Bahnsen v. Discover Fin. Servs., Inc. (In re Bahnsen)

• Decision Date: 22 March 2016
• Docket Number: Adv. Pro. No. 15–3015,Case No. 12–31039
• Citation: Bahnsen v. Discover Fin. Servs., Inc. (In re Bahnsen), 547 B.R. 779 (Bankr. N.D. Ohio 2016)
• Parties: In re: Brenda S. Bahnsen, Debtor. Brenda S. Bahnsen and James Bahnsen, Plaintiffs, v. Discover Financial Services, Inc., Defendant.
• Court: U.S. Bankruptcy Court — Northern District of Ohio

547 B.R. 779

In re: Brenda S. Bahnsen, Debtor.

Brenda S. Bahnsen and James Bahnsen, Plaintiffs,

v.Discover Financial Services, Inc., Defendant.

Case No. 12–31039

Adv. Pro. No. 15–3015

United States Bankruptcy Court, N.D. Ohio, Western Division.

Signed March 22, 2016

Donald R. Harris, Sandusky, OH, for Plaintiffs.

Steven Alan Friedman, Squire Patton Boggs, Cleveland, OH, for Defendant.

MEMORANDUM OF DECISION AND ORDER REGARDING CROSS–MOTIONS FOR SUMMARY JUDGMENT

John P. Gustafson, United States Bankruptcy Judge

Plaintiff Brenda S. Bahnsen ("Mrs. Bahnsen" or "Debtor") is the debtor in the underlying Chapter 7 case, and her co-plaintiff, James Bahnsen ("Mr. Bahnsen"), is her husband, who was not a debtor in the underlying Chapter 7 case. On February 4, 2015, Mrs. and Mr. Bahnsen (collectively, "Plaintiffs") commenced this adversary proceeding, requesting that the court enforce injunctive relief "against Defendant for violation of 11 U.S.C. § 524 and 11 USC § 24(a)(2), and for violation of 15 U.S.C. §§ 1692 –1692(o)." [Doc. # 1, p. 3].

Defendant Discover Bank ("Defendant" or "Discover"), incorrectly identified as Discover Financial and Discover Card in the Complaint, was listed as an unsecured creditor in Mrs. Bahnsen's Chapter 7 case. [Case No. 12–31039, Doc. # 1, p. 26].

Plaintiffs allege that Defendant, a state-chartered bank with its principal place of business located in Delaware, acted by and through its agents, servants, and/or employees, "to collect on a discharged debt [of Mrs. Bahnsen] through the husband, James Bahnsen." [Doc. # 1, ¶ 12]. Plaintiffs also allege that after being properly notified of Mrs. Bahnsen's discharge, Defendant "continued to contact and harass Plaintiff[s] for past due payments, notwithstanding an order of discharge granted" by this court. [Id. at ¶¶ 14–15]. Plaintiffs request that this court "enforce injunctive relief of the bankruptcy [discharge]", and in so doing, order Defendant to cease any and all collection efforts. They also seek $20,000 in punitive damages, legal fees, and any other remedy the court would find appropriate. [Id. at p. 5].

This proceeding is now before the court on Defendant's Motion for Summary Judgment ("Defendant's Motion") [Doc. # 27], Plaintiffs' Motion for Summary Judgment ("Plaintiffs' Motion") [Doc. # 29], and Defendant's Memorandum in Opposition to Plaintiffs' Motion for Summary Judgment ("Defendant's Memo") [Doc. # 32].

Having considered the parties' respective arguments, for the reasons that follow, Defendant's Motion will be granted as to Mr. Bahnsen and denied as to Mrs. Bahnsen, and Plaintiff s Motion will be denied.

FACTUAL BACKGROUND

Unless otherwise noted, the following facts are not in dispute. On March 12, 2012, Mrs. Bahnsen filed her Chapter 7 bankruptcy petition in this court. [Case. No. 12–31039]. Mr. Bahnsen was not a joint debtor in the underlying bankruptcy case. In Mrs. Bahnsen's petition, Discover Financial Services was listed in Schedule F as an unsecured debtor, with a claim of $11,695.72.¹ [Doc. # 1, Pl. Ex. A, p. 7].

On March 15, 2012, Defendant received notice of Mrs. Bahnsen's bankruptcy filing. [Doc. # 27, p. 5]. Later, Defendant received a 341 hearing notice through the court's electronic noticing system, notifying Discover that the deadline to file a complaint objecting to Mrs. Bahnsen's discharge was July 2, 2012. [Doc. # 1, Pl. Ex. B, p. 9]. Defendant neither responded nor filed any objection to the discharge [Doc. # 1, ¶ 11]. Mrs. Bahnsen received her discharge on July 5, 2012 [Case No. 12–31039, Doc. # 17], and Defendant received notice of Mrs. Bahnsen's discharge on July 7, 2012. [Doc. # 27, p. 2]. Defendant does not dispute that the debt owed to it by Mrs. Bahnsen was discharged on July 5, 2012.

