Johnson v. Magee Rentals, Inc. (In re Johnson)

478 B.R. 235
CourtUnited States Bankruptcy Court, S.D. Mississippi
DecidedAugust 28, 2012
DocketBankruptcy No. 11-02071-NPO; Adversary No. 11-00131-NPO
StatusPublished
Cited by5 cases

This text of 478 B.R. 235 (Johnson v. Magee Rentals, Inc. (In re Johnson)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, S.D. Mississippi primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Johnson v. Magee Rentals, Inc. (In re Johnson), 478 B.R. 235 (Miss. 2012).

Opinion

MEMORANDUM OPINION AND ORDER ON COMPLAINT SEEKING DAMAGES FOR VIOLATION OF THE AUTOMATIC STAY

NEIL P. OLACK, Bankruptcy Judge.

There came on for trial on July 18, 2012 (the “Trial”), the Complaint Seeking Dam[239]*239ages for Violation of the Automatic Stay (the “Complaint”) (Adv. Dkt. 1)1 filed by Touya J. Johnson (the “Debtor”), and the Defenses and Answer of Magee Rentals, Inc. (Adv. Dkt. 6) filed by Magee Rentals, Inc. (“Magee Rentals”), in the above-referenced adversary proceeding (the “Adversary”). The Pretrial Order (Adv. Dkt. 17) was approved by the Court on July 6, 2012.

At Trial, Edwin Woods, Jr. (“Woods”), with the law firm of Bond Botes & Woods, P.C. (“Bond Botes & Woods”), represented the Debtor, and Marc E. Brand represented Magee Rentals. By stipulation, the Debtor introduced into evidence five exhibits, Debtor Exhibits 1-5, and Magee Rentals introduced into evidence nine exhibits, Magee Exhibits 1-9. During the Trial, Magee Rentals withdrew its objection to Debtor Exhibit 6, and the exhibit was admitted into evidence.2 In addition to her own testimony, the Debtor presented the testimony of six witnesses: (1) Michael Bass (“Bass”), the Debtor’s boyfriend; (2) Matthew A. Love (“Love”), an attorney formerly associated with Bond Botes & Woods; (3) Jerry Wayne Hilton (“Hilton”), the owner and president of Magee Rentals; (4) Cindy Breaux (“Breaux”), the store manager of Magee Rentals; (5) Alicia Floyd (“Floyd”), the assistant manager and account manager of Magee Rentals; and (6) Woods. Magee Rentals, in its case-in-chief, called three witnesses: (1) Hilton, (2) Breaux, and (3) Floyd. At issue in the Adversary is whether Magee Rentals violated the automatic stay under 11 U.S.C. § 362(a),3 and if so, whether the Debtor is entitled to damages under § 362(k). The Court, having considered the pleadings, evidence, and arguments of counsel, finds that the Debtor has successfully demonstrated that Magee Rentals willfully violated the automatic stay and is entitled to damages in the amount of $3,300.00 for the reasons set forth below.4 This Opinion memorializes and supplements the Court’s ruling from the bench rendered at the close of the Trial.

I. Jurisdiction

This Court has jurisdiction over the parties and the subject matter of this Adversary pursuant to 28 U.S.C. § 1334. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(1). Notice of the Trial was proper under the circumstances.

II. Facts

The following facts are derived from the stipulations included in the Pretrial Order, as well as from the evidence presented at the Trial.

1. The Debtor is a family protection worker with the Mississippi Department of Human Services, Division of Family and Children Services, in Prentiss, Mississippi.5 (Dkt. 4 at 15). At Trial, the Debtor [240]*240testified that her annual gross salary is $27,614.15.6

2. Magee Rentals is a Mississippi corporation operating as a rent-to-own store in Magee, Mississippi. (Adv. Dkt. 17 at 3).

3. Magee Rentals has been owned and operated by Hilton since it first opened in 1989.7

4. On November 30, 2010, the Debtor entered into a Rental Purchase Agreement, Agreement # 18757 (the “Rental Agreement”), with Magee Rentals for the rental of a television cabinet8 (the “TV Cabinet”). (Magee Ex. 1).

5. Under the Rental Agreement, the Debtor agreed to pay $135.80 per month (or $33.95 per week) to Magee Rentals for use of the TV Cabinet. (Magee Ex. 1). The term of the lease was 18 months (or 78 weeks) at the end of which time the Debtor could own the TV Cabinet.

A. Magee Rentals’ Debt Collection Policy

6. There was some conflicting evidence at Trial regarding Magee Rentals’ debt collection policy as to customers in bankruptcy. In the Response of Magee Rentals, Inc. to Plaintiff’s First Set of Interrogatories (the “Response”), Magee Rentals set forth its policy as follows: “[i]f a customer advises that [she] has filed bankruptcy then Magee [Rentals] waits for notification from the Court and when proper notification is received it ceases all collection activity.” (Debtor Ex. 2, ¶ 5). Also in the Response, Magee Rentals stated that when it receives proper notice from the Court, “the account is removed from Ma-gee [Rentals’] computer system.” (Debtor Ex. 2, ¶ 5).

7. Consistent with the Response, Ma-gee Rentals stipulated in the Pretrial Order that it was “the official policy of Magee Rentals ... [to] continue all collection efforts against a non-paying customer and cease such collection efforts only after an official notice was received from a bankruptcy court advising that such non-paying customer had filed a bankruptcy case.” (Adv. Dkt. 17, ¶ 11(0).

8. Floyd testified at Trial that the store policy was that “we don’t go on just a phone call or hearsay, we stop [collection efforts] after we get the bankruptcy paperwork.” 9

9. The testimony of Hilton, the owner and president of Magee Rentals, as to its store policy differed not only from the policy outlined in the Response and in the Pretrial Order, but also from Floyd’s testimony. Hilton testified that once the store learned that a customer had filed for bankruptcy, whether by written notification from the bankruptcy court or oral notice from the customer, the store policy was to stop all communications with the customer and remove that customer’s account from the store’s computer system.10

10. Hilton testified that as the owner of Magee Rentals, he was ultimately responsible for deciding how the store handled debt collections against customers in bankruptcy.11 Hilton acknowledged that he was generally familiar with the Bankrupt[241]*241cy Code12 and "with the automatic stay provision.13

B. Bankruptcy Case

11. On June 10, 2011, the Debtor filed a voluntary petition (the “Petition”) for relief under chapter 13 of the Bankruptcy Code. (Dkt. 1).

12. According to Magee Rentals, the Debtor’s payments were “sporadic.” (Debtor Ex. 2, ¶ 6). Magee Rentals claimed that the Debtor made her last and final payment on the Rental Agreement in the amount of $100.00 on May 14, 2011, and that thereafter the Debtor became in default on May 19, 2011. Id. In contrast, the Debtor testified that she remained current on her payments to Magee Rentals prior to filing her Petition on June 10, 2011.14

13. Along with the Petition, the Debtor filed her verified schedules. (Dkt. 4). In Schedule D-Creditors Holding Secured Claims, the Debtor listed Magee Rentals as a secured creditor15 with a claim in the amount of $1,700.00. Id. at 6. The Debtor identified the collateral securing Magee Rentals’ claim as an “ENTERTAINMENT CENTER” valued at $1,000.00. Id.

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Bluebook (online)
478 B.R. 235, Counsel Stack Legal Research, https://law.counselstack.com/opinion/johnson-v-magee-rentals-inc-in-re-johnson-mssb-2012.