Mayer v. DeCarlo
Filing
11
MEMORANDUM AND OPINION: For the reasons set forth herein, the order of the Bankruptcy Court is vacated, and this action is remanded for further findings and proceedings consistent with this Memorandum and Order. The Clerk of Court shall close this case. SO ORDERED. Ordered by Judge Joseph F. Bianco on 3/2/2017. (Zbrozek, Alex)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
_____________________
No 16-CV-1225 (JFB)
_____________________
GINETTE MAYER,
Appellant,
VERSUS
ANTHONY DECARLO,
Appellee.
___________________
MEMORANDUM AND ORDER
March 2, 2017
___________________
JOSEPH F. BIANCO, District Judge:
Pending before the Court is an appeal by
debtor Ginette Mayer (“appellant”) from the
February 24, 2016 order of the Honorable
Robert E. Grossman, United States
Bankruptcy Judge (the “Bankruptcy
Order”), granting appellant’s motion to
reopen her Chapter 7 bankruptcy
proceeding; finding pro se creditor Anthony
DeCarlo (“appellee”) in contempt for
willfully violating a discharge injunction
pursuant to the Bankruptcy Code, 11 U.S.C.
§ 524(a)(2); and declining to award
appellant sanctions, actual and punitive
damages, and attorneys’ fees for appellee’s
violation of the discharge injunction.
Appellant argues that the Bankruptcy Court
abused its discretion in declining to award
sanctions, damages, and attorneys’ fees
against appellee and in failing to hold an
evidentiary hearing on that issue.
For the reasons set forth below, the
Court vacates the Bankruptcy Order and
remands this action to the Bankruptcy Court
for further findings and proceedings
consistent with this Memorandum and
Order.
I. BACKGROUND
The Court summarizes the facts and
procedural history relevant to the instant
appeal.
A. The Bankruptcy Court Proceedings
Appellant filed a voluntary petition
under Chapter 7 of the Bankruptcy Code on
May 11, 2012 and listed a $2,800 debt owed
by appellant to appellee’s company Zemo
Landscaping in a schedule attached to her
petition. (R.1 at 8-9, 68.) On August 21,
2012, the Bankruptcy Court granted
appellant a full Chapter 7 discharge of her
pre-petition debt pursuant to an order of
discharge (the “Discharge Order”). (Id. at 9,
73-74.) Zemo Landscaping was served with
notice of the Discharge Order, which
explained that the Discharge Order “mean[t]
that [a creditor] may never try to collect the
debt from the debtor.” (Id. at 10, 76, 80.)
appellee filed the Small Claims Case in
retaliation for appellant’s decision to
terminate an intimate relationship between
the two of them that began in 2010 and
ended in 2014. (E.g., id. at 8, 11-12.) On
December 14, 2015, the Bankruptcy Court
held a hearing on the Contempt Motion that
lasted approximately five minutes. (First
Hr’g Tr., ECF No. 2-3.) After briefly
hearing argument from appellant’s counsel
and appellee, who appeared pro se, the
Bankruptcy Court and the parties engaged in
the following colloquy:
Nevertheless, on or about September 11,
2015, appellee commenced a small claims
court proceeding in the Nassau County
District Court, Second District to collect
$2,895 from appellant (the “Small Claims
Case”). (Id. at 12, 82.) On October 16,
2015, appellant sent appellee a letter stating
that appellee had violated the Discharge
Order by seeking to collect a pre-petition
debt in the Small Claims Case, and warning
appellee that failure to terminate the Small
Claims Case would cause appellant to seek
sanctions and attorneys’ fees in the
Bankruptcy Court. (Id. at 13, 84.)
THE COURT: Look. Look. Listen
to me. I got other things to do. This
isn’t Judge Judy.
[APPELLEE]: I’m not –
THE COURT: Just, just don’t talk.
This debt was discharged.
[APPELLEE]: Yes.
THE COURT: And you went ahead
– You guys had this personal
relationship, which I could care less
about, it’s over apparently. Move
on.
