UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF ALASKA

In re: CATHY SEDENQUIST, aka Catherine Sedenquist, aka Cathy Cortes,              Debtor.

Case No. A02-00045-DMD          Chapter 7

 

MEMORANDUM REGARDING PENDING MOTIONS

                      We The People Forms and Service Centers U.S.A., Inc. (WTP USA) seeks dismissal of the debtor’s motion for damages as well as summary judgment against the debtor. The debtor has also moved for summary judgment. In a separate order, I have denied all of the pending motions. This memorandum will address the issues raised in the motions.

                      11 U.S.C. § 110(a) provides:

(a) In this section–

 

(1) “bankruptcy petition preparer” means a person, other than an attorney or an employee of an attorney, who prepares for compensation a document for filing; and

 

(2) “document for filing” means a petition or any other document prepared for filing by a debtor in a United States bankruptcy court or a United States district court in connection with a case under this title.

WTP USA alleges that it is not a bankruptcy petition preparer (“BPP”) because it does not receive compensation directly from a debtor. It further alleges that it did not produce a document for filing by the debtor in this case, Cathy Sedenquist. Rather, it
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produced a petition, statements and schedules for its franchisee, We The People of Alaska, L.L.C. (WTP Alaska).

                      I begin my analysis with the premise that Congress “says in a statute what it means and means in a statute what it says there.” ^1.  “[W]hen the statute’s language is plain,

the sole function of the courts – at least where the disposition required by the text is not absurd – is to enforce it according to its terms.” ^2.  Section 110(a)(1) defines a BPP as “a person, other than an attorney or an employee of an attorney, who prepares for compensation a document for filing.” A person includes a corporation. ^3.  WTP USA prepares documents for filing by debtors. WTP Alaska prepares no documents. It sends data to WTP USA and WTP USA sends the completed documents back to WTP Alaska for a fee. WTP USA fits within the definition contained in § 110 when the words of the statute are given their natural meaning. Nothing in § 110(a) requires direct payment to a BPP from a debtor. If Congress had desired to limit the definition of a BPP in this manner, it could easily have done so. Additionally, the fact that completed bankruptcy documents are first delivered to WTP Alaska before the debtor receives them is meaningless. The documents were prepared, ultimately, for filing by a debtor and are intended to be filed in bankruptcy court.

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                       In addition to defining a BPP, § 110 addresses a number of requirements imposed upon BPPs and provides consequences for violating the requirements. 11 U.S.C. § 110(b) requires BPPs to sign documents they have prepared, and to print their name and address thereon. Section 110(c) requires BPPs to provide an “identifying number,” e.g., a social security number, that identifies the individuals who have prepared the documents. Section 110(d) requires a BPP to furnish a copy of the prepared document to the debtor. BPPs are prohibited from executing documents on behalf of the debtor. ^4.  They are precluded from using the word “legal” in any advertisements or advertising under any category that includes the word “legal” or any similar term. ^5.  They also cannot collect court fees from a debtor. ^6.  The statute also provides, in part:

(h)(1) Within 10 days after the date of the filing of a petition, a bankruptcy petition preparer shall file a declaration under penalty of perjury disclosing any fee received from or on behalf of the debtor within 12 months immediately prior to the filing of the case, and any unpaid fee charged to the debtor.

This subsection requires BPPs to disclose fees received from or on behalf of debtors. It does not modify or limit the definition of a BPP found § 110(a) in any manner. It simply requires BPPs to disclose fees. Similar fee disclosures have been required of
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attorneys for many years. ^7.  Requiring WTP USA to disclose fees received from or on behalf of the debtor is not unreasonable and does not lead to an absurd result.

                       I conclude that WTP USA’s suggested construction of § 110 is at odds with a natural reading of the statute. ^8.  The court need go no further. Even if the legislative history of § 110 were appropriate to consider, WTP USA’s view of § 110's legislative history is inaccurate and misleading. I simply can’t interpret § 110 in the convoluted manner WTP USA has suggested. WTP USA is a BPP. Its motion to dismiss must be denied.

                       WTP USA seeks summary judgment on the grounds that it did nothing wrong in preparing the petition, statements and schedules in the debtor’s case because it acted as a simple typing service. The issues in this case are far more complex, however. This proceeding involves the application of the whole of § 110 to the actions of WTP Alaska, WTP USA and Jason and Holly Skala. It involves the possible creation of a misleading impression of competence beyond simple document preparation through fraudulent, unfair or deceptive acts. Issues of control and agency must also be resolved. These are fact-intensive issues that will be addressed at the upcoming hearing prior to certification. WTP USA is not entitled to summary judgment.

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                       The debtor’s motion for summary judgment will also be denied. A full hearing on all issues, including control and agency, must be held. The facts surrounding the actual operation of this franchise must be presented prior to certification to the district court.

                      DATED: March 17, 2003.

                                                                  BY THE COURT

                                           DONALD MacDONALD IV
                                           United States Bankruptcy Judge

NOTES:

1.    Hartford Underwriters Ins. Co. v. Union Planters Bank, N.A., 530 U.S. 1, 6 (2000) (quoting\ Connecticut Nat. Bank v. Germain, 503 U.S. 249, 254 (1992)).

2.    Hartford Underwriters, 530 U.S. at 6 (internal quotation marks omitted) (quoting United States v.\ Ron Pair Enter., Inc., 489 U.S. 235, 241 (1989)).

3.    11 U.S.C. § 101(41).

4.    11 U.S.C. § 110(e).

5.    11 U.S.C. § 110(f).

6.    11 U.S.C. § 110(g).

7.    11 U.S.C. § 329; Fed. R. Bankr. P. 2016(b).

8.    11 U.S.C. § 110 was adopted in 1994. It was not part of the Bankruptcy Reform Act of 1978. There was no pre-Code practice delineating or dealing with bankruptcy petition preparers. Even if there had been, “[w]here the meaning of the Bankruptcy Code’s text is itself clear . . . its operation is unimpeded by contrary . . . prior practice.” Hartford Underwriters, 530 U.S. at 10 (quoting BFP v. Resolution Trust Corp., 511 U.S. 531, 546 (1994) (internal quotation marks omitted).