In re Walker, Bankruptcy No. 90BK-80357-A7. Adv. No. 94AP-8018.
| Decision Date | 24 April 1995 |
| Docket Number | Bankruptcy No. 90BK-80357-A7. Adv. No. 94AP-8018. |
| Citation | 180 BR 834 |
| Court | U.S. Bankruptcy Court — Western District of Louisiana |
| Parties | In re Ellis R. WALKER, Jr., Lorena Bolen Walker, Debtors. Ellis R. WALKER, Jr., Lorena Bolen Walker, Plaintiffs, v. M & M DODGE, INC. and Bureau of Credit Control-Alexandria, Inc., Defendants. |
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Thomas R. Willson, Alexandria, LA, for debtors.
Harold A. Van Dyke, III, Pineville, LA, for M & M Dodge, Inc.
Edward A. Kaplan, Alexandria, LA, for Bureau of Credit Control-Alexandria, Inc.
REASONS FOR DECISION
This is a Core Proceeding pursuant to 28 U.S.C. § 157(b)(2). This Court has jurisdiction pursuant to 28 U.S.C. § 1334 and by virtue of the reference by the District Court pursuant to Local District Court Rule 22.01 incorporated into Local Bankruptcy Rule 1.2. No party at interest has sought to withdraw the reference to the bankruptcy court, nor has the District Court done so on its own motion. This Court makes the following findings of fact and conclusions of law in accordance with Federal Rule of Bankruptcy Procedure 7052. Pursuant to these reasons, judgment is rendered in favor of the Plaintiffs. The parties will be allowed additional time to file post-trial briefs as to recovery under the Louisiana Unfair Trade Practices and Consumer Protection Act.
The complaint of the Plaintiffs, Ellis R. Walker, Jr., and Lorena Bolen Walker, allege that the defendants, M & M Dodge, Inc., and the Bureau of Credit Control — Alexandria, Inc., ("B.C.C.") violated the post-discharge injunction of 11 U.S.C. § 524 and the Louisiana Unfair Trade Practices and Consumer Protection Act set forth in La.Rev.Stat. § 51:1401, et seq. Further, due to such violations, the Walkers contend that the defendants owe $20,000.00 in compensatory damages, $50,000.00 in punitive damages, $25,000.00 in attorney fees, together with interest and costs.
From 1984 to 1991, Mr. Walker was employed as a mechanic at M & M Dodge. During this time, Mr. Walker purchased two (2) automobiles from his employer. M & M Dodge extended financing to enable Mr. Walker to purchase the vehicles. On July 8, 1988, Mr. Walker acquired a 1983 Mercury Cougar for $4,057.00. Exh. P-1. Mr. Walker signed a promissory note and granted M & M Dodge a chattel mortgage on the automobile to secure payment. M & M Dodge retained money out of Mr. Walker's paycheck and applied such funds to the balance on the note and insurance on the vehicle. Thereafter, on November 12, 1988, Mr. Walker purchased a 1982 Toyota Pick-up truck for $1,369.20. Exh. P-2. Mr. Walker signed another promissory note and provided M & M Dodge with a chattel mortgage.
M & M Dodge continued to hold money out of Mr. Walker's paycheck for insurance and payments on the notes. Funds were also retained and applied to the balance on several nominal short-term loans, interest on the notes, and other charges. The separate debts were combined into one account and not designated separately. An account card was maintained by Mary L. Ducote, the bookkeeper and office manager of M & M Dodge, displaying the balance, payments, payroll deductions, and other activity on Mr. Walker's account. Exh. P-4.
In March 1990, prior to Mr. Walker leaving M & M Dodge, the Walkers discussed the possibility of filing bankruptcy with Ms. Ducote. Ms. Ducote previously filed bankruptcy herself. She ultimately referred the Walkers to Thomas R. Willson who was her bankruptcy attorney. The Walkers also discussed the potential filing with Oliver McMickens, President and owner of M & M Dodge. Thus, M & M Dodge was unquestionably aware of the Walker's intent. In fact, Ms. Ducote and Mr. McMickens responded to a garnishment request and interrogatories by Monogram Bank against the Walkers on March 26, 1990, by stating:
This defendant has filed a Chapter XIII Bankruptcy. His attorney is Thomas Willson, 1330 Jackson Street, Alexandria, Louisiana 71303, Telephone: 318 442-8658.
Exh. P-8.
This is significant because it demonstrates M & M Dodge's actual knowledge of the bankruptcy, the automatic stay, and the stay's powerful effect on attempted collections against the Walkers personally. Ms. Ducote testified that Monogram Bank's claim was "overridden," thus preventing the garnishment.
