Even though the debtor had not listed a contract among her executory contracts, all of the claims associated with the contract were discharged because the debtor had scheduled the counterparty as a creditor, the Eleventh Circuit ruled.
The debtor had a contract for satellite television service. Before bankruptcy, she took advantage of a provision in the contract allowing her to “pause” the contract for up to nine months. During the pause, her monthly payment would decline to $5 a month, but she wouldn’t have television service. The number of months the contract was on “pause” would be added to the term of the contract once the “pause” ended.
In chapter 7, the debtor scheduled the satellite provider as having an unsecured claim for about $850, but she did not list the contract on her schedule of executory contracts. The trustee neither assumed nor rejected the contract. The parties agreed that the agreement was an executory contract.
After discharge, the satellite provider contacted the debtor numerous times attempting to collect the $5-per-month “pause” fee. The debtor sued in federal district court, claiming that the attempted collection of a discharged debt violated both the Florida Consumer Collection Practices Act and the Telephone Consumer Practices Act.
The district court dismissed the claims under both statutes. The district court reasoned that the contract was not rejected because it was not scheduled as executory. The contract not having been rejected, the district court believed that “pause” charges accrued after filing were not discharged.
Sitting by designation, Senior District Judge C. Ashley Royal of Macon, Ga., reversed in an opinion on May 1.
Judge Royal held that the failure to schedule the executory contract did “not prevent its deemed rejection” under Section 365(d)(1). That section provides that a contract not assumed or rejected within 60 days of a chapter 7 order for relief is deemed rejected.
To reach this conclusion, Judge Royal noted that the satellite provider was listed as an unsecured creditor and “clearly” had notice of the bankruptcy. Also, there was no evidence that the debtor intentionally concealed the contract.
Given those facts, Judge Royal found that the contract “was deemed rejected pursuant to Section 365(d)(1).” In turn, rejection resulted in a prepetition breach of contract under Section 365(g), giving the provider a prepetition breach of contract claim for the “pause” debt.
Having found that the “pause” debt was discharged, Judge Royal reinstated the debtor’s claim under the FCCPA but upheld dismissal of the TCPA claim.
In her concurring opinion, Circuit Judge Britt C. Grant said in substance that the appeals court might have also reinstated the TCPA claim had the debtor not waived a pivotal argument on appeal. Therefore, the circuit’s affirmance of dismissal of the TCPA claim should have little precedential value.
Even though the debtor had not listed a contract among her executory contracts, all of the claims associated with the contract were discharged because the debtor had scheduled the counterparty as a creditor, the Eleventh Circuit ruled.
The debtor had a contract for satellite television service. Before bankruptcy, she took advantage of a provision in the contract allowing her to “pause” the contract for up to nine months. During the pause, her monthly payment would decline to $5 a month, but she wouldn’t have television service. The number of months the contract was on “pause” would be added to the term of the contract once the “pause” ended.
In chapter 7, the debtor scheduled the satellite provider as having an unsecured claim for about $850, but she did not list the contract on her schedule of executory contracts. The trustee neither assumed nor rejected the contract. The parties agreed that the agreement was an executory contract.
After discharge, the satellite provider contacted the debtor numerous times attempting to collect the $5-per-month “pause” fee. The debtor sued in federal district court, claiming that the attempted collection of a discharged debt violated both the Florida Consumer Collection Practices Act and the Telephone Consumer Practices Act.
The district court dismissed the claims under both statutes. The district court reasoned that the contract was not rejected because it was not scheduled as executory. The contract not having been rejected, the district court believed that “pause” charges accrued after filing were not discharged.
Sitting by designation, Senior District Judge C. Ashley Royal of Macon, Ga., reversed in an opinion on May 1.