UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT ...

UNITED STATES BANKRUPTCY COURT

FOR THE NORTHERN DISTRICT OF OHIO

In Re:

Timothy/Pamela O¡¯Connor

Debtor(s)

)

)

)

)

)

)

JUDGE RICHARD L. SPEER

Case No. 08-36756

DECISION AND ORDER

This cause comes before the Court on two related matters: (1) The Debtors¡¯ Motion for

Contempt Against the City of Toledo, Department of Public Utilities; and (2) the Debtors¡¯ Objection

to the Claim of the City of Toledo, Department of Public Utilities. (Doc. Nos. 54 & 70). On each of

these matters, the City of Toledo filed a response. (Doc. Nos. 56 & 70). For these matters, the Court

held two hearings, at which time the Parties presented evidence to the Court. (Doc. Nos. 63, 64, 77

& 78). After considering the evidence presented, together with the respective arguments made by the

Parties, the Court finds, for the reasons set forth below, that the Debtors¡¯ Motion for Contempt should

be Granted, and that the Debtors¡¯ Claim Objection should be Sustained.

FACTS

On December 12, 2008, the Debtors, Timothy and Pamela O¡¯Connor, filed a petition in this

Court for Relief under Chapter 13 of the United States Bankruptcy Code. (Doc. No. 1). With their

bankruptcy filing, the Debtors submitted a proposed Chapter 13 plan. (Doc. No. 4). Among its terms,

the Debtors¡¯ plan provided that property of the estate shall revest in the Debtors upon confirmation.

Id. This plan was confirmed by the Court on April 2, 2009. (Doc. No. 22).

At the time they filed their petition for relief, the Debtors obtained water service from the City

of Toledo, Department of Public Utilities (hereinafter the ¡°City of Toledo¡±). To this day, the Debtors

continue to receive their water service from the City of Toledo. For the water service, the City of

In re: Timothy/Pamela O¡¯Connor

Case No. 08-36756

Toledo bills the Debtors on a quarterly basis, with the quarterly invoices sent to the Debtors charging

between $200.00 and $400.00.

When they filed their petition for bankruptcy relief, the Debtors did not disclose the City of

Toledo as a creditor in their case; nor was the City of Toledo provided for in the Debtors¡¯ Chapter

13 plan. The circumstances in this regard show that, at the time the Debtors sought bankruptcy relief,

they were current on their obligation to the City of Toledo and that afterwards the Debtors continued

to pay the City of Toledo in the ordinary course. (Doc. No. 77, Ex. C-III).

In 2010, the City of Toledo discovered that, because of incorrect meter readings, it had been

undercharging the Debtors for its water service. To correct the deficiency, the City of Toledo

installed a new water meter at the Debtors¡¯ residence. The initial installation of the meter, however,

was defective ¨C it was installed backwards ¨C and had to be corrected. In October of 2010, once the

new water meter had been correctly installed, the City of Toledo sent to the Debtors a revised water

bill for the sum of $2,033.37. (Doc. No. 77, Ex. C-IV.). After receiving the revised water bill, the

Debtors contacted the City of Toledo to arrange a procedure for payment. (Doc. No. 77, Ex. B).

On November 1, 2010, the Debtors filed a motion to modify their Chapter 13 plan. (Doc. No.

33). As the basis for their Motion, the Debtors set forth that they ¡°have incurred additional medical

bills and a disputed post-petition water bill, out of necessity, for which an Amendment is being filed

herewith.¡± Id. Consistent with this statement, the Debtors then amended their bankruptcy schedules

so as to include the City of Toledo as an unsecured creditor. (Doc. No. 34). The Debtors listed the

amount of the unsecured claim held by the City of Toledo as $2,033.37. On November 1, 2010, the

Attorney for the Debtors, Gordon Barry, certified that he sent notice of the Debtors¡¯ amended plan

Page 2

In re: Timothy/Pamela O¡¯Connor

Case No. 08-36756

and schedules to the City of Toledo, utilizing the address the City of Toledo provides on the invoices

it sends to the Debtors for the remittance of payment.1 (Doc. No. 33 & 34).

On January 5, 2011, the Debtors personally informed the City of Toledo that they had filed

for bankruptcy relief. Id. One week later, Debtors¡¯ attorney, Gordon Barry, contacted the City of

Toledo at which time Attorney Barry informed the City of Toledo that it had amended the Debtors¡¯

Chapter 13 plan. Id. On February 17, 2011, the City of Toledo formally filed a notice of appearance

in the Debtors¡¯ bankruptcy case. (Doc. No. 51).

On February 1, 2011, the Court entered an order, confirming the Debtors¡¯ amended Chapter

13 plan. (Doc. No. 43). In this Order it was first provided that ¡°commencing November, 2010, the

Debtors¡¯ Plan will include the additional bills listed in their Amendment filed November 1, 2010.¡±

Id. The Order then further provided that ¡°new creditors shall have ninety (90) days from the date of

this Order to file their proof of claim.¡± Id.

