Greer v. Healthcare Fin. Servs., LLC (In re Greer), Bankruptcy No. 1103337EE.

498 B.R. 98

In re Mark S. GREER, Whitney L. Greer.Mark S. Greer and Whitney L. Greer

v.Healthcare Financial Services, LLC and Advanced Recovery Systems, Inc.¹

Bankruptcy No. 1103337EE.

Adversary No. 1200023EE.

United States Bankruptcy Court, S.D. Mississippi.

Aug. 19, 2013.

Edwin Woods, Jr., Byram, MS, for Debtors.

William V. Westbrook, III, Gulfport, MS, Robert W. Camp, Jackson, MS, for Healthcare Financial Services, LLC.

MEMORANDUM OPINION ON HEALTHCARE FINANCIAL SERVICES, LLC'S MOTION FOR SUMMARY JUDGMENT AND HEALTH CARE FINANCIAL SERVICES, LLC'S SUPPLEMENTAL MOTION TO DISMISS ADVERSARY COMPLAINT AND OTHER RELIEF

EDWARD ELLINGTON, Bankruptcy Judge.

THIS MATTER came before the Court on Healthcare Financial Services, LLC's Motion for Summary Judgment (Adv. # 46) and Healthcare Financial Services, LLC's Supplemental Motion to Dismiss Adversary Complaint and Other Relief (Adv. # 54).

Having considered the motions and the briefs filed by Healthcare Financial Services, LLC (HFS) in support of its motions, the Court finds that Healthcare Financial Services, LLC's Motion for Summary Judgment (Adv. # 46) should be granted in part and denied in part. Since the adversary proceeding is being dismissed on summary judgment, the Court finds that Healthcare Financial Services, LLC's Supplemental Motion to Dismiss Adversary Complaint and Other Relief (Adv. # 54) is moot, and that HFS's request for attorney fees contained within Healthcare Financial Services, LLC's Supplemental Motion to Dismiss Adversary Complaint and Other Relief (Adv. # 54) should be denied.

Further, the Court sua sponte grants summary judgment in favor of the Debtors as to the counterclaim contained within the Separate Answer to Adversary Complaint and Counterclaim by the Defendant Healthcare Financial Services, LLC (Adv. # 12). Consequently, the above-styled adversary proceeding should be dismissed.

FINDINGS OF FACT

I. Procedural Background

On September 22, 2011, Mark S. Greer and Whitney L. Greer (Debtors) filed a joint petition for relief under Chapter 13 of the United States Bankruptcy Code. The petition was signed by their attorney, Edwin Woods, Jr.

At some point prior to the filing of the petition, Whitney L. Greer (Whitney) obtaineda student loan from Feild Cooperative Association, Inc. (Feild). Feild is a non-profit organization that grants students loans up to $5000.00 per year for a period of four years. HFS is a collection agency that was hired by Feild to collect from Whitney approximately $7,400.00, the amount of the unpaid Feild loan owed by Whitney.

The Debtors' Schedule F—Creditors Holding Unsecured Nonpriority Claims (# 4) lists the following creditors which are pertinent to this Opinion:

+----------------------------------------------------------------------------+
¦             ¦Healthcare Financial   ¦medical            ¦$7,783.00         ¦
+-------------+-----------------------+-------------------+------------------¦
¦             ¦643 Lakeland East Drive¦                   ¦                  ¦
+-------------+-----------------------+-------------------+------------------¦
¦             ¦Flowood, MS 39232      ¦                   ¦                  ¦
+-------------+-----------------------+-------------------+------------------¦
¦             ¦                       ¦                   ¦                  ¦
+-------------+-----------------------+-------------------+------------------¦
¦             ¦Jackson Medical CL     ¦Representing:      ¦Notice Only       ¦
+-------------+-----------------------+-------------------+------------------¦
¦             ¦c/o Healthcare         ¦Healthcare         ¦                  ¦
¦             ¦Financial              ¦Financial          ¦                  ¦
+-------------+-----------------------+-------------------+------------------¦
¦             ¦643 Lakeland East      ¦                   ¦                  ¦
+-------------+-----------------------+-------------------+------------------¦
¦             ¦Flowood, MS 39232      ¦                   ¦                  ¦
+-------------+-----------------------+-------------------+------------------¦
¦             ¦                       ¦                   ¦                  ¦
+-------------+-----------------------+-------------------+------------------¦
¦             ¦Sports Therapy Center  ¦Representing:      ¦Notice Only       ¦
+-------------+-----------------------+-------------------+------------------¦
¦             ¦207 West Jackson St    ¦Healthcare         ¦                  ¦
¦             ¦                       ¦Financial          ¦                  ¦
+-------------+-----------------------+-------------------+------------------¦
¦             ¦Ridgeland, MS 39157    ¦                   ¦                  ¦
+----------------------------------------------------------------------------+

Apparently, Schedule F misidentifies the student loan as “medical,” overstates the balance of the student loan by $338.32, and incorrectly associates HFS with Jackson Medical and Sports Therapy Center. On November 21, 2011, the Order Confirming the Debtor's Plan, Awarding a Fee to the Debtor's Attorney and Related Orders (# 30) (Confirmation Order) was entered by the Court. Pursuant to the plan confirmed in the Confirmation Order, HFS is treated as an unsecured creditor.

