Opinion
Case No. 8:19-bk-03452-RCT
08-27-2020
In re: Catherine Musto, aka Catherine Wilson Musto Debtor.
Chapter 7 ORDER GRANTING , IN PART, AND DENYING, IN PART, DEBTOR'S MOTION FOR SUMMARY JUDGMENT
THIS CASE is considered on Debtor Catherine Musto's Motion for Summary Judgment (Doc. 27) (the "Motion"), filed with respect to her Motion for Sanctions for Violation of the Discharge Injunction (Doc. 16) (the "Sanctions Motion"). Debtor reopened her chapter 7 case for the purpose of prosecuting the Sanctions Motion against Creditor K. Dean Kantaras, Esq. ("Creditor"), who represents Debtor in state court in her marriage dissolution proceeding. Creditor opposes the Motion (Doc. 31) and the Sanctions Motion, the latter of which is set for trial on September 15.
As clarified in Creditor's opposition to the Motion (Doc. 31), Mr. Kantaras, individually, is not a creditor of the Debtor. Rather, it is his law firm K. Dean Kantaras, P.A. Insofar as there is no objection to the court's jurisdiction over the law firm and it appears, based on the evidence presented by the parties, that the law firm is the proper party in interest, the Court will deem the Sanctions Motion as filed against the law firm unless and until Debtor objects and provides reason why Mr. Kantaras might be held individually liable. In any event, the Court need not decide the issue for purposes of adjudicating the Motion.
Doc. 22.
Background
Debtor commenced this chapter 7 case on April 16, 2019, scheduling Creditor on Schedule F with an unsecured claim for "legal fees" in an unknown amount. Creditor was included on the list of creditors filed pursuant to Fed. R. Bankr. P. 1007(a).
Doc. 1.
Creditor does not dispute that it was appropriately scheduled in the case and that the notice of commencement of the case was sent to it. Though not as specifically stated, insofar as the same address and means, i.e. official court notice, were used to provide notice of entry of the Order of Discharge, Creditor does not dispute that it was notified of Debtor's discharge. Debtor received her chapter 7 discharge on July 23, 2019.
Doc. 31 ¶ 4; see Doc. 5.
Doc. 31 ¶ 4 & n.1. Compare Doc. 5, with Doc. 11.
Doc. 9.
But from this point forward, the parties understanding of the relevant facts diverge.
Debtor asserts that between August 5, 2019 and December 31, 2019, Creditor contacted Debtor several times, generally by email, requesting payment for attorney's fees incurred before the bankruptcy. Debtor's counsel sent a cease and desist letter on January 22, 2020, and when Creditor did not respond to the demand for sanctions contained within the letter, counsel sent a second letter on February 20, 2020. When, again, counsel's demand was ignored, Debtor reopened the case and filed the Sanctions Motion.
Creditor does not dispute that some contacts were made, but disputes Debtor's characterization of these contacts as attempts to collect a debt. Creditor notes that it continued to represent Debtor in the state court dissolution proceed even after the discharge. Creditor asserts that the alleged improper contacts were, in fact, "friendly emails containing an outstanding balance [and] many . . . had nothing to do with the outstanding balance but instead related to the status of [Debtor's] case and information needed from her." As example, Creditor cites a motion for contempt against Debtor's former spouse filed September 24, 2019, for which Creditor had to contact Debtor to obtain her signature. Creditor asserts that its contacts with Debtor were attempts "to preserve its rights to collect the outstanding attorney['s] fees from the [Debtor's former spouse] as ordered by the divorce court." Creditor ceased its contacts with Debtor following receipt of counsel's January 22 letter.
Doc. 31 ¶¶ 4-6, 9.
Id. at ¶¶ 7-8.
Id. at ¶ 12.
Summary Judgment Standard
Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." The moving party bears the initial burden of demonstrating the absence of a triable issue and its entitlement to judgment as a matter of law. Thereafter, the burden shifts and the non-moving party must set forth specific facts to show that there is a genuine issue for trial. In deciding a motion for summary judgment, all reasonable inferences to be drawn from the facts must be viewed in the light most favorable to the non-movant.
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (quoting Fed. R. Civ. P. 56(c) (1963) (later amended and relocated, in part, to Fed. R. Civ. P. 56(a)); see Fed. R. Civ. P. 56(a) (incorporated here by Fed. R. Bankr. P. 7056).
Kernel Records Oy v. Mosley, 694 F.3d 1294, 1300 (11th Cir. 2012).
Id. at 1301.
Discussion
Debtor seeks summary judgment on two factual issues. First, whether Creditor received notice of the bankruptcy case and entry of the discharge. Second, whether Creditor's contacts with Debtor after entry of the discharge were attempts to collect a debt. Debtor asserts she is entitled to summary judgment in her favor on these issues and, therefore, entitled to recover damages in the form of sanctions against Creditor.
The Motion includes argument on Debtor's entitlement to certain damages, but she does not seek summary judgment on this point. Doc. 27 pp. 9-13. Given the Court's ruling, the Court is not required to decide the issue. But it notes that a significant portion of Debtor's brief makes arguments for recovery under 11 U.S.C. § 362(k), which does not apply in the context of a violation of the discharge injunction. Rather, damages may be recovered, if at all, in the form of civil contempt sanctions. See Taggart v. Lorenzen, 139 S. Ct. 1795, 1801-02 (2019).
The Court need not decide the first question as Creditor concedes the point. And to the extent Creditor does not, the Court finds that the record conclusively demonstrates that Creditor was notified of both Debtor's bankruptcy filing and the entry of her chapter 7 discharge.
But the second question is not so clear. The Court agrees with the Creditor that its continued representation of Debtor in the dissolution proceeding following entry of the discharge clouds the issue. Viewing the evidence in the light most favorable to Creditor as the Court must, the Court cannot conclude that the contacts were calculated to collect a debt from the Debtor nor, for that matter, that Creditor contacts were in bad faith. The emails attached to the Motion appear to be form emails and the attachments, which might serve to place the emails in context, have not been provided. And, Creditor's representation that it contacted Debtor largely to preserve its right to collect its fees ordered in the divorce judgment from Debtor's former spouse, particularly given Debtor's cooperation in preparing a motion for sanctions, at a minimum, raises a question of fact as to whether there was "fair ground of doubt" whether Creditor's contacts might be lawful given the discharge. Accordingly, summary judgment on the second question is not appropriate.
The Court presumes the exhibits attached to the Motion would be admissible. The Motion, unlike the Creditor's response, is not verified nor is there an affidavit or declaration supporting the admissibility of the exhibits. Absent such presumption, the Court might be justified in denying the Motion on its face. See generally Fed. R. Bankr. P. 7056 (incorporating Fed. R. Civ. P. 56). Debtor has filed an "Affidavit of Verification" (Doc. 26); however, the affidavit makes no mention of the Motion or the exhibits.
Taggart, 139 S. Ct. at 1804. --------
For these reasons, it is ORDERED:
1. The Motion (Doc. 27) is GRANTED, in part, and DENIED, in part.
2. Debtor is entitled to summary judgment on the issue of the Creditor's notice of the bankruptcy filing and entry of discharge.
3. The trial on the Sanctions Motion set for September 15, 2020, shall proceed as scheduled. However, per the Court's procedures implemented in response to the COVID-19 pandemic, the trial shall be conducted using the services of Zoom Video Communications, Inc. An order establishing procedures for the video hearing shall be entered separately.
ORDERED. Dated: August 27, 2020
/s/_________
Roberta A. Colton
United States Bankruptcy Judge Service of this Order other than by CM/ECF is not required. Local Rule 9013-3(b).