Opinion
Case No. 8:14-bk-14330-RCT
09-26-2016
In re JOHN HENRY SYMONS, Debtor.
Chapter 13 ORDER GRANTING , IN PART, DEBTOR'S MOTION FOR VIOLATION OF AUTOMATIC STAY, CREDITOR MISCONDUCT AND REQUEST FOR ATTORNEYS FEES
THIS CASE came before the Court on Debtor's verified Motion for Violation of Automatic Stay, Creditor Misconduct and Request for Attorney's Fees ("Motion") (Doc. No. 47), filed against Kent County Treasurer o/b/o Kent County - Sewer Operations ("Creditor"). A hearing on the Motion was held on July 11, 2016. Although duly noticed of both the Motion and the hearing, Creditor did not appear or defend the Motion in any respect.
BACKGROUND
Debtor filed a Chapter 13 petition on December 10, 2014, and scheduled Creditor with an unsecured claim of $461.26 for sewer services at Debtor's former residence in Delaware. Creditor promptly filed a proof of claim, listing the debt as a priority claim, to which Debtor objected. Creditor amended the proof of claim, asserting a claim for $479.21 secured by the former residence under Delaware state law. (Claim No. 3-3). Debtor withdrew his objection. (Doc. No. 26).
Debtor's Chapter 13 plan provided that Debtor would surrender his former residence at 161 Mayor Lane in Felton, Delaware (the "Property"), and that the surrendered property would vest with the secured creditors, which included Creditor, upon confirmation. (Doc. No. 8). As suggested by the plan, Debtor filed and duly served a Motion to Compel Vestment of Secured Real Property to Secured Creditors upon Confirmation. (Doc. No. 23). Pursuant to that motion, which no creditor opposed, the Court entered an order providing that upon entry of a confirmation order, the Property would "revest" with the following secured creditors: City National Bank/Ocwen, Ocwen Loan Servicing, US Bank Home Mortgage, Bank of America, Kent County Tax Collector and the Town of Felton Tax Office ("Vesting Order"). (Doc. No. 36). Debtor's Chapter 13 plan was confirmed, without objection, by order entered July 22, 2015. ("Confirmation Order") (Doc. No. 43). No appeals were taken of either the Vesting or Confirmation Order. On August 5, 2015, the Confirmation Order became final and non-appealable. Creditor is bound by the provisions of the confirmed plan. 11 U.S.C. § 1327(a).
Debtor later amended his Chapter 13 plan to address priority claims of the Internal Revenue Service and Delaware Division of Revenue. The amended plan did not alter Debtor's intentions regarding the Property. (Doc. No. 38).
Unless otherwise noted, all section references are to the Bankruptcy Code ("Code"), 11 U.S.C. §§ 101-1532.
In the verified Motion, Debtor claims that Creditor willfully violated the automatic stay by sending him quarterly bills after the petition date for sewer services provided to the Property, entitling him to actual damages under § 362(k). Attached to the Motion are the subject bills and other related correspondence between Debtor, Debtor's counsel and Creditor. The exhibits reflect that Creditor separated Debtor's account into one account for pre-petition arrears (the "Pre-Petition Account") and one for post-petition services (the "Post-Petition Account"). (Mot., Exh. A). Creditor sent Debtor quarterly bills on both accounts during the pendency of the case, including after the entry of the Confirmation Order.
DISCUSSION
Damages for Violation of Automatic Stay
Section 362(k)(1) provides that "an individual injured by any willful violation of a stay provided by this section shall recover actual damages, including costs and attorneys' fees, and, in appropriate circumstances, may recover punitive damages." A violation of the stay is "willful" if the offending party "(1) knew the automatic stay was invoked and (2) intended the actions which violated the stay." Jove Eng'g, Inc. v. I.R.S., 92 F.3d 1539, 1555 (11th Cir. 1996).
1. Pre-Petition Account
Debtor's verified Motion and the attached exhibits establish that (1) after the petition date, Creditor repeatedly sent Debtor bills in an effort to collect amounts owed for pre-petition services, thereby violating § 362(a)(6), and (2) Creditor's violation of the stay was "willful." It is clear that Creditor knew the automatic stay was invoked, inter alia, as Creditor was noticed of the commencement of the case (Doc. No. 9) and sent Debtor a letter on December 18, 2014, acknowledging receipt of that notice (Mot., Exh. A). Creditor intended its actions. Notwithstanding requests of Debtor's counsel to cease and desist, Creditor sent Debtor at least four quarterly bills requesting payment for the pre-petition arrears. (Mot., Exhs. B, D, E, H, J, K, O).
Accordingly, the Court finds that Creditor willfully violated the automatic stay and, under § 362(k)(1), Debtor is entitled to recover for his "actual damages." Debtor has, thus far, failed to present evidence sufficient to determine any injury or damages. Debtor shall have ten days from entry of this Order to submit evidence of actual damages, including attorney's fees. See In re Gholston, Case No. 6:11-bk-17200-ABB, 2012 WL 639288, at *4 n.2 (Bankr. M.D. Fla. Feb. 27, 2012) (enumerating twelve factors for determining reasonableness of attorney's fees under § 362(k)(1)); In re Voll, 512 B.R. 132, 138 (Bankr. N.D.N.Y. 2014) (indicating that an individual seeking damages under 362(k) must show "damages were actually incurred" (citation omitted)).
