In re Achinivu

• Decision Date: 25 February 2020
• Docket Number: Case No. 17-30949 (MBK)
• Citation: 612 B.R. 860
• Parties: IN RE Victor ACHINIVU, Debtor.
• Court: U.S. Bankruptcy Court — District of New Jersey

612 B.R. 860

IN RE Victor ACHINIVU, Debtor.

Case No. 17-30949 (MBK)

United States Bankruptcy Court, D. New Jersey.

Hearing Date: February 18, 2020

Signed February 25, 2020

Entered February 27, 2020

Peter E. Zimnis, Esq., Law Office of Peter E. Zimnis, 1245 Whitehorse Mercerville Rd., Suite 412, Trenton, NJ 08619, Counsel for Debtor

Albert Russo, Esq., CN 4853, Trenton, NJ 08650-4853, Standing Chapter 13Trustee

Edward L. Paul, Esq., Paul & Katz, P.C., 1103 Laurel Oak Rd., Suite 105C, Voorhees, NJ 08043, Counsel for City of Trenton

MEMORANDUM DECISION

Honorable Michael B. Kaplan, United States Bankruptcy Judge

This matter comes before the Court on a motion filed by the Debtor, Victor Achinivu("Debtor"), seeking to enjoin the City of Trenton("City") from initiating and prosecuting any municipal ordinance violations with respect to real estate properties owned by the Debtor and located in the Cityat 63 Tyrell Avenue and 114 Chestnut Avenue ("Motion").The City has filed opposition to the Debtor's motion and his efforts to enjoin the City from enforcing its property maintenance code.

The Court has reviewed the parties' submissions and has fully considered the arguments.This Court has jurisdiction over this contested matter under 28 U.S.C. §§ 1334(a)and157(a) and the Standing Order of the United States District Court dated July 10, 1984, as amended September 18, 2012, referring all bankruptcy cases to the bankruptcy court.This matter is a core proceeding within the meaning of 28 U.S.C. §§ 157(b)(2)(A)and157(b)(2)(O).Venue is proper in this Court pursuant to 28 U.S.C. § 1408.

For the reasons set forth below, the Debtor's motion is DENIED.The following constitutes the Court's findings of fact and conclusions of law as required by FED. R. BANKR. P. 7052.¹

I.Background

The factual background and procedural history of this matter are well known to the parties and will not be repeated in detail here.In relevant part, the Debtor filed for relief under chapter 13 of the Bankruptcy Code on October 16, 2017.At the time of the filing, the Debtor owned real property located at 114 Chestnut Avenue, Trenton, New Jersey a/k/a/ Block 13101, Lot 49, Trenton, New Jersey and 63 Tyrell Avenue, Trenton, New Jersey a/k/a/ Block 1701, Lot 64, Trenton, New Jersey ("Trenton Properties").The Debtor has not paid real estate property taxes on the Properties since 2011 and 2012, respectively, and the City undertook tax sales in which it attempted to auction tax sale certificates.Since there were no bidders, the tax sale certificate defaulted to the City of Trenton.During the bankruptcy proceedings, by order dated May 28, 2019, the City obtained relief from the automatic stay to pursue its remedies with respect to the outstanding real estate tax obligations.In addition, the claims register reflects a tax sale certificate held by Daxuan Wang concerning the property at 114 Chestnut Avenue, as well as additional secured claims by Trenton Water Works.The Debtor's initial bankruptcy schedules did not reference either of the Trenton Properties, nor the associated tax obligations.Furthermore, the Debtor's original chapter 13 plan, confirmed by the Court on February 8, 2018, did not provide for any treatment of the tax claims.After filing amended schedules on March 16, 2019, to include the Trenton Properties, the Debtor filed a modified plan which provided for the surrender of the Properties and which the Court confirmed on October 17, 2019.

Almost immediately thereafter, on October 26, 2019, the Debtor filed his Motion seeking injunctive relief against the City with respect to ongoing and future property maintenance code violations.²As of the filing of the Debtor's Motion, the City had issued a single Notice of Violation with respect to the property at 114 Chestnut, relative to overgrown vegetation and potentially poisonous weeds, in violation of City Ordinance132-71.1(E).At the initial hearing on December 3, 2019, the Court heard preliminary oral argument and granted the parties permission to file supplemental submissions.The Court reviewed the supplemental submissions and entertained additional oral argument on the adjourned hearing date of February 18, 2020.

II.Discussion

The Debtor frames the issue as whether this Court should enjoin the City's efforts to enforce its property code ordinances to ensure that the Debtor receives the "fresh start" envisioned by the drafters of the Bankruptcy Code.³The Court, however, views the issue somewhat differently—should the Court employ its equitable and statutory powers to absolve the Debtor from honoring his commitments to the community when he assumes ownership of real property.As discussed below, the Court must come down on the side of restraint and the simple answer is "no".

