In re Day
| Decision Date | 15 May 1997 |
| Docket Number | 96-16437DAS and 96-17563DAS.,Bankruptcy No. 96-15751DAS |
| Citation | 208 BR 358 |
| Parties | In re Linda DAY, Debtor. In re Linda DRIGGINS, Debtor. In re Bettie WHITAKER, Debtor. |
| Court | U.S. Bankruptcy Court — Eastern District of Pennsylvania |
Roger V. Ashodian, Chester, PA, for Debtors Driggins and Day.
Sharon Oris Morgan, Caplan & Luber, L.L.P., Paoli, PA, for Receiver of Chester Housing Authority.
Bettie Whitaker, Chester, PA, Debtor pro se.
Edward Sparkman, Philadelphia, PA, Standing Chapter 13 Trustee.
In this Opinion, we address several issues common to three Chapter 13 cases filed by public housing tenants within six years of their having filed Chapter 7 cases in which they previously received discharges.
We grant the Objection of the Chester Housing Authority ("the CHA") by its receiver, Robert C. Rosenberg, Esquire, to confirmation of the Debtors' plans, since they contemplate only nominal payments to the CHA. We hold that, in Chapter 13 cases like these, which are essentially serial successors to Chapter 7 cases, the CHA's allowed claims for rents accruing subsequent to the Debtors' prior discharges must be paid in full under the Debtors' Chapter 13 plans.
However, we reject the CHA's contention that we must defer our claims process to an arbitration procedure established for the CHA's tenants in a pending federal class action brought against the CHA by its tenants. We also reject the CHA's contention that there is no warranty of habitability applicable as to it, and we will sustain in part the Debtors' Objections to these claims on this basis. Finally, we reject the CHA's argument that the Debtors are obliged to assume their leases to retain their public housing tenancies, reaffirming our holdings in In re Sudler, 71 B.R. 780, 786-87 (Bankr. E.D.Pa.1987), that public housing tenants are protected by 11 U.S.C. § 525(a) and that a public housing tenant can generally retain a premises despite the failure of the case trustee to assume the lease or, except where a prior Chapter 7 discharge was obtained in a previous case instituted within six years of a refiling, paying dischargeable rent.
As a result of these holdings, we will carry, to an anticipated final confirmation hearing date of June 19, 1997, the CHA's motions for relief from the automatic stay to proceed under applicable nonbankruptcy law against the Debtors.
Before we discuss the individual circumstances of the three Debtors before us, we note certain elements common to all three cases that bear mentioning, first among which is the status of the aforementioned federal class action against the CHA. Subsequent to the filing of this action, in which the District Court found that the CHA was liable for a "de facto demolition" of a substantial amount of the CHA's housing stock in a decision reported as Velez v. Cisneros, 850 F.Supp. 1257 (E.D.Pa.1994), the CHA was placed in receivership by the United States Department of Housing and Urban Development ("HUD") as a "Troubled Housing Authority." Id. at 1259-60.
On February 24, 1995, a partial settlement in the Velez case was approved by the District Court, per the Honorable Norma L. Shapiro ("the Settlement"), which purported to globally resolve the rent arrearage and maintenance disputes outstanding between the CHA and many members of the plaintiff class of CHA residents. Through the Settlement it was agreed that the CHA would grant all tenants who executed documents to participate in the Settlement a one hundred (100%) percent rent abatement for all arrears due prior to January 1, 1992, followed by a fifty (50%) percent abatement of all arrearages due from January 1, 1992, to August 31, 1994. Thereafter, tenants would be obligated to pay their full rent plus an extra amount toward the arrears at the rate of the greater of five (5%) percent of their income or $15.00 monthly. Tenants could choose to become parties to the Settlement by individually executing "Repayment/Repair Agreements" with the CHA and, as part of the Settlement, tenants were to submit to the CHA a list of items to be repaired. If the repairs were not made within a 60-day period, the tenants' obligations to pay rent were to be suspended.
The parties agree that, at some time subsequent to the Settlement, Judge Shapiro entered a further Order of December 20, 1995, appointing a master to arbitrate CHA evictions in order to effect an arbitration provision added in a new CHA lease form. In that Order, Federal Magistrate Judge M. Faith Angell was appointed as master. We now address the procedural histories and facts adduced at hearings of March 18, 1997, and April 1, 1997, with respect to each of the Debtor-tenants against this background.
