E.D.N.C.: Pannaman v. DNB Management, Inc.- Bankruptcy Court Lacked “Related To” Jurisdiction Over Third-Party Quantum Meruit Claim Ed Boltz Fri, 03/06/2026 - 15:33 Summary: In a concise but significant jurisdictional ruling, the District Court for the Eastern District of North Carolina vacated a bankruptcy court judgment awarding $28,600 in quantum meruit against a non-debtor homeowner, holding that the bankruptcy court lacked subject matter jurisdiction over the claim. The underlying Chapter 7 case involved debtors who had allegedly performed home improvement work for the appellant homeowner using their employer’s materials and labor. After settling claims against the debtors, the plaintiffs proceeded solely against the homeowner on a quantum meruit theory and obtained judgment when he failed to participate at trial. On appeal—now with counsel—the homeowner challenged jurisdiction for the first time. The district court agreed, emphasizing that subject matter jurisdiction can never be waived and may be raised even on appeal. Applying the familiar “conceivable effect on the estate” test from Celotex and Pacor, the court held that the quantum meruit claim against the non-debtor was not “related to” the bankruptcy case. The complaint sought recovery only from the homeowner and did not allege joint liability or indemnification rights that would impact the estate. As such, resolution of the claim would not alter the debtors’ rights, liabilities, or administration of the bankruptcy estate. Because the claim neither arose under, arose in, nor related to the bankruptcy case, the bankruptcy court lacked jurisdiction under 28 U.S.C. § 1334(b). The district court vacated the judgment and remanded. Commentary: This is a deceptively modest opinion that quietly reinforces one of the most important—yet frequently misunderstood—limits on bankruptcy court power: not every dispute with a factual connection to a bankruptcy case belongs in bankruptcy court. At first glance, the adversary proceeding felt bankruptcy-adjacent. The alleged misconduct arose from work performed by Chapter 7 debtors using their employer’s resources. There was a narrative overlap with the bankruptcy case, and one can see why the parties and bankruptcy court treated the claim as sufficiently tethered to the estate. But jurisdiction in bankruptcy is not about narrative overlap—it is about estate impact. And here, Judge Flanagan applied the Fourth Circuit’s Celotex framework exactly as intended. The question is not whether the same facts underlie both disputes. The question is whether resolving the third-party claim would “conceivably” affect the debtor’s estate—by altering rights, liabilities, or administration. Without joint liability, indemnity, or some derivative claim against the debtors, the answer was simply no. That conclusion is doctrinally unremarkable but practically significant. Consumer bankruptcy practitioners regularly see attempts—sometimes by creditors, sometimes by trustees—to drag peripheral state-law disputes into adversary proceedings under the broad umbrella of “related to” jurisdiction. This decision is a useful reminder that Pacor still has teeth. The Quiet Importance of the “No Joint Liability” Distinction The court’s contrast with In re Adair Realty Group is particularly instructive. There, claims against a third party were related to the bankruptcy because joint and several liability meant the estate’s exposure could be directly affected. Here, the complaint carefully sought recovery only from the homeowner, severing any jurisdictional nexus to the debtors. That drafting choice—perhaps tactical at the time—ultimately proved jurisdictionally fatal. This underscores a lesson for bankruptcy litigators: pleading strategy can determine jurisdiction. If a plaintiff wants the bankruptcy court, it must allege a theory tying the third party’s liability to the debtor or estate (joint liability, indemnification, contribution, alter ego, etc.). Without that connective tissue, the dispute belongs in state court, not bankruptcy court. A Procedural Twist Worth Noting Equally notable is that the appellant initially litigated pro se, failed to participate in trial, and only later raised jurisdiction on appeal—yet still prevailed. That result should give pause. Bankruptcy courts often (understandably) prioritize efficiency when a non-debtor defendant defaults or fails to comply with discovery. But subject matter jurisdiction is never a mere procedural nicety; it is a structural limitation that cannot be cured by default, waiver, or even final judgment. For practitioners, this is a cautionary tale: a jurisdictional defect can unwind even a seemingly clean adversary judgment years later. Broader Consumer Bankruptcy Implications From a consumer bankruptcy perspective—where the overwhelming majority of cases involve modest estates and tangential third-party disputes—this opinion provides a useful doctrinal boundary. Bankruptcy courts are not small-claims courts for every dispute touching a debtor’s life. Their jurisdiction is broad, but not limitless. In that sense, Pannaman fits squarely within a long line of Fourth Circuit jurisprudence resisting the gravitational pull of over-expansive “related to” jurisdiction. It quietly but firmly reaffirms that bankruptcy is about administering the debtor-creditor relationship—not adjudicating every independent state-law claim that happens to share factual background with a bankruptcy filing. And sometimes, as this case reminds us, the most important bankruptcy ruling is the one that says: this dispute does not belong in bankruptcy court at all. To read a copy of the transcript, please see: Blog comments Attachment Document pannaman_v._dnb_management.pdf (107.06 KB) Category Eastern District

E.D.N.C.: Mouselli v. Equifax Information Services LLC- Denial of Motion to Disqualify of Out-of-State Counsel: Local Rules, Federal Authorization, and a Quiet Omission Ed Boltz Thu, 03/05/2026 - 15:11 Summary: In Mouselli v. Equifax, the Eastern District of North Carolina denied a motion to disqualify plaintiff’s out-of-state counsel who had entered a special appearance under Local Civil Rule 83.1(e), rejecting the argument that the attorney’s North Carolina residence and a stray Chamber of Commerce listing amounted to the unauthorized practice of law. The court began with the familiar Fourth Circuit admonition that disqualification is a “drastic” remedy, to be applied sparingly and only upon a heavy showing—not speculation—of ethical violation. Federal law governs admission to federal courts, and the E.D.N.C.’s own Local Rule 83.1 provides the operative framework for special appearances by attorneys licensed elsewhere. Here, the Indiana-licensed attorney associated with admitted local counsel and demonstrated he had not entered special appearances in other E.D.N.C. cases. That compliance with Rule 83.1(e), combined with North Carolina Rule of Professional Conduct 5.5(c) and (d) (permitting federally authorized practice in the jurisdiction), meant his representation was authorized rather than an instance of unauthorized practice. Equifax’s attempt to show a “systematic and continuous presence” in North Carolina failed on the facts. The court found no evidence the lawyer opened an office, solicited clients, or held himself out as licensed in North Carolina; the Cary Chamber of Commerce listing was treated as, at most, speculative proof of advertising. In short, without proof of actual North Carolina practice outside the federally authorized representation, the motion to disqualify could not carry its heavy burden. The result: motion denied, counsel stays in the case. Commentary: This opinion reflects the increasingly pragmatic approach federal courts in North Carolina have taken toward multijurisdictional practice: if you follow Local Rule 83.1, associate competent local counsel, and avoid holding yourself out as licensed in North Carolina, you are generally on solid ground. That is particularly important in specialized fields—consumer protection, bankruptcy, and FCRA litigation included—where experienced national counsel often collaborate with local practitioners to litigate recurring issues against large institutional defendants. The court’s reasoning sensibly harmonizes three layers of authority: Federal courts control admission to their bar. Local Civil Rule 83.1 governs special appearances in E.D.N.C. North Carolina Rule of Professional Conduct 5.5 recognizes federally authorized practice as an exception to unauthorized practice concerns. That triangulation makes