Cournoyer v. Elansari

El ye □□ □□

SIGNED this 22nd day of April, 2022. We)

BBRNJAMIN A. KAHN

UNITED STATES BANKRUPTCY JUDGE

NOT FOR PUBLICATION

UNITED STATES BANKRUPTCY COURT

MIDDLE DISTRICT OF NORTH CAROLINA

GREENSBORO DIVISION

In re: ) Case No. 21-10106

)

Tawana Williams, ) Chapter 7

)

Debtor. )

a)

)

William P. Miller, )

U.S. Bankruptcy Administrator, )

)

Plaintiff, )

)

Vv. ) Adv. Pro. No. 21-02006

)

Amro Elansari and The Law )

Lian, LLC, )

)

Defendants. )

a)

MEMORANDUM OPINION DENYING MOTIONS TO DISMISS

Amro Elansari (“Defendant”) appears in this matter pro se.

On July 26, 2021, Defendant filed his Answer and New Matter

(“Answer”). ECF No. 14. In his Answer, Defendant asserts the

affirmative defense under Fed. R. Civ. P. 12(b) (6), made applicable

to this adversary proceeding by Fed. R. Bankr. P. 7012, that the

Complaint fails to state a claim upon which relief may be granted.

After filing his Answer, Defendant further filed his Defendant’s

Motion to Dismiss Pursuant to 12(b)(6), ECF No. 63 (the “Second

Motion to Dismiss”), and the Motion to Dismiss Pursuant to Article

III Constitution/Unconstitutionality of the Instant Action, ECF

No. 79 (the “Constitutional Challenge”).

For the following reasons, the defense for failure to state

a claim will be overruled, and the Motion to Dismiss will be

denied. For the avoidance of doubt, and because the other filings

contain overlapping, similar, and sometimes identical arguments,

the Second Motion to Dismiss, as defined below, similarly will be

denied.

I. JURISDICTION AND AUTHORITY

The Court has jurisdiction over the subject matter of this

case under 28 U.S.C. § 1334(a) and over this proceeding under 28

U.S.C. § 1334(b). The United States District Court for the Middle

District of North Carolina has referred this case and this

proceeding to this Court under 28 U.S.C. § 157(a), by its Local

Rule 83.11. This is a core proceeding under 28 U.S.C. § 157(b),

in which this Court has statutory authority to enter final

judgments. See e.g., In re Spence, 515 B.R. 369, 372 (Bankr. M.D.

Fla. 2014); In re Farris, 598 B.R. 411, 414 (Bankr. W.D. La. 2019).

The Court has constitutional authority to enter final judgment in

this proceeding.

II. BACKGROUND

A. Factual Background.1

The Law Lion, LLC (“Law Lion”) is a Pennsylvania limited

liability company created on December 18, 2020.2 Defendant is the

Law Lion, LLC’s organizer. As part of Tawana William’s (“Debtor”)

bankruptcy filing, Debtor paid or agreed to pay Defendant to help

fill her bankruptcy forms. Debtor was referred to Defendant by

family members but contacted him through an advertisement on the

“legal services” section of the website craigslist.com. That

advertisement read, in part:

SUE ANYONE-$120 + Court Fees

Someone giving you a problem? Lawyer Too Busy?

SUE ‘EM-it’s just a few forms I can fill out and type

up-

I am a paralegal that does a lot of legal writing-I write

the lawsuit for you

We file it and SUE ‘EM

Housing Issue? SUE ‘EM

Business Issue? SUE ‘EM

You have the right to sue people if you need help with

an issue-just a few forms at your local court.

$120-I write the paperwork for you legal style-we file

it and serve it and GET THEM IN COURT.

Using the questionnaire and a credit report, Defendants

completed Debtor’s petition, schedules, and statements. Debtor

paid Defendants $120.00 for the services. Defendants did not

1 This matter is before the Court on Defendant’s Motion to Dismiss. Therefore,

the Court must accept the facts in the Complaint as true and in a light most

favorable to Plaintiff. The Court may not consider Defendant’s many factual

arguments at this stage in the litigation.