Thereafter, on November 5, 2015,
appellant filed a motion in the Bankruptcy
Court to reopen the Chapter 7 proceeding
and to obtain an order holding appellee in
contempt for violating the Discharge Order;
granting appellant sanctions, actual and
punitive damages, and attorneys’ fees; and
directing the Nassau County District Court
to dismiss the Small Claims Case (the
“Contempt Motion”). (Id. at 85.) In the
affidavits submitted in support of the
Contempt Motion, appellant alleged that
[APPELLEE]: Yes, Sir.
THE COURT: Now unless you
could cut a deal, give you – Yeah.
You’re going to pay something now.
You’re going to pay him a couple
hundred bucks or whatever it is.
That’s all you’re going to get. Take
it and be satisfied. If you think I’m
re-opening this at a sanctions hearing
against this guy and have to hear
about this landscaping over $2,800,
1
“R.” refers to the Bankruptcy Record on Appeal.
(ECF No. 2-2.)
2
(see generally id. at 6). Appellee also stated
that he had sent appellant a check for $200,
which appellant refused to accept, leading
the Bankruptcy Court to state: “Sir, this is
like sitting on a TV show. What are you
guys crazy?” (Id. at 8:5-6.) The following
dialogue ensued:
one of us is nuts. Now they may
think it’s me. But since I’m here this
is the way it’s going. Do you agree?
[APPELLEE]: I agree.
THE COURT: Good. Do you agree?
THE COURT: Okay. This case will
be dismissed in State Court
immediately.
[APPELLANT]: Reluctantly but yes,
Your Honor.
THE COURT: Okay. So you’re in
the $200 range. Is it enough for
you? No. Does it make him hurt a
little? Yes. And then leave her
alone.
[APPELLEE]: Yes, sir.
THE COURT: Okay. And since you
don’t want the $200, the Court will
rule that there are no damages to
you. So now, you’ll dismiss the case
and you get zip. Have a nice day.
[APPELLEE]: Absolutely.
...
[APPELLANT]: Thank you, Your
Honor.
THE COURT: You’re going to
dismiss the case in State Court?
[APPELLEE]: Excuse me, Your
Honor, how, how do I go about
[sic]?
[APPELLEE]: Yeah. Absolutely.
(Id. at 7:20-8:25, 9:16-18.) On the basis of
appellee’s agreement to pay appellant $200
and to terminate the Small Claims Case, the
Bankruptcy Court said that it would deny
the Contempt Motion and set a “holding
date” of February 8, 2016. (Id. at 10:3-17.)
THE COURT: That’s your problem.
But if you’re back here with this case
not dismissed in the next couple of
weeks, then I’m going to award them
more money than you can pay.
[APPELLEE]: I’ll go right now.
On that date, the Bankruptcy Court held
a second hearing on the Contempt Motion.
(Second Hr’g Tr., ECF No. 2-4.)
Appellant’s
counsel
informed
the
Bankruptcy Court that his client could not
accept the Bankruptcy Court’s suggested
settlement of $200 due to appellee’s “blatant
violation of the . . . Order of Discharge,” (id.
at 5:12-15), and appellee admitted that he
had not yet dismissed the Small Claims Case
THE COURT: I don’t care how you
do it. I don’t know how to do it. Go
to Small Claims Court get rid of this
case, give them an acknowledgement
that the case is gone.
[APPELLEE]:
home.
3
I’ll go on my way
Court.” (R. at 99-100.) As a result, the
Bankruptcy Court (1) re-opened appellant’s
Chapter 7 bankruptcy proceeding and
waived the accompanying filing fee;
(2) ordered appellee to immediately
withdraw the Small Claims Case and warned
that “his failure to do so [would] result in an
award of sanctions against him upon
separate motion”; and (3) denied appellant’s
request for sanctions, an award of actual and
punitive damages, and attorneys’ fees. (Id.
at 100.)
[APPELLANT]: Now, there was a
violation of the Stay.
We, we
estimated the damage I estimated the
damages.
[APPELLEE]: Mmh-hmm.
THE COURT: You all didn’t agree
with that. Now I’m going to make a
ruling. I can’t see, since there were
no more hearings after this Court
directed you to appear.
