In re Lempesis

557 B.R. 659, 2016 Bankr. LEXIS 3593, 2016 WL 5539813
CourtUnited States Bankruptcy Court, N.D. Illinois
DecidedSeptember 28, 2016
DocketCase No: 13 B 38994
StatusPublished
Cited by1 cases

This text of 557 B.R. 659 (In re Lempesis) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Lempesis, 557 B.R. 659, 2016 Bankr. LEXIS 3593, 2016 WL 5539813 (Ill. 2016).

Opinion

MEMORANDUM OPINION REGARDING MOTION FOR CIVIL CONTEMPT AND SANCTIONS FOR VIOLATION OF THE DISCHARGE INJUNCTION

Bruce W. Black, Bankruptcy Judge

This matter is before the court on the Debtor’s motion for civil contempt and [661]*661sanctions for violation of the discharge injunction by Anthony Collaro (“Collaro”), a creditor, and his counsel, Romanucei & Blandin (“R & B,” collectively with Colla-ro, “Respondents”). After trial and post-trial briefing, and for the reasons stated below, the motion is granted, and the Respondents are found to be in civil contempt for violation of the discharge injunction provided by section 524 of the Bankruptcy Code.1

Background

The Debtor is not an admirable person. He admits to conduct that is reprehensible and unjustifiable: sexual contact with one of his players, Collaro, when he was a college baseball coach. Nevertheless, he is a debtor, and no one has suggested that he filed his bankruptcy case in bad faith. Therefore, he is entitled to the protections afforded debtors by the Code. Moreover, the time has expired for anyone to contest the dischargeability of any debt he may owe Collaro.2 Consequently, for purposes of the present motion, the nature of the Debtor’s conduct is irrelevant.

Most of the facts are not in dispute. The Debtor filed for relief under chapter 7 of the Code on October 3, 2013. On Schedule F he listed Collaro as a creditor with an unliquidated and disputed claim in the form of a lawsuit filed in May of 2013 and pending in state court against the Debtor (“the first lawsuit”). On October 6, 2013, notice of the bankruptcy containing relevant information for creditors was mailed by the Bankruptcy Notification Center to creditors, including Collaro in care of his counsel in the state court case, R & B, at an address on N. LaSalle in Chicago. (Bankr. Dkt. No. 9). On November 4, 2013, upon discovering that R & B had recently moved their offices (Debtor’s Ex. 3), the Debtor’s attorney mailed a copy of the bankruptcy notice to R & B at their new address, 321 N. Clark Street, Suite 900, Chicago, IL 60654 and sent it via facsimile to R & B with attention to attorney Rebekah Williams (“Williams”), the lead associate at R & B assigned to the pending state court case. (Debtor’s Ex. 5).

The notice included, in bold print, a warning about the automatic stay. It also included, in bold print, a statement that the deadline to object to the Debtor’s discharge or to challenge the dischargeability of certain debts was January 17, 2014. No adversary proceeding regarding the Debt- or’s discharge or the dischargeability of any debts was ever filed in the case. The Debtor’s discharge order (Bankr. Dkt. No. 20) was entered on January 21, 2014 and noticed to all creditors on the same day. (Bankr. Dkt. No. 22). The certificate of service for this notice indicates it was sent to R & B’s old address on N. LaSalle in Chicago, IL. The case was closed on February 25, 2014. (Bankr. Dkt. No. 29).

Also on January 21, 2014, the Debtor appeared pro se in the first lawsuit and filed his answer (Debtor’s Ex. 6 and Respondents’ Ex. 8). The answer referred to his bankruptcy case and included the case number. Nearly three months later, on April 3, 2014, the Respondents voluntarily dismissed the first lawsuit. More than eight months after that, on December 30, 2014, Collaro, through R & B, filed a sec[662]*662ond action in state court against the Debt- or (“the second lawsuit”) containing the allegations and claims from the first lawsuit and some additional allegations.

On February 20, 2015, the Debtor moved to reopen the bankruptcy case and brought this motion for an order of civil contempt against the Respondents. The Debtor contends that the Respondents violated the discharge injunction by failing to dismiss the first lawsuit timely and by filing the second lawsuit. The Debtor’s request to reopen the case was granted, and the motion for sanctions was fully briefed and set for trial.

Jurisdiction

The Debtor seeks to recover damages for violation of the discharge injunction. Enforcement of the discharge injunction is a core proceeding. 28 U.S.C. §§ 157(b)(2)(0).3 Therefore, this court may conduct appropriate proceedings and enter a final order in this matter. 28 U.S.C. § 157(b)(1).

Motion for Sanctions (Bankr. Dkt. No. 32)

The Debtor seeks to .have this court invoke its equitable powers under section 105(a) to remedy the Respondents’ violation of the discharge injunction set forth in section 524(a). In addition to a finding of contempt against Respondents, the Debt- or’s requested remedies include sanctions in the form of actual damages for emotional distress and humiliation, punitive damages, out-of-pocket expenses, as well as attorneys’ fees and court costs. The request includes those fees and costs incurred for defending the second lawsuit, reopening this case, and prosecuting this motion for sanctions.

The motion does not seek damages for violation of the automatic stay even though there appears .to have been such a violation from when the Respondents received notice of the bankruptcy until the discharge was entered.

Motion in Limine (Bankr. Dkt. No. 52)

Prior to the trial, the Respondents filed a motion in limine seeking to bar evidence relating to punitive damages and damages for emotional distress and humiliation. The Respondents assert that (1) punitive damages are not available in an action for civil contempt; and (2) permissable remedies for violation of the discharge injunction do not include damages for emotional distress and humiliation. The court reserved ruling on the motion.

Trial

The trial was held on November 2, 2015. Two witnesses were presented at trial: the Debtor on behalf of himself, and attorney Antonio Romanucci (“Romanucci”) .on behalf of the Respondents.'

The Debtor testified about two relevant issues: (1) notice of the bankruptcy filing and the discharge order, and (2) his claimed damages. Romanucci’s relevant testimony included the structure of his law firm and its effect on his firm’s receipt of notice of' the Debtor’s bankruptcy, as well as his firm’s actions in the two state court cases.

The Debtor’s Testimony

The Debtor testified about filing his bankruptcy case. He also testified that on January 21, 2014 — the day the Discharge Order was entered in this case — he filed his answer pro se in the first lawsuit. He further stated that when he filed the answer with the clerk of the circuit court of Cook County, he was told that he should [663]*663mail a copy to R & B, and he promptly did so. (Tr. p. 15). His testimony in this regard was credible.

Regarding damages, the Debtor testified that he suffered emotional distress and humiliation as a result of the filing of the second lawsuit, which was filed more than eight months after the first lawsuit was voluntarily dismissed. Again, the Debtor’s testimony was credible. The Debtor contends that the filing of the second suit was leaked to the press and revived interest in Collaro’s claims against the Debtor.

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Related

In re Hardej
563 B.R. 855 (N.D. Illinois, 2017)

Cite This Page — Counsel Stack

Bluebook (online)
557 B.R. 659, 2016 Bankr. LEXIS 3593, 2016 WL 5539813, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-lempesis-ilnb-2016.