OPINION

ERIC L. FRANK, CHIEF U.S. BANKRUPTCY JUDGE.

I. INTRODUCTION

In this chapter 13 case, Debtor Angela P. Freeman ("the Debtor") seeks both

The Debtor frames her request for sanctions as an attempt to protect the bankruptcy claims allowance process from the conduct of a creditor who

(Debtor's Mem. at 7) (unpaginated). The Debtor asserts that such creditor conduct harms other creditors who hold and timely file valid proofs of claim by diluting their distribution from the bankruptcy estate. (Id. at 6).

For the reasons set forth below, I will disallow the proof of claim at issue because it is unenforceable under applicable nonbankruptcy law. However, I will deny the Debtor's request for sanctions because sufficient grounds do not exist in this case to impose sanctions on the claimant under Rule 9011 for filing a "stale proof of claim."1

II. PROCEDURAL HISTORY

The Debtor filed a chapter 13 bankruptcy case on December 5, 2014. On February 23, 2015, Palisades Collections, LLC ("Palisades") filed a proof of claim ("the POC"), asserting a general unsecured claim in the amount of $316.23. The claim is based on a bill from Verizon Pennsylvania, Inc. ("Verizon") for unpaid telephone services. The POC identified Palisades as the creditor, but stated that notices should be sent to Vativ Recovery Solutions, LLC ("Vativ"). The POC was signed under penalty of perjury by Stephen Braun, who identified himself as Vativ's Assistant VP of Operations/Director of Litigation.

The POC was supported by copies of:

On August 4, 2015, the Debtor filed what she styled as a "Motion for Sanctions Pursuant to FRCP 11 and FRBP 9011" ("the Motion") (Doc. # 49).2 In the Motion, the Debtor pointed out that the POC states neither the date of Verizon's last service nor the date of the last payment. However, based on the attached Verizon bill from April 2004 — more than ten (10) years before the Debtor commenced her bankruptcy case — the Debtor asserted that the applicable statute of limitations, 42 Pa.C.S. § 5525(a), has expired and that the claim "is completely without the claimed value, uncollectable [sic] at law, and without reasonable basis in law or fact." (Motion ¶ 10).

Only the Debtor's counsel appeared at the hearing on the Motion on September 1, 2015. At the conclusion of the hearing, I took the matter under advisement. The Debtor filed a memorandum of law in support of her position on September 15, 2015 and the matter is ready for decision.

III. DEBTOR'S STANDING TO OBJECT TO THE POC

The Debtor seeks disallowance of the Proof of Claim and monetary sanctions for prosecuting a successful objection to the Proof of Claim. Disallowance of the claim is requested under 11 U.S.C. § 502(b)(1).

The Debtor also requests that sanctions be imposed for the asserted violation of Fed. R. Bankr. P. 9011(b). In making this request, the Debtor asserts that:

(Motion ¶¶ 13-14). In connection with the request for sanctions the Debtor posits that Palisades and Vativ filed an invalid claim based upon the expectation that the Debtor lacks a sufficient incentive to object to the claim and would not do so,3 and that, similarly, the chapter 13 trustee was unlikely to object to the claim.4

The Debtor's statement, that the claimant would surmise that she lacks an incentive to object to an invalid proof of claim appears accurate. In this case, the Debtor's First Amended Plan, which was confirmed by order entered on August 19, 2015, provided for the payment of a fixed, base amount in plan payments and a pro-rata distribution to unsecured creditors after the distribution to more senior classes has been completed. (See Doc. #'s 40, 57). Thus, the allowance or disallowance of the POC cannot have any effect on the Debtor's payment obligations under the confirmed plan. Nor has the Debtor suggested that any of the allowed claims are nondischargeable. (If there were nondischargeable claims, the Debtor would have a financial incentive to seek disallowance of invalid claims so as to increase the distribution to the holders of the nondischargeable claims and decrease the balance due on the nondischargeable debt after the completion of the case).

The Debtor's candid observation that she lacks an incentive to object to the POC leads to a threshold question whether the Debtor even has standing to object to the POC, a question that the court is obliged to consider sua sponte. See, e.g., In re Gronczewski, 444 B.R. 526, 532 n. 4 (Bankr.E.D.Pa.2011) (citing cases).

