MEMORANDUM DECISION
Thеse consolidated cases are before the Court on the Defendants’ Motion for Judgment on the Pleadings.
I. FACTS.
As this is before the Court on the Defendants’ Motion for Judgment on the Pleadings, the Court will accept as true the facts pled in the Complaint.
II. JURISDICTION.
This Court has jurisdiction to hear these proceedings pursuant to 28 U.S.C. § 1334(b). An objection to a proof of claim is a core proceeding. 28 U.S.C. § 157(b)(2)(B). Determination of whether the Defendants are entitled to judgment on Feggins’s FDCPA claim is a non-core proceeding, but the denial of a motion for judgment on the pleadings is not a final order. See Continental Nat’l Bank of Miami v. Sanchez (In re Toledo),
III. MOTION FOR JUDGMENT ON THE PLEADINGS STANDARD.
These consolidated adversary proceedings are before the Court on the Defendants’ motion for judgment on the pleadings. See Fed. R. Civ. P. 12(c), as made applicable to these proceedings by Fed. R. BaNKR. P. 7012(b). The standard to be applied here is the same as if this were a motion to dismiss made pursuant to Rule 12(b)(6). Robert v. Abbett, Case No. 3:08—CV-329-WKW,
A pleading must contain a short and plain statement of the claim showing that the pleader is entitle to relief.... The pleading standard Rule 8 announces does not require detailed factual allegations but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.... A pleading that offers labels and conclusions or a formulaic recitation of the element of a cause of action will not do. Nor does a complaint suffice if it tenders naked assertions devoid of further factual enhancement.
To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausiblе on its fact. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.
Ashcroft v. Iqbal,
IV. THE BANKRUPTCY CODE DOES NOT PRECLUDE THE FDCPA.
The Defendants’ central argument in the instant motion is that the Bankruptcy Code precludes the Fair Debt Collection Practices Act. The Eleventh Circuit recently held that the filing of a proof of claim on a stale debt in bankruptcy proceedings is a violation of the FDCPA. Crawford v. LVNV Funding, LLC,
A. Repeal by implication is not favored.
Before addressing the specifics of the Defendants’ repeal argument, the Court notes that there is nothing in the language of either the FDCPA or the Bankruptcy Code that states that a debtor may not be provided a remedy under the FDCPA when the collection activity complained of takes place in a bankruptcy proceeding. In other words, there is no express conflict here and the Defendants make no claim that there is. Rather, the Defendants assert that there is an inherent conflict—the weakest of statutory preclusion arguments.
The Defendants argue that the Bankruptcy Code repeals the FDCPA by implication, failing to recognize that such a practice is highly disfavored and'only rarely done. “Because a repeal by implication requires the most speculation about the intent of Congress, there is a presumption against finding one.” Miccosukee Tribe of Indians of Fla. v. U.S. Army Corps of Engineers,
The Seventh Circuit in Randolph reversed the district court’s holding that § 362(h) of the Bankruptcy Code “preempts” § 1692e(2)(A) of the FDCPA.
The implicit repeal of one federal statute by another is exceedingly rare. “The conclusion that two statutes conflict ... is one that courts must not reach lightly. If any interpretation permits both statutes to stand, the court must adopt that interpretation, ‘absent a clearly expressed congressional intention to the contrary.’ ” Miccosukee Tribe,
B. Section 501 of the Bankruptcy Code does not irreconcilably conflict with the FDCPA.
The Defendants argue that § 501 of the Bankruptcy Code provides an absolute right to file a proof of claim, thereby precluding provisions of the FDCPA that impose liability for the filing of a time-barred claim. (Doc. 39 pp. 9-16; Doc. 51 pp. 4-10). The flaw in the Defendants’ argument is that this right to file a proof of claim under § 501 does not shelter them from liability if it is later determined that the filing violates another provision of the law. For example, sanctions may be imposed under Bankruptcy Rule 9011 if a filed proof of claim is found to be frivolous. Matter of Sekema,
1. Processing claims under the Bankruptcy Code and Federal Rules of Bankruptcy Procedure.
The claims allowance process begins with § 501(a), which provides that “[a] creditor or an indenture trustee may file a proof of claim.” Section 502(a) provides, in part, that “[a] claim or interest, proof of which is filed under section 501 of this title, is deemed allowed, unless a рarty in interest ... objects.” So far this is straightforward enough. Three simple principles emerge: (1) a creditor may file a proof of claim, (2) other parties in interest may object, and (3) if no objection is made, the claim is “deemed allowed.”