2 Law Lion and Defendant shall be collectively referred to as “Defendants.”

provide a signed Official Form 119 before accepting the payment

from Debtor.

Debtor filed the Official Form 119, Bankruptcy Petition

Preparer’s Notice, Declaration, and Signature. The Form 119

identifies Defendants as bankruptcy petition preparers and

provides their address. The Form did not include an identifying

number for either Defendants or a signature.

B. Procedural Background

On June 9, 2021, William P. Miller, Bankruptcy Administrator

for the Middle District of North Carolina (“Bankruptcy

Administrator”), commenced the above-captioned adversary

proceeding by filing his Complaint of the United States Bankruptcy

Administrator for Forfeiture of Compensation, Damages, and

Injunctive Relief Pursuant to 11 U.S.C. §§ 110 and 526 against

Defendants Amro Elansari and The Law Lion, LLC. ECF No. 1

(“Complaint”). The Bankruptcy Administrator alleges, among other

things, Defendants violated 11 U.S.C. §§ 110, 526, and 528 while

acting as bankruptcy petition preparers and as a debt relief agency

in the Chapter 7 case of Tawana Williams. The Bankruptcy

Administrator seeks forfeiture and turnover of fees, damages,

injunctive relief, and fines against Defendants for these alleged

violations.

Law Lion did not respond to the Complaint. On July 26, 2021,

Defendant filed several documents, including the Answer. In his

Answer, Defendant responded to the individual allegations of the

Complaint and asserted a Counterclaim against the Bankruptcy

Administrator and Sarah D. Bruce (“Counterclaims”). Defendant

also asserts various defenses, including that the Court lacks

subject matter jurisdiction and that each cause of action fails to

state a claim for relief. ECF No. 14, pp. 15-16.

On October 20, 2021, Defendant filed Defendant Motion to

Dismiss Pursuant to 12(b)(6), ECF No. 63 (the “Second Motion to

Dismiss”), and the accompanying Brief in Support of Defendant

Motion to Dismiss Pursuant to 12(b)(6), ECF No. 64 (the “Brief”).

The Court entered an Order on November 5, 2021 “constru[ing] the

brief in support of the untimely [Second Motion to Dismiss] in

support of the defense in the Answer.” ECF No. 68. Plaintiff had

30 days from the November 3, 2021 hearing to respond to Defendant’s

brief. Id. On December 3, 2021, Plaintiffs filed Plaintiff’s

Response in Opposition to Defendant’s Brief in Support of Rule

12(b)(6) Defense. ECF No. 83 (“Plaintiff’s Response”).

In his Second Motion to Dismiss, Defendant argues that

“Plaintiff failed to claim material defects of foul play . . .

[and] [t]he Plaintiff failed to show proof of actual misconduct

such communication where the Defendant advises or informs anyone

of anything.” ECF No. 63, pp. 1-2. Further, Defendant argues

that Plaintiff failed to mitigate damages and that they committed

fraud in filing the instant matter. Id. at p. 2. Finally,

Defendant contends that he does not qualify as a bankruptcy

petition preparer. Id. The Brief solely focused on whether

Defendant was a bankruptcy petition preparer and the limited

services that Defendant provided to Debtor.

On December 2, 2021, Defendant filed a third motion to

dismiss, the Motion to Dismiss Pursuant to Article III

Constitution/Unconstitutionality of the Instant Action, ECF No. 79

(the “Constitutional Challenge”), and the Brief in Support of

Motion to Dismiss Pursuant to Article III

Constitution/Unconstitutionality of the Instant Action, ECF No. 80

(the “Brief in Support of the Constitutional Challenge”). In the

Constitutional Challenge, Defendant alleges that 11 U.S.C § 110 is

unconstitutional because it limits freelance writers and

unconstitutionally infringes on their right to contract.