B. The Appeal
Therefore, you don’t want to take the
deal that the Court felt was fair the
last time. I still feel it’s fair but since
you don’t want it, therefore, the
ruling of the Court is you don’t have
to take it.
Appellant filed a Notice of Appeal of the
Bankruptcy Order on March 11, 2016.
(ECF No. 1.) The Notice of Bankruptcy
Record Received was filed on April 29,
2016 (ECF No. 2), and appellant filed her
brief on August 16, 2016 (ECF No. 7).
Appellee, proceeding pro se, filed a onepage letter opposition on October 21, 2016. 2
(ECF No. 9). Appellant did not file a reply
brief but did submit a letter on December 2,
2016 providing a copy of a case that
appellant had erroneously cited in her
opening brief. (ECF No. 10.) The Court has
fully considered all of the parties’
submissions.
[APPELLANT]: But –
THE COURT: And therefore, I’m
not finding any, any monetary
sanctions at this point. If this case
isn’t dismissed, the Court will revisit
that and then apply appropriate
sanctions.
(Id. at 9:2-10:8.)
II. STANDARD OF REVIEW
Following that hearing, the Bankruptcy
Court issued the Bankruptcy Order on
February 24, 2016, which stated that the
Bankruptcy Court had determined that
appellee had “engaged in contempt of court
by willfully violating the order of discharge
in that he commenced an action in Nassau
County District Court in violation of the
order of discharge and failed to withdraw
the action despite being admonished to do so
by both [appellant’s] counsel and this
This Court has jurisdiction to hear
appeals from bankruptcy courts under 28
U.S.C. § 158(a), which provides that “[t]he
district courts of the United States shall have
jurisdiction to hear appeals . . . from final
judgments, orders, and decrees; . . . [and]
2
Although this filing was un-timely pursuant to
Federal Rule of Bankruptcy Procedure 8018, the
Court, in its discretion, will consider it in resolving
the instant appeal.
4
with leave of the court, from other
interlocutory orders and decrees . . . of
bankruptcy judges.” 28 U.S.C. § 158(a)(1),
(3). Part VIII of the Federal Rules of
Bankruptcy
Procedure
outlines
the
procedure governing such appeals. Fed. R.
Bankr. P. 8001.
his letter opposition, appellee asks this Court
to affirm the Bankruptcy Order because it
was “right and just,” appellant refused to
accept the “fine” of $200 suggested by the
Bankruptcy Court, and appellee has “made
every attempt to adhere to the law . . . all the
while being harassed by [appellant’s
counsel] wanting more money.” (Appellee’s
Opp’n, ECF No. 9, at 1.)
The Court will review the Bankruptcy
Court’s legal conclusions de novo and its
factual findings for clear error. See In re
Hyman, 502 F.3d 61, 65 (2d Cir. 2007). The
Bankruptcy Court’s decision not to award
appellant sanctions, damages, and attorneys’
fees is reviewed for abuse of discretion. See
In re Kalikow, 602 F.3d 82, 91 (2d Cir.
2010) (“A bankruptcy court’s award of
sanctions will not be set aside by this Court
in the absence of an abuse of discretion.”);
In re Bayshore Wire Prods. Corp., 209 F.3d
100, 103 (2d Cir. 2000) (“Like the District
Court, we review the Bankruptcy Court’s
findings of fact for clear error, . . . its
conclusions of law de novo, . . . its decision
to award costs, attorney’s fees, and damages
for abuse of discretion.”). “The bankruptcy
court ‘necessarily abuse[s] its discretion if it
based its ruling on an erroneous view of the
law or on a clearly erroneous assessment of
the evidence.’” Kalikow, 602 F.3d at 91
(quoting In re Highgate Equities, Ltd., 279
F.3d 148, 152 (2d Cir. 2002)).
For the reasons that follow, the Court
concludes that it cannot review the
Bankruptcy Order for abuse of discretion
because the Bankruptcy Court did not
explain why it denied appellant’s request for
sanctions, damages, and fees. Accordingly,
the Court vacates the Bankruptcy Order and
remands this action to the Bankruptcy Court
for further findings and proceedings
consistent with this Memorandum and
Order. The Court takes no view on whether
the Bankruptcy Court is required to hold a
full evidentiary hearing on the Contempt
Motion.
