Pamela Hawthorne

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF COLUMBIA
In re
PAMELA HAWTHORNE,
Debtor.
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Case No. 04-00853
(Chapter 13)
OPINION AND ORDER REQUIRING
RE-SERVICE OF OBJECTION TO CLAIM
The debtor has filed an objection to the proof of claim
filed by Sherman Acquisition LP dba Resurgent Acquisition in
the amount of $1,506.46. The creditor’s proof of claim, after
listing the creditor’s name, indicated in the box for “Name
and address where notices should be sent” the following:
Resurgent Capital Services
P.O. Box 10587
Greenville, SC 29603-0587
The Opinion and Order below is hereby signed.
Dated: June 1, 2005.
_____________________________
S. Martin Teel, Jr.
United States Bankruptcy Judge
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The debtor mailed the objection to the proof of claim, and LBR
3007-1 notice of opportunity to oppose the objection, on:
Sherman Acquisition, LP
dba Resurgent Acquisition
P.O. Box 10587
Greenville, SC 29603-0587
The creditor has not filed a timely opposition.
The proof of claim identifies as the “prior creditor”
Triad (alternate name: Triad/HFN SWB Banko Bulk Sale), and
identifies the account as for a Mastercard product. The
debtor's objection was not accompanied by an affidavit setting
forth non-conclusory evidence to show that she does not owe
this debt.
I
The court concludes that mailing as required by Rule 3007
would have constituted proper service (with service in the
manner provided for service of a summons and complaint under
Rule 7004 not being required), but that the debtor's mailing
of the objection did not comply with Rule 3007.
A.
Rule 3007 provides in relevant part that “[a] copy of the
objection with notice of the hearing thereon shall be mailed
or otherwise delivered to the claimant . . . at least 30 days
prior to the hearing.” Nevertheless, an objection to a proof
of claim and various other objections under the Rules
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1 Prior to its amendment in 2002, Rule 9014 was a single
paragraph. The 2002 amendment, as relevant here, broke Rule
9014 into subparagraphs and added the second sentence to Rule
9014(b). However, the Advisory Committee Notes to the 2002
amendment do not indicate an intention to make the "not
otherwise governed" language in subparagraph (a) inapplicable
to subparagraph (b).
3
constitute contested matters. Rule 9014 provides in relevant
part:
(a) Motion. In a contested matter in a case
under the Code not otherwise governed by these
rules, relief shall be requested by motion, and
reasonable notice and opportunity for hearing shall
be afforded the party against whom relief is sought.
No response is required under this rule unless the
court orders an answer to a motion.
(b) Service. The motion shall be served in the
manner provided for service of a summons and
complaint by Rule 7004. Any paper served after the
motion shall be served in the manner provided by
Rule 5(b) F.R.Civ.P.
[Italics added.]1 For reasons developed below, the court
concludes that the first sentence of Rule 9014(b) does not
apply to a contested matter commenced by an objection when the
rule governing that objection sets forth the required manner
of service of the objection.
The contested matters the court has found that are not
commenced by a motion are objections to:
a claim (Rule 3007),
confirmation of a chapter 13 plan (Rule 3015(f)),
a disclosure statement (Rule 3017(a)),
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confirmation of a chapter 11 plan (Rule 3020(b)),
exemptions (Rule 4003(b)),
notice of a proposed use, sale, or lease of property
(Rule 6004(b)), and
notice of a proposed abandonment or disposition of
property (Rule 6007(a)).
Rules 3007 and 4003(b) are the only objections for which the
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2 Rules 3015(f), 3017(a), 3020(b), Rule 6004(b), and
6007(a) do not specify the manner of service on the entities
required to be served under those rules, and borrowing the
manner of service rules in F.R. Bankr. P. 7004 or F.R. Civ. P.
5 makes sense. As a practical matter, the issue of the proper
manner of service almost never arises under these rules. The
notice of opportunity to object to the plan, disclosure
statement, or proposed action will usually specify the
entities to whom the objection is to be mailed.
Moreover, mailing the objection to the attorney (or pro
se party) who signed the paper being objected to, at the
address listed on the paper (and to any trustee or creditor
committee members at their addresses of record) ought to
constitute valid service by way of borrowing the mailing-to-
attorney manner of service authorized by either F.R. Civ. P.
5(b) or F.R. Bankr. P. 7004(b)(8) in analogous circumstances.
