461 B.R. 823
Bankr. C.D. Cal.2011Background
- UST sought Rule 2004 examinations of BAC in six related Chapter 13 cases pending in the District of New Jersey.
- Subpoenas requested BAC representatives testify and produce documents about claims practice, loan files, and procedures.
- BAC filed six motions to quash, asserting procedural defects, lack of standing, and burdensomeness.
- Court held UST has standing to seek 2004 examinations and that Rule 2004 subpoenas were proper under local rules.
- Court rejected BAC’s objections (good cause, RFPA, burdensomeness, vagueness, privilege) and denied all six motions to quash.
- UST may proceed with examinations and document production; orders should be lodged accordingly.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| UST standing to issue subpoenas | UST has broad standing under §307 to raise and pursue 2004 examinations. | UST lacks party-in-interest status; standing limited by §586 and enumerated duties. | UST has standing to seek 2004 examinations in all six cases. |
| Good cause for 2004 examinations | Examinations needed to address potential nationwide abuse in proofs of claim. | No good cause; requests are overly broad and exploratory. | Good cause established; examinations warranted. |
| Procedural sufficiency of 2004 examination requests | Subpoenas properly issued under Rule 2004(c) and applicable local rules; no motion required. | Should have obtained a court order under Rule 2004; procedural defect. | Subpoenas proper under local rule; no separate order required. |
| RFPA compliance and document production objections | RFPA releases were obtained; objections are boilerplate or vague. | RFPA compliance not clearly shown; protected materials and confidentiality concerns. | RFPA releases obtained; objections overriden to permit production and privilege logs. |
Key Cases Cited
- In re Countrywide Home Loans, Inc., 384 B.R. 373 (Bankr. W.D. Pa. 2008) (UST standing to seek 2004 examinations harmonized with §307)
- Dean v. McDow, 299 B.R. 133 (E.D. Va. 2003) (UST authority to seek Rule 2004 examinations)
- Gache v. Balaber-Strauss, 198 B.R. 662 (S.D.N.Y. 1996) (UST standing and scope under Rule 2004)
- Campbell v. Countrywide Home Loans, Inc., 545 F.3d 348 (5th Cir. 2008) (pre-petition escrow and abuse concerns in proof of claim processes)
- In re Rodriguez, 629 F.3d 136 (3d Cir. 2010) (bankruptcy disclosures and proofs of claim scrutiny)
- TRW Inc. v. Andrews, 534 U.S. 19 (U.S. 2001) (statutory interpretation and avoiding superfluous language)