LINDA DRIGGINS has been a CHA tenant for seven years, residing throughout that time in a three-bedroom McCafferty Village unit at 2904 Knight Place, Chester, Pennsylvania 19013. Driggins filed bankruptcy on two occasions prior to filing the instant case. On July 13, 1994, she filed under Chapter 7 and received a discharge in November of that year. At or about the time of her Chapter 7 filing, simultaneous to being in Chapter 7, Driggins also filed a case under Chapter 13 which was ultimately dismissed. Following the Chapter 7 discharge, Driggins only rarely, if ever, paid rent and has accumulated substantial post-discharge arrearages, amounting to $3,915.27 as of July 11, 1996, when she filed her instant case pro se under Chapter 13.
Driggins testified that a local tenants council assisted her and the two other instant Debtors, who live in her same block, in their bankruptcy-filings. Driggins' Plan, filled out on the same form as the other Debtors' plans, contemplates payments of $25 monthly to the trustee for 3 years and fails to designate any anticipated distribution.
The CHA filed, as it did in almost the same form in the other Debtors' cases, comprehensive Objections to Driggins' Plan on January 15, 1997, the day before her first scheduled confirmation hearing. The confirmation hearing was continued to February 13, 1997. On that date, Roger V. Ashodian, Esquire, of Delaware County Legal Assistance Association, an agency providing free legal services in civil cases to low-income persons, appeared and requested permission to file a "limited appearance" for Driggins and Debtor LINDA DAY. We allowed this request of Ashodian, though extraordinary, because it was apparent that Driggins and Day needed legal assistance, having received very little practical insight into what they needed to obtain plan confirmation by the tenants counsel which had "assisted" them; no issue of fees for partial service was presented; and the CHA did not oppose Ashodian's request, presumably to attempt to globally resolve, with counsel involved in the Velez case, certain issues which would probably recur in cases of other tenants. The parties agreed to continue the confirmation hearings until March 6, 1997.
On the latter date, the parties agreed to a further continuance of these hearings, until March 18, 1997, which we allowed only on the condition that no further continuances would be allowed. They also desired to put before us on March 18, in hearings consolidated with the confirmation hearings, motions of the CHA for relief from the automatic stay ("the Motions") and Objections of the Debtors to the CHA's amended proof of claim ("the Objections"), which were not then filed but which were subsequently filed on March 13, 1997. We also placed the case of pro se Debtor BETTIE WHITAKER, for whom Ashodian did not seek to enter his appearance in any sense, on the same track.
The consolidated hearing was commenced and completed as to Driggins on March 18, 1997. The Day and Whitaker hearings were continued to and completed on April 1, 1997. A post-trial briefing schedule was established and, after several extensions, was completed on May 7, 1997.
Driggins testified to residing in a grossly-overcrowded apartment, as her family has grown to include seven minor children. She sleeps with her youngest child in one bedroom, three other daughters occupy another bedroom, two sons sleep in the third bedroom, and her oldest daughter sleeps in the living room. The CHA has acknowledged for several years that Driggins' three-bedroom unit is overcrowded and promised to assist her in obtaining a five-bedroom unit through an alternative federally-subsidized housing program, because the CHA owns no units with more than four bedrooms. However, Driggins has never been offered a larger unit.
In addition to overcrowding, Driggins described a variety of maintenance problems in her apartment, most prominently cracks in her stairs; a weak ceiling in her kitchen, which has fallen down once and she believes may be coming down again; loose tiles on her living room floor; a defective electrical outlet in her living room which at one time caused her son to be "electrocuted" in a serious but nonfatal accident; and, for the last two winters, a persistent lack of heat. This last problem began, ironically, after the CHA installed a new boiler in her building. At this point the CHA acknowledges that the boiler is defective but has indicated that it is not going to repair or replace it again because the building is scheduled for demolition.
The CHA admitted into evidence a voluminous number of maintenance orders for Driggins' unit. These work orders cover a large number of defective conditions in the unit, including a variety of leaks and electrical and structural problems occurring over the last several years. To the CHA's credit the reports indicate that many necessary repairs were completed, notably that Driggins received a new stove. On the other hand, however, the sheer number of work orders suggests that Driggins' unit, even when repaired, is in a fragile and dilapidated condition.
Driggins was the only one of the three instant Debtors who did...
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