According to Defendant's records relating to Brenda Bahnsen's (nee Schaefer) credit card account ("the Account"), Mr. Bahnsen was added to the Account, pursuant to a telephone request, on November 3, 1989. Defendant asserts that Mr. Bahnsen, in accordance with the request made over the telephone, was added to the Account as a "Joint Applicant—Spouse", as opposed to an "Authorized User", the only other available option that could have been filled in on Defendant's "Pre–Approved Telemarketing" form. [Doc. # 27–1, Def. Ex. 1, p. 5].

James Ball ("Mr. Ball"), an employee of Discover Products, Inc. (a subsidiary of Discover Bank), stated in his affidavit that he reviewed Defendant's records, certifying that Mr. Bahnsen "was added to the Account by telephone request as a ‘Joint Applicant—Spouse.’ " [Doc. # 27–1, Def. Ex. 1, ¶ 6]. The court notes that it is unclear whether Plaintiffs or Defendant initiated the telephone call that resulted in Mr. Bahnsen being added to the Account as a joint applicant. Discover's "Pre–Approved Telemarketing" form only shows that Discover spoke to "Lead" on "11/03/89", and Verification of the change to the Account was made by "Call Back". [Doc. # 27–1, p. 5].

Mr. Ball also testified in his affidavit that on the same day Discover received notice (March 15, 2012) of Mrs. Bahnsen's filing, Defendant removed Mrs. Bahnsen's name from the Account, leaving Mr. Bahnsen as the only name associated with the account. [Id. at ¶ 7]. This name change appears to be reflected in Defendant's Exhibit B. [Id., pp. 6–7]. It was not until August 9, 2013 that Defendant placed the Account, solely in Mr. Bahnsen's name, for collection. Mr. Ball claims that as the Account was solely associated with Mr. Bahnsen at that time, Defendant's collection counsel "would only have received Mr. Bahnsen's name as the debtor on the Account." [Id. at ¶ 8].

Plaintiffs state that the telemarketing form, which includes Mrs. Bahnsen's name, date of birth, and social security number, with "James Bahnsen" being typed on the form, is not adequate proof to show that James Bahnsen ever spoke to Discover during the aforementioned telephone call, nor does it show that he provided "express and explicit consent to assume financial liability for the credit line." [Doc. # 29, pp. 4–5].

In Plaintiffs' response to Defendant's interrogatories, when asked to "[a]dmit that Plaintiffs requested that Mr. Bahnsen be added as a Joint Applicant on the Account", Plaintiffs stated that "[n]either Mr. Bahnsen or Mrs. Bahnsen made this request." [Doc. # 27–2, Def. Ex. 2, p. 3]. In response to another of Defendant's interrogatories, Plaintiffs admit that all correspondence they received from Defendant via U.S. mail was addressed to Mr. Bahnsen only. [Id. at p. 2].

When asked to admit that "neither Discover nor its agents placed any telephone calls to Plaintiffs after March 12, 2012 concerning the [d]ebt", Plaintiffs responded that "on or about the summer and fall of 2014", they received "a few calls from third party collectors/agents for Discover Card", specifically listing calls received from "Thomas and Thomas" and "FMS Inc". Thomas & Thomas was the law firm employed by Defendant to collect the debt from Mr. Bahnsen. No information regarding "FMS Inc" has been provided to the court, other than the fact that the corporation is listed in an answer to Defendant's interrogatories.

In response to Defendant's attempts to collect on a debt that Plaintiffs argue was discharged, Plaintiffs filed this adversary complaint on February 4, 2015. In their complaint, Plaintiffs ask that the court enforce injunctive relief under 11 U.S.C. § 524(a)(2)"by ordering the Defendant to cease its collection efforts, grant punitive damages of $20,000, legal fees," and any other relief that the court may find appropriate. [Doc. # 1, p. 5]. This case is now before the court on Defendant's Motion for Summary Judgment [Doc. # 27], Plaintiffs' Motion for Summary Judgment [Doc. 29], and Defendant's Memorandum in Opposition to Plaintiffs' Motion [Doc. # 32].

LAW AND ANALYSIS

I. Summary Judgment Standard

Under Rule 56 of the Federal Rules of Civil Procedure, made applicable to this proceeding by Federal Rule of Bankruptcy Procedure 7056, summary judgment is proper only where there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). In reviewing a motion for summary judgment, however, all inferences "must be viewed in the light most favorable to the party opposing the motion." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586–88, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

The party moving for summary judgment always bears the initial responsibility of informing the court of the basis for its motion, "and identifying those portions of ‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits if any’ which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Where the moving party has met its initial burden, the adverse party "may not rest upon the mere allegations or denials of his pleading but ... must set forth specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A genuine issue for trial exists if the evidence is such that a reasonable factfinder could find in favor of the nonmoving party. Id."The non-moving party, however, must provide more than mere allegations or denials ... without giving any significant probative evidence to support" its position. Berryman v. Rieger, 150 F.3d 561, 566 (6th Cir.1998).

Where the parties have filed cross-motions for summary judgment, the court must consider each motion separately on its merits, since each party, as a movant for summary judgment, bears the burden to establish both the nonexistence of genuine issues of material fact and that party's entitlement to judgment as a matter of law. Lansing Dairy v. Espy, 39 F.3d 1339, 1347 (6th Cir.1994) ; Markowitz v. Campbell (In re Markowitz), 190 F.3d 455, 463 n. 6 (6th Cir.1999).

The fact...