Defendant claims that he was merely a scrivener or free-lance

writer, and § 110 unconstitutionally infringes on his right to

contract with Debtor for writing services.

On January 7, 2022, Defendant filed two additional documents

pertinent to the Motion to Dismiss.3 Defendant filed the

Supplemental Brief in Support of Motion to Dismiss Pursuant to

Article III Constitution/Unconstitutionality and the Reply Brief

in Support of Motion to Dismiss pursuant to Article III

3 Defendant did not request leave to file additional pleadings in support of

his Motion. However, the Court will consider the pleadings in its ruling.

Constitution/Unconstitutionality. ECF Nos. 92 & 93, respectively.

Both briefs challenge the constitutionality of 11 U.S.C § 110 under

a theory that the statute violates Defendant’s freedom of contract

under the due process clause of the Fifth Amendment to the

Constitution, as determined in Lochner v. New York, 198 U.S. 45

(1905).

III. STANDARD OF REVIEW

Defendant contends that the Complaint should be dismissed

under Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon

which relief can be granted. Instead, and because Defendant has

already filed an answer, the appropriate avenue to bring an

affirmative defense arguing a deficiency in the claim for relief

is through Rule 12(c). Walker v. Kelly, 589 F.3d 127, 139 (4th

Cir. 2009) (“Because the Commonwealth filed its answer to Walker's

petition and its motion to dismiss simultaneously, it technically

should have filed the motion under Rule 12(c) as one for judgment

on the pleadings.”)(considering the motion to dismiss despite the

procedural deficiency). Whether the motion to dismiss is under

Rule 12(b)(6) or 12(c), the standards are the same.

A motion for judgment on the pleadings under Rule 12(c)

is assessed under the same standards as a motion to

dismiss under Rule 12(b)(6). . . . A motion to dismiss

tests the sufficiency of a complaint. To survive such

a motion, the complaint must contain facts sufficient to

raise a right to relief above the speculative level and

state a claim to relief that is plausible on its face.

Although a motion pursuant to Rule 12(b)(6) invites an

inquiry into the legal sufficiency of the complaint, not

an analysis of potential defenses to the claims set forth

therein, dismissal nevertheless is appropriate when the

face of the complaint clearly reveals the existence of

a meritorious affirmative defense.

Columbia v. Haley, 738 F.3d 107, 115-16 (4th Cir. 2013)(internal

citations and quotations omitted).

As stated by the Fourth Circuit, the standards set forth in

Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v.

Iqbal, 556 U.S. 662 (2009), guide the Court in determining whether

to dismiss a complaint. A complaint should survive a motion to

dismiss if it contains “sufficient factual matter, accepted as

true, to ‘state a claim to relief that is plausible on its face.’”

Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570).

A claim has facial plausibility when the plaintiff

pleads factual content that allows the court to draw the

reasonable inference that the defendant is liable for

the misconduct alleged. The plausibility standard is

not akin to a “probability requirement,” but it asks for

more than a sheer possibility that a defendant has acted

unlawfully. Where a complaint pleads facts that are

“merely consistent with” a defendant’s liability, it

“stops short of the line between possibility and

plausibility of ‘entitlement to relief.’

Id. (citations omitted).

IV. DISCUSSION

Defendant raised a constitutional argument in the Third

Motion to Dismiss. ECF No. 79. Defendant argues that 11 U.S.C.

§ 110 is both facially unconstitutional and unconstitutional as

applied to him. Defendant argues that he did not do the things

alleged in the Complaint, and therefore the statute is

unconstitutional as proposed to be applied to him. Since the

remaining motion to dismiss would be moot if § 110 is

unconstitutional, the Court will first consider Defendant’s

constitutional attack on § 110.

A. Regulating bankruptcy petition preparers under 11 U.S.C. §

110 does not violate any freedom of contract under the U.S.

Constitution.

