# Cournoyer v. Elansari

> United States Bankruptcy Court, M.D. North Carolina · April 22, 2022

URL: https://www.frixlaw.com/law-library/cases/10459310

## Case

- **Court:** United States Bankruptcy Court, M.D. North Carolina
- **Decided:** April 22, 2022
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10459310

## How later opinions describe it (automated extraction)

- 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
- holding that sanctions for even minor violations of § 110 did not violate the petition preparer’s due process rights
- holding that § 110 did not violate a petition preparer’s First Amendment rights of freedom of speech

## Opinion text

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NOT FOR PUBLICATION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.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10459310. Public record. Not legal advice.