In re Cousins

Decision Date28 April 2009
Docket NumberAdversary No. 08-3178.,Bankruptcy No. 06-30003.
Citation404 B.R. 281
PartiesIn re Thomas N. COUSINS, Debtor. Thomas N. Cousins, Plaintiff v. CitiFinancial Mortgage Company, Defendant.
CourtU.S. Bankruptcy Court — Southern District of Ohio

Lester R. Thompson, Dayton, OH, for Plaintiff.

J. Michael Debbeler, Jeffrey M. Hendricks, Graydon Head & Ritchey LLP, Cincinnati, OH, for Defendant.

DECISION DENYING DEFENDANT CITIMORTGAGE, INC.'S MOTION TO DISMISS

LAWRENCE S. WALTER, Bankruptcy Judge.

The court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157(a) and 1334, and the standing General Order of Reference in this District. This matter is before the court on Defendant CitiMortgage, Inc.'s Motion to Dismiss the Plaintiff's Amended Complaint [Adv. Docs. 10 and 33]1; the Plaintiff-Debtor Thomas N. Cousins' Response to Motion to Dismiss [Adv. Doc. 23] and the Reply Memorandum in Support of CitiMortgage, Inc.'s Motion to Dismiss [Adv. Doc. 28 and 33].

In its motion, Defendant CitiMortgage, Inc.2 ("CitiMortgage") argues two alternative reasons why the amended complaint [Adv. Doc. 32] filed by Plaintiff-Debtor Thomas N. Cousins ("Debtor") alleging an automatic stay violation should be dismissed. First, CitiMortgage asserts that the amended complaint fails to state a claim pursuant to Fed.R.Civ.P. 12(b)(6) because CitiMortgage's action of sending the Debtor an "information account statement" after his bankruptcy filing does not amount to a per se violation of the automatic stay. Second, CitiMortgage claims that the amended complaint must be dismissed for failure to state a claim as well as a lack of standing pursuant to Fed. R.Civ.P. 12(b)(1) because the Debtor failed to allege any compensable actual damages resulting from CitiMortgage's actions.

As more fully explained below, the court determines that the allegations in the complaint state a claim for a violation of the automatic stay, a determination largely based upon the particular composition of the account statement allegedly sent by CitiMortgage to the Debtor, especially the inclusion of a payment coupon. In addition, because resultant attorney fees alone can constitute actual damages under 11 U.S.C. § 362(k), the Debtor has sufficiently alleged compensable damages. Therefore, the Debtor has stated a claim and has standing such that the CitiMortgage Motion to Dismiss must be denied.

FACTUAL BACKGROUND

Solely for the purpose of determining whether the Debtor's amended complaint should be dismissed, the court deems the facts as stated in the Debtor's amended complaint to be true. The Debtor's residence is encumbered by a mortgage owned or serviced by CitiMortgage [Adv. Doc. 32, ¶¶ 7, 12]. Following confirmation of his Chapter 13 plan, the Debtor received documents from CitiMortgage that included payment coupons [Id., ¶ 1]. An example of the documents received by the Debtor was attached to the Complaint as an exhibit [Id., Ex. 1]. The document was labeled a "Mortgage Account Statement" and included this language at the top in capital letters:

THIS MORTGAGE ACCOUNT STATEMENT IS FOR INFORMATIONAL PURPOSES ONLY, AS THE DEBT MAY HAVE BEEN INCLUDED IN A BANKRUPTCY ACTION, OR MAY HAVE BEEN DISCHARGED. THIS IS NOT AN ATTEMPT TO COLLECT, RECOVER OR OFFSET THE MORTGAGE INDEBTEDNESS AGAINST YOU PERSONALLY, BUT OUR RECORDS REFLECT THAT WE HOLD A SECURITY INTEREST IN YOUR PROPERTY.

IN PENDING CHAPTER 13 CASES, THE PLAN STATUS AND TERMS MAY NOT BE REFLECTED ON THIS ACCOUNT STATEMENT.

[Id.]. Underneath this language was a statement of the Debtor's monthly payment, prior balance and current balance3 and a phone number to call to discontinue future notices [Id.]. At the bottom of the document was a "Voluntary Payment Coupon" from CitiMortgage which included a place for the Debtor to write in the "total amount enclosed" and gave an address for the Debtor to use to mail the payment [Id.].

The payment coupons led the Debtor to believe that he was to pay the requested sums of money outside the Chapter 13 plan and, had he not communicated with his counsel prior to making the payment, he would have made such payments to CitiMortgage [Id., ¶ 3]. Debtor was damaged by the actions of CitiMortgage in that he was forced to expend time and effort in consulting his bankruptcy attorney and attending at least one office consultation with his bankruptcy attorney to discuss the nature of the payment coupons [Id., ¶ 4]. CitiMortgage's actions further damaged the Debtor by causing emotional distress [Id., ¶ 5]. The Debtor was under the belief that creditors would cease contacting him post-bankruptcy and that all payments would be made via his Chapter 13 plan [Id.]. Upon receiving payment coupons in the mail, the Debtor was distraught that the contact was continuing [Id.].

