Molloy v. PRIMUS AUTOMOTIVE FIN. SERVICES
| Decision Date | 30 March 2000 |
| Docket Number | No. CV 99-7847 AHM(RNBx).,CV 99-7847 AHM(RNBx). |
| Citation | 247 BR 804 |
| Court | U.S. District Court — Central District of California |
| Parties | Kathleen S. MOLLOY, Plaintiff, v. PRIMUS AUTOMOTIVE FINANCIAL SERVICES, Defendant. |
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Ronald Goldser of Zimmerman Reed, P.L.L.P., Minneapolis MN, for Plaintiff.
Scott Hyman of Severson & Werson, San Francisco, CA, for Defendant.
ORDER GRANTING PLAINTIFF'S MOTION TO REFER BANKRUPTCY MATTERS TO UNITED STATES BANKRUPTCY COURT AND GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS
This case is before the Court on the motion of plaintiff Kathleen Molloy ("Molloy") to "refer bankruptcy matters to United States Bankruptcy Court" and the motion of defendant Primus Automotive Financial Services ("Primus") to dismiss pursuant to F.R.Civ.P. 12(b)(6). On the major issues, the Court concludes that (1) referral of plaintiff's "core" bankruptcy claims is appropriate; (2) a private right of action exists under 11 U.S.C. § 524; and (3) plaintiff's complaint fails to state a claim for violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"). For these reasons, and as set forth more fully below, the Court grants plaintiff's motion to refer to the Bankruptcy Court and grants defendant's motion to dismiss, but only in part.
All of plaintiff's claims stem from Primus' alleged attempts to collect debts ostensibly owed by plaintiff on an automobile lease after plaintiff filed for Chapter 7 bankruptcy. Plaintiff's complaint contains a total of ten (10) counts. Four of the claims allege violations of the United States Bankruptcy Code ("the Code") 11 U.S.C. §§ 524(a), 524(c) and 362. Plaintiff also alleges claims for violations of RICO, 18 U.S.C. § 1962(c), and the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692, et seq. Plaintiff seeks compensatory and punitive damages, attorney's fees, declaratory relief, an accounting and an injunction prohibiting defendant from engaging in further violations of the Code and the FDCPA.1
Plaintiff contends that Primus' debt collection activities violated two injunctions resulting from 11 U.S.C. §§ 362 and 524. Upon the filing of a Chapter 7 bankruptcy petition, § 362 (the "automatic stay") automatically enjoins attempts to collect prepetition debts during the bankruptcy proceedings. Following the discharge of the bankruptcy, § 524 permanently enjoins creditors from attempting to collect discharged debts. Prior to a discharge, however, a creditor and a bankrupt debtor may enter into a reaffirmation agreement pursuant to which they may voluntarily agree to the payment by the debtor of some part of the dischargeable debt.
The relevant allegations in the Complaint are as follows:
Plaintiff asks the Court to refer all bankruptcy issues in this case to the United States Bankruptcy Court for the Central District of California. Specifically, plaintiff seeks to have the Bankruptcy Court resolve the following six issues:
Plaintiff requests that the Court retain the RICO and FDCPA claims as well as the issue of class certification and decide these claims after the Bankruptcy Court rules on the six bankruptcy issues listed above. Plaintiff argues that because the Bankruptcy Court should decide the bankruptcy issues raised in her claims, those portions of defendant's motion to dismiss concerning her Bankruptcy Code claims should be heard by the Bankruptcy Court. Furthermore, she argues, this Court should stay defendant's motion to dismiss on the RICO and FDCPA claims until the Bankruptcy Court rules on the bankruptcy issues.
Primus implicitly agrees that the six issues described above are all core bankruptcy issues under 28 U.S.C. § 157(b)(2) and does not challenge this Court's authority to refer them to the Bankruptcy Court under 28 U.S.C. § 157(a). That subsection provides:
Each district court may provide that any or all cases under title 11 and any or all proceedings arising under title 11 or arising in or related to a case under title 11 shall be referred to the bankruptcy judges for the district.3
The six issues that plaintiff seeks to have the Bankruptcy Court resolve clearly arise under Title 11 and thus could be referred under § 157(a). However, Primus argues that a referral would violate its Seventh Amendment right to a trial by jury on the RICO and FDCPA claims.4 Although in her motion papers plaintiff failed to demonstrate a right to referral, this Court nevertheless concludes that referral is appropriate given the particular posture of this case.
It is undisputed that Primus has the right to a trial by jury on plaintiff's RICO and FDCPA claims. Primus asserts that a major issue in the litigation of these claims as well as the bankruptcy claims will be whether it ever received notice of plaintiff's bankruptcy. The parties agree that referral of the bankruptcy claims will require the Bankruptcy Court to make that very factual determination. Primus argues that if the Bankruptcy Court finds that it did have knowledge of plaintiff's bankruptcy, it would be collaterally estopped from raising this argument in the trial of plaintiff's RICO and FDCPA claims, thus depriving Primus of its right to have a jury resolve a key issue of fact.5
Plaintiff relies heavily on an Order recently issued by Judge Dickran Tevrizian of this District granting a motion of class action plaintiffs for referral substantially similar to plaintiff's motion in this case. See Michael J.B. Henry, et al. v. Associates Home Equity Services, Inc., CV 99-4143 DT(AIJx), July 12, 1999 Order Granting Plaintiffs' Motion to Refer Bankruptcy Matters to United States Bankruptcy Court. In that Order, Judge Tevrizian rejected the defendant's argument that referral of the plaintiffs' "core" bankruptcy claims would violate the defendant's right to a trial by jury on the plaintiffs' RICO and FDCPA claims:
Defendant contends that its right to a jury trial on the non-core matters will be precluded by referral. This Court disagrees. It is true that as to non-core issues such as Plaintiffs\' RICO and FDCPA claims, ordinarily the bankruptcy court could only conduct a jury trial "if specially designated to exercise such jurisdiction by the district court and with the express consent of all the parties." 28 U.S.C. § 157. Defendant insists that it will not give such consent. But, again, these RICO and FDCPA claims will not be before the Bankruptcy Court.
Judge Tevrizian's order in Henry cannot dispose of the issue here because the defendant in that case, unlike the defendant here, did not contend that the core and non-core claims would necessarily require a determination of the same factual issues. Nor did the defendant make the collateral estoppel argument raised by Primus in this case.7 Defendant merely argued that referral would violate its right to a jury trial and Judge Tevrizian merely opined that "this argument does not preclude referral of the aforementioned core bankruptcy issues." Id.
In their memoranda of points and authorities before this Court, both sides provided virtually no analysis of the doctrine of collateral estoppel. Indeed, plaintiff fails to even address Primus' assertion that because the question of its knowledge of plaintiff's bankruptcy will be a critical factual issue for both the core and non-core claims, the Bankruptcy Court's determination would collaterally estop Primus from re-litigating the issue before a jury on the RICO and FDCPA claims. Rather, in her reply brief, plaintiff merely cites the above-quoted passage from Judge...
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