In Re Wingerter

394 B.R. 859, 60 Collier Bankr. Cas. 2d 783, 2008 Bankr. LEXIS 2497, 2008 WL 4489258

• Court: Bankruptcy Appellate Panel of the Sixth Circuit
• Decided: October 8, 2008
• Docket: BAP 07-8063
• Status: Published

Opinions

OPINION

THOMAS H. FULTON, Bankruptcy Judge.

B-Line, LLC (“B-Line”) appeals a bankruptcy court order sanctioning it under Federal Rule of Bankruptcy Procedure (“Rule”) 9011(b). The bankruptcy court issued its order after a show cause order and an evidentiary hearing to determine the procedures that B-Line employs for processing and fifing proofs of claim. The court was concerned that B-Line, a company that exclusively purchases claims in bankruptcy, does not request copies of originating documents before fifing a proof of claim despite the requirement in Rule 3001(c) and Official Form 10 that such documents be attached to proofs of claim.

I. ISSUES ON APPEAL

Whether the bankruptcy court abused its discretion in issuing an order (1) concluding that B-Line did not fulfill its obligations under Rule 9011 when it filed its proof of claim in the debtors’ case; and (2) expressing the court’s view generally that filing a proof of claim without review of originating documents falls short of reasonable inquiry under Rule 9011 when the obligation is not scheduled by the debtor and the purchase of the claim is not accompanied by reliable representations of validity.

II. JURISDICTION AND STANDARD OF REVIEW

The Bankruptcy Appellate Panel of the Sixth Circuit has jurisdiction to decide this appeal. The United States District Court for the Northern District of Ohio has authorized appeals to the Panel and a final order of the bankruptcy court may be appealed as of right pursuant to 28 U.S.C. § 158(a)(1). For purposes of appeal, a final order “ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.” Midland Asphalt Corp. v. United States, 489 U.S. 794, 798, 109 S.Ct. 1494, 1497, 103 L.Ed.2d 879 (1989) (citations omitted). The bankruptcy court’s order imposing sanctions on B-Line for violating Rule 9011 in this case is a final order. Buckeye Retirement Co., LLC, Ltd. v. Hake (In re Hake), 2006 WL 2621116 (6th Cir. BAP 2006) (unpub.)¹

Decisions regarding the imposition of sanctions under Rule 9011 are reviewed for abuse of discretion. Timmons v. Cassell (In re Cassell), 254 B.R. 687 (6th Cir. BAP 2000) (citing Corzin v. Fordu (In re Fordu), 201 F.3d 693, 711 (6th Cir. 1999)). “An abuse of discretion occurs only when the [trial] court relies upon clearly erroneous findings of fact or when it improperly applies the law or uses an erroneous legal standard.” Volvo Commercial Fin. LLC the Americas v. Gasel Transp. Lines, Inc. (In re Gasel Transp. Lines, Inc.), 326 B.R. 683, 685 (6th Cir. BAP 2005) (citing Schmidt v. Boggs (In re Boggs), 246 B.R. 265, 267 (6th Cir. BAP 2000)). A court also abuses its discretion if, upon review, the appellate court is left with a “definite and firm conviction that the [bankruptcy court] committed a clear error of judgment.” Barlow v. M.J. Waterman & Assocs., Inc. (In re M.J. Waterman & Assocs., Inc.), 227 F.3d 604, 607-08 (6th Cir.2000) (quoting Soberay Mach. & Equip. Co. v. MRF Ltd., Inc., 181 F.3d 759, 770 (6th Cir.1999)). “The question is not how the reviewing court would have ruled, but rather whether a reasonable person could agree with the bankruptcy court’s decision; if reasonable persons could differ as to the issue, then there is no abuse of discretion.” Mayor and City Council of Baltimore, Md. v. W. Va. (In re Eagle-Picher Indus., Inc.), 285 F.3d 522, 529 (6th Cir.2002).

The court’s findings of fact are reviewed under the clearly erroneous standard. Riverview Trenton R.R. Co. v. DSC, Ltd. (In re DSC, Ltd.), 486 F.3d 940, 944 (6th Cir.2007). “A finding of fact is clearly erroneous ‘when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.’ ” Id. (quoting Anderson v. City of Bessemer City, 470 U.S. 564, 573, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985)).