doctrinal sense and avoids converting routine pro hac vice practice into an ethical minefield. It also implicitly recognizes the modern reality that lawyers increasingly reside in one jurisdiction while litigating federally in another. The Quiet Omission: Local Rule 83.1(e)(5) One curious—and potentially significant—aspect of the opinion is what it does not discuss. While the court quotes Local Rule 83.1(e)’s numerical limitations in general terms, the opinion does not specifically reference Local Rule 83.1(e)(5) (as appearing at page 77 of the E.D.N.C. Local Rules), which provides: A special appearance is not a substitute for admission to the bar of this court; it is intended only to facilitate occasional appearances. Unless otherwise ordered for good cause shown, no attorney may be admitted pursuant to Local Civil Rule 83.1 in more than three unrelated cases in any twelve-month period, nor may any attorney be admitted pursuant to Local Civil Rule 83.1 in more than three active unrelated cases at any one time. (Emphasis added.) The omission is not outcome-determinative here—the record showed the attorney had not entered special appearances in other E.D.N.C. cases, so the numerical cap was satisfied on the facts. But the absence of an express citation matters for future cases. Why? Because Rule 83.1(e)(5) embodies a structural limit: pro hac vice admission is intended to be occasional, not a mechanism for maintaining a de facto federal practice in North Carolina without seeking full admission to the district court bar. In other words, the rule is less about ethics and more about institutional control over the composition of the court’s bar. That distinction has practical consequences. An attorney might comply fully with Rule 5.5 and still run afoul of Rule 83.1(e)(5) if appearing repeatedly in unrelated cases. The former is about authorization to practice law; the latter is about authorization to practice regularly before this particular federal court. Why This Matters (Especially for Bankruptcy Practitioners) For those of us practicing regularly in the E.D.N.C. (and in neighboring districts), Mouselli offers reassurance but also a quiet warning: Reassurance: Federal authorization + local counsel + factual restraint = generally safe harbor. Warning: Repeated “special appearances” across multiple unrelated cases risk bumping into the hard numerical limits of Rule 83.1(e)(5), even if no unauthorized practice exists under state ethics rules. In the bankruptcy context, where national firms often handle FCRA, student loan, or mortgage-servicing litigation connected to consumer bankruptcy cases, that numerical limitation could become a trap for the unwary. A pattern of recurring appearances might look less like “occasional” participation and more like a systematic federal practice—precisely what Rule 83.1(e)(5) is designed to prevent. Bottom Line Mouselli is a sensible, measured decision that resists using disqualification as a tactical weapon and instead focuses on concrete ethical violations. But practitioners should not overlook the local rule architecture lurking beneath the surface. Even where federal law and Rule 5.5 authorize an out-of-state attorney’s participation, Local Rule 83.1(e)(5) still places a firm institutional cap on how often that participation can occur. For lawyers who frequently appear in E.D.N.C.—including those working in consumer bankruptcy-adjacent litigation—the safer course may be to seek full admission to the district court bar rather than rely repeatedly on special appearances that were, by rule and design, meant to be only occasional. To read a copy of the transcript, please see: Blog comments Attachment Document mouselli_v._equifax.pdf (93.52 KB) Category Eastern District

E.D.N.C.: Dublin v. Truist- Dismissal of FCRA Claim Against for Failure to Allege Inaccurate Reporting Ed Boltz Wed, 03/04/2026 - 14:52 Summary: In Dublin v. Truist Bank, the Eastern District of North Carolina dismissed—with prejudice—a pro se plaintiff’s Fair Credit Reporting Act (FCRA) action alleging that Truist failed to investigate and correct allegedly inaccurate credit reporting tied to an account he claimed was fraudulently opened through identity theft. The court’s opinion is a methodical application of Twombly/Iqbal pleading standards to an increasingly common genre of consumer credit litigation built on “affidavit of truth” theories rather than concrete factual disputes. The plaintiff contended that Truist violated §§ 1681s-2(b), 1681i, and 1681b(f) by failing to conduct a reasonable investigation after receiving disputes through Early Warning Services and a CFPB complaint. He alleged the continued furnishing of inaccurate information caused credit denials, housing difficulties, and reputational harm. Procedurally, the court: Allowed amendment of the complaint; Denied the motion to strike exhibits (finding them integral to the pleadings); Rejected an attempted transfer to state court (or remand) as untimely and jurisdictionally improper; and Overruled objections relating to parallel litigation and alleged coordinated defense counsel conduct. On the merits, the case rose and fell on a single doctrinal fulcrum: a furnisher’s duty to investigate under § 1681s-2(b) is triggered only when the consumer disputes the accuracy of information reported, not merely the furnisher’s legal right to report it. The court emphasized that the plaintiff’s own attached “Affidavit of Truth” expressly stated he was not claiming the account was opened without his permission, thereby contradicting the identity-theft theory pled in the complaint. Because exhibits control over conclusory allegations, the court held that no plausible dispute of accuracy had been alleged and thus no investigation duty was triggered. The court further held that: § 1681i applies to consumer reporting agencies, not furnishers like Truist; § 1681b(f) applies to users of consumer reports; and although § 1681s-2(a) bars knowingly furnishing inaccurate information, it carries no private right of action. With no viable statutory hook remaining, the amended complaint was dismissed with prejudice and the case closed. Commentary This opinion is a quiet but useful reminder for consumer practitioners—and bankruptcy lawyers who increasingly see FCRA issues intertwined with identity-theft and credit reporting disputes—that the difference between disputing “accuracy” and disputing “authorization” is outcome determinative. The court draws a sharp line that echoes Fourth Circuit precedent: furnishers must investigate disputes about whether reported information is factually wrong, but they are not required to adjudicate broader legal or philosophical objections to reporting itself. That distinction is not merely academic. It often marks the dividing line between viable FCRA litigation and dismissal at the pleading stage. For bankruptcy practitioners, this matters in at least three recurring contexts:   Post-discharge credit reporting disputes. Debtors often frame disputes as “the creditor had no right to report this account.” But unless the dispute actually challenges the accuracy of the tradeline (e.g., reporting a balance on a discharged debt), courts may treat the claim as outside § 1681s-2(b)’s scope.   Identity theft and zombie account claims. This case shows the risk of hybrid pleadings that simultaneously deny identity theft while asserting it. As the court bluntly held, a debtor’s own exhibit can defeat plausibility. That is a practical warning: documentation attached to complaints must be curated with the same care as schedules in a bankruptcy petition—because they can become admissions.   The recurring pro se “affidavit of truth” phenomenon. The opinion implicitly rejects the growing use of quasi-sovereign “affidavit” theories as substitutes for factual allegations. Courts in this circuit continue to treat such documents as insufficient to trigger statutory duties absent concrete disputes of fact. There is also a broader access-to-justice tension here. The plaintiff alleged real-world harms—credit denials and housing obstacles—but the court’s formalist application of FCRA doctrine foreclosed relief once the pleadings failed to allege factual inaccuracy. This reflects a systemic challenge: the FCRA provides powerful remedies, but only when the dispute is framed with doctrinal precision—something pro se litigants, and even some consumer counsel, frequently miss. Finally, for bankruptcy attorneys in North Carolina, Dublin is a useful companion to stay-violation and discharge-injunction jurisprudence. It reinforces that while bankruptcy law often focuses on legal entitlement (e.g., discharge eliminates personal liability), FCRA litigation remains grounded in factual accuracy. Bridging that conceptual gap is essential when advising clients on credit reporting disputes arising from bankruptcy cases. In short, Dublin v. Truist is less about banks winning on technicalities and more about the continuing insistence—particularly in the Fourth Circuit—that consumer protection statutes are enforced through disciplined pleading and careful statutory alignment. For those representing “honest but unfortunate” debtors whose fresh start depends on accurate credit reporting, that lesson is both doctrinally sound and practically indispensable. To read a copy of the transcript, please see: Blog comments Attachment Document dublin_v._truist.pdf (208.25 KB) Category Eastern District

