In re Jean-Francois

• Decision Date: 01 July 2015
• Docket Number: Case No. 13–44946–CEC
• Citation: 532 B.R. 449
• Parties: In re Jean S. Jean–Francois, Debtor.
• Court: U.S. Bankruptcy Court — Eastern District of New York

532 B.R. 449

In re Jean S. Jean–Francois, Debtor.

Case No. 13–44946–CEC

United States Bankruptcy Court, E.D. New York.

Signed July 1, 2015

Sean A. O'Neal, Esq., Humayun Khalid, Esq., Cleary Gottlieb Steen & Hamilton LLP, One Liberty Plaza, New York, New York 10006, Attorneys for the Debtor

Bruce D. Mael, Esq., Berkman Henoch Peterson Peddy & Fenchel P.C., 100 Garden City Plaza, Garden City, New York 11530, Attorneys for Church Avenue Partners, LLC

DECISION

CARLA E. CRAIG, Chief United States Bankruptcy Judge

This matter comes before the Court on the motion of Jean S. Jean–Francois (the “Debtor”) for sanctions against Church Avenue Partners LLC (“Church Avenue”) pursuant to § 362(k)¹ for willful violation of the automatic stay. Church Avenue opposed the Debtor's motion, and the Court held a trial on April 27, 2015 on the issue of whether Church Avenue violated the automatic stay by evicting the Debtor after he filed for bankruptcy, whether the violation was willful, and whether the Debtor is entitled to actual or punitive damages. For the following reasons, the Court finds that Church Avenue violated the automatic stay, and awards the Debtor $50,000 in punitive damages.

JURISDICTION

This Court has jurisdiction of this proceeding pursuant to 28 U.S.C. § 1334(b), and the Eastern District of New York standing order of reference dated August 28, 1986, as amended by order dated December 5, 2012. This is a core proceeding under § 157 of the Judicial Code. 28 U.S.C. § 157 ; see Calderon v. Bank of America Corp. (In re Calderon), 497 B.R. 558, 564 (Bankr.E.D.Ark.2013) (“A proceeding under section 362(k) is a proceeding arising under title 11 and is a core proceeding under § 157 of the Judicial Code.”) (quotations and alterations omitted). This decision constitutes the Court's findings of fact and conclusions of law to the extent required by Federal Rule of Bankruptcy Procedure 7052.

BACKGROUND

The following facts are undisputed unless otherwise indicated. The Debtor is a pastor of Eglise de Dieu church (the “Church”) (Trial Tr. 18:10–15, 101:13–14, April 27, 2015, ECF No. 130.)² In February, 2007, the Debtor purchased a three-story building at 3502 Church Avenue, in Brooklyn, New York, which includes a basement, a commercial space on the first floor, and seven residential apartments on the second and third floors (the “Building”). (Pre–Trial Order 2, ECF No. 129.) To finance the purchase, the Debtor borrowed $562,500 from Flushing Savings Bank, which took a mortgage on the Building. (Pre–Trial Order 2, ECF No. 129.) The Debtor used the first floor and basement of the Building to conduct religious worship services for the Church. (Pre–Trial Order 2, ECF No. 129.) The Debtor fell behind in his mortgage payments, and in December 2008, Flushing Savings Bank brought a foreclosure action against him. (Pre–Trial Order 2, ECF No. 129.)

Church Avenue subsequently purchased the loan from Flushing Savings Bank and was substituted as plaintiff in the ongoing foreclosure action. In re Jean–Francois, 516 B.R. 699, 701 (E.D.N.Y.2014). In February 2012, the Kings County Supreme Court entered a Judgment of Foreclosure and Sale with respect to the Building, which was amended in May 2013. (Pre–Trial Order 2, ECF No. 129.) A foreclosure sale of the Building was scheduled for August 15, 2013 at 3:00 p.m. (Pre–Trial Order 2, ECF No. 129.) On August 13, 2013, two days prior to the scheduled foreclosure sale, the Debtor attempted to file for relief under Chapter 13 of the Bankruptcy Code, but the filing consisted only of the certificate of credit counseling pursuant to § 109(h), and did not include a bankruptcy petition. (Pre–Trial Order 3, ECF No. 129; Notice to Cure Defective Internet Filing, ECF No. 3.) On August 15, 2013, at 2:09 p.m., the Debtor filed a petition for relief under Chapter 13 of the Bankruptcy Code. (Petition, ECF No. 4.)

On August 15, 2013, at approximately 2:30 p.m., the Building was sold at the foreclosure sale. (Pre–Trial Order 3, ECF No. 129.) On August 30, 2013, the successful bidder's counsel sent Church Avenue's counsel an email noting that the Debtor had filed for bankruptcy. (Pre–Trial Order 3, ECF No. 129.) On September 3, 2013, Church Avenue's counsel acknowledged that the Debtor had filed for bankruptcy in an email that he sent to the successful bidder's counsel. (Pre–Trial Order 3, ECF No. 129.) On September 4, 2013, the city marshal issued a notice of eviction to the Debtor with respect to the Building. (Pre–Trial Order 3, ECF No. 129.)

