Matter of Davis, Bankruptcy No. B85-01073-Y.
| Decision Date | 29 May 1987 |
| Docket Number | Bankruptcy No. B85-01073-Y. |
| Citation | 74 BR 406 |
| Parties | In the Matter of Edward Claren DAVIS, and Mary Esther Davis, Debtors. |
| Court | U.S. Bankruptcy Court — Northern District of Ohio |
William A. Gemma, Youngstown, Ohio, for debtors.
Michael A. Gallo, Youngstown, Ohio, trustee.
Jeffrey B. Duber, Asst. Atty. Gen., Office of Atty. Gen. of Ohio, Employment Services Section, Cleveland, Ohio, for State of Ohio.
This cause is before the Court on the Court's Order that the STATE OF OHIO, DEPARTMENT OF LIQUOR CONTROL ("DEPARTMENT OF LIQUOR CONTROL"), appear and show cause why it should not be found in violation of the automatic stay provisions of 11 U.S.C. Sec. 362. Hearings on this matter were held on September 18, 1986 and September 24, 1986, at which time both Debtors and representatives of the DEPARTMENT OF LIQUOR CONTROL appeared with counsel. Based upon the testimony and documentary evidence introduced at hearing, the Court finds:
1. Debtors, EDWARD and MARY DAVIS, dba ED'S OTHER PLACE LOUNGE, filed a Petition for Relief under Chapter 13 of the Bankruptcy Code on November 14, 1985. THE STATE OF OHIO DEPARTMENT OF TAXATION was listed as a creditor for sales tax owed in the amount of Four Thousand, One Hundred Forty & 00/100 Dollars ($4,140.00).
2. Prior to the filing of the Chapter 13 Petition, THE STATE OF OHIO LIQUOR CONTROL COMMISSION issued an Order suspending Debtors' liquor permits indefinitely, effective December 20, 1985, until such time as certain unpaid sales taxes, in the total amount of Six Thousand, Two Hundred Ten & 00/100 Dollars ($6,210.00) were paid in full and the suspension order set aside by subsequent Order of the Commission. (STATE's Exhibit 1). This Order was apparently mailed to Debtors on September 6, 1985.
3. In January, 1986, THE DEPARTMENT OF LIQUOR CONTROL, ENFORCEMENT DIVISION, received a request from THE STATE OF OHIO's Attorney General's Office to investigate Debtors' place of business for a violation of operating while under the tax suspension as set forth in the Commission's Order of September 6, 1985. (Record 1 at 75). On January 14, 1986, three enforcement agents went to Debtors' place of business. While there, they observed a video machine called "Castle," and subsequently charged Debtor, EDWARD DAVIS, with the possession of a gambling device. At this time, they also charged Debtor with selling and keeping beer upon the permit premises while the permit was under a tax suspension and not in force. The enforcement agents did not remove any inventory from Debtors' place of business but merely instructed Debtors not to sell any beer or liquor. During this investigation, the enforcement officers were informed that Debtors were in a Chapter 13 case. (Record 1 at 10; Record 2 at 38-39).
4. On April 10, 1986, Debtors appeared before a hearing officer for THE OHIO LIQUOR CONTROL COMMISSION on the charges of keeping and selling beer while under a tax suspension and possession of a gambling device. Debtor, EDWARD DAVIS, testified that, while at this hearing, he informed the hearing officer and an assistant attorney general that he had filed a Petition for Relief under Chapter 13 of the Bankruptcy Code. (Record 1 at 12-15; Record 2 at 43-44).
5. On May 22, 1986, THE OHIO LIQUOR CONTROL COMMISSION issued an Order relative to the charges heard on April 10, 1986. (Debtors' Exhibit B). The Order sets forth that Debtor had denied the gambling charges and further set forth that the Commission was dismissing the charges of operating while under a tax suspension. However, despite the dismissal of the latter charges, the Order reads:
Said indefinite suspension given in Case Number 1096-ST-85 the tax case will continue in effect and if the stated delinquencies in Case Number 1096-ST-85 are not paid in full by noon, June 21, 1986, said permits are revoked.
