In re Stephenson

IN RE: Kelly Ann Stephenson Debtor

Case Number: 18-11439

UNITED STATES BANKRUPTCY COURT WESTERN DISTRICT OF LOUISIANA SHREVEPORT DIVISION

March 28, 2019

Chapter 13

Memorandum of Decision

This case presents two questions arising from claim objections. First, whether an unsecured claim for contract-based attorneys' fees should be reduced where the objecting party argued the fees were unreasonable. Second, whether claims subject to a three-year liberative prescription should be disallowed where the debts were acknowledged by Debtor in a prior bankruptcy filed less than three years before the commencement of this case. For the reasons set forth below, the Court denies each of the objections.

I. Jurisdiction, Venue, Core Status and Authority to Enter Final Order

This Court has jurisdiction over the objections pursuant to 28 U.S.C. § 1334 and by virtue of the reference by the district court pursuant to 28 U.S.C. § 157(a) and LR 83.4.1. Venue is proper pursuant to 28 U.S.C. § 1408. All claims presented to this Court are "core" pursuant to 28 U.S.C. § 157 (b)(2)(A) and (B).

This Court has an independent duty to evaluate whether it has the constitutional authority to enter a final order. The Supreme Court's ruling in Stern v. Marshall, 564 U.S. 462 (2011), sets forth certain limitations on the constitutional authority of bankruptcy courts to enter final orders. BP RE, L.P. v. RML Waxahachie Dodge, L.L.C., 735 F.3d 279, 286 (5th Cir. 2013) (" 'the question is whether the action at issue stems from the bankruptcy itself or would necessarily be resolved in the claims allowance process.' ") (quoting Stern, 564 U.S. at 499). Thus, under Stern, in addition to determining whether each claim is core or non-core, this Court must also determine whether the underlying issue "stems from the bankruptcy itself or it would necessarily be resolved in the claims allowance process." BP RE, 735 F.3d at 286. Absent both statutory and constitutional authority, this Court may not enter a final order, and instead must issue proposed findings of fact and conclusions of law to be considered by the district court.

In this case, the matters before the Court involve the claim resolution process as the objections challenge the validity and amounts of the proofs of claims at issue. This case is far different than the matter presented in Stern where the court was confronted with the resolution of a counterclaim that was "not resolved by in the process of ruling on a creditor's proof of claim." Stern, 564 U.S. at 503. Although resolution of the claim objections in this case will require application of state law, thematters before the Court arise from an express provision of the Bankruptcy Code and an express Bankruptcy Rule: § 502(a) and Bankruptcy Rule 3007. Moreover, unlike Stern, application of the state law to this provision will resolve the validity or invalidity of the claims. Accordingly, this Court finds that it is constitutionally authorized to enter a final order on the claim objections. In re Rodriguez, 567 B.R. 275, 278 (Bankr. S.D. Tex. 2017) ("As the allowance of a claim is a quintessential issue in bankruptcy law, this Court possesses the necessary constitutional authority to enter a final order in this matter.").

II. Findings of Fact

This Court makes the following findings of fact pursuant to Rule 7052 of the Federal Rules of Bankruptcy Procedure, which incorporates Rule 52 of the Federal Rules of Civil Procedure. To the extent that any finding of fact constitutes a conclusion of law, it is adopted as such.

The facts, in pertinent part, are as follows:

1. On September 11, 2018, Kelly Ann Stephenson ("Debtor") commenced this case by filing a voluntary petition pursuant to Chapter 13 of the Bankruptcy Code (Doc. 1).

2. This is Debtor's fourth bankruptcy case.¹ The other cases were filed inthis Court on July 3, 2001 (Chapter 7 case, No. 01-12042), March 18, 2015, (Chapter 13, Case No. 15-10498) and November 9, 2015 (Chapter 13, Case No. 15-12085).

3. Ford Motor Credit, LLC ("Ford") filed a proof of claim in each Chapter 13 case filed by Debtor, as follows:

a. Case No. 15-10498, Claim No. 3, in the amount of $21,752.49, secured by 2011 Ford Edge;

b. Case No. 15-12085, Claim No. 5, in the amount of $23,073.74, secured by 2011 Ford Edge; and

c. Case No. 18-11439, Claim No. 5, in the amount of $22,506.64. This claim was filed as an unsecured claim seeking recovery for a deficiency balance owed after the vehicle was recovered by Ford and sold at a commercially reasonable sale.