The Debtor seeks a permanent injunction with respect to the City's property maintenance enforcement efforts and, thus, the Court must first determine whether such injunctive relief is appropriate.

With respect to a preliminary or permanent injunction, a plaintiff—or the Debtor in this matter—has the burden of proving the basis for a preliminary or permanent injunction.See, e.g.,Campbell Soup Co. v. ConAgra, Inc ., 977 F.2d 86, 90(3d Cir.1992).The decision to grant a permanent injunction is within the equitable discretion of the court.SeeFree Speech Coalition, Inc. v. Att'y Gen. United States , 825 F.3d 149, 173 n.21(3d Cir.2016)(citingeBay Inc. v. MercExchange, L.L.C. , 547 U.S. 388, 391, 126 S.Ct. 1837, 164 L.Ed.2d 641(2006) ).To grant a permanent injunction, the Court considers whether the party seeking such relief has demonstrated the following:

(1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.

ebay, Inc. , 547 U.S. at 391, 126 S.Ct. 1837.This four-part test applies equally to applications for injunctions sought in the bankruptcy court.See, e.g.,In re Clark Entertainment Group, Inc.,183 B.R. 73, 80(Bankr. D.N.J.1995).Therefore, the Debtor bears the burden of demonstrating that the cited elements weigh in favor of granting the injunction.See, e.g.,Monsanto Co. v. Geertson Seed Farms , 561 U.S. 139, 156, 130 S.Ct. 2743, 177 L.Ed.2d 461(2010)(quotingebay , Inc., 547 U.S. at 391, 126 S.Ct. 1837 ).The Debtor has not met his burden.

Frankly, the Court need not go beyond the first two factors, to wit, a showing of irreparable harm and the lack of adequate remedies at law.The Debtor's Motion does not reference an allegation of an irreparable injury, much less proof of such an injury.At best, the Debtor suggests that being compelled to expend resources to pay fines and legal fees constitutes an injury that warrants an injunction.In an analogous context, the United States Court of Appeals for the Third Circuit determined that "the ‘cost, anxiety, and inconvenience’ of defending one's self in a good faith criminal prosecution does not constitute irreparable injury."In the Matter of Davis , 691 F.2d 176, 178(3d Cir.1982).The Third Circuit in Davis, supra, has provided guidance on the circumstances that merit imposing an injunction to stop the commencement or continuation of criminal proceedings.⁴A federal court is permitted to intervene only when the criminal complaint is "brought in bad faith or for purposes of harassment."Davis , 691 F.2d at 178.The Debtor has neither alleged, nor put forward evidence suggesting that the City is acting in bad faith or with an intent to harass.As emphasized in Davis , principles of comity dictate that the Court presume that the City is prosecuting the alleged violation of the municipal property maintenance code, as well as potential future violations, in the interests of the public health and welfare.Such a course of conduct cannot, as a matter of law, constitute irreparable harm to the Debtor.

Much of the Debtor's argument is bottomed on a request for the Court to look beyond a rigid application of the established test for injunctive relief and engage in a fair weighing of interests in favor of the Debtor's "fresh start."The Court is willing to undertake this balancing of hardships and public interests because it does, in fact, strike at the heart of the four-part test.Unfortunately for the Debtor, the examination of competing policy concerns leads to the inescapable conclusion that the Motion must be denied.

A debtor's ability to surrender real property under a chapter 13 plan and to force a lienholder to assume immediately all ongoing and future maintenance responsibilities has been the subject of recent scholarly and judicial debate.⁵In the past several years, bankruptcy courts have addressed efforts by debtors to shift post-petition liabilities (such as condominium and homeowner association fees) and maintenance obligations through chapter 13 plans, which not only provide for the surrender of real estate, but the "forced vesting" of real estate in lienholders though application of 11 U.S.C. § 1322(b)(9)⁶and11U.S.C. § 1325(a)(5)(c)⁷ .A critical factor for most courts which have allowed such provisions is whether the affected secured creditor timely objects to the proposed treatment.⁸

In the present matter, there has been no consent to vesting title to the Trenton Properties in the City.Pointedly, the Debtor's confirmed plan does not include any "vesting" provisions; rather, the Debtor simply surrenders the Trenton Properties under his plan.As noted in In re Sagendorph , supra :

The meaning of the word "surrender," whether used in the Bankruptcy Code or elsewhere, is plain and well-established in property law.See, e.g.,Tosi , 546 B.R. [487, 492(Bankr. D. Mass.2016) ](finding the meaning of "surrender""settled and well understood," and

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