Walnut Meadows, LLC v. Tzabari (In re Tzabari)

622 B.R. 332

IN RE Shai TZABARI, Debtor

Walnut Meadows, LLC, Plaintiff

v.Shai Tzabari, Defendant

Bky. No. 18-15854 ELF

Adv. No. 19-026

United States Bankruptcy Court, E.D. Pennsylvania.

Signed November 4, 2020

Yun Lee, Daniel Francis Schranghamer, GSP Management Co., Williamsport, PA Lawrence S. Rubin, Lawrence S. Rubin, Atty., Media, PA for Plaintiff.

Yun Lee, GSP Management Co., Williamsport, PA, Lawrence S. Rubin, Lawrence S. Rubin, Atty., Media, PA, for Defendant.

OPINION

ERIC L. FRANK, U.S. BANKRUPTCY JUDGE

I. INTRODUCTION

In this adversary proceeding, Walnut Meadows LLC ("the Plaintiff") objects to the discharge of Debtor Shai Tzabari ("the Debtor"). The Plaintiff alleges that the Debtor failed to read his bankruptcy petition, schedules and statements before filing them and that the disclosures contained numerous false and/or inconsistent statements, all of which rises to the level of a "false oath or account" under 11 U.S.C. § 727(a)(4)(A).

Alternatively, the Plaintiff seeks a determination that its claim against the Debtor is nondischargeable under 11 U.S.C. § 523(a)(6). The Plaintiff alleges it suffered a willful and malicious injury when the Debtor knowingly and intentionally stored his manufactured home on a Walnut Meadows lot for almost three (3) years without paying ground rent or storage fees.

The Debtor answered the complaint on February 17, 2019. This court conducted a trial of this adversary proceeding on November 25, 2019. Thereafter, the parties submitted proposed findings of fact and conclusions of law in support of their positions, the last of which was filed on January 24, 2020.

For the reasons set forth below, I find the Plaintiff has failed to prove its case under either 11 U.S.C. § 523(a)(6) or 11 U.S.C. § 727(a)(4)(A). Therefore, I will enter judgment in the Debtor's favor.

II. FINDINGS OF FACT

Based on the credibility and demeanor of the trial witnesses, the plausibility of their testimony, the existence of corroborating circumstantial, testimonial or documentary evidence, the totality of the evidentiary record presented at the trial, and my consideration of the parties' posttrial submissions, I make the following findings of fact:

Debtor Shai Tzabari

1. The Debtor was born in Israel and arrived as an adult in the United States in May 1991. (Audio 1:08:23; Audio 1:09:03).¹

2. The Debtor does not speak English fluently and does not read English well. (Audio 1:08:47).

3. The Debtor's first language is Hebrew. The Debtor understands and speaks English, but not with the fluency of a natural speaker. He required the use of a translator, his wife Mrs. Tzabari ("Mrs. Tabari"), to fully participate at trial. (Audio 1:05:13).² The Debtor is able to read some English. (Audio 2:00:23). The Debtor speaks English with his customers. (Audio 2:03:05).

4. The Debtor labors as a handyman. Mrs. Tzabari, does the paperwork for the Debtor's handyman business and handles the family's household and financial affairs (Audio 1:09:40; Audio 2:07:50 – Audio 2:09:50).

5. During both state court proceedings and bankruptcy proceedings, the Debtor was diagnosed with cancer and was receiving treatments. (Audio 1:37:42; Audio 2:11:04).

Walnut Meadows

6. Walnut Meadows is a manufactured home community in Harleysville, PA. (Joint Pre-Trial Statement ¶4.b.; Audio 3:20).

7. Tenants of Walnut Meadows own their mobile homes while paying ground rent to the Plaintiff for the privilege of locating their homes on a lot in Walnut Meadows. (Joint Pre-Trial Statement ¶4.c.).

8. Ms. Andrea Johnson is currently employed with GSP Management as a regional manager and was the Walnut Meadows' manager at the time the Debtor owned the mobile home. (Audio 2:42; Audio 3:00).

9. Ms. Johnson is licensed by the Commonwealth of Pennsylvania as vehicle salesperson and, as such, may engage in the sale and resale of mobile homes. (Audio 44:31).

10. In November 2019, the lots in Walnut Meadows were 100% occupied. (Audio 3:32).

11. From 2015 and 2019, Plaintiff charged residents between rent at the range between $720 and $777 per month. (Audio 4:02).

12. A Walnut Meadows homeowner who wishes to dispose of a mobile home may sell the mobile home, tow the mobile home out of Walnut Meadows, or demolish the mobile home. (Audio 6:00).

13. If a Walnut Meadows homeowner sells his mobile home, the purchaser must be approved by the Plaintiff before moving into the community. (Audio 6:15).

14. The Plaintiff does not allow mobile homeowners to store their homes in the community; the Plaintiff wants homeowners to live in the community. (Audio 6:50).

The Debtor's Ownership of the Mobile Home

15. On October 15, 2015, the Debtor purchased a mobile home at a tax sale conducted by the Montgomery County Tax Claim Bureau. (Joint Pre-Trial Statement ¶4.a.).

