Ellison et al v. Hawthorne et al

Filing 115

ORDER: of Dismissal. 102 Motion to Substitute Party and 104 Motion to Substitute Party are DENIED as moot. Signed by Judge Sharon L. Gleason on 10/26/2015. (AEM, CHAMBERS STAFF)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
In re JOHANNA E. HAWTHORNE,
Debtor,
RENEE ELLISON and LOUIS A.
BREUER,
Plaintiffs,
v.
JOHANNA HAWTHORNE,
Defendant.
Case No. 3:12-cv-00072-SLG

ORDER OF DISMISSAL
This matter is before the Court following the Ninth Circuit Court of Appeals
mandate which affirmed in part, reversed in part, and remanded the Court’s October 16,
2012 dismissal of this case. 1 The Court also addresses two motions by Plaintiffs: at
Docket 102, Ellison/Breuer seek to substitute Plaintiff Louis Breuer for Defendant
Johanna Hawthorne because Ms. Hawthorne died on May 20, 2014 and Mr. Breuer was
appointed personal representative of her estate; at Docket 104, Ellison/Breuer seek to
substitute or add Robert and Sharon Johnson as defendants because the Johnsons
received from Hawthorne, by Deed in Lieu of Foreclosure, the apartment building where
the landlord-tenant disputes between Ellison and Hawthorne originated. Ellison/Breuer
have briefed the motions; the Johnsons have appeared to oppose their addition to this

1

See generally Docket 64 (Court of Appeals Memorandum). See also Docket 44 (Judgment).

action. 2 Ellison/Breuer and the Johnsons have each extensively discussed the viability
of the remaining claims in this action in their briefing. Oral argument was not requested
and was not necessary to the Court’s decision. 3
The humble origins of this case belie its rather exceptional progression through the
federal courts. The dispute originated in 2009 when Johanna Hawthorne, an elderly
landlord, sought to evict Renee Ellison from a four-plex apartment unit in Palmer, Alaska.
The tenancy began as a six-month lease in March 2009. The lease limited the occupants
to one adult and three children. The lease also indicates that Ms. Ellison paid an initial
$925.00 security deposit; but Ms. Hawthorne submitted an affidavit in support of her 2012
summary judgment motion in which she testified that she “never received a security
deposit” and had instead agreed to waive the deposit in exchange for landscaping work. 4
Ms. Ellison did not leave the premises when the six-month term expired in
September 2009. On November 10, 2009, Ms. Hawthorne wrote to Ms. Ellison seeking
to terminate the tenancy. Ms. Hawthorne indicated in the letter that she believed there
were then two adults and six children occupying Ms. Ellison’s apartment. Ms. Hawthorne
provided 30-days notice to vacate the property, but added that “as the holiday season is
approaching,” Ms. Ellison could instead elect to remain in the unit through December 31,

2

See Docket 102–105, 111, and 114.

3

The Court would generally allow supplemental briefing prior to dismissal of an action. But
given that there is presently no one appearing in this action to advocate on behalf of the Estate
of Ms. Hawthorne, and the fact that all issues have been extensively briefed, the Court finds
supplemental briefing unnecessary and unwarranted.

4

See Docket 19 (Memorandum), 19-2 (Lease), 19-4 (Letter), 19-6 (Log notes), 19-11
(Hawthorne Aff.).

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2009 with a $25 per month rent increase for that one month. 5 Mr. Breuer has alleged that
Ms. Ellison tried to tender $775 to Ms. Hawthorne for rent for the month of December. 6
But there appears to be no admissible evidence in the record to support that allegation.
In any event, Ms. Hawthorne filed a Forcible Entry and Detainer proceeding in state court
on December 18, 2009. 7 It appears undisputed that Ms. Ellison did not pay rent in
December 2009 or January 2010, and did not vacate the apartment until January 25,
2010, after the state court entered a Judgment for Possession for Ms. Hawthorne and
ordered Ms. Ellison to pay $745 toward Ms. Hawthorne’s court costs. 8 Mr. Breuer filed a
Motion for Reconsideration on January 22, 2010. 9 The state court denied the motion and
no appeal was taken. 10
From there, the original dispute has evolved into a four-year federal court odyssey.
Ms. Ellison, whose interests Mr. Breuer is supposed to represent, has never
directly participated in this adversary bankruptcy case. The only sworn statement by Ms.
Ellison in the Court’s file is the verified First Amended Answer/Counterclaims that Ms.
Ellison submitted in the state court eviction proceedings on December 27, 2010. In that
verified statement, which the notary indicated Ms. Ellison signed on December 17, 2010,

5

Docket 19-4 (Letter).

6

Docket 19 (Memorandum) at 2.

7

Docket 19-5.

