Miller v. European Connection, LLC (In re Miller)
| Docket Number | 20-81129-BPC,Adv. Proc. 21-08001- BPC |
| Decision Date | 28 September 2021 |
| Parties | In re MARQESE PHILANDIS MILLER, Debtor. v. EUROPEAN CONNECTION, LLC, Defendant. MARQESE PHILANDIS MILLER, Plaintiff, |
| Court | U.S. Bankruptcy Court — Middle District of Alabama |
This Adversary Proceeding comes before the Court on the issue of damages for willful violations of the automatic stay. The Court entered the Order Granting Default Judgment against Defendant in favor of Plaintiff on May 27, 2021. (Doc. 22). An evidentiary hearing to determine damages was held on June 30, 2021. For the reasons set forth herein, Plaintiff is awarded $14, 209.55 in actual damages and $15, 000 in punitive damages, for a total award of $29, 209.55.
On January 5, 2021, Plaintiff filed a Complaint alleging willful violations of 11 U.S.C. §§ 362(a)(3), (4), (5), and (6). (Doc. 1). The Summons was issued on January 6, 2021 and served on Defendant by first class mail. (Doc. 4). A response to the Complaint was mailed to the Court by Eddie Barzegar ("Mr. Barzegar"), an individual, who identified himself as a representative of Defendant. (Doc. 6). An initial telephonic conference was set for February 23, 2021 at which Defendant failed to appear. The conference was continued to March 16, 2021 to allow Defendant an opportunity to appear through counsel. Defendant again failed to appear at the continued telephonic hearing. Additionally, Defendant failed to answer the Complaint by February 5, 2021 as required by the Summons.
Plaintiff submitted a Request for Entry of Default and the Clerk entered default on March 24, 2021. (Docs. 10 and 11). Thereafter, Plaintiff filed a Motion for Default Judgment (the "Motion") which was scheduled for a telephonic hearing on April 27, 2021. (Docs. 12 and 14). Defendant failed to appear at this hearing, and the Court issued an order requiring Defendant to appear and show cause why the Motion should not be granted. (Doc. 17). Defendant failed to appear at the May 25, 2021 show cause hearing, and the Court granted the Motion. (Doc. 22). After the Order Granting Default Judgment entered, an evidentiary hearing to determine damages was held on June 30, 2021. Defendant further failed to appear at the evidentiary hearing.[1]
The Court has jurisdiction to hear this matter pursuant to 28 U.S.C. § 1334. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A). This is a final order.
Due to Defendant's failure to appear and defend in this case, the Court adopts the facts below as established by Plaintiff in his Complaint.[2] (Doc. 1).
In September of 2020, Plaintiff purchased a 2007 Mercedes-Benz S550 (the "Automobile") from Defendant for $9, 000. At the time of purchase, Plaintiff paid Defendant $1, 000 in cash and conveyed title to a 2004 Mercedes-Benz S500 with a value of $6, 000, for a total payment of $7, 000. After applying the $7, 000 credit, Plaintiff owed Defendant a remaining balance of $2, 000 towards the purchase of the Automobile. On October 7, 2020, Plaintiff paid Defendant an additional $200 towards the remaining balance.
On November 20, 2020, Plaintiff filed a voluntary chapter 13 petition with this Court. In Schedule D, Plaintiff identified Defendant as the holder of a claim fully secured by the Automobile in the amount of $2, 115. Plaintiff also included provisions to pay the debt to Defendant in his chapter 13 plan. On December 4, 2020, Defendant attempted to repossess the Automobile at Plaintiff's home. At that time, Plaintiff informed Defendant's repossession agent that he was in bankruptcy. On December 4, 2020, after the repossession attempt, Plaintiff's bankruptcy counsel (through an assistant) had a phone call with Defendant's representative, Mr. Barzegar, and informed him of Plaintiff's pending bankruptcy case. Additionally, on December 8, 2020, Plaintiff's bankruptcy counsel mailed a letter to Defendant regarding Plaintiff's pending bankruptcy case and demanded Defendant immediately cease and desist with all unlawful activity. Despite these communications with Defendant, sometime between the late evening hours of December 9 or early morning hours of December 10, 2020, Defendant repossessed the Automobile.