Finally, the paper objected to has usually already been
set for a hearing. Once objected to, no order issues, and the
matter remains on, or is placed on, the court's hearing
calendar. At the hearing, questions about the manner of
service are usually rendered moot because the parties proceed
to the substantive matter set for hearing. In any event, in
the rare instance in which the propriety of service is
questioned, the court has broad discretion to enlarge the time
for the objection to be served properly and to continue the
hearing if any questionable service caught a party off guard.
This court’s research discovered only two decisions addressing
the issue of proper service under these rules. See In Re
Thompson, 4 B.R. 700 (Bankr. E. D. Penn. 1980) (applying
predecessor to Rule 3015(f) and holding that Rule 7004 service
was required); Beard v. United States Trustee, 188 B.R. 220,
222-23 (W.D. La. 1995), aff'd, 84 F.3d 431 (5th Cir. 1996)
(applying Rule 3015(f) and assuming that Rule 7004 service was
required). In both cases, the court allowed the defective
service to be cured.
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applicable rule specifies the manner of service.2
Rule 3007, as already noted, requires that “[a] copy of
the objection with notice of the hearing thereon shall be
mailed or otherwise delivered to the claimant.” Although Rule
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3 But see Boykin v. Marriott International, Inc. (In re
Boykin), 246 B .R. 825 (Bankr. E.D. Va. 2000); In re
Schweitzer, 145 B.R. 292 (Bankr. E.D. Ark. 1992); United
States v. Oxylance Corp., 115 B.R. 380 (N.D. Ga. 1990); In re
Morrell, 69 B.R. 147 (N.D. Cal. 1986). Most of these
decisions involve service on the United States or an agency
thereof, a creditor who traditionally enjoys the benefit of
special service requirements.
4 Usually requiring service under Rule 7004 would not add
anything not already accomplished by mailing or delivery under
Rule 4003(b), but not always. For example, if a dependent of
the debtor files an exemption claim without an attorney, and
lists as his or her address an address that is not his or her
“dwelling house or usual place of abode or . . . the place
6
3007 does not use the term “serve,” plainly the mailing it
requires is a form of service. Similarly, Rule 4003(b)
specifies that the objection to exemptions must be “delivered
or mailed to the trustee, the person filing the list [meaning
the debtor or a dependent of the debtor, as the case may be],
and the attorney for that person,” again a form of service.
Rule 3007, as the specific rule dealing with objections
to claims, controls service of such an objection, not Rule
9014(b). Jorgenson v. State Line Hotel, Inc. (In te State
Line Hotel, Inc.), 2005 WL 857471 (9th Cir. BAP Mar. 29,
2005); In re Hejl, 85 B.R. 399 (W.D. Tex. 1988).3 Similarly,
Rule 4003(b)'s rule regarding serving an objection to
exemptions, as the more specific rule, ought to trump Rule
9014(b)'s rule regarding serving a motion commencing a
contested matter.4 If Rule 9014(b) controlled service of an
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where the individual regularly conducts a business or
profession” (within the meaning of that language in Rule
7004(b)(1)), mailing the objection to the listed address would
not satisfy Rule 7004. However, the address listed on the
claim of exemption ought to control as it implicitly gives
notice of the address to be used for any service of papers
relating to the claim, and consents to use of that address.
Cf. F.R. Civ. P. 5.
5 An argument in favor of interpreting “motion” in the
first sentence of Rule 9014(b) as extending to objections to
claims is that the second sentence of Rule 9014 also uses
“motion” in mandating the manner of service of papers filed
after the commencement of a contested matter, and that this
second sentence obviously applies to all contested matters.
However, Rules 3007 and 4003 do not purport to address service
of papers after service of the objection, and thus do not
override Rule 9014(b)’s second sentence regarding service of
papers once the contested matter has commenced. If that
second sentence applies to contested matters commenced by
motion, there is no reason to believe that a different rule
would apply in the case of a contested matter commenced by an
objection.
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objection, there would be no need to require mailing of an
objection to claim under Rule 3007 or to require mailing or
delivery under Rule 4003 in the case of an objection to
exemptions. If the first sentence of Rule 9014(b) were
intended to apply to objections to claims (or objections to
exemptions), the sentence could have readily referred to “the
paper commencing a contested matter” instead of to “the
motion.”5 Moreover, as next discussed, the nature and
practicalities of the claims process demonstrate that the
rule-makers did not intend to require service of an objection
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to claim under Rule 7004.
First, the nature of the claims process shows that
service under Rule 7004 was not intended. When a creditor
files a proof of claim, it is analogous to a complaint,
subjecting the creditor to the jurisdiction of the court to
adjudicate the validity of its claim. Kline v. Zueblin, AG
(In re American Export Group Int'l Servs., Inc.), 167 B.R.