Bankr. M.D.N.C.: In re Bryant (I & II): Motion to Disqualify Counsel & Confession of Judgment as a Debt Stafford Patterson Tue, 03/03/2026 - 15:06 In re Bryant (I) —  Strategic Disqualification Motions in § 523 Litigation Summary In the first January 2026 order, Judge Benjamin Kahn denied the pro se Chapter 7 debtors’ motion to disqualify the plaintiff’s counsel and stay proceedings in a nondischargeability action under § 523(a)(6). The debtors asserted counterclaims and third-party claims against opposing counsel, arguing this posture created conflicts under North Carolina Rules of Professional Conduct 1.7 and 3.7. Judge Kahn rejected those arguments, emphasizing that disqualification is a drastic remedy subject to strict scrutiny and frequently misused as a tactical device. Because the debtors were not current or former clients of plaintiff’s counsel, they lacked standing to assert a concurrent conflict under Rule 1.7. The Court further held that conclusory speculation that counsel might be a witness did not satisfy Rule 3.7, and that a party cannot force disqualification simply by suing opposing counsel or expressing an intent to call that lawyer as a witness. The motion was denied in full. Commentary Judge Kahn’s order is a practical, no-nonsense reminder that litigation strategy does not include manufacturing conflicts. In contentious nondischargeability litigation, debtors sometimes attempt to “flip the script” by asserting claims against creditor’s counsel, hoping to gain procedural leverage. This opinion firmly closes that door. The key point is standing. Without an attorney-client relationship, most alleged conflicts are simply not cognizable. That rule matters in consumer bankruptcy, where emotions run high and pro se litigants may understandably perceive counsel’s aggressive advocacy as personal misconduct. Judge Kahn properly distinguishes between adversarial conduct and ethical conflict. Equally important is the Court’s rejection of the “lawyer-as-witness” gambit. If merely naming opposing counsel as a witness sufficed, every aggressive defense would become a vehicle for disqualification. The opinion instead reinforces the governing test: necessity, materiality, and lack of alternative evidence—not mere speculation. For practitioners, this case will be useful authority when faced with tactical disqualification motions in § 523 adversaries, particularly in the Middle District of North Carolina. In re Bryant (II) — Futility, Judgments, and the Meaning of “Debt” Summary The companion order, issued the following day, again by Judge Benjamin Kahn, addressed the debtors’ attempt to “conditionally” withdraw prior counterclaims while adding a new counterclaim seeking a declaration that a prepetition confession of judgment was not a “debt” subject to exception from discharge. Judge Kahn construed the filing as (1) a motion for leave to amend to dismiss existing counterclaims and (2) a notice of voluntary dismissal of the third-party complaint. Leave was granted only as to withdrawal; the proposed new counterclaim was denied as futile. The Court reaffirmed that a judgment is a “claim” under § 101(5)(A) and that liability on that claim is a “debt” under § 101(12). Because the confession of judgment was undisputed, the plaintiff necessarily held a debt that could be tested under § 523(a)(6). Judge Kahn also delivered a pointed reminder: parties, even pro se litigants, cannot assert “conditional” or speculative claims and rely on the Court to sort out their merit. Rule 9011 requires a reasonable inquiry before filing. Commentary This second opinion is doctrinally straightforward but procedurally important. Judge Kahn emphasizes a foundational bankruptcy principle that sometimes gets lost in litigation strategy: bankruptcy does not relitigate the existence of a debt already reduced to judgment. Instead, § 523 asks a narrower question—whether that debt is dischargeable. For consumer bankruptcy practitioners, the ruling reinforces the distinction between state-court liability and bankruptcy dischargeability. Once a valid judgment exists, the focus shifts to willful and malicious injury, not to whether the judgment should exist at all. The Court’s discussion of “conditional” pleading is also notable. In high-conflict adversary proceedings, especially involving pro se debtors, there can be a temptation to raise every conceivable argument and withdraw later if necessary. Judge Kahn makes clear that such an approach risks Rule 9011 consequences and imposes unnecessary costs on opposing parties and the court system. Broader Significance Taken together, Judge Kahn’s twin Bryant orders provide a useful playbook for managing pro se litigation in nondischargeability proceedings: Disqualification of counsel requires a real, material conflict—not strategic maneuvering. Naming opposing counsel as a defendant or prospective witness will not create a conflict where none otherwise exists. A prepetition judgment plainly constitutes a “debt” for purposes of § 523. Even pro se litigants must satisfy Rule 9011’s requirement of a reasonable prefiling inquiry. In short, these decisions reflect Judge Kahn’s characteristic approach: patient with pro se litigants, careful in construing their filings liberally, but firm in enforcing the procedural and doctrinal boundaries necessary for the efficient administration of consumer bankruptcy cases in the Middle District of North Carolina. To read a copy of the transcript, please see: Blog comments Attachment Document in_re_bryant_1.pdf (558.94 KB) Document in_re_bryant_ii.pdf (583.28 KB) Category Middle District

Law Review (Book): Lubben, Stephen- To Protect Their Interests: The Invention and Exploitation of Corporate Bankruptcy Ed Boltz Tue, 03/03/2026 - 14:43 Available at:  https://cup.columbia.edu/book/to-protect-their-interests/9780231213110/ Summary: Chapter 11 corporate bankruptcy proceedings are commonly thought of as a tool to protect the broader economy from the failure of large firms, even though the biggest players reap the greatest rewards. In the conventional telling, modern corporate reorganization began in the 1890s, with J. P. Morgan leading a noble effort to protect bondholders from the depredations of corporate insiders. What does this story leave out, and how do the true origins of bankruptcy law shed light on its present-day uses and abuses? To Protect Their Interests is a groundbreaking historical account of how corporate bankruptcy became what it is today—a forum for battles between well-heeled insiders. Stephen J. Lubben strips away the myths surrounding the history of corporate restructuring, showing that it emerged a decade before Morgan, when the robber baron Jay Gould strove to keep control of his railroad by working out a compromise with a handful of wealthy investors. The 1885 restructuring of Texas and Pacific Railway set the pattern for future corporate reorganizations: insider dealing, elite manipulation of the legal system, and judicial deference. Lubben traces the evolution of the bankruptcy system through a series of major cases involving companies such as W. T. Grant and Toys “R” Us, demonstrating that it has always been a way for the powerful to maintain power. Revealing the sordid origins of bankruptcy law, this book also considers the limited prospects for reform. Commentary: Control, Venue, and the Enduring Power Struggle in Bankruptcy Stephen Lubben’s To Protect Their Interests is, at its core, a history of control. While it is nominally about corporate insolvency—moving from railroad receiverships through modern Chapter 11—it reads as a continuous case study in how sophisticated debtors and their financial backers have always sought to