In re Templeton
538 B.R. 578
Bankr. N.D. Ala.2015Background
- Multiple Chapter 13 cases where debtors objected under Rule 3007 that various creditor proofs of claim were time‑barred under Alabama law. Objections focused especially on medical debts incurred more than 3 but less than 6 years prepetition.
- Debtors argued those medical debts were "open accounts" governed by Alabama's 3‑year statute; creditors argued the debts were "accounts stated" subject to the 6‑year statute.
- Many contested claims were filed pre‑confirmation and the confirmed plans provided for distributions to unsecured creditors; the trustee had in many instances already paid some or all of those claims.
- Creditors defended on three main grounds: (1) claims are accounts stated (6‑year statute), (2) trustee payments or plan language removed the limitations bar under Ala. Code § 6‑2‑16, and (3) res judicata (or laches) bars post‑confirmation objections.
- Debtors did not dispute the amounts or the services but relied solely on statute‑of‑limitations defenses; claims filed in compliance with Rule 3001 carried prima facie validity.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Nature of medical debts (open account v. account stated) | Medical debts are open accounts → 3‑year statute (Ala. Code §6‑2‑37) | Medical bills were rendered statements/acknowledged → accounts stated → 6‑year statute (Ala. Code §6‑2‑34) | Court: Debtors failed to rebut prima facie claims; medical debts are accounts stated and governed by 6‑year statute; objections overruled. |
| Effect of trustee payments after bar complete (partial payment under §6‑2‑16) | Trustee payments remove bar even if made post‑bar | §6‑2‑16 requires partial payment before the bar is complete; post‑bar payments do not revive claim | Court: Payments made after the statute ran do not remove the bar; post‑bar payments insufficient. |
| Whether confirmed chapter 13 plan language is an "unconditional promise in writing" under §6‑2‑16 | Plan provisions that provide distributions are written, signed promises that revive barred claims | Plan obligations are conditional (dependent on case continuation and plan completion) and do not create new unconditional contract to pay | Court: Confirmed plan provisions are not unconditional promises under §6‑2‑16 and do not reset limitations. |
| Preclusion / timeliness of post‑confirmation objections (res judicata and laches) | Debtors may object post‑confirmation to claims that are time‑barred on their face | Creditors/trustee relied on confirmed plan and payments; confirmation has res judicata effect; delay prejudiced parties → laches | Court: Where claims were filed pre‑confirmation, plans provided for unsecured distributions, payments were made, and limitations grounds were apparent but not raised until long after confirmation, res judicata (and alternatively laches) bars the objections; such objections overruled. |
Key Cases Cited
- Ingalls v. Ingalls Iron Works Co., 258 F.2d 750 (5th Cir. 1958) (elements and shifting burdens for an account stated)
- Martin v. Stoltenborg, 142 So.2d 257 (Ala. 1962) (account stated is a post‑transaction agreement analogous to a promissory note)
- Univ. of S. Ala. v. Bracy, 466 So.2d 148 (Ala. Civ. App. 1985) (account stated standards applied to medical bills)
- Justice Oaks II, Ltd. v. Commissioner, 898 F.2d 1544 (11th Cir. 1990) (confirmation effect and need to object before confirmation)
- Bateman (Universal Am. Mort. Co. v. Bateman), 331 F.3d 821 (11th Cir. 2003) (confirmation has preclusive effect; objections to claims must be raised prior to confirmation)
- Hope v. Acorn, 731 F.3d 1189 (11th Cir. 2013) (§1327 binds the trustee; res judicata bars post‑confirmation challenges known before confirmation)
- Covert v. LVNV Funding, LLC, 779 F.3d 242 (4th Cir. 2015) (confirmed plans that provide pro rata distributions to unsecured creditors preclude post‑confirmation challenges to claims that could have been raised earlier)