WILLIAM H. STEELE, Chief Judge.
This matter is before the Court on the defendant's motion to dismiss. (Doc. 17). The parties have filed briefs in support of their respective positions, (Docs.17, 21, 22, 25, 27), and the motion is ripe for resolution. After careful consideration, the Court concludes the motion is due to be granted.
According to the complaint, (Doc. 1), the plaintiff filed for bankruptcy relief under Chapter 13. The defendant then filed a proof of claim that disclosed on its face that the claim is barred by the statute of limitations. The complaint alleges that this filing violated the Fair Debt Collection Practices Act ("the Act"), in that it was deceptive and misleading for purposes of 15 U.S.C. § 1692e and unfair and unconscionable for purposes of 15 U.S.C. § 1692f.
In Crawford v. LVNV Funding, LLC, 758 F.3d 1254 (11th Cir.2014), the Eleventh Circuit "consider[ed] whether a proof of claim to collect a stale debt in Chapter 13 bankruptcy violates" the Act and "answer[ed] this question affirmatively." Id. at 1256-57. The defendant argues that dismissal nevertheless is required on two grounds: (1) "[a]ny claim Johnson might otherwise assert under the [Act] in this case is precluded by the Bankruptcy Code"; and (2) "[e]ven if Johnson's claim were not precluded by the Bankruptcy Code, she still fails to state a claim under the [Act]." (Doc. 17 at 5, 16).
"There is no burden upon the district court to distill every potential argument that could be made based upon the materials before it on summary judgment." Resolution Trust Corp. v. Dunmar Corp., 43 F.3d 587, 599 (11th Cir. 1995). The Court's review on this motion to dismiss is similarly limited to those arguments the parties have expressly advanced. E.g., Jurich v. Compass Marine, Inc., 906 F.Supp.2d 1225, 1228 (S.D.Ala. 2012).
The defendant's second argument is essentially an extended and futile effort to deny and thereby avoid the ruling in Crawford. The only serious question presented by the defendant's motion is whether tension between the Bankruptcy Code ("the Code") and the Act precludes the plaintiff from pursuing her claim under the Act.
"The courts are not at liberty to pick and choose among congressional enactments, and when two statutes are capable of co-existence, it is the duty of the courts, absent a clearly expressed congressional intention to the contrary, to regard each as effective." Morton v. Mancari, 417 U.S. 535, 551, 94 S.Ct. 2474, 41 L.Ed.2d 290 (1974); accord J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred International, Inc., 534 U.S. 124, 143-44, 122 S.Ct. 593, 151 L.Ed.2d 508 (2001). There are various ways of measuring and resolving the tension between federal statutes, but the parties agree to use the test requiring "irreconcilable conflict" between the provisions. (Doc. 17 at 4-5, 7, 16; Doc. 21 at 3, 7-12, 16, 18, 21; Doc. 22 at 1, 3, 7, 9).
Before deciding whether the Act and the Code are in irreconcilable conflict, the Court must determine what each provides. The Act, as construed by Crawford, provides that it is unlawful for a debt collector to file a proof of claim in a Chapter 13 proceeding knowing the claim to be time-barred.
"A creditor . . . may file a proof of claim." 11 U.S.C. § 501(a). Pursuant to this provision, "[w]hen a debtor declares bankruptcy, each of its creditors is entitled to file a proof of claim. . . ." Travelers Casualty & Surety Co. of America v. Pacific Gas & Electric Co., 549 U.S. 443, 449, 127 S.Ct. 1199, 167 L.Ed.2d 178 (2007).
"In this title . . . `claim' means . . . right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured. . . ." 11 U.S.C. § 101(5)(A). Thus, if a creditor has a right to payment he has a claim, and if he has a claim he is entitled to file a proof of claim.
"The basic federal rule in bankruptcy is that state law governs the substance of claims. . . ." Travelers, 549 U.S. at 450, 127 S.Ct. 1199 (internal quotes omitted). This flows naturally from the proposition that "property interests are created and defined by state law, and unless some federal interest requires a different result, there is no reason why such interests should be analyzed differently simply because an interested party is involved in a bankruptcy proceeding." Id. at 451, 127 S.Ct. 1199 (internal quotes omitted). "Accordingly, when the Bankruptcy Code uses the word `claim'—which the Code itself defines as a `right to payment,' [citation omitted]—it is usually referring to a right to payment recognized under state law." Id. Thus, if a creditor has a right to payment (i.e., a property interest) recognized by applicable state law despite the lapse of the limitations period, he has a claim for such time-barred debt and is entitled to file a proof of claim as to such time-barred debt.