dictate the terms of reorganization by choosing the forum, shaping the process, and minimizing oversight. Lubben’s narrative reminds us that bankruptcy law has never been merely about distributing value; it has been about who gets to steer the ship during distress and who emerges holding the wheel afterward. From Jay Gould to the Texas Two-Step: Venue as Strategy: Lubben traces how late-19th-century railroad reorganizations, orchestrated by figures like Jay Gould and J.P. Morgan, used equity receiverships as proto-bankruptcies. These were not neutral judicial proceedings; they were curated events. Friendly courts were selected. Receivers were aligned with management. Committees were structured to ensure continuity of control. The entire point was to “protect their interests”—and those interests were the insiders’ and dominant creditors’, not dispersed stakeholders. The modern echo of that dynamic is unmistakable in contemporary mass-tort restructurings and the so-called “Texas Two Step.” Whether by divisional mergers, strategic entity creation, or venue engineering, the animating principle remains constant: secure a forum where the debtor—or the capital structure controlling it—can manage the process with minimal interference from trustees, regulators, or even an overly inquisitive judge. Lubben’s great contribution is not simply recounting these episodes, but showing their continuity. The tools change; the objective does not. Control during the case determines leverage over plan formulation, claim valuation, and ultimately the distribution of enterprise value. Control after the case determines who actually owns the reorganized entity. Everything else is, in many respects, procedural detail. Avoiding Oversight: Trustees, the SEC, and the “Nosy Judge” Problem Another throughline in Lubben’s history is the persistent corporate debtor impulse to avoid external supervision. Early receiverships sidestepped robust judicial involvement. Later iterations of bankruptcy prompted the creation of SEC oversight precisely because Congress recognized that reorganization could become an insiders’ game. The subsequent retreat from SEC involvement in Chapter 11 did not eliminate the instinct to manage the forum—it simply shifted the battlefield to venue selection and case architecture. One cannot read this history without seeing how modern corporate debtors seek to cabin the influence of: Independent trustees (rare in large Chapter 11 cases); Government oversight (now largely through the U.S. Trustee rather than the SEC); Judges whose enthusiasm for aggressive case management might disrupt the negotiated script. The historical lesson is sobering: procedural reforms repeatedly attempt to rebalance power, but sophisticated repeat players adapt, using structure and venue to reclaim the initiative. The Stark Contrast: Consumer Bankruptcy as a Regime of Scrutiny If To Protect Their Interests chronicles the steady expansion of autonomy for corporate debtors, it simultaneously highlights—by contrast—the intensely supervised environment imposed on consumer debtors. A consumer Chapter 7 or Chapter 13 debtor: Hostility to  selecting a “friendly” or even merely "convenient" venue; Faces an automatic trustee investigation and extended supervision; Even though 11 U.S.C. §1321 provides that "The debtor shall file a plan",  Chapter 13 Trustees routinely object to those plans for the benefit of otherwise silent and absent creditors; Is subject to mandatory documentation, means testing, and §341 examination; and  Encounters routine judicial scrutiny on even modest plan provisions. The asymmetry is striking. Corporate debtors can often choreograph complex restructurings in jurisdictions selected for predictability or debtor-friendliness. Consumers, by contrast, are funneled into a tightly regulated, trustee-driven process in which even small discretionary expenditures or asset valuations can draw objection. In short, Lubben’s history implicitly confirms what consumer practitioners experience daily: the Bankruptcy Code is functionally bifurcated. Corporate reorganization is a "negotiated" process. Consumer bankruptcy is an audited entitlement program. A Provocative Question: Could Consumers Replicate the Playbook? Lubben’s work invites an uncomfortable hypothetical. If venue engineering and entity structuring are legitimate tools for corporate debtors, could consumers theoretically deploy similar strategies? Imagine a consumer forming a wholly owned shell corporation in a perceived debtor-friendly jurisdiction, placing certain assets or liabilities into that entity, filing the corporate case first, and then filing a personal bankruptcy relying on the corporate case to anchor venue. On paper, this is merely the retail version of strategies routinely used in large Chapter 11 filings. Would courts welcome the increased filings? Or would they recoil at what suddenly looks like “forum shopping” when individuals practice it rather than massive enterprises? History suggests the answer. Courts and policymakers have repeatedly tolerated aggressive venue strategies when employed by sophisticated corporate actors, often framing them as efficiency-enhancing or necessary for complex restructurings. But when similar creativity appears in consumer cases, it is more likely to be labeled bad faith or manipulation of the system. That double standard exposes the deeper truth Lubben’s book reveals: the tolerance for procedural innovation correlates closely with the perceived legitimacy and economic importance of the debtor. Railroads, asbestos defendants, and mass-tort conglomerates are treated as systemically significant reorganizations deserving procedural flexibility. Individual wage earners are treated as risks to the integrity of the system if they attempt comparable maneuvers. Would Courts Compete for Consumer Cases? Lubben’s historical account of courts positioning themselves as preferred forums for major reorganizations raises a further question: if consumers could replicate these tactics at scale, would certain jurisdictions begin competing for those filings? One suspects not. Consumer cases are high-volume but low-fee and administratively burdensome. Unlike mega-Chapter 11s, they do not generate prestige, professional fees, or the institutional attention that large restructurings command. The economic incentives that quietly encourage venue flexibility for corporate debtors simply do not exist in the consumer context. Indeed, the likely response would be doctrinal tightening: more aggressive policing of venue, expanded findings of bad faith, and perhaps legislative amendments aimed at closing the perceived loophole. In other words, the system that accommodates structural ingenuity in corporate insolvency would likely move quickly to suppress it in consumer practice. Final Thoughts: Control as the Central Axis of Bankruptcy Lubben’s To Protect Their Interests ultimately teaches that bankruptcy history is less about statutory evolution than about governance: who controls the case, who controls the negotiations, and who controls the reorganized enterprise. For corporate debtors—from Gould’s railroads to modern mass-tort defendants—success has often meant retaining meaningful control throughout the process while minimizing intrusive oversight. For consumer debtors, the process begins with surrendering control to trustees, compliance regimes, and judicial supervision, in exchange for the promise of a fresh start. That divergence is not an accident of doctrine; it is the product of historical development shaped by economic power and institutional priorities. Lubben’s work forces us to confront whether our modern bankruptcy system still “protects their interests”—and whose interests those really are. Blog comments Category Book Reviews