6. On September 10, 1986, agents from the DEPARTMENT OF LIQUOR CONTROL, ENFORCEMENT DIVISION, entered Debtors' place of business with a warrant to search and seize all beer, wine and intoxicating liquor and items relating to the sale of intoxicating beverages. Debtor testified that, during this search, he and his employee, Wanda Shobel, informed Investigators Akins and Quicksall that he had filed for relief under the Bankruptcy Code and that he was in a Chapter 13 (Record 1 at 19-20). Ms. Shobel testified that she showed Investigator Quicksall a copy of the bankruptcy notice, but Ms. Quicksall denies seeing any such notice (Record 2 at 22-24). Based upon the totality of circumstances reflected in the record and based upon the Court's observation of the demeanor of Ms. Quicksall as a witness, her testimony with respect to lack of notice or knowledge of the pendancy of Debtors' Chapter 13 case cannot be credited. The Court concludes that a copy of the bankruptcy notice was indeed shown to one or more of the agents of the ENFORCEMENT DIVISION during the search on September 10, 1986.
7. During the investigation, the agents listed the inventory and removed it from the premises. The agents also removed from the walls some of the mirrors which were advertisements for beer. Debtor EDWARD DAVIS testified that one of the mirrors was dragged across the bar and a table, resulting in damage. However, no evidence was presented as to the amount of monetary damage to the table and the bar. The agents denied that there was any damage to the premises. They did testify, however, that the bottom half of a plastic advertisement had been accidentally broken.
8. After the investigation had been completed and the inventory had been counted and listed on the search warrant and removed from the premises, the inventory was taken by van to the DIVISION headquarters in Akron, Ohio. Since there was no evidence investigator to take in and mark the evidence at that time, the inventory remained in the van, which was locked and backed against a cement wall.
9. On September 11, 1986, Debtor filed an Application with this Court for an Order directing THE DEPARTMENT OF LIQUOR CONTROL to appear and show cause why they should not be held in violation of 11 U.S.C. Sec. 362, which Application was granted on September 15, 1986.
10. On September 16, 1986, the inventory was returned. Upon a count conducted by both Debtor and the investigator returning the inventory, it was found that the count on the canned beer was 289 cans less than the amount which had been listed on the inventory prepared by Division agents. Debtor testified that he had paid Nine & 90/100 Dollars ($9.90) per case (24 cans) for the beer. Debtor signed a receipt for the inventory and noted the difference in the canned beer. There were no other discrepancies.
11. Debtor claims that he missed four days of work at his regular employment with General Motors Corporation as a result of the action taken by THE DEPARTMENT OF LIQUOR CONTROL, for a total of Five Hundred & 00/100 Dollars ($500.00) in lost wages. In addition, Debtor estimates that he experienced lost profits in the amount of Six Hundred Nineteen & 23/100 Dollars ($619.23), the estimate being based upon interpretation of historic sales data of Debtor. Finally, Debtor prays for an award of attorney's fees which were incurred as a result of the actions of THE DEPARTMENT OF LIQUOR CONTROL. According to the testimony of WILLIAM GEMMA, ESQ., counsel for Debtors in this cause, at least 20.9 hours were spent in the prosecution of this cause.
12. According to the testimony of Connie Hammus, a secretary-clerk for THE STATE OF OHIO LIQUOR CONTROL COMMISSION, no notice of the bankruptcy filing was ever received by THE LIQUOR CONTROL COMMISSION from the Clerk of this Court. However, it is beyond dispute that through this Court's automated noticing system, notice of the filing was sent to the OHIO DEPARTMENT OF TAXATION, the office or agency wherein Debtors' sales tax problems originated. In addition, the Court finds that unofficial notice of the Chapter 13 proceeding was given by Debtor EDWARD DAVIS to an agent of THE LIQUOR CONTROL COMMISSION; i.e., the hearing officer, on April 10, 1986, to a representative of THE OHIO ATTORNEY GENERAL'S OFFICE on April 10, 1986, and to the investigating agents of the DEPARTMENT OF LIQUOR CONTROL, ENFORCEMENT DIVISION, on January 14, 1986, and September 10, 1986.
11 U.S.C. Sec. 362(a) provides in pertinent part:
Under 11 U.S.C. Sec. 362, the filing of a bankruptcy petition stays all judicial and other proceedings and actions to recover debts owed any creditor by the debtor. This general provision contains several listed exceptions, including 11 U.S.C. Sec. 362(b)(4), which provides:
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