Bruce v. Fazilat (In re Bruce), Case No.: 8:14-bk-15055-MW
| Decision Date | 12 July 2018 |
| Docket Number | Case No.: 8:14-bk-15055-MW,Adv. No: 8:15-ap-01028 |
| Court | U.S. Bankruptcy Court — Central District of California |
| Parties | In re Dakarai Nyamyke Bruce, Debtor(s). Dakarai Nyamyke Bruce, Plaintiff(s), v. Zahira Fazilat, Defendant(s). |
Chapter: 7
Hearing:
Date: June 19, 2018
Time: 9:00 a.m.
Place: 411 West Fourth Street
Courtroom 6C
This adversary proceeding came on for trial on June 19, 2018 to determine whether defendant Zahira Fazilat ("Defendant") violated the discharge injunction imposed by 11 U.S.C. § 524(a) and the automatic stay imposed by 11 U.S.C. § 362(a) in the main bankruptcy case of In re Dakarai N. Bruce, Case No. 8:14-bk-15055-MW.
The Court has subject matter jurisdiction over this proceeding pursuant to 28 U.S.C. § 1334 and General Order No. 13-05, filed July 1, 2013, of the United States District Court for the Central District of California. This is a core proceeding under 28 U.S.C. § 157(b)(2)(A).
On the record, each of Dakarai N. Bruce ("Plaintiff") and Defendant have waived jury trial and consented to this Court's final determination of the matters here in controversy under the rule of Stern v. Marshall, 564 U.S. 462, 131 S. Ct. 2594 (2011) and Wellness International Network, Ltd. v. Sharif, 135 S. Ct. 1932 (2015).
Defendant leased to Plaintiff a single family residence located at 24872 Via Sonoma, Laguna Niguel, CA 92677 (the "Property") pursuant to a Residential Lease or Month- to-Month Rental Agreement (C.A.R. Form LR, Revised 11/12) (the "Lease"). The Lease's term commenced in January 2013 and ended sometime in January 2014. Thereafter, a month-to-month tenancy was established.1
It would appear that rental payments due under the Lease were not timely paid by Plaintiff in May and June 2014, leading Defendant to commence unlawful detainer proceedings against Plaintiff in California state court. Before a trial could be held in state court on the unlawful detainer actions, Plaintiff filed a chapter 7 petition in this Court on August 18, 2014. The automatic stay imposed by 11 U.S.C. § 362(a) arose on that date. Plaintiff listed Defendant as a creditor on Schedule F. The Lease was not assumed by Weneta M. Kosmala, chapter 7 trustee for Plaintiff's bankruptcy estate. (Defendant's position is that the Lease was forfeited and terminated prior to the date Plaintiff filed his chapter 7 petition on August 18, 2014).2
On August 23, 2014, Defendant sent her agent John Pettijohn (ph) to turn off the electricity at the Property. There was an electrical box outside the house, and Plaintiff had placed a padlock on it. Mr. Pettijohn arrived with bolt cutters, cut the padlock off, turned off the electricity and then placed a new padlock on the electrical box.3 Defendant gave Plaintiff no prior warning or advance notice that his electricity was going to be shut off.4 The Court finds that Defendant caused Plaintiff's electricity to be turned off as part of an effort to coerce him into paying prepetition rent arrears.
On August 25, 2014, Defendant, Defendant's daughter Sabrina Aziz and a third person arrived at the Property at about 7:45 p.m. to 8:00 p.m. and began banging on the door in an attempt to breach the door and enter the Property's interior.5 They told Plaintiff that he owed them money. Plaintiff telephoned the police, and the police escorted Defendant, Sabrina Aziz and the third person from the premises.6
The ostensible purpose of the August 25 visit was an inspection of the Property relating to possible water damage from a plumbing leak.7 Supposedly, Plaintiff had raised a defense of habitability in his answer in the unlawful detainer proceeding, and Defendant on August 25 was purporting to follow up on that with an inspection. The Court finds that this was merely a pretext on Defendant's part and that the real purpose of the August 25 visit was to intimidate Plaintiff into paying the rent arrears.
