Minutes from the April 2, 2007 Meeting

Minutes of the Bench Bar Committee
Topeka Courtroom 210
April 2, 2007

Members Present
: Laurie Williams, Chapter 13 Representative and Committee Chair
Hon. Janice M. Karlin, Judges Representative
Joyce G. Owen, US Trustee Representative
Emily B. Metzger, Standing US Attorney’s Office Representative
Jay Befort
Douglas Depew
Wesley Smith
Jeffrey Deines
Susan Saidian
Robert Kumin
Christopher Redmond (Mr. Redmond was available for only a portion of the meeting)

Guest(s) Present: Hon. Robert D. Berger

Court Staff Present: Hugh Zavadil, Clerk’s Representative

The meeting was called to order at 10:07 a.m. Judge Karlin welcomed the committee.

The first order of business was approval of the minutes of the August 30, 2006 meeting. Jay Befort moved, and Douglas Depew seconded, that the minutes be approved as submitted. There was no discussion on the matter and the motion was approved on a unanimous voice vote.

Hugh Zavadil presented an overview of a packet of proposed rule changes. The changes were being proposed to incorporate most of the Standing Orders of the Court into regular Local Rules. During discussion, questions were asked about proposed D. Kan. LBR 2002.2, dealing with scheduling and noticing of federal and state agencies as creditors (which would replace D. Kan. Bk. S.O. 07-1). Members of the group asked if it would be more difficult to regularly change names and addresses if they were maintained in a Local Rule instead of a Standing Order. Hugh explained that the Registry of mailing addresses for Federal, State and local governmental units responsible for the collection of taxes, required by Fed. R. Bankr. P. 5003, is actually maintained on the Court’s website. As such, the publication of these addresses in a Rule or Standing Order is simply a convenience to debtors’ counsel.

After a brief discussion of the relationship between proposed D. Kan. LBR 1007.2 (which would replace D. Kan. Bk. S.O. 05-1) and proposed revisions to D. Kan. LBR 1007.1, it was decided that proposed D. Kan. LBR 1007.2 be amended to incorporate some changes proposed by the group (copies of the proposed rules, including these changes, are attached to these minutes). Upon motion by Judge Karlin, and second by Wes Smith, the proposed rules were adopted on a unanimous voice vote.

Doug Depew introduced proposals that he had received to (1) post notices of upcoming Bench-Bar Committee meetings on the bk-kansas listserv, (2) post agendas for upcoming meetings on the Court’s website, and (3) to post minutes of the Bench-Bar Committee meetings on the Court’s website. During the discussion which ensued, Hugh noted that the minutes from the last two meetings were posted on the Court’s website. The group also discussed the problems of posting unapproved minutes. It was decided that the group would develop a procedure to approve meeting minutes via electronic mail, rather than waiting for the next regular BB meeting. Judge Karlin directed Hugh to see that announcements for upcoming meetings were circulated via the bk-kansas listserv.

The group also discussed usability problems with the Court’s current website. Hugh informed the group that a redesign of the website was underway.

Doug shared that he was contacted by an attorney in advance of the meeting, who asked if the Court could provide an update on significant legal issues and decisions. Doug responded directly to the attorney that the best way to keep up with these issues is by joining the bk-kansas listserv and attending the annual K.B.A. Bankruptcy Section seminar. It was also noted that all written opinions by all four bankruptcy judges are posted and maintained on the Court website (under Judges’ Corner) and often circulated on the bk-kansas listserv. It was observed that the Topeka Area Bankruptcy Council and the Wichita Bar Association’s Bankruptcy Council both distribute digests of recent opinions to members. The consensus of the group was that attorneys should be encouraged to join and attend meetings of these organizations and, where possible, obtain program materials. (Lee Hendricks is a contact for joining the Topeka Area Bankruptcy Council and Bill Zimmerman is a contact for joining the Wichita Bar Association’s Bankruptcy Council). Judge Karlin also passed out an article she has recently written for the K.B.A. Bankruptcy and Insolvency Section Newsletter, which includes a summary of all post-BAPCPA written decision in the District.