If your phone rings with yet another unsolicited pitch for a loan you never asked about, a warranty you don’t need, or a credit card offer from a company you’ve never heard of, you’re not powerless. Federal law gives you the right to sue—and collect real money for every illegal call. The Telephone Consumer Protection Act (TCPA) is one of the strongest consumer protection statutes on the books. It imposes strict penalties on companies that make automated or prerecorded calls to your cell phone without your consent. And unlike most federal claims, you don’t need a government agency to enforce it. You can file suit yourself. This guide explains what the law covers, how to identify the companies behind the calls, and how to build a case that makes robocallers pay. The numbers: The TCPA awards $500–$1,500 per illegal call or text, carries a four-year statute of limitations, and TCPA filings doubled in 2025—making it one of the most actively litigated consumer protection laws on the books. What the TCPA Actually Prohibits The TCPA targets several specific practices. If you’re receiving unsolicited loan pitches by robocall, chances are the caller is violating multiple provisions simultaneously. Autodialed or prerecorded calls to cell phones without prior express written consent. For marketing calls, verbal consent isn’t enough—the law requires written permission. If you never signed up for anything, every call is a separate violation. Do Not Call Registry violations. If your number is registered at donotcall.gov and you’re still receiving telemarketing calls, that’s an independent violation—even from live callers, not just robocalls. Calls after you’ve revoked consent. Under FCC rules effective April 2025, you can revoke consent by any reasonable means—saying “stop,” texting “STOP,” or telling the caller to remove you. The company has 10 business days to comply. Every call after that is a willful violation at the $1,500 tier. AI-generated voice calls. The FCC has ruled that AI-generated voices qualify as “artificial or prerecorded” under the TCPA. A call that sounds human but is actually AI is still covered. Calls outside permitted hours. Telemarketing calls before 8:00 a.m. or after 9:00 p.m. in your time zone violate the TCPA regardless of consent. Step 1: Build Your Evidence File Before you can sue, you need proof. Start documenting every unwanted call right now—even before you know who’s behind them. What to Record for Every Call Screenshot your call log immediately. Date, time, and the number displayed. Don’t rely on memory. Save every voicemail. Prerecorded messages are direct evidence of a TCPA violation. Back them up to cloud storage or email them to yourself. Keep your phone bills. Carrier records show incoming call history and can be used to trace the source. Retain them for the full four-year limitations period. Keep a written log. Note whether the call was a prerecorded message or live person, what product or service was pitched, and whether you told them to stop calling. Don’t delete anything. Keep your phone handset through any litigation to prevent spoliation issues. Step 2: Identify the Caller This is the critical challenge. Robocallers hide behind spoofed numbers, shell companies, and third-party lead generators. But they can be found. Answer and Extract Information The most effective identification technique is counterintuitive: pick up the phone. Stay on the line, get transferred to the “live agent,” and before providing any personal information, ask: What company are you with? What’s your website? What’s your mailing address? Can you send me something by email? Even one of these details can be enough to identify the entity behind the calls and serve a complaint. Use Technology and Public Records Reverse phone lookups. Services like Hiya, Nomorobo, CallerSmart, or even a Google search of the number can sometimes reveal the company or lead generator behind it. Check the FCC’s Robocall Mitigation Database. All voice service providers must certify their STIR/SHAKEN implementation status. This can help identify which VoIP provider originated the call. Search it at fcc.gov/robocall-mitigation-database. STIR/SHAKEN attestation data. The FCC’s caller ID authentication framework enables carriers to verify that caller ID information is legitimate. While there’s no private right of action under STIR/SHAKEN itself, the authentication data makes identifying robocallers in TCPA litigation far more practical. Your carrier may provide this information upon request. Subpoena carrier records. Once litigation is filed, you can subpoena your carrier’s call detail records and, through the originating carrier, trace back to the entity that placed the call. The Industry Traceback Group (ITG) also traces illegal robocalls back to their originating provider, and their data can surface through discovery. Step 3: Confirm Your Legal Claims For unsolicited loan marketing robocalls to your cell phone, you likely have multiple independent violations per call—each carrying its own statutory damages. No prior express written consent. Did you ever sign up, fill out a form, or click “I agree” authorizing calls from this company? If not, every call is a $500 violation—or $1,500 if the court finds it was willful. DNC Registry violation. If your number is registered and you’re receiving telemarketing calls, that’s a separate violation even without an autodialer. Failure to honor opt-out. Did you tell them to stop? Under the April 2025 FCC rule, they must comply within 10 business days. Every call after that is willful. No caller identification. TCPA regulations require telemarketers to identify themselves and the entity they represent and provide a callback number. Failure to do so is an additional violation. Do the math: if a loan company has called you 20 times without consent, that’s potentially $10,000–$30,000 in statutory damages for your individual claim alone. The threat of class-wide exposure gives you significant settlement leverage. Step 4: File and Litigate You can bring a private action under the TCPA in federal or state court. You don’t need to show actual damages—statutory damages are automatic. Here’s how to maximize your position. File complaints with the FCC and FTC. Report violations at fcc.gov and ReportFraud.ftc.gov. These won’t litigate for you, but they create a public record of the caller’s behavior that strengthens your case. Consider both individual and class claims. If the same company is blasting robocalls to thousands of people, a class action multiplies the damages exponentially—and your leverage with it. Name the right defendants. Go after the company whose product is being marketed, not just the call center. The TCPA applies to the entity “on whose behalf” the call is made, which means the lender or lead buyer can be liable even if they hired a third-party dialer. Pursue FDCPA claims in parallel. If the robocalls relate to debt collection rather than marketing, you may have additional claims under the Fair Debt Collection Practices Act, which provides separate damages. Your Robocall Action Plan Register your number on the National Do Not Call Registry at donotcall.gov if you haven’t already. Start logging every unwanted call—date, time, number, content. Screenshot your call log and save voicemails. Answer the next robocall and extract the company name, website, email, or mailing address. Tell the caller to stop. Say “stop calling me” clearly. Note the date. This starts the willful-violation clock. Run reverse lookups on the calling numbers. Check the FCC’s Robocall Mitigation Database. Keep your phone and phone bills. Do not switch devices or delete records during the limitations period. File complaints with the FCC and FTC to create a public record. Consult with a consumer protection attorney to evaluate your claims and file suit. Key Legal Developments to Know TCPA law is evolving rapidly. A few developments that strengthen your hand in 2025–2026: FCC consent revocation rule (effective April 2025). Consumers can now revoke consent by any reasonable means—”stop,” “quit,” “end,” “opt out,” “cancel,” or “unsubscribe.” Companies get 10 days, then every subsequent contact is willful. AI voice calls are covered. The FCC’s February 2024 Declaratory Ruling confirmed that AI-generated voices are “artificial or prerecorded” under the TCPA. Companies can’t dodge the law by using natural-sounding AI. STIR/SHAKEN is making callers traceable. The FCC’s caller ID authentication framework, mandated by the TRACED Act, makes it increasingly difficult for robocallers to hide behind spoofed numbers. While there’s no private right of action under STIR/SHAKEN, the data it generates is invaluable in TCPA litigation. Courts are setting standards independently. A 2025 Supreme Court decision shifted TCPA interpretation authority from the FCC to the courts, meaning judges now set their own standards—and many are ruling favorably for consumers. If robocall harassment has contributed to financial stress or overwhelming debt, you don’t have to face it alone. Lakelaw’s bankruptcy attorneys have helped thousands of people find a fresh financial start. Contact us today for a free, confidential consultation. Get a Free Confidential Consultation The post Fight Back Against Robocallers: A Lawyer’s Guide to Suing Under the TCPA appeared first on Lakelaw.