"The linchpin of standing, in the constitutional sense, is that the party seeking relief demonstrate exposure to some actual or threatened injury." In re Gronczewski, 444 B.R. 526, 533 (Bankr.E.D.Pa. 2011) (quoting and citing cases) (quotations omitted). The Bankruptcy Code also addresses standing. Section 502(a) of the Bankruptcy Code provides that a proof of claim is deemed allowed "unless a party in interest ... objects." 11 U.S.C. § 502(a). The Code does not define a "party in interest." To give meaning to the term, many courts have concluded that, in the bankruptcy context, a party must have a "pecuniary interest" in the outcome of the dispute. See, e.g., In re Kaiser, 525 B.R. 697, 705 (Bankr.N.D.Ill.2014); In re Bozman, 403 B.R. 494, 496 (Bankr.S.D.Ohio 2006); In re Manshul Constr. Corp., 223 B.R. 428 (Bankr.S.D.N.Y.1998).

Here, to the extent the Debtor emphasizes that the filing and allowance of invalid claims does not have much impact on her, but rather harms creditors holding legitimate, allowed claims by diluting their distribution under her chapter 13 plan, she does not appear to be raising issues in which she has a pecuniary interest; she appears to be asserting the rights of third parties, not her own. A litigant's assertion of the rights of third parties is at odds with generally accepted principles of standing. See, e.g., Twp. of Piscataway v. Duke Energy, 488 F.3d 203, 209 (3d Cir. 2007) (as a matter of prudential standing, a "plaintiff generally must assert his own legal rights and interests, and cannot rest his claim to relief on the legal rights or interests of third parties"); see also Powers v. Ohio, 499 U.S. 400, 410-11, 111 S.Ct. 1364, 113 L.Ed.2d 411 (1991).

Despite the concerns expressed above, I am satisfied that the Debtor has the requisite personal interest in the allowance or disallowance of the POC to provide her with standing to object to the claim.

Many confirmed chapter 13 plans are not completed, resulting in dismissal of the case under 11 U.S.C. § 1307(c)(4) and (6). See Ed Flynn, Chapter 13 Case Outcomes by State, 33-AUG Am. Bankr.Inst. J. 40, 76 (August 2014). Upon dismissal, a debtor remains liable on prepetition claims. In light of the real risk that a plan will not be completed, leaving the debtor liable on the prepetition claims, the debtor has a legitimate interest in seeing that only valid claims (to which he or she has no defense) are paid by plan distributions. In addition, if the chapter 13 trustee makes a distribution on a time-barred claim, the debtor has a legitimate concern that the trustee's payment pursuant to the debtor's plan may be asserted as an "acknowledgment" of the debt, resulting in the re-commencement of the limitations period.5 See U.S. v. Quinones, 36 B.R. 77, 79 (D.P.R.1983). But see In re Seltzer, 529 B.R. 385, 389-90 (Bankr.M.D.Ga.2015). Consequently, I conclude that the Debtor in this case has a sufficient stake in the outcome of the dispute to confer standing to object to this POC.6

IV. DISALLOWANCE OF THE POC

A. Procedural Irregularities

In seeking disallowance of the POC by filing the Motion, the Debtor did not invoke the proper procedure. Fed. R. Bankr. P. 3007 provides for disallowance of claims to be requested by objection, not motion.

There is a significant difference between a contested matter arising from a claims objection and one arising by motion. Motion practice typically imposes a response requirement, see, e.g., L.B.R. 9014-3(I) (Bankr.E.D.Pa.) ("an answer to a motion shall be filed and served ... no later than 14 days after the date on which the movant serves the motion"),7 with the potential for the grant of relief by default if no timely response is filed. Claims objection practice includes neither a response requirement nor a default procedure for failing to respond.8

The Debtor also erred by titling her motion as a motion for sanctions without indicating in the title that she was seeking disallowance of the POC. Nevertheless, these procedural irregularities do not preclude consideration of the merits of the Debtor's objection to the POC.