On September 16, 2013, Church Avenue executed the warrant of eviction, and in the course of this action, there was a physical altercation between the Debtor's wife, Ms. Jean–Francois, and agents or members of Church Avenue at the Building. (Pre–Trial Order 3, ECF No. 129.)³ The parties disagree about the details of this altercation and who initiated it. The Debtor contends that Eli Davidovics, a member of Church Avenue, and a city marshal entered the Building to evict the Debtor and change the locks. (Pre–Trial Order 4, ECF No. 129.) The Debtor further contends that personal property belonging to him—consisting of furniture, musical instruments, audio-visual equipment, and religious accessories and decorations used in religious services—was removed from the first floor commercial space and the basement during the eviction and never returned. (Pre–Trial Order 4, ECF No. 129.) According to the Debtor, while the movers were removing the personal property, Ms. Jean–Francois showed them documentation from the state court indicating that she was entitled to access to the Building, and in response the movers and Mr. Davidovics physically assaulted Ms. Jean–Francois. (Pre–Trial Order 4, ECF No. 129.) According to the Debtor, following the altercation, Ms. Jean–Francois sought medical care and filed a report with the New York Police Department. (Pre–Trial Order 4, ECF No. 129.) Church Avenue disputes the Debtor's version of events, contending the personal property that had been removed from the Building was put back, and that any physical altercation that occurred was started by Ms. Jean–Francois. (Pre–Trial Order 5, ECF No. 129.)

The parties agree that Ms. Jean–Francois returned to the Building on September 18, 2013 to retrieve personal property pursuant to an order issued by the Civil Court of the City of New York. (Pre–Trial Order 3, ECF No. 129.) Mr. Davidovics was present at the time and let Ms. Jean–Francois into the Premises. (Pre–Trial Order 4, ECF No. 129.) The Debtor contends that upon entering the Building, Ms. Jean–Francois observed that all of the personal property that had been in the Building was gone, except for approximately 15 to 20 chairs. (Pre–Trial Order 4, ECF No. 129.) Church Avenue contends that any personal property that was removed from the Building was returned and that the personal property did not belong to the Debtor in any event, but to the Church. (Pre–Trial Order 4–5, ECF No. 129.)

On September 24, 2013, Church Avenue moved to modify and annul the automatic stay to retroactively validate the foreclosure auction (the “Lift Stay Motion”), and on October 8, 2013 the Debtor filed a motion for damages against Church Avenue for violation of the automatic stay (the “Sanctions Motion”). On November 25, 2013, the Court granted the Lift Stay Motion in part, and entered an order annulling the automatic stay as to Church Avenue's actions in connection with the foreclosure sale of the Building on August 15, 2013. (Order Aning the Automatic Stay, ECF No. 43.) The Order Aning the Automatic Stay did not lift the stay with respect to any action taken by Church Avenue to evict the Debtor, and Church Avenue never sought stay relief to evict the Debtor. The Debtor appealed the Order Aning the Automatic Stay to the District Court, and the District Court affirmed the Order Aning the Automatic Stay. Jean–Francois, 516 B.R. 699. On April 24, 2014, the Court dismissed the Debtor's bankruptcy case and reserved jurisdiction to rule on the Sanctions Motion. (Dismissal Order, ECF No. 87.) On April 27, 2015, the Court held a trial on the Sanctions Motion.

LEGAL STANDARD

Under § 362(a), the filing of a bankruptcy petition “operates as a stay, applicable to all entities, of ... (1) the commencement or continuation ... of a judicial, administrative, or other action or proceeding against the debtor [and] (2) the enforcement, against the debtor ..., of a judgment obtained before the commencement of the [bankruptcy case.]” 11 U.S.C. § 362(a). “Clearly an eviction proceeding is a judicial proceeding against the Debtor within § 362(a)(1), and the issuance of the state court warrant of eviction is the enforcement of a judgment against the Debtor obtained before the commencement of the bankruptcy case within the meaning of § 362(a)(2).” In re Butler, 14 B.R. 532, 534–35 (S.D.N.Y.1981).

Under § 362(k), “an individual injured by any willful violation of [the automatic stay] shall recover actual damages, including costs and attorneys' fees, and, in appropriate circumstances, may recover punitive damages.” 11 U.S.C. § 362(k). As the Second Circuit has recognized, “any deliberate act taken in violation of a stay, which the violator knows to be in existence, justifies an award of actual damages.” In re Crysen/Montenay Energy Co., 902 F.2d 1098, 1105 (2d Cir.1990) ; see also In re Ebadi, 448 B.R. 308, 320 (Bankr.E.D.N.Y.2011) (“A deliberate action that violates the automatic stay, taken while the violator knew that the stay was in effect, justifies an award of actual damages, with no further showing necessary.”). “A ‘specific intent to violate the stay is not required; instead, general intent in taking actions which have the effect of violating the automatic stay is sufficient to warrant damages.’ ” In re Ampal–Am. Israel Corp., 502 B.R. 361, 373 (Bankr.S.D.N.Y.2013) (quoting In re Sturman, No. 10 CIV. 6725, 2011 WL 4472412, at *2 (S.D.N.Y. Sept. 27, 2011) ). “The party moving for damages [under § 362(k) ] bears...