Washington v. Abreu (In re Abreu)

IN RE: FRANKLIN ABREU, Debtor,

LILLIAN L. WASHINGTON, Plaintiff, v. FRANKLIN ABREU, Defendant.

CASE NO. 19-53827-WLH

ADVERSARY PROCEEDING NO. 19-5301-WLH

UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION

February 1, 2021

IT IS ORDERED as set forth below:

CHAPTER 7

ORDER ON COMPLAINT

THIS MATTER is before the Court on the complaint which seeks a determination a state court judgment against the Debtor is not dischargeable pursuant to sections 523(a)(3)(B) and 523(a)(6) of the Bankruptcy Code. The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334, and this proceeding is a core matter pursuant to 28 U.S.C. § 157(b)(2)(I). For the reasons given below, the Court finds Ms. Washington's debt is nondischargeable in part.

I. FACTS

Lillian L. Washington ("Ms. Washington") and Franklin Abreu ("Mr. Abreu") met online in 2012. Mr. Abreu has been employed by MARTA as an electronic technician since at least 2012 but, at the time the parties met, Mr. Abreu was homeless and would often sleep at work or rent hotel rooms. In June 2012, Ms. Washington invited Mr. Abreu to her home located at 3607 Heritage Estates, Lithonia, Georgia 30038. Mr. Abreu came to stay with Ms. Washington and ultimately ended up living with her for three years. Mr. Abreu moved out in May 2015.

After several months, when it became clear Mr. Abreu's stay was not temporary, Ms. Washington asked Mr. Abreu to pay her rent to help cover her mortgage and other expenses. The parties did not have a written agreement regarding rent. While Mr. Abreu says he agreed to contribute to the household as he could by paying for other items such as utilities, Mr. Abreu made no rent payments until May 2013. The parties discussed paying $200-$400 a month. At some point, he agreed to pay her $500 a month rent. He then began making payments to Ms. Washington somewhat regularly, though he missed a payment in December 2013. The amount he paid each month varied. The payments were mostly $500 until May 2014, at which point Ms. Washington requested Mr. Abreu pay more. He then paid $1,200, reportedly for May and June 2014 rent. Mr. Abreu paid Ms. Washington in July 2014, but he did not make a payment in August and September 2014. Mr. Abreu continued to make inconsistent payments to Ms. Washington of $600 a monthon average until February 2015. Mr. Abreu missed a payment in January 2015, and he paid no rent for March, April, and May 2015. At one point, Ms. Washington asked Mr. Abreu to pay $750 a month. He responded he would move out rather than pay that amount. On May 1, 2015, the parties executed a verification of rent, which Mr. Abreu submitted to rent an apartment of his own, stating he had paid monthly rent of $550 a month to Ms. Washington.

Ms. Washington added Mr. Abreu to a pre-paid legal plan she had through her employer. The services were intended to provide Mr. Abreu with assistance in ongoing litigation with his former spouse. Ms. Washington contends Mr. Abreu agreed to reimburse her for the added cost associated with coverage but, once benefits were active, Mr. Abreu refused to reimburse her for the benefit. Mr. Abreu denies ever agreeing to reimburse Ms. Washington for the benefit and contends he never asked to be added to the plan.

Ms. Washington contends Mr. Abreu was emotionally and physically abusive during their relationship, which Mr. Abreu vehemently denies. At one point, emotions between the parties flared when Ms. Washington took an iPad from Mr. Abreu. Ms. Washington went into the bathroom and locked the door. Mr. Abreu tried to force the door open and kicked the door open, physically damaging the door and wall in the process. The police were called, though neither Ms. Washington nor Mr. Abreu was present when they arrived at the scene.

While Mr. Abreu was living with Ms. Washington, Ms. Washington purchased a 2005 Cadillac SRX which she allowed Mr. Abreu to drive. Ms. Washington made the monthly payments on the Cadillac. Ms. Washington contends Mr. Abreu purposely damaged the vehicle by driving the car into a parked vehicle; Mr. Abreu denies willfully damaging the car. He admits the car was damaged and the bumper needed to be replaced, but he states he accidentally bumped into a parkedcar. He also states he properly maintained the vehicle and paid for necessary repairs and to replace the bumper.

Once Mr. Abreu moved out in May 2015, Mr. Abreu indicated he was interested in purchasing the vehicle, and Ms. Washington allowed Mr. Abreu to continue using the Cadillac in return for monthly payments. Ms. Washington agreed to waive a few payments in exchange for keeping a dresser and TV owned by Mr. Abreu. After a few months, Ms. Washington asked Mr. Abreu to make the agreed upon monthly payments for the car. The parties did not have a written agreement regarding the vehicle but they both testified to the agreement. Mr. Abreu did not pay for continued use of the car because he believed she had retained some of his property. Ms. Washington swore out an arrest warrant and the car was ultimately returned to Ms. Washington in November 2015.