III. FACTS

Gerald Wingerter and Janet Keller-Wingerter (“Debtors”) filed a chapter 13 bankruptcy petition in the United States Bankruptcy Court for the Northern District of Ohio on February 7, 2006. According to the chapter 13 plan that was filed on the same date, the Debtors would pay their unsecured creditors 100%. B-Line, LLC (“B-Line”) filed a proof of claim for an unsecured claim in the amount of $431.57 on March 17, 2006, thirty-eight days after the Debtors filed their chapter 13 petition and nearly two months before the deadline for filing proofs of claim.

As its proof of claim, B-Line submitted a copy of Official Form 10 (“Form 10”) that listed “B-Line LLC/Covenant Management/GTE” as the name of creditor. B-line’s Form 10 was incomplete or incorrect in several places: it stated that the basis for the claim was “money loaned;” the space for “Date debt was incurred” was left blank; and B-Line did not submit any copies of the original documents evidencing the Debtors’ obligation. The only additional document B-Line filed with Form 10 was a single computer-generated sheet entitled “Account Summary” that contained the following information:

Debtor Name: WINGERTER, GERALD A

Debtor SSN: XXX-XX-8300

Debtor Address: 644 STAR DR.

End Balance: $431.57

Last Payment Date:

Last Payment Amount:

Last Purchase Date:

Last Purchase Amount:

Original Creditor: GTE

Related Account Number: XXXXXXXXXXXX1221

On September 1, 2006, the Debtors filed an objection to B-Line’s claim on grounds that they were unaware of any contract or extension of credit with GTE or B-Line. On September 14, 2006, B-Line filed a response to the Debtor’s objection, requesting an extension of sixty days “to obtain supporting documentation for its claims pursuant to Rule 9006 because the Debtors did not schedule the debt.” The bankruptcy court denied B-Line’s request for additional time, and a hearing was held on October 19, 2006, with respect to the Debtors’ objection to B-Line’s claim. At this hearing, the Debtors testified that they had no recollection of ever entering into any contract with GTE or B-Line.

The bankruptcy court found the Debtors’ testimony credible and made a specific factual finding accordingly. At the October 19 hearing, the bankruptcy court scheduled another hearing for January 11, 2007, and prohibited B-Line from withdrawing its proof of claim unless it provided a “complete explanation” therefor. On January 3, 2007, in direct contravention of the bankruptcy court’s order, B-Line filed a document withdrawing its proof of claim without filing an accompanying explanatory statement.

On January 8, 2007, five days later, B-Line submitted a sworn affidavit by Steven G. Kane (“Kane”), the records custodian and operations manager of B-Line. Kane averred that, according to B-Line’s eom-puter database, in March 2006 B-Line purchased from Covenant Management Group, LLC (“Covenant”) an account that Gerald Wingerter originally opened with GTE Communications Company on December 21, 1993.² Kane further averred that the account had an outstanding balance of $431.57 when it was purchased from Covenant by B-Line.

Pursuant to a forward-flow purchase agreement (“Purchase Agreement”) entered between Covenant and B-Line, B-Line would purchase from Covenant, on a periodic basis, claims on accounts for which the obligor on each purchased account had filed a chapter 13 bankruptcy petition. The claim purportedly owed by Gerald Wingerter was among the “portfolio” of claims B-Line had purchased from Covenant in March 2006. The affidavit stated that B-Line withdrew its proof of claim on January 3, 2007, after GTE informed B-Line that it was unable to locate original documentation evidencing the Debtors’ account.

On January 11, 2007, the bankruptcy court held another hearing during which it expressed concern that B-Line had filed a proof of claim without sufficient inquiry into the factual or legal basis for the claim. In order to address the matter further, the bankruptcy court scheduled a hearing at which B-Line would “provide the Court with an explanation of its procedures regarding the due diligence it conducts to assure itself of the validity of a claim before filing a proof of claim.” B-Line was directed to file a written explanatory statement prior to the hearing. The bankruptcy court entered an order to this effect on January 26, 2007.

