In re Heghmann

• Decision Date: 05 May 2005
• Docket Number: Bankruptcy No. 03-12162-MWV.,BAP No. NH 03-073.
• Citation: 324 B.R. 415
• Parties: Beatrice M. HEGHMANN, Debtor. Beatrice M. Heghmann, Appellant, v. Ronald Indorf and Djamel Hafiani, Appellees.
• Court: U.S. Bankruptcy Appellate Panel, First Circuit

Page 415

324 B.R. 415

Beatrice M. HEGHMANN, Debtor.

Beatrice M. Heghmann, Appellant, v. Ronald Indorf and Djamel Hafiani, Appellees.

BAP No. NH 03-073.

Bankruptcy No. 03-12162-MWV.

United States Bankruptcy Appellate Panel of the First Circuit.

May 5, 2005.

Beatrice M. Heghmann, Rye, NH, pro se.

Before HILLMAN, BOROFF and CARLO, United States Bankruptcy Appellate Panel Judges.

Before the Panel on Beatrice Heghmann's Motion for Leave to Proceed In Forma Pauperis.

HILLMAN and CARLO, U.S. Bankruptcy Appellate Panel Judges.

Before the Bankruptcy Appellate Panel (the "Panel") is Beatrice Heghmann's Motion for Leave to Proceed In Forma Pauperis before the United States Court of Appeals for the First Circuit.¹ On November 17, 2004, Beatrice Heghmann (the "Debtor") appealed to the Court of Appeals from the Panel's decision affirming the bankruptcy court's order regarding her Motion for Contempt against Ronald Indorf and Djamel Hafiani, and her Motion for an Order Implementing the Automatic Stay.

BACKGROUND

The Debtor appealed to the Panel from the bankruptcy court's August 19, 2003 order regarding her Motion for Contempt against Ronald Indorf and Djamel Hafiani, and her Motion for an Order Implementing the Automatic Stay. In the first motion, the Debtor sought a finding of contempt against Djamel Hafiani and his attorney, Ronald Indorf, for alleged violations of the automatic stay. The second motion sought an order allowing the Debtor to return to her previous residence and requiring that her possessions be returned to her by her previous landlord, Djamel Hafiani. The bankruptcy court concluded that Mr. Hafiani (but not Attorney Indorf) had violated the automatic stay by selling some of the Debtor's property at post-petition yard sales and ordered him to pay actual damages of $1,200 under 11 U.S.C. § 362(h). The bankruptcy court also denied the Debtor's request to return to her previous residence. The Panel affirmed.

A. Eviction Proceedings and Robert Heghmann's Chapter 13 Petition

The Debtor and her husband, Robert Heghmann, leased residential property owned by Djamel Hafiani. In February 2003, Mr. Hafiani filed an eviction proceeding against the Heghmanns in the Portsmouth, New Hampshire District Court (the "State Court") for failure to pay rent. On March 3, 2003, after a hearing, the State Court ordered the Heghmanns to pay rental arrears of $5,700 to Mr. Hafiani by March 15, 2003, or a writ of possession would issue as of March 17, 2003, without further hearing.

The Heghmanns neither paid the $5,700 nor appealed the judgment. Instead, on March 13, 2003, Robert Heghmann filed a voluntary Chapter 13 petition. Notwithstanding the filing of the bankruptcy petition, on March 17, 2003, the State Court issued a Notice of Default Judgment and a Writ of Possession in accordance with its March 3rd order.

On May 19, 2003, Robert Heghmann filed a motion in the State Court to quash the writ of possession, alleging that the writ was void because it issued in violation of the automatic stay. However, on May 21, 2003, the bankruptcy court dismissed Robert Heghmann's Chapter 13 case for failure to file the required bankruptcy schedules and Chapter 13 plan. Accordingly, on May 23, 2003, the State Court denied the Motion to Quash and issued a new Writ of Possession in accordance with its March 3rd order. The next day, the Heghmanns were evicted from the premises. The Heghmanns did not appeal.

On May 22, 2003, the Heghmanns filed a complaint in the United States District Court for the District of New Hampshire alleging violations of the automatic stay by Mr. Hafiani and seeking a temporary restraining order. On May 28, 2003, the district court issued an order sua sponte dismissing the complaint, finding that it lacked subject matter jurisdiction. The Heghmanns did not appeal.

On June 2, 2003, Robert Heghmann filed two motions with the bankruptcy court: (1) a motion to "set aside" the dismissal of his bankruptcy petition, and (2) a motion for contempt against Mr. Hafiani and his counsel, Attorney Ronald Indorf, for alleged violations of the automatic stay. The bankruptcy court denied both motions, concluding that Robert Heghmann had not established sufficient grounds to overturn the dismissal and that dismissal rendered moot the motion for contempt. Robert Heghmann did not appeal these orders, nor did he appeal the dismissal of his Chapter 13 case.