In both the body of the Motion and the accompanying proposed order, the Debtor made it crystal clear that she was objecting to the POC and was requesting its disallowance. Further, this matter proceeded in a manner entirely consistent with claims objection procedure, not motion procedure. The Debtor effected service of the motion. A hearing on the merits was held; the relief requested by the Debtor was not granted by default. Thus, functionally speaking, the only difference between the Motion and a typical claims objection was the Debtor's mislabeling of the objection as a motion and the incorrect representation in the Notice of Motion that a response was required.9 In these circumstances, denial of the Debtor's request for relief on that basis would exalt form over substance, an outcome that is not compelled by the rules of court. See Fed. R. Bankr. P. 1001 (the bankruptcy rules of court "shall be construed to secure the just, speedy, and inexpensive determination of every case and proceeding").

B. Merits of the Claim Objection

With respect to the merits, the Debtor requests disallowance of the Proof of Claim, asserting that the claim is unenforceable under applicable nonbankruptcy law due to the expiration of the statute of limitations. See 11 U.S.C. § 502(b)(1) (claim should not be allowed if "such claim is unenforceable against the debtor and property of the debtor, under any agreement or applicable law for a reason other than because such claim is contingent or unmatured").

I will sustain the Debtor's objection to the POC.

The applicable statute of limitation in Pennsylvania is four (4) years. 42 Pa.C.S. § 5525(a)(3), (8).10 The only evidence in the record is a bill for services provided to the Debtor that was issued more than ten (10) years before the bankruptcy case was filed. It is reasonable to infer that the Debtor made no payments after the issuance of the bill and that the account has been in default for more than ten (10) years.

This evidence is sufficient to satisfy the Debtor's burden of production. See n.8 supra. The claimant having failed to appear at the hearing to offer any further evidence on the issue, I find that the Debtor has established that the statute of limitations expired on this claim prior to the filing of the bankruptcy case and therefore, the claim should be disallowed as unenforceable under applicable nonbankruptcy law. See In re Keeler, 440 B.R. 354, 360 (Bankr.E.D.Pa.2009); In re Michael Angelo Corry Inn, Inc., 297 B.R. 435, 438-39 (Bankr.W.D.Pa.2003).

IV. DENIAL OF THE DEBTOR'S REQUEST FOR SANCTIONS

In addition to disallowance of the POC, the Debtor requests sanctions for the filing of the POC under Fed. R. Bankr. P. 9011. Unquestionably, Rule 9011 applies to proofs of claim. See, e.g., In re Hannon, 421 B.R. 728, 731 (Bankr.M.D.Pa.2009); In re Abramson, 313 B.R. 195, 198 (Bankr. W.D.Pa.2004). However, as explained below, the Debtor has not established that the filing of the POC in this case violated the standards of conduct in Rule 9011. Therefore, I will deny the request for sanctions.

A. Rule 9011, Generally

1.

Fed. R. Bankr. P. 9011, like its counterpart in the civil rules, Fed. R. Civ. P. 11, is designed to deter abusive practices and otherwise streamline litigation. See, e.g., In re Schaefer Salt Recovery, Inc., 542 F.3d 90, 97 (3d Cir.2008). The centerpiece of the Rule is subsection (b), which sets forth the standard of conduct to which attorneys and parties acting pro se must adhere.

Fed. R. Bankr. P. 9011(b) provides:

If a court determines that a violation of Rule 9011(b) has occurred, the court may impose an appropriate sanction upon the attorneys, law firms, or parties that have violated the rule or are responsible for the violation. Fed. R. Bankr.P. 9011(c).11 The sanction may be non-monetary or monetary in nature and, if monetary, may include an order to pay a penalty into the court or the movant's reasonable attorney's fees. Id. Sanctions may be imposed upon request of a party, see Fed. R. Bankr.P. 9011(c)(1)(A),12 or upon the court's own motion, see Fed. R. Bankr. P. 9011(c)(1)(B).

2.

In this matter, the two (2) pertinent subsections of Rule 9011 are (b)(1) and (b)(2).

Rule 9011(b)(1) refers to the presentation of matters "for an improper purpose," giving as examples, "to harass or to cause unnecessary delay or needless increase in the cost of litigation." The examples are not exclusive. Sanctions may be imposed "for any improper purpose." 2-11 James Wm. Moore, Moore's Federal Practice § 11.11[8][a], at 11-33 (Matthew Bender 3d ed. 2015) ("Moore's"). For example, bringing a matter before the court for "a purpose other than ... to vindicate substantive or procedural rights or to put claims of a right to a proper test" is encompassed by Rule 9011(b)(1). In re Jazz Photo Corp., 312 B.R. 524, 539-40 (Bankr. D.N.J.2004) (quotation and citation omitted); see also Chu v. Griffith, 771 F.2d 79, 81 (4th Cir.1985) (lawsuit filed to compel a judge to recuse himself in a different case).