8

Docket 19-7 (Judgment for Possession).

9

Docket 19-8 (Motion).

10

See Docket 19 at 12.

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Ms. Ellison makes a number of statements, including the following two rather conclusory
claims:
First Counterclaims – Unfitness of Premises (A.S. 34.03.100)
As her first counterclaim, Defendant states as follows:
21) At the inception of, or during the course of, the lease, Defendant
requested that Plaintiff remedy the defects in the premises specifically
enumerated and attached hereto as Exhibit C. 11
22) On or about December 9, 2009, the Central Mat-Su Fire Department
notified Plaintiff of specific fire hazards on or about the premises and
ordered Plaintiff to correct such violations, and a copy of that order is
attached hereto as Exhibit D. 12
23) Plaintiff failed to make required repairs and put and keep the premises
in a fit and habitable condition.
24) Plaintiff failed to maintain in good and safe working condition all
electrical, plumbing, sanitary, heating, ventilating, air-conditioning,
kitchen, and other facilities and appliances supplied or required to be
supplied by a landlord.
25) Having been requested by Defendant, Plaintiff failed to provide and/or
maintain locks and furnish keys reasonably adequate to ensure the
safety of the defendant, her family, and her property.
26) Plaintiff failed to provide smoke detection devices and carbon monoxide
detection devices as required by applicable law.
***
Third Counterclaim – Retaliatory Eviction (A.S. 34.03.310(b))
As her third counterclaim, Defendant states as follows:

11

Exhibit C is a hand-written note titled “Things We’ve Asked To Be Fixed.” See Docket 28-5 at

4.
12

Exhibit D is a December 2, 2009 report by the Mat-Su Fire Department documenting
problems with the apartment’s carbon monoxide and smoke detectors. See Docket 28-6. But
this is not evidence of a wrongful or retaliatory eviction because the termination of tenancy letter
predated it by nearly a month.

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31) Defendant re-alleges and incorporates as if fully rewritten here the
allegations contained in Paragraphs 21-26.
32) Subsequent to, and on account of, Defendant’s complaints about the
defects in the premises, Plaintiff retaliated against Defendant by
increasing rent or decreasing services or by bringing or threatening to
bring an action for possession of the premises.
33) Defendant was unlawfully removed or excluded from the premises on
or about January 25, 2010. 13
In August 2011, before Ms. Ellison’s counterclaims in the eviction action had been
heard by the state court, Ms. Hawthorne filed for bankruptcy—listing Ellison/Breuer as
creditors—which stayed the state court proceedings.
On November 4, 2011, Ms. Hawthorne motioned in the bankruptcy court to
abandon out of her bankruptcy estate the apartment building where Ms. Ellison had lived.
On November 21, 2011, Mr. Breuer filed the adversary complaint in the bankruptcy
court on behalf of himself and Ms. Ellison that initiated this case. That complaint is not
verified.

It repeated many of the conclusory statements from the state court

counterclaims and added a claim for “Breach of Covenant of Quiet Enjoyment / Wrongful
Eviction.” That claim asserted that the “[d]ebtor’s actions in evicting Plaintiff were in
violation of the lease and applicable state law.” 14 Ellison/Breuer also added Count 8
(“Debtor has done willful and malicious injury to Plaintiff and/or her property such that
Plaintiff’s claims are non-dischargeable”) and Count 9 (“Plaintiff Breuer’s claims for
attorney fees already incurred in Case No. 3PA-09-2590CI is derived from Plaintiff’s

13

Docket 28-4 and 28-5 (Verified Answer). January 21, 2010 is the date that the state court
judgment of possession awarded possession of the premises to Ms. Hawthorne.

14

In re Hawthorne, No. A11-00659-DMD, Docket 27.

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claims against Debtor and, likewise, are non-dischargeable”). As pled, if Counts 8 and 9
are dismissed in their entirety, then all of Ellison/Breuer’s claims against Ms. Hawthorne
are dischargeable.
On December 9, 2011—almost a year before this Court’s dismissal of this
adversary action, and over Ellison and Breuer’s opposition—the bankruptcy court granted
Ms. Hawthorne’s motion to abandon the apartment building and removed the apartment
building out of Ms. Hawthorne’s bankruptcy estate. The bankruptcy court ruled that “[t]he
real property has no value for, and is a burden to, the bankruptcy estate.” 15 Ellison/Breuer
did not appeal the abandonment decision. 16
On January 3, 2012, Hawthorne received a final bankruptcy decree without any
distribution to creditors. 17 Three days later the Johnsons took title to the apartment
building by a Deed in Lieu of Foreclosure. 18 Accordingly, there is no property that ever
was, or could now be distributed from, Ms. Hawthorne’s bankruptcy estate, a point this
Court could well have better articulated in the prior rulings it has made in this case.
On May 31, 2012, this Court granted Ellison/Breuer’s motion to withdraw the
reference to the bankruptcy court, and this adversary action was moved to this Court. 19
The Court dismissed this action on the merits on October 16, 2012. The Court

15

See Docket 110-2 (Opp. to Abandonment); In re Hawthorne, No. A11-00659-DMD, Docket 34
(Abandonment Order) (Bankr. D. Alaska Dec. 9, 2011).

