In Re: ERIC DUBOIS, Debtor.
ATLAS ACQUISITIONS LLC, Defendant-Appellee, CHAILLE DUBOIS, f/k/a Chaille Gaines, f/k/a Candace DuBois, f/k/a Candace Gaines, f/k/a Candi Gaines, f/k/a Candi DuBois; KIMBERLY ADKINS, Plaintiffs - Appellants, and TIMOTHY P. BRANIGAN; NANCY SPENCER GRISBY, Trustees.
Argued: May 10, 2016
from the United States Bankruptcy Court for the District of
Maryland, at Greenbelt. Thomas J. Catliota, Bankruptcy Judge.
William Fisher, LAW OFFICES OF MORGAN FISHER LLC, Annapolis,
Maryland, for Appellants.
S. Maurice, Jr., MAURICE WUTSCHER, LLP, Flemington, New
Jersey, for Appellee.
Courtney L. Weiner, LAW OFFICES OF MORGAN FISHER LLC,
Washington, D.C., for Appellants.
C. Hochheiser, BUCKLEY KING, LPA, Cleveland, Ohio, for
DIAZ, FLOYD, and THACKER, Circuit Judges.
Kimberly Adkins and Chaille Dubois filed separate Chapter 13
bankruptcy petitions in the Bankruptcy Court for the District
of Maryland. Appellee Atlas Acquisitions LLC (Atlas) filed
proofs of claim in their bankruptcy cases based on debts that
were barred by Maryland's statute of
limitations.The issue on appeal is
whether Atlas violated the Fair Debt Collection Practices Act
(FDCPA) by filing proofs of claim based on time-barred debts.
We hold that Atlas's conduct does not violate the FDCPA,
and affirm the bankruptcy court's dismissal of
Appellants' FDCPA claims and related state law claim.
facts of Appellants' cases are similar. Adkins filed for
Chapter 13 bankruptcy on August 29, 2014. Atlas filed two
proofs of claim in her case. The first proof of claim
indicated that Adkins owed Atlas $184.62 based on a loan that
originated with payday lender Check N Go and that Atlas
purchased from Elite Enterprise Services, LLC (Elite
Enterprise) on September 15, 2014. The proof of claim identified the last
transaction date on the account as May 19, 2009. Atlas's
second proof of claim was for $390.00 based on a loan that
originated with payday lender Impact Cash USA and that Atlas
purchased from Elite Enterprise on November 18, 2014. The
proof of claim identified the last transaction date on that
account as September 10, 2009. It is undisputed that both
debts were beyond Maryland's three-year statute of
limitations when Atlas purchased and attempted to assert the
debts in Adkins's bankruptcy case. See Md. Code
Ann., Cts. & Jud. Proc. § 5-101. Adkins neither
listed the debts on her bankruptcy schedules nor sent a
notice of bankruptcy to Atlas.
filed for Chapter 13 bankruptcy on December 6, 2014. Atlas
filed a proof of claim for $135.00 based on a loan that
originated with payday lender Iadvance and that Atlas
purchased from Elite Enterprise on January 5, 2015. The proof
of claim identified the last transaction date on the account
as October 18, 2008. It is undisputed that this debt was also
beyond Maryland's statute of limitations when Atlas
purchased and attempted to assert the debt in Dubois's
bankruptcy case. Dubois did not list the debt on her
bankruptcy schedules nor did she send a notice of bankruptcy
and Dubois filed separate adversary complaints against Atlas.
Both objected to Atlas's claims as being time-barred and
further alleged that Atlas violated the FDCPA by filing
proofs of claim on stale debts. Appellants sought
disallowance of Atlas's claims as well as damages,
attorney's fees, and costs under the FDCPA.
conceded that its claims were based on time-barred debts and
stipulated to their disallowance. However, Atlas moved to
dismiss Appellants' FDCPA claims under Federal Rule of
Civil Procedure 12(b)(6) for failure to state a claim upon
which relief could be granted. See Fed.R.Bankr.P.
7012(b) (incorporating Rule 12(b)(6) into adversary
proceedings). After hearing consolidated oral arguments, the
bankruptcy court concluded that filing a proof of claim does
not constitute debt collection activity within the meaning of
the FDCPA and granted Atlas's motion to dismiss. Pursuant
28 U.S.C. § 158(d)(2), we permitted Appellants to appeal
the bankruptcy court's decision directly to this Court.
We review the bankruptcy court's dismissal of
Appellants' claims under Rule 12(b)(6) de novo. See,
e.g., In re Mwangi, 764 F.3d 1168, 1173 (9th
Cir. 2014); In re McKenzie, 716 F.3d 404, 412 (6th
addressing the substance of Appellants' claims, we
provide a brief overview of the relevant statutes in this
case: the Bankruptcy Code (the "Code") and the
principal purpose of the Bankruptcy Code is to grant a
'fresh start' to the 'honest but unfortunate
debtor.'" Marrama v. Citizens Bank, 549
U.S. 365, 367 (2007) (quoting Grogan v. Garner, 498
U.S. 279, 286, 287 (1991)). Through bankruptcy, the
debtor's assets are collected for equitable distribution
among creditors and his remaining debts are discharged.
See Covert v. LVNV Funding, LLC, 779 F.3d 242, 248
(4th Cir. 2015); In re Jahrling, 816 F.3d 921, 924
(7th Cir. 2016). A bankruptcy debtor must file with the
bankruptcy court a list of creditors, a schedule of assets
and liabilities, and a statement of the debtor's
financial affairs. 11 U.S.C. § 521(a)(1). "[B]eing
all-inclusive on the schedules is consistent with the
Code's principle of honest and full disclosure."