Doug presented another topic he received from a member of the bar concerning use of the Debtor’s Certification in conjunction with the Certificate of Completion for the post-petition course in Financial Management. Interim Fed. R. Bankr. P. 1007 requires submission of the statement prepared as prescribed by the appropriate Official Form (Official Form B-23). Members of the group agreed that the Certification requirement duplicates information on the Certificate. Interim Federal Rules are pending final adoption, and as such, will be subject to a public comment period. Members of the bar are encouraged to watch for, and submit, public comments as appropriate (public comment periods are posted and comments can be submitted under “Federal Rulemaking” link at the U.S. Court’s website: www.uscourts.gov).

Doug received a question from a Kansas City attorney about why attorneys and clients were being required to appear at Reaffirmation Hearing dockets when the attorney had already signed the Reaffirmation Agreement. Judge Berger stated that these cases were being set for hearing in Kansas City when the Reaffirmation Agreement shows “undue hardship” and contains no rebuttal of undue hardship. Judge Berger also noted that in the past, the Clerk’s Office had set a number of cases for the Reaffirmation Hearing docket that should not have been set. As a result, he is now reviewing these settings prior to the Reaffirmation Hearing docket so attorneys can be notified if a hearing is unnecessary. He also suggested that if an attorney feels a case would be more appropriately heard on the Chapter 7 docket, he/she should call the Clerk’s Office to request such a setting. He also noted that he has discussed the matter with the attorney who raised the question and considers the matter resolved.

Doug also introduced a discussion about § 707(b) motions filed by the office of the U.S. Trustee, the fact that these are noticed by the Clerk, and that the notice sets the matter straight to the docket without requiring any response from debtor or counsel. The U.S. Trustee has to send someone to court, because she doesn’t know whether the debtor is going to object (or, even be present). Further, if there is an objection, the hearing will usually be continued to another docket on another date. The consensus was that these motions should be noticed to a hearing about 30 days down the road, but with an objection deadline at least 5 days prior to the hearing. The thought on the 30 days is that some attorneys exclude representation of a § 707(b) motion in their fee agreements, and they need time to get in contact with their clients to explain the Motion To Dismiss, to see if their client wants to retain them to defend, and if not, for the debtor to potentially retain new counsel. The committee agreed that these matters should appear on the docket, even if no response is filed. Judge Karlin said she would like to discuss this issue with the other judges. Specifically, the judges will discuss how far in advance these matters should be set, whether there should be an objection deadline inserted, and whether the hearing should occur regardless whether a written response is filed.

Laurie Williams introduced a discussion of how the Chapter 13 trustees should approach questions of discharge eligibility under § 1328, for post-BAPCPA debtors who have completed, or are about to complete, plan payments. Their concern involves at least four issues: 1) has the debtor completed the financial management course and filed the requisite paperwork; 2) is the debtor current on child support obligations; 3) is the debtor even entitled to a discharge because of a previous discharge; and 4) how is the determination that § 522(q)(1) is not applicable to the debtor going to be determined. Initially, the Chapter 13 Trustees discussed the possibility of preparing and filing a “Notice of Completion of Plan Payments.” After discussion, the Trustees could not come to any consensus on the form or content of such a document.

As a related matter, Judge Karlin distributed a copy of a notice currently being developed by the Court regarding post-petition Financial Management course. The Notice is patterned after a similar Notice currently used in Chapter 7 cases. One Chapter 13 Trustee suggested that the proposed notice might be too complicated. Judge Berger suggested sending this notice six months or a year from the date of filing. This permits the Court to discharge it’s duty to inform debtors and still permits the Notice to go out before most debtors are close to plan completion. After some additional discussion, the consensus of the group was that six months from date of filing would be best, because debtors would get the earlier benefit of the content of the financial management course, and the reminder would come at a time closer to when their attorney and the Chapter 13 trustee had reminded them to take the course. Judge Karlin noted that she needed to discuss these matters with the other judges, and that the Court would likely start issuing these notices.