There is additional information that must be filed with the proof of claim when the debtor'is an individual or when the claim is based on an open-end or revolving consumer credit agreement. Specifically, a proof of claim must include an itemization of any interest, fees, expenses, or charges incurred pre-petition when the debtor is an individual. Fed. R. Bankr. P. 3001(c)(2)(A). When the claim is based on an open-end or revolving consumer credit agreement that is not secured by the debt- or’s real property, the proof of claim must include:
(i) thе name of the entity from whom the creditor purchased the account;
(ii) the name of the entity to whom the debt was owed at the time of an account holder’s last transaction;
(iii) the date of an account holder’s last transaction;
(iv) the date of the last payment on the account; and
(v) the date on which the account was charged to profit or loss.
Fed. R. Bankr. P. 3001(c)(3)(A). Thus, a creditor whose claim falls within the purview of Bankruptcy Rule 3001(c)(3) should be aware of whether its claim is time-barred. '
The claims allowance process continues. Section 502(b) provides, in part, that:
if such objection to a claim is made, the court, after notice and a hearing, shall determine the amount of such claim ... as of the date of the filing of the petition, and shall allow such claim in such amount, except to the extent that—
(1) such claim is unenforceable against the debtor and propеrty of the debtor, under any agreement or applicable law for a reason other than because such claim is contingent or unmatured[.]
11 U.S.C. § 502(b)(1).
It is well established that a claim that is barred by statute of limitations under applicable law will be disallowed under § 502(b)(1).
The typical federal court disposes of hundreds of cases each year — a bankruptcy court disposes of thousands. It is not uncommon to see dozens of attorneys in a bankruptcy courtroom, presenting arguments and objections on a long list of cases, with rulings issuing at pace that makes a cattle auction appear leisurely. A bankruptcy court does not have the time district courts devote to a motion, to examine each petition, proof of claim, and objection; the bankruptcy judge must rely on counsel to act in good faith. The potential for mischief to be caused by an attorney who is willing to skirt ethical obligations and procedural rules is enormous.
Young v. Young (In re Young),
2. Applicable provisions from the FDCPA.
The Eleventh Circuit held in Crawford that the filing of a proof of claim in a bankruptcy proceeding is a “collection of debt”- as that term is used in 15 U.S.C. § 1692a(6). Crawford,
Congress enacted the FDCPA amidst the baсkdrop of “abusive, deceptive, and unfair debt collection practices” that “contribute[d] to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.” 15 U.S.C. § 1692(a). The FDCPA’s purposes are “to eliminate abusive debt collection practices by debt collectors, to insure [sic] that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.” 15 U.S.C. § 1692(e).
In furtherance of these purposes, the FDCPA prohibits “[t]he false representation of ... the character, amount, or legal status of any debt[,]” 15 U.S.C. § 1692e(2)(A), as well as “[t]he use of any fаlse representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.” 15 U.S.C. § 1692e(10). In the context of the Bankruptcy Code’s automatic claims allowance process, the filing of a proof of claim amounts to an assertion that the underlying claim is enforceable and that the claimant is entitled to be paid out of the bankruptcy estate — at the expense of other creditors. As discussed above, however, a time-barred claim is unenforceable within the meaning of the Bankruptcy Code, so a debt collector who knowingly files such a claim in bankruptcy is falsely asserting that it is entitled to be paid.
