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LVNV Funding, LLC v. Harling

United States Court of Appeals, Fourth Circuit

March 30, 2017

LVNV FUNDING, LLC, its successors and assigns as assignee of CitiFinancial, Inc., Creditor - Appellant,
v.
DERRICK ALLEN HARLING; TERESA STEVENS HARLING, Debtors - Appellees,
v.
PAMELA SIMMONS-BEASLEY; JOY S. GOODWIN; U.S. TRUSTEE'S OFFICE, Trustees. PAMELA SIMMONS-BEASLEY; NATIONAL ASSOCIATION OF CONSUMER BANKRUPTCY ATTORNEYS, Amici Supporting Appellees. LVNV FUNDING, LLC, its successors and assigns as assignee of Citibank (South Dakota), N.A., Creditor - Appellant,
v.
JEFFREY JEREL RHODES, a/k/a Jeff Rhodes, a/k/a Jeffery Jerel Rhodes, Debtor - Appellee,
v.
GRETCHEN D. HOLLAND; U.S. TRUSTEE'S OFFICE, Trustees. PAMELA SIMMONS-BEASLEY; NATIONAL ASSOCIATION OF CONSUMER BANKRUPTCY ATTORNEYS, Amici Supporting Appellee.

          Argued: January 24, 2017

         Appeal from the United States Bankruptcy Court for the District of South Carolina, at Columbia. David R. Duncan, Chief Bankruptcy Judge. (15-03369-dd)

         Appeal from the United States Bankruptcy Court for the District of South Carolina, at Spartanburg. Helen E. Burris, Bankruptcy Judge. (14-03965-hb)

         ARGUED:

          Adam C. Bach, ELLER TONNSEN BACH, Greenville, South Carolina, for Appellant.

          Jane H. Downey, MOORE TAYLOR LAW FIRM, P.A., West Columbia, South Carolina, for Appellees.

         ON BRIEF:

          Robert H. Cooper, THE COOPER LAW FIRM, Greenville, South Carolina, for Appellee Jeffrey Jerel Rhodes. John B. Butler, III, Columbia, South Carolina, for Amicus Pamela Simmons-Beasley.

          Tara Twomey, Allan L. Gropper, NATIONAL CONSUMER BANKRUPTCY RIGHTS CENTER, San Jose, California, for Amicus National Association of Consumer Bankruptcy Attorneys.

          Before AGEE, KEENAN, and THACKER, Circuit Judges.

          AGEE, Circuit Judge:

         LVNV Funding, LLC ("LVNV") appeals from orders of the United States Bankruptcy Court for the District of South Carolina, which disallowed its claims as an unsecured creditor in two proceedings under Chapter 13 of the United States Bankruptcy Code (the "Bankruptcy Code"). See generally 11 U.S.C. ch. 13. On appeal, LVNV contends that the bankruptcy court's Chapter 13 plan confirmation orders (the "Confirmation Orders") barred the objections to LVNV's claims because those objections were filed after entry of the Confirmation Orders. For the reasons set out below, we disagree with LVNV and affirm the judgments of the bankruptcy court.

         I.

         A.

         This appeal arises out of two separate Chapter 13 bankruptcy proceedings that followed a similar pattern. On July 11, 2014, Jeffrey Rhodes ("Rhodes") filed in the United States Bankruptcy Court for the District of South Carolina a voluntary petition for relief under Chapter 13. Rhodes' Chapter 13 plan was confirmed on October 17, 2014. On June 26, 2015, Derrick and Teresa Harling (the "Harlings"; collectively with Rhodes, the "Debtors") filed in that same court their own Chapter 13 bankruptcy petition. The bankruptcy court confirmed the Harlings' Chapter 13 plan on August 20, 2015.

         The Debtors used "form" Chapter 13 plans, which are utilized by the bankruptcy courts in the District of South Carolina. In their respective plans, the Debtors scheduled their secured debts individually, naming each of their secured creditors, the value of each secured creditor's claim, the value of the lien each secured creditor held in the collateral securing the Debtors' particular obligation, and the amount of each secured creditor's claim that was unsecured by operation of 11 U.S.C. § 506. In contrast to the specific provisions for secured creditors, each plan provided for treatment of unsecured creditors as a single class, so that: "General unsecured creditors shall be paid allowed claims pro rata by the trustee to the extent that funds are available after payment of all other allowed claims." E.g., J.A. 158. In addition, the Debtors' plans contained a provision reserving the right to object to claims after plan confirmation: "Confirmation of this plan does not bar a party in interest from objecting to a claim." E.g., J.A. 157 (a "reservation of rights" clause).

         B.

         LVNV filed proofs of claim in each case before entry of the Confirmation Orders. In Rhodes' case, LVNV filed proof of an unsecured claim in the amount of $761.44 on August 1, 2014. In the Harlings' case, LVNV filed proof of an unsecured claim in the amount of $3, 878.86 on July 8, 2015. Neither the Debtors, nor their trustees, took any action regarding LVNV's claims before the respective Confirmation Orders were entered.

         As is typical in Chapter 13 proceedings, the claim bar date in each case was later than the date of plan confirmation. Under the Bankruptcy Code's timeline in a Chapter 13 bankruptcy proceeding, plan confirmation and the deadline to file proofs of claim are set relative to the § 341 meeting of creditors. 11 U.S.C. § 341; Fed.R.Bankr.P. 2003(a). Federal Rule of Bankruptcy Procedure 2003(a) sets the § 341 meeting twenty-one to fifty days after the debtor's petition for relief. Under § 1324, the plan confirmation hearing follows twenty to forty-five days after the § 341 meeting, 11 U.S.C. § 1324(b), while the claim bar date is ninety days after the creditor's meeting, Fed.R.Bankr.P. 3002(c). As a consequence, it is common in a Chapter 13 proceeding that the bar date to file claims by unsecured creditors occurs after plan confirmation. In ...


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