LEGAL ANALYSIS
A. Legal Standard for Determining Motion to Dismiss

CitiMortgage requests dismissal of the Debtor's amended complaint under Fed. R.Civ.P. 12(b)(1) and (6), incorporated in bankruptcy adversary proceedings by Fed. R. Bankr.P. 7012. CitiMortgage argues that the Debtor failed to state any claim upon which relief can be granted and lacks standing to assert the claim.

Rule 12(b)(1) provides for dismissal for a lack of subject matter jurisdiction and Rule 12(b)(6) provides for dismissal when the plaintiff fails to state a claim.4 Under either standard, the court is to accept as true the well-pleaded facts in the complaint and construe them in the light most favorable to the nonmoving party who, in this matter, is the Debtor. Terlecky v. Hurd (In re Dublin Securities, Inc.), 197 B.R. 66, 69 (S.D.Ohio 1996).5

To survive dismissal under Rule 12(b)(6), the Debtor's complaint "must contain either direct or inferential allegations respecting all the material elements to sustain a recovery under some viable legal theory." Varljen v. Cleveland Gear Co., Inc., 250 F.3d 426, 429 (6th Cir.2001). See also Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1969, 167 L.Ed.2d 929 (2007) (noting that the accepted pleading standard is that "once a claim has been adequately stated, it may be supported by showing any set of facts consistent with the allegations in the complaint"). This standard does not require that a complaint attacked by a Rule 12(b)(6) motion to dismiss provide detailed factual allegations. Bell Atlantic, 127 S.Ct. at 1964. However, "a plaintiff's obligation to provide the `grounds' of his `entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action." Id., at 1964-65 (further citations omitted) (holding that the factual allegations must be enough to raise a right to relief above the speculative level).

While the material elements must be asserted, the Federal Rules of Civil Procedure do not require a plaintiff to set out in detail the facts in support of each cause of action. Limor v. Buerger (In re Del-Met Corp.), 322 B.R. 781, 793 (Bankr. M.D.Tenn.2005). Rather, the Rules require a short and plain statement of the claim that will give defendants fair notice of what the plaintiff's claim is and upon what grounds it rests. Id. Furthermore, the court's responsibility on a motion to dismiss is to assess the sufficiency of the claims asserted in the complaint and not to weigh the evidence. Perry v. United Parcel Service, 90 Fed.Appx. 860, 861 (6th Cir.2004) (noting that the complaint may be dismissed only if the plaintiff has failed to allege facts that, if true, would entitle him to relief).

B. Automatic Stay Violation

Upon the filing of a debtor's bankruptcy petition, an automatic stay arises which precludes creditors from taking almost any action to obtain property of a debtor's estate or to collect from a debtor upon a prepetition debt outside the bankruptcy process. 11 U.S.C. § 362(a). The automatic stay is among the most fundamental debtor protections in bankruptcy law and its scope in protecting debtors and debtor property is broad. Rijos v. Vizcaya (In re Rijos), 263 B.R. 382, 389 (1st Cir. BAP 2001); O'Neal v. Beneficial of Tennessee, Inc. (In re O'Neal), 165 B.R. 859, 862 (Bankr.M.D.Tenn.1994) (citing Smith v. First America Bank (In re Smith), 876 F.2d 524, 525 (6th Cir.1989)). The scope of the automatic stay and its basic purpose are well stated in the legislative history to § 362:

It gives the debtor a breathing spell from his creditors. It stops all collection efforts, all harassment, and all foreclosure actions. It permits the debtor to attempt a repayment or reorganization plan, or simply to be relieved of the financial pressures that drove him into bankruptcy.

The automatic stay also provides creditor protection. Without it, certain creditors would be able to pursue their own remedies against the debtor's property. Those who acted first would obtain payment of their claims in preference and to the detriment of other creditors. Bankruptcy is designed to provide an orderly liquidation procedure in which all creditors are treated equally.

H.R.Rep. No. 95-595 (1977), reprinted in 1978 U.S.C.C.A.N. 5787, 6296-97; S.Rep. No. 95-989 (1978), reprinted in 1978 U.S.C.C.A.N. 5787, 5835-36. Thus, the automatic stay is intended to provide not only a breathing spell from creditors' collection efforts, but also to safeguard creditors' rights by preventing "`different creditors from bringing different proceedings in different courts, thereby setting in motion a free-for-all in which opposing interests maneuver to capture the lion's share of the debtor's assets.'" Rijos, 263 B.R. at 389 (further citations omitted).

Of all the actions prohibited by the automatic stay, the most relevant to the matter at hand arises pursuant to § 362(a)(6) which prohibits creditors from taking "any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case" 11 U.S.C. § 362(a)(6). Again, the legislative history reflects Congress's...

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