Likewise, the FDCPA prohibits the “use [of] unfair or unconscionable means' to collect or attempt to collect any debt.” 15 U.S.C. § 1692f. A debt collector who files a proof of claim on a debt it knows to be unenforceable unfairly games the system by taking advantage of the automatic claims allowance process in bankruptcy and camouflaging among the inundation of other claims filed. See Young,
3. Reconciling the FDCPA with the Bankruptcy Code.
Bankruptcy is not a free-for-all that invites creditors to gorge themselves on the debtor’s assets without regard to the merit or enforceability of their claims. Rather, bankruptcy is intended to offer an insolvent debtor a fresh start while equitably dividing the debtor’s assets among creditors who hold meritorious and enforceable claims. See 11 U.S.C. § 502(b)(1). A creditor’s lot in bankruptcy is famine, not feast, because the debtor’s insolvency usually means that there will not be enough assets to make all of the creditors whole. A creditor who obtains payment via an undeserving proof of claim exacerbates this problem and undermines one of bankruptcy’s key purposes by parasitieally diluting the already meager shares of deserving creditors still further. See Avalos v. LVNV Funding, LLC (In re Avalos),
The Bankruptcy Code and Rules provide remedy for such conduct. As discussed above, the bankruptcy court may disallow an unenforceable proof of claim under § 502(b)(1). In addition, Bankruptcy Rule 9011 authorizes the bankruptcy court to impose sanctions on creditors who .file proofs of claim “for any improper purpose” or who make claims or legal contentions that are not “warranted by existing law[.]” Fed. R. BANKR. P. 9011(b)(l)-(2); see also Sekema,
If Bankruptcy Rule 9011 authorizes sanctions for the filing of stale proofs of claim, it follows that § 501(a) does not provide creditors an absolute right to file a proof of claim with impunity if it violates another rule or statute. Thus qualified, § 501(a) does not conflict with the Crawford court’s application of the FDCPA. Instead, the FDCPA promotes the purposes of bankruptcy by providing an additional remedy for the abuse of the bankruptcy process by debt collectors. It protects debtors, creditors, and bankruptcy courts by helping to maintain the integrity of the automatic claims allowance process.
“When two statutes comрlement each other, it would show disregard for the congressional design to hold that Congress nonetheless intended one federal statute to preclude the operation of the other one.” POM Wonderful LLC v. Coca-Cola Co., - U.S. -,
C. Survey of on-point case law.
In holding that the Bankruptcy Code does not preclude the FDCPA, the Court acknowledges that it stands in opposition to a considerable body of contrary case law. The Defendants correctly point out that Crawford marked a radical change in the way courts considerеd the FDCPA’s relationship with bankruptcy. At the time Crawford was decided, there were only four cases the Court is aware of that had held that a wrongfully filed proof of claim can form the basis of a FDCPA claim and that the Bankruptcy Code did not preclude the FDCPA; two of those cases had been reversed on appeal.
The number of eases holding that the Bankruptcy Code precludes the FDCPA is much less formidable.
D. Johnson v. Midland Funding, LLC.
The court in Johnson held that there was an irreconcilable conflict between the Bankruptcy Code and a FDCPA suit based on a stale proof of claim. Johnson,
The Johnson court first determined that state law governs the sсope of a claim. Id.
Having determined that the Bankruptcy Code provides a right to file a time-barred proof of claim, the Johnson court concluded it was in irreconcilable conflict with the FDCPA. Id. at 470. The court rejected the idea that a creditor could comply with the FDCPA by not filing a time-barred proof of claim:
The ability to “comply” with both statutes, however, is not the proper test when, as here, the case does not concern a comparison of the obligations imposed by one statute with the obligations imposed by another but rather a comparison of the obligations imposed by one statute with the rights conferred by another. In such a case, to speak of mutual compliance is nonsensical, because one does not “comply” with a right, one exercises it. The plaintiff is not urging that the defendant “comply” with both the [FDCPA] and the [Bankruptcy] Code, she is insisting that the defendant comply with the [FDCPA] by surrendering its right under the Code to file a proof of claim on a time-barred debt. This is not the vindicatiоn of both statutes, it is the negation of one by the enforcement of the other. A clearer demonstration of irreconcilable conflict would be difficult to imagine.
Id. at 471.
This Court respectfully disagrees with the analysis in Johnson for two reasons. First, as discussed above, the Court disagrees that § 501(a) provides an absolute right to file a claim. Liberty Nat’l Life Ins. Co., on which the Johnson court relied, is a case that discusses application of a statute of repose, and the sentence relied on in Johnson is dicta comparing a statute of repose to a statute of limitations. See Liberty Nat’l Life Ins. Co.,
Bankruptcy does not resurrect dead debt. The legal enforceability of a claim for bankruptcy purposes hinges on how that claim is treated under the Bankruptcy Code. Section 502(b)(1) is the operative statute, and there is no question that a time-barred claim is unenforceable and will be disallowed under it. Supra, Part IV, B, 1. Rather than being an enforceable property interest, as the Johnson court suggests, such a claim more closely resembles a counterfeit product that is exposed upon closer inspection and rejected. To say that § 501(a) allows such claims to be filed with impunity effectively writes Bankruptcy Rule 9011(b) out of existence.