16. The home was located on a lot in Walnut Meadows. (Joint Pre-Trial Statement ¶4.b.; Audio 3:17).

17. The Debtor purchased the mobile home at the Sheriff's sale believing he was buying a house and land. (Audio 1:19:11; Audio 1:21:05).

18. After he purchased the mobile home, the Debtor discovered it was uninhabitable and unsaleable due to mold. (Audio 1:24:48).

19. When the Debtor purchased the mobile home, he was not aware that he would have to pay rent. (Audio 1:23:47).

20. A few months after Debtor purchased the mobile home, Ms. Johnson contacted the Debtor and informed him that he was required to pay rent to keep the mobile home in the community and that the Plaintiff would work with him so that the Debtor could either: (a) fix the mobile home so that it could be sold, (b) tow the mobile home from the community, or (c) demolish the mobile home. (Audio 8:13).

21. Ms. Johnson informed the Debtor he was required to sign a lease to keep the mobile home in the community, but the Debtor never signed a lease. (Audio 9:50).

22. The Debtor offered to pay rent while he fixed up the mobile home, but the Debtor did not pay any rent or other fees to the Plaintiff (Audio 8:53; Audio 31:10).

23. The Debtor offered the mobile home to Walnut Meadows for free. (Audio 1:24:48).

24. The Debtor then offered the mobile home on Craigslist for free. (Audio 1:25:35; Audio 1:25:47; Audio 1:26:25). The Debtor received only one response. (Audio 1:26:35).

25. On January 12, 2016, the Debtor entered into an agreement whereby a purchaser would remove the mobile home from Walnut Meadows. (Audio 1:27:38). The purchaser backed out of the deal with Debtor when the purchaser discovered how much it would cost to remove the mobile home, which caused the Debtor to relist the property on Craigslist. (Audio 1:28:11; Audio 1:28:36).

26. After Walnut Meadows filed a lawsuit against him, the Debtor engaged an attorney to help him sell the mobile home. (Audio 1:29:10). An entity known as Mustard House Branch Trust Limited ("Mustard House") acquired the mobile home from the Debtor. (Audio 35:09). The Debtor signed some papers and the attorney told him the mobile home had been sold. (Audio 1:29:25).

27. The deed to the mobile home was dated August 21, 2016. (Audio 1:30:31). The Debtor relied upon his attorney to handle the sale of the mobile home and to notify Walnut Meadows and the court of common pleas of the sale. (Audio 1:31:02).

28. After the transfer of the mobile home to Mustard House, the Debtor was unable to continue paying his lawyer's fees. (Audio 1:32:15).

29. At some point after the Plaintiff commenced litigation against the Debtor, Ms. Johnson was advised by the Plaintiff's legal counsel that the Debtor no longer owned the mobile home because it had been sold. (Audio 13:38).

State Court Actions

30. The Plaintiff originally filed an action against the Debtor before the District Justice in Harleysville. The Debtor and his attorney appeared at the District Justice hearing. The District Justice dismissed the action because the Plaintiff had filed it in the wrong court. (Audio 41:43).

31. On June 20, 2016, the Plaintiff initiated a civil action against the Debtor in the Court of Common Pleas of Montgomery County ("the CP Court"), alleging claims of ejectment, trespass, and unjust enrichment. (Joint Pre-Trial Statement ¶4.g.).

32. On September 26, 2017, the CP Court entered a default judgment in the amount of $14,047.92 in favor of the Plaintiff and against the Debtor, awarded the Plaintiff possession of the lot, and ordered the Debtor to remove the home from the lot within 30 days. (Joint Pre-Trial Statement ¶4.h.).

33. The Debtor did not remove the home from the lot in compliance with the CP Court's September 26, 2017 Order. (Id. ).

34. On July 12, 2018, the CP Court granted the Plaintiff's contempt motion by default, authorized the Plaintiff to demolish the mobile home, awarded the Plaintiff $5,000 in removal costs, and increased the judgment in favor of the Plaintiff as a result of additional storage fees to $23,972.14. (Joint Pre-Trial Statement ¶4.j.).

35. On August 14, 2018, following the Debtor's failure to remove the home from Walnut Meadows, the CP Court entered an amended judgment of $28,972.14 in favor of the Plaintiff and against the Debtor. (Joint Pre-Trial Statement ¶4.k.).

36. The Debtor did not appeal the CP Court's judgment and orders. (Joint Pre-Trial Statement ¶¶4.i., 4.l.).

37. The Debtor did not participate in the proceedings before the CP Court because he did not have any money to pay a lawyer and he did not think his English was good enough. (Audio 1:36:43; Audio 2:12:05).

38. The Plaintiff continued the litigation against the Debtor after it was notified that Mustard House was the owner of the mobile home, (Audio 35:30), but the Debtor did not provide Ms. Johnson with a copy of the quit claim deed transferring the mobile home to Mustard House. (Audio 45:37).

39. When the CP Court ordered the Debtor to remove the mobile home, he did not think he was legally entitled to remove the mobile home because he believed he no longer owned the mobile home. (Audio 1:40:29). In any event, the Debtor did not have the money to remove the mobile home. (Audio 1:36:03).

40. The

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