As counterintuitive as it might seem initially, the determination of "improper purpose" also is based on an objective standard. See, e.g., Lieb v. Topstone Indus., Inc., 788 F.2d 151, 157 (3d Cir. 1986). Essentially, this means that the propriety of the purpose is measured objectively and the offending party or attorney cannot escape liability because he or she subjectively did not intend to cause harm (e.g., harass the opposing party, delay the proceedings or impose unnecessary litigation costs or any other improper purpose).

Rule 9011(b)(2) attacks litigation abuse from a different direction. It imposes the requirement that an attorney or pro se party conduct a "reasonable inquiry" prior to presenting a claim or defense to the court and have a reasonable basis to assert that the claim or defense is "warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law."

The evaluation whether a claim or defense is warranted or supported by a nonfrivolous argument also is measured by an objective standard. E.g., Martin v. Brown, 63 F.3d 1252, 1264 (3d Cir.1995) (citation omitted). Specifically, in evaluating whether Rule 9011(b)(2) has been satisfied or violated, the court must employ "an objective standard of reasonableness under the circumstances." Martin, 63 F.3d at 1264 (quotations and citations omitted); see also Wright & Miller § 1335 & n.9. No showing of bad faith is necessary. See, e.g., Shine v. Bayonne Bd. of Educ., 2015 WL 5559842, at *3 (3d Cir. Sept. 22, 2015) (unpublished); Martin, 63 F.3d at 1264. The subjective state of mind of the offending attorney or party has no bearing. Rule 9011's objective standard eliminates any "empty-head pure-heart" justification for claims or arguments that lack a reasonable basis in fact and law. See, e.g., Clement v. Pub. Serv. Elec. & Gas Co., 198 F.R.D. 634, 637 (D.N.J.2001). At the risk of oversimplification, as one court put it, pro se parties and attorneys "are expected to take reasonable preparatory steps before filing pleadings or other papers." Trustees of the Nat. Elevator Indus. Pension, Health Ben., Educ., Elevator Indus. Work Pres. Funds, Elevator Constructors Annuity & 401(K) Ret. Plan v. Access Lift & Serv. Co., Inc., 2015 WL 1456040, at *2 (E.D.Pa. Mar. 30, 2015).13

B. Relevant Case Law: Filing Stale Proofs of Claim

1.

The Debtor has not specified the particular subsection of Rule 9011(b) on which she bases her request for sanctions. However, there is precedent in her favor under both subsections (b)(1) and (b)(2).

The leading reported decision favorable to the Debtor is Matter of Sekema, 523 B.R. 651 (Bankr.N.D.Ind.2015), in which the court based its ruling on Rule 9011(b)(2).

In Sekema, the debtor successfully objected to a creditor's proof of claim as stale. The creditor did not contest the claims objection. After disallowing the claim, the court sua sponte issued a show cause hearing to consider sanctions under Rule 9011(b)(2). The creditor neither responded to the show cause hearing order or appeared at the scheduled hearing.

After holding that Rule 9011(b)(2) applies to proofs of claim and encompasses consideration of obvious affirmative defenses, the Sekema court reasoned that it was obliged to

Sekema, 523 B.R. at 654.

The court next determined that the statute of limitations defense was "blindingly obvious" in that a "third-grader could do the math" to determine that the charge-off date on the account more than ten (10) years prior was beyond the applicable six (6) year statute of limitations. Id.

Finally, in light of the claimant's failure to appear at either the claims objection or the sanction hearing, the court inferred that "there is nothing that could allow the court [to] conclude that either claimant undertook any investigation into the obvious statute of limitations defense to the claims they each filed, much less a reasonable one" and concluded that the filing of the proof of claim violated Rule 9011(b)(2). Id. at 654.

Sekema is grounded in the legal proposition that Rule 9011(b) compels a party to engage in a "reasonable inquiry" to evaluate the merits of "any obvious affirmative defenses" that may exist to the claim. There are many reported cases stating this principle in other contexts.14

Sekema is on all fours with the case sub judice, the only (nonmaterial) difference being that the court invoked Rule 9011 sua sponte in Sekema, while in this case, the Debtor filed the motion for Rule 9011 sanctions.

