PHILADELPHIA – A federal appeals court has affirmed a district court ruling dismissing a Colwyn man’s complaint against PECO Energy Company, a PECO Bankruptcy Department attorney and a trustee from U.S. Bankruptcy Court.
In a per curiam ruling issued Tuesday, U.S. Court of Appeals for the Third Circuit judges D. Michael Fisher, Kent A. Jordan and Thomas I. Vanaskie upheld the trial court ruling, which dismissed Derrick Mathis’s complaint against PECO, PECO attorney Shawn Lee and U.S. Bankruptcy Court trustee Gary F. Seitz.
Mathis was the debtor in a Chapter 7 bankruptcy proceeding where PECO filed a claim for about $7,400. Mathis repeatedly objected to PECO’s claim as fraudulent and asserted the Chapter 7 trustee, Seitz, committed misconduct in connection with the PECO claim. The Bankruptcy Court overruled Mathis’s objections and ordered Seitz to pay the claim, which he did before the bankruptcy case was closed in January of 2014. Mathis did not appeal this decision.
Instead, more than one year later, Mathis filed a lawsuit and an amended complaint seeking damages from PECO and one of its attorneys Lee (collectively, PECO), as well as Seitz. Under various federal statutes, such as 18 U.S.C. Sections 371 and 1001 and the Fair Debt Collection Practices Act (FDCPA), Mathis alleged the $7,400 claim was fraudulent because it was connected to his business property and not his residence, and that PECO and Seitz conspired to bring that purportedly fraudulent claim before the Bankruptcy Court. Second, Mathis alleged that PECO was attempting to collect the same debt despite its discharge and that, toward that end, PECO suspended his electrical service.
Both defendants filed motions to dismiss under Federal Rule of Civil Procedure 12 (b)(6), failure to state a claim upon which relief may be granted, and the District Court granted both motions and dismissed Mathis’s complaint.
Further, the District Court ruled it lacked jurisdiction over Mathis’s claims against Seitz and that Mathis failed to properly state a federal claim against PECO.
The District Court also chose not to exercise supplemental jurisdiction over the complaint’s state law claims, which were denied without prejudice to allow Mathis to argue them in state court. Mathis appealed the District Court’s decision.
“We will affirm the District Court’s dismissal of Mathis’s amended complaint as to PECO for the reasons it adequately explained. In particular, the District Court properly determined that the criminal statutes that Mathis invoked do not create a private right of action,” the Third Circuit said. “The District Court further properly concluded that Mathis failed to state a claim under the FDCPA because his allegations show that PECO is a direct creditor and not a “debt collector.”
The Third Circuit also believed the District Court acted within its discretion to decline supplemental jurisdiction over the state law claims and dismissing them without prejudice.
Though the Third Circuit additionally questioned the District Court’s use of the Barton doctrine in dismissing Mathis’s claims against Seitz on jurisdictional grounds, the Court said these claims regardless remain subject to dismissal for failure to state a claim.
“Mathis alleges Seitz conspired with PECO to submit and obtain payment of a fraudulent claim during Mathis’s bankruptcy. The validity of PECO’s claim was established over Mathis’s objections during that bankruptcy, however, and Mathis did not appeal,” the Third Circuit said.
The appeals court said the “conclusory” claim is no longer subject to challenge on that basis and due to immunity from suit, since Seitz was operating as an officer of the Bankruptcy Court.
In addition, the Third Circuit illustrated Mathis did not specify how Seitz allegedly defrauded the Bankruptcy Court and doesn’t suggest he could amend the complaint in further detail, were he provided the opportunity.
“Mathis does not specify how Seitz allegedly defrauded the Bankruptcy Court, and his conclusory allegations to that effect are inconsistent with other of his allegations, including that Seitz presented nothing to the Bankruptcy Court at all,” the Third Circuit said.
“Mathis does not argue that he could further amend his complaint to state a claim against Seitz in this regard, and nothing in his filings in either the District Court or this one suggests that he could,” the Third Circuit decided.
The appellees represented by Lynn R. Zack of Exelon Business Services Company and Seitz of Gellert Scali Busenkell & Brown, both in Philadelphia.
U.S. Court of Appeals for the Third Circuit case 15-2968
U.S. District Court for the Eastern District of Pennsylvania case 2:14-cv-02234
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at email@example.com