Second, even if the Johnson court is correct that § 501(a) authorizes creditors to file time-barred claims, the Court disagrees with the conclusion in Johnson that an irreconcilable conflict with the FDCPA arises. The Johnson court finds conflict in an “authorization” by the Bankruptcy Code versus a restriction by the FDCPA. This characterization is certainly proper in the preemption context where a state restriction conflicts with a federal authorization or “right.” E.g., Barnett Bank of Marion Cnty., N.A. v. Nelson,
The Supreme Court “has not hesitated to give effect to two statutes that overlap, so long as each reaches distinct cases.” J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred Int’l, Inc.,
Because the ability to comply with both statutes is the correct inquiry, the Court must reject the analysis set forth in Johnson. The Defendants could easily have complied with the FDCPA by not filing a time-barred claim. They could have complied by obtaining judgment in state court in a timely fashion and recording the judgment. They could even have complied by having the underlying creditor file the time-barred claim itself.
V. THE ELEVENTH CIRCUIT’S DECISION IN CRAWFORD IS BINDING PRECEDENT.
The Defendants argue that Crawford “was not a decision on the merits and thus, there is no binding mandate upon this Court.” (Doc. 39 p. 16). The Defendants posit that because Crawford was an appeal involving a ruling on a motion to dismiss, pursuant to Rule 12(b)(6), it is not binding here. That argument was recently rejected in a case handed down by the District Court in the Northern District of Alabama. See Slaughter v. LVNV Funding, LLC, No. 14-MC-2050,
The Defendants also argue that this Court should not apply the “least sophisticated consumer” standard in these cases because the Plaintiffs were all represented by counsel in their bankruptcy cases. In Miljkovic v. Shafritz & Dinkin, P.A., the Eleventh Circuit recently questioned whether the “least sophisticated consumer” standard should apply when the debt collection activity is directed to a consum
Because Crawford is binding, it forecloses the Defendants’ remaining arguments. The Court rejects the Defendants’ argument that Feggins’s FDCPA “claim fails as a matter of law because the bankruptcy estate is not a consumer or a natural person” as it is contrary to the ruling in Crawford.
VI. THE DEFENDANTS’ ARGUMENTS TO THE EFFECT THAT FEGGINS’S COMPLAINT SHOULD BE DISMISSED AS TO CLAIM NO. 18, AND THAT THE CASES OF OLIVER AND BRYANT SHOULD BE DISMISSED, HAVE BECOME MOOT IN LIGHT OF THE PLAINTIFFS’ DISMISSAL.
The Defendants argue, in Part VII of their motion for judgment on the pleadings, that they are entitled to dismissal of Feggins’s complaint insofar as it relates to Claim No. 18. (Doc. 39, pp. 49-53). Moreover, the Defendants argue, in Part VIII of their memorandum, that the cases of Bryant (AP 14-1061) and Oliver (AP 14-1065) should be dismissed because the underlying bankruptcy cases have been dismissed. (Doc. 39, pp. 52-56). The Plaintiffs have conceded both issues and do not oppose the motion in either of these respects. (Doc. 50, pp. 17-18); supra notes 1 and 4.
VII. CONCLUSION.
Section 501 of the Bankruptcy Code does not provide an absolute right to file frivolous or groundless proofs of claim without consequence. Because there is no inherent conflict between § 501 and the FDCPA, the Bankruptcy Code does not preclude a cause of action under the FDCPA that is based on a stale proof of claim. Therefore, the Defendants’ motion
Notes
.By this Court's Order of October 3, 2014, the following adversary proceedings were consolidated (Doc. 18):(1) AP No. 14-1049 William Henry Feggins; (2) 14-1060 Ray C. Balcom; (3) 14-1061 Robert R. Bryant; (4) 14-1062 Donnie L. Chandler; (5) 14-1063 Cynthia Gamble Grant; (6) 14-1064 Robert W. Henson; and (7) 14 — 1065 Krista R. Oliver. On June 19, 2015, Oliver and Bryant moved to voluntarily dismiss their cases. (Doc. 49). This Court will grant that motion by way of a separate document. This leaves five adversary proceedings for disposition.
