Brodgen v. Holmes Motors Inc. (In re Brodgen)

• Decision Date: 29 August 2018
• Docket Number: Adv. Pro. No. 17-3029-WRS,Case No. 17-30955-WRS
• Parties: IN RE Stacey H. BRODGEN, Debtor Stacey H. Brodgen, Plaintiff v. Holmes Motors Inc., Defendant
• Court: U.S. Bankruptcy Court — Middle District of Alabama

588 B.R. 625

IN RE Stacey H. BRODGEN, Debtor

Stacey H. Brodgen, Plaintiff

v.Holmes Motors Inc., Defendant

Case No. 17-30955-WRS

Adv. Pro. No. 17-3029-WRS

United States Bankruptcy Court, M.D. Alabama.

Signed August 29, 2018

Entered August 30, 2018

Anthony B. Bush, The Bush Law Firm, LLC, Pike Road, AL, for Plaintiff.

Stephen M. Cozart, Kubicki Draper, PA, Pensacola, FL, Amy M. Hampton, Fuller Hampton, LLC, Alexander City, AL, for Defendant.

AMENDED MEMORANDUM DECISION

William R. Sawyer, United States Bankruptcy Judge

This Adversary Proceeding came before the Court for trial on April 27, 2018. Plaintiff Stacey H. Brodgen was present in court and by counsel Anthony B. Bush. Defendant Holmes Motors, Inc., was present by Jason Johnson, its Chief Operating Officer, and by counsel Stephen M. Cozart. For the reasons set forth below, judgment is entered in favor of the Plaintiff.

I. FACTS

Plaintiff Stacey H. Brodgen ("Brodgen") is a debtor in bankruptcy and seeks damages from Defendant Holmes Motors Inc. ("Holmes") alleging willful violations of the automatic stay afforded to debtors in bankruptcy. Holmes is in the business of selling cars using the "lease here pay here" business model. The dealership operates three locations in the Southeast, one of which is located in Montgomery, Alabama.

On March 31, 2017, Brodgen filed a petition in bankruptcy in this Court, pursuant to Chapter 13 of the Bankruptcy Code. (17-30955, Doc. 1). At the time she filed bankruptcy, Brodgen owned a 2007 Chevrolet Tahoe, subject to an indebtedness owned by Holmes. Brodgen filed a Chapter 13 Plan, simultaneously with her petition in bankruptcy, proposing to pay the entire indebtedness to Holmes as a secured indebtedness with an interest rate of 4.5%, pursuant to Paragraph 4 of her Plan. (17-30955, Doc. 2). The Court's records show that notice of Brodgen's bankruptcy filing and a copy of her Chapter 13 Plan were mailed to Holmes Motors on April 5, 2017. (17-30955, Docs. 10, 12)(Pl. Ex. 5). The Plan called for a specified monthly payment in the amount of $502.00 to be paid to Holmes.

Holmes filed a motion for summary judgment, alleging that there could be no violation of the automatic stay because the subject vehicle lease had terminated and the subject vehicle was not property of the estate. That motion was denied in a decision dated March 30, 2018. (Docs. 50, 51); Brodgen v. Holmes Motors, Inc., (In re Brogden) , 583 B.R. 527 (Bankr. M.D. Ala. 2018). The Court finds that Brodgen owns the 2007 Tahoe, subject to a security interest in favor of Holmes Motors. Holmes Motors did not object to Brodgen's Chapter 13 Plan, which calls for this treatment. To the extent that any argument made by Holmes Motors calls for different treatment (i.e. that its interest is as a lessor) the Court will treat that as a motion to reconsider and deny it.

The parties entered into a contract, denominated "Motor Vehicle Lease Agreement – Closed End," on May 11, 2016. (Pl. Ex. 2). In an unnumbered paragraph on the last page of the contract, it is provided that "[y]ou agree to refrain from listing this Lease or this Vehicle in any current or future bankruptcy filing." When one files bankruptcy, the debtor is required to file Schedules–which call for the a listing of all vehicles owned or leased. 11 U.S.C. § 521(a)(1)(B)(ii). Brodgen did in fact list her 2007 Tahoe on Schedule B. (17-30955, Doc. 1). Had Brodgen failed to schedule the Tahoe, and thereby comply with her lease agreement, she would have committed perjury.

Notwithstanding the fact that Holmes had notice of Brogden's bankruptcy filing, its representatives made repeated telephone calls and sent numerous text messages to her subsequent to the bankruptcy filing. Many of the telephone calls were automated telephone calls where a recording would be played when Brodgen answered the line. On other occasions, an individual would call and make a demand for payment. Brodgen's testimony and the evidence admitted proves that, since the filing of her petition, Brodgen received upwards of one-hundred telephone calls—both automatic and manual—and approximately ten text messages from Holmes Motors about her indebtedness.

Brodgen testified that Holmes collection manager, named Chris, telephoned her demanding payment on numerous occasions. She was familiar with Chris from previous contacts and told him that she had filed bankruptcy and that she was making payments under her plan. Brodgen testified that Chris told her that "she could not file bankruptcy" under her lease.

