In re Humbert

• Decision Date: 16 February 2017
• Docket Number: Case No. 16–10148
• Parties: IN RE: George S. HUMBERT, Debtor.
• Court: U.S. Bankruptcy Court — Northern District of Ohio

567 B.R. 512 (Mem)

IN RE: George S. HUMBERT, Debtor.

Case No. 16–10148

United States Bankruptcy Court, N.D. Ohio.

Signed February 16, 2017

Charles J. Van Ness, Mayfield Heights, OH, for Debtor.

MEMORANDUM OF OPINION¹

ARTHUR I. HARRIS, UNITED STATES BANKRUPTCY JUDGE

In this Chapter 7 case, the debtor, George S. Humbert, seeks a determination that a creditor and former landlord, Welcome Home of Northeast Ohio, LLC, is willfully violating the discharge injunction by pursuing a claim in state court against the debtor for postpetition rent. For the reasons that follow, the Court agrees and holds that the creditor's action for postpetition rent constitutes a violation of the discharge injunction. In addition, absent a stay of this order pending postjudgment relief or appeal, the Court orders the creditor to dismiss the state court action and pay the debtor $900 within thirty days of the date of this order.

JURISDICTION

The Court has jurisdiction over this matter. A determination as to whether certain conduct violates the discharge injunction is a core proceeding under 28 U.S.C. § 157(b)(2)(I) and (O). In re Hager , 510 B.R. 131, 133 (Bankr. W.D. Mich. 2014). This Court has jurisdiction over core proceedings pursuant to 28 U.S.C. §§ 157(a) and 1334 and Local General Order No. 2012–7, entered by the United States District Court for the Northern District of Ohio.

PROCEDURAL HISTORY

On January 13, 2016, the debtor filed the above-captioned voluntary petition for relief under Chapter 7 of the Bankruptcy Code. The debtor listed his residential lease of 70 Keewaydin Drive, Timberlake, Ohio, from Welcome Home of Northeast Ohio on his Schedules E/F and G. Creditor Kurt Kluznik is the owner/agent of Welcome Home of Northeast Ohio, and the debtor informed Kluznik of the debtor's bankruptcy at some point after the petition was filed. On February 22, 2016, a meeting of creditors was held pursuant to 11 U.S.C. § 341(a), and, on February 23, 2016, the Chapter 7 trustee filed a report of no distribution (Docket No. 8).

On February 8, 2016, without filing first for relief from stay, Kluznik initiated an eviction action against the debtor in Willoughby Municipal Court (Willoughby Municipal Court Case No. 16CVF00182). The debtor filed a Notice of Bankruptcy Proceeding and Automatic Stay in the Willoughby Municipal Court on February 12, 2016, and Judge Harry E. Field stayed the eviction proceeding as to the debtor on February 19, 2016.

On March 4, 2016, Kluznik filed a Motion for Relief from Stay and Abandonment for Eviction Purposes (Docket No. 9). On April 12, 2016, the debtor objected, (Docket No. 17), and filed a motion for sanctions (Docket No. 18). After filing several motions in error, Kluznik withdrew his Motion for Relief from Stay and Abandonment on April 19, 2016 (Docket Nos. 21, 23, 24, 25, and 26). On April 27, 2016, the debtor received an order of discharge.

On August 26, 2016, this Court held that Kluznik had violated the automatic stay by filing the first eviction action and making related collection efforts against the debtor. The Court ordered Kluznik to pay the debtor attorney's fees in the amount of $930 (Docket No. 35). The Court denied the debtor's request to award noneconomic and punitive damages at that time but left open the option of additional damages if Kluznik did not dismiss the eviction action within 30 days of the date of that order. In a section of the opinion entitled "FUTURE PROCEEDINGS FOR EVICTION OR TO RECOVER RENT " the Court cautioned: "to proceed with an eviction action against the debtor, Kluznik must refile a new eviction action with proper notice to the debtor.... Given the debtor's discharge, any such eviction action would be limited to restitution of the premises and would not include a money judgment" (Docket No. 35 at 15).

Meanwhile, on July 19, 2016, the creditor filed another eviction action in Willoughby Municipal Court (Case No. 16CVG01190). The debtor vacated the premises on or before July 31, 2016, but the creditor did not dismiss the state court action. On August 1, 2016, the debtor filed his Notice of Bankruptcy Discharge and Injunction in the state court. Notwithstanding the cautionary language in this Court's August 26, 2016, decision, and without first seeking clarification from this Court, on September 23, 2016, the creditor moved in state court for leave to file an amended complaint seeking money damages against the debtor for the time that the debtor remained on the premises after his bankruptcy discharge.