Laurie led a discussion about a Standing Order and proposed Local Rule from Vermont that require mortgage creditors, service centers, and other secured creditors to provide debtors with information including principal balance, maturity date, current interest rate, current escrow balance, interest paid to date, and property taxes paid to date, as well information containing any payment changes or interest rate changes, with an explanation why those changes were required. Some creditors decline to send this information, even including monthly statements that they would otherwise send to non-debtor customers, fearing the allegation of a § 362 stay violation. Several members of the creditors bar had been solicited prior to the meeting to comment on these items. The consensus of those attorneys was that the Standing Order and proposed Rule were overbroad and that not all creditors were capable of complying with the requirements due to computer software issues. In addition, these attorneys expressed concerns about being required to produce different forms of information in each of the 94 judicial districts.

Attorneys who regularly represent debtors shared problems they have encountered in obtaining information about their clients’ mortgages, including where payments are being applied, what the payment amount should be, why payments have precipitously risen in some instances, and whether the mortgagees’ records showed the debtor as “current” at the end of a Chapter 13 plan. After an extended discussion, it was agreed that some mechanism needs to be developed to improve communication between debtors and creditors to allow conscientious debtors to keep up with changes in their mortgage accounts and to stay current with requisite payments. In addition, creditors need to be able to provide this information without fear of sanctions for violating the automatic stay. Numerous anecdotes were provided illustrating the extent of the problem.

Judge Berger proposed that a subcommittee draft a proposal for consideration by the entire committee. Bob Kumin, Wes Smith, and Emily Metzger agreed to constitute the subcommittee, and their mission is to deal only with residential consumer mortgages at this time. The proposal should allow creditors to provide information without fear of sanctions and the information required should include, at a minimum, any payment changes, any interest rate changes, a legible and understandable payment history when requested, and the amount necessary to cure. Laurie also suggested that the rule require the mortgagee or servicer to also provide the information to the trustee in those cases when the trustee is making the ongoing mortgage payment through the plan. The subcommittee was asked to circulate of draft proposal by the end of April.

Susan Saidian presented a request she had received to modify D. Kan. LBR 6007.1 and D. Kan. LBR 2002.1 to further clarify noticing requirements for abandonment and sales. After discussion, it was concluded that the combination of the 341 Meeting Notice and any electronic notice obtain via the Court’s CM/ECF system were adequate and that D. Kan. LBR 6007.1 should not be amended. Susan will also seek further clarification of the proposed change to D. Kan. LBR 2002.1 from the constituent who had asked for a review, and communicate same back to the group.

Susan also discussed a request she had received asking that creditor contact information appear on the first page of all reaffirmation agreements. After discussion, it was noted that reaffirmation agreements should be filed on Director’s Procedural Form B-240 if at all possible. The Director’s Procedural Form has the creditor name on page one and contact information on page 6. The group did not propose any Local Rule change as a result of this proposal.

Wes discussed a Notice (that a debtor had not completed his financial management course), which he had received from the Court that did not include a case number or caption. It was noted that this form has now been replaced by a system generated Notice that references the caption of the case, so this issue is resolved.
Bob Kumin presented an issue he received from an attorney, who questioned whether a “no look” fee could be set for the filing of stay relief motions. The issue is that if a seemingly large fee for filing a routine RFS motion is included, a debtor’s counsel must then file an objection (even when there is no objection to the underlying stay relief), which then necessitates a hearing. The proponent thought that if the Court set a “no look” fee for “average” RFS motions—like two courts have for Chapter 13 attorney fees for debtor(s)’ counsel, it would help creditors know what fee to ask for, and it would help debtors’ attorneys know when it would be cost-effective to object. Bob noted that not all MRS were “garden variety” enough to justify setting a “no look” fee. The consensus of the group was that, while a presumptive fee may eventually be set as a result of litigation over a particular fee, it would be inappropriate to establish such a fee via local rule. Judge Karlin also noted that she frequently discusses during hearings whether a particular requested fee–on its face and without hearing evidence—seems high, based on her own experience, and that creditors attorneys’ seem to be taking that conversation to heart in requesting fees.

Judge Karlin made an announcement about an upcoming Topeka Area Bankruptcy Council program and the Court’s planned implementation of a new phone system. Judge Karlin also thanked Laurie Williams, Wes Smith and Doug Depew for their service on the Committee, since this meeting was likely the last official meeting before the end of their terms. Laurie also thanked the group for their efforts.

The meeting was adjourned at 2:32 p.m.
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