The plaintiff identifies Alabama as providing the applicable state law. (Doc. 21 at 1 n. 1). In Alabama, a creditor's right to payment is not eliminated by a limitations bar. Ex parte Liberty National Life Insurance Co., 825 So.2d 758, 765
The plaintiff, while ignoring the Court's analysis, insists that the Code does not "condon[e] . . . the filing of proofs of claim on patently unenforceable debt." (Doc. 21 at 8). According to the plaintiff, Section 101(5) requires a "bona fide `right to payment,'" which she defines as a "legally enforceable right." (Id. at 2, 17).
Mr. Black
There is no indication that the Supreme Court has used the term "enforceable obligation" in any more restrictive sense than Mr. Black has used the parallel term "legally enforceable claim." The question presented in Davenport was whether restitution obligations imposed in state criminal proceedings are "debts" as defined by 11 U.S.C. § 101(11). Because "debt" means "liability on a claim," id., the Court looked to the definition of "claim." The petitioners argued in part that a restitution order could not represent a "right to payment" because the obligation could not be enforced in civil proceedings but only by threatening the probationer with revocation. 495 U.S. at 558-59, 110 S.Ct. 2126. The Supreme Court did not regard this difference in "enforcement mechanism" as significant. Id. at 559-60, 110 S.Ct. 2126. Its statement that a right to payment is "nothing more nor less than an enforceable obligation" signifies only that a right to payment is legally enforceable however the law chooses to enforce it—by civil litigation or otherwise. The Davenport Court's reliance on legislative history to show that the Code "contemplates that all legal obligations of the debtor . . . will be able to be dealt with in the bankruptcy case," id. at 558, 110 S.Ct. 2126 (emphasis added, internal quotes omitted), further reflects that it used "enforceable obligation" only in Mr. Black's sense of an interest recognized and protected by law. Moreover, Davenport expressly recognizes that the Code's definitions of "claim" and "debt" are the "broadest possible," id. at 558, 564, 110 S.Ct. 2126 (internal quotes omitted), and a definition of the embedded term "right to payment" that excludes obligations exposed to a limitations defense patently is not the broadest possible. Finally, to read Davenport as the plaintiff desires would directly contradict Travelers' pronouncement that the parameters of a right to payment are defined by state law, not federal law. In short, Davenport cannot plausibly be read for the proposition that a "right to payment" as contemplated by Section 101(5) ceases to exist the moment the statute of limitations expires.
This is underscored by the Code's procedure for addressing proofs of claim. If no party in interest objects, the claim is allowed as a matter of course. 11 U.S.C. § 502(a). The objections a party in interest may raise include that the "claim is unenforceable," id. § 502(b)(1), which would be unnecessary if proofs of claim on unenforceable claims were prohibited to begin with. Since one ground of unenforceability is the expiration of the limitations period,
Finally, the plaintiff's restrictive definition of a claim is at odds with practice under the prior bankruptcy code, and she offers no sound basis for believing Congress rejected that practice when it enacted the Code. "In 1978, after almost 10 years of study and investigation, Congress enacted a comprehensive revision of the bankruptcy laws," known as the Bankruptcy Act of 1978. Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U.S. 50, 53, 102 S.Ct. 2858, 73 L.Ed.2d 598 (1982). Among the many changes worked by the 1978 revision was the adoption of the current definition of a "claim." In re: Keeler, 440 B.R. 354, 361 (Bankr. E.D.Pa.2009). Previously, "a claim had to be both proved and allowed in order for a creditor to receive a distribution." Id.
"We will not read the [1978] Bankruptcy Code to erode past bankruptcy practice absent a clear indication that Congress intended such a departure." Davenport, 495 U.S. at 563, 110 S.Ct. 2126. "The normal rule of statutory construction is that if Congress intends for legislation to change the interpretation of a judicially created concept, it makes that intent specific," and "[t]he Court has followed this rule with particular care in construing the scope of bankruptcy codifications." Kelly v. Robinson, 479 U.S. 36 47, 107 S.Ct. 353, 93 L.Ed.2d 216 (1986) (internal quotes omitted); accord In re: St. Laurent, 991 F.2d 672, 679-80 (11th Cir.1993). The plaintiff has identified nothing in Section 101(5) or its legislative history suggesting that Congress, in adopting the "broadest possible" definition of "claim," intended to overturn the longstanding rule that a limitations defense becomes relevant only after proofs of claim are filed, when the Bankruptcy Court (previously the referee) considers whether to allow an asserted claim. Any such argument would appear to be untenable.
"Based upon the broad definition of a claim found in section 101(5)(A), and based upon the provisions of section 501, which affords all entities that hold claims the statutory entitlement to file a proof of claim, numerous courts have upheld the right of an entity to file a proof of claim, even if that claim is clearly barred by the applicable statute of limitations." Keeler, 440 B.R. at 363. For the reasons set forth above, the Court adds its voice to this chorus.
