LLC.
- Capital Recovery III, LLC amended proofs with affidavits and an Exhibit 2 (Bill of Sale/Assignment) but Appendix A identifying specific accounts was not attached.
- Georgia law requires a continuous, written chain of assignment identifying the assignor and assignee, and proper documentation or personal-knowledge testimony with a proper business-records foundation.
- Court sustained all three objections for failure to establish a valid chain of assignment or proper evidentiary foundations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is there a valid chain of assignment for each debt? | Stephens argues no valid chain. | Capital Recovery III contends assignment chain exists via affidavits and Exhibit 2. | No valid chain; claims invalid. |
| Are the affidavits and documents sufficient under Georgia law and the Business Records Act? | Affidavits rely on staff reviews, lacking personal knowledge and proper records. | Documents show assignments to Sherman Acquisitions and to Capital Recovery III. | Insufficient foundation; invalid proofs. |
| Does the absence of Appendix A in Exhibit 2 defeat the claims? | Appendix A would identify accounts; its absence breaks linkage. | Exhibit 2 references being attached; no Appendix A provided. | Yes, Appendix A missing; linkage incomplete. |
| Must there be a fully identified assignor and assignee with documents or proper testimony? | General statements of assignment are inadequate. | Affidavits plus business records should suffice. | Requirements unmet; claims invalid. |
Key Cases Cited
- Raleigh v. Illinois Dept. of Revenue, 530 U.S. 15 (2000) (federal rule: state law governs substance of claims; context for assignments)
- Butner v. United States, 440 U.S. 48 (1979) (real property and business records; underlying law governs claims)
- Green v. Cavalry Portfolio Servs., LLC, 305 Ga.App. 843, 700 S.E.2d 741 (2010) (strict chain-of-assignment requirements under Georgia law)
- Nyankojo v. North Star Capital Acquisition, 298 Ga.App. 6, 679 S.E.2d 57 (2009) (insufficiency of chain and records for revolving charge accounts)
- Wirth v. Cach, LLC, 300 Ga.App. 488, 685 S.E.2d 433 (2009) (chain-of-assignments insufficient; similar reasoning)
- Ingles Markets v. Martin, 236 Ga.App. 810, 513 S.E.2d 536 (1999) (evidence foundation for business records)
- Span v. Phar-Mor, Inc., 251 Ga.App. 320, 554 S.E.2d 309 (2001) (hearsay foundations for business-records)
- Southern Mut. Life Ins. Assn. v. Durdin, 132 Ga. 495, 64 S.E. 264 (1909) (assignment identification requirements)