UNITED STATES BANKRUPTCY COURTNORTHERN DISTRICT OF INDIANA

SOUTH BEND DIVISION

In the Matter of: **

EBERAIA DEMONE FIELDS * Case No. 12-32283 HCDMERRI CHRISTINE FIELDS * Chapter 7

*Debtors *

____________________________________________ **

MERRI CHRISTINE FIELDS **

Plaintiff **

vs. * Adv. Proc. No. 16-3041*

CHRISTY LYNN WADE and DOUGLAS COX **

Defendants *____________________________________________ *

Appearances:Stephen P. Taylor, Esq., 6100 North Keystone, Suite 254, Indianapolis, Indiana46220, attorney for plaintiff.

Andrew M. David, Esq., 208 Fourth Street, Logansport, Indiana 46947, attorney fordefendants.

MEMORANDUM OF DECISION and ORDER

At South Bend, Indiana, March 13, 2018.

This adversary proceeding concerns the violation of the bankruptcy discharge

injunction, 11 U.S.C. § 524(a)(2). On March 6, 2018, the court held a trial on

plaintiff Merri Christine Fields (“Fields”) complaint for injunctive relief due to the

violation of the discharge injunction by defendants Christy Lynn Wade (“Wade”)

and Douglas Cox (“Cox”) (collectively “Defendants”). For the reasons discussed

below the court finds the Defendants have flagrantly violated the discharge

injunction.

Jurisdiction and Venue

The court has subject-matter jurisdiction over this proceeding pursuant to 28

U.S.C. §§ 1334(b), 157(a), and 157(b)(1) and Northern District of Indiana Local Rule

200-1. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(O). Venue is proper

pursuant to 28 U.S.C. § 1409(a). The court makes the following findings of fact and

conclusions of law pursuant to Rule 7052 of the Federal Rules of Bankruptcy

Procedure.

Factual Background

In February 2011 Fields contracted to purchase real property from Wade.

Later, on June 22, 2012, Fields and her spouse filed a joint petition for relief under

chapter 7. See Northern District of Indiana bankruptcy case number 12-32283.

Court records in Fields’ bankruptcy case show that Fields listed Wade as a creditor.

The court issued Fields her discharge on October 1, 2012. Court records, and the

evidence presented at trial on March 6, show that the Bankruptcy Noticing Center

mailed Wade the following notices: Notice of Chapter 7 Bankruptcy Case on June

27, 2012; Notice of Need to File Proof of Claim on September 1, 2012; Discharge of

Debtor on October 4, 2012. The court also notes that the record in Fields’

bankruptcy case shows she entered reaffirmation agreements with several different

2

creditors. Wade was not one of them. The court closed Fields’ bankruptcy case on

April 25, 2013.

Twenty-one months after the closing of Fields’ bankruptcy, Wade filed a

complaint in foreclosure of contract for conditional sale of real estate in Cass

County Superior Court on July 29, 2014, cause number 09D01-1407-CC-218. This

state court action sought foreclosure of the real estate that was the subject of the

February 2011 contract for sale, and a personal judgment against Fields for

$138,923.14, plus interest, costs and expenses, and attorney’s fees of $2,000.00.

Well after she received her bankruptcy discharge, Fields executed a quitclaim deed

in favor of Wade for the subject real estate in February 2016. The record shows that

Fields provided information to the Defendants and the state court concerning her

chapter 7 bankruptcy case in May 2015, and again in February 2016. The state

court held a trial on Wade’s complaint on May 11, 2016. Cox represented Wade at

this state court trial. Fields appeared pro se. On May 25, 2016, the state court

issued an order awarding in personam damages of $15,688.00, plus court costs,

against Fields in favor of Wade.

The Defendants filed a verified motion for proceedings supplemental with the

state court on August 1, 2016, more than 3 and one-half years after Fields received

a discharge from her debts. Fields’ prior bankruptcy attorney again provided

information to the state court and Cox of her chapter 7 bankruptcy. On August 26,

2016, the state court entered a garnishment order requiring Fields employer to

withhold funds from her wages until Wade’s $15,844.00 judgment was satisfied.

3

This garnishment order resulted in Fields’ employer withholding $781.18 from her

wages in 2016.

As a result of the state court proceedings and garnishment instigated by

Wade and Cox, on September 9, 2016, Fields moved to reopen her bankruptcy case

for the purpose of enforcement of the discharge injunction. This court granted the

motion. On September 14, 2016, Fields filed this adversary proceeding.