On April 12, 2017, Jason Johnson, Chief Operating Officer for Holmes and one other individual, arrived at Brodgen's place of employment with the intention to repossess the Tahoe. During the attempted repossession, Brodgen approached them and informed them that she was in bankruptcy and demanded that they cease the attempted repossession. Johnson refused to comply, and instead demanded that Brodgen made a $703.00 payment to them. At this point, Brodgen volunteered to drive to the dealership to resolve the issue. Upon arriving at the dealership, Brodgen's Tahoe was immediately blocked into the dealership by three other vehicles. At this point, the Tahoe was seized in violation of the automatic stay.

Employees of Holmes demanded payment in the amount of $703.00 from Brodgen, refusing to allow her to leave with the Tahoe unless she paid immediately. Brodgen repeatedly informed the Defendant's agents, employees, and attorney, while she was at Holmes Motors place of business on April 12, 2017, that she was in bankruptcy. Holmes was well aware of Brodgen's bankruptcy filing prior to its unlawful repossession, nevertheless, Brodgen was not allowed to leave with her Tahoe unless payment was tendered and was threatened that the police would be called if she attempted to take the Tahoe without paying. After being blocked in for nearly two hours, Brodgen reluctantly made the payment so she could leave the dealership with the Tahoe. Holmes has not returned the $703 to this day.

Four days after the April 12 incident, Brodgen sought medical treatment for symptoms relating to the events surrounding the unlawful repossession and the repeated harassment perpetrated by Holmes. Brodgen testified that she began to see a psychiatrist for unmanageable levels of stress and an inability to sleep. She was prescribed medication to help reduce her stress levels and assist her in sleeping at night. Brogden testified that she lost 10 days of work as result of stress from the constant badgering from Holmes Motors and from the repossession of her vehicle. Brodgen is paid $11.77 per hour. (17-30955, Doc. 3). Brodgen has lost wages of $941.60. The Court finds that Brodgen's testimony is forthright and credible.

II. LAW

A. Jurisdiction

The Court has jurisdiction to hear this matter pursuant to 28 U.S.C. § 1334. This is a core proceeding. 28 U.S.C. § 157(b)(2)(A). This is a final order.

B. Violation of the Automatic Stay

The act of filing a petition in bankruptcy "operates as a stay ... of ... any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate ... [and] any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case under [Title 11] ...." 11 U.S.C. § 362(a). A debtor "injured by any willful violation of a stay ... shall recover actual damages, including costs and attorneys' fees, and, in appropriate circumstances, may recover punitive damages." 11 U.S.C. § 362(k)(1).

Brodgen contends that Holmes violated the automatic stay by making repeated demands for payment and by repossessing the 2007 Tahoe. These are clearly acts to exercise control over property of the estate and to collect or recover a claim. It is clear that Holmes violated the automatic stay. Indeed, at trial Holmes conceded that it had in fact violated the automatic stay; however, it contends that any violation was inadvertent and not willful.

Having found that Holmes violated the automatic stay, the Court must next determine whether the violation was willful. A violation of the automatic stay is willful "if the violator (1) knew of the automatic stay and (2) intentionally committed the violative act, regardless of whether the violator specifically intended to violate the stay." Jove Eng'g. Inc. v. IRS (In re Jove Eng'g. Inc.) , 92 F.3d 1539, 1555 (11th Cir. 1996) ; Cent. Miss. Credit Corp., v. Vaughn , 555 B.R. 803, 814 (M.D. Ala. 2016) ; Credit Nation Lending Serv. v. Nettles , 489 B.R. 239, 247 (N.D. Ala. 2013). The burden of proving the violation, willfulness, and injury by a preponderance of the evidence, rests on the plaintiff. In re Parker , 279 B.R. 596, 602 (Bankr. S.D. Ala. 2002). Holmes argues that it did not know of Brodgen's bankruptcy and for that reason, even if there was a violation of the automatic stay, it was not willful. This argument cannot be taken seriously. Holmes was sent notice of Brodgen's bankruptcy filing by the Court. Moreover, Brodgen told Chris, Holmes' representative, during telephone conversations initiated by him. Brodgen testified, and the Court credits her testimony, that Chris told her that she could not file bankruptcy. Holmes was well aware of Brodgen's bankruptcy filing. The Court concludes that Holmes' violation of the automatic stay was willful.

C. Actual Damages

When a defendant willfully violates the automatic stay, § 362(k) mandates an award of actual damages. Parker v. Credit Cent. South (In re Parker) , 634 Fed. Appx. 770 (11th Cir. 2015) ; Lodge v. Kondaur Capital Corp., 750 F.3d 1263, 1268 (11th Cir. 2014). The evidence here shows that Brodgen suffered actual damages insofar as the $703 payment wrongfully extracted from her on April 12, 2017, the loss of 10 days wages, and stress incurred as result of Holmes' unlawful actions. The record shows that Brodgen's hourly wage is $11.77 per hour, multiplied by 8 hours per day for 10 days yields damages for lost wages of $941.60.

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