IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

JUDY N. BROCK, et al., etc., )

 )

Plaintiffs, )

 )

v. ) CIVIL ACTION 14-0324-WS-M

 )

RESURGENT CAPITAL SERVICES, ) 

LP, et al., )

 )

Defendants. )

 ORDER

This matter is before the Court on the defendants’ motion for judgment on 

the pleadings. (Doc. 40). Upon initial review, the Court noted that among the 

defendants’ arguments is one the Court recently addressed in Johnson v. Midland 

Funding, LLC, 528 B.R. 462 (S.D. Ala. 2015). The Court ordered the parties to 

focus their briefing on that issue, and the parties have done so. (Docs. 41, 51, 54). 

The amended complaint alleges that the defendants violated the Fair Debt 

Collection Practices Act (“the Act”) by filing proofs of claim in the plaintiffs’

Chapter 13 bankruptcy proceedings on debts plainly barred by the statute of 

limitations. (Doc. 21 at 2-4). The Court in Johnson held that, while the 1977 Act 

“provides that it is unlawful for a debt collector to file a proof of claim in a 

Chapter 13 proceeding knowing the claim to be time-barred,” the 1978 

Bankruptcy Code generally “permits creditors to file proofs of claim in Chapter 13 

proceedings on debts known to be time-barred.” 528 B.R. at 465, 470. The Court 

ruled that the two provisions are “in irreconcilable conflict,” with the result that 

“the Act must give way to the Code,” id. at 473, precluding the plaintiff’s cause of 

action.

The plaintiffs (represented by the same counsel as in Johnson) disagree 

with the Court’s construction of the Code. (Doc. 51 at 9-16). They also maintain 

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that, even if the Court correctly construed the Code, there is no irreconcilable 

conflict between the Code and the Act. (Id. at 16-18). The plaintiffs’ argument 

regarding irreconcilable conflict mirrors that of the plaintiff in Johnson, and it fails 

for the reasons set forth therein. The Court thus turns to whether the Code 

prohibits debt collectors from filing proofs of claim on debts as to which they 

know the limitations period has expired.

As set forth in Johnson, the Code provides that a creditor “may file a proof 

of claim.” 11 U.S.C. § 501(a). A “claim” is a “right to payment.” Id. § 

101(5)(A). The existence of a “right to payment” is governed by state law. 

Travelers Casualty & Surety Co. of America v. Pacific Gas & Electric Co., 549 

U.S. 443, 451 (2007). Under Alabama law, a creditor has a right to payment of a 

debt even after the limitations period expires; the remedy is extinguished, but the 

right to payment continues. Ex parte HealthSouth Corp., 974 So. 2d 288, 296 

(Ala. 2007); Ex parte Liberty National Life Insurance Co., 825 So. 2d 758, 765 

(Ala. 2007); Pinigis v. Regions Bank, 942 So. 2d 841, 848 (Ala. 2006). Because 

the defendant continued to have a right to payment under Alabama law after the 

statute of limitations expired, it had a claim under Section 101(5)(A) and therefore 

was permitted to file a proof of claim under Section 501(a). 528 B.R. at 465-66. 

The Court then showed that this straightforward construction is consistent with 

several features of the Code and with pre-Code practice, which Congress did not 

indicate it was abandoning. Id. at 468-69. Finally, the Court noted that Congress 

and the Supreme Court consider the Code’s definition of “claim” as the “broadest 

possible,” an understanding at war with the narrower construction championed by 

the plaintiff. Id. at 467.

The plaintiffs, (Doc. 51 at 9-10), stress that “[t]he plain meaning of a ‘right 

to payment’ is nothing more nor less than an enforceable obligation ....” 

Pennsylvania Department of Public Welfare v. Davenport, 495 U.S. 552, 559 

(1990). As the Court explained in Johnson, the Supreme Court did not by this 

language proclaim that a creditor holding a debt subject to a limitations defense 

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has no right to payment even when state law (which governs, per Travelers) says 

he does. Instead, the Davenport Court (which expressly confirmed that the Code’s 

definition of “claim” is the “broadest possible,” 495 U.S. at 558, 564), used the 

term “enforceable obligation” only in the “sense of an interest recognized and 

protected by law,” as opposed to “a mere moral obligation or idiosyncratic opinion 

with which the law is not concerned.” 528 B.R. at 466-67.