B. Beatrice Heghmann's Bankruptcy Proceedings

On June 19, 2003, Robert Heghmann filed a voluntary Chapter 13 petition on behalf of his wife, Beatrice Heghmann.² Thereafter, the Debtor filed three motions: (1) a Motion for Order Implementing Automatic Stay (the "Motion to Implement Stay"), (2) a Motion for Contempt, and (3) an Application for Partial Relief from Stay (the "Motion for Partial Stay Relief"). The Motion to Implement Stay sought an order allowing the Debtor to return to her previous residence and requiring Mr. Hafiani to return the Debtor's possessions. The second motion, although styled as a motion for contempt, alleged violations of the automatic stay by Mr. Hafiani and Attorney Indorf and sought punitive and compensatory damages.³ The Motion for Partial Stay Relief sought relief from the automatic stay to allow the Debtor to pursue a federal civil action against Mr. Hafiani and Attorney Indorf.

On August 12, 2003, the bankruptcy court held a hearing on the three motions, at which Robert Heghmann and Mr. Hafiani apparently testified.⁴ On August 19, 2003, the bankruptcy court entered one order with respect to both the Motion for Contempt and the Motion to Implement Stay (the "Order"). On that same day, the bankruptcy court also issued an order denying the Motion for Partial Relief without further discussion.

In the Order, the bankruptcy court refused to consider any pre-petition stay violations.⁵ Rather, the bankruptcy court focused on post-petition actions taken by Mr. Hafiani as landlord in handling the Debtor's personal property. The bankruptcy court concluded that Mr. Hafiani had "pleaded" with the Heghmanns to pick up their personal property, making numerous telephone calls to the Heghmanns and even leaving the premises open several times. Finding Mr. Hafiani's testimony to be credible, the bankruptcy court concluded that there were no stay violations until Mr. Hafiani sold some of the Debtor's property at yard sales on July 12 and 19, 2003. Accordingly, the bankruptcy court ordered him to pay damages of $1,200. The bankruptcy court also concluded that although Mr. Hafiani's actions were taken on the advice of his counsel, Attorney Indorf did not violate the automatic stay as he did not take any actions against the estate.

The Debtor appealed to the Panel. The Panel ultimately affirmed the decision of the bankruptcy court. On November 17, 2004, the Debtor appealed the Panel's decision to the United States Court of Appeals for the First Circuit.

DISCUSSION

I. Authority to Consider In Forma Pauperis Relief

The question before the Panel is whether the Debtor's appellate filing fees may be waived. The authority to proceed in forma pauperis is found in 28 U.S.C. § 1915(a), providing that "any court of the United States" may:

authorize the commencement, prosecution or defense of any suit, action or proceeding, civil or criminal, or appeal therein, without prepayment of fees or security therefor, by a person who submits an affidavit that .... the person is unable to pay such fees or give security therefor.

28 U.S.C. § 1915(a).⁶

In 1973, however, the U.S. Supreme Court ruled that 28 U.S.C § 1915(a) does not allow waiver of fees for filing a bankruptcy petition, holding that no constitutional right to discharge debts in bankruptcy exists, and further holding that bankruptcy fee requirements do not violate due process or equal protection rights. United States v. Kras, 409 U.S. 434, 93 S.Ct. 631, 34 L.Ed.2d 626 (1973); see also In re Garland, 428 F.2d 1185, 1187 (1st Cir.1970) (requiring payment of fees in order to obtain discharge not a violation of due process); In re Red Barn, 23 B.R. 593 (Bankr.D.Me.1982) (requiring payment of fee to file a complaint for relief from stay does not violate any fundamental right). The Bankruptcy Reform Act of 1978, 11 U.S.C. §§ 101, et seq., codified the Kras holding, expressly excepting fees associated with the commencement of bankruptcy cases from the operation of 28 U.S.C. § 1915(a):

Notwithstanding section 1915 of this title, the parties commencing a case under title 11 shall pay to the clerk of the district court or the clerk of the bankruptcy court ... the following filing fees ...

28 U.S.C. § 1930(a) (emphasis added). Some courts read § 1930(a) expansively, holding that it prohibits a party from proceeding in forma pauperis in all bankruptcy proceedings. See In re Woodman, 213 B.R. 53, 56 (Bankr.D.Conn.1997) (holding that even though administrative fees are not explicitly excluded from waiver it was intended that these fees be paid in all cases); In re Rogers, 147 B.R. 16, 17 (Bankr.E.D.Va.1992) (debtors may not proceed in forma pauperis on appeal because the right to proceed in forma pauperis does not exist in bankruptcy); Harris v. M.E.I. Diversified, Inc., 156 B.R. 814, 815 (Bankr.E.D.Mo.1993) (holding that creditor may not proceed in forma pauperis because § 1930 removes bankruptcy proceedings from the ambit of § 1915).

On the other hand, 28 U.S.C. § 1930(b), allowing the Judicial Conference of the United States to prescribe other fees in bankruptcy cases, does not contain any language removing these fees from the operation of § 1915. Most bankruptcy courts that have addressed the § 1930 issue in published opinions hold that § 1930(a) applies only to the filing of a bankruptcy petition and does not apply to fees, as set from time to time by the Judicial Conference pursuant to § 1930(b), for other proceedings in bankruptcy. See Benoit v. Lassina (In re Lassina), 261 B.R. 614, 616 (Bankr.E.D.Pa.2001) (holdi...