HENRY J. BOROFF, Bankruptcy Judge.
Before the Court is a "Defendant's Motion to Dismiss Plaintiff's Complaint" (the "Motion to Dismiss") filed by defendant LVNV Funding, LLC ("LVNV") in this adversary proceeding and a "Debtor's Motion for Sanctions: LVNV Funding, LLC" (the "Sanctions Motion") filed by Jose Luis Claudio, Sr. (the "Debtor") in the main case. The underlying issue is the same: is it improper as a matter of law for a creditor to file a proof of claim for a debt which is unenforceable under state law on account of the passage of the applicable statute of limitations? By the adversary proceeding, the Debtor maintains that such a filing offends the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (the "FDCPA") and Federal Rule of Bankruptcy Procedure 9011;
The Debtor filed this Chapter 13 case on June 30, 2010. LVNV timely filed two proofs of claim—docketed respectively as Claims Nos. 6 and 7. Claim No. 6, in the amount of $1,733.47, discloses that LVNV purchased the claim from Tri-Cap Investment Partners, LLC and that the debt was charged off by the "original creditor" on March 26, 1993.
The Debtor contends that LVNV violated the FDCPA and Rule 9011 by filing Claim Nos. 6 and 7 because those claims were undeniably stale and unenforceable. As to the FDCPA, the Debtor relies on Randolph v. IMBS, Inc., 368 F.3d 726 (7th Cir.2004) to support his contention that the provisions of the FDCPA are applicable in bankruptcy cases. And as to Rule 9011, the Debtor dismisses his noncompliance with the Rule's "safe harbor" provision in the name of "procedural uncertainty" and "an expedient procedural shortcut." As justification for this timesaver and in an effort to illustrate LVNV's perceived arrogance, the Debtor cites to an Order for Sanctions issued by Bankruptcy Judge Dodd for the Middle District of Louisiana against LVNV for having filed, and then having failed to withdraw after "amicable demand," a time barred claim in that case. See In re Jones, Case No. 08-10120, Docket Entry No. 36.
Citing to a long list of court decisions, LVNV contends both that the FDCPA is inapplicable to proofs of claim in bankruptcy cases, and that the filing of a proof of claim does not constitute an act to collect a debt under the FDCPA, but instead is simply a request for leave to participate in the distribution of the bankruptcy estate. And LVNV counters the Debtor's request for Rule 9011 sanctions on the merits and as procedurally defective.
In order to survive a motion to dismiss under Rule 7012(b)(6), a complaint must state a claim upon which relief can be granted. The Supreme Court has explained that the allegations "must contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). "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." Id. (citing Twombly, at 556, 127 S.Ct. 1955).
Congress enacted the FDCPA
15 U.S.C. § 1692(e). In Som v. Daniels Law Offices, District Judge Saylor explained that,
573 F.Supp.2d 349, 356 (D.Mass.2008). The FDCPA defines "debt collector" to mean,
15 U.S.C. § 1692a(6). Violations of the FDCPA include, but are not limited to, "[t]he false representation of . . . the character, amount, or legal status of any debt." 15 U.S.C. § 1692e(2)(A). However, "whether the debt at issue is legitimately owed has no bearing of the validity of a FDCPA action." Som, 573 F.Supp.2d at 356.
Here, although LVNV is arguably a "debt collector" under the FDCPA
Simmons v. Roundup Funding, LLC, 622 F.3d 93, 95-96 (2nd Cir.2010) (citing B-Real, LLC v. Rogers, 405 B.R. 428, 431-31 (M.D.La.2009) ("[T]he Bankruptcy Code itself contemplates a creditor filing a proof of claim on a time-barred debt and the
The Debtor ostensibly ignores this consensus and instead bases his FDCPA claim on a brief citation to the Seventh Circuit's decision in Randolph v. IMBS, Inc., 368 F.3d 726 (7th Cir.2004) in which a FDCPA claim was permitted to proceed. But Randolph was not a case about the filing of invalid or stale proofs of claim—in fact, it was not about proofs of claim at all. Randolph concerned the consolidation of separate actions brought by three Chapter 13 debtors who alleged violations of the FDCPA by debt collection agencies that had commenced collection efforts on discharged debts using unfair practices—including by contacting the debtors directly even though they were each represented by counsel. Id. at 728-29. Accordingly, the Randolph case is inapposite and the FDCPA is inapplicable. No reported decision has held otherwise.
Finally, even if the FDCPA did apply, it is far from clear that the filing of a claim whose enforcement is barred under state law would violate its provisions. Under the Bankruptcy Code,
11 U.S.C. § 101(5). In Johnson v. Home State Bank, 501 U.S. 78, 83, 111 S.Ct. 2150, 115 L.Ed.2d 66 (1991) the Supreme Court explained that, "Congress intended by this language to adopt the broadest available definition of `claim.'"
A claim in bankruptcy is deemed valid simply by virtue of a proof of claim filed in accordance with 11 U.S.C. § 501 unless—a "party in interest" objects to the claim. 11 U.S.C. § 502. The "evidentiary effect" of filing a proof of claim "constitute[s] prima facie evidence of the validity and amount of the claim." Fed. R. Bankr.P. 3001(f). Accordingly, absent a timely objection, the claim will be allowed. Rule 3007 provides the procedure for objecting to a claim:
The Debtor nevertheless contends LVNV's claims are invalid and unenforceable because the debts upon which they are based are stale. They may be unenforceable, but they are not invalid. In Butner v. United States, 440 U.S. 48, 55, 99 S.Ct. 914, 59 L.Ed.2d 136 (1979), the Supreme Court explained that state law defines property interests including the validity of claims under § 502. In Massachusetts,
M.G.L.A. 260 § 2. This 6-year statute of limitation operates to bar enforcement of a debt (in state court), not to extinguish the debt. See Don v. Soo Hoo, 75 Mass.App.Ct. 80, 87 n. 9, 912 N.E.2d 18 (2009) ("[I]t is important to remember that the statute does not extinguish the underlying obligation. Instead, if properly asserted, the statute makes the obligation unenforceable in a court. Nevertheless, the debts may be collected in other ways"). Statutes of limitation are affirmative defenses and, in bankruptcy, would be appropriately raised in an objection to a claim. The Supreme Judicial Court of Massachusetts has "repeatedly referred to the statute of limitations defense as an affirmative defense." Com. v. Shanley, 455 Mass. 752, 780, 919 N.E.2d 1254 (2010). "Consequently, a proof of claim based on a stale claim will be deemed allowed under § 501(a) unless the affirmative defense is raised in a filed objection." In re Andrews, 394 B.R. 384, 388 (Bankr.E.D.N.C.2008) (citations omitted).
Here, the Debtor has not chosen to file an objection to the instant claims, the procedure provided in § 502; rather, he has sought to remediate the perceived harm by attempting to punish the claimant. But regardless of the intentions of the Debtor or his counsel, noble or not, the remedy adopted has been rejected by every court which has considered the matter.
Finally, the Debtor would have the Court hold that the filing of LVNV's proofs of claim based upon allegedly stale debts is grounds for sanctions under Bankruptcy Rule 9011.
Because the FDCPA is inapplicable to the filing of proofs of claims in bankruptcy cases and because the Debtor did not satisfy the requirements of Rule 9011's safe harbor provision, the Court will GRANT LVNV's Motion to Dismiss and DENY the Debtor's Sanctions Motion.
Orders consistent with this memorandum will issue accordingly.