On March 1, 2012, the Debtors commenced the above-styled adversary proceeding by filing their Complaint Seeking Damages for Violation of the Automatic Stay (Adv. # 1) (Complaint). The Complaint was signed by Mr. Woods, their attorney. The Complaint contained two counts: Count I was a claim against HFS, and Count II was a claim against Advanced Recovery Systems, Inc.

As to Count I, Whitney alleged that subsequent to the filing of the bankruptcy petition, HFS filed suit against Whitney on October 13, 2011, in the County Court of Rankin County, Mississippi (County Court Lawsuit). Whitney alleged that HFS violated the automatic stay of 11 U.S.C. § 362² and requested compensatory damages, punitive damages, attorney's fees and costs pursuant to § 362(k).

As to Count II, Mark S. Greer (Mark) alleged that fifteen (15) days before the bankruptcy petition was filed, Advanced Recovery Systems, Inc. filed suit against Mark in the Justice Court of Rankin County, Mississippi, seeking to collect a pre-petition medical debt owed by Mark to Southern Diagnostic. Mark alleged that Advanced Recovery Systems, Inc. continued to prosecute its collection action in justice court post-petition. Advanced Recovery Systems, Inc. was dismissed as a defendant by an agreed order entered on November 26, 2012. (Adv. # 49). Therefore, this Opinion will only address the remaining Count I which relates to HFS.

On April 27, 2012, HFS filed its Separate Answer to Adversary Complaint and Counterclaim by the Defendant HealthcareFinancial Services, LLC (Adv. # 12) (Answer or Counterclaim). Even though only Whitney was liable to Feild/HFS, the Counterclaim was filed “against either or both of the Debtors.” ³ In its Counterclaim, HFS alleged that it should be awarded sanctions and attorney fees because the Debtors and their attorney committed a fraud upon the Court and that the Confirmation Order should be revoked, modified or clarified to state that the student loans are nondischargeable unless Whitney complies with the requirements for a hardship discharge.

The Court entered a Scheduling Order (Adv. # 22) on May 29, 3013. This Scheduling Order was later amended with the entry of the August 15, 2012, Agreed Order Amending Scheduling Order (Adv. # 36). The amended scheduling order set November 20, 2012, as the deadline for the filing of all motions, except in limine motions.

On October 5, 2012, the Debtors' filed Debtors' Response to Counterclaim of Healthcare Financial Services, LLC. (Adv. # 43) (Answer to Counterclaim). In their Answer to Counterclaim, the Debtors deny the majority of HFS's allegations and state that the Counterclaim should be dismissed.

Thereinafter, HFS filed Healthcare Financial Services, LLC's Motion for Summary Judgment (Adv. # 46) (Summary Judgment Motion) on November 20, 2012. In its Summary Judgment Motion, HFS states that there are no questions of material fact, and therefore, HFS is entitled to a judgment as a matter of law dismissing the Debtors' adversary proceeding. In addition, HFS seeks modification of the Confirmation Order. Finally, included within its Summary Judgment Motion, is HFS's request for sanctions pursuant to Federal Rule of Bankruptcy Procedure 9011.⁴

On November 26, 2012, the Clerk's Notice Regarding Motion for Summary Judgment⁵ was sent to the Mr. Woods. The notice directed Mr. Woods's attention to Local Rule 7056–1 of the Uniform Local Rulesfor the United States Bankruptcy Courts of the Northern and Southern Districts of Mississippi. Local Rule 7056–1(3)(B) states that a respondent shall file its response and brief to a motion for summary judgment within 21 days of service of the motion.

By subsequent order of the Court, the Debtors were given an extension of time (past the 21 day deadline), until January 15, 2013, to respond to the Summary Judgment Motion (Adv. # 53). As of the date of this Opinion, the Debtors have failed to file any responsive pleading to the Summary Judgment Motion.

Even though the deadline to file all motions (except in limine motions) had passed on November 20, 2012, and even though HFS had already filed the Summary Judgment Motion, HFS filed Healthcare Financial Services, LLC's Supplemental Motion to Dismiss Adversary Complaint and Other Relief (Adv. # 54) (Motion to Dismiss) on February 22, 2013. In its Motion to Dismiss, HFS alleges that the adversary should be dismissed pursuant to Rule 7041 for failure of the Debtors to prosecute their adversary proceeding; that the Confirmation Order should be revoked,modified or clarified to state that the student loans are nondischargeable; and that HFS should be awarded attorneys' fees and costs.

While...