Opinion
SEPARATE STATEMENT OF DECISION ON EX PARTE MOTION TO RECONSIDER COURT'S ORDERS DENYING DEBTOR'S MOTIONS TO AVOID LIENS
ROBERT KWAN, Bankruptcy Judge.
By separate order, the court denies the ex parte motion of debtor Ivan Rafaelian to reconsider debtor's Motions to Avoid Lien Under 11 U.S.C § 522(f). This statement of decision sets forth the reasons for denial of the motion for reconsideration.
By orders entered on October 2, 2013, the court denied the motions of debtor to avoid liens of Citibank (South Dakota), N.A., pursuant to Section 522(f) of the Bankruptcy Code, 11 U.S.C., for insufficient proof of service of the motions. The proof of service attached to the motions indicated that state court counsel was served on behalf of the creditor. However, as noted in the court's orders denying the motions and citing the opinion of the Bankruptcy Appellate Panel of the Ninth Circuit in In re Villar, debtor had not shown that state court counsel was authorized to accept service of process of the lien avoidance motion as required by Rule 7004(b)(3) of the Federal Rules of Bankruptcy Procedure. See In re Villar, 317 B.R.88, 93-94 (9th Cir. BAP 2004)(explaining that a court cannot presume by an attorney's handling of state court litigation that resulted in the judicial lien that he is also authorized to accept service for a motion to avoid the judicial lien in a later federal bankruptcy case).
Copies of abstracts of judgment attached to the moving papers indicate that Citibank (South Dakota), N.A., obtained a judgment against debtor in the amount of $9, 518.79, and the abstract of judgment was recorded with the County Recorder of the County of Los Angeles, State of California, on August 17, 2011. Citibank (South Dakota), N.A., obtained a second judgment against debtor in the amount of $12, 143.00, and the abstract of judgment was recorded with the County Recorder of the County of Los Angeles, State of California on September 20, 2011. The abstracts of judgment were recorded to perfect the creditor's judgment lien under California law. California Code of Civil Procedure, § 697.310.
According to the Bank Find locator on the website of the Federal Deposit Insurance Corporation (FDIC), Citibank (South Dakota), N.A., is no longer active, and Citibank, N.A., is its successor-in-interest. According to FDIC Bank Find locator, Citibank, N.A.'s address of record is 701 East 60th Street North, Sioux Falls, South Dakota 57104. The moving papers show that neither Citibank (South Dakota), N.A., nor Citibank, N.A., was served at this address.
After the court denied the lien avoidance motions, on October 11, 2013, debtor filed an ex parte motion for reconsideration. In support of the motion for reconsideration, debtor contends that the creditor was properly served with the motions in accordance with Rule 7004(h) and that the court erred in denying the motion. Debtor pointed to the amended proofs of service of the motions (Docket Nos. 35 and 36), signed by counsel, Henrik Mosesi, indicating that the creditor was served in the United States mail "with the postage thereon fully prepaid and certified, with Return Receipt Requested" addressed as follows, Citibank, National Association, Armita Rohani, Vice President, 9401 Wilshire Blvd., Beverly Hills, CA 90212. Attached to the amended proofs of service were photocopies of a PS Form 3811, Domestic Return Receipt, a PS Form 3800, Certified Mail Receipt, and a purported business card for Armita Rohani, Branch Manager, Vice President, Citibank, N.A., 9401 Wilshire Blvd., Beverly Hills, CA 90212. None of these documents were properly authenticated as required by Rule 901 of the Federal Rules of Evidence.
Debtor has not laid a proper evidentiary foundation to show that Armita Rohani is an officer of Citibank, N.A., for purposes of demonstrating proof of service of the motions pursuant to Rule 7004(h) of the Federal Rules of Bankruptcy Procedure. There is no testimony of any witness with personal knowledge to attest that Ms. Rohani was an officer of Citibank, N.A., at the time of the service of the motions pursuant to Rule 602 of the Federal Rules of Evidence. A photocopy of a purported business card does not establish this, that is, there is no showing that the photocopy is that of a business card, and whether it is authentic, pursuant to Rule 901 of the Federal Rules of Evidence. Moreover, none of the Postal Service form documents show that any processing by the Postal Service, such as a postmark on either the Domestic Return Receipt or the Certified Mail Receipt. The Certified Mail Receipt is blank, except for the name of the addressee, Citibank with the debtor's name in parentheses; no amounts of postage, certified fee, return receipt fee, restricted delivery fee or total postage and fees are shown, and there is no postmark. The Domestic Return Receipt is blank, except for the names of the addressee and the sender, and an illegible signature for the purported recipient, but no postmark for either the original mailing or return of the Domestic Return Receipt. Without a postmark or other corroborating information, such as a "received" stamp by Citibank, the documents do not corroborate counsel's declaration of service. Counsel for debtor is implicitly vouching for the authenticity of the documents, but this is improper because he has not laid any foundation that he is competent to testify that Ms. Rohani was an officer of Citibank, N.A., at the time of service of the motions by showing that he has personal knowledge of such facts as required by Rule 602 of the Federal Rules of Evidence.
