In re Beeter
| Decision Date | 12 September 1994 |
| Docket Number | Bankruptcy No. 93-51912-C. Adv. No. 94-5028-C. |
| Citation | 173 BR 108 |
| Parties | In re Robert H. BEETER and Lucille Beeter, Debtors. Robert H. BEETER, Plaintiff, v. TRI-CITY PROPERTY MANAGEMENT SERVICES, INC., Defendant. |
| Court | U.S. Bankruptcy Court — Western District of Texas |
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Melvin N. Eichelbaum and Joseph W. Shulter, Law Offices of Roger N. Havekost, San Antonio, TX, for plaintiff.
Robert L. Barrows, LeLaurin & Adams, P.C., San Antonio, TX, for defendant.
CAME ON for consideration the complaint of Robert Beeter, the debtor ("plaintiff" or "debtor") for violation of the automatic stay, 11 U.S.C. § 362(a), and to enforce the permanent discharge injunction of 11 U.S.C. § 524(a), against Tri-City Management Services, Inc. ("Tri-City"), in connection with post petition actions taken by Tri-City in pursuit of collection of condominium common charges and assessments. For the reasons stated below, the court concludes that Tri-City violated neither the automatic stay nor the permanent discharge injunction.1 The following are the court's findings of fact and conclusions of law. FED.R.BANKR.P. 7054.
The court has jurisdiction over this proceeding pursuant to 28 U.S.C. § 1334(b), and the District Court's general order of reference of bankruptcy matters, as a matter arising in or related to a case under title 11. This is a core proceeding under 28 U.S.C. § 157(b)(2)(O).
The facts are largely undisputed, although the legal consequences of those facts have been most competently debated by the parties and counsel for approximately 40 homeowners' associations and property management companies who filed an amicus curie brief with the court. On July 17, 1989, by joint tenancy deed, debtors purchased a pre-owned condominium unit located at 222 West Brown Road, Lot # 47, Mesa, Maricopa County, Arizona (the "unit"). To facilitate purchase of the unit debtors obtained a (first) mortgage from Norwest Mortgage, Inc. ("Norwest"). The deed executed by the debtors provided that the conveyance was subject to all "covenants, restrictions, reservations, easements, conditions and rights appearing of record . . ."
The unit was part of Northwood Park condominiums. The property on which the condominiums are settled was purchased by Northwood Park Joint Venture (the "Joint Venture") in the late 1970s or early 1980s. In March 1981, as declarant, the Joint Venture filed a Declaration of Covenants, Conditions and Restrictions (the "Declaration") with the Maricopa County, Arizona, county recorder's office.2 The Declaration creates mutual obligations among unit owners and their governing association of owners, established under the Declaration, and inherently creates and defines ownership rights to which the owners' obligations are attendant.
In that regard, the Declaration provides:
Declarant hereby declares that all of the properties described above shall be held, sold and conveyed subject to the following easements, restrictions, covenant and conditions, which are for the purpose of protecting the value and desirability of, and which shall run with, the real property, be binding on all parties having any right, title or interest in the described properties or any part thereof, their heirs, successors, and assigns, and shall inure to the benefit of each owner thereof.
To further those purposes, the Declaration gives authority to the Association to make annual and special assessments for the maintenance of common areas, extraordinary expenses and capital improvements. Provides the Declaration:
The Declarant, for each lot owned within the Properties, hereby covenants, and each Owner of any Lot by acceptance of a deed therefor . . . is deemed to covenant and agree to pay the Association: (1) annual assessments or charges, and (2) special assessments for capital improvements, such assessments to be established and collected as hereinafter provided. The annual and special assessments, together with interest, costs, and reasonable attorney\'s fees shall be a charge on the land and shall be a continuing lien upon the property against which each assessment is made. Each such assessment together with interest, costs, and reasonable attorneys\' fees, shall also be the personal obligation of the person who was the Owner of such property at the time when the assessment fell due. The personal obligation for delinquent assessments shall not pass to his successors in title unless expressly assumed by them.
