In re Watts
| Decision Date | 30 June 1987 |
| Docket Number | 86-04593S and 86-02640G,Bankruptcy No. 86-03358S,Adv. No. 86-1366S. |
| Citation | 76 BR 390 |
| Parties | In re Dorothy WATTS, Debtor. In re Robert BRATTON, Debtor. In re John & Irene PIZZILEO, Debtors. Dorothy WATTS, Robert Bratton, John & Irene Pizzileo, Plaintiffs, v. PENNSYLVANIA HOUSING FINANCE CO. and Robert F. Bobincheck, Individually and in his official capacity as Director of the Pennsylvania Housing Finance Agency, Defendants. |
| Court | U.S. Bankruptcy Court — Eastern District of Pennsylvania |
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David A. Searles, Mary Jeffrey, Henry J. Sommer, Philadelphia, Pa., for plaintiffs.
Jo Lynn M. Stoy, Lawana M. Johns, Harrisburg, Pa., for defendants.
Edward M. Mazze, Furlong, Pa., Trustee in case of Dorothy Watts.
Horace A. Stern, Philadelphia, Pa., Trustee in case of Robert E. Bratton.
Christopher G. Kuhn, Philadelphia, Pa., Trustee in case of John & Irene Pizzileo.
The instant adversarial proceeding raises several procedural and substantive issues for determination at this juncture. One procedural issue is a Motion requesting this Court to recuse itself, which recent local authority rather clearly indicates we should deny. The second procedural issue is a Motion for class determination, which we shall grant, and permit the named Plaintiffs to maintain the matter pursuant to Federal Rule of Civil Procedure () 23(b)(2), although we shall confine the relief to unnamed class members to declaratory and injunctive as opposed to monetary relief.
The substantive issues are whether the termination of the Debtors' pre-petition benefits pursuant to the state Homeowners' Emergency Mortgage Assistance Act Program, 35 P.S. § 1680.401c, et seq. (), by the Defendants upon the Plaintiffs' filing of their respective bankruptcy petitions violated 11 U.S.C. § 525(a) and 11 U.S.C. § 362(a) of the Bankruptcy Code and 42 U.S.C. § 1983 of the federal Civil Rights Act. We hold that the Defendants' conduct violated all of these laws, and hence that declaratory and injunctive relief must be granted to the named parties and the members of their class, although we believe that the only appropriate additional relief at this juncture is an award of attorney's fees to the Plaintiffs' counsel, as we do not believe that any award of monetary damages to even the named Plaintiffs has been established.
This adversarial proceeding was commenced by the filing of a Complaint by two individuals and a couple who were, at the time of filing, debtors in three separate Chapter 7 bankruptcy cases in our Court, on November 24, 1986. Named as Defendants were the "PENNSYLVANIA HOUSING FINANCE CO.," a Pennsylvania state agency to which we will hereinafter refer as "PHFA"),1 and ROBERT F. BOBINCHECK, individually and Director of PHFA. One named Plaintiff, DOROTHY WATTS, had filed her petition on July 11, 1986, and was discharged on December 23, 1986; Plaintiff ROBERT BRATTON filed on October 2, 1986, and his case remains open, without any Discharge having been granted as yet; and Plaintiffs JOHN and IRENE PIZZILEO filed on May 19, 1986,2 and they were discharged on March 13, 1987.
The Defendants filed an Answer to the Complaint on January 6, 1987, and the Plaintiffs embarked upon discovery, to which the Defendants responded on February 9, 1987.
On February 15, 1987, the Defendants filed a Motion to Disqualify Judge (hereinafter referred to as "the Recusal Motion"), including an unsworn "Affidavit" by the Defendants' counsel which merely incorporates the contents of the Motion. This Motion was answered by the Plaintiffs on February 20, 1987, and scheduled for a hearing on March 18, 1987.
On February 20, 1987, the Plaintiffs also filed a Motion for Determination of Class Action (hereinafter referred to as "the Class Motion"). This Motion was also scheduled for a hearing on March 18, 1987.
