In re Holyfield

• Decision Date: 03 June 2019
• Docket Number: CASE NO. 16-67309
• Parties: IN RE: ANGELA YVONNE HOLYFIELD, Debtor.
• Court: U.S. Bankruptcy Court — Northern District of Georgia

IN RE: ANGELA YVONNE HOLYFIELD, Debtor.

CASE NO. 16-67309

UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION

June 3, 2019

IT IS ORDERED as set forth below:

CHAPTER 13

JUDGE WENDY L. HAGENAU

ORDER ON DEBTOR'S MOTION TO HOLD LUANNE M. BONNIE IN CONTEMPT FOR VIOLATION OF THE AUTOMATIC STAY

This case is replete with stay violations. The question is what this Court should do about them - specifically whether two acts taken by Luanne Bonnie as administratrix of the estate of the Debtor's mother, constituted willful violations of the stay for which the Debtor is entitled to damages.

The Debtor's Motion to Hold Luanne M. Bonnie in Contempt for Violation of the Automatic Stay [Docket No. 100] came before the Court for hearing after notice on April 29, 2019. Scott Riddle appeared on behalf of Ms. Bonnie and Ralph Goldberg appeared on behalf of the Debtor. The Court heard the testimony of the Debtor and Ms. Bonnie and received several exhibits into evidence. Both parties have filed post-hearing briefs.

This Court has jurisdiction of this matter pursuant to 28 U.S.C. §§ 157 and 1334 and this is a core matter under 28 U.S.C. § 157(b)(2).

FINDINGS OF FACT

Most of the facts are undisputed. The Debtor's mother owned a home at 342 Clifford Avenue in Georgia ("Property") when she died intestate on June 5, 2000. At the time of her mother's death, the Debtor was an heir, together with her sister Gwendolyn Turner and a third sister (or the children thereof). The home on Clifford Avenue was encumbered by a deed to secure debt ("DSD") held by Wells Fargo. The Debtor has made some payments on the debt secured by the DSD since 2000. Apparently, no other heirs have made payments on the debt secured by the DSD.

The Debtor filed this bankruptcy petition on September 30, 2016 and listed the Property as an asset, with a value of $99,000. The Debtor did not, however, disclose the interests of other heirs in the Property. The Debtor also listed Wells Fargo as a creditor in the amount of $70,000. This is the Debtor's fifth bankruptcy case since 2000. She received a discharge in 2012 and in 2014, each upon conclusion of a Chapter 13 plan.

On September 29, 2017, Shimika Rhodes (the Debtor's niece) filed a Petition for Letters of Administration in the DeKalb Probate Court requesting that she be appointed the representative of the estate of the Debtor's mother. On October 23, 2017, Gwendolyn Turner (the Debtor's sister) and Sonya Rhodes (the Debtor's niece) filed Caveats. On January 9, 2018, the Debtor filed a Caveat. On September 17, 2018, the Debtor filed her own Petition for Letters of Administration seeking to be appointed the representative of her mother's estate. On September 18, 2018, a hearing was held in Probate Court on the Petitions and Caveats. The Debtor was represented at the hearing by Laurene Cuvillier, the law partner of the Debtor's bankruptcy attorney. At the hearing, it was made known to the judge that the Debtor was a debtor in bankruptcy. Ms. Cuvillierargued, among other things, that the automatic stay protected the Property so an administrator was not needed for that purpose.¹

On September 20, 2018, Ms. Cullivier submitted a post-hearing brief to the Probate Court. In it, she referenced the Debtor's bankruptcy case, but did not raise the automatic stay as a bar to the continuation of the Probate proceedings. Instead, she lobbied for the Debtor to be the administrator and argued that a failure to appoint the Debtor administrator based on the Debtor's bankruptcies was prohibited discrimination under 11 U.S.C. § 525.

The Probate Court entered an order on October 24, 2018 appointing Ms. Bonnie the administrator of the Debtor's mother's estate. On November 8, 2018, Ms. Bonnie sent a letter to all the heirs introducing herself and sent a letter specifically to the Debtor terminating the Debtor's "tenancy of the Property", and notifying her that she had until 9:00 a.m. on Monday, January 7, 2019 to vacate the Property and deliver the keys to Ms Bonnie. The letter also stated, "Failure to comply fully with any of the terms of this demand will result in an immediate eviction proceeding against you and any other occupants of the property." In response, the Debtor's bankruptcy counsel sent a letter to Ms. Bonnie on November 27, 2018 notifying her that the Debtor was a debtor in a current bankruptcy case and providing her with the case number. The Debtor's counsel also advised Ms. Bonnie, "Your action of sending such a letter to an individual in bankruptcy violates the automatic stay of bankruptcy, and subjects you to an action for contempt. Additionally, your action to force her to vacate said residence and your proposed sale of such residence, also violate the automatic stay of bankruptcy." On December 19, 2018, Ms. Bonnie responded to the Debtor's counsel disagreeing with counsel's assessment of the situation. Ms. Bonnie asserted that the Debtor owned no interest in the Property and did not owe any obligationto Wells Fargo. It was Ms. Bonnie's position that upon her appointment, the Property vested in the probate estate. She stated, "Thus, your letter dated November 27, 2018, informing me that my pending eviction violates the automatic stay, was wrongful, because no fraction of the Property is property of your client's bankruptcy estate. Because the Property is not part of the bankruptcy estate, my eviction of your client cannot violate the automatic stay." Ms. Bonnie went further though and stated the following:

