In re Atkins

• Decision Date: 18 June 2002
• Docket Number: Bankruptcy No. 86-10604.,Adversary No. 00-90144.
• Parties: In re Edwin H. ATKINS, Jr., Debtor. Edwin H. Atkins, Jr., Plaintiff, v. United States of America, Defendant.
• Court: United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — Northern District of New York

279 B.R. 639

In re Edwin H. ATKINS, Jr., Debtor Edwin H. Atkins, Jr., Plaintiff, v. United States of America, Defendant.

Bankruptcy No. 86-10604.

Adversary No. 00-90144.

United States Bankruptcy Court, N.D. New York.

June 18, 2002.

Selbach & Viencek, L.L.P., Syracuse, New York, for plaintiff, Mark F. Viencek, of counsel.

U.S. Attorney General, Albany, New York, for defendant, Diane Cagino, Assistant U.S. Attorney.

MEMORANDUM-DECISION AND ORDER

ROBERT E. LITTLEFIELD, Jr., Bankruptcy Judge.

The current matter before the court is the request of Edwin H. Atkins ("Plaintiff" or "Debtor") for damages against the United States of America ("Defendant" or "Government") based on the Defendant's alleged violation of the permanent injunction provided by 11 U.S.C. § 524. The court has jurisdiction via 28 U.S.C. §§ 157(b)(2)(A) and (G) and 1334(b).

FACTS

The court finds the following facts taken directly from the stipulation of the parties:¹

1. On or about May 24, 1979, the United States of America, acting through the Farmers Home Administration, United States Department of Agriculture entered into a transaction with the Plaintiff whereby money was loaned to Plaintiff in exchange for a mortgage on Plaintiff's real property located at R.D. # 2, Johnston, New York.

2. The Plaintiff is the Debtor in Chapter 7 Bankruptcy Case No. 86-10604 which was filed on April 25, 1986.

3. Plaintiff listed the Government as a creditor in said Bankruptcy case in connection with the debt secured by said mortgage.

4. The Government received notice of the commencement of said Bankruptcy case.

5. On a number of occasions, the Plaintiff communicated his intention to surrender the property to the Government.

6. On January 30, 1987, the Bankruptcy Court issued Plaintiff a Chapter 7 Discharge wherein the debt owed by Plaintiff to Government in connection with said mortgage was discharged. On January 30, 1987, the Bankruptcy Court mailed the Government a copy of said Discharge, which was received by the Government.

7. In an effort to assist the Government in minimizing its losses concerning the property, the Plaintiff cooperated with the Government in attempting to transfer his interest in the property to it.

8. In or about March of 1987, the Government intercepted and seized the Plaintiff's 1986 Federal Income Tax Refund in the amount of $677.00 in an attempt to offset the debt Plaintiff discharged in his Bankruptcy case. Plaintiff was due said amount from the Internal Revenue Service as the result of a $677.00 overpayment he had made in connection with his 1986 income taxes.

9. The Government never returned to the Plaintiff said 1986 tax refund in the amount of $677.00.

10. On or about November 17, 1987, the Government sent a letter to the Bankruptcy Court requesting a copy of the Plaintiff's Bankruptcy Petition.

11. On or about May 31, 1988, the Government sent Plaintiff a letter which Plaintiff received demanding payment from Plaintiff of $6,005.50 past due in connection with the discharged debt, and advising Plaintiff that "[f]uture contact regarding this matter will require you to come into the office." The May 31, 1988 letters bears the notation "SECOND NOTICE" and was the second notice sent by the Government and received by the Plaintiff demanding payment from Plaintiff of the discharged debt.

12. On or about June 23, 1988, the Government sent Plaintiff a letter which Plaintiff received demanding payment from Plaintiff of "6,471.40 past due" in an attempt to collect the discharged debt. Despite the fact that the Plaintiff had made clear to the Government his intention of surrendering the property to same, and, in fact, was in the process of assisting the Government in connection with said voluntary transfer, said letter dated June 23, 1988, stated as follows: "If you are willing to cooperate and want to keep your home, you must contact this office within 10 days from the date of this letter ... IMPORTANT — If we do not hear from you within 10 days, your account will be referred to the District Office." Said letter bears the notation "FOURTH NOTICE" and was the fourth such notice sent to Plaintiff in an attempt to collect the discharge debt.

13. On or about July 6, 1988, the Government sent Plaintiff a letter which Plaintiff received demanding payment and threatening foreclosure. Said letter bears the notation "FIFTH NOTICE."