How Fraudsters Exploit Lawyers, Trust Accounts, and the Prestige of Your License By David P. Leibowitz You went to law school to help people, not to become a money mule. But to a new breed of international fraudster, your law license, your trust account, and your professional instinct to help a client in need make you the perfect target. These scams aren’t crude. They’re engineered to exploit the specific mechanics of legal practice—IOLTA accounts, escrow obligations, the duty to act on a client’s behalf, and the time pressure of transactions. The FBI has issued repeated warnings. State bars across the country post new alerts nearly every month. Yet lawyers keep falling for these schemes, sometimes to the tune of hundreds of thousands of dollars, because the scams are designed to look exactly like the legitimate work lawyers do every day. If you handle collections, real estate closings, business transactions, or any matter that involves receiving and disbursing funds, you need to read this. The Fake Collection Client This is the most widespread scam targeting lawyers, and the FBI has flagged it repeatedly. Here’s how it works: you receive an email—often from someone overseas—asking whether you handle debt collection in your state. The story is always plausible. A foreign company is owed money by a U.S.-based debtor. They need local counsel to send a demand letter and collect the funds. You agree. You send the demand letter. And then something remarkable happens: the debtor agrees to pay immediately—in full, no negotiation, no pushback. A cashier’s check arrives at your office, often drawn on a Canadian bank or another institution that’s difficult to verify quickly. You deposit it into your IOLTA account. Your “client” asks you to wire the proceeds—minus your fee—to an overseas account. Days later, your bank notifies you that the check was counterfeit. The funds are clawed back. But the wire you sent is gone. And because it came out of your trust account, you are personally liable for every dollar. Red Flags Unsolicited contact from an overseas “client” you’ve never met, often with a vague or generic email address. The debtor capitulates immediately with no negotiation—the fastest, easiest collection of your career. Payment arrives by cashier’s check, often from a Canadian or foreign bank, sometimes for more than the alleged debt. The client pressures you to wire funds quickly, before the check has fully cleared—often citing an “urgent business need.” Communication is exclusively by email. The client resists phone calls, video conferences, or any verification of identity. How to Protect Yourself Never disburse funds until a check has fully cleared. Cashier’s checks can take weeks to be returned as counterfeit. Your bank’s “available balance” is not confirmation that funds are good. Verify the client independently. Search the company name, check business registries, and insist on a video call before accepting the engagement. Be suspicious of any collection where the debtor pays without resistance. In what universe does a debtor immediately agree to pay a demand letter in full, from a lawyer they’ve never heard of? Call the issuing bank directly to verify the cashier’s check—using a number you find independently, not one printed on the check itself. The Real Estate Wire Intercept Business email compromise has become the most financially devastating form of cybercrime targeting the legal profession. The FBI’s 2024 Internet Crime Report documented over 21,000 BEC complaints with losses exceeding $2.7 billion—and real estate transactions are among the most frequently targeted. Here’s the scenario: you’re handling a closing. Somewhere in the email chain, a hacker has been quietly monitoring the thread—often for weeks. At the critical moment, just before closing, someone in the transaction receives an email that appears to come from you, from the title company, or from the lender. It contains “updated” wire instructions. The email uses the right logos, the right tone, and references the correct property and transaction details. The only thing different is the account number—which now routes to a fraudster’s account. Red Flags Last-minute changes to wiring instructions sent via email, especially close to the closing date. Subtle changes to email addresses—a single character swap, a different domain extension, or a display name that doesn’t match the actual address. Unusual urgency in the request: “This needs to go out today” or “time is of the essence.” The email thread feels slightly off—different formatting, a different signature block, or a tone that doesn’t match the sender’s normal style. How to Protect Yourself Establish a firm policy: wiring instructions never change by email. Communicate this to all parties at the outset of every transaction. Verify all wiring instructions by phone using a known number—never a number from the email itself. Enable multi-factor authentication on all firm email accounts. A compromised inbox is the most common entry point for these attacks. Train every person in your office who touches financial transactions. Paralegals, assistants, and bookkeepers are often the ones who actually initiate wires. Escrow and Trust Account Abuse Your IOLTA account is a laundromat waiting to happen—at least, that’s how criminals see it. Money that passes through a lawyer’s trust account acquires a veneer of legitimacy. Sophisticated fraud rings know this, and they’re engineering scenarios designed to push funds through your escrow in ways that make you an unwitting participant in money laundering. Common setups include: an overseas “client” asks you to hold funds in escrow pending a business transaction that never quite materializes, or a new client asks you to receive a wire, hold it briefly, and forward it to a third party minus your fee. The transaction may be framed as an equipment sale, a consulting agreement, or a settlement of a foreign dispute. The funds are real—but they’re stolen. And when law enforcement traces the money, the trail leads to your trust account. Red Flags A client asks you to receive and forward funds with no substantive legal work beyond holding money. The transaction structure doesn’t make legal sense. Why does an equipment sale between two foreign parties need a U.S. lawyer to hold escrow? Multiple parties you can’t independently verify—the “buyer,” “seller,” and “client” may all be the same person or organization. The client is indifferent to your fee or offers an unusually generous retainer for minimal work. How to Protect Yourself Never let your trust account be used as a payment pass-through. If the primary purpose of your engagement is to receive and forward funds rather than provide legal services, walk away. Know your client. Conduct due diligence that goes beyond a signed engagement letter. Verify corporate registrations, confirm identities, and understand the economic substance of the transaction. Understand your obligations under anti-money laundering frameworks. While the U.S. hasn’t adopted the ABA’s recommended “gatekeeper” rules in full, the ethical and criminal exposure is real. Consult your state bar’s ethics hotline if a potential engagement feels unusual. Most bars are happy to help you spot a scam before it becomes a disciplinary matter. The Overpayment Scam A variation on the collection scam, but worth its own section because it’s devastatingly effective. A new client retains you for a straightforward matter—a contract dispute, a personal injury settlement, a family law collection. A check arrives, but it’s for more than the agreed amount. The client apologizes for the “error” and asks you to deposit the check, keep your fee, and wire the overage back. The check is fraudulent. The “error” was the whole point. And you’ve just wired clean money from your trust account to a criminal. How to Protect Yourself Any overpayment followed by a request to return the excess is a scam. Full stop. Legitimate clients do not accidentally overpay and then urgently need the difference wired to a third-party account. Return overpayments by the same method they arrived. If a check came in, send a check back to the same account. Never wire a refund from a check deposit. Wait for final clearance—not “available funds.” Banks make funds “available” long before a check has truly cleared. Cashier’s checks drawn on foreign banks can take weeks