Opinion
8:09-bk-17864-CED
08-19-2024
In re: Charles L. Hayley, Jr., and Glenda L. Hayley, Debtors.
ORDER DISAPPROVING ROYAL INVESTMENT ACQUISITIONS, LLC'S APPLICATION FOR PAYMENT OF UNCLAIMED FUNDS
CARYL E. DELANO, Chief United States Bankruptcy Judge.
THIS CASE came on for consideration without a hearing on the Application \for Payment of Unclaimed Funds (the "Application") filed by Royal Investment Acquisitions, LLC ("Royal") as Debtors' assignee. For the reasons that follow, the Court will disapprove the Application.
Doc. No. 85.
The record reflects that during this Chapter 13 case, the Court entered an order allowing a $52,137.00 unsecured claim in favor of Wilshire Credit Corporation ("Wilshire"). The Chapter 13 Trustee distributed $9,471.40 to Wilshire on account of its allowed claim, but the Trustee's check(s) were either returned or uncashed. Therefore, the Chapter 13 Trustee deposited the $9,471.40 into the Court registry ("Unclaimed Funds"). On August 18, 2015, Debtors' bankruptcy case was closed.
Doc. No. 58.
Doc. No. 74.
In February 2024, Dynamic Recovery Processing filed an application for payment of the Unclaimed Funds ("Previous Application"). In the Previous Application, Dynamic Recovery Processing alleged Royal Investment Acquisitions, LLC d/b/a Dynamic Recovery Processing was Debtors' assignee. Dynamic Recovery Processing ("Dynamic") alleged that, as Debtors' assignee, it was entitled to the Unclaimed Funds because Wilshire and its successor by merger, BAC Home Loans Servicing, LP ("BAC"), are no longer authorized to conduct business in the states of Georgia, Florida, California, and Texas.
Doc. Nos. 76 and 80.
Doc. No. 80, p. 5.
After notice and a hearing, this Court disapproved the Previous Application for two reasons: First, Dynamic failed to serve the Previous Application on Wilshire or BAC. Second, Dynamic failed to explain how Wilshire's lack of authority to conduct business in the four listed states affects Wilshire's (or BAC's) right to the distribution on Wilshire's allowed claim or why Debtors are entitled to the Unclaimed Funds.
Now, Royal has filed the current Application, alleging that it has a right to the Unclaimed Funds because the "check to Wilshire Credit Co. in the amount of $9,471.40 was uncashed and became stale." Royal certified it sent a copy of the Application to Wilshire, c/o Secretary of State, 202 N. Carson Street, Carson City, Nevada 89701. However, Royal did not serve the Application on BAC, which Royal alleged in the Previous Application is Wilshire's successor by merger.
Both the Previous Application and the current Application were signed by Eli Melse, Dynamic's "Manager" and "Authorized Representative" and Royal's "Managing Member."
Doc. No. 85; Doc. No. 86.
Under 28 U.S.C. § 2042, this Court may disburse funds from the Court registry only upon "full proof of the right thereto." "A creditor to whom a distribution in a bankruptcy case is payable retains a property interest in such funds." Therefore, when the name of the person applying for unclaimed funds differs from the name of the original creditor to whom the trustee wrote the uncashed check, "the application must clearly and unequivocally explain why the applicant is entitled to funds payable on account of a proof of claim in another name and support that explanation with appropriate proof."
In re Applications for Unclaimed Funds Submitted in Cases Listed on Exhibit "A," 341 B.R. 65, 69 (Bankr. N.D.Ga. 2005) (citing Leider v. U.S., 301 F.3d 1290, 1296 (Fed. Cir. 2002)).
Id. at 71.
But even assuming that service on Wilshire (and not BAC) was proper, the current Application suffers from the same defect as the Previous Application: Royal fails to provide a valid reason why Royal, as Debtors' assignee, is entitled to the Unclaimed Funds. The facts asserted by Dynamic and Royal that (1) Wilshire and BAC are no longer authorized to conduct business in the states of Georgia, Florida, California, and Texas, and (2) the check to Wilshire was uncashed and "became stale," do not mean that Wilshire, BAC, or some successor person or entity, are not entitled to the Unclaimed Funds.
Accordingly, it is
ORDERED that the Application for Payment Unclaimed Funds filed by Royal Investment Acquisitions, LLC (Doc. No. 85) is DISAPPROVED.
The Clerk's office is directed to serve a copy of this Order on Royal Investment Acquisitions, LLC, by U.S. Mail.