4. The record in each Chapter 13 case filed by Debtor indicates that Ford used the services of a lawyer to:

a. File a proof of claim in each case as noted above;

b. File a notice of appearance in Case No. 15-10498 (Doc. 25) and Case No. 15-12085 (Doc. 32);

c. File an objection to Debtor's Plan in Case No. 15-10498 (Doc 27);

d. File a motion to abandon and/or motion to lift the automatic stay in Case No. 15-12085 (Doc. 33);

e. File a proposed order granting adequate protection for Debtor's use of Ford's collateral in Case No. 15-12085 (Doc. 43);

f. Prepare a "Reschedule of Payments Agreement." See, Case No. 18-11439, Claim 5, p. 5, ¶ III, pp. 10-11;

g. Prepare and file a lawsuit in state court against Debtor for the recovery of a deficiency judgment for all sums owed on the vehicle after it was recovered and sold at a commercially reasonable sale for $6,000.00. Case No. 18-11439, Claim 5, pp. 5-7, ¶¶ VI, VII; and

h. Prepare and file discovery requests in the state court lawsuit. Case No. 18-11439, Claim 5, p. 7.

5. In this bankruptcy case, Ford filed a proof of claim using Official Form 410, and attached copies of: (i) a summary page on a lawyer's letterhead which itemizes the amounts sought, (ii) the petition filed in the state court lawsuit, (iii) discovery requests propounded in the state court lawsuit, (iv) the Louisiana Vehicle Retail Installment Contract, (v) the Reschedule of Payments Agreement, and (vi) the Notice of Sheriff Returns filed in the state court lawsuit. Claim 5.

6. Cavalry SPV I, LLC ("Cavalry"), as assignee of Capital One Bank (USA), N.A./Direct Merchants Bank, filed Claim 2 in this bankruptcy case. The Claim was filed using Official Form 410. The Claim attaches sufficient evidence of the transfer of the claim from Capital One to Cavalry. The Claim indicates that the last payment date was on 09/17/2014. The Claim attaches a copy of an account statement. The Claim is in the amount of $455.04.

7. Cavalry SPV I, LLC, as assignee of Capital One Bank (USA), N.A. filed Claim 3 in this bankruptcy case. The Claim was filed using Official Form 410. The Claim attaches sufficient evidence of the transfer of the claim from Capital One toCavalry. The Claim indicates that the last payment date was on 07/23/2014. The Claim attaches a copy of an account statement. The Claim is in the amount of $2,709.31.

8. In her 2^nd and 3^rd bankruptcy cases, Debtor listed the claims of Capital One Bank and/or Cavalry in the amounts of $2,709.00 and $455.00 in Schedule F of her Schedules of Liabilities filed pursuant to § 521(a)(1) of the Bankruptcy Code and Bankruptcy Rule 1007(b). (Case No. 15-10498, Doc.1, p.31-32; Case No. 15-12085, Doc.1, p.17). Debtor did not identify any of her debts in Schedule F as disputed, contingent or unliquidated. Debtor signed a declaration under penalty of perjury acknowledging the accuracy of Schedule F.

9. Prior to the commencement of the current bankruptcy case, Debtor's last known acknowledgment of her debts owed to Capital One Bank and/or Cavalry was on November 9, 2015, the date Schedule F was filed in Case No. 15-12085.

III. Conclusions of Law and Analysis

This Court makes the following conclusions of law pursuant to Rule 7052 of the Federal Rules of Bankruptcy Procedure. To the extent that any conclusion of law constitutes a finding of fact, it is adopted as such.

A. Legal Standards for Allowance of, and Objection to, Claims

A court may sustain an objection to a proof of claim only if it complies with § 502 of the Bankruptcy Code. Objections must be based upon one of nine (9) specific statutory grounds:

(1) such claim is unenforceable against the debtor and property of the debtor, under any agreement or applicable law for a reason other than because suchclaim is contingent or unmatured;

(2) such claim is for unmatured interest;

(3) if such claim is for a tax assessed against property of the estate, such claim exceeds the value of the interest of the estate in such property;

(4) if such claim is for service of an insider or attorney of the debtor, such claim exceeds the reasonable value of such services;

(5) such claim is for a debt that is unmatured on the date of the filing of the petition and that is excepted from discharge under section 523(a)(5) of this title;

(6) if such claim is the claim of a lessor for damages resulting from the termination of a lease of real property...;

(7) if such claim is the claim of an employee for damages resulting from the termination of an employment contract...;

(8) such claim results from a reduction, due to late payment, in the amount of an otherwise applicable credit available to the debtor in connection with an employment tax on wages, salaries, or commissions earned from the debtor; or

(9) proof of such claim is not timely filed....

11 U.S.C. § 502(b).

A proof of claim is deemed allowed unless a party in interest objects to the claim. 11 U.S.C. § 502(a). Additionally, if the proof of claim is executed and filed in accordance with the bankruptcy rules, it is considered prima facie evidence of the validity and amount of the claim. Fed. Rule Bankr.P. 3001(f). Jacobsen v. Sramek, 362 Fed. Appx. 413, 415 (5th Cir. 2010) ("a party correctly filing a proof of claim is deemed to have established a prima facie case against Debtor's assets."). The burden of proof then shifts to the objecting party to prove one of the nine exceptions set forth in § 502(b) of the bankruptcy code. 11 U.S.C. § 502(b)(1)-(9). The nine...