16
17

Docket 110 (Opp.) at 2–3.
In re Hawthorne, No. A11-00659-DMD, Docket 37 (Bankr. D. Alaska Jan. 3, 2012).

18

Docket 110-1 (Deed in Lieu) at 11.

19

Docket 4 (Order).

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dismissed Ellison’s Count 1 (Breach of Covenant of Quiet Enjoyment / Wrongful Eviction)
and Count 5 (Retaliatory Eviction) as precluded under the Rooker-Feldman doctrine. It
granted summary judgment in favor of Hawthorne on Count 2 (Breach of Covenant of
Good Faith). The Court found insufficient evidence of willful or maliciousness to allow for
non-dischargeability of any recovery under Counts 3 (Unfitness of Premises) and 6
(Breach of Separate Reimbursement Contract). On Count 4 (Unfair and Deceptive Trade
Practices), the Court granted summary judgment in favor of Hawthorne because the
statute on which Ellison based the claim does not apply to residential landlord-tenant
leases.

The Court found no evidence of willful or malicious injury to Ellison, and

accordingly granted Hawthorne summary judgment on Counts 8 and 9 (NonDischargeability). Having dismissed or granted summary judgment on Counts 1 through
6, the Court granted summary judgment to Hawthorne on Count 7 (Attorney Fees). And
the Court granted summary judgment to Hawthorne on Counts 10–12 (Equitable Liens),
finding them inapplicable (1) in light of the other rulings, and (2) when a former tenant
seeks to recover against the landlord with regard to alleged conduct during the term of
the rental agreement. 20
Ellison/Breuer appealed, and on November 26, 2013 the United States Court of
Appeals for the Ninth Circuit affirmed in part, reversed in part, and remanded. 21 The
Court of Appeals affirmed this Court’s rulings on Counts 2, 4, 8 and 9, adding (with regard
to Counts 8 and 9) that “[v]iewed in the light most favorable to Ellison, there is no genuine

20

Docket 56, 57 (Transcripts).

21

See generally Docket 64 (Court of Appeals Memorandum).

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issue of material fact relevant to Hawthorne’s willfulness and malicious intent with respect
to Counts 2, 3, 4, and 6.” 22 Consistent with its order affirming this Court’s rulings on
Counts 8 and 9, the last paragraph of the Court of Appeals’ decision does not identify
Counts 8 and 9 as reversed or remanded, either in whole or in part.
The Court of Appeals did not directly address Hawthorne’s willfulness or malicious
intent with respect to Counts 1 and 5. But the Court does not find the Court of Appeals
silence in this regard as inconsistent with its affirmation of this Court’s rulings on Counts
8 and 9, which found all the Ellison/Breuer claims dischargeable. In its previous ruling on
Counts 8 and 9, this Court considered the sparse evidence in the record regarding Ms.
Hawthorne’s conduct as relevant to all of Ellison/Breuer’s claims. 23 The only evidence
Ellison/Breuer submitted on willfulness and maliciousness was Ms. Ellison’s verified
answer in the state court eviction proceeding. 24 This Court ruled that Ellison/Breuer did
not raise the requisite showing of willful and malicious injury to create a triable issue of
fact. 25 The Court of Appeals affirmed this ruling. Accordingly, the Ellison/Breuer claims
against Hawthorne are all dischargeable; and recourse is limited to the bankruptcy estate,
which was closed with no distribution to creditors nearly 4 years ago.
While upholding the dischargeability ruling on Counts 8 and 9, the Court of Appeals
reversed this Court’s grant of summary judgment to Hawthorne on Counts 3 and 6, based
on an assumption that Ellison/Breuer could obtain a pro-rata share of the property of the
22

Docket 64 at 3.

23

Docket 57 at 6–10.

24

Docket 28-4 and 28-5 (Answer).

25

Docket 57 (Transcript) at 10.