While the Sekema court holding is based on Rule 9011(b)(2), in In re Feggins, 535 B.R. 862, 867-69 (Bankr.M.D.Ala.2015), the court, in dictum, suggested that the filing of a proof of claim for a time-barred claim violates both Rule 9011(b)(1):

535 B.R. at 868-69 (internal quotations omitted)

There also are reported decisions that have stated, in dicta, in the course of denying claims brought under the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692-1692p ("FDCPA"), that the filing of proof of claim for an obviously time-barred claim violates Rule 9011. See Torres v. Asset Acceptance, LLC, 96 F.Supp.3d 541, 547-48, 2015 WL 1529297 at *6 (E.D.Pa. Apr. 7, 2015), appeal pending, No. 15-2132 (3d Cir.); In re Chaussee, 399 B.R. 225, 240 (9th Cir. BAP 2008). Interestingly, in the course of upholding FDCPA claims for the filing of stale proofs of claim, there also are reported decisions that have stated, in dicta, that such filings violate Rule 9011. See Feggins, 535 B.R. at 867-69; In re Avalos, 531 B.R. 748, 757 (Bankr.N.D.Ill.2015).

To some extent, the holdings and dicta in the cases cited above are driven by a concern that the bankruptcy courts are facing a "deluge" of proofs of claim for time barred claims, filed by "[c]onsumer debt buyers ... armed with hundreds of delinquent accounts purchased from creditors," Crawford v. LVNV Funding, LLC, 758 F.3d 1254, 1256 (11th Cir.2014), cert. denied, ___ U.S. ___, 135 S.Ct. 1844, 191 L.Ed.2d 724 (2015). One court has depicted the filing and allowance of these claims as an abuse of the claims allowance process:

Feggins, 535 B.R. at 869.

2.

There is legal authority contrary to the Debtor's position, including a decision from this district, In re Keeler.

In Keeler, the debtor filed an adversary proceeding against a creditor for filing a claim that it "knew or should have known" was time-barred under § 105(a), the FDCPA, the Pennsylvania Unfair Trade and Consumer Protection Law, 73 P.S. § 201-1 et seq., and 28 U.S.C. § 1927. Keeler, 440 B.R. at 357. Although Rule 9011 was not at issue, in granting the defendant-creditor's motion to dismiss the adversary complaint, the Keeler court unequivocally held the creditor committed no impropriety in filing a stale proof of claim. The court offered a number of rationales for its decision.

First, the Keeler court reasoned that the existence of a "claim" as defined by 11 U.S.C. § 101(5) is a distinct concept from its "allowance" (i.e., the entitlement to share in the distribution from the estate). Based on this distinction, as well as the broad definition of "claim," which encompasses rights to payment that may are not currently enforceable,15 the court concluded that the Code gave the creditor holding a claim barred by the statute of limitations the right to file a proof of claim. See 440 B.R. at 362-63.16

Second, the Keeler court considered the treatment of the issue under the Bankruptcy Act. Concluding that the filing of time-barred proofs of claim was permitted under the prior Act, see In re Weidenfeld, 277 F. 59, 61-62 (2d Cir.1921),17 and taking into account the expansion of the definition of the term "claim" when the present Code was enacted in 1978, the court perceived no Congressional intent to overrule prior practice. Keeler, 440 B.R. at 364 (citing Dewsnup v. Timm, 502 U.S. 410, 419, 112 S.Ct. 773, 116 L.Ed.2d 903 (1992) ("[T]his Court has been reluctant to accept arguments that would interpret the Code, however vague the particular language under consideration might be, to effect a major change in pre-Code practice that is not the subject of at least some discussion in the legislative history.")).

