Emilio Torres Ramos v. Cooperativa de Ahorro y Credito Aguas Buenas

Opinion

THE DISTRICT OF PUERTO RICO 2

IN RE: 3 EMILIO TORRES RAMOS CASE NO. 18-01410(MCF) 4 Debtor Chapter 7

5 ------------------------------ EMILIO TORRES RAMOS 6

ADVERSARY CASE: 19-00456 (MCF) 7 Plaintiff

V. 8

9 COOPERATIVA DE AHORRO Y CREDITO AGUAS BUENAS 10

Defendant 11

13 OPINION AND ORDER

14 The Plaintiff Emilio Torres Ramos filed this adversary 15 complaint, alleging that the Defendant Cooperativa de Ahorro y 16 Credito Aguas Buenas (“COOP”) violated the discharge injunction. The dispute centers around whether COOP engaged in collection 17 efforts to coerce payment from the Plaintiff after the discharge 18 order was entered by sending credit card statements, making 19 telephone calls, and failing to report certain information to the credit bureau. 20

21 UNDISPUTED FACTS AND PROCEDURAL HISTORY

22 The Plaintiff filed a voluntary petition under chapter 7 of 23 the Bankruptcy Code on March 16, 2018, Bankruptcy Case No. 18- 24 01410 (MCF). The Plaintiff included COOP as a creditor in his bankruptcy case. On July 13, 2018, the Bankruptcy Court granted 2 727. COOP had notice of the Order of Discharge. Exhibit #2 of 3 Docket No. 63-2. The Plaintiff’s personal obligation under the 4 MasterCard credit card with COOP was discharged.

5 Seven months later, on February 16, 2019, COOP mailed a credit 6 card statement to the Plaintiff. The document is named “Monthly 7 Statement of Account.” The statement's closing date was February 8 9, 2019. This document stated the following: the "New Balance" was 9 $5,517.91; a "Minimum Payment Due" of $1,796.91; and "Payment Due 10 Date" March 6, 2019. The document further contains a late payment 11 warning which reads as follows: “If we do not receive your minimum 12 payment by the date listed above, you may have to pay a late fee 13 of up to $15.” Exhibit C of Docket No. 51-3. 14 On the following month, on March 13, 2019, COOP mailed another 15 “Monthly Statement of Account” to the Plaintiff. The statement’s 16 closing date was March 9, 2019. The form and content of this

17 document is identical to Exhibit C described above. The "Minimum 18 Payment Due" increased by $92.00 from the previous credit card 19 statement to $1,888.91. Exhibit D of Docket No. 51-4. 20 On April 11, 2019, COOP mailed to the Plaintiff a third 21 “Monthly Statement of Account.” The closing date was April 9, 2019. 22 This document follows the same format as the credit card statements 23 found at Exhibits C and D. The new "Minimum Payment Due" increased 24 in that statement to $1,980.91. This is a $92 dollar increase from the prior statement. Exhibit E of Docket No. 51-5. 2 report agency- that the MasterCard account of Plaintiff was 3 delinquent. Docket No. 51-11, Exhibit K. The Equifax Credit Report 4 dated October 28, 2020, classified the account as Charged off, and

5 was last reported delinquent on September 23, 2019. Id. 6 DISPUTED FACTS 7 On April 16, 2019 and January 2, 2020, the Plaintiff alleges 8 that a COOP employee called him to seek payment of the discharged 9 credit card debt. The phone number from which the Plaintiff was 10 supposedly called is (787) 732-4036. COOP disputes this fact by 11 stating that there is no evidence of calls going out from its 12 collection department to the Plaintiff.1 13 PARTIES CONTENTIONS 14 The Plaintiff argues that he included his MasterCard credit 15 card account with COOP in his Bankruptcy and the debt was 16 discharged. Seven months after the discharge order was entered,

17 COOP began to send him credit card statements in February, March, 18 and April 2019. The credit card statements unequivocally make a 19 demand for payment of the debt. The statements also included a 20 late payment warning. The minimum payment required in the first 21 statement sent to the Plaintiff was $1,796.91. In every successive 22 1 In the statement of uncontested facts, the Plaintiff alleges that an employee 23 of COOP named Omar Rivera, called him to demand payment from the discharged debt on April 16, 2019. Docket No. 51, at 4, ¶ 18. The court notes that 24 Plaintiff’s request of admissions shows the name of Cesar Rivera as the caller with a date of April 10, 2019. Exhibit B, Docket No. 51-2, at 2, Request Nos. 3 & 4. COOP denied both admissions. The Plaintiff included in its exhibits a screenshot of the Facebook profile of a person named Omar Rivera, that appears to be employed by COOP. Exhibit I, Docket No. 51-9. 2 in March 2019, and to $1,980.91 in April 2019. These three 3 statements are not informational in nature. The statements do not 4 have a disclaimer that the debt was discharged in the Plaintiff’s