B-Line filed an explanatory statement on February 16, 2007. In the statement, B-Line explained that it had entered the Purchase Agreement with Covenant in 2004. B-Line disclosed the requirements for accounts it purchases from Covenant: (1) the debtor must be in a chapter 13 bankruptcy proceeding; (2) the debt has not been disputed or discharged; (3) the amount owed is accurate; (4) the statute of limitations on the claim has not expired; and (5) the debt is not fraudulent. B-Line stated further that “According to the Purchase Agreement, Covenant ... represents that it will use reasonable efforts in accordance with industry standards to create computer files for each account and will provide account documents where available.”

Additionally, in its statement, B-Line explained that GTE had merged with another telecommunications company in 2000 to form Verizon Communications Company. The Debtors included a debt owed to Verizon on the schedules accompanying their bankruptcy petition. Although the account number for the Verizon account scheduled by the Debtors did not match the GTE account number purchased by B-Line, B-Line opined that the scheduled debt owed to Verizon might be the same as the claim held by B-Line that was originally owed to GTE. Finally, B-Line stated that it had intended the affidavit submitted by Kane to satisfy the bankruptcy court’s requirement that a “complete explanation” accompany the withdrawal of B-Line’s proof of claim, but that the Kane affidavit was filed five days later because it had to be sent to a different B-Line attorney prior to filing.

On March 8, 2007, the bankruptcy court entered a Show Cause Order and Notice of April 12, 2007 Hearing (“Show Cause Order”), in which it specifically recounted B-Line’s withdrawal of its proof of claim in direct contravention of the bankruptcy court’s order. The bankruptcy court stated further in this Show Cause Order:

The plan in the instant chapter 13 case provides that the Debtors will pay a 100% dividend to the holders of unsecured claims. Thus, the Debtors had an incentive, absent in the more common “pot plan” cases, to review the validity of the proofs of claims that had been filed in their bankruptcy. In response to the Court’s inquiry, the Chapter 13 Trustee’s Office serving Akron reports that in January and February of this year, it disbursed over $15,000 to B-Line. If one makes the assumption that $7,500 represents an average monthly distribution in regard to the chapter 13 cases pending in each of approximately 350 bankruptcy judges’ dockets in the United States, one arrives at the working assumption that B-Line is receiving monthly chapter 13 distributions, on a national aggregate basis, of over 2.6 million dollars. Thus, this Court deems it material to the integrity of the bankruptcy system to determine whether B-Line’s procedures for filing proofs of claim are based on a reasonable inquiry, prior to filing, as to whether there is admissible evidentiary support for the claim.

(Appellant’s App. Vol. I., Sect. 8 at 3.) The Show Cause Order then directed B-Line to file a pre-hearing brief and proffer evi-dentiary support “showing cause why B~ Line should not be sanctioned under Rule 9011 for its acts in filing the B-Line [Proof of Claim] and in withdrawing that same claim without an order of the Court pursuant to Rule 3006 or a lifting of the Court’s oral directive that the claim could not be withdrawn.” Finally, the Show Cause Order set forth eleven specific questions that it expected B-Line to answer through the evidence it was to present at the April 12, 2007 hearing.

These eleven questions focused on four primary issues: (1) how much human oversight, inquiry, or review did B-Line dedicate to the bankruptcy claims filing process, and how much of the work in filing a proof of claim was simply generated by computer software with no human oversight or review; (2) how and when did B-Line obtain certain specific information relating to the purported account between the Debtors and GTE; (3) what information did B-Line actually receive from Covenant regarding the Debtors’ account, and what information was B-Line contractually obligated to receive from Covenant; and (4) what evidence did B-Line accrue from sources other than Covenant that was included on the proof of claim filed in the Debtors’ bankruptcy case.

B-Line filed its pre-hearing brief in which it purported to answer the questions posed by the bankruptcy court. Along with its brief, B-Line filed sworn declarations of Rui Pinto-Cardoso, B-Line’s President and Chief Operating Officer, Kane and Lihn K. Tran, B-Line’s in-house counsel. These declarations contained statements the declarants were prepared to offer as testimony in order to answer the eleven questions in the Show Cause Order.