A. Applicable Law
The Bankruptcy Code discharges
preexisting debts to give “honest but
unfortunate” debtors a fresh start. Cohen v.
de la Cruz, 523 U.S. 213, 217 (1998).
Accordingly, a discharge order “operates as
an injunction against the commencement or
continuation of an action, the employment
of process, or an act, to collect, recover or
offset any such debt as a personal liability of
the debtor, whether or not discharge of such
debt is waived.” 11 U.S.C. § 524(a)(2).
III. DISCUSSION
Appellant argues that vacatur of the
Bankruptcy Order and remand to the
Bankruptcy Court is warranted because the
Bankruptcy Court (1) “failed to explain why
[it] exercised [its] discretion to deny the
sanctions request,” and (2) “refused to have
an evidentiary hearing in this matter.”
(Appellant’s Br., ECF No. 7, at 21-23.) In
Section 105(a) of the Bankruptcy Code
permits a court to “issue any order, process,
or judgment that is necessary or appropriate
to carry out the provisions” of the
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Bankruptcy Code. 11 U.S.C. § 105(a). The
Second Circuit has held that this provision
enables a bankruptcy court to “exercise
equity in carrying out the provisions of the
Bankruptcy Code,” In re Smart World
Techs., LLC, 423 F.3d 166, 184 (2d Cir.
2005) (emphasis omitted), and district courts
in this Circuit have accordingly found that
Section 105(a) “provid[es] statutory
authority to enforce the discharge injunction
by holding a party who violates the
injunction in contempt, and assessing
appropriate punishment,” In re Haemmerle,
529 B.R. 17, 25 (Bankr. E.D.N.Y. 2015)
(footnote omitted) (collecting cases). 3
explain its rationale for its decision
declining to award appellant sanctions,
damages, and fees pursuant to the legal
authority and standards set forth above.
Instead, after concluding that appellee had
“engaged in contempt of court by willfully
violating the order of discharge in that he
commenced an action in Nassau County
District Court,” it denied, without any
reasoning, the monetary relief that appellant
sought. (R. at 99-100.) In other words, the
Bankruptcy Court apparently determined
that appellee (1) knew of the Discharge
Order, and (2) failed to comply with it by
commencing the Small Claims Case; yet, for
unknown reasons, it decided not to award
appellant monetary relief.
Under such
circumstances, this Court cannot determine
whether that decision was an abuse of
discretion. See Capone v. Weeks, 326 F.
App’x 46, 47 (2d Cir. 2009) (“Although the
district court denied [appellant’s] motion for
attorney’s fees . . . , it did not explain why it
exercised its discretion in that way. Absent
any such explanation, we cannot evaluate
whether the court abused its discretion when
it denied attorney’s fees . . . .”).
As the court in Haemmerle correctly
held, “a “discharge injunction violation may
be punished as a civil contempt of court, and
requires a two part inquiry: ‘(1) did the party
know of the lawful order of the court, and
(2) did the defendant comply with it.’” Id.
at 26 (quoting In re Nicholas, 457 B.R. 202,
225 (Bankr. E.D.N.Y. 2011)). Further,
because “a sanctions award serves many
objectives, including compensation and
deterrence,” it may include “‘attorneys’ fees
reasonably incurred because of [the
sanctionable] conduct.’” In re Khan, 488
B.R. 515, 535-36 (Bankr. E.D.N.Y. 2013)
(quoting 28 U.S.C. § 1927).
The district court in Desiderio v. Parikh,
No. 12-CV-2148 (JS), 2013 WL 1305499
(E.D.N.Y. Mar. 28, 2013), confronted a
similar situation where the Bankruptcy
Court denied a sanctions motion but “failed
to explain why [it] exercised [its] discretion
to deny the request . . . .” Id. at *5.