Third, the Keeler court found support for its conclusion in bankruptcy court decisions from other jurisdictions holding that the claims allowance process contemplates that stale proofs of claim may be filed subject to objection based on the expiration of the statute of limitations. See In re Andrews, 394 B.R. 384, 387 (Bankr. E.D.N.C.2008); In re Simpson, 2008 WL 4216317, at *2 (Bankr.N.D.Ala. Aug. 29, 2008); In re Varona, 388 B.R. 705, 723-24 (Bankr.E.D.Va.2008). In this line of cases, the courts emphasize that the expiration of the statute of limitations does not extinguish a claim, but merely imposes a procedural barrier to the claimant's right to seek redress through the court. Indeed, sometimes that procedural barrier may be lifted, such as through the "acknowledgment" of the debt. See generally In re Irwin, 509 B.R. 808, 820 (Bankr.E.D.Pa. 2014) (discussing the acknowledgment doctrine under Pennsylvania law). Further, in many jurisdictions, the statute of limitations defense is an affirmative one that is waived if not raised by the defendant. In Keeler, the court cited Pennsylvania case law for both of these propositions and concluded that in Pennsylvania, "[a] debt barred by the statute of limitations is not extinguished; rather, it is subject to an affirmative defense that can be waived." 440 B.R. at 365.

Given the nature of the legal consequences attending the expiration of a statute of limitations under applicable nonbankruptcy law, the Keeler court perceived no impropriety in the filing of a stale proof of claim in a bankruptcy case. Id. at 366; accord Hess, 404 B.R. at 752 ("Unless and until local or national rules changes are made, it is incumbent on debtors, their counsel, and the Chapter 13 Trustee, carefully to scrutinize proofs of claims to identify and object, if appropriate, to stale claims."). Thus, while Keeler did not specifically address Rule 9011, it stands for the proposition that it is permissible for a creditor to seek allowance of a stale proof of claim and place the burden on the debtor or trustee to object to the claim.

Recently, in In re Jenkins, 538 B.R. 129, 135 (Bankr.N.D.Ala.2015), a bankruptcy court in Alabama invoked much the same reasoning as in Keeler and concluded that "the filing of a claim on a debt that is stale under state law — where the proof of claim is otherwise in all material respects compliant — is not egregious and offensive conduct that Rule 9011 was intended to address. The Jenkins court also expressed concern that such a holding will lead courts down the proverbial "slippery slope," with undesirable consequences:

Jenkins, 538 B.R. at 136 (quotation marks and footnote omitted).

C. Analysis

In order to resolve the present matter, I need not choose between the Sekema/Feggins and Keeler/Jenkins lines of cases. Even if I were to agree that Rule 9011 imposes a duty on a claimant to investigate and develop a response to overcome an "obvious" affirmative defense before filing a proof of claim, sanctions are not appropriate in this case and will not be appropriate under Rule 9011(b)(2) unless and until the division of authority discussed above is settled definitively by the Supreme Court.

1.

Initially, I perceive no basis to impose sanctions under Rule 9011(b)(1).

I respectfully disagree with the suggestion in Feggins that filing a stale proof of constitutes the filing of a document for an "improper purpose" as that term is used Fed. R. Bankr. P. 9011. Such a proof of claim fits none of the examples of improper purpose stated in the rule (harassment, causing unnecessary delay or increasing the cost of litigation). Nor does the filing of a stale proof of claim appear to satisfy the more general type of improper purpose (i.e., a purpose other than to vindicate the rights put at issue by the filing of the document, see n.14 & accompanying text, supra). Quite the opposite. A stale proof of claim is filed to obtain the precise relief afforded to a properly filed, valid proof of claim: the allowance of the claim. Whether the proof claim is so unfounded on the merits that the filing may warrant sanctions should be evaluated under Rule 9011(b)(2), not 9011(b)(1).18

2.

Second, as far Rule 9011(b)(2) is concerned, in light of the uncertain state of the law, the imposition of sanctions for filing a stale proof of claim is inappropriate.

As a starting point, "the test for Rule 9011 sanctions is a stringent one." In re 15375 Mem'l Corp., 430 B.R. 142, 150 (Bankr.D.Del.2010). Rule 9011 sanctions are imposed only in exceptional circumstances where the claim is "patently unmeritorious or frivolous," Dura Sys., Inc. v. Rothbury Investments, Ltd., 886 F.2d 551, 556 (3d Cir.1989), i.e., where it is "clear that a claim has absolutely no chance of success." Oliveri v. Thompson, 803 F.2d 1265, 1275 (2d Cir.1986); accord Zuniga v. Riverview Residential Partners, II, L.P., 2011 WL 240162, at *3 (E.D.Pa. Jan. 25, 2011). Rule 9011 is not intended to chill an attorney's creativity in pursuing legal theories. Rothbury Investments, 886 F.2d at 556. Sanctions should not be imposed based on hindsight bias, but rather, the conduct should be evaluated based on what was reasonable at the time of the filing. See id.; 15375 Mem'l Corp., 430 B.R. at 150. All doubts should be resolved in favor of the signer of the filed document. See Ohio Cas. Grp. v. McClinton, 1991 WL 125467, at *3 (E.D.Pa. June 27, 1991).