5 bankruptcy. In fact, the statements demand payment in the same 6 fashion that COOP required payment from the Plaintiff prior to the 7 bankruptcy. 8 In addition to the monthly statements, the Plaintiff received 9 telephone calls from COOP to collect a debt allegedly owed to it 10 in relation to a MasterCard credit card. The Plaintiff informed 11 that he had filed a bankruptcy and the debt was discharged. 12 The Plaintiff also contends that COOP has not corrected the 13 information regarding the MasterCard credit card account on the 14 last Equifax Credit Report. According to the Plaintiff, COOP 15 omitted providing to Equifax the crucial information that the 16 account had been included in a bankruptcy. This omission has a

17 strong coercion effect on the Plaintiff to pay the debt because 18 the credit report has a direct impact on his credit worthiness and 19 prospects of obtaining credit. This behavior unequivocally shows 20 COOP’s coercive actions to harass the Plaintiff into paying the 21 credit card debt. 22 COOP argues that there were no collection efforts and no phone 23 calls made to the Plaintiff. To counter the accusation of 24 collection efforts, COOP argues that this court previously determined at Docket No. 44 that the monthly statements referred 2 COOP views this court’s determination that the credit card 3 statements are not collection letters as a reason to deny the 4 Plaintiff a judgment as a matter of law. COOP points out that the

5 ruling is final and unappealable. 6 COOP further contends that this case is a clear example of 7 the inappropriate use of the summary judgment because there is a 8 genuine issue as to the material facts regarding phone calls. It 9 points out that no record of the phone calls coming out of its 10 Collection Department or principal lines went to the Plaintiff on 11 April 16, 2019 and January 2, 2020. 12 As to the credit reporting issues, COOP claims that “there 13 are no monthly reports because the account is no longer active.” 14 COOP concludes that this court cannot hold it in civil contempt 15 for violating the discharge order because of a test established 16 in Taggart v. Lorenzen, 139 S. Ct. 1795 (2019).2

17 LEGAL STANDARD 18 Under Fed. R. Civ. P. 56(a), made applicable in bankruptcy by 19 Fed. R. Bankr. P. 7056, a party may file a motion for summary 20 judgment, identifying each claim or the part of each claim on which 21 summary judgment is sought. “The court shall grant summary judgment 22 if the movant shows that there is no genuine dispute as to any 23 material fact and that the movant is entitled to a judgment as a 24

2 COOP fails to explain the test it alleges that bars this court from holding it in contempt for a violation of the discharge order. 2 F.3d 1, 4 (1st Cir. 2010). The court may grant part of the relief 3 requested by the moving party. Fed. R. Civ. P. 56(g). A partial 4 summary judgment is the disposition of less than the entire case,

5 regardless of whether the order grants all the relief requested. 6 Hotel 71 Mezz. Lender LLC v. National Ret. Fund, 778 F.3d 593, 606 7 (7th Cir. 2015). The granting of a partial summary judgment is a 8 pretrial ruling that deems as established certain issues for the 9 trial. FDIC v. Massingil, 24 F3d 768, 774 (5th Cir. 1994). 10 To prove a discharge injunction violation, the Plaintiff must 11 establish that the creditor "(1) has notice of the debtor's 12 discharge; (2) intends the actions which constituted the 13 violation; and (3) acts in a way that improperly coerces or 14 harasses the debtor." Bates v. CitiMortgage, Inc., 844 F.3d 300, 15 304 (1st Cir. 2016)(citing Best v. Nationstar Mortgage LLC, 540 16 B.R. 1, 9 (B.A.P. 1st Cir. 2015)). “[A] debtor need not prove that

17 a creditor acted in bad faith or even that the creditor created 18 all of the circumstances in which the coercion occurred, only that 19 the creditor's actions had a coercive effect upon the debtor.” In 20 re Lumb, 401 B.R. 1, 7 (B.A.P. 1st Cir. 2009)(citing Curtis v. 21 Salem Five Mortgage Co., LLC (In re Curtis), 359 B.R. 356 (1st 22 Cir. BAP 2007)). 23 LEGAL ANALYSIS 24 In applying the three-prong test in this case, COOP admits that it had notice of the discharge order. With such admission, 2 the debtor’s discharge. Exhibit #2 of Docket No. 63-2. 3 COOP does not dispute the second prong of the test and merely 4 states that the account statements were not collection efforts.

5 COOP rests on the fact that this court had previously ruled that 6 the account statements sent to the Plaintiff were not collection 7 letters. The court's ruling at that hearing was limited to 8 resolving a discovery dispute. The court maintained its 9 jurisdiction to rule on the contents of the communications sent by 10 COOP to the Plaintiff on a summary judgment or at trial. As such, 11 the three credit card statements are not collection letters from 12 an attorney or a collection agency demanding payment. The 13 communication sent on February 2019, March 2019 and April 2019 are 14 clearly monthly credit card statements demanding payment and 15 threatening late charges. Each successive statement demanded 16 payment and the amount requested increased for lack of payment.