311, 313-15 (Bankr. D.D.C. 1994). "Every person submitting
himself to the jurisdiction of the bankrupt[cy] court in the
progress of the cause, for the purpose of having his rights in
the estate determined, makes himself a party to the suit."
Wiswall v. Campbell, 93 U.S. 347, 351, 23 L.Ed. 923 (1876).
The creditor is already before the court, in other words, and
has an implicit obligation to keep the trustee and the court
informed of any change in address. However, the claim is
allowed unless objected to, and as a matter of due process,
the creditor is entitled to notice when an objection is filed
to its claim. When the court has already acquired
jurisdiction over the creditor’s person by way of its filing a
proof of claim, due process is satisfied by mailing the
objection and notice to the name and address specified on the
proof of claim for the receipt of notices in the case.
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Second, requiring service under Rule 7004 would subject
the estate to considerable uncertainty and expense in contrast
to permitting notice under Rule 3007 to suffice. Consider for
example a case in which scores of individuals file proofs of
claim, and the trustee objects to several of their claims.
The trustee mails each objection to the name and address the
proof of claim designates for receiving notices in the case.
If Rule 7004 controlled service, the trustee would have to
make service in each instance to an address that is the
creditor’s “dwelling house or usual place of abode or . . .
the place where the individual regularly conducts a business
or profession” as required by Rule 7004(b)(1) for service by
mail to be effective. There is no way the trustee can readily
ascertain–-at least not without a significant expenditure of
estate funds--that service under Rule 3007 would satisfy Rule
7004(b)(1). Moreover, if an individual moved and filed no
change of address with the court or the postal service, Rule
7004 would require the trustee to incur the expense of making
service by publication on that individual, already before the
court, who is at fault for having failed to keep the trustee
and the court apprised of his location. These practicalities
demonstrate that mailing as required by Rule 3007 was intended
to constitute the required service.
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While this court continues to require service of an
objection to claim under Rule 7004 when the claimant is the
United States or an agency thereof, it does so under LBR 3007-
1 in recognition of the government’s unique structure for
processing litigation. When there is no special need for Rule
7004 service, the court utilizes LBR 9029-1 to not require
such service under LBR 3007-1. Here, the creditor is a
private entity and has no need for special service under Rule
7004.
B.
Nevertheless, the court concludes that service was not
properly made in this case. The creditor indicated that
notices relating to its claim should be sent to Resurgent
Capital Services. The debtor mailed the notice to the
creditor itself, instead of Resurgent Capital Services.
Although the debtor mailed the notice to the same address as
the address for Resurgent Capital Services, the creditor
specifically asked that notices be sent to Resurgent Capital
Services. To obtain the benefits of service by mail under
Rule 3007, the party filing an objection ought to scrupulously
comply with the creditor's specific instructions regarding how
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6 The failure to send the notice to the specified entity
here may have caused the notice not to be routed to the office
that handles objections to claims.
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notice is to be sent.6
II
The debtor’s objection is that she does not owe this
creditor any money. However, she has filed no affidavit to
rebut the prima facie validity of the proof of claim under
F.R. Bankr. P. 3001(f). If the debtor anticipates that the
creditor will not file a response to a re-served objection to
claim, she should give consideration to filing an affidavit
with the objection to rebut the prima facie validity of the
proof of claim, so that the objection can be promptly
sustained, and an evidentiary trial avoided.
III
It is accordingly
ORDERED that within 28 days after entry of this order,
the debtor shall file a certificate of renewed service of her
objection to claim, failing which the court will dismiss the
objection to claim without prejudice to renewal of the
objection at a later date. It is further
ORDERED that if the debtor re-serves the objection to
claim, the debtor should consider including an affidavit
presenting evidence to rebut the prima facie validity of the
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12	O:\JUDGEFIL\Claims\Objn to Claim Service Rule 7004 Non-Applicability v3.wpd
creditor’s proof of claim. The evidence should address in
non-conclusory terms the basis for the debtor’s claiming not
to owe any debt to Sherman Acquisition LP dba Resurgent
Acquisition on account of a MasterCard account with Triad.
[Signed and dated above.]
Copies to: Debtor’s Attorney; Debtor; Cynthia A. Niklas; the
Office of U.S. Trustee; and Resurgent Capital Services, P.O.
Box 10587, Greenville, SC 29603-0587.
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