During a phone call on December 10, 2020, Defendant acknowledged repossession of the Automobile. Also on December 10, 2020, Mr. Barzegar texted Plaintiff stating that until he received a letter from the bankruptcy court, he was "in my rights to do any thing that law allows me". (Doc. 1). In response, Plaintiff, through counsel, made multiple demands for return of the Automobile. Despite these demands, Defendant refused to return the Automobile to Plaintiff. On December 14, 2020, Defendant mailed a letter to Plaintiff advising him that the Automobile would be sold at a private sale unless Plaintiff redeemed the Automobile for $2, 138.21 plus additional expenses. In a communication from Mr. Barzegar to Plaintiff's counsel on December 15, 2020, Defendant acknowledged that, during the initial repossession attempt, Plaintiff informed the agent he was in bankruptcy and the agent informed Defendant of the same. Defendant also acknowledged that the day following the initial attempt to repossess the Automobile, Defendant's representative received a call from "some lady claiming she was with some sort of attorney office" regarding the Automobile. On December 26, 2020, Defendant sent a letter to Plaintiff's counsel including various notices from the Court regarding Plaintiff's bankruptcy case. As of the filing of the Complaint and hearing on damages, Defendant had not returned the Automobile to Plaintiff.
At the hearing on damages, Plaintiff testified that in addition to the $6, 000 trade-in value, $1, 000 deposit, and $200 payment paid to Defendant for the Automobile, he incurred an additional $2, 140 in repairs to the Automobile on December 3, 2020. Additionally, Plaintiff testified that, due to the repossession, he incurred a weekly transportation cost of $150 for twelve weeks for a total of $1, 800. After the hearing, Plaintiff's attorney submitted a supplemental affidavit reflecting 15.95 hours of work in this case at $325 per hour for total attorney's fees of $5, 183.75 and expenses of $25.80.
While there is a strong policy of determining a case on its merits, it is well established that courts have authority to enter default judgment for a party's failure to comply with orders or rules of procedure. Wahl v. McIver, 773 F.2d 1169, 1174 (11th Cir. 1985). Here, Defendant failed to properly appear in this proceeding despite being given numerous opportunities by the Court. On several occasions (in open court and by written order) the Court explained that Mr. Barzegar, who is not an attorney, could not defend or argue on behalf of Defendant, a limited liability company. See Pipes v. Weyerhaeuser Company, 2020 WL 5493212, *1-2 (Ala. Civ. App. 2020), cert. denied, 2020 WL 7089438 (Ala. 2020). Thus, despite Mr. Barzegar's letters and telephonic appearances, a default judgment against Defendant was warranted.
However, Defendant's failure to appear and the Clerk's subsequent entry of default do not automatically entitle Plaintiff to default judgment in the amount requested. A default is not a confession of a defendant's liability or a plaintiff's right to recover, but merely an admission of the well-pleaded facts cited in the Complaint. Pitts ex rel. Pitts v. Seneca Sports, Inc., 321 F.Supp.2d at 1357. While the facts in the Complaint are deemed admitted, an evidentiary hearing to determine the amount of damages with certainty is necessary when the sums requested cannot conclusively be established by the Complaint. See Anheuser Busch, Inc. v. Philpot, 317 F.3d 1264, 1266 (11th Cir. 2003); Virgin Records America, Inc. v. Lacey, 510 F.Supp.2d 588, 593 n.5 (S.D. Ala. 2007) (Plaintiff's "allegations relating to the amount of damages are not admitted by virtue of default; rather, the court must determine both the amount and character of damages.").
The filing of a bankruptcy petition "operates as a stay" of "any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate." 11 U.S.C. § 362(a)(3). A debtor "injured by any willful violation of a stay . . . shall recover actual damages, including costs and attorneys' fees, and, in appropriate circumstances, may recover punitive damages." 11 U.S.C. § 362(k)(1).
Plaintiff contends that Defendant violated the automatic stay by repossessing the Automobile and refusing to return it despite numerous notifications of Plaintiff's pending bankruptcy case. Defendant's acts in repossessing the Automobile and failing to return it were clearly acts to exercise control over property of the estate and to collect or recover a claim. Thus, Defendant violated the automatic stay.
Having found that Defendant violated the automatic stay, the Court must next determine whether the violation was willful. A violation of the stay is considered willful if the offending party "(1) knew of the automatic stay and (2) intentionally committed the violative act, regardless of whether the violator specifically intended to violate the stay." In re Brodgen, 588 B.R. 625, 629 (Bankr. M.D. Ala. 2018) (citing Jove Eng'g, Inc. v. I.R.S., 92 F.3d 1539, 1555 (11th Cir. 1996)). The burden rests on Plaintiff to prove the violation, willfulness, and injury by a preponderance of the evidence. In re Parker, 279 B.R. 596, 602 (Bankr. S.D. Ala. 2002). The Court finds that Defendant's violation of the stay was willful.
First the facts support that Defendant had knowledge of the bankruptcy...
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