14. On or about October 11, 1988, the Government sent Plaintiff a letter which Plaintiff received in which it threatened to intercept further income tax refunds from Plaintiff in an attempt to offset the discharge debt, then threatened to report his "account" to "consumer credit reporting agencies." One side of said letter indicated that the Plaintiff was "more than 3 months delinquent on a debt owed to the [Government]." The other side of said letter indicated that Plaintiff was 16 payments delinquent and that the amount of said delinquency was $7,403.50.

15. On or about December 2, 1988, the Government sent Plaintiff a letter by certified mail, return receipt requested which Plaintiff received wherein Plaintiff was advised that he was required to complete and return a budget and financial statement to the Government within 10 days of the date of said letter.

16. The Plaintiff alleges that in 1988, an employee of the Government called the Plaintiff in an attempt to collect the discharged debt; that when the Plaintiff indicated that the debt had been discharged in his Bankruptcy case, said employee said "that's not true"; and that because of this and because of all other actions taken by the Government, the Plaintiff became fearful that even though he had filed bankruptcy and lost his home, he still owed the discharged debt. The Government denies these allegations based on lack of knowledge sufficient to form a belief.

17. On or about February of 1989, Plaintiff was denied an income tax refund anticipation loan at Mellon Bank. Said Mellon Bank stated in a letter dated 02/15/89 concerning said denial that the reason for the denial is that "the Internal Revenue Service informed [Mellon Bank] that they will not direct deposit [Plaintiff's] tax refund to [Plaintiff's] account at Mellon Bank ..."

18. On or about February 17, 1989, the Government sent Plaintiff a letter by certified mail return receipt requested which was received by Plaintiff wherein the Government demanded full payment of the discharged debt consisting of "$36,566.80 unpaid principal and $7,327.84 unpaid interest as of February 17, 1989, plus additional interest accruing at the rate of $9.0165 per day thereafter ..." The Government demanded in said letter full payment of said amount by March 17, 1989.

19. On or about March 6, 1989, Plaintiff sent the Government a letter and again advised the Government that he had filed a Bankruptcy Petition. Plaintiff also notified the Government of the name and address of his attorney and advised the Government that he had already transferred his interest in the property and turned the keys to the property over to the Government.

20. In February or March of 1989, as threatened, the Government intercepted and seized the Plaintiffs 1988 income tax refund in the amount of $1386.00.

21. On or about March 19, 1990, the Government sent Plaintiff a letter which Plaintiff received wherein the Government demanded payment of the discharge debt indicating that said debt was "$20.317 past due" and advising the Plaintiff that he was required to complete a household budget and to bring the same with his "payment coupon" to the Government's office on March 28, 1990, at 9:00 a.m.

22. The Government was contacted by Attorney Hallenbeck who demanded a return of the 1988 income tax refund the Government had seized. In its letter to Mr. Hallenbeck dated March 26, 1990, and in the memorandum enclosed therewith and referenced therein, the Government acknowledged that it should not have intercepted the 1988 tax refund and stated that the refund would be returned to the Plaintiff.

23. The Government did not return the Plaintiff's 1988 refund in the amount of $1,386.00 until late April of 1990 when it mailed the refund to the Plaintiff on April 23, 1990.

24. On or about May 4, 1990, the Government sent the Plaintiff a letter which the Plaintiff received demanding payment on the discharged debt and indicating that said debt "is past due $22,757."

25. On or about September 19, 1990, the Government sent Plaintiff a letter which the Plaintiff received wherein the Government threatened to intercept his tax refund and report his account "to credit reporting agencies."

26. On or about September 20, 1990, the Government sent Plaintiff a letter by certified mail return receipt requested which Plaintiff received. Said letter demanded full payment of the discharged debt consisting of $45,924.42 unpaid principal and $13,540.98 unpaid interest, as of September 20, 1990, plus additional interest accruing at the rate of $10.8307 per day thereafter.

27. On or about March 26, 1991, the Government sent Plaintiff a letter which the Plaintiff received informing the Plaintiff that his "loan file" would be forwarded to the Government's "attorney and then on to the United States Attorney." Said letter also advised the Plaintiff to consider bringing the discharged debt current.

28. On or about January 22, 1993, the Government sent Plaintiff a letter which the Plaintiff received wherein the Government stated: "The principal debt owed as of January 19, 1993 is $45,418.88, with subsidy recapture of $4,128.00 and interest in the amount of $22,879.53, for a total of $72,426.41. Interest continues to accrue at $11.1992 per day."

29. In or about February of 1993, the Government commenced a foreclosure action against the Plaintiff in the United States District Court for the Northern District of New York. The Government demanded that the Plaintiff acknowledge receipt of the Summons and Complaint by signing and returning an acknowledgment...