Ultimately, two evidentiary hearings were held on April 12, 2007, and May 21, 2007, and the bankruptcy court ordered post-trial briefs to be filed by June 22, 2007, at which point the matter was taken under advisement. The bankruptcy court issued an opinion and order on October 1, 2007, concluding that:

particularly where a debtor has not scheduled any claim resembling the purportedly assigned obligation that a claim purchaser wants to file in the debtor’s case, the claim purchaser needs to discharge its obligations under Rule 3001 and Rule 9011 at the time it files a proof of claim. The assignee should not be able to shift the expense of the initial examination of claims to other interested parties, e.g., chapter 7 trustees and chapter 13 debtors and trustees. More specifically, the Court finds that when the debtors have not scheduled any claim listing the originating creditor, Rule 9011 requires a claim purchaser, before filing a proof of claim with a bankruptcy court, to obtain originating documents or, when such documents are not available, a clear understanding of the nature of the original dealings that support the assertion of a claim against the particular debtor. Having obtained those documents or that clear understanding, the claim purchaser should then attach to the proof of claim form the originating documents or an affidavit explaining the non-availability of such “media” to the proof of claim form so the debtor and other interested parties are given fair notice of the source and particulars of the claim.

In re Wingerter, 376 B.R. 221, 224 (Bankr. N.D.Ohio 2007).

The bankruptcy court found that, in addition to erroneously stating that the basis for B-Line’s claim was “money loaned,” Form 10 accompanying B-Line’s proof of claim was incomplete because queries for “Date debt was incurred” and “Charges made Prior to Filing” were left blank; B-Line did not respond to the query asking whether the claim included interest or other charges in addition to the principal amount of the claim (Part 5 of the Form); B-Line did not comply with the instructions on Form 10 to “[a]ttach itemized statement of all interest or additional charges”; B-Line did not comply with Part 7 of Form 10, which instructs the claimant either to attach copies of originating documents or to explain the unavailability thereof. Moreover, no testimony was offered as to how the interest rate applied by Covenant to the outstanding balance purportedly owed was reached.

The bankruptcy court also made the following pertinent factual findings:

31. B-Line’s Pre-hearing Brief further acknowledged the fluidity of the computer data set when it stated that computer files generated by the original creditor are “updated to reflect any payments, credits or other transactions” and “therefore represents the best and most current summary of the overall status of the purchased account”....

33. Covenant was never in possession of, or reviewed, originals or copies of any application by Gerald Win-gerter for services from GTE or any signed agreement between those parties. Nor did Covenant possess or review copies of any account statements mailed to Mr. Wingerter.

34. The purported assignment from Covenant to B-Line of a claim against a Mr. Wingerter rests upon the Covenant/B-Line Forward Flow Agreement. Under this agreement, B-Line periodically purchases accounts owned by Covenant as to which Covenant has been notified of a bankruptcy filing.

36. Section 5.7 of the Covenant/B-Line Forward Flow Agreement, which is titled “computer files” states: “Seller has used reasonable efforts in accordance with industry standards to create Computer Files which set forth each Account designated in the Term Agreement, each of which meets the Eligibility Requirements of the Cut-Off Date.” When trying to find a warranty or representation as to the validity of the claims acquired by B-Line from Covenant in the Covenant/B-Line Forward Flow Agreement, B-Line’s counsel points to that section, arguing that it should be pieced together with the section on Eligibility Requirements. The court finds, however, that there is no representation or warranty in the Covenant/B-Line Forward Flow Agreement as to the validity or enforceability of the claims summarized in the data transmitted from Covenant to B-Line.

37. Rather, if an account in the purchased portfolio is not valid, B-Line has a contractual remedy against Covenant, i.e., B-Line is entitled to “reassign” the account to Covenant and to receive complete reimbursement of amounts paid to B-Line to Covenant with respect to that account.

In re Wingerter, 376 B.R. at 229-30.

