Hamby v. Fouts (In re Hamby)

646 B.R. 865

IN RE: Cole Dalton HAMBY, Debtor.

Cole Dalton Hamby, Plaintiff,

v.Richard Fouts, Richard Fouts, Jr., Everybody Rides Auto Sales, LLC, Greenlight Lending, LLC, and Does 1-10, Defendants.

CASE NO. 22-40467-PWB

ADVERSARY PROCEEDING NO. 22-4015-PWB

United States Bankruptcy Court, N.D. Georgia, Rome Division.

Signed November 29, 2022

Jeffrey B. Kelly, Law Office of Jeffrey B. Kelly, P.C., Rome, GA, for Plaintiff.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

Paul W. Bonapfel, United States Bankruptcy Judge

After Cole Dalton Hamby filed a Chapter 13 bankruptcy petition, his vehicle, a 2012 GMC Sierra, was repossessed. Mr. Hamby had purchased the car from Everybody Rides Auto Sales, LLC ("Everybody Rides"), a "buy here, pay here" business, and listed Everybody Rides as the holder of a security interest in it on his schedules.

After the repossession, Greenlight Lending, LLC ("Greenlight Lending") sent Mr. Hamby a demand letter for payment of the debt owed on the vehicle. Richard A. Fouts, Jr., also known as Richard Fouts, Jr., Richard A. Fouts and Richard Fouts ("Mr. Fouts"), is the principal, if not the sole, owner and manager of Everybody Rides and Greenlight Lending.

On April 28, 2022, the Court entered an Order requiring Mr. Fouts, Everybody Rides, and Greenlight Lending (collectively, the "Defendants") to return the vehicle to Mr. Hamby and imposed a coercive sanction of $ 100 per day for each day that the vehicle was not returned. [22-4015, Doc. 10]. The Defendants did not return the vehicle.

On October 26, 2022, the Court held a trial on Mr. Hamby's claim for damages under 11 U.S.C. § 362(k) for violation of the automatic stay of § 362(a) and the Court's April 28 Order.

At the trial, the Court heard testimony from Mr. Hamby, and Lacey Kinghorn, a paralegal for the Law Office of Jeffrey B. Kelly, P.C., Mr. Hamby's counsel. None of the Defendants appeared for trial despite notice sent by U.S. Mail to each of them at multiple addresses. The testimony of the witnesses and the record in this case establish that no facts are in dispute.

Based on the findings of fact and conclusions of law announced on the record at the end of the trial and as set forth below, the Court will enter judgment against Everybody Rides Auto Sales, LLC, Greenlight Lending, LLC, and Richard A. Fouts, Jr., a/k/a Richard Fouts, Jr., Richard A. Fouts and Richard Fouts ("Mr. Fouts"), jointly and severally, for violation of the automatic stay and this Court's April 22 Order for monetary damages of $ 36,665.19, itemized as follows: (1) $1,133.46 for the value of personal property in the vehicle that the Defendants did not return; (2) punitive damages of $ 17,800, representing a penalty of $ 100 per day for 178 days between entry of the April 22 Order and the date of trial for failure to return the vehicle; (3) punitive damages of $ 14,732.53, representing the amount of the debt claimed on the vehicle; and (4) $ 3,000 for Mr. Hamby's attorney's fees. In addition, the Court will order the cancellation of the lien on the vehicle and prohibit collection of the debt as a personal liability of Mr. Hamby.

I. Findings of Fact

On April 15, 2022, Mr. Hamby filed a chapter 13 bankruptcy petition. At the time of the bankruptcy filing, he was in possession of the vehicle, a 2012 GMC Sierra, purchased and financed by Everybody Rides, a "buy here, pay here" car lot. When he purchased the vehicle, he met Richard Fouts who told him he was the owner of Everybody Rides. Prior to filing bankruptcy, Mr. Hamby made bi-weekly payments on the vehicle either in cash or by debit card. When Mr. Hamby paid with his debit card, the charge showed the payee as Everybody Rides.

Mr. Hamby listed Everybody Rides as a creditor in his bankruptcy schedules. Lacey Kinghorn, a paralegal working for his attorney, testified that she made her first call to Everybody Rides on April 15, 2022, but was told to call back. On April 19, 2022, Ms. Kinghorn called Everybody Rides again and sent notice of the bankruptcy filing to it by fax and electronic mail.

The Bankruptcy Noticing Center, the entity that provides notices issued by the Clerk of the Bankruptcy Court or the Bankruptcy Court itself, sent notice of the commencement of the case with various deadlines and instructions to Everybody Rides and other creditors by first class mail on April 20, 2022.

On April 21, 2022, two days after Ms. Kinghorn called Everybody Rides to advise of the bankruptcy filing, Mr. Hamby returned home and discovered the vehicle was gone. Assuming that it was repossessed, Mr. Hamby called Everybody Rides twice. In response to the second call, an Everybody Rides representative told him not to call back.