In re Vaughn, 536 B.R. 670, 676 (Bankr. D.S.C.
2015). Scheduling a debt notifies the creditor of the
bankruptcy and of the creditor's opportunity to file a
proof of claim asserting a right to payment against the
debtor's estate. See id. at 679; 11 U.S.C.
bankruptcy court may "allow" or
"disallow" claims from sharing in the distribution
of the bankruptcy estate. 11 U.S.C. § 502. In Chapter 13
proceedings, allowed claims are typically paid, either in
whole or in part, out of the debtor's future earnings
pursuant to a repayment plan proposed by the debtor and
confirmed by the bankruptcy court. See id. §
1322(a)(1); 4-501 Collier on Bankruptcy ¶
501.01 (Collier). Upon completion of all payments
under the plan, the bankruptcy court "grant[s] the
debtor a discharge of all debts provided for by the plan or
disallowed." 11 U.S.C. § 1328(a). Thus, at the end
of the process the debtor receives the "fresh
start" contemplated by the Bankruptcy Code.
enacted the FDCPA to eliminate abusive debt collection
practices and to ensure that debt collectors who refrain from
such practices are not competitively disadvantaged. 15 U.S.C.
§ 1692(a), (e). The FDCPA regulates the conduct of
"debt collectors, " defined to include "any
person who uses any instrumentality of interstate commerce or
the mails in any business the principal purpose of which is
the collection of any debts, or who regularly collects or
attempts to collect, directly or indirectly, debts owed or
due or asserted to be owed or due another." Id.
§ 1692a(6). Among other things, the FDCPA prohibits debt
collectors from using "any false, deceptive, or
misleading representation or means in connection with the
collection of any debt, " and from using "unfair or
unconscionable means to collect or attempt to collect any
debt." Id. §§ 1692e-1692f. The
statute provides a non-exhaustive list of conduct that is
deceptive or unfair (e.g., falsely implying that the debt
collector is affiliated with the United States, id.
§ 1692e(1)). Debt collectors who violate the FDCPA are
liable for actual damages, statutory damages of up to $1,
000, and attorney's fees and costs. See id.
courts have consistently held that a debt collector violates
the FDCPA by filing a lawsuit or threatening to file a
lawsuit to collect a time-barred debt. See Crawford v.
LVNV Funding, LLC, 758 F.3d 1254, 1259-60 (11th Cir.
2014) (collecting cases), cert. denied, 135 S.Ct.
1844 (2015). Appellants contend that filing a proof of claim
on a time-barred debt in a bankruptcy proceeding similarly
violates the FDCPA. Atlas counters that filing a proof of
claim is not debt collection activity and is therefore not
subject to the FDCPA. Alas further argues that, even if the
FDCPA applies, filing a proof of claim on a time-barred debt
does not violate its provisions. These arguments are
addressed in turn.
does not dispute that it is a debt collector but argues that
filing a proof of claim does not constitute debt collection
activity regulated by the FDCPA. See 15 U.S.C.
§ 1692e (prohibiting deceptive or misleading
representations "in connection with the collection of
any debt"); id. § 1692f (prohibiting
unfair or unconscionable means "to collect or attempt to
collect any debt"). Instead, Atlas contends that a proof
of claim is merely a "request to participate in the
bankruptcy process." Appellee's Br. 20.
whether a communication constitutes an attempt to collect a
debt is a "commonsense inquiry" that evaluates the
"nature of the parties' relationship, " the
"[objective] purpose and context of the communication,
" and whether the communication includes a demand for
payment. Gburek v. Litton Loan Servicing LP, 614
F.3d 380, 385 (7th Cir. 2010); see also Olson v. Midland
Funding, LLC, 578 F.App'x 248, 251 (4th Cir. 2014)
(citing Gburek factors approvingly). Here, the
"only relationship between [the parties] [is] that of a
debtor and debt collector." Olson, 578
F.App'x at 251. Moreover, the "animating
purpose" in filing a proof of claim is to obtain payment
by sharing in the distribution of the debtor's bankruptcy
estate. See Grden v. Leikin Ingber & Winters PC,
643 F.3d 169, 173 (6th Cir. 2011); 4-501 Collier
¶ 501.01. This fits squarely within the Supreme
Court's understanding of debt collection for purposes of
the FDCPA. See Heintz v. Jenkins, 514 U.S. 291, 294
(1995) (explaining that in ordinary English, an attempt to
"collect a debt" is an attempt "to obtain
payment or liquidation of it, either by personal solicitation
or legal proceedings" (quoting Black's Law
Dictionary 263 (6th ed. 1990))). Precedent and common sense
dictate that filing a proof of claim is an attempt to collect
a debt. The absence of an explicit demand for payment does
not alter that conclusion, Gburek, 614 F.3d at 382,
nor does the fact that the bankruptcy court may ultimately
disallow the claim.
argues that treating a proof of claim as an attempt to
collect a debt would conflict with the Bankruptcy Code's
automatic stay provision. The automatic stay provides that
filing a bankruptcy petition "operates as a stay"
of "any act to collect, assess, or recover a claim
against the debtor that arose before the commencement of the
case." 11 U.S.C. § 362(a)(6). Atlas argues that if
filing a proof of claim were an act to collect debt, ...