Rule 7004 notice

In re Brondum (Bankr. E.D. La. November 5, 2014)

The debtor was unable to complete the sale of encumbered real estate because the mortgage lender failed to provide a payoff letter after multiple requests. The debtor sought sanctions. The Court found that the bank had actual knowledge of the request for payoff and found no reason why the requested information was not provided. It went on to find that since this was a contested matter, service of both the motion for payoff and the motion for sanctions failed by not complying with FRBP 7004.

The Advisory Committee Notes to FRBP opined that “[w]henever there is an actual dispute, other than an adversary proceeding, before the bankruptcy court, the litigation to resolve that dispute is a contested matter.”13 The debtor’s motion is therefore a contested matter because there is an opposing party (U.S. Bank) but this matter does not fall into any of the adversary proceeding categories outlined by Rule 7001. As such, service upon U.S. Bank should have comported with 7004(h) which requires “[s]ervice on an insured depository institution…in a contested matter or adversary proceeding shall be made by certified mail addressed to an officer of the institution….”14 The debtor’s service to U.S. Bank of its motions for a payoff letter and sanctions did not comply with the requirements of the Bankruptcy Rules, because service were neither sent via certified mail nor addressed to an officer of the institution. 

Sanctions in one case will more than pay the additional postage for all of the other cases. When in doubt, serve on an officer to comply with FRBP 7004.