Hambrick v. Perceptual Development Corp. (In re Hambrick)

481 B.R. 105, 68 Collier Bankr. Cas. 2d 859, 2012 WL 4435236, 2012 Bankr. LEXIS 4442
CourtUnited States Bankruptcy Court, E.D. Oklahoma
DecidedSeptember 24, 2012
DocketBankruptcy No. 09-81378-TRC; Adversary No. 11-8001-TRC
StatusPublished
Cited by3 cases

This text of 481 B.R. 105 (Hambrick v. Perceptual Development Corp. (In re Hambrick)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. Oklahoma primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hambrick v. Perceptual Development Corp. (In re Hambrick), 481 B.R. 105, 68 Collier Bankr. Cas. 2d 859, 2012 WL 4435236, 2012 Bankr. LEXIS 4442 (Okla. 2012).

Opinion

OPINION

TOM R. CORNISH, Bankruptcy Judge.

On June 25, 2012, this matter came on for trial on the Plaintiffs Amended Complaint seeking damages for violations of the discharge injunction set forth in 11 U.S.C. § 524(a). At the request and by agreement of the parties, trial of this case was combined with trial of Case No. 11-8002, which was brought by Plaintiff Selby against the same Defendants. Appearances were entered by Daryl Roberts for Plaintiffs, and Jerome Sepkowitz and Pete Serrata for Defendants. The Court denied Defendants’ Motion for a Directed Verdict. A ruling on Defendants’ Motion for Sanctions was reserved until after trial. Upon the submission of proposed findings of fact and conclusions of law, the Court took all pending matters in both cases under advisement. Based upon the facts of this case and applicable law, the Court finds in favor of Plaintiffs against Defendants. The following constitutes the Court’s findings of fact and conclusions of law as required by Federal Rule of Bankruptcy Procedure 7052.

INTRODUCTION

Plaintiff Nita Sue Hambrick, and Plaintiff in related Case No. 11-8002, Barbara Selby (collectively “Plaintiffs”), were sued by Defendant Perceptual Development Corporation dba Irlen Institute (“PDC”) in California state court in 2008 to collect damages regarding a contract between the [107]*107parties. In 2009, Plaintiffs filed their bankruptcy cases, and generally speaking, the California state court litigation was stayed. PDC filed adversary complaints alleging nondischargeability of the debts it claimed pursuant to their contract. PDC subsequently voluntarily dismissed its adversary proceedings. Plaintiffs received their discharges, and both bankruptcy cases were closed in 2010. In early 2011, PDC resumed the California litigation it had filed against Plaintiffs prepetition, but allegedly only with respect to damages stemming from their postpetition conduct. Plaintiffs then filed these adversary proceedings claiming violations of the automatic stay and discharge injunction.

FINDINGS OF FACT

These parties have a long and tortuous relationship. Plaintiffs Hambrick and Sel-by operated a business in Ardmore, Oklahoma, and entered into a contractual relationship in 1998 or 1999 with Defendant PDC.1 Plaintiffs were granted a license to use a method of diagnosing difficulties in processing visual information. This contract included a nondisclosure/noncompetition clause, and it also provided that disputes would be resolved by arbitration or by a particular California court. Years later, on February 11, 2008, PDC filed a lawsuit in the Superior Court of California, Los Angeles County South Division, against Hambrick and Selby as individuals, and against TLC Assessment Center, Inc., an Oklahoma corporation, Kathy Wyriek, another individual, and “Does 1 to 100, inclusive” (“California Case”). The 2008 Complaint included twelve causes of action against Hambrick and Selby, TLC, and Does 1 to 25.2 It was based upon the 1998-1999 contract, and upon PDC’s patent that expired in 2007. Damages sought from all defendants were restitution, lost royalties, lost profits, lost lens orders, lost prospective business, injunctive relief, exemplary damages, compensatory damages, attorneys fees, and return of all PDC client files. According to the Case Summary from the California Case, default was entered against Hambrick and Selby in July of2008.3

Shortly after the California Case was filed, Hambrick and Selby filed declaratory judgment actions against Defendants in the District Court of Carter County, Oklahoma. Those lawsuits were stayed pending resolution of the California Case. Ham-brick filed her Chapter 13 bankruptcy and Selby filed her Chapter 7 bankruptcy on August 17, 2009. A Suggestion of Bankruptcy was filed in the California Case on August 20, 2009. PDC and the California Court were aware that both Hambrick and Selby had filed bankruptcy in Oklahoma.

PDC filed a Proof of Claim in Ham-brick’s bankruptcy for $1,937,993.84. This amount consisted of $129,524.25 for underpayment of royalties from 2002-2005, $226,528.78 for lost revenues from 2006-2008, $200,000 for damage to reputation, [108]*108$57,969.68 for legal fees through July 30, 2009, and $1,453,495.38 for punitive damages (treble actuals).4 The Claim also listed specific injunctive relief requested. PDC filed adversary proceedings under 11 U.S.C. § 523(a)(2), (4) and (6) against Hambrick and Selby.5 Hambrick and Sel-by filed counterclaims against PDC seeking declaratory judgments regarding certain provisions of their contract with PDC, and injunctive relief. Eventually, PDC decided to dismiss its adversary proceedings against Hambrick and Selby, and withdraw its Proof of Claim against Hambrick. Hambrick and Selby did not object, but desired to continue with their counterclaims. This Court then determined that it should abstain from deciding the counterclaims based upon state law, and granted PDC’s motions to dismiss the adversaries.6 After Hambrick’s Chapter 13 Plan was confirmed and completed, the stay was lifted to allow PDC to continue its state court lawsuit in accordance with this Court’s Order of Abstention.7 Selby received her discharge on December 2, 2009, and her case was closed on July 7, 2010. Hambrick received her discharge on September 10, 2010. Her case was closed on December 27, 2010.

The primary participants in the California Case are Defendants Fine and Robert Irlen, and they each testified before this Court regarding those proceedings. Irlen testified that he is Chief Financial Officer and corporate counsel of PDC. He was admitted to the California Bar in 1976, but has never really practiced law. He was aware that Plaintiffs filed bankruptcy in Oklahoma and was involved in the bankruptcies and earlier adversary cases. Upon advice of counsel, he decided to dismiss those adversary cases, and proceed against Plaintiffs in California after the bankruptcies were completed. He appeared at the Status Conferences held in the California Case on behalf of PDC. He also calculated the amount of damages sought by PDC against Hambrick and Sel-by and their co-defendants. He stated that it was always his intent and the intent of PDC to take judgment against Ham-brick and Selby in the California Case.

Defendant Fine is PDC’s attorney in California. She testified that during and after the bankruptcy proceedings, various status conferences were held in the California Case.8 Notices of the status conferences were prepared, filed and served by her. These were referred to as “Notice of Ruling,” and included the appearances, actions taken at the conference, and orders to appear at future conferences.9 One particular notice issued after Plaintiffs’ bankruptcies were filed included a reminder to pay sanctions previously awarded by [109]*109a certain deadline.10 In regard to future Status Conference dates, the notices included this language: “It is ordered that all parties appear at that time” or “All parties are ordered to attend.”11

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
481 B.R. 105, 68 Collier Bankr. Cas. 2d 859, 2012 WL 4435236, 2012 Bankr. LEXIS 4442, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hambrick-v-perceptual-development-corp-in-re-hambrick-okeb-2012.