Around this same time, Mr. Hamby received a "10-Day Demand Letter for Payment" (the "Letter") dated April 21, 2022, from Green Light Lending, 100 Sentinae Close, Atlanta, GA 30350. The Letter states, "THIS IS AN ATTEMPT TO COLLECT A DEBT. AMOUNT DUE $14,732.53. YOU HAVE 10 DAYS TO PAY ENDING ON May 1^st, 2022."

The Letter further states:

Dear Mr. Hamby,

You currently have an outstanding balance with Green Light Lending in the amount of $14,732.53. The outstanding balance is in regard to: 2012 GMC Sierra Vin #3GTP2VE75CG134143. In order to resolve this matter, you shall have ten (10) days to pay this debt. The Letter is signed, "R. Fouts."

Mr. Hamby amended his schedules on April 22, 2022, to add Greenlight Lending as a creditor using the address on the Letter as the address for notices.

On April 22, 2022, Mr. Hamby filed a complaint for turnover of the vehicle and damages naming Richard Fouts d/b/a Everybody Rides Auto Sales, LLC, d/b/a Greenlight Lending, LLC, and Does 1-10, as defendants. Lacey Kinghorn testified that before the complaint was filed, she personally called Everybody Rides and that the woman who answered cursed at her and hung up the telephone.

After notice to all Defendants and a hearing, the Court entered an Order on April 28, 2022, [22-4015, Doc. 10 at 4]. The Order provided:

[It is hereby] ORDERED that Richard Fouts, Everybody Rides Auto Sales, LLC, and Greenlight Lending, LLC, and any of their officers, managers, representatives, and agents or other persons acting in active concert or participation with, or on the behalf of, any of them having actual notice of this Order (by personal service, service by first class mail, by e-mail, by facsimile transmission or otherwise), shall (1) comply with the automatic stay of 11 U.S.C. § 362(a) with regard to the Vehicle and (2) return the Vehicle to the Debtor at 457 Law Road Northwest, Cartersville, Georgia 30120, within twenty-four hours of receipt of actual notice of this Order. It is further

ORDERED that, until the Vehicle is returned to the Debtor, any person in violation of this Order shall be liable to the Debtor in the amount of $100 per day for each day after the deadline stated above that the Vehicle has not been returned. This amount is a minimum coercive penalty, and its imposition does not preclude or limit any rights of the Debtor to seek actual or punitive damages for a violation of 11 U.S.C. § 362(a) or this Order. Further, the Court may increase the penalty at a later time if necessary to compel compliance with this Order.

On May 18, 2022, Mr. Hamby filed an amended complaint to set forth further allegations regarding damages and to clarify and add defendants. [Doc. 20]. The amended complaint names Richard Fouts, Richard Fouts, Jr., Everybody Rides Auto Sales, LLC, Greenlight Lending, LLC, Rick Adkins, and Does 1-10. Although counsel served the amended complaint, it does not appear that he obtained and served an alias summons on any of the newly added defendants.

On June 29, 2022, the Court held a hearing via Zoom.gov on Mr. Hamby's Motion for Sanctions for Violation of the Automatic Stay. [Doc. 21]. None of the Defendants appeared. At the hearing, the Court observed that all of the Defendants had been properly served, but expressed concerns because the complaint, amended complaint (without an alias summons), and the motion for sanctions sought varying degrees of relief that, out of an abundance of caution and in consideration of the Defendants’ due process rights, should be consolidated in a second amended complaint and served, with an alias summons, upon each Defendant.

In its July 15, 2022 Order following the June 29 hearing, the Court granted leave to Mr. Hamby to file a second amended and supplemental complaint to set forth all factual statements and relief requested, including an itemized request for damages (that could be supplemented at a future date) with respect to the named Defendants, to obtain an alias summons, and to serve same upon the Defendants in accordance with Rule 7004 of the Federal Rules of Bankruptcy Procedure.

The Court included the following explicit provision in the July 15, 2022 Order [Doc. 22 at 4-5]:

A failure by any Defendant to answer may result in the entry of a monetary judgment against one or all of the Defendants. In other words, if Richard Fouts, Richard Fouts, Jr., Rick Adkins, Everybody Rides Auto Sales, LLC, or Greenlight Lending, LLC, fails to answer the amended complaint, he or it may be personally liable for damages in the discretion of the Court including, but not limited to, the damages requested by the Debtor/Plaintiff.

The Court served this Order on all of the Defendants at all addresses identified.

Mr. Hamby filed a second amended complaint and served it along with an alias summons upon all of the Defendants. [Doc. 28, 30]. None of the Defendants responded to it.

After expiration of the time for a response to the second amended complaint, Mr. Hamby filed a motion for an evidentiary hearing and the Court scheduled the matter for trial on October 26, 2022. The trial notice, served by the Court on all Defendants, again contained an admonition to them [Doc. 32 at 2]:

[It is] FURTHER ORDERED AND NOTICE IS HEREBY GIVEN that the Debtor/Plaintiff seeks compensatory damages, punitive damages, and attorney fees against

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