In Manikan v. Peters & Freedman, L.L.P., No. 19-55393, 2020 U.S. App. LEXIS 37176 (9th Cir. Nov. 25, 2020), the 9th Cir. distinguished its Walls decision to allow an FDCPA claim to proceed because the claim did not depend on the issuance or enforcement of the discharge order.
P&F contends that Walls categorically bars a discharged debtor’s FDCPA claims brought against a creditor seeking to collect a debt that was provided for in a bankruptcy proceeding. P&F reads Walls too broadly, and we decline to extend Walls to preclude claims that are not premised on a violation of a bankruptcy discharge order. In Walls, the FDCPA claim depended on the discharge injunction. Stated another way, the debtor had no basis independent from the discharge order to show that the creditor acted unlawfully. The lawfulness of the creditor’s actions stood or fell on the entry of discharge and the accompanying injunction. And we instructed that claims brought outside of bankruptcy contempt proceedings that seek remedies for violation of the discharge injunctions fail “no matter how cast.” Id. at 511. This case is different. Manikan does not seek to remedy a violation of his discharge order. Instead, he alleges P&F acted unlawfully because it tried to collect a debt that he fully paid nearly two years before his discharge. 3 So, even if Manikan had never received a discharge in his bankruptcy case, he could still assert P&F acted unlawfully by attempting to collect a debt that he fully satisfied. Manikan’s FDCPA claims are therefore premised on a wholly independent theory of relief. 4 It may be that Manikan could have relied on his discharge order in alleging unlawful conduct by P&F. See 11 U.S.C. § 1328(a) (upon completion of all payments under the plan, the bankruptcy “court shall grant the debtor a discharge of all debts provided for by the plan . . .”). But he did not, nor did he need to. And our decision in Walls does not bar independent theories of recovery whenever violation of the discharge order also is a potentially available theory of recovery. Nor does our holding in this case allow debtors to improperly “circumvent the remedial scheme of the [Bankruptcy] Code.” Walls, 276 F.3d at 510. Because Manikan’s FDCPA claims are not premised on enforcing the discharge order, they do not “necessarily entail[] bankruptcy-laden determinations.” Id. The amount that Manikan paid was dictated by the terms of his contract with the HOA, not bankruptcy law. And just because he made his arrearage payments through operation of a bankruptcy plan does not render his FDCPA claims inextricably intertwined with bankruptcy issues. Allowing Manikan’s FDCPA claims to proceed will therefore not place the enforcement of “complex, detailed, and comprehensive provisions” of the Bankruptcy Code in the hands of the district court or a jury. Id. (quoting MSR Expl., Ltd. v. Meridian Oil, Inc., 74 F.3d 910, 914 (9th Cir. 1996)). 5 P&F counters that Midland Funding LLC v. Johnson, 137 S. Ct. 1407, 197 L. Ed. 2d 790 (2017), compels affirmance. But Midland Funding does not conflict with our holding. There, the Supreme Court held that filing a proof of claim that is facially barred by the applicable statute of limitations is not actionable under §1692e and § 1692f of the FDCPA. Id. at 1410-11. The Court explained that the creditor’s proof of claim was not “false, deceptive, or misleading,” see 15 U.S.C. § 1692e, because it had a “right to payment,” see 11 U.S.C. § 101(5)(A), even after the applicable limitations period had expired and rendered the claim unenforceable. Midland Funding, 137 S. Ct. at 1410-13. Nor was the creditor’s proof of claim “unfair” or “unconscionable,” see 15 U.S.C. § 1692f, because of the numerous “protections available in a Chapter 13 bankruptcy proceeding.” Midland Funding, 137 S. Ct. at 1413-14. The Court explained that it “[did] not find in either the [FDCPA] or the Bankruptcy Code good reason to believe that Congress intended an ordinary civil court applying the [FDCPA] to determine answers to . . . bankruptcy-related questions.” Id. at 1414. The Court therefore declined to “authorize a new significant bankruptcy-related remedy in the absence of language in the [Bankruptcy] Code providing for it.” Id. at 1415. As we have explained, the resolution of Manikan’s claims does not hinge on bankruptcy-related questions. The only determination necessary is whether he fully paid his debt in 2014. This is easily resolved because Manikan’s full payment is memorialized in multiple documents publicly filed by both his creditor’s representative and the bankruptcy trustee and because P&F does not dispute that Manikan fully paid his HOA debt. Allowing Manikan’s FDCPA claims to proceed therefore does not run afoul of Midland Funding.