The answer to the second question is straightforward. "`Where provisions in the two acts are in irreconcilable conflict, the later act to the extent of the conflict constitutes an implied repeal of the other one.'" EC Term of Years Trust v. United States, 550 U.S. 429, 435, 127 S.Ct. 1763, 167 L.Ed.2d 729 (2007) (quoting Posadas v. National City Bank, 296 U.S. 497, 503, 56 S.Ct. 349, 80 L.Ed. 351 (1936)). The Act has not been amended in any relevant respect since its 1977 enactment, while the Code dates from no earlier than 1978. Thus, and as the plaintiff acknowledges, in case of irreconcilable conflict the Act must yield to the Code.
The first question requires more discussion. The plaintiff insists there is no irreconcilable conflict because the defendant "can easily comply with both the Bankruptcy Code and the [Act] by simply refraining from filing proofs of claim premised on time-barred debts." (Doc. 21 at 3; accord id. at 12 n. 10, 16). The defendant argues that the two are in irreconcilable conflict "because [the Code] expressly prescribes the conduct allegedly prohibited by the [Act]." (Doc. 17 at 3).
The plaintiff relies for her position on Randolph v. IMBS, Inc., 368 F.3d 726 (7th Cir.2004). In Randolph, the defendant sent the debtor two dunning letters after the debtor's Chapter 13 petition had been filed and her plan confirmed.
Randolph addresses the situation where both statutes impose obligations on a party.
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 Act and the Code, she is insisting that the defendant comply with the Act by surrendering its right under the Code to file a proof of claim on a time-barred debt. This is not the vindication 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.
The plaintiff's other primary authority is POM Wonderful LLC v. Coca-Cola Co., ___ U.S. ___, 134 S.Ct. 2228, 189 L.Ed.2d 141 (2014). In POM Wonderful, the label on the defendant's juice blend product prominently displayed the words "pomegranate blueberry" even though those juices represented only 0.5% of the product. The plaintiff sued under the Lanham Act for unfair competition in the form of a false or misleading product description. The defendant argued that the plaintiff's
The decision in POM Wonderful does not stand for the proposition that there can be no irreconcilable conflict between statutes when they serve different purposes. Nor could it, since it did not address the "high standard" of "irreconcilable conflict" to begin with but considered only how to "reconcile or harmonize" the two statutes. 134 S.Ct. at 2237.
It is of course true that legislative history may eliminate what would otherwise be an irreconcilable conflict by revealing an intent to restrict the meaning or scope of a facially clear statutory provision. E.g., Watt v. Alaska, 451 U.S. 259, 266, 273, 101 S.Ct. 1673, 68 L.Ed.2d 80 (1981) ("declin[ing] to read the statutes as being in irreconcilable conflict without seeking to ascertain the actual intent of Congress" and finding from legislative history that Congress intended the new term "minerals," which "by its literal terms applies to the facts before us," to have a narrower meaning compatible with the existing statute). But the plaintiff has pointed to no indication that Congress intended the permission it granted in the Code to file proofs of claim on stale debts to be qualified or withdrawn when the creditor is a debt collector. Simply pointing to Randolph's description of the Act as "regulating how debt collectors interact with debtors" and of the Code's "principal subjects" as "what assets are made available to which creditors and how much is left for debtors," 368 F.3d at 731—which is all the plaintiff offers, (Doc. 21 at 16)—reflects no congressional intent for the Code to mean something less than what it plainly says.
Statutory provisions are in irreconcilable conflict when "there is a positive repugnancy between them or ... they cannot mutually coexist." Radzanower v. Touche Ross & Co., 426 U.S. 148, 155, 96 S.Ct. 1989, 48 L.Ed.2d 540 (1976); accord J.E.M. Ag Supply, 534 U.S. at 143, 122 S.Ct. 593. Thus, for example, when two different limitations periods purport to apply to the same situation, they are in irreconcilable conflict. EC Term of Years Trust, 550 U.S. at 435, 127 S.Ct. 1763 ("We
For the reasons set forth above, the defendant's motion to dismiss is
DONE and ORDERED.
The Eleventh Circuit appears to have quoted this portion of Davenport just once, in support of its conclusion that "a judgment requiring payment of punitive and compensatory damages for a common cause of fraudulent conduct is a `debt' as defined by the Bankruptcy Code in § 523(a)." In re: St. Laurent, 991 F.2d 672, 679 (11th Cir.1993). Nothing in St. Laurent suggests the restrictive definition proposed by the plaintiff.