A number of courts have overruled various Constitutional

challenges to § 110. See, e.g., In re Doser, 412 F.3d 1056 (9th

Cir. 2005) (holding that § 110 was not unconstitutionally vague

and did not violate the petition preparer’s First Amendment rights

by restricting the information that she could provide to her

customers); Wynns v. Adams, 426 B.R. 457 (E.D.N.Y. 2010) (holding

that sanctions for even minor violations of § 110 did not violate

the petition preparer’s due process rights), aff’d, 435 Fed. Appx.

27 (2d Cir. 2011); In re Douglas, 304 B.R. 223 (Bankr. D. Md. 2003)

(holding that § 110 did not violate a petition preparer’s First

Amendment rights of freedom of speech); In re Kaitangian, 218 B.R.

102 (Bankr. S.D. Cal. 1998) (finding that the prohibition against

misleading advertisements does not violate First Amendment rights,

or “the right to pursue [defendant’s] chosen calling or profession”

under the Equal Protection Clause); In re Adams, 214 B.R. 212

(B.A.P. 9th Cir. 1997) (holding that the requirement for a petition

preparer to disclose her social security number did not violate

her constitutional right of privacy). The statue similarly

withstands constitutional scrutiny under Defendant’s related due

process challenges here. “The party challenging the statute has

the burden of proving that it is unconstitutional.” Kaitangian,

218 B.R. at 107 (citing In re Raush, 197 B.R. 109, 117 (Bankr. D.

Nev. 1996)). Defendant has failed to carry that burden.

The Fifth and Fourteenth Amendment to the United States

Constitution, in relevant part, “speaks of liberty and prohibits

the deprivation of liberty without due process of law.” W. Coast

Hotel Co. v. Parrish, 300 U.S. 379, 391 (1937). “It has been held

that the right to make contracts is embraced in the conception of

liberty as guaranteed by the Constitution.” Chi., B. & Q. R. Co.

v. McGuire, 219 U.S. 549, 566 (1911) (citations omitted).

An unlimited freedom of contract, though, has never been part

of the due process jurisprudence. E.g., Lochner v. New York, 198

U.S. 45, 53-54 (1905)(“Contracts in violation of a statute, either

of the Federal or state government, or a contract to let one's

property for immoral purposes, or to do any other unlawful act,

could obtain no protection from the Federal Constitution, as coming

under the liberty of person or of free contract.”); Parrish, 300

U.S. at 392 (quoting McGuire, 219 U.S. at 567 (“But it was

recognized in the cases cited, as in many others, that freedom of

contract is a qualified and not an absolute right. There is no

absolute freedom to do as one wills or to contract as one

chooses.”)). Even at its height, there were examples of legitimate

laws restricting a person’s right to contract. See Parrish, 300

U.S. at 397.

Since these cases, the freedom of contract has been limited

in its concept, and regulating this freedom is left to the general

discretion of the legislature. Day-Brite Lighting, Inc. v.

Missouri, 342 U.S. 421, 423 (1952). As the Supreme Court has said,

“[i]t is by now well established that legislative Acts adjusting

the burdens and benefits of economic life come to the Court with

a presumption of constitutionality, and that the burden is on one

complaining of a due process violation to establish that the

legislature has acted in an arbitrary and irrational way.” Usery

v. Turner Elkhorn Mining Co., 428 U.S. 1, 15 (1976)(superseded by

statute on other grounds); see Williamson v. Lee Optical of Okla.,

Inc., 348 U.S. 483, 488 (1955) (citing Nebbia v. New York, 291

U.S. 502 (1934); Parrish, 300 U.S. 379; Olsen v. Nebraska, 313

U.S. 236 (1941); Lincoln Fed. Labor Union v. Nw. Iron & Metal Co.,

335 U.S. 525 (1949); Daniel v. Family Sec. Ins. Co., 336 U.S. 220

(1949); Day-Brite Lighting, 342 U.S. 421); Austin Apartment Ass'n

v. City of Austin, 89 F. Supp. 3d 886, 898 (W.D. Tex. 2015). A

statute regulating economic conduct is unconstitutional only if it

“is clearly arbitrary and unreasonable, having no substantial

relation to the public health, safety, morals, or general welfare.”