The Walkers retained Mr. Willson as their attorney and a petition was filed under Chapter 7 of the Bankruptcy Code on March 30, 1990, four days after the answer to the garnishment. Both Ms. Ducote and Mr. McMickens contend that the Walkers assured them that M & M Dodge would not be listed as a creditor, and would otherwise be paid outside the bankruptcy proceeding. However, M & M Dodge was listed on the mailing matrix as well as the schedules. On Schedule A-2, M & M Dodge was specified as a creditor holding security interests of approximately $3,800.00 on a 1983 Mercury Cougar and $700.00 on a Toyota Pick-up truck. On the Debtors' Statement of Intentions, the Walkers proposed to retain and reaffirm the debt on both the Cougar and the Pick-up as well as another unrelated debt to Gulfco Finance.
M & M Dodge did not file a proof of claim in the case. The meeting of creditors under § 341(a) was held on May 1, 1990. No creditors made an appearance. The Trustee, Mark Sutton, noted that the matter was a "no asset" case and that it was his intention to abandon any interest in the "Truck" and the "Mercury." M & M Dodge failed to take advantage of any of the mechanisms within the bankruptcy proceeding to obtain the collateral or other relief, such as filing a motion for relief of the automatic stay, filing a motion for abandonment, filing an adversary proceeding to determine dischargeability, or objecting to the Walker's discharge. No distributions were made to creditors
Although Mr. Walker does not remember attending the discharge and reaffirmation hearing on August 20, 1990, the records of this Court indicate that both Mr. and Mrs. Walker were present. At the hearing, the discharge was entered and a reaffirmation agreement to Gulfco Finance was approved. Orders were signed by this Court on the same date. Again, M & M Dodge received notice of the discharge. The case was later closed and a final decree was entered on October 18, 1990.
The Walkers never entered into a reaffirmation agreement with M & M Dodge. Ms. Ducote admitted that she knew what a reaffirmation agreement was, its effect, and the fact that M & M Dodge should have prepared such an agreement for the Walkers. Notwithstanding, M & M Dodge continued to retain money out of Mr. Walker's paycheck. On May 31, 1991, Mr. Walker quit his job at M & M Dodge. The Walker's later made a few sporadic payments to M & M Dodge.
Soon after, M & M Dodge sent the Walkers notice of its intent to sue for the balance on the debt. The notice also asserted that M & M Dodge planned to turn the matter over to the B.C.C. for collection. Mr. McMickens referred to this as a "form letter" and a "collection notice." Mr. McMickens also acknowledged that he made a notation on the account card stating, "send suit 12-4-91 / 12/10/91." Exh. P-4. On May 6, 1992, M & M Dodge formally assigned and conveyed the Walker account of approximately $6,573.56 to the B.C.C. Exh. P-3. M & M Dodge did not inform the B.C.C. of the Walker's bankruptcy.
For years, M & M Dodge assigned all of its delinquent accounts to the B.C.C. for collection. Mr. McMickens admitted that he intended and "hoped" that the latter file lawsuits against persons owing money to M & M Dodge. According to Mr. McMickens, these suits were filed a "majority" of the time. On May 13, 1992, the B.C.C. filed a petition against the Walkers in the Ninth Judicial District Court seeking recovery of $6,573.56 on an "Open Account" allegedly owed to M & M Dodge. Exh. P-9. Personal service was made on Mr. Walker on May 18, 1992. In the petition, no mention was made of M & M Dodge's rights under the promissory notes or the chattel mortgages. In fact, Mr. McMickens affirmatively testified that it was standard procedure not to relinquish the notes or chattel mortgages to the B.C.C.
Afterwards, Mr. Walker called Mr. Willson's office and forwarded the petition and summons to Mr. Willson's paralegal, Terri Strickland. Ms. Strickland informed Mr. Walker that she would "take care of it." The Walkers did not file an answer or a responsive pleading. Consequently, a default judgment was granted against the Walkers on July 1, 1992, in the amount of $6,573.56. The judgment was also silent as to any rights under the promissory notes or the chattel mortgages. Exh. P-3. Ms. Strickland explained that the Walkers did not file an answer because Edward Kaplan's office assured her that it was not required due to the pending bankruptcy. Mr. Kaplan is Counsel to the B.C.C.
Thereafter, a petition for garnishment was filed by the B.C.C. on August 11, 1992. The petition was served upon Southern Chevrolet, Mr. Walker's employer at the time. Mr. Walker immediately contacted Mr. Willson's office once again and spoke to Ms. Strickland. Ms. Strickland advised Mr. Walker that she would "take care of it" and called Mr. Kaplan's office. Ms. Strickland again informed Mr. Kaplan's office of the bankruptcy filing, the filing date, and the case number. However on August 21, 1992, $46.00 was withheld from Mr. Walker's paycheck.1 Repeatedly, Mr. Walker contacted Ms. Strickland. Ms. Strickland sent Mr. Kaplan a copy of the petition and schedules listing M & M Dodge as a creditor.
After the garnishment, a representative of the B.C.C. contacted M & M Dodge to advise the former that the Walkers previously filed bankruptcy. Unquestionably, this revelation was already known by M & M Dodge. Mr. McMickens instructed the B.C.C. to "hold up" while Ms. Ducote contacted the Trustee and inquired about M & M Dodge's rights in the vehicles. Mr. Sutton supposedly told...
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