The bankruptcy court concluded that, although B-Line did not file its proof of claim for any improper purpose, B-Line failed to comply with its obligations under Rule 9011(b) to make a reasonable inquiry into the basis of its claim before filing the proof of claim in a bankruptcy case because it made no effort to comply with Rule 3001(c) and Form 10. The court reasoned that when a potential bankruptcy creditor has only limited information about a debtor, and the information it holds was not warranted by the seller of the claim, the bankruptcy creditor’s obligation under Rule 9011(b)(2) and (3) requires the creditor to do more than simply file a proof of claim based on information from a bulk claims seller and wait to see whether the debtor in bankruptcy will object to the claim before the bankruptcy creditor conducts its own inquiry into the basis for its claim. The court pointed out that Rule 3001(a) directs compliance with the Official Forms. B-Line did not comply with Rule 3001(a) when it filed an incomplete Form 10 despite having sufficient information to complete the queries on the form; its regular procedures for filing proofs of claim simply did not make use of this information. B-Line failed to comply with Form 10 because it did not append copies of the originating documentation or assert that the documents were too voluminous to do so. In the bankruptcy court’s view, this omission indicated that B-Line “neglected [its] obligations to make reasonable inquiry” — sanctionable conduct. Further, Rule 3001(c) requires copies of originating documents to be filed with a proof of claim when the claim at issue is based on a writing. Yet, by its own admission, B-Line never requested or made any attempt to obtain copies of the written agreement from which the claim purportedly derived. The bankruptcy court also was troubled by the fact that B-Line filed its incomplete proof of claim and Form 10 roughly ninety days before the deadline for filing proofs of claim in the Debtor’s bankruptcy case.

Despite finding that B-Line failed to comply with its obligations under Rule 9011(b), the bankruptcy court did not issue monetary sanctions against B-Line or direct B-Line to take, or refrain from taking, any specific action. Instead, the court deemed the expenses incurred by B-Line in participating in the prior evidentiary hearings to be a sufficient sanction.

Lastly, the bankruptcy court expressed its view generally regarding Rule 9011(b) and the filing of proofs of claim by stating, inter alia, as follows: “As a prospective matter, B-Line and other purchasers in the claims trading industry should understand that this Court views the filing, without review of originating documents, of a proof of claim by an assignee/purchaser to fall short of reasonable inquiry under Rule 9011 when the obligation has not been scheduled by the debtors and the purchase of the claim was not accompanied by reliable representations of claim validity.” (Emphasis added) The bankruptcy court stated, in conclusion³:

When debtors have not admitted, through their schedules, the validity of the claim in the hands of the originating creditor or any of its assignees, the filer should comply with Rule 3006 and complete Official Form 10 by taking the time to obtain and review originating documents before filing any proof of claim. If originating documents cannot be obtained, and the assignee decides to file a proof of claim notwithstanding the absence of such documents, the assignee must comply with Rule 3006 and Official Form 10 by providing a dear explanation (which would include all non-confidential information in the hands of the assignee) of how the initial obligation arose and setting forth the warranties and representations in the chain of transfers that the assignee relies upon in asserting its claim.

In re Wingerter, 376 B.R. at 239 (emphasis added).

IV. DISCUSSION

In imposing Rule 9011 sanctions, a bankruptcy court must determine whether the individual’s conduct was reasonable under the circumstances. In applying this test to the filing of proofs of claim, the bankruptcy court “is not to use the benefit of hindsight but ‘should test the signer’s conduct by inquiring what was reasonable to believe at the time the ... [claim] ... was submitted.’ ” Timmons v. Cassell (In re Cassell), 254 B.R. 687, 691 (6th Cir. BAP 2000) (quoting Mapother & Mapother, P.S.C. v. Cooper (In re Downs), 103 F.3d 472, 481 (6th Cir.1996)). “Factors to consider in making this determination include the amount of time available for investigation, the nature of the investigation, and whether the claim is based on a plausible view of the law.” Id. (citing Davis v. Crush, 862 F.2d 84, 88 (6th Cir. 1988)). As discussed above, the Panel reviews imposition of Rule 9011 sanctions for abuse of discretion.

Before the Panel can address whether the bankruptcy court abused its discretion, the Panel must address whether this appeal is moot or otherwise not justiciable. In this regard, the bankruptcy court’s order should be considered in two parts — the portion of the order directed at the case at hand and the portion ostensibly addressing future conduct.