Ferm v. United States Tr. (In re Crawford), 194 F.3d 954, 962 (9th

Cir. 1999)(internal citations omitted); see Ferguson v. Skrupa,

372 U.S. 726 (1963)(upholding a statute that disallowed non-

attorneys from acting as “debt relief” agencies.)(“The doctrine

that prevailed in Lochner, Coppage, Adkins, and Burns, and like

cases . . . has long since been discarded[,]” and “[l]egislative

bodies have broad scope to experiment with economic problems . .

..”).

“The purpose of [§ 110] was to address the proliferation of

bankruptcy petition preparers not employed or supervised by

attorneys and to enact limitations on and standards for the types

of activities in which bankruptcy petition preparers could be

engaged, particularly with respect to providing legal advice and

engaging in the unauthorized practice of law.” In re Evans, 413

B.R. 315, 319-20 (Bankr. E.D. Va. 2009) (citing In re Springs, 358

B.R. 236, 241 (Bankr. M.D.N.C. 2006); Crawford, 194 F.3d at 960,

cert. denied, 528 U.S. 1189, 120 S. Ct. 1244, 146 L. Ed. 2d 102

(2000); In re Moffett, 263 B.R. 805, 812-13 (Bankr. W.D. Ky. 2001);

In re Farness, 244 B.R. 464, 467 (Bankr. D. Idaho 2000); In re

Graham, Nos. 02-81930C-7D, 02-82065C-7D, 2004 Bankr. LEXIS 1678,

at *7 (Bankr. M.D.N.C. Feb. 10, 2004)). As Congressman Jack Brooks

explained:

Bankruptcy petition preparers not employed or supervised

by any attorney have proliferated across the country.

While it is permissible for a petition preparer to

provide services solely limited to typing, far too many

of them also attempt to provide legal advice and legal

services to debtors. These preparers often lack the

necessary legal training and ethics regulation to

provide such services in an adequate and appropriate

manner. The services may take unfair advantage of

persons who are ignorant of their rights both inside and

outside the bankruptcy system.

Keith M. Lundin, Lundin On Chapter 13, § 4.2, at ¶ 2,

LundinOnChapter13.com (last visited April 22, 2022) (quoting 140

Cong. Rec. H10,770 (daily ed. Oct. 4, 1994)).

Congress has acted with clear intent when enacting the

statutes governing bankruptcy petition preparers. Section 110

regulates scrivener and writing services to ensure these

professionals do not advise clients in areas that are reserved for

legal professionals. Congress’ intent is to safeguard debtors

from any misleading advice in filing their petitions. To reach

this objective, § 110 creates certain standard forms that preparers

must use and certain forms that they file with courts. The

reporting requirements ensure the Court can protect fairness and

debtors’ interests, and the disclosures directly protect debtors

and the integrity of the bankruptcy system. Requiring certain

qualifications in a profession does not violate substantive due

process rights such as freedom of contract. E.g. Skrupa, 372 U.S.

726. For these reasons, Congress did not act arbitrarily when

enacting § 110, and the section therefore does not violate the

right to contract under the United States Constitution.

Applying the statute in this case similarly does not

arbitrarily infringe on Defendant’s right to contract. There is

nothing that prohibits Defendant, as a non-attorney writer or

scrivener, from functioning as a bankruptcy petition preparer or

charging $120.00. Instead, there are certain safeguards that these

professionals must adhere to when completing forms on behalf of

debtors. According to the Complaint,4 Defendant contracted with

Debtor to help her with preparing official court forms. When

Defendant prepared official forms, rather than any other writing

that Defendant contends, Defendant fell into the class of

professionals that are subject to reporting requirements.