Please be advised and please advise your client, that I am seeking authority from the DeKalb County Probate Court to hire a bankruptcy attorney to make the Bankruptcy Court aware that your client holds no ownership interest in the Property and no liability on the Mortgage. After the Bankruptcy Court is aware that neither the Property, nor the Mortgage is part of the bankruptcy estate, I will proceed with administering the Estate.

Please also be advised, and please advise your client, that upon distribution of the Estate, I will seek authority from the Probate Court to assess the cost of dealing with your client's bankruptcy case, against her. If your client would like to avoid the expense of exposing her bankruptcy issues please have her immediately turnover possession of 342 Clifford Avenue, Atlanta, Georgia, by delivering the keys to my office.

On January 28, 2019, Ms. Bonnie filed her first Motion for Relief from Stay and Motion to Dismiss [Docket No. 93]. In it, Ms. Bonnie alleged that the Debtor was "in essence, a squatter, or at best a tenant at will". She also alleged the Debtor was "perpetuating a fraud upon the Court" by holding herself out to be the sole owner and the mortgagee (sic). This motion was withdrawn and then refiled with the proper movant identified on February 8, 2019 [Docket No. 99]. The Debtor's Motion followed. On April 3, 2019, this Court entered an order granting relief from the stay to Ms. Bonnie to continue the probate of the Debtor's mother's estate [Docket No. 111]. On April 19, 2019, the Court entered an order granting relief from the stay to Wells Fargo to commence foreclosure proceedings against the Property [Docket No. 114].

CONCLUSIONS OF LAW

When a bankruptcy petition is filed, an automatic stay immediately becomes effective and operates as a self-executing injunction against a variety of acts against the debtor and property of the estate. 11 U.S.C. § 362. Specifically, the filing of the bankruptcy case operates as a stay of

(1) the commencement or continuation, including the issuance or employment of process of a judicial, administrative, or other actual proceeding against the debtor that was or could have been commenced before the commencement of the case under this title ...

. . .

(3) any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate.

11 U.S.C. § 362(a). The language in Section 362 is very broad and is in the disjunctive, meaning that any of the provisions may apply to a particular act by a creditor or a third party. As one court noted, "This provision is about as clear as one could reasonably want . . . Simply stated, it creates a restraint and injunction against any judicial proceeding against a debtor in bankruptcy." In re Panayotoff, 140 B.R. 509, 511 (Bankr. D. Minn. 1992) (emphasis in original); see also In re Steward, 338 B.R. 654, 659 (Bankr. D.N.J. 2006).

In this case, three possible stay violations have occurred: the commencement and continuation of the probate proceeding, Ms. Bonnie's letter to the Debtor of November 8, 2018 demanding possession of the Property, and Ms. Bonnie's letter of December 19, 2018 addressed to Mr. Goldberg.

The commencement and continuation of the probate proceeding pursuant to which Ms. Bonnie was appointed administrator violated the automatic stay. Under Georgia law, when the Debtor's mother died intestate, the title to her real property automatically vested in the heirs at law which undisputedly included the Debtor. O.C.GA. § 53-2-7. At the time the Debtor filed herbankruptcy case in 2016, she therefore held an interest in the Property. Moreover, her interest as an heir, whatever that may be, was also property of the estate. See 11 U.S.C. § 541; see also Schieffler v. Pulaski Bank & Trust Company (In re Molitor), 183 B.R. 547, 553 (Bankr. E.D. Ark. 1995) (rights of the debtor in the probate estate became property of the estate). Because under Georgia law, the appointment of an administrator divests the heirs of their ownership interests directly in the Property (O.C.G.A. § 53-2-7(c)), the petition for the appointment of an administrator was an act to obtain possession of property of the estate in violation of 11 U.S.C. § 362(a)(3). Moreover, because the probate case was commenced against the Debtor, among others, as an heir of the estate, it was the commencement of a judicial proceeding against the Debtor which could have been filed before...