The issue of mootness has not been raised by the parties. However, because mootness suggests the question of jurisdiction, the Panel raises the issue sua sponte, and addresses the issue of mootness on the Panel’s own motion. Berger v. Cuyahoga County Bar Assoc., 983 F.2d 718, 721 (6th Cir.1993). Under Article III of the United States Constitution, the Panel may adjudicate only actual, ongoing cases or controversies. Lewis v. Cont’l Bank Corp., 494 U.S. 472, 477, 110 S.Ct. 1249, 108 L.Ed.2d 400 (1990).

[F]ederal courts have ‘no authority to render a decision upon moot questions or to declare rules of law that cannot affect the matter at issue.’ NAACP v. City of Parma, 263 F.3d 513, 530 (6th Cir.2001) (citing Church of Scientology v. United States, 506 U.S. 9, 12, 113 S.Ct. 447, 121 L.Ed.2d 313 (1992)). ‘Simply stated, a case is moot when the issues presented are no longer “live” or the parties lack a legally cognizable interest in the outcome.’ County of Los Angeles v. Davis, 440 U.S. 625, 631, 99 S.Ct. 1379, 1383, 59 L.Ed.2d 642 (1979) (quoting Powell v. McCormack, 395 U.S. 486, 496, 89 S.Ct. 1944, 1951, 23 L.Ed.2d 491 (1969)); see also Carras v. Williams, 807 F.2d 1286, 1289 (6th Cir.1986) (‘Mootness results when events occur during the pendency of a litigation which render the court unable to grant the requested relief.’). This court determined mootness ‘by examining whether an actual controversy between the parties exists in light of intervening circumstances.’ Fleet Aerospace Corp. v. Holderman, 848 F.2d 720, 723 (6th Cir. 1988).

Hood v. Keller, 229 Fed.Appx. 393 (6th Cir.2007).

B-Line seeks reversal of the bankruptcy court’s order finding B-Line in violation of Rule 9011. Even if the Panel were to find that B-Line did not violate Rule 9011⁴, however, it cannot fashion any relief from the bankruptcy court’s order because the only sanction levied was the answering of the show cause order. The Panel cannot undo the show cause hearings now. See Carras v. Williams, 807 F.2d 1286, 1289 (6th Cir.1986) (where relief will not be forthcoming, appellant no longer has an interest in the outcome which justifies a federal court’s decision on the underlying factual and legal issues). Because there is no live case or controversy, the issue of whether B-Line violated Rule 9011 in this case is moot. Where it is impossible for the Panel to grant any effectual relief, the appeal must be dismissed. Church of Scientology of Cal. v. U.S., 506 U.S. 9, 12, 113 S.Ct. 447, 121 L.Ed.2d 313 (1992); United States v. Thomas, 43 Fed.Appx. 728 (6th Cir.2002).

B-Line also seeks reversal of the portion of the bankruptcy court’s order in which the bankruptcy court expresses its views regarding future filings of proofs of claim. This presents two issues. First, this portion of the bankruptcy court’s order is not final. While the concept of finality is applied more flexibly in bankruptcy cases, to be final, an order must dispose of discrete disputes within a larger case. See Millers Cove Energy Co. v. Moore (In re Millers Cove Energy Co.), 128 F.3d 449 (6th Cir.1977); In re Dow Corning Corp., 86 F.3d 482 (6th Cir.1996). The portion of the bankruptcy court’s order at issue here does not dispose of a discrete dispute within a larger case. In fact, it addresses hypothetical situations which have not yet occurred. As such, it is not final and appealable.

Second, because this portion of the order addresses hypothetical future situations, the appeal seeks an impermissible advisory opinion. B-Line argues that the bankruptcy court is requiring that B-Line comply with Rule 9011 in the future, all purchasers in the claims trading industry obtain and review originating documents, or, in the absence of originating documents, provide an explanation of how the initial obligation occurred and the warranties received in the chain of transfers. Such efforts will, in B-Line’s view, “add expense, delay and uncertainty to the claims resolution process.” B-Line further argues that with these requirements the bankruptcy court has “eliminated the adversarial framework, dramatically increased the cost, and diminished the convenience and fairness of the bankruptcy claims resolution process for B-Line.” While B-Line does not object to obtaining documents where B-Line feels that is warranted, it “objects to being subjected to a universal requirement of pulling documents in every case where the debt is unscheduled, regardless of the size of the claim, or the presence of a dispute.”