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bankruptcy estate if they were to prevail on these claims. 26 But this Court failed to clearly
articulate that because Ms. Hawthorne received a discharge with no distribution to
creditors, there can be no pro-rata share available to Ellison/Breuer. Hence this Court
focused on Ms. Ellison’s lack of a willful and malicious injury—not as an element of Counts
3 or 6—but as a finding that rendered those claims moot because they would be
discharged and there would be no assets to satisfy any recovery.
The Court of Appeals’ memorandum disposition concludes, “[b]ecause we reverse
in part the district court’s decision on the merits, we reverse and remand its grant of
summary judgment with respect to Count 7 (seeking attorneys’ fees) and Counts 10, 11,
and 12 (seeking equitable liens).” 27 Notably, the mandate to this Court does not direct
any action on Counts 8 and 9, but rather upheld this Court’s order granting summary
judgment to Ms. Hawthorne on those two claims in their entirety.
In summary, the Court of Appeals ruled that this Court dismissed Counts 1 and 5
and granted summary judgment on Counts 3 and 6 on improper grounds; and that if
Ellison/Breuer happen to succeed on any of those claims, the Court could award fees
(Count 7) or establish an equitable lien (Counts 10–12). But every Ellison/Breuer claim
is dischargeable, as the Court of Appeals found; and there are no assets in the bankruptcy
estate to satisfy any judgment.
It appears this case has continued on for so long solely due to the persistence of
Attorney Louis Breuer. He named himself as a plaintiff in the adversary action because

26

Docket 64 at 4–5.

27

Docket 64 at 5.

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he “was scheduled as a creditor of the debtor in this [Hawthorne’s] bankruptcy
proceeding” by virtue of a “contingent, unliquidated, and disputed” claim for attorneys’
fees he has hoped to recover if he eventually prevails on one of Ms. Ellison’s claims and
obtains a fee award. 28 Because the case could not continue without a defendant after
Ms. Hawthorne died, Mr. Breuer applied for and received an appointment from the state
probate court as Ms. Hawthorne’s personal representative. 29 So Mr. Breuer now seeks
to appear for the defendant while also advocating for himself as a self-represented
plaintiff, and as the attorney for Ms. Ellison. 30 And he would like to join new defendants
who have nothing to do with the underlying 2009 landlord-tenant dispute. Given that the
Ninth Circuit affirmed this Court’s dismissal of Counts 8 and 9, none of these actions are
appropriate, as there is no basis for this litigation to continue.
Under 11 U.S.C. § 524(a)(2), a discharge “operates as an injunction against the
commencement or continuation of an action…to collect, recover or offset any such
[discharged] debt as a personal liability of the debtor.” 31 This is frequently referred to as
the “discharge injunction.” 32 In the Bankruptcy Code, the term “debt” means liability on a
claim. 33 A “claim” includes:

28

Docket 26 (Amended Complaint).

29

See Docket 100 (Probate Court Documents) and 101 (Memorandum).

30

Docket 102 (Motion).

31

See also In re Zilog, Inc., 450 F.3d 996, 1007 (9th Cir. 2006).

32

See generally Walls v. Wells Fargo Bank, N.A., 276 F.3d 502 (9th Cir. 2002).

33

11 U.S.C. § 101(12).

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(A) right to payment, whether or not such right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured, or unsecured; or
(B) right to an equitable remedy for breach of performance if such breach
gives rise to a right to payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent, matured,
unmatured, disputed, undisputed, secured, or unsecured. 34
The bankruptcy court ordered Ms. Hawthorne’s debts discharged on December
21, 2011. 35 In its April 4, 2012 Report and Recommendation regarding the withdrawal of
the reference, the bankruptcy court explained that “[t]he plaintiffs’ state law counts cannot
survive Hawthorne’s bankruptcy discharge, unless and except to the extent that any of
those counts are found to be for ‘willful and malicious injury by the debtor to another entity
or to the property of another entity.’” 36 In dismissing Counts 8 and 9, this Court ruled, and
the Court of Appeals affirmed, that all of the Ellison/Breuer’s claims are dischargeable.
Accordingly, none survive, all are barred by the discharge injunction, and the action will
be dismissed.
Therefore, IT IS ORDERED that:
1. The Motions at Docket 102 and 104 are DENIED as moot.
2. This action is DISMISSED.
DATED this 26th day of October, 2015 at Anchorage, Alaska.
/s/ Sharon L. Gleason
UNITED STATES DISTRICT JUDGE
34

11 U.S.C. § 101(5).

35

In re Hawthorne, No. A11-00659-DMD, Docket 35 (Bankr. D. Alaska Dec. 21, 2011).

36

In re Hawthorne, No. A11-00659-DMD, 2012 WL 1143656, at *5 (Bankr. D. Alaska Apr. 4,
2012). Ellison/Breuer recognize this at least with respect to the equitable lien claims, all of which
are pled in the Amended Complaint as applicable “[t]o the extent Plaintiff’s claims herein are held
non-dischargeable.”

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