Opinion
Case No. 96-00002.
December 6, 2010
MEMORANDUM DECISION AND ORDER REQUIRING SUPPLEMENTATION OF APPLICATION FOR RELEASE OF UNCLAIMED FUNDS
On November 24, 2010, Bank of America, N.A., dba Nations Bank Mortgage, filed an application for release of unclaimed funds in the amount of $234.36 (Dkt. No. 49). The chapter 13 trustee in the above-captioned bankruptcy case distributed the dividend by check to Nations Bank Mortgage, but the check remained unpaid ninety days after the final distribution. The application does not address why the check was not cashed. The chapter 13 trustee deposited the funds attributable to the unclaimed dividend into the court's registry pursuant to 11 U.S.C. § 347(a) and the funds were later deposited in the Treasury pursuant to 28 U.S.C. § 2041. Absent a showing by Bank of America that the debt payable to Nations Bank Mortgage has not been previously satisfied, the court will not grant the relief sought.
11 U.S.C. § 347(a) provides, in relevant part:
Ninety days after final distribution under section . . . 1326 of this title in a case under chapter . . . 13 of this title . . . the trustee shall stop payment on any check remaining unpaid, and any remaining property of the estate shall be paid into the court and disposed of under chapter 129 of title 28 [ 28 USC §§ 2041 et seq.].
28 U.S.C. § 2041 provides, in relevant part:
All moneys paid into any court of the United States, or received by the officers thereof, in any case pending or adjudicated in such court, shall be forthwith deposited with the Treasurer of the United States or a designated depositary, in the name and to the credit of such court.
The burden is on Bank of America to demonstrate that it is entitled to the funds sought. Hansen v. United States, 340 F.2d 142, 144 (8th Cir. 1965). Although the record before the court demonstrates that Nations Bank was at one time entitled to the funds, Bank of America, as Nations Bank's successor-in-interest, has not demonstrated a present entitlement. The court will require pursuant to 28 U.S.C. § 2042 that the withdrawal of the funds and payment to Bank of America be ordered only upon a demonstration by Bank of America of a present right to the funds. See Willametz v. Susi, 489 F.2d 364, 366 (1st Cir. 1973).
28 U.S.C. § 2042 provides:
No money deposited under section 2041 of this title shall be withdrawn except by order of the court.
In every case in which a right to withdraw money deposited in court under section 2041 has been adjudicated or is not in dispute and such money has remained so deposited for at least five years unclaimed by the person entitled thereto, such court shall cause such money to be deposited in the Treasury in the name and to the credit of the United States. Any claimant entitled to such money may, on petition to the court and upon notice to the United States attorney and full proof of right thereto, obtain an order directing payment to him. [Emphasis added.]
Although the funds were originally distributed by check made payable to Nations Bank pursuant to an allowed claim, the court is not willing to deem this satisfactory evidence, standing alone, of Bank of America's present entitlement, as Nation Bank's successor-in-interest, to the funds. See Willametz, 489 F.2d at 366 (funds originally deposited with district court on condition that such court enjoin enforcement of previously entered but potentially duplicative state court judgment could be distributed to creditor of prevailing party despite absence of provision for such payment upon change in circumstances justifying such payment). If Nation Bank's claim that was the basis for the issuance of the distribution has already been satisfied, circumstances have changed such that Bank of America is no longer entitled, as Nation Bank's successor-in-interest, to the funds. Id. at 367 (quoting Harris v. Balk, 198 U.S. 215, 226 (1905) ("It ought to be and is the object of courts to prevent the payment of any debt twice over.")).
Any overpayment that might result from payment of the unclaimed funds to Bank of America is not simply a matter to be resolved by Bank of America and the debtor. Instead, § 2042 requires that the court determine Bank of America's entitlement to the funds. It is thus
28 U.S.C. § 2042 requires that the funds be withdrawn only upon order of the court, and even after five years have passed and moneys have been deposited in the treasury, a claimant must be "entitled to any such money." Further, funds deposited in the Treasury may only be paid to the rightful owners as determined by the court. Hansen, 340 F.2d at 144. The court does not address which entity or entities — the debtor, the unsecured creditors in the case (assuming their allowed claims were never paid), or the trustee as a representative of the unsecured creditors — are entitled to the funds in the event that Citicorp is not entitled to the funds. Although it would seem that someone ought to be entitled to the funds, the court need not resolve at this juncture the question of who is entitled to the funds.
ORDERED that within 21 days of the entry of this order Bank of America shall supplement its application for release of unclaimed funds with the court by providing documentation showing that the unclaimed funds amount has not been previously paid to Nations Bank Mortgage or Bank of America as its successor in interest (e.g., foreclosure records, account statements, etc.) and that if such documentation is not timely filed, the court will deny the Application without prejudice.
The order below is hereby signed.
Signed: December 03, 2010.