2009 Consumer Law Recent Developments (Part II)

through the order removing the offending attachments. The court found no private right of action under § 107, which provides for public access to court records but also protects an individual's privacy in certain respects. The legal sufficiency of the proof of claim is not otherwise attacked by the debtor. No private right of action existed under the Gramm-Leach-Bliley Act or the E-Government Act of 2002. Section 105 does not create a private right of action that does not otherwise exist. The debtor's allegation of negligent infliction of emotional distress is dismissed also, for failure to sufficiently state a claim for that tort. The only action surviving dismissal is the debtor's claim for a contempt finding; the court has authority under § 105(a) for contempt if the ultimate finding is that creditor violated § 107. French v. American General Fin. Sers. (In re French), ___ B.R. ___, 2009 WL 489609 (Bankr. E.D. Tenn. Feb. 13, 2009).

Creditors may have standing to object to other creditor's claims. The Chapter 7 debtor typically lacks standing to object to creditors' claims, but creditors have a pecuniary interest, giving standing to object as parties in interest, if there either is no trustee appointed or the trustee refuses to act. In re Ulz, __B.R. ___, 2009 WL 222657 (Bankr. N.D. Ill. Jan. 30, 2009).

10. Jurisdiction and Court Powers

Bankruptcy court has authority to suspend attorney. Bankruptcy court has inherent authority under § 105(a) to sanction an attorney, including suspension from practice in all bankruptcy courts in the district; however, remand is ordered for the bankruptcy court to consider the reasonableness of six-month suspension, using ABA standards, as required by prior Ninth Circuit BAP authority, In re Lehtinen, 332 B.R. 404 (B.A.P. 9th Cir. 2005) and In re Crayton, 192 B.R. 970 (B.A.P. 9th Cir. 1996). In re Brooks-Hamilton, ___ B.R. ___, 2009 WL 226002 (B.A.P. 9th Cir. Jan. 21, 2009).

11. Appeals

Payment by IRS of refunds after denial of stay relief for setoff did not moot appeal. The bankruptcy court denied motion by IRS for stay relief to permit set off against repetition tax refunds, and by administrative mistake IRS paid the refunds to the debtor, but the BAP holds that this payment did not make IRS's appeal constitutionally or equitably moot. Under Ninth Circuit authority, the appellate court may still fashion an effective remedy when payment has been made to a party in the appeal. The fact that IRS did not obtain a stay pending appeal doesn't prevent hearing the appeal, when the payment was made by administrative error. The BAP rejects contrary authority from the Eighth Circuit BAP, IRS v. Ealy (In re Ealy), 396 B.R. 20 (B.A.P. 8th Cir. 2008), where that court held that the payment destroyed mutuality of debt. The Ninth Circuit BAP commented that Ealy "summarily ignores basic principles that underlie the doctrine of constitutional mootness." United States v. Gould (In re Gould), B.R. ___, 2009 WL 465599, at *5 (B.A.P. 9th Cir. Feb. 11, 2009).

©2009 Hon. William Houston Brown