to bounce back. AI-Powered Impersonation Artificial intelligence has made these scams dramatically more convincing. Fraudsters now use AI to generate flawless legal correspondence, clone the voices of known contacts, and create deepfake video. A scammer posing as a foreign client can now produce emails that read like they were written by a sophisticated business professional—because they were written by an AI trained on corporate communications. More alarmingly, the FBI has warned of criminal operations that impersonate existing law firms and real attorneys, complete with cloned websites and fabricated bar credentials, to victimize people who’ve already been scammed once. Your name and your firm’s reputation can be weaponized without your knowledge. How to Protect Yourself Monitor your firm’s online presence. Periodically search for your name, your firm name, and your bar number to check for impersonation websites or fraudulent use of your credentials. Don’t rely on the quality of written communications as a trust signal. AI has eliminated grammatical errors as a reliable red flag. A perfectly written email no longer means a legitimate sender. Verify voice and video. If a client or counterparty calls with an urgent financial request, hang up and call back at a known number. AI voice cloning is now available to anyone. The Lawyer’s Fraud Prevention Checklist Eight Rules to Protect Your Practice Never disburse trust funds until checks have irrevocably cleared. “Available” doesn’t mean “good.” Verify every new client’s identity independently—especially those who contact you unsolicited from overseas. Insist on live communication. Clients who refuse phone or video calls are a serious red flag. Never wire funds to a third party you haven’t independently confirmed. Treat wiring instruction changes as hostile until verified by phone. If a collection or transaction seems too easy, it’s probably a trap. Refuse to let your trust account be used as a pass-through. Document your due diligence. If you’re ever investigated, your file should show what you checked and when. If You Suspect You’ve Been Targeted Speed matters. If you’ve deposited a suspicious check or wired funds based on a potentially fraudulent instruction, act immediately. Contact your bank’s fraud department and request an immediate recall of any outgoing wires. Recovery rates drop sharply after the first 24 hours. Notify your state bar. Most bars have dedicated scam reporting channels and will not treat your report as a disciplinary matter. File a report with the FBI’s IC3 at ic3.gov and with the FTC at ReportFraud.ftc.gov. Notify your malpractice carrier immediately. Prompt reporting is typically a condition of coverage. Preserve all communications—emails, texts, checks, wire confirmations. These are evidence. Alert colleagues in your local bar. Scammers often work geographic regions systematically. If they targeted you, they’re targeting other lawyers in your area. There is no shame in being targeted. These are professional criminals running industrial-scale operations. The shame would be in not warning your colleagues. Share this guide with every lawyer you know. If fraud has left you or your clients facing overwhelming debt, you don’t have to face it alone. Lakelaw’s bankruptcy attorneys have helped thousands of people find a fresh financial start. Contact us today for a free, confidential consultation. Get a Free Confidential Consultation The post You’re the Mark, Counselor appeared first on Lakelaw.

 My law firm is representing a number of jewelry vendors who have sold goods to Saks, prior to their Chapter 11 bankruptcy filing. I am proud to announce that I was quoted in a New York Post article on the Saks Chapter 11 bankruptcy filing article. A link to the article can be found at https://nypost.com/2026/02/18/business/saks-and-neiman-low-on-luxury-goods-as-fashion-labels-fret-over-court-battle-with-amazon/Clients or their advisors who have questions about being paid on their Saks receivables prior to the bankruptcy filing or about being paid for goods shipped after the Saks bankruptcy filing should contact Jim Shenwick, Esq Jim Shenwick, Esq 917 363 3391 jshenwick@gmail.com Please click the link to schedule a telephone call with me. https://calendly.com/james-shenwick/15minWe help individuals & businesses with too much debt! & creditors in Bankruptcy cases

M.D.N.C. — Custer v. Dovenmuehle (IV): Transparency Wins Again — No Sealing of Documents at Summary Judgment (Post B- Bankruptcy Practice Tips and Sample Documents) Ed Boltz Fri, 02/13/2026 - 16:20 Below is a practitioner-focused review of what can be gleaned from the Custer v. Dovenmuehle record you provided — not as a case summary, but as a toolbox for attacking mortgage Proofs of Claim in Chapter 13, both against Dovenmuehle and other servicers who use similar practices. I focus on what Custer alleged, what DMI admitted (or couldn’t), and how those themes translate into objections, discovery, and plan practice in consumer cases. I. What Custer’s case reveals about how servicers actually operate Even without a merits ruling yet, the unsealed discovery tells us a great deal about how at least one major sub-servicer behaves — and where consumer lawyers can push back in bankruptcy. A. “Optional” fees that are functionally unavoidable Key takeaways from the admissions and depositions: DMI treated phone payments as a fee-generating channel, not an accommodation. The practice existed for “20-plus years” (Braun depo, pp. 36–39 of Ex. D). The fee was not tied to any borrower default or special service; it was a routine way to pay. Fees were set by market benchmarking, not cost accounting. In Interrogatory No. 8, DMI admits it raised fees based on what “others in the industry” were charging — not on its own costs. There is no evidence DMI ever analyzed its actual cost of processing payments. This matters enormously in bankruptcy, because it undermines any claim that the charge is a “reasonable fee” recoverable under § 506(b) or the loan documents. DMI could not (or would not) identify its “actual cost.” In Response to RFA No. 7, DMI said it lacked information to calculate its own costs. That admission is gold for debtors: if the servicer can’t quantify cost, it is very hard for them to justify a post-petition charge as “actual, necessary, and reasonable.” II. What this means for Proofs of Claim in Chapter 13 Here are practical ways to translate Custer into claim litigation. 1. Attack “pay-to-pay” and similar junk fees as unenforceable components of the claim When a Proof of Claim includes: “Processing fees” “Pay-by-phone fees” “Convenience fees” “Payment handling fees” “Transaction fees” You now have a template for objection: Arguments you can make (a) Not authorized by the mortgage or note. DMI tried to rely on boilerplate language that the lender may charge fees not “expressly prohibited.” That is backwards. Many courts require affirmative authorization, not mere absence of prohibition. Use: The mortgage terms (often FNMA/FHLMC uniform instruments) Servicing guides State law (in NC, NCDCA and UDTPA principles) (b) Not a recoverable charge under § 506(b). Even if a fee exists, a secured creditor can only recover post-petition fees if they are: Provided for in the agreement, AND Reasonable and necessary Custer shows that at least one servicer set fees by market comparison, not by cost — which undercuts “reasonableness.” (c) Not a “cost of cure” under § 1322(b)(5). If the debtor is curing arrears, “convenience fees” are not properly part of arrears unless: They are contractually required, and They actually relate to default. Custer shows these fees were routine, not default-based. 2. Use discovery strategically in bankruptcy cases Borrow from Custer’s playbook. Useful discovery requests in claim litigation: Cost inquiry (mirroring Custer RFA No. 7): Ask the servicer to admit or produce: The actual cost of processing a phone payment The vendor charge (e.g., ACI) Any internal analysis of profitability Whether fees exceed cost If they say “we don’t know,” that helps you argue the fee is per se unreasonable. Policy inquiry: Request documents showing: When the fee was adopted Why it was increased Whether the increase was revenue-driven Whether any borrower alternatives existed (free channels) Loan-type screening (Exhibit B themes). The record shows DMI had internal coding to decide which loans were charged the fee. In bankruptcy, ask: What criteria were used? Were some borrowers exempt? Why? Did this change over time? Inconsistencies can support UDTPA-style unfairness arguments. 