Gray v. ZB, N.A. (In re Gray)

567 B.R. 841
CourtUnited States Bankruptcy Court, W.D. Washington
DecidedMay 12, 2017
DocketCase No. 16-41279-BDL; Adversary No. 16-4123-BDL
StatusPublished
Cited by4 cases

This text of 567 B.R. 841 (Gray v. ZB, N.A. (In re Gray)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, W.D. Washington primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Gray v. ZB, N.A. (In re Gray), 567 B.R. 841 (Wash. 2017).

Opinion

ORDER GRANTING PARTIAL SUMMARY JUDGMENT

Brian D. Lynch, U.S. Bankruptcy Judge

Plaintiffs Michael Gray and Nicole Hart filed a Motion for Partial Summary Judgment (ECF No. 27) in this adversary seeking to have the Court determine that the Defendants to this action, ZB, N.A. and Bailey & Busey PLLC, committed a willful violation of the automatic stay under 11 U.S.C. § 362(k)(l) when the Defendants failed to have bench warrants for the arrest of the Plaintiffs quashed after Defendants learned of Plaintiffs’ bankruptcy filing.

Both Defendants filed responses to the motion (ECF Nos. 35, 36) contending that the events that allegedly constituted a stay violation were not subject to the stay as they were within the government regulatory exemption to the stay of Section 362(b)(4) as proceedings for contempt of court, and also that if there was a stay violation it was not willful. Plaintiffs filed a reply brief (ECF No. 42) and counsel for all parties appeared at the hearing on the motion for partial summary judgment on April 26, 2017 and provided argument.

At the conclusion of the April 26, 2017 hearing, the Court made findings of fact and conclusions of law on the record, per Fed. R. Bankr. P. 7052, which are incorporated herein by reference. By this Order, Plaintiffs’ Motion is hereby GRANTED.

Background

The facts are largely uncontested. Plaintiffs obtained a vehicle loan from defendant ZB, N.A. dba Zions National Bank (hereinafter “ZBNA”) to purchase a pickup truck. Plaintiffs somehow defaulted on the loan, and ZBNA repossessed the truck. In 2011, ZBNA retained defendant Bailey & Busey PLLLC (hereinafter “Bailey & Busey”) to pursue collection of the deficiency balance on the car loan. Bailey & Busey obtained a default judgment against Plaintiffs in June 2012. Bailey & Busey then began garnishment proceedings, and entered into various negotiations with Plaintiffs to resolve the debt. Unable to reach an agreed resolution, Bailey & Bu-sey commenced a supplemental proceedings action against Plaintiffs in Cowlitz County Superior Court in February 2016. During the garnishment period, Plaintiffs had told ZBNA once that they might file bankruptcy, but had not filed by the time the supplemental proceedings were commenced.

Defendants obtained an order on February 17, 2016 setting a hearing in the supplemental proceeding for March 16, 2016. The order was served on Plaintiffs at their residence, but they did not appear at the March 16th hearing. On March 23, 2016, Bailey & Busey mailed to the Cowl-itz Superior Court a motion to issue bench warrants, orders granting the motion and proposed bench warrants. The Court received the pleadings on March 25, 2016 and the orders granting the motion (one order as to each Plaintiff) were entered on March 28, 2016. Bailey & Busey received the signed orders back from the Court on or about March 31, 2016. Bailey & Busey believed they had received back the “original” bench warrants, but what was produced in response to the motion for summary judgment are just copies of [844]*844the “Order Granting Bench Warrant” with a stamped name for the judge’s signature, and which directed the clerk of court to issue a bench warrant to the Cowlitz County Sheriff, and copies of Bailey & Busey’s proposed bench warrants, with the same stamped name. (Busey Dec, Ex. F, ECF No. 33). However, the bench warrants ultimately used by the sheriff in Plaintiffs’ later arrests are of a different format than the version sent in by Bailey & Busey. (Henry Dee. Ex, AA, ECF No. 30). The bench warrants used were issued directly by the Cowlitz County Superior Court, were issued March 28, 2016, and were signed under seal, by the Cowlitz County Clerk. Id.

Neither the motion for bench warrants nor the orders granting bench warrants were served on Plaintiffs.

Unbeknownst to the Cowlitz Court or apparently to either Defendant at the time of these actions, Plaintiffs had filed Chapter 7 bankruptcy on March 25, 2016. Plaintiffs did not schedule Bailey & Busey as a creditor, but they did schedule “Zion’s Bank.” (In re Gray, Case No. 16-41279, ECF No. 1). ZBNA received notice of Plaintiffs’ bankruptcy filing on or before April 4, 2016 as on April 4th a ZBNA representative called Bailey & Busey to inform them about the bankruptcy. Bailey & Busey put a “hold” on their file, but took no action to inform the Cowlitz County Superior Court about the filing and took no affirmative action to quash the court orders for issuance of bench warrants or the bench warrants. According to Bailey & Busey they believed they had the original documents, and nothing else would happen with the warrants without Bailey & Busey taking affirmative action.

Instead, with the bench warrants outstanding, Plaintiffs were arrested by the Cowlitz County Sheriff on May 24, 2016.

Summary Judgment Standard

As the parties agree, summary judgment is appropriate under Fed. R. Bankr. P. 7056 and Fed. R. Civ. P. 56 if “if the pleadings, depositions, answers to interrogatories, and admissions on file together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. Id. at 323, 106 S.Ct. 2548. Once the initial burden is met, the opposing party must then set forth specific facts showing that there is a genuine issue of fact for trial in order to defeat the motion. Anderson v. Liberty Lobby, 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Facts must be viewed in the light most favorable to the non-moving party where there is a genuine dispute to those facts. Scott v. Harris, 550 U.S. 372, 380, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007).

Exemption from the Automatic Stay under Section 362(b)(4)

Upon filing bankruptcy, the automatic stay of 11 U.S.C. § 362 goes into effect and stays, in general, any actions to recover claims against the debtor, among other things. But certain actions are not subject to the stay, per Section 362(b). These include actions or proceeding by governmental units to enforce their police or regulatory powers. 11 U.S.C. § 362(b)(4).

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Cite This Page — Counsel Stack

Bluebook (online)
567 B.R. 841, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gray-v-zb-na-in-re-gray-wawb-2017.