Brooks v. Chase Bank USA

Summarized by Jeffrey Snyder , Bilzin Sumberg Baena Price & Axelrod, LLP
11 years 9 months ago

Citation:

13-13538 (Unpublished)

Tag(s):

Ruling:

Reversal of District Court decision reversing Bankruptcy Court and remand for determination of attorneys' fees. Bankruptcy Court did not abuse its discretion when it refused to allow bank to set off statutory damages and attorney's fees awarded under Florida Consumer Collection Practices Act (the "FCCPA") against a pre-petition consumer credit card debt discharged in the bankruptcy. The right to set off is not absolute, but rather is a permissive decision that lies within the sound discretion of the bankruptcy court. Validity of set off is determined under state law and the Bankruptcy Code does not create an independent set off right. Because Florida law does not mandate or prohibit set off under the FCCPA, it is entirely within the bankruptcy court's discretion whether to allow set off. The bankruptcy court's determinations that set off was not available because (a) of a lack of mutuality between an award under a penal statute and a debt discharged in bankruptcy, and (b) the inequity of permitting set off of FCCPA damages and attorneys' fees against the debt that the creditor seeks to collect because that would defeat the purpose of FCCPA, were not an abuse of discretion.

Procedural context:

Bankruptcy court refused to permit bank to set off award of statutory damages and attorneys fees against pre-petition debt. District Court reversed and ordered set off. Court of Appeals reversed District Court and remanded for determination of attorneys' fees due under FCCPA.

Facts:

Bank held a pre-petition claim against debtor for approximately $30,000 for outstanding credit card debt, which was discharged through the bankruptcy. Chapter 7 Trustee brought adversary complaint against bank alleging that bank violated FCCPA (sections 559.72(7) and 559.72(18), Florida Statutes). Bankruptcy court awarded $1,000 of statutory damages and statutorily-mandated attorney's fees. The bankruptcy court denied bank's request to set off the FCCPA award against the credit card debt.

Judge(s):

WILSON, JORDAN, and ROTHSTEIN (District Judge sitting by designation)

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