On October 28, 2016, the debtor filed a motion for contempt and to show cause to enforce the discharge injunction against the creditor (Docket No. 40). On December 20, 2016, the Court heard argument on the debtor's motion and the creditor's brief in opposition (Docket No. 42), first supplemental brief in opposition (Docket No. 43), and second supplemental brief in opposition (Docket No. 44). The parties agreed to file joint stipulations of fact and additional briefing, after which the matter would be ready for the Court to decide. The parties did not request an evidentiary hearing. The parties filed joint stipulations of fact on January 6, 2017 (Docket No. 47). The parties further agreed to request that the state court not proceed on the creditor's claim for postpetition rent until this Court first determined whether such a claim survived the debtor's discharge.

STIPULATIONS OF FACT

In this proceeding, the parties agreed to have the Court decide the claims based on the parties' joint stipulations of fact without any witnesses. To the extent that the Court has drawn inferences based on the parties' stipulations, any such inferences reflect the Court's weighing of the evidence.

The parties submitted the following stipulations:

A. Debtor filed his voluntary petition under Chapter 7 of the Bankruptcy Code on January 13, 2016, Case No. 16–10148, in the United States Bankruptcy Court, Northern District of Ohio (Doc 1).

B. Prior to the filing of Debtor's case, Debtor and Creditor had entered into a residential lease for the premises owned by the Creditor at 70 Keewaydin Drive, Timberlake, OH 44095 (the "Premises").

C. The Statement of Intention (Official Form 108) in Debtor's bankruptcy petition stated that he would assume his unexpired lease of the Premises with the Creditor.

D. Debtor's 341 Meeting of Creditors was held and concluded on February 22, 2016.

E. The Chapter 7 Trustee filed a Report of No Distribution on February 23, 2016 (Doc 8), and neither Debtor nor the Trustee assumed the residential lease of the Premises with the Creditor.

F. Debtor's Discharge was entered on April 27, 2016 (Doc 29).

G. Debtor continued to occupy the Premises after the entry of his Discharge on April 27, 2016.

H. On July 19, 2016, the Creditor filed its Complaint for Restitution of the Premises (eviction only) against Debtor in the Willoughby Municipal Court.

I. On August 1, 2016, Debtor filed and served his Notice of Bankruptcy Discharge and Injunction in the Willoughby (Ohio) Municipal Court.

J. Debtor vacated the Premises on or before July 31, 2016, and filed his Notice of Change of Address with the Court on September 6, 2016 (Doc 39).

K. On August 17, 2016, the Willoughby Municipal Court entered an order for restitution of the Premises in favor of the Creditor.

L. On September 23, 2016, the Creditor filed its "Motion for Leave to Amend Complaint, Second Cause of Action, Instanter, and Reply to Notice of Bankruptcy Discharge and Injunction; Motion for Scheduling of Hearing on Damages" in the Willoughby Municipal Court.

M. Following a hearing held October 17, 2016 before the Willoughby Municipal Court, the Creditor's Motion for Leave to Amend Complaint, Instanter, was granted on November 8, 2016.

N. The Creditor's Amended Complaint seeks monetary damages for Debtor's occupancy of the Premises from the day after his discharge (i.e. , April 28, 2016) until he vacated on or before July 31, 2016.

O. Debtor filed his Motion for Contempt and to Show Cause to Enforce Discharge Injunction Against Welcome Home of Northeast Ohio, Inc. (the "Creditor") on October 28, 2016 (Doc 40).

[P.] On November 22, 2016, the Creditor filed its Reply to Motion to Show Cause as to Enforce Discharge Injunction (Doc 42), and a Supplemental Brief on November 29, 2016 (Doc 43).

[Q.] On December 16, 2016, the Creditor filed its Supplemental Objection to [Motion to] Show Cause to Enforce Discharge Injunction (Doc 44).

DISCUSSION

The debtor requests that the Court: (1) find the creditor in contempt of court for willfully violating the discharge injunction under 11 U.S.C. § 524(a)(2)–(3) ; and (2) enter a monetary judgment against the creditor and in favor of the debtor for compensatory damages, punitive damages, and attorney's fees for contempt of court. 11 U.S.C. § 524 provides in pertinent part:

(a) A discharge in a case under this title—

....

(2) operates as an injunction against the commencement or continuation of an action, the employment of process, or an act, to collect, recover or offset any such debt as a personal liability of the debtor, whether or not discharge of such debt is waived....

A debtor may bring an action in civil contempt if a party violates the discharge injunction of § 524(a)(2). See Pertuso v. Ford Motor Credit Co. , 233 F.3d 417, 421–23 (6th Cir. 2000) ; Lover v. Rossman & Co. (In re Lover) , 337 B.R. 633 (Bankr. N.D. Ohio 2005). The debtor must prove that the creditor's action violated the discharge injunction and that the creditor had specific knowledge of the bankruptcy discharge.

I. The Creditor's Action for Postpetition Rent Violates the Discharge Injunction.

The creditor's state court action for postpetition rent constitutes a violation of the discharge injunction. 11 U.S.C. § 502(g) treats a claim for postpetition damages for the breach of an unexpired prepetition lease as a prepetition claim that is discharged. See Miller v. Chateau Communities, Inc. (In re Miller) , 282 F.3d 874, 876–77 (6th Cir. 2002). Any debt owed a...