Therefore, Defendant’s motion to dismiss on constitutional

grounds is denied.

B. The Complaint includes sufficient factual information to

present a plausible claim for relief under 11 U.S.C. § 110.

“Among other things, [§ 110] requires the [bankruptcy]

petition preparer to provide written notice informing the debtor

that he is not an attorney and may not give legal advice or practice

law[,] . . . [t]he petition preparer is also required to disclose

all fees received from the debtor within the 12 months before the

petition was filed and any remaining unpaid fee charged to the

debtor[,] . . . [and the] statute prohibits the petition preparer

from: executing any documents on behalf of the debtor or providing

legal advice, § 110(e), Bankruptcy Code; using the word ‘legal’ or

4 Defendant disputes the allegations in the Complaint. To the extent, if any,

that the Court determines Defendant did not in fact commit the alleged actions

in violation of § 110, the statute is not unconstitutional as applied.

any similar term in advertisements, § 110(f), Bankruptcy Code; and

collecting any court filing fees from the debtor, § 110(g),

Bankruptcy Code.” In re Evans, 413 B.R. 315, 320 (Bankr. E.D. Va.

2009). “The statute provides a variety of sanctions for any

violations, including disgorgement of some or all fees charged, §

110(h)(3), Bankruptcy Code; fines, § 110(l)(1), Bankruptcy Code;

compensatory and statutory damages, § 110(i)(1), Bankruptcy Code;

and injunctive relief, § 110(j), Bankruptcy Code.” Id.

In order to be liable under the statute, Defendant must fall

into the class regulated by the statute, and the Complaint must

support a plausible claim for relief under each cause of action.

Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570).

1. The Complaint includes sufficient facts, taken as true,

to present a plausible claim that Defendant is a

Bankruptcy Petition Preparer.

Defendant contends that because his activities described in

the Complaint are as a typist and freelance writer, he has acted

in a way that disqualifies himself as a bankruptcy petition

preparer. On the contrary, a writer or typist who employs his

trade in completing official forms on behalf of another, forms

prepared by the judiciary, is preparing legal forms.

Section 110 applies to all bankruptcy petition preparers, or

“a person, other than an attorney for the debtor or an employee of

such attorney under the direct supervision of such attorney, who

prepares for compensation a document for filing.” 11 U.S.C. §

110(a). Preparing documents requires rudimentary work and

includes (and is in fact limited to) scrivener services or a

typist, rather than any advisory role. In re Lazarus, No. 05-

80274C-7D, 2005 Bankr. LEXIS 1093, at *12 (Bankr. M.D.N.C. Mar.

14, 2005); In re Graham, Nos. 02-81930C-7D, 02-82065C-7D, 2004

Bankr. LEXIS 1678, at *24 (Bankr. M.D.N.C. Feb. 10, 2004)

(distinguished on state law grounds); In re Johnson, No. 16-30809,

2016 Bankr. LEXIS 3526, at *12 (Bankr. W.D.N.C. Sep. 28, 2016); In

re Howerton, No. 04-12819, 2004 Bankr. LEXIS 2695, at *11 (Bankr.

M.D.N.C. Nov. 24, 2004) (deciding a debts status as secured or

unsecured, determining exemptions after receiving information from

debtor, and providing the relevant forms are acts that exceed the

bankruptcy petitions preparers’ duties); In re Guttierez, 248 B.R.

287, 298 (Bankr. W.D. Tex. 2000)). A “‘document for filing’ means

a petition or any other document prepared for filing by a debtor

in a United States bankruptcy court or a United States district

court in connection with a case under this title.” § 110(a)(2).