Article III of the Constitution prohibits the Panel from considering hypothetical or abstract questions. Mu Ju Li v. Mukasey, 515 F.3d 575, 579 (6th Cir.2008) (citing United States v. McGee, 494 F.3d 551, 558 (6th Cir.2007)). In this portion of the appeal, B-Line is essentially asking the Panel to consider a hypothetical question in future cases, not this case, where a debtor has not scheduled a debt and a purchaser in the claims trading industry, not necessarily B-Line, files a proof of claim without reviewing the originating documents. Through B-Line’s arguments and objections detailed above, the question essentially becomes: what must a purchaser in the claims trading industry do to comply with Rule 9011 when filing a proof of claim? Answering this question would require the Panel to issue an advisory opinion which it is prohibited from doing by Article III of the Constitution.⁵ Sankyo Corp. v. Nakamura Trading Corp., 139 Fed.Appx. 648, 650 (6th Cir.2005) (unpub.).

Finally, the Panel questions whether the bankruptcy court’s order in fact sets specific filing requirements for proofs of claim. The Panel reads the language in question as a recommendation of best practices — what creditors ought but are not necessarily required to do to avoid potential Rule 9011 trouble. At most, the bankruptcy court requires that a creditor provide a “clear explanation” of the source of its claim, which seems nothing more than a restatement of the obvious. Ultimately, it must be remembered that the bankruptcy court engaged in an exhaustive investigation and thorough analysis of the underlying facts and circumstances of B-Lines proof of claim before finding B-Line in violation of Rule 9011. The Panel finds no reason to believe that the bankruptcy court will do otherwise in other cases in the future.⁶

V. CONCLUSION

For the foregoing reasons, the appeal is dismissed because it is moot and seeks an impermissible advisory opinion.

1 . An order imposing Rule 9011 sanctions is only final upon assessment of fees and expenses. Buckeye Retirement Co., LLC, Ltd. v. Hake (In re Hake), 2006 WL 2621116 (6th Cir. BAP 2006) (unpub.) (citing In re Jeannette Corp., 832 F.2d 43, 46 (3rd Cir. 1987)). The bankruptcy court found that “[bjecause of the time and energy that B-Line’s senior management devoted in response to this Court’s show cause order ... the Court does not view any further sanctions to be necessary in this case.” Because the bankruptcy court essentially assessed fees and expenses in the form of the show cause hearing itself and the attendant preparation, the order is sufficiently final. Compare In re Jeannette Corp., 832 F.2d at 46 (explaining that order imposing sanctions is not final where the amount or form of sanction is not yet determined).

2 . Although the Kane Affidavit did not mention any intervening purchasers between the original creditor and Covenant, testimony offered later by representatives of Covenant or B-Line reveal that Covenant had purchased the claim at issue as a part of a portfolio of claims purchased from Professional Recovery Systems, LLC (“PRS”) on December 22, 2000. Additionally, PRS was believed to have purchased the claim at issue, not from GTE directly, but from another intervening party.

3 . The bankruptcy court made a similar statement in the introduction of its opinion.

4 . Although the Panel does not address the merits here, the Panel notes that the bankruptcy court engaged in extensive fact-finding before rendering its decision.

5 . For example, in United States v. McGee, the appellant, a criminal defendant convicted of possession with intent to distribute cocaine, argued that the presumption of reasonableness applicable to a sentence within the Sentencing Guidelines range "is not necessarily the appropriate way to review sentences,” and asked the Sixth Circuit Court of Appeals "to reconsider its standard of review and to better define what a criminal defendant must do to rebut the presumption of reasonableness.” 494 F.3d at 558. The Sixth Circuit found that by "asking the panel to 'better define what a criminal defendant must do to rebut the presumption of reasonableness,' ” the appellant was "simply inviting the panel to issue an advisory opinion or to consider hypothetical or abstract questions” which is prohibited by Article III of the Constitution. Id.

6 . In the unlikely event that the bankruptcy court were to do otherwise — establish rigid, mechanical filing requirements — the Panel might very well find an abuse of discretion.