Moreover, at the motion hearing, the
Bankruptcy Court expressed frustration with
the parties’ positions, stating:
B. Analysis
Here, the Court is unable to review the
Bankruptcy Order for abuse of discretion
because the Bankruptcy Court did not
3
In addition, “[f]ederal courts, including bankruptcy
courts, possess inherent authority to impose sanctions
against attorneys and their clients.” MA Salazar, Inc.
v. Inc. Vill. of Atl. Beach, 499 B.R. 268, 274
(E.D.N.Y. 2013) (quoting In re Plumeri, 434 B.R.
315, 327 (S.D.N.Y. 2010)).
But you want to talk about vexatious
litigation; you want to talk about
pleadings that make absolutely no
sense. Read your own papers, all
6
court, this Court agrees with appellant that
vacatur of the Bankruptcy Order and remand
for further factual findings is appropriate. 4
See 2013 WL 1305499 at *6; see also
Capone, 326 F. App’x at 47 (“Because we
are unable to assess, on the record before us,
whether the district court abused its
discretion in denying [appellant’s] motion
for attorney’s fees, we REMAND the case to
the district court . . . .”). The Court takes no
view on whether the Bankruptcy Court must
hold a full evidentiary hearing on the
Contempt Motion.
right? . . . I don’t know—get
something else to do. Get another
case. Find something else to do in
your life. You’re too young to be
wasting your entire existence on this
ridiculous case. Go find the . . .
defendant. Sue him in state court.
Collect any monies you can. I told
you you could do that. Are you ever
going to collect? I have no idea.
You’re suing a guy who you knew
the odds of collecting on were
probably small.
You made a
decision not to settle, your decision,
completely your decision. Live with
it, all right? Live with it. But to
continue . . . But don’t bring this
stuff in my courtroom again, don’t
do it, because the next time you do,
then I will figure out sanctions.
IV. CONCLUSION
For the foregoing reasons, the order of
the Bankruptcy Court is vacated, and this
action is remanded for further findings and
proceedings
consistent
with
this
Memorandum and Order. The Clerk of
Court shall close this case.
Id. at *3 (omissions in original).
Here,
the
Bankruptcy
Court
demonstrated similar exasperation, stating at
the first hearing that that it was not “Judge
Judy,” and that “[i]f you think I’m reopening this at a sanctions hearing against
this guy and have to hear about this
landscaping over $2,800, one of us is nuts.”
(First Hr’g Tr. at 7:22, 8:11-13). Further,
without explanation, it suggested that $200
was an appropriate settlement (id. at 8:2122), but at the second hearing, it “rule[d]
that there are no damages to” appellant
(Second Hr’g Tr. at 9:5-7), adding that “this
is like sitting on a TV show. What are you
guys crazy?” (id at 8:5-6).
4
Although appellant’s counsel “reluctantly” agreed
to $200 in connection with the Contempt Motion at
the first hearing (see First Hr’g Tr. at 8:20), the Court
does not view that agreement as a waiver of
appellant’s objection to the ultimate resolution of the
Contempt Motion for three reasons. First, the
Bankruptcy Court made clear that, if appellant did
not agree to that amount, it was not going to consider
any additional sanctions. (See id. at 8:10-15 (“That’s
all you’re going to get. Take it and be satisfied. . . .
But since I’m here this is the way it’s going.”).)
Second, even if that could be viewed as an
agreement, appellee violated his end of the bargain
by failing to dismiss the Small Claims Case by the
next hearing date. Thus, under those circumstances,
appellant is not bound by that “agreement” and can
seek relief beyond the $200 that appellee offered to
pay. Third, it was clear from the first hearing that
appellant’s counsel would need his client’s approval
for any agreement, and he reported back to the
Bankruptcy Court at the second hearing that his client
would not agree to accept $200. (See Second Hr’g
Tr. at 5:12-15.)
The record, thus, does not adequately
reflect why the Bankruptcy Court declined
to award appellant monetary relief on the
Contempt Motion, and like the Desiderio
7
SO ORDERED.
__________________
JOSEPH F. BIANCO
United States District Judge
Dated: March 2, 2017
Central Islip, New York
***
Appellant Ginette Mayer is represented by
Craig D. Robins of the Law Office of Craig
D. Robins, 35 Pinelawn Road, Suite 218-E
Melville, New York 11747.
Appellee
Anthony DeCarlo is proceeding pro se.
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