Here, Defendant concedes that he acted as “a typist and

freelance writer” in connection with preparing Debtor’s petition

and schedules. The Complaint further alleges that Defendant

administered a questionnaire to Debtor and requested a credit

report so that Defendant could complete Debtor’s bankruptcy

petition forms. ECF No. 1, p. 3. Debtor paid Defendants $120.00

to prepare her petitions, schedules, and statements. Id. The

Court must accept these allegations as true for purposes of the

Motion to Dismiss. Iqbal, 556 U.S. at 678 (quoting Twombly, 550

U.S. at 570). Therefore, the Complaint plausibly states sufficient

allegations to support a claim that Defendant acted as a petition

preparer.

2. The Complaint includes enough facts to support claims

for relief under §§ 110(h)(3)(B).

Section 110(h)(3)(B) provides that “[a]ll fees charged by a

bankruptcy petition preparer may be forfeited in any case in which

the bankruptcy petition preparer fails to comply with this

subsection or subsection (b), (c), (d), (e), (f), or (g).” Under

§ 110(l)(1), “[a] bankruptcy petition preparer who fails to comply

with any provision of subsection (b), (c), (d), (e), (f), (g), or

(h) may be fined not more than $500 for each such failure.”

Subsection (h)(2) requires that “[a] declaration under

penalty of perjury by the bankruptcy petition preparer shall be

filed together with the petition, disclosing any fee received from

or on behalf of the debtor within 12 months immediately prior to

the filing of the case, and any unpaid fee charged to the debtor.”

Subsection (b) requires that the preparer print and sign the

documents prepared for filing, and subsection (c) requires that

the preparer include an identifying number. Under § 110(l)(1),

each document that is prepared by a preparer and has a similar

deficiency, such as the petition, schedules, and statements of

intention, carries a separate fine. In re Springs, 358 B.R. 236,

241-42 (Bankr. M.D.N.C. 2006).

According to the Complaint, Debtor’s petitions did not

include any signature from Defendant or any identifying numbers.

ECF No. 1, p. 2. Defendant did not file a declaration regarding

his fees. Therefore, the Complaint plausibly alleges a claim for

violation of the statute, and Defendant’s Motion to Dismiss as to

Claim 2 and 5 is denied.

3. The Complaint includes sufficient facts to support

claims for relief under §§ 110(i)(1) and under (j)(2)(A)

and (B).

Under § 110(i)(1), “[i]f a bankruptcy petition preparer

violates this section or commits any act that the court finds to

be fraudulent, unfair, or deceptive, on the motion of the debtor,

trustee, United States trustee (or the bankruptcy administrator,

if any), and after notice and a hearing, the court shall order the

bankruptcy petition preparer to pay to the debtor . . .” certain

damages. Under § 110(j)(2)(A), injunctive relief is appropriate

if the court finds that a preparer has “(I) engaged in conduct in

violation of this section or of any provision of this title; (II)

misrepresented the preparer’s experience or education as a

bankruptcy petition preparer; or (III) engaged in any other

fraudulent, unfair, or deceptive conduct.” The conduct enjoined

is dependent on the level of misconduct. See § 110(j)(2)(A)(ii);

compared to § 110(j)(2)(B).

“Courts have determined that a petition preparer who engages

in the unauthorized practice of law commits an unfair or deceptive

act pursuant to Section 110(i) and that the conduct may also

subject the petition preparer to an injunction under Section 110(j)

for engaging in ‘fraudulent, unfair or deceptive conduct.’”

Springs, 358 B.R. at 246 (citing In re Moore, 283 B.R. 852, 857

(Bankr. E.D.N.C. 2003)). The unauthorized practice of law includes

when a bankruptcy petition preparer uses their “discretion,

experience, and knowledge to provide the Debtor with advice and

legal citations concerning the completion of his bankruptcy

documents, including [schedules].” Springs, 358 B.R. at 245.

Legal advice includes advice “concerning how to characterize the

nature of the debtor’s interests in property or the debtor’s debts.

§ 110(e)(2)(B)(vi).

