In re Heghmann

• Decision Date: 03 November 2004
• Docket Number: BAP No. 03-073.,Bankruptcy No. 03-12162-MWV.
• Parties: In re Beatrice M. HEGHMANN, Debtor. Beatrice M. Heghmann, Appellant, v. Ronald Indorf and Djamel Hafiani, Appellees.
• Court: Bankruptcy Appellate Panels. U.S. Bankruptcy Appellate Panel, First Circuit

Page 395

316 B.R. 395

In re Beatrice M. HEGHMANN, Debtor Beatrice M. Heghmann, Appellant, v. Ronald Indorf and Djamel Hafiani, Appellees.

BAP No. 03-073.

Bankruptcy No. 03-12162-MWV.

United States Bankruptcy Appellate Panel of the First Circuit.

November 3, 2004.

COPYRIGHT MATERIAL OMITTED

Robert A. Heghmann, York Beach, ME, on brief for Appellant.

Richard C. Bell, on brief for Appellee, Ronald Indorf.

Sean P. Joyce, Portland, ME, on brief for Appellee, Djamel Hafiani.

Before LAMOUTTE, VOTOLATO and HAINES, United States Bankruptcy Appellate Panel Judges.

LAMOUTTE, Chief Judge.

The debtor, Beatrice Heghmann, appeals 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 Appellee 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 postpetition 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. We affirm.

BACKGROUND

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

Robert and Beatrice Heghmann leased residential property owned by Appellee 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.

II. Beatrice Heghmann's Bankruptcy Proceedings

On June 19, 2003, Robert Heghmann filed a voluntary Chapter 13 petition on behalf of his wife, Beatrice Heghmann (hereafter, the "Debtor").¹ 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.² 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.³ 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.⁴ 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. This appeal ensued. Subsequently, the Debtor's bankruptcy case was dismissed for failure to file the required schedules and Chapter 13 plan.

JURISDICTION

A bankruptcy appellate panel may hear appeals from "final judgments, orders and decrees [pursuant to 28 U.S.C. § 158(a)(1)] or with leave of the court, from interlocutory orders and decrees [pursuant to 28 U.S.C. § 158(a)(3)]." Fleet Data Processing Corp. v. Branch (In re Bank of New England Corp.), 218 B.R. 643, 645 (1st Cir. BAP 1998). "A decision is final if it `ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.'" Id. at 646 (citations omitted). An interlocutory order "`only decides some intervening matter pertaining to the cause, and requires further steps to be taken in order to enable the court to adjudicate the cause on the merits.'" Id. (quoting In re American Colonial Broad. Corp., 758 F.2d 794, 801 (1st Cir.1985)). A bankruptcy appellate panel is duty-bound to determine its jurisdiction before proceeding to the merits even if not raised by the litigants. See In re George E. Bumpus, Jr. Constr. Co., 226 B.R. 724 (1st Cir. BAP 1998).

Generally, orders finding violations of the automatic stay and imposing sanctions are final appealable orders. See generally Washington Mutual v. Fritz (In re Fritz), 225 B.R. 218 (E.D.Wash.1997); Zeoli v. RIHT Mortg. Corp., 148 B.R. 698 (D.N.H.1993) (order finding violation of automatic stay and imposing attorneys' fees is final appealable order); Diviney v. NationsBank, N.A. (In re Diviney), 225 B.R. 762 (10th Cir. BAP 1998) (same).

STANDARD OF REVIEW

Appellate courts reviewing an appeal from the bankruptcy court generally apply the "clearly erroneous" standard to findings of fact and de novo review to conclusions of law. See T I Fed. Credit Union v. DelBonis, 72 F.3d 921, 928 (1st Cir.1995); Western Auto Supply Co. v. Savage Arms, Inc. (In re Savage Indus., Inc.), 43 F.3d 714, 719-20, n. 8 (1st Cir.1994). A bankruptcy court's determination that the automatic stay has been violated involves a question of law that is subject to de novo review. See Varela v. Ocasio (In re Ocasio), 272 B.R. 815, 822 (1st Cir. BAP 2002); see also Soares v. Brockton Credit Union (In re Soares), 107 F.3d 969, 973 (1st Cir.1997). Moreover, a bankruptcy court's assessment of damages for violations of the automatic stay is reviewed for an abuse of discretion. See Ocasio, 272 B.R. at 822 (citations omitted).

Judicial discretion is necessarily broad — but it is not absolute. Abuse occurs when a material factor deserving significant weight is ignored, when an improper factor is relied upon, or when all proper and no improper factors are assessed, but the court makes a serious mistake in weighing them.

Colon v. Rivera (In re Colon), 265 B.R. 639 (1st Cir. BAP 2001) (citations omitted).

ISSUES ON APPEAL

On appeal, the Debtor primarily argues that: (1) the bankruptcy court erred by not considering evidence of pre-petition stay violations; (2) the bankruptcy court erred in converting her motion for contempt into a motion for damages under § 362(h); (3) the bankruptcy court erred in denying her motion for contempt against Attorney Indorf and Mr. Hafiani; and (4) the bankruptcy court abused its discretion in failing to "implement" the automatic stay to allow the Debtor to return to her previous residence.

DISCUSSION

I. Pre-Petition Violations of the Automatic Stay

The Debtor argues that the bankruptcy court erred by not considering evidence of prepetition stay violations, specifically the State Court's issuance of a writ of possession and the resulting eviction. We disagree. First, contrary to the...