3. Recharacterize these fees as disguised interest or impermissible add-ons Bankruptcy courts are increasingly skeptical of servicers using fees to supplement revenue. You can argue: These are not “costs of collection” but a revenue stream. If so, they should be treated as unsecured claims — or disallowed entirely — rather than secured arrears. This parallels arguments used in: Property inspection fee litigation Force-placed insurance cases “Default service” fee challenges Custer gives you evidentiary support that at least some servicers treat these as profit centers. III. Implications beyond Dovenmuehle Although this case is against DMI, the practices described are industry-wide. If any of these servicers include: “Convenience fees,” “Processing fees,” or “Payment channel fees” Custer can be cited as evidence that these charges are typically market-based rather than cost-based. IV. How this fits into Chapter 13 litigation strategy Step 1 — Read the Proof of Claim closely Look for: Added fees post-petition Unexplained “miscellaneous” charges Line items not tied to escrow, taxes, insurance, or principal/interest Step 2 — File a targeted objection Grounds: Not authorized by contract Not reasonable under § 506(b) Not part of arrears under § 1322(b)(5) Violates state law (NCDCA/UDTPA in NC) Step 3 — Serve limited discovery (if necessary) Model requests inspired by Custer: Identify actual cost of processing payment Produce vendor invoices (ACI or equivalent) Explain how fee was set Produce any analysis of profitability Identify when fees changed and why Step 4 — Use the burden of proof Remember: the creditor bears the burden to prove its secured claim amount is correct once you object. Custer shows many servicers cannot substantiate these fees with real cost data. V. Big-picture takeaway for consumer lawyers Custer is not just about one borrower or one servicer. It exposes a pattern: Mortgage servicers often impose “optional” payment-channel fees that are set by industry custom, not by actual cost, and are not clearly authorized by the mortgage. That pattern is deeply vulnerable in Chapter 13. Blog comments Attachment Document model_objection_pigeon_foreclosure_mill.docx (37.05 KB) Document discovery_template_pigeon_foreclosure_mill.docx (36.56 KB) Category Middle District

M.D.N.C. — Custer v. Dovenmuehle (IV): Transparency Wins Again — No Sealing of Documents at Summary Judgment (Post A) Ed Boltz Fri, 02/13/2026 - 16:13 Summary: Short take: In yet another skirmish in the Custer v. Dovenmuehle litigation, Chief Judge Catherine Eagles refused to let either side keep key summary-judgment materials under seal—especially the evidence about “pay-to-pay” fees. If Dovenmuehle wants to defend its business model, it will have to do so in the sunlight. What happened As the parties teed up cross-motions for summary judgment, both sides filed exhibits and briefing under temporary seal. Dovenmuehle Mortgage, Inc. (“DMI”) then sought to keep significant portions sealed, including: What DMI pays its vendor (ACI) to process phone payments; ACI contracts and invoices; Internal data about fee exceptions; and Information about which loan types are subject to the “pay-to-pay” fee. Custer, for his part, had filed a bank statement as an exhibit showing two payments to DMI—but the page also included his bank name, partial account number, balance, and unrelated transactions. Judge Eagles denied both motions to seal, with two important nuances: Custer’s bank statement (Exhibit L). The Court agreed that Custer’s irrelevant personal banking details should not be public—but criticized counsel for filing them unredacted in the first place. Rather than seal the whole exhibit, the Court ordered plaintiff’s counsel to submit a redacted replacement page limited to the two DMI payments. Once replaced, the exhibit would be fully unsealed. DMI’s business information. Although the Court had allowed some of this material to remain sealed at the class certification stage, Judge Eagles held that the balance shifts at summary judgment, where public access is at its constitutional apex. Because a central question in the case is whether DMI’s phone-payment fee is unlawful under the North Carolina Debt Collection Act and the UDTPA, the Court ruled that the public has a strong interest in knowing: What it actually costs DMI to provide the service; and Whether the fee is profit-driven or cost-based. DMI failed to show a “compelling interest” narrowly tailored enough to justify secrecy, so its request to seal was flatly denied. Result: The Clerk was ordered to unseal Custer’s brief (after redaction of the bank page) and to unseal DMI’s sealed materials in full. Why this matters — and how it fits with Custer I & II This decision is not just a procedural sideshow; it is very much of a piece with the earlier Custer rulings previously chronicled: Custer I — “No default required” (Nov. 6, 2024 post) Judge Eagles previously held that a borrower need not be in default to have a viable claim under the North Carolina Debt Collection Act. That ruling opened the door for routine mortgage servicing practices—like pay-to-pay fees—to be scrutinized even for current borrowers. 👉 Connection to today: If DMI is charging a fee that is allegedly “unfair,” “unconscionable,” or not authorized by contract, the public should be able to see the economics behind it. Transparency is part of accountability. Custer II (Nov. 21, 2025 post) You previously highlighted how Custer’s claims survived aggressive arguments that his loss-mitigation-related fees were somehow insulated from state law. 👉 Connection to today: The sealing order underscores that this case is not just about one borrower’s annoyance—it’s about systemic servicing practices affecting thousands of North Carolinians. When a practice is widespread, the public interest in transparency is at its zenith. Custer III — Class Certification granted (your Jan. 7, 2026 post) At class certification, the Court recognized common questions about DMI’s pay-to-pay practice and certified a class—while allowing some cost data to remain sealed for the moment. 👉 Connection to today: Judge Eagles essentially said: That was then; this is now. At summary judgment, secrecy gives way to the First Amendment. The very information that might show whether the fee is excessive is now presumptively public. Commentary: This ruling is vintage Chief Judge Eagles: careful on doctrine, pragmatic on procedure, and skeptical of reflexive secrecy. Two themes jump out: Sunshine as substance, not just process. DMI wanted to litigate in the shadows—arguing that its fee structure was commercially sensitive. But when a fee is alleged to violate North Carolina consumer law, secrecy becomes part of the problem. The public cannot evaluate whether a practice is abusive if the numbers are hidden. Class actions change the stakes. Once a class is certified, the case stops being about George Custer alone. It becomes a public dispute over mortgage servicing practices in North Carolina. That status justifies greater openness. A gentle but pointed rebuke to counsel. The Court did Custer a favor by allowing a redacted replacement instead of simply denying the motion outright. But the message was clear: lawyers should not dump sensitive personal data into the record and then ask the Court to clean it up. What to watch next With the cost data now not only in the open record  but also attached for everyone to pick through, expect: A sharper fight over whether the pay-to-pay fee is “reasonable,” “cost-based,” or simply a revenue stream; Potential expert battles on damages; and Possibly, stronger settlement pressure on DMI now that its numbers will be public. If Judge Eagles ultimately rules that the fee violates the NCDCA or UDTPA, this case could become a leading precedent for attacking junk mortgage servicing fees across North Carolina—much like Bland and Greene reshaped the rent-to-own landscape. To read a copy of the transcript, please see: To read a copy of the transcript, please see: Blog comments Attachment Document custer_v._dovenmuehle.pdf (206.47 KB) Document dovenmuehle_mortgage_unsealed_documents.pdf (20.78 MB) Category Middle District