In addition to what the Court said in Johnson, reading Davenport as the 

plaintiffs suggest would lead to nonsensical results. If, as they insist, a right to 

payment means an obligation enforceable in Bankruptcy Court, then a claim 

(which is defined as a right to payment) also is limited to an obligation enforceable 

in Bankruptcy Court. What then to make of Section 502(b)(1), which provides 

that the Bankruptcy Court “shall allow such [challenged] claim except to the 

extent that ... such claim is unenforceable against the debtor and property of the 

debtor, under any agreement or applicable law ...”? If the plaintiffs are correct, 

the Code provides that a creditor’s enforceable obligation is to be allowed unless it 

is not an enforceable obligation. 

Without directly addressing this awkward inconsistency, the plaintiffs 

propose that the Code be read to permit proofs of claim if supported by a “goodfaith belief in [the claim’s] enforceability” but to forbid proofs of claim known to 

be subject to a defense. (Doc. 51 at 15). The Code, however, imposes no such 

restriction. In re: Dunaway, 531 B.R. 267, 274 (Bankr. W.D. Mo. 2015); In re: 

Keeler, 440 B.R. 354, 368 (Bankr. E.D. Pa. 2008).

The plaintiffs stress the inefficiency inherent in filing proofs of claim on 

claims known to be time-barred, given that the defense (assuming a properly 

completed form, as in this case) is apparent from the face of the proof of claim, 

such that the trustee will surely object and the Bankruptcy Court will surely 

disallow the claim. They note that the Eleventh Circuit has decried the “deluge” 

of proofs of claim on stale debts filed by consumer debt buyers (including the 

creditor herein) and has noted that the practice – and the need it generates to file 

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and resolve objections – “consumes energy and resources in a debtor’s bankruptcy 

case.” Crawford v. LVNV Funding, LLC, 758 F.3d 1254, 1256, 1261 (11th Cir. 

2014). The defendants’ business practice “wastes limited judicial and party 

resources with no offsetting public benefit” or “societal value.” Why, they ask, 

would Congress endorse such a “pointless exercise,” which is endlessly repeated 

in countless cases by consumer debt buyers embracing this business model and 

which results either in wasted time or (if a stale claim slips through) in “divert[ing] 

funds from honest creditors”? (Doc. 51 at 10-11, 15-16). 

The question is a good one, but it is the wrong one. The issue before the 

Court is not how Congress might have crafted the Code in 1978 had it foreseen 

developments in debt collection that occurred several decades later. Rather, the 

issue is what Congress in fact provided in the Code. That the congressional 

solution may in retrospect appear inadequate furnishes no grounds for judicially 

changing that legislative solution. 

The plaintiffs next point to a recent decision imposing monetary sanctions

against creditors filing proofs of claim on patently time-barred debt, as conduct 

violating Rule 9011. In re: Sekema, 523 B.R. 651 (Bankr. N.D. Ind. 2015). This, 

they assert, proves that the practice is “forbidden ... under the Code.” (Doc. 51 at 

11-13).1 Except that Rule 9011 is not part of the Code but a non-statutory adjunct 

to it. Rule 9011 (especially if it becomes routinely invoked, as in In re: Sekema) 

may temper the eagerness of creditors to file proofs of claim on debts known to be 

stale, but it does not alter the Code’s statutory permission to file such proofs of 

claim. 

Finally, the plaintiffs cite Miljkovic v. Shafritz and Dinkin, P.A., 791 F.3d 

1291 (11th Cir. 2015). Miljkovic involved claims under the Act, without a whiff of 

bankruptcy. The plaintiffs nevertheless suggest that the “tone and language” 

 1 The plaintiffs cite other cases, but they involve either Rule 11 in the limitations 

context or Rule 9011 in a non-limitations context. Only In re: Sekema involves Rule 

9011 in a limitations context.

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employed in Miljkovic render it “unlikely” the Eleventh Circuit would find the Act 

and Code in irreconcilable conflict, (Doc. 51 at 9), but the Court cannot from this 

vague statement make such a leap. 

For the reasons set forth above and in Johnson, the defendants’ motion for 

judgment on the pleadings is granted. This action is dismissed with prejudice. 

Judgment shall be entered accordingly by separate order. 

DONE and ORDERED this 20th day of August, 2015. 

 

s/ WILLIAM H. STEELE 

CHIEF UNITED STATES DISTRICT JUDGE

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