Should Debtor wish to pursue his claim for emotional distress damages, the Court, upon request, will set a trial on damages. Debtor and Debtor's counsel are cautioned to take note of the heightened standard that must be satisfied in order for the Court to award emotional distress damages under § 362(k). See Lodge v. Kondaur Capital Corp., 750 F.3d 1263, 1271 (11th Cir. 2014). --------
2. Post-Petition Account
Creditor did not violate the automatic stay in sending Debtor quarterly bills for amounts owed on Debtor's Post-Petition Account. See Jones v. Boston Gas Co. d/b/a Keyspan Energy Delivery N.E. (In re Jones), 369 B.R. 745, 750 (B.A.P. 1st Cir. 2007) ("Post-petition creditors providing a Chapter 13 debtor with goods or services are permitted to invoice debts as they come due . . . ."); In re Sciarrino, Case No. 9:11-bk-05881-FMD, 2013 WL 3465920 (Bankr. M.D. Fla. July 10, 2013) (holding that utility did not violate automatic stay by sending invoices for post-petition debt).
3. Post-Confirmation
To the extent the Motion seeks sanctions for bills sent after confirmation of Debtor's chapter 13 plan, the Court treats the Motion as a request to impose sanctions for civil contempt relative to the Vesting and Confirmation Orders. Bankruptcy courts have the authority to find parties in civil contempt. 11 U.S.C. § 105(a); In re Dorado Marine, Inc., 343 B.R. 711, 713 (Bankr. M.D. Fla. 2006). To succeed on a claim for sanctions for civil contempt, a complaining party must prove by clear and convincing evidence that the alleged contemnor "knowingly and willfully violated a definite and specific court order." In re Dorado Marine, Inc., 343 B.R. at 713; see Commodity Futures Trading Comm'n v. Wellington Precious Metals, Inc., 950 F.2d 1525, 1529 (11th Cir. 1992).
The Vesting and Confirmation Orders are final non-appealable orders that were intended to divest Debtor of any interest in the Property. See, e.g., In re Tosi, 546 B.R. 487, 493 (Bankr. D. Mass. 2016) ("[T]o vest property in another, as contemplated in 11 U.S.C. § 1322(b)(9) . . . is to effect a transfer of ownership of that property from the [bankruptcy] estate to another person or entity. 'Vesting means transferring title.'" (quoting In re Sagendorph, No. 14-41675-MSH, 2015 WL 3867955, at *2 (Bankr. D. Mass. June 22, 2015)); In re Rosa, 495 B.R. 522, 524 (Bankr. D. Haw. 2013) ("The plain meaning of 'vesting' includes a present transfer of ownership.") Accordingly, as of August 5, 2015, Debtor was no longer responsible for sewer services to the Property.
Yet, the Vesting and Confirmation Orders fail to specify which of the secured creditors would take title to Property and which would be responsible for the Property's ongoing maintenance or the obligations incidental to ownership. Creditor reasonably could have been confused as to which secured creditor was responsible for the post-confirmation sewer bills. See In re Dorado Marine, Inc., 343 B.R. at 714 (finding that an order holding creditor had interest in property was not sufficiently definite and specific to find debtor in contempt for failing to remit proceeds from property sale).
At the hearing on the Motion, the Court requested Debtor to submit evidence demonstrating that the Vesting Order and the Confirmation Order had been filed in the appropriate public records. To date, Debtor has submitted no such evidence. Although recording in the public records may not be required to vest title to the Property pursuant to 11 U.S.C. § 1322(b)(9), the Court finds that the failure to record a transfer of title impacts a request for sanctions. Recording appropriate documents in the public records puts the world on notice that Debtor no longer holds any interest in the Property.
On the facts presented, the Court cannot conclude that Creditor willfully violated a definite and specific order. The Motion is therefore denied to the extent it seeks to impose sanctions on Creditor for civil contempt relative to the Vesting and Confirmation Orders.
Accordingly, it is ORDERED and ADJUDGED:
1. By sending Debtor quarterly bills for the Pre-Petition Account, Creditor willfully violated the stay imposed by 11 U.S.C. § 362, entitling Debtor to recover any actual damages incurred.
2. Within ten days of entry of this order, Debtor's counsel shall file an affidavit, with supporting documentation, evidencing Debtor's actual damages, including attorney's fees, related to Creditor's attempts to collect for the Pre-Petition Account.
3. Debtor is not liable for any sewer bills associated with the Property after August 5, 2015. Creditor shall cease any and all attempts to collect fees from Debtor for services on the Property incurred after August 5, 2015, including the provision of quarterly billing statements.
4. To the extent that the Motion seeks sanctions for Creditor's bills and collection efforts for the Post-Petition Account, the Motion is DENIED.
5. Any in rem claims or rights that Creditor may have against the Property are not impacted by this Order.
ORDERED. Dated: September 26, 2016
/s/_________
Roberta A. Colton
United States Bankruptcy Judge Attorney Nancy L. Cavey is directed to serve a copy of this order on interested parties and shall file a certificate of service within three days of entry of this Order.