Ms. Washington filed a lawsuit against Mr. Abreu in magistrate court in November 2015. The DeKalb County Magistrate Court entered a judgment in favor of Ms. Washington, which Mr. Abreu appealed. The State Court of DeKalb County, Georgia held a bench trial and entered a judgment on August 16, 2018 in favor of Ms. Washington for $9,000. The judgment is comprised of $4,200 for back rent, $1,800 for the use of the Cadillac, $1,571.69 for the insurance benefits Ms. Washington paid, $700 for the door and wall damage, $220 for court costs, and $500 for the deductible for damage to the Cadillac.

Mr. Abreu filed for relief under Chapter 7 of the bankruptcy code on March 8, 2019. While Ms. Washington was listed as a creditor on Schedule D and Mr. Abreu's creditor matrix, the petition did not include an address for her. Consequently, Ms. Washington was not served with the notice of meeting of creditors and the deadline to file a complaint to object to thedischargeability of a particular debt and/or the Mr. Abreu's discharge, which was June 7, 2019. (See Bankr. Doc. No. 8.)

Mr. Abreu filed a motion to avoid Ms. Washington's judicial lien on May 28, 2019 with a certificate of service showing Ms. Washington was served (Bankr. Doc. No. 13). The Court entered an order denying the motion to avoid lien without prejudice on June 27, 2019 (Bankr. Doc. No. 16). The Court vacated the order on July 11, 2019 (Bankr. Doc. No. 18), and an order granting the motion to avoid lien was entered on July 12, 2019 (Bankr. Doc. No. 19). All the orders show Ms. Washington on the distribution list. Ms. Washington filed a motion to reconsider the order granting the motion to avoid lien on July 26, 2019 (Bankr. Doc. No. 23). She filed an objection to dischargeability in the main bankruptcy case on July 29, 2019 (Bankr. Doc. No. 25). On September 10, 2019, Ms. Washington initiated this adversary proceeding by filing the complaint seeking a determination the $9,000 judgment against Mr. Abreu is nondischargeable pursuant to sections 523(a)(3) and 523(a)(6) of the Bankruptcy Code. Mr. Abreu answered the complaint and filed a counterclaim for attorney's fees.

The Court held a trial on the complaint on January 20, 2020. Ms. Washington, Mr. Abreu, and Mr. Abreu's counsel (Louis McLendon) appeared by video. After considering the evidence presented and argument of the parties, the Court took the matter under advisement.

II. ANALYSIS

A presumption exists all debts owed by the debtor are dischargeable unless the party contending otherwise proves nondischargeability. 11 U.S.C. § 727(b). The purpose of this "fresh start" is to protect the "honest but unfortunate" debtor. U.S. v. Fretz (In re Fretz), 244 F.3d 1323, 1326 (11th Cir. 2001). Exceptions to discharge are, therefore, narrowly construed against the creditor and in favor of the debtor, and the burden is on the creditor to prove nondischargeabilityby a preponderance of the evidence. Grogan v. Garner, 498 U.S. 279, 287-88 (1991); St. Laurent v. Ambrose (In re St. Laurent), 991 F.2d 672, 680 (11th Cir. 1993).

a. Section 523(a)(3)

Ms. Washington seeks a determination the debt owed by Mr. Abreu is nondischargeable pursuant to section 523(a)(3)(B), which provides a claim is not discharged if it is:

(3) neither listed nor scheduled under section 521(1) of this title, with the name, if known to the debtor, of the creditor to whom such debt is owed, in time to permit—

(B) if such debt is of a kind specified in paragraph (2), (4), or (6) of this subsection, timely filing of a proof of claim and timely request for a determination of dischargeability of such debt under one of such paragraphs, unless such creditor had notice or actual knowledge of the case in time for such timely filing and request[.]

11 U.S.C. § 523(a)(3)(B). Pursuant to this section, a debt may be excepted from discharge if the creditor has a debt that was neither listed nor scheduled, had no actual knowledge of the bankruptcy case prior to the deadline for filing a nondischargeability complaint, and has a claim of the type specified in section 523(a)(2), (4), or (6).

"An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections." Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950). The notice must not only reasonably convey the required information, but it must also "afford a reasonable time for those interested to make their appearance." Id. at 314. "A key function of the notice provided to a creditor in a bankruptcy proceeding is to give the creditor the opportunity to file a proof of claim and, where the debt is potentially nondischargeable, to request a determination of...