Summary:
Chapter 13 Debtor brought an Adversary Proceeding against Cashcall, seeking a declaratory judgment that the debt owed to Cashcall (resulting from a $1,500.00 payday loan) was in violation of the North Carolina Consumer Finance Act, N.C. Gen. Stat. §§ 53-164 to -191 (2012) and alleging that Cashcall engaged in acts that qualify as Prohibited Acts by Debt Collectors under N.C. Gen. Stat. § 75-50 to -56 (2012) in attempts to collect on the debt, seeking actual and statutory damages.
Cashcall sought dismissal of the Adversary Proceeding on the basis that it was a non-core matter or, alternatively, that it be sent for arbitration.
The bankruptcy court held that “[a]rbitration is inconsistent with centralized decision-making because permitting an arbitrator to decide a core issue would make debtor-creditor rights ‘contingent upon an arbitrator’s ruling’ rather than the ruling of the bankruptcy judge assigned to hear the debtor’s case.” See TP, Inc. v. Bank of Am., N.A., 479 B.R. 373, 382 (Bankr. E.D.N.C. 2012).
Accordingly, the determining issue was whether this was a core proceeding under 28 U.S.C. § 157. Again relying on TP, Inc., the bankruptcy court held that state law claims against a creditor who had filed a proof of claim was a core matter as it was “in the nature of a counterclaim.” Id. at 383.
The bankruptcy court then proceeded to determine whether, following Stern v. Marshall, the jurisdiction was constitutional. As to the declaratory judgment sought, the bankruptcy court held that a determination that the underlying loan was void would alter the claim amount and was accordingly, constitutionally core. Id. at 384. The request for damages under N.C.G.S. § 75-50, however, would not alter the claim amount, Id. at 387, and it was only constitutional for the bankruptcy court to submit findings of fact and conclusions of law to the district court.
For a copy of the opinion, please see:
Moses v. Cashcall, Inc.- Arbitration and Bankruptcy Court Jurisdiction of Counterclaims against Creditor.pdf
Blog comments