Plaintiff's profession was the financial services business. He had been engaged in the business of selling financial products for about 10 years. He worked for the Automobile Club of Southern California and had been earning in excess of $100,000 per annum. Beginning in January 2014, he moved over to Capstone Partners and continued in the financial services business. His expectation, and his reason for movingto Capstone Partners, was that he would be earning about $300,000 per year.8 Plaintiff received a leadership award at Capstone Partners in recognition of his production.9
Defendant's daughter, Sabrina Aziz, contacted Capstone Partners' legal compliance officer, David Bennett, on or about October 17, 2014, purportedly to ask for Plaintiff's address so that he could be served with process.10 Mr. Bennett spoke with Plaintiff's supervisor, Evan Osborne, regarding the matter.11
Mr. Osborne's understanding was that a Capstone Partner's employee who commenced a bankruptcy proceeding likely would not be permitted to continue as an employee because such person would not have good standing to offer financial advice to customers.12 Indeed, even if someone had filed bankruptcy within the past three to five years, such person probably would not be hired because of the detrimental effect on reputation.13
Within one week after Sabrina Aziz's contact with David Bennett, Capstone Partners informed Plaintiff that he had a choice: either resign or be fired.14 Plaintiff understood that if he had been fired, he would have been blacklisted in the financial services industry.15 He resigned his position with Capstone Partners by a resignation letter dated October 24, 2014.16 Plaintiff suffered the loss of "a couple of months" of employment as a result of losing employment at Capstone Partners.17 His income declined to approximately $50,000 to $60,000 per annum.18
These multiple actions by Defendant and her agents against Plaintiff caused Plaintiff suffering in the form of anxiety, stress and "a lot of consternation."19
Plaintiff was granted a discharge on December 8, 2014.
On September 16, 2014, Defendant filed a motion for relief from the automatic stay pursuant to 11 U.S.C. 362(d)(1) to permit the state court unlawful detainer case against Plaintiff to proceed so that Defendant could recover possession of the Property and so that the state court could award "[a]ll postpetition rents, attorney's fees, and costs" to Defendant.20 The Court held a hearing on December 22, 2014, orally granted the Lift Stay Motion in part, denied extraordinary relief and directed Defendant's attorney, Gregory Sproul, Esq. ("Mr. Sproul"), to lodge an order through the Court's LOU system within seven days. Mr. Sproul failed to timely obey the Court's oral order to lodge a form of order within seven days. As a result, the Order Granting Motion for Relief From Stay Under 11 U.S.C. § 362 (Unlawful Detainer), Docket No. 39, filed and entered January 13, 2016 (the "Lift Stay Order"), did not issue for more than an entire full year. The Lift Stay Order denied the extraordinary relief prayed for in the Lift Stay Motion, namely, that portion of the Lift Stay Motion requesting that the state court be permitted to award "[a]ll postpetition rents, attorney's fees, and costs" to Defendant.
An unlawful detainer trial was held in state court on December 31, 2014. The state court found in favor of Defendant. Judgment was entered on January 8, 2015 for possession of the Property plus $12,995 in holdover damages and $600 in attorney's fees. Mr. Sproul was Defendant's attorney in the state court trial.
The state court judgment was later vacated on appeal. The state court held a new trial on May 10, 2017 and again found in Defendant's favor. Defendant was awarded $15,016.56 in holdover damages and $1,200 in attorney's fees pursuant to a Judgment filed on May 31, 2017 (the "2017 Judgment").
Plaintiff contends that Defendant's actions as described above violated the automatic stay imposed by 11 U.S.C. § 362(a) and the discharge injunction provided in11 U.S.C. § 524(a). The Court discusses these allegations below.
Violations of the Automatic Stay.
The automatic stay enjoins acts "to recover a claim against the debtor that arose before the commencement of the case under this title." 11 U.S.C. § 362(a)(1). The automatic stay also enjoins "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." 11 U.S.C. § 362(a)(3). In this case, the automatic stay arose on the petition date, August 18, 2014 and continued as to the Plaintiff until December 8, 2014. 1 U.S.C. § 362(c)(2)(C). The automatic stay continued as to property of the bankruptcy estate until such property was no longer property of the estate. 11 U.S.C. § 362(c)(1). The automatic stay remains in effect as to property of the estate even after a discharge issues. In re Rich, 544 B.R. 436 (Bankr. E.D. Cal. 2016). Under 11 U.S.C. § 362(k), an individual injured by any willful violation of the automatic stay is entitled to recover actual damages, including costs and attorney's fees, and in appropriate circumstances may recover punitive damages.
The actions recounted above of Defendant and her agent John Pettijohn on August 23, 2014 and of Defendant and her daughter on August 25, 2014 were intended to intimidate Plaintiff and to coerce him into paying prepetition debts. These actions are willful violations of the automatic stay.
Although Defendant's daughter contends that her telephone call to Capstone Partners on or about October 17, 2014 was for the purpose of obtaining Plaintiff's address so that he could be served with process, this explanation rings false: Defendant obviously knew where Plaintiff was living because he was living at the Property and she was striving to have...
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