In Re Bock

297 B.R. 22, 2002 WL 32139295
CourtUnited States Bankruptcy Court, W.D. North Carolina
DecidedJanuary 24, 2002
Docket08-50011
StatusPublished
Cited by12 cases

This text of 297 B.R. 22 (In Re Bock) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, W.D. North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Bock, 297 B.R. 22, 2002 WL 32139295 (N.C. 2002).

Opinion

FINDINGS OF FACT, CONCLUSIONS OF LAW AND ORDER

J. CRAIG WHITLEY, Bankruptcy Judge.

This matter is before the Court upon Motion of the Debtor Marguerite Sarah Bock (“Bock”) for Sanctions for Violation of the Automatic Stay and Discharge Injunction, dated January 19, 1999; as well as the Responses filed by Creditors Karl and Bettina Pond(the “Ponds”) and their attorney Gary Gavenus (“Gavenus”) (collectively, “Respondents”). An evidentiary hearing was conducted on October 18, 2001, and a preliminary ruling was an *25 nounced. However, entry of the Order was delayed to afford the parties an opportunity to discuss settlement. These negotiations have not succeeded. As such, the matter is ripe for decision.

For the reasons stated below, the undersigned believes Bock’s motion should be GRANTED.

FINDINGS OF FACT

1. Bock filed a voluntary Chapter 7 bankruptcy petition with this Court on October 13,1998.

2. Bock’s bankruptcy case was routine and uneventful. Upon the filing, her creditors were served with notice of the bankruptcy and of the opportunity to file objections to discharge/disehargeability of their debts. None were filed, so a few months later, Bock received a discharge. Because Bock’s bankruptcy was a no-asset case, the case was closed in January 1999.

3. Ten months later, Bock moved to reopen her case, in order to bring this motion. In it, Bock alleges that the Respondents have wilfully violated 11 U.S.C. 524 (2001) and her bankruptcy discharge by continuing to pursue a prepetition collection suit against her after her bankruptcy-

4. At this point, Respondents are willing to acknowledge that they did in fact prosecute a collection suit against Bock after bankruptcy and that this violated her discharge. 1 However, they deny that their actions were willful. They assert a number of defenses, including the assertion that this motion is barred by the Rooker-Feldman Doctrine; the action is time barred; and that Bock waived the discharge. Gavenus also contends that Bock did not properly assert the discharge and thus did not mitigate her damages.

5. This controversy arises out of the Pond’s 1995 purchase of a home. Bock, an Avery County realtor, represented the seller.

6. The Pond’s soon learned that the house that they had purchased had several latent defects. They came to believe that both the seller and his realtors, including Bock, were aware of these defects, and had intentionally concealed the same.

7. In early 1997, the Pond’s brought a small claims action against Bock, a sales agent in her firm, and the sellers. The Ponds prevailed, receiving a $1,000 judgment.

8. When Bock and the other defendants appealed, the Pond’s decided that they needed an attorney. They retained Gavenus to represent them. Gavenus realized that the Pond’s claims were worth more than what could be recovered in small claims court. He had the Pond’s dismiss the small claims action, and in September 1997 refiled the action in Avery County Superior Court (the “State Action”).

9. Meanwhile, Bock was experiencing financial problems. These led her to file a Chapter 13 bankruptcy case in the Middle District of North Carolina during the first half of 1997 (the “Chapter 13 case”).

10. Bock did not schedule the Pond’s as creditors in her Chapter 13 case. However, when served with the Pond’s complaint in September 1997, Bock’s bankruptcy attorney added the claim to the Chapter 13 case. The Ponds were given notice of that proceeding. When they filed a proof of claim, Bock objected. The Ponds claim was disallowed by the Middle District Bankruptcy Court.

*26 11. Meanwhile in the State Action, when they were served with the Pond’s new complaint, the State Action defendants hired Greensboro attorney Kent Lively (“Lively”) to represent them. Answers were filed on their behalf.

12. Bock’s Chapter 13 filing stayed prosecution of the State Action against Bock, but not against the other defendants.

13. On January 19, 1998, Bock’s Chapter 13 case was dismissed. This revived the State Action against Bock.

14. On October 13, 1998, Bock filed a second bankruptcy case — this time under Chapter 7 and in the Western District of North Carolina (the “Chapter 7 case”). Attorney Peggy Palms represented Bock in the Chapter 7 case.

15. The Chapter 7 case triggered another Section 362 stay, legally enjoining prosecution of the State Action against Bock.

16. In the Chapter 7 ease, Bock scheduled the Pond’s as creditors holding disputed claims. Both the Ponds and Gaven-us were included on the case matrix and received case notices. One of these was the First meeting notice. This notice set a deadline for creditors to file objections to the dischargeability (11 U.S.C. § 523) of individual debts, or to a discharge in general (11 U.S.C. § 727).

17. This notice explained the terminal effect of the discharge on a creditor’s claims:

“DISCHARGE OF DEBTS. The debt- or is seeking a discharge of debts. A discharge means that certain debts are made unenforceable against the debtor personally. Creditors whose claims against the debtor are discharged may never take action against the debtor to collect the discharged debts.” (emphasis added).

18. The notice also explained that prompt action by the creditor was required to avoid this result:

“If a creditor believes that the debtor should not receive a discharge of debts under Sec. 727 of the Bankruptcy Code or that a debt owed to the creditor is not dischargeable under Sec. 523(a)(2),(4), (6) or (15) of the Bankruptcy Code, timely action must be taken in the bankruptcy court by the deadline set forth above labeled ‘Discharge of Debts.’ Creditors considering taking such action may wish to seek legal advice.”

19. The Pond’s consulted with Gavenus regarding Bock’s bankruptcy. Gavenus then called Robert Laney, an attorney who practices in bankruptcy court to seek his advice. Laney confirmed what the notice said: To preserve their claim against Bock, the Pond’s would have to bring a dischargeability suit in the bankruptcy court.

20. Although aware of the effect of the discharge, for cost reasons, the Respondents decided not to file a dischargeability suit against Bock. Instead, they chose to pursue the State Action against the other defendants.

21. Bock received her discharge on January 19,1999, without objection.

22. Around the same time, Bock moved to Tennessee. Bock had understood from her bankruptcy attorney that her Chapter 7 filing arrested further collection proceedings against her. Thinking her involvement in the State Action was over, she did not update Lively of her move.

23.

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Cite This Page — Counsel Stack

Bluebook (online)
297 B.R. 22, 2002 WL 32139295, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-bock-ncwb-2002.