United States District Court, D. New Jersey
IN RE: BONNIE FIORELLA, Debtor.
AMERICAN INFOSOURCE, LP, Appellee. BONNIE FIORELLA, Appellant,
Nicholas S. Herron, Esq., Wasserstrum & Herron, LLP, Vineland, NJ, Attorney for Appellant Bonnie Fiorella.
JEROME B. SIMANDLE, Chief District Judge.
This action comes before the Court on Bonnie Fiorella's ("Debtor" or "Appellant") unopposed appeal from Bankruptcy Case No. 13-22318, in which the Bankruptcy Court issued an order on April 24, 2014 denying Debtor's motion to expunge a proof of claim filed by American InfoSource, LP ("AIS"), as an agent on behalf of Midland Funding LLC ("Midland"), an assignee of one of Debtor's past due credit card accounts originally held by Citibank USA N.A. ("Citibank"). In the Order, Bankruptcy Judge Judith Wizmur rejected Debtor's argument that AIS lacked standing to file a proof of claim because the assignment of Debtor's credit card debt from Citibank to Midland is unenforceable under New Jersey law. For the following reasons, the Bankruptcy Court's order is affirmed.
On June 3, 2013, Debtor filed a petition under Chapter 13 of the Bankruptcy Code. Prior to filing, Debtor incurred debts on various credits cards. Debtor's Plan contemplated a one hundred percent distribution to unsecured creditors. On October 15, 2013, Debtor challenged three specific claims and filed motions to expunge. Only Debtor's motion to expunge the claim of AIS as agent for Midland (Claim # 5-1) is subject to the instant appeal. The Bankruptcy Court permitted discovery regarding the contested claims. Debtor received responses to her requests for production of documents and interrogatories. On December 30, 2013, Debtor testified under oath that she has never had any contact with or received any notification from Midland. AIS did not oppose Debtor's motion to expunge.
Debtor never contested the validity of the underlying debt. On April 16, 2014, the Bankruptcy Court issued a letter opinion denying Debtor's motion to expunge AIS's claim. On April 24, 2014, Judge Wizmur entered an Order consistent with the earlier letter opinion, which Debtor timely appealed. AIS has not entered an appearance in the instant appeal, nor filed opposition. This Court has jurisdiction to hear this appeal pursuant to 28 U.S.C. § 158(a)(1) and will proceed to the merits.
III. STANDARD OF REVIEW
Bankruptcy Rule 8013 provides that a district court "may affirm, modify, or reverse a bankruptcy judge's judgment, order, or decree or remand with instructions for further proceedings." Fed.R.Bankr.P. 8013. The Rule further provides that "[f]indings of fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the bankruptcy court to judge the credibility of the witnesses." Fed.R.Bankr.P. 8013. Essentially, the district court must "review the bankruptcy court's legal determinations de novo, its factual findings for clear error and its exercise of discretion for abuse thereof." In re Am. Pad & Paper Co., 478 F.3d 546, 551 (3d Cir. 2007) (quotation omitted).
Appellant argues that the Bankruptcy Court failed to apply the appropriate legal standards of assignment under New Jersey law and erred by relying on documents inadmissible under the rules of evidence. The crux of Appellant's argument is that Citibank's assignment of her credit card debt to Midland is invalid and unenforceable under New Jersey law, and thus AIS, as an agent of Midland, lacked standing to file a proof of claim in Appellant's bankruptcy proceedings. The Court will uphold the Bankruptcy Court's factual and legal findings because there is sufficient information in the record to verify AIS's proof of claim, and Appellant has failed to identify any legal authority that contradicts Judge Wizmur's determination that New Jersey law does not require notice to the cardholder for an assignment of credit card debt to be enforceable.
The Court first considers Appellant's contention that the Bankruptcy Court erred by adopting a lesser evidentiary standard than applied by New Jersey courts.
A creditor's proof of claim is deemed allowed upon filing, unless a party in interest objects. 11 U.S.C. § 502(a). "A proof of claim executed and filed in accordance with [Fed. R. Bankr. P. 3001] shall constitute prima facie evidence of the validity and amount of the claim." Fed.R.Bankr.P. 3001(f). "[A] proof of claim that alleges sufficient facts to support liability satisfies the claimant's initial obligation to proceed, after which the burden shifts to the objector to produce sufficient evidence to negate the prima facie validity of the filed claim." In re Lampe, 665 F.3d 506, 514 (3d Cir. 2011) (citing In re Allegheny Int'l, Inc., 954 F.2d 167, 173-74 (3d Cir. 1992)). "Nevertheless, the claimant always has the burden of persuasion in a contested proceeding." Id . 11 U.S.C. § 502(b) provides statutory grounds for disallowance of a claim, including that "such claim is unenforceable against the debtor and property of the debtor, under any agreement or applicable law for a reason other than because such claim is contingent or unmatured." 11 U.S.C. § 502(b)(1).
Effective December 1, 2012, an amendment to Rule 3001(c) explicitly identified the filing requirements for open-ended or revolving consumer credit agreements. "After the 2012 amendment, the focus of the claimant's obligation under [Rule 3001] has shifted from the attachment of documents to the disclosure of particular information regarding the credit card account that the drafters of the Rule deemed most pertinent in the assessment by the debtor (or trustee) of the validity or proper ...