In re Porter

603 B.R. 449
CourtUnited States Bankruptcy Court, N.D. California
DecidedMay 8, 2019
DocketCase No. 17-42255 WJL
StatusPublished

This text of 603 B.R. 449 (In re Porter) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Porter, 603 B.R. 449 (Cal. 2019).

Opinion

William J. Lafferty, III, U.S. Bankruptcy Judge

On April 17, 2019 the Court held a hearing on Debtor's Renewed Objections to *451Proofs of Claims of LVNV Funding, LLC (the "Objection") (doc. 191) in the above captioned case. Appearances were made on the record. Briefly summarized, the Objection poses the question whether three proofs of claim that were filed within the deadline that unquestionably pertained when the case was converted from one under Chapter 7 to one under Chapter 13, and which was confirmed by an official "Notice" sent out by the Clerk's Office, were nonetheless untimely because an intervening change in the pertinent Federal Rule of Bankruptcy Procedure, which shortened by almost two months the deadline for filing claims, should be applied retroactively. Stated slightly differently, the Court must decide whether it would be "just and practicable" to apply the change in the Rule to this already pending case. At the conclusion of the hearing, the Court took the matter under submission. For the reasons set forth below, the Court HEREBY OVERRULES the Objection.1

In order fully to assess the issues presented, some background is necessary.

On September 7, 2017 Debtor filed a chapter 72 bankruptcy case. This original filing was done by the Debtor pro se, and without the advice of counsel. It appears that the Debtor did not then understand that, in a Chapter 7 case a trustee would be appointed, whose principal task would be to identify assets of the estate, liquidate them, and pay proceeds to creditors on account of allowed claims. The Debtor owns her residence located at 73 Graegle Ct., Oakland, California (the "Property"), in which she has enough equity to pay all her secured and unsecured claims in full. It was thus apparent that a chapter 7 trustee would have sold the Property to pay allowed claims in the chapter 7 case.

Having engaged counsel post-filing, Debtor made the decision to convert her case to one under chapter 13, which would permit her to propose and possibly confirm a plan to pay her creditors, including arrears on any claims secured by the Property, as well as unsecured claims, as allowed. Of greatest importance to Debtor, it would have enabled her to retain the Property, her home. However, of great significance in this matter, because in a chapter 7 case all allowed claims would have been paid in full from the proceeds of sale of the Property, any chapter 13 plan proposed by the Debtor would be required to treat creditors equally well, meaning that the plan would have to ensure that all holders of allowed unsecured claims would be paid in full pursuant to § 1325(a)(4) (better known as the "best interests of creditors test," stating that a chapter 13 plan may only be confirmed if unsecured creditors receive as much as they would receive under a chapter 7 liquidation).

On October 23, 2017, on motion of the Debtor, the case was converted to a chapter 13 bankruptcy. On October 25, 2018, *452the Court entered a Notice of Chapter 13 Bankruptcy Case , Official Form 309I (the "Notice") (doc. 23). Pursuant to (and as required by) Rule 2002(f)(3), the Court mailed the Notice, which contained all pertinent deadlines, including the deadline to file proofs of claim, to all creditors listed in Debtor's bankruptcy schedules. The filing deadline for all non-government creditors to file proofs of claim set forth in the Notice was February 28, 2018, in accordance with then-in-effect Rule 3002(c) ("a proof of claim is timely filed if it is not later than 90 days after the first date set for the meeting of creditors").

Also on October 25, 2018, prior to any proof of claim being filed, Debtor filed her first chapter 13 plan (doc. 24). That plan proposed to pay zero-percent of allowed unsecured claims. The Chapter 13 Trustee objected to this plan on the basis that the plan needed to pay all allowed claims, including unsecured claims, in full. The plan eventually confirmed by the Debtor on August 14, 2018 (Debtor's Fourth Amended Plan, doc. 148) provides for the payment of all allowed unsecured claims in full, as it must.

On December 1, 2017, an amended version of Rule 3002 took effect, among myriad other Rule amendments. Amended Rule 3002(c) shortens the deadline to file proofs of claim to 70 days after an order for relief is entered or a bankruptcy case is converted. Chief Justice John Roberts' Order transmitting the amendments to Congress stated "the foregoing amendments to the Federal Rules of Bankruptcy Procedure shall take effect on December 1, 2017 and shall govern in all proceedings in bankruptcy cases thereafter commenced and, insofar as just and practicable , all proceedings then pending." (Transmittal of 2017 Federal Bankruptcy Rule Amendments from Supreme Court to Congress, at 3) (emphasis added).

On February 27, 2018 LVNV filed three proofs of unsecured claim, totaling, in the aggregate, approximately $1500. These claims were acquired by LVNV from Capitol One Bank, N.A. and Arrow Financial Services, LLC. It thus appears that these claims are credit card debts. Debtor objects to these general unsecured claims on the basis that the claims were untimely filed, because the bar date for the filing of claims pursuant to amended Rule 3002(c) was January 1, 2018. Debtor has not objected to the claims based on any other ground.

LVNV defends the timeliness of its filings, arguing that it would not be "just and practicable" for the Court to apply amended Rule 3002(c) effectively to shorten by fifty-eight days the deadline duly set by the Court to file proofs of claim on this chapter 13 case.

It is Neither Just nor Practicable to Apply Amended Rule 3002(c) in Debtor's Case.

Courts within the Ninth Circuit that have addressed the question of whether application of an amended Rule of Civil or Criminal Procedure would be "just and practicable" have done so on a case-by-case basis. See United States v. Pangang Group Co. , No. 11-cr-00573-JSW, 2017 WL 3034063 at *6 (N.D. Cal. Jul. 18, 2017) (just and practicable to apply amended Fed. R. Crim. P. 4 to pending case because defendants had actual notice of indictment for years but had evaded service due to deficiencies of former Rule 4 which were corrected by the amended Rule); United States v. Woods , No. 05-10494, 173 F.App'x. 631 (9th Cir. 2006) (not abuse of discretion to find it was just and practicable to apply amended Fed. R. Crim. P. 33 when defendant had more than 31 months to file relevant motion under amended Rule's deadline); United States v. Ross , 372 F.3d 1097, 1105 & n. 6 (9th Cir. 2004)

Free access — add to your briefcase to read the full text and ask questions with AI

Related

United States v. Ricky D. Ross
372 F.3d 1097 (Ninth Circuit, 2004)
United States v. Woods
173 F. App'x 631 (Ninth Circuit, 2006)

Cite This Page — Counsel Stack

Bluebook (online)
603 B.R. 449, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-porter-canb-2019.