Here, the reported cases, all of which are supported by thoughtful opinions, are divided on the propriety of filing a stale proof of claim. The case law includes a decision in this district that supports the claimant's position, with no binding Third Circuit or Supreme Court precedent to the contrary.

In these circumstances, the conclusion is inescapable. There is no basis under Rule 9011(b)(2) to sanction this claimant for filing a stale proof of claim. It is not possible to conclude that the filing satisfies the Rule 9011(b)(2) requirement that it was not "warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law." Sanctions should not be imposed for putting forward a claim or argument if circuit case law is unsettled, but there is support in this circuit or other circuits for the position taken. See Matthews v. Freedman, 128 F.R.D. 194, 200 (E.D.Pa. 1989) (citing Edward D. Cavanagh, Developing Standards Under Amended Rule 11 of the Federal Rules of Civil Procedure, 14 Hofstra L.Rev. 499, 543-44 (1986)), aff'd, 919 F.2d 135 (3d Cir.1990); see also Andrews, 394 B.R. at 388 (sanctions are not appropriate if party reasonably relies on existing case law, even if the court disagrees with those decisions); see generally Zuniga, 2011 WL 240162, at *3 (party's removal of case from state court held not frivolous or sanctionable in light of a "vacuum" of legal authority on its propriety).

Indeed, given the split in the case law, it is difficult to see how sanctions under Rule 9011(b)(2) can be imposed on claimants filing stale proofs of claim, even if, in the future, a substantial number of courts (including, perhaps, several courts of appeal) adopt the Sekema/Feggins position that it is improper to file proofs of claim without investigating and developing plausible responses to obvious affirmative defenses to a proof of claim. See generally Georgene M. Vairo, Rule 11 Sanctions: Case Law Perspectives and Preventive Measures § 6.05[a][1][A] at 340 (3d ed.2004) (discussing decisions in which arguments relying on precedent from outside the circuit that are inconsistent with circuit precedent may be made consistent with Rule 11). Unless and until the Supreme Court resolves the issue, a rational argument exists for the practice of filing stale proofs claims and compelling debtors and trustees to object to their allowance.19

V. CONCLUSION

The parties that decry the practice of filing stale claims as an abuse of the bankruptcy claims allowance system may be correct. Certainly, some courts agree. The bankruptcy court's inability to sanction parties that file stale proofs of claim under Fed. R. Bankr. P. 9011 may frustrate the parties compelled to undertake the obligation of objecting to stale claims and the courts in which such claims are filed. However, given the present state of the law, there is a respectable argument that claimants are entitled to file stale claims because the statute of limitations is a waivable, affirmative defense. As a result, Rule 9011 is not the proper vehicle to remedy the perceived problem.

The limitations built into Rule 9011 are purposeful. Rule 9011 is intended to address abuses in the litigation process. The Rule is not intended to be a broad remedy for correcting other, diverse types of mischief that offend policies embodied in a particular statute — here, the Bankruptcy Code policy of an equitable distribution of limited assets to creditors holding valid claims against the bankruptcy estate. If the practice of filing stale proofs of claim is improper and should be stopped, some means other than Rule 9011 must be employed by those with the authority to make that judgment — at least until the U.S. Supreme Court provides definitive guidance on the issue.20

For the reasons set forth above, the Debtor's Motion will be granted in part and denied in part. Palisades' proof of claim will be disallowed. But the Debtor's request for sanctions will be denied.

ORDER

AND NOW, upon consideration of the Debtor's Motion for Sanctions (Doc. # 49) ("the Motion"), and after notice and hearing, and for the reasons set forth in the accompanying Memorandum; it is hereby ORDERED that:

1. The Motion is GRANTED IN PART and DENIED IN PART.

2. Claim No. 3, filed by Palisades Collections, LLC is DISALLOWED.

3. In all other respects, the Motion is DENIED.