Debtor's lien avoidance remedy under 11 U.S.C. § 522(f) is a powerful one. As Collier on Bankruptcy noted, "One of the more significant changes in the bankruptcy laws brought by the Bankruptcy Reform Act of 1978 was the grant of avoiding powers to debtors to provide additional protection for their exempt property. Described in its simplest terms, section 522(f) permits a debtor to wipe out the interest that a creditor has in particular property if the debtor's interest in that property would be exempt but for the existence of the creditor's lien or interest. The debtor's avoiding power under this section is limited in that it may be employed only to the extent that the lien impairs the debtor's exemption.'" 4 Resnick and Sommer, Collier on Bankruptcy, ¶ 522.11[1] at 522-94 (16th ed. 2013). Under Section 522(f), a debtor may avoid the judgment lien of a creditor who had successfully litigated its claim in a nonbankruptcy forum and obtained a judgment which it perfected through state law to attach to the debtor's assets by filing a motion served by mail process rather than personal delivery permitted under the bankruptcy rules. 11 U.S.C. § 522(f); Rules 4003(d), 7004 and 9014 of the Federal Rules of Bankruptcy Procedure; see also, In re Villar, 317 B.R. at 92-95. As noted by the Bankruptcy Appellate Panel in Villar, "nationwide service of process by first class mail is a rare privilege which should not be abused or taken lightly..., " and "[w]here the alternative to service by mail is hiring a process server to serve the papers in person, it seems like a small burden to require literal compliance with the rule[s]." 317 B.R. at 92-93, quoting, In re Schoon, 153 B.R. 48, 49 (Bankr. N.D. Cal. 1993). As further noted by the Bankruptcy Appellate Panel in Villar, "[s]trict compliance with [these] notice provision[s] in turn serve[] to protect due process rights as well as assure that bankruptcy matters proceed expeditiously." Id. at 93, quoting, Addison v. Gibson Equipment Co., Inc. (In re Pittman Mechanical Contractors, Inc.), 180 B.R. 453, 457 (Bankr. E.D. Va. 1995). While the court in Villar was specifically referring to the requirement of Rule 7004(b)(3) to serve a corporation, partnership or other unincorporated association to the attention of a specifically named officer, the general observations about the need for strict compliance with notice provisions regarding mail service of process apply to serving an insured depository institution under Rule 7004(h), such as Citibank, at a procedurally correct address.
The court denied the lien avoidance motions without prejudice, and debtor can remedy the service deficiencies by serving the moving papers at a proper address for the creditor, such as the address of Citibank, N.A., attention of the President, 701 East 60th Street North, Sioux Falls, S.D. 57104 (the address listed on the website of the FDIC, which agency enforces the Federal Deposit Insurance Act referenced in Rule 7004(h)), as required by Rule 7004(h) of the Federal Rules of Bankruptcy Procedure. In this court's estimation, it seems like a small burden on debtor as the movant to serve the judgment lien creditor, an insured depositary institution, by mail at a publicly recognized address rather at some generally unrecognized address. See also, Mullane v. Central Hanover Bank & Trust Co., 389 U.S. 306, 314 (1950)("An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.")(citations omitted). But if debtor relies upon some address other than a publicly recognized address to serve the judgment lien creditor in this case, an insured depositary institution, then he should prove up that service is otherwise proper with evidence admissible under the Federal Rules of Evidence. To observe the requirements of due process of law, the court cannot accept at face value a declaration of service based on representations not supported by admissible evidence.
For the foregoing reasons, debtor has not shown any error by the court in denying the lien avoidance motions, and therefore, the court must deny his ex parte motion for reconsideration.
IT IS SO ORDERED.