The Complaint alleges that Defendant prepared the bankruptcy

forms by using a credit report and certain questionnaires. ECF

No. 1, p. 3. Further, according to the Complaint, Defendant’s

advertisements included statements like “I write the lawsuit for

you . . . We file it and SUE ‘EM” and “$120-I write the paperwork

for you legal style-we file it and serve it and GET THEM IN COURT.”

Id. Viewing these allegations in the light most favorable to

Plaintiff as the Court must at this stage of the litigation, Iqbal,

556 U.S. at 678 (quoting Twombly, 550 U.S. at 570), Defendant used

his discretion, experience, and knowledge to convert information

in a credit report and questionnaire to the information and

classifications necessary in the forms. Accepting these

allegations as true and construing them in a light most favorable

to Plaintiffs, Defendant gave advice on how to classify the

interest in property as either secured or unsecured, and how to

claim exemptions. These facts plausibly state a claim under §

110(e)(2). Defendant’s Motion to Dismiss as to Claims 3 & 4 is

denied.

C. The Complaint includes sufficient factual information to

present a plausible claim for relief under 11 U.S.C. § 526,

527, and 528.

Under 11 U.S.C. § 526(c)(2), “[a]ny debt relief agency shall

be liable to an assisted person in the amount of any fees or

charges in connection with providing bankruptcy assistance to such

person that such debt relief agency has received, for actual

damages, and for reasonable attorneys’ fees and costs if such

agency is found, after notice and a hearing, to have—(A)

intentionally or negligently failed to comply with any provision

of this section, section 527, or section 528 with respect to a

case or proceeding under this title for such assisted person[.]”

Additionally, “if the Court, on the motion of the [Bankruptcy

Administrator], finds that a person intentionally violated this

section, or engaged in a clear and consistent pattern or practice

of violating this section, the court may- (A) enjoin the violation

of such section[.]” § 526(c)(5). A “debt relief agency” includes

“any person . . . who is a bankruptcy petition preparer under

section 110[.]” § 101(12A). Pertinent here, § 527(a)(1) requires

that a debt relief agency provide the relevant information under

§ 342(b)(1), or “a brief description of— (A)chapters 7, 11, 12,

and 13 and the general purpose, benefits, and costs of proceeding

under each of those chapters; and (B) the types of services

available from credit counseling agencies[.]” Under Fed. R. Civ.

P. Rule 9(b), “[m]alice, intent, knowledge, and other conditions

of a person’s mind may be alleged generally.” A complaint

sufficiently pleads a condition of a person’s mind if “plaintiff

pleads sufficient facts or events that give rise to an inference

of intent.” Walter v. Freeway Foods, Inc. (In re Freeway Foods of

Greensboro, Inc.), 467 B.R. 853, 865 (Bankr. M.D.N.C. 2012).

Based on the facts in the Complaint, Defendant prepared

bankruptcy forms by using credit reports and questionnaires.

Official Form 119 includes a declaration that “I or my firm

prepared the documents listed below and gave the debtor a copy of

them and the Notice to Debtor by Bankruptcy Petition Preparer as

required by 11 U.S.C. §§ 110(b), 110(h), and 342(b).” Official

Form 2010 is titled “Notice Required by 11 U.S.C. § 342(b) for

Individuals Filing for Bankruptcy.” A simple search on the list of

forms provided by the United States Courts website shows both these

forms. Even more, 11 U.S.C. § 527(b) specifically lists the

necessary disclosures. Defendant prepared forms on behalf of

Debtor but did not provide the notices necessary for a debt relief

agency. Defendant prepared forms and applied the bankruptcy rules

but ignored the mandatory disclosures that are highlighted in those

very same forms. Construing the facts in a light most favorable to

Plaintiffs, Plaintiffs have pled with sufficient particularity the

necessary elements and a plausible claim for relief.

V. CONCLUSION

For the reasons set forth above, the Court will deny both

Motions to Dismiss.

[END OF DOCUMENT]

PARTIES TO BE SERVED

Case No. 21-02006

All parties to this Adversary Proceeding.