. The Court announced its decision denying Defendants' motion fоr judgment on the pleadings on July 23, 2015. Trial was held August 10, 2015. The Court did not consider' evidence or arguments offered at trial in ruling upon this motion.
. While there are five separate adversary proceedings, unless specified otherwise, the Court will refer here to the complaint filed by Feggins. The facts and issues are sufficiently similar that the Court’s reasoning, as applied to Feggins, will apply equally well to the remaining adversary proceedings.
. The Court assumes, for purposes of this motion only, that Alabama's 6-year statute of limitations applies. Feggins had alleged in his complaint that Claim 18, also filed by the Defendants, was barred by Alabama’s 3-year statute of limitations. (Doc. 1). When the Defendants asserted in their motion for judgment on the pleadings that the 6-year limitation applied, Feggins consented to judgmеnt as to Claim 18. (Doc. 50, p. 17). This has no effect on the other claims filed by the Defendants, which are clearly beyond the 6-year statute of limitations.
. Only Feggins seeks disallowance of the Defendants’ proof of claim in the context of this adversary proceeding. See FED. R. BANKR. P. 3007(b). The remaining Plaintiffs separately objected to the Defendants' proofs of claim on the basis that they were time-barred, and the Court has sustained those objections. See 11 U.S.C. § 502(b)(1). Therefore, the remaining Plaintiffs only assert FDCPA claims against the Defendants.
. The Defendants do not dispute that they are "debt collectors” within the meaning of the FDCPA. See 15 U.S.C. § 1692a(6).
. Section 362(h) was recodified as 11 U.S.C. § 362(k) in the 2005 BAPCPA amendments.
. E.g., In re Mazyck,
. In equipoise with such creditor conduct is the unscrupulous debtor who frivolously objects to every claim. This Court has a negative notice rule, LBR 3007-1, that provides for objections to claims to be sustained automatically after 30 days if they are not responded to. Several of the Plaintiffs' objections to the Defendants' claims were (propеrly) sustained in this way. Supra note 5. In many respects, a debtor who attempts to abuse this rule mirrors the Defendants’ conduct, and may not do so with impunity. See FED. R. BANKR. P. 9011(b); Smyth v. City of Oakland (In re Brooks-Hamilton),
. Smith v. Asset Acceptance, LLC,
. Taylor v. Galaxy Asset Purchasing, LLC, - F.Supp.3d -,
. Simmons v. Roundup Funding, LLC,
. Perkins v. LVNV Funding, LLC (In re Perkins),
. See Rhodes v. Diamond,
. The Johnson court's reasoning also undermines Alabama's carefully considered procedure by which creditors can (and are encouraged to) preserve their claims by seeking and recording judgments quickly. See ALA. CODE § 6-9-211 (providing a procedure by which a judgment certificate is recorded and preserved for 10 years, with an option of renewal for another 10 years). By purporting to uphold state law, the Johnson analysis actually undermines it by allowing creditors to sit on their rights and present their claims in bankruptcy after most debtors no longer have the means or wherewithal to dispute them.
. That is not to say that the Court would condone such activity. It simply illustrates how narrow the scope of the Crawford court’s application of the FDCPA is.
. In substance, the Defendants’ argument is an improper attack on Crawford: "The Crawford opinion is clearly erroneous and would work a manifest injustice.” (Doc. 39, p. 29).
. The Court also notes that Miljkovic is factually distinguishable because the communication in that case merely raised an adverse legal position in state court, whereas the Defendants' proof of claim here is a meretricious factual assertion and request for payment.
. The Court also notes that this argument is premised on a partial quotation of 15 U.S.C. § 1692(e), addressing the FDCPA's purpose, that has been taken out of context and given a different meaning. The Court takes a dim view of such tactics.
.The Court notes that a debtor must provide notice of his bankruptcy to creditors before he can discharge his debts to them. 11 U.S.C. § 523(a)(3).