Serving A Depository Institution By Serving Counsel Allows You to Sidestep Rule 7004(h)
March 22, 2007
The case of In re Hildreth — B.R. —-, 2007 WL 458066 (Bkrtcy.M.D.Ala. 2007) makes clear that a depository institution was properly served by first class mail addressed to an attorney, though the attorney in question had never entered formal appearance in bankruptcy case on bank’s behalf, where attorney appeared numerous times on bank’s behalf and had filed motion and submitted a proposed order as bank’s legal representative.
Federal Rule of Bankruptcy Procedure 7004(h) requires that service on an insured depository institution (as defined in section 3 of the Federal Deposit Insurance Act) in a contested matter or adversary proceeding shall be made by certified mail addressed to an officer of the institution unless the institution has appeared by its attorney, in which case the attorney shall be served by first class mail; the court orders otherwise after service upon the institution by certified mail of notice of an application to permit service on the institution by first class mail sent to an officer of the institution designated by the institution; or the institution has waived in writing its entitlement to service by certified mail by designating an officer to receive service.
So the question in Hildreth was really what constitutes “unless the institution has appeared by its attorney.” The court, using the cases of Rubin v. Pringle (In re Focus Media, Inc.), 387 F.3d 1077, 1084 (9th Cir.2004) and Ms. Interpret v. Rawe (In re Ms. Interpret), 222 B.R. 409, 416 (Bankr.S.D.N.Y.1998) held that an attorney does not have to enter a formal appearance in a case in order to be the party’s attorney for purposes of service of process. The attorney for the bank in this case had appeared numerous times in this bankruptcy case, filing a motion and submitting a proposed order on behalf of the bank.
In response, the attorney claimed that she received thousands of emails and that she cannot possibly “monitor each pleading filed in each and every case in which [she] has filed a motion for a creditor.” Citing McMillian v. District of Columbia, 233 F.R.D. 179, 181 (D.D.C.2005) as well as In re Mayhew, 223 B.R. 849, 856 (D.R.I.1998), the court tossed aside this argument and held that it is the duty of the creditor’s attorney to monitor the court’s docket to keep himself apprised of the developments in the case.
So the lesson here is that unbundling is not permitted by either party If a creditor has retained counsel for one aspect of a bankruptcy case, that attorney cannot come to the court with an argument that is has merely “unbundled” it’s services. Most debtor attorneys face the same challenge, with many courts holding that a lawyer in the base case is automatically the lawyer in any adversary proceeding commenced against the debtor during the court of the case.
What’s good for the goose is good for the gander.
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