The Summons originally set the date for trial on the merits in this matter on January 20, 1987. By agreement of the parties, the trial date was continued until February 24, 1987.
On February 24, 1987, only counsel for the Plaintiffs appeared and proposed a schedule for disposition which he indicated was acceptable to all parties. This schedule, incorporated into an Order issued by us on February 24, 1987, was as follows:
1. The Defendants were provided until March 18, 1987, to file a Brief in support of the Recusal Motion.
2. The Plaintiffs were provided until April 10, 1987, to respond to the Defendants' Brief on the Recusal Motion, file a Motion for Summary Judgment (hereinafter referred to as "the Summary Judgment Motion"), and file a Brief addressing the Summary Judgment Motion and the Class Motion.
3. The Defendants were provided until May 8, 1987, to file any responses they deemed appropriate to the Plaintiffs' Briefs.
This briefing schedule was, for the most part, adhered to by the parties, although we note that the Defendants filed their responses to the Plaintiffs' Summary Judgment Motion in the form of a Cross-Motion for Summary Judgment on May 11, 1987, and the Plaintiffs filed a Response to this Cross-Motion on May 22, 1987.
Because all of the issues are presented to us on Motions, we need not, and indeed cannot, render Findings of Fact. Also, the facts are simple and can be very briefly described before we address the contents of the record relevant to each of the following in turn: (1) the Recusal Motion; (2) the Class Motion; and (3) the Summary Judgment Motions.
Each of the named Plaintiffs' circumstances present similar factual patterns. After falling behind in their home mortgage payments, each homeowner applied to PHFA for HEMAP benefits. In each case, HEMAP benefits were granted, and PHFA agreed to bring the arrears up to date, and, for named Plaintiffs Watts and Bratton and most of the class members, awarded ongoing monthly assistance payments as well. At some point after having been approved for HEMAP benefits, each homeowner filed a bankruptcy petition. After notification of the petition, PHFA, without seeking relief from the automatic stay, admittedly sent each of the named Plaintiffs and unnamed putative class members a form letter stating that "the PHFA is discontinuing your monthly assistance under HEMAP due to your filing for bankruptcy." The letter, under the signature of Defendant BOBINCHECK, goes on to state two reasons for this action: (1) A homeowner is ineligible for HEMAP benefits when the mortgagee "is prevented by law from foreclosing upon the mortgage," per 35 P.S. § 1680.404c(a)(7), and the imposition of the automatic stay prohibits the foreclosure; and (2) the bankruptcy filing is a "change in your financial circumstances," necessitating a reevaluation of eligibility. In addition to the named Plaintiffs, PHFA admitted, in discovery, that thirteen other debtors had received this letter and, like the named Plaintiffs, had their benefits terminated until their bankruptcies were completed.
The Affidavit of Defendant BOBINCHECK, attached to the Defendants' Summary Judgment Motion, does not deny any of these facts, but contends that the Defendants' actions were legally justified. Thus, the sole issue is whether the Defendants' legal position is correct, rendering the case appropriate for full disposition on the Cross-Motions for Summary Judgment.
The Recusal Motion, raising issues which have been addressed in recent decisions of this Court, the Local District Court, and the local Court of Appeals, can be rather easily disposed of on the basis of those recent decisions. This Motion is based upon, alternatively, 28 U.S.C. §§ 144 and 455(a) and (b)(1), which provide as follows:
We discussed each of these statutory provisions at length in what we believe was a factual setting presenting a closer question of whether recusal was appropriate in In re Johnson-Allen, 68 B.R. 812 (Bankr.E. D.Pa.1987), modified sub nom. Crown Leasing Corp. v. Johnson-Allen, 70 B.R. 350 (E.D.Pa.1987). As we explained in that decision, 68 B.R. at 815, the significant document in a 28 U.S.C. § 144 motion is the affidavit, which must meet the following standards:
Here, there is some question as to whether the...
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