On April 21, 2011, the City of Toledo filed a proof of claim in the amount of $679.05. Later,

on November 14, 2011, this claim was amended to the amount of $654.05. (Cl. No. 20). As

consideration for this claim, the City of Toledo set forth that it constituted water services extended

to the Debtors for the prepetition period of June 14, 2008 through December 12, 2008. Id. On

November 7, 2011, the Debtors objected to the amended proof of claim, ¡°for the reason that they

believe they do not owe it.¡± (Doc. No. 70).

After their amended plan was confirmed by the Court, the Debtors continued to receive billing

statements from the City of Toledo, demanding that the Debtors pay all outstanding sums due on their

water bill. These statements included the following correspondences:

1

Department Of Public Utilities, 420 Madison Ave Ste. 100, Toledo, Ohio 43604.

Page 3

In re: Timothy/Pamela O¡¯Connor

Case No. 08-36756

A water bill dated March 2, 2011, showing an amount due of $3,129.94.

A water bill dated March 4, 2011, showing an amount due of $1,709.26.

A water bill dated March 15, 2011, showing a current charge of $229.64, and

a total amount due of $1,938.90.

On April 11, 2011, a ¡°Reminder Notice¡± was sent to the Debtors, seeking to

collect the sum of $1,794.72.

On April 21, 2011, a ¡°Final Notice Prior to Disconnection¡± was sent to the

Debtors, demanding that they pay the sum of $1,794.72 by May 3, 2011.

On September 7, 2011, a ¡°Reminder Notice¡± was sent to the Debtors, seeking

to collect the sum of $1,809.94.

(Doc. No. 63. Ex. 7).

DISCUSSION

Before this Court is the Debtors¡¯ Motion for Contempt against the City of Toledo and the

Debtors¡¯ Objection to the Claim of the City of Toledo. The Debtors¡¯ Motion for Contempt alleges

the City of Toledo violated the automatic stay of 11 U.S.C. ¡ì 362(a) and that the City of Toledo has

disregarded this Court¡¯s order confirming the Debtors¡¯ amend Chapter 13 plan. Matter concerning

a violation of the automatic stay and orders regarding the confirmation of a plan are deemed to be

core proceedings pursuant to 28 U.S.C. ¡ì¡ì 157(b)(2)(G)/(L). In addition, a matter concerning the

allowance or disallowance of a claim against the estate is deemed to be core proceeding pursuant to

28 U.S.C. ¡ì 157(b)(2)(B). Accordingly, as all the matters before the Court are ¡°core proceedings,¡±

this Court has jurisdiction to enter final orders and judgments in this matter. 28 U.S.C. ¡ì 157(b)(1).

Page 4

In re: Timothy/Pamela O¡¯Connor

Case No. 08-36756

Motion for Contempt

The first matter before the Court is the Debtors¡¯ Motion to hold the City of Toledo in

Contempt. At its center, this Motion is predicated on a number of billing statements and notices

regarding the termination of service issued by the City of Toledo after the Debtors¡¯ amended Chapter

13 plan had been confirmed by the Court. According to the Debtors, the issuance of these

statements/notices is actionable because they seek to recover amounts owed on their water bill which

had been included in their amended Chapter 13 plan.

Liability against the City of Toledo is predicated on two legal grounds: (1) a violation of the

automatic stay as set forth in 11 U.S.C. ¡ì 362(a); and (2) contempt, with the Debtors alleging that the

City of Toledo disregarded this Court¡¯s Order confirming the Debtors¡¯ amend Chapter 13 plan. (Doc.

No. 54). Beginning with automatic stay, each of these grounds is now addressed.

Pursuant to ¡ì 362(a) of the Bankruptcy Code, an automatic stay arises upon the

commencement of a bankruptcy case. The stay arises as a matter of law; no formal notice or service

of process is required for the stay to have effect. 11 U.S.C. ¡ì 362(a); Smith v. First America Bank,

N.A., 876 F.2d 524, 526 (6th Cir.1989). The stay is effective against ¡°all entities,¡± including

municipalities such as the City of Toledo. 11 U.S.C. ¡ì 362(a), ¡ì 101(15) (defining entity to include

a ¡°governmental unit.¡±); 11 U.S.C. ¡ì 101(27) (defining a ¡°governmental unit¡± to include ¡°a

municipality¡±).

A creditor who violates the automatic stay may be held in contempt. Furthermore, it is

provided in ¡ì 362 that an individual debtor injured by a creditor¡¯s willful violation of the stay is

entitled to an award of damages. 11 U.S.C. ¡ì 362(k)(1). Such an award must include an assessment

against the creditor of a debtor¡¯s actual damages, including costs and attorney fees, and in appropriate

circumstances, it may include an award of punitive damages. Id.

Page 5

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download