17 This court concludes that the statements were intentionally sent 18 by COOP to the Plaintiff, and they violate the discharge order. 19 Hence, the Plaintiff has satisfied the second prong of the test 20 for violation of the discharge order with respect to the credit 21 card statements. 22 Plaintiff also satisfies the second prong of violation of the 23 discharge order with respect to the failure of COOP to report the 24 bankruptcy to the credit bureau. COOP merely states that it did not have to report because the account is no longer active. The 2 delinquency on the MasterCard account was first reported on April 3 1, 2019, several months after the Debtor had obtained the 4 discharge.

5 As to the third prong, the court concludes that the 6 communications regarding the credit card statements were improper 7 and harassed the Plaintiff. “In this circuit, courts assess 8 whether conduct is improperly coercive or harassing under an 9 objective standard.” Kirby v. 21st Mortgage Corp., 599 B.R. 427, 10 440 (B.A.P. 1st Cir. 2019). “While there is no specific test to 11 determine whether a creditor's conduct meets this objective 12 standard, the circuit considers the facts and circumstances of 13 each case, including factors such as the immediateness of any 14 threatened action and the context in which a statement is made.” 15 Id. 16 The common factor in violations of the automatic stay or

17 discharge injunction by a creditor for loan related correspondence 18 “is a clear demand for payment of a pre-petition debt accompanied 19 by coercion in the form of threatened action or some other 20 consequence for nonpayment, or harassment to induce the debtor to 21 pay.” Id. at 441. A look at the three credit card statements 22 (Exhibits D, E and F) show that COOP threatened the Plaintiff with 23 late charges of $15 for non-payment of the discharged debt. 24 In examining the Equifax Credit Report, the Plaintiff's MasterCard is listed as "Closed." (Exhibit K at 9-11). The payment 2 Plaintiff's payment has been past due for more than 180 days during 3 the period when he was in bankruptcy. The chart's legend shows a 4 letter “B” for reporting when the account has been included in a

5 bankruptcy. This letter ”B” is not reported during the period in 6 which the Plaintiff was in bankruptcy. COOP's actions have the 7 effect of coercing the Plaintiff into payment of a discharged debt. 8 Courts have held that the failure to update a credit report 9 to show that a debt has been discharged is also a violation of the 10 discharge injunction if shown to be an attempt to collect the debt. 11 4 Collier on Bankruptcy P 524.02 (16th 2021)(citing Phillips v. 12 Deutsche Nat’l Trust (In re Phillips), 2011 Bankr. LEXIS 3780 13 (Bankr. N.D. Ohio Sept. 29, 2011)(failure to update credit report 14 to show mortgage had been cured in chapter 13 violated discharge 15 injunction); Torres v. Chase Bank USA, N.A. (In re Torres), 367 16 B.R. 478 (Bankr. S.D.N.Y. 2007)(the adverse effects of the

17 creditor's refusal to update information concerning the debts 18 could be construed as pressure on the debtors to pay their 19 discharged debts). The court is of the view that this failure to 20 update the credit report aggravated the collection efforts made by 21 COOP through the credit card statements. 22 With respect to the alleged phone call communications between 23 COOP and the Plaintiff, this is a material factual dispute that 24 cannot be resolved by summary judgment. The Plaintiff says that he received two phone calls from a COOP employee requesting payment 2 records do not show that calls were originated from its lines to 3 the Plaintiff. The court cannot resolve this issue summarily 4 without having an evidentiary hearing on the issue of whether the

5 Plaintiff received telephone calls from a COOP employee demanding 6 payment on a discharge debt. 7 Although the court cannot rule on whether COOP violated the 8 discharge injunction based on alleged telephone calls, the court 9 can enter partial judgment as to liability with respect to the 10 three credit card statements and the failure to report the 11 bankruptcy to the credit bureau. It is appropriate for a partial 12 summary judgment as there are no material facts in dispute as to 13 the delivery of the credit card statements and the failure to 14 report of the bankruptcy filing to the credit bureau, and that 15 COOP violated the discharge as a matter of law. In re Colarusso, 16 382 F.3d 51 (1st Cir. 2004) (citing Celotex, 477 U.S. at 322-323);

17 Vega-Rodriguez v. Puerto Rico Tel. Co., 110 F.3d 174, 178 (1st 18 Cir. 1997). 19 20 21 22 23 24 1 2 Consequently, the hearing scheduled for December 1, 2021, is 3 ||converted into a pre-trial hearing. Parties must file a joint pre- 4 ||trial report 14 days before the hearing. After the pre-trial 5 ||conference, the court will schedule an evidentiary hearing for 6 ||}damages regarding the credit card statements and the failure to 7 \lupdate the credit report and to decide whether the allege 8 |i}telephone call constitutes a violation of the discharge order. 9 IT IS SO ORDERED. 10 San Juan, Puerto Rico, this 29th day of September, 2021. hole ch (bam 12 Mildred Caban Flores U.S. Bankruptcy Judge 13 14 15 16 17 18 19 20 21 22 23 24

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