In their answer to the complaint in this adversary proceeding, filed on

November 14, 2016, the Defendants stated “[Fields] wages were garnished, but said

garnishment was terminated after discussion with [Fields’] counsel. Defendants are

ready to return any funds that were garnished from [Fields’] wages prior to the

termination of said garnishment. … Defendants are releasing any judgment and

have offered to return funds received from the garnishment.” See Defendants’

Answer to Plaintiff’s Complaint, ECF no. 23, at ¶¶ 33 and 36.1

The court originally set the trial in this adversary proceeding for November

14, 2017. The scheduling order required the parties to file a joint pre-trial order,

including a list of exhibits and witnesses, ten days before the scheduled trial date.

On November 3, 2017, Fields’ attorney moved to continue the trial due to family

medical emergencies. Defendants’ attorney consented to a continuance. The court

granted the motion, and rescheduled trial for January 16, 2018. The order granting

the continuance required the parties to file a joint pre-trial order ten days before

1The record at the March 6, 2018 trial in this court established that theDefendants have yet to return the garnished funds to Fields.

4

the rescheduled trial date. On January 12, 2018, the attorney for the Defendants

moved for a continuance of the January 16 trial due to conflicting court hearing

dates. Fields’ attorney consented to a continuance. The court granted the

continuance and rescheduled trial for March 6, 2018. This order required the

parties to file a joint pre-trial order 14 days before the rescheduled trial date.

While the requirement of a joint pre-trial order was noted in three different

scheduling orders, the record in this adversary proceeding does not include any

such joint order. Fields’ attorney filed the Plaintiff’s Final Witness and Exhibit List

on January 11, 2018. See ECF no. 34. The court has received nothing in the way of

a pre-trial order or list of witnesses and exhibits from the Defendants.

At the scheduled time on March 6 the court opened the trial. Counsel for

Fields was present and ready to proceed. No one was present for the Defendants.

The court delayed the start of trial and attempted to contact counsel for the

Defendants. The court was advised that the Defendants’ attorney was in a jury trial

in another court. Counsel for the Defendants did not contact either Fields’ attorney

or this court before the scheduled March 6 trial about a schedule conflict or to

request a continuance. Consequently the court directed counsel for Fields to present

his case.

At trial the court received documentary evidence and heard credible witness

testimony. One of the exhibits received in evidence was a certified transcript of a

state court hearing on proceedings supplemental conducted on August 24, 2016.

This transcript shows that Cox was fully aware of Fields prior bankruptcy filing

5

and discharge. Notwithstanding that knowledge, he continued to press on Wade’s

behalf for the garnishment of Fields wages. The documentary exhibits received at

trial show that $781.19 was withheld from Fields’ wages as a result of garnishment.

Evidence at trial also included records of this court. These records show that Wade

was properly scheduled as a creditor by Fields. Wade was also sent notices of the

meeting of creditors on June 27, 2012, of the need to file proofs of claim on

September 1, 2012, and of Fields’ bankruptcy discharge on October 4, 2012.

Discussion

The discharge of debt in a bankruptcy proceeding “voids any judgment at any

time obtained, to the extent that such judgment is a determination of the personal

liability of the debtor with respect to any debt discharged.” 11 U.S.C. § 524(a)(1).

The state court garnishment judgment obtained by the Defendants imposes

personal liability on Fields for a discharged debt in contravention of § 524(a)(1) and

is void. “The Bankruptcy Code ‘governs the field’ of bankruptcy law and preempts

state law on that basis.” Helman v. Udren Law Offices, P.C., 85 F.Supp.3d 1319,

1329 (S.D. Fla. 2014).

The discharge also “operates as an injunction against the commencement or

continuation of an action, the employment of process, or an act, to collect, recover or

offset any such debt as a personal liability of the debtor.” 11 U.S.C. § 524(a)(2). A

garnishment to collect a pre-petition debt directly violates the discharge injunction.

“[T]he creditor who attempts to collect a discharged debt is violating not only a

statute but also an injunction and is therefore in contempt of the bankruptcy court

6

that issued the order of discharge.” Cox v. Zale Delaware, Inc., 239 F.3d 910, 915

(7th Cir. 2001); see also Reynolds v. Gunite Corp., 2012 WL 3069150, *2 (N.D. Ind.

July 25, 2012) (citing Cox).

Cox, as the attorney representing Wade in the state court garnishment

proceedings, knew or should have known of the significance of a bankruptcy

discharge at the time he was pressing for the garnishment of Fields’ wages. Wade

has received multiple notifications from this court, including Fields’ discharge. The

evidence at trial clearly shows affirmative actions by the Defendants to collect a

discharged debt. See 11 U.S.C. § 524(a)(2). Because of the multiple notices sent to

Wade, the court cannot consider her continuation of efforts to collect a pre-petition

debt as inadvertent or accidental. The record convinces the court the Defendants

took action with full knowledge of Fields’ bankruptcy filing and in complