Summary:
The Debtors brought a Motion for Sanctions against Sun Trust, serving the motion by certified mail, return receipt requested, to the attention of the “Officer or Managing Agent” at the address listed on the Proof of Claim filed by Sun Trust, at the address listed on the billing statements and one additional address. Sun Trust did not respond to the Motion for Sanctions sought reconsideration of the Order granting sanctions on the basis that the Debtors were required to serve the Motion, as Sun Trust is an FDIC insured institution, on its Chief Executive Officer, as disclosed with the North Carolina Secretary of State.
The bankruptcy court reviewed the conflicting opinions on whether service on whether the more generic service on an “Officer or Managing Agent” is sufficient. Based on the conflicting authority, the bankruptcy court held that Sun Trust did not have a meritorious defense, as required by Rule 60(b), to overturn the sanctions. Further, the bankruptcy court noted that the Debtors reasonably relied on the address used by Sun Trust in its Proof of Claim. Further, the bankruptcy court noted that service on the “Officer or Managing Agent” had long been “ the accepted form of service pursuant to Rule 7004(h) in this district”.
Commentary:
The better practice for Debtors, particularly with Motions or Adversary Proceedings that are directed at a specific creditor, would be to serve such creditor’s CEO or named officer, in addition to the address listed on billing statements and Proofs of Claim.
It would be an equally good practice for creditors to actually list such officers and addresses in Proofs of Claim. Rule 7004(h)(3) would seem to contemplate such by allowing waiver by the creditor. Perhaps Local Rules specifically providing that the filing of a Proof of Claim shall constitute assent to accept service at the address indicated would resolve this matter.
For a copy of the opinion, please see:
Exum- Notice pursuant to Bankruptcy Rule 7004(h).pdf
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