Declaration at 4-5. Each owner in turn is entitled to the use and enjoyment of the common areas. The owner's obligation to pay assessments cannot be escaped by mere nonuse of common areas, however:
No Owner may waive or otherwise escape liability for the assessments provided for herein by non-use of the Common Area or abandonment of his Lot.
As anticipated in the Declaration, a homeowners' association was formed, aptly named the Northwood Park Homeowners' Association (the "Association"). Each unit owner is, per the Declaration, a member of the Association, and, provided she is in good standing, i.e., current on assessments, is entitled to vote on all matters brought before the Association. The Association and its board of directors are subject to bylaws which are consistent with the Declaration.
Pursuant to the authority of the Association's board of directors to set assessments, by resolution dated October 21, 1992, the general assessments for 1993 were set at $93.00 per month. Unit owner payments were due on the first of each month. In November 1993, the board considered 1994 assessments, and resolved that the general assessments would be $94.00 per month. In both instances, owners received a corresponding notice from Tri-City, the entity engaged by the Association, pursuant to its authority under the Association's bylaws, to manage the condominium community, which included, among other things, the billing and collecting of assessments.
Debtors filed a petition for relief under chapter 7 of the Bankruptcy Code on June 7, 1993. Debtors did not reside in the unit at the filing date, though their son resided in the unit for a short time after the filing, until requested by his parents to vacate. The unit was listed on debtors' schedule of assets, as was the indebtedness to Norwest secured thereby. Debtors filed a statement of intention with the court that indicated they wished to surrender the unit to Norwest.3 Tri-City was listed in debtors' schedule and matrix of creditors as "Tri-City Homeowners' Association," an appellation which was incorrect, but showing its correct address. It appears that the debtors were current with Tri-City as of the filing. The first meeting of creditors was held on July 13, 1993, at which time the chapter 7 trustee indicated his intention to abandon the property. On October 4, 1993, Norwest obtained relief from the automatic stay to foreclose its lien, an undertaking not completed until March 30, 1994. The debtors received a discharge on October 12, 1993, and the case was subsequently closed.
In the interim between debtors' chapter 13 filing and their discharge, Tri-City twice communicated with plaintiff in regard to unpaid assessments — once on or about August 26, 1993, and once on or about September 27, 1993. Those "communications" consisted of monthly billing statements for post petition assessments. Those statements, plus one responsive letter, continued to be received by the debtor after his discharge and up until this action was filed. Plaintiff urges that Tri-City's continued efforts at collection of post petition assessments was in violation of the automatic stay while the case was pending, and in violation of the permanent discharge injunction after plaintiff received his discharge. Tri-City concedes that it continued to bill plaintiff for assessments, post petition, but, as it argues here, the obligations at issue do not constitute "claims" subject to either the automatic stay or the discharge injunction.
The fundamental issue before the court is whether post petition assessments constitute "claims" within the meaning of section 101(5) of the Bankruptcy Code. Resolution of that question will enable the court to address both charges brought by the debtor, i.e., that Tri-City violated both the automatic stay and the discharge injunction. These issues, while of first impression for this court, have been widely discussed by other jurists. Indeed, courts have conceived manifold approaches to the question whether post petition assessments are "claims" dischargeable in bankruptcy. Compare River Place East Housing Corp. v. Rosenfeld (In re Rosenfeld), 23 F.3d 833 (4th Cir.1994) (); In re Gonzalo, 169 B.R. 13 (Bankr. E.D.N.Y.1994); In re Raymond, 129 B.R. 354 (Bankr.S.D.N.Y.1991) (accord); Horton v. Beaumont Place Homeowners Ass'n, Inc. (In re Horton), 87 B.R. 650 (Bankr.D.Colo. 1987) (accord); Rink v. The Timbers Homeowners Ass'n I, Inc. (In re Rink), 87 B.R. 653 (Bankr.D.Colo.1987) (accord); In re Case, 91 B.R. 102 (Bankr.D.Colo.1988) (); Hill v. Windward Hills Condominium Ass'n (In re Hill), 100 B.R. 907 (Bankr.N.D.Ohio 1989) (); In re Harvey, 88 B.R. 860 (Bankr.N.D.Ill.1988) ...
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