Lienhard v. Lehighton Ambulance Ass'n (In re Lienhard)

498 B.R. 443
CourtUnited States Bankruptcy Court, M.D. Pennsylvania
DecidedSeptember 30, 2013
DocketBankruptcy No. 5-11-bk-05194-RNO; Adversary No. 5-11-ap-00473-RNO
StatusPublished
Cited by6 cases

This text of 498 B.R. 443 (Lienhard v. Lehighton Ambulance Ass'n (In re Lienhard)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, M.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lienhard v. Lehighton Ambulance Ass'n (In re Lienhard), 498 B.R. 443 (Pa. 2013).

Opinion

OPINION1

ROBERT N. OPEL, II, United States Bankruptcy Judge.

The instant Adversary Proceeding was brought by the Chapter 7 Debtor, Ms. Treena Lienhard (“Plaintiff’ or “Debtor”), against the Defendant, Lehighton Ambulance Association, Inc. (“Defendant” or “Lehighton”), for alleged violations of the automatic stay and discharge injunction. A trial on the merits was held on February 22, 2013. For the reasons stated herein, I find that the Defendant did not willfully violate the stay pursuant to 11 U.S.C. § 362(k). Additionally, I find that the Defendant did not violate the discharge injunction pursuant to 11 U.S.C. § 524(a)(2).

I. Jurisdiction

This Court has jurisdiction pursuant to 28 U.S.C. § 1334(b). This matter is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A), (G), and (0).

II. Facts and Procedural History

John and Treena Lienhard filed their voluntary petition for Chapter 7 protection on July 26, 2011. The Chapter 7 Trustee reported to the Court that this was a no asset case on August 30, 2011, and they subsequently received their discharge on October 31, 2011.

Prior to their discharge being entered, the Plaintiff filed this Adversary Proceeding on her own behalf. Her Complaint, dated October 26, 2011, states a claim against the Defendant for a violation of the automatic stay pursuant to 11 U.S.C. § 362(k).2 It alleges that the Defendant received notice of the Plaintiffs bankruptcy filing on July 30, 2011, as did the rest of her creditors. Pl.’s Compl. ¶ 7. Notwithstanding this notice, the Defendant mailed billing statements to the Debtor’s residence on or about August 25, 2011 (“Bill 1”), and September 28, 2011 (“Bill 2”). Id. at ¶ 9. Upon receipt of Bill 1 and Bill 2, the Plaintiff alleges that she suffered the following damages: 1) anxiety; 2) nervousness; 3) fear; 4) worry; 5) intimidation; 6) emotional distress; and, 7) loss of income. Id. at ¶ 10.

Lehighton filed its responding paper, i.e. Answer, Affirmative Defenses, and Counterclaim of Defendant (“Answer”), on November 23, 2011. Among the affirmative [446]*446defenses listed in the Answer, the Defendant claims it had no actual notice of the Lienhards’ bankruptcy until October 6, 2011, a date after both bills were sent. Def.’s Answer 4. On this date, Plaintiffs counsel personally informed Lehighton of the bankruptcy filing. Id. at 5. Counsel gave notice in person because his office is allegedly “close to Defendant’s place of business.” Ibid. Additionally, the Defendant claims to have discontinued all collection efforts once it received the notice of the bankruptcy filing on October 6, 2011. Id. at 6.

The Answer also includes a counterclaim which sought to reinstate a debt already discharged by this Court in the amount of $1,080.36. Lehighton provided an “advanced life support transport” to the Debt- or on June 4, 2011. Id. at 7. An invoice for these services was sent to the Debtor’s insurer. Ibid. Instead of paying Lehigh-ton directly, the insurer forwarded a check to the Debtor on July 11, 2011, for the specific purpose of paying Lehighton. Ibid. The Defendant alleges that the Debt- or converted the check upon receipt and failed to remit any portion to it. Id. at 8. Lehighton contends that the funds should have been held in trust for them and not discharged in Plaintiffs bankruptcy. Ibid.

On December 13, 2011, Plaintiff filed her response to the Answer: a Motion to Dismiss and Motion to Strike Defendant’s Counterclaim (“Motion to Strike”). The Motion to Strike has a unique basis in that it claims the counterclaim, on its own, “is an attempt to collect a debt discharged in Debtor’s bankruptcy.” Def.’s Mot. to Strike ¶ 8. Hence, the Plaintiff contends that the mere filing of the counterclaim is in direct violation of the discharge injunction under § 524(a)(2), id. at ¶ 17, and thus, originates a contempt claim against the Defendant. Plaintiff filed a Motion for Contempt Citation and Damages (“Contempt Motion”) in the Debtors’ Chapter 7 case on that same day. The Contempt Motion alleges a violation of the discharge injunction on the same grounds given in the Motion to Strike and seeks the reward of damages and attorney’s fees.

Defendant’s answers to both the Motion to Strike and Contempt Motion were filed on January 9, 2012, in the Adversary Proceeding and the Chapter 7 case, respectively. Along with its general answers and denials to the statements made in the Motion to Strike, Lehighton defends its right to file the counterclaim on the same proposition as before: Lehighton has legal and equitable title to the funds from the insurer. Def.’s Answer to Pl.’s Mot. to Strike ¶¶ 5-6, 8-9, 14. The Defendant bases its argument on the fact that the counterclaim was only filed after the Plaintiff had filed the instant Adversary Proceeding; one day after the dischargeability claim deadline had run. Id. at ¶ 14. Up until notice of the Complaint, the Defendant was unaware of the payment by the insurer to the Debtor, and had no opportunity to compel its return; therefore, the argument goes, the counterclaim was the Defendant’s first opportunity to assert its rights. Id. at ¶¶ 5, 14. In the alternative, Lehighton states that the counterclaim can be treated as a request for a relief from stay pursuant to the ruling in Creative Conservation, Inc. v. Northern Lehigh School District (In re Creative Conservation, Inc.), No. 91-0734S, 1991 WL 261706 (Bankr.E.D.Pa. Dec. 5,1991).

A few weeks later, the Defendant changed course and filed its Motion to Permit Amended Answer and Affirmative Defenses and to Withdraw Counterclaim. Filed with this Motion was a draft version of an amended answer which retained all affirmative defenses in the original Answer but removed the counterclaim language. Def.’s Mot. to Permit Am. Answer Ex. A. [447]*447However, the “Wherefore clause” which originally followed the counterclaim remained in the paper. Its existence essentially prayed for the same relief notwithstanding the removal of the counterclaim grounds. The error in this filing led to the Plaintiffs filing another Motion to Strike the same day. Eventually, the Defendant filed an Amended Motion to Permit Amended Answer, on February 2, 2012, to correct the error.

At this point, the Court proposed mediation with the hope to bring the parties to a mutually agreeable settlement. This effort bore no fruit as the Defendant filed correspondence on March 6, 2012, stating the parties agree that mediation “will serve little purpose.” Def.’s Correspondence Regarding Mediation, Mar. 6, 2012. The Court Appointed Mediator filed a report stating same a few days later.

A trial on the merits was held on February 22, 2013. At the beginning of the hearing, all sides agreed to a consolidated record on both the Adversary Proceeding and the Contempt Motion. Trial Tr. 5:6-18.

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498 B.R. 443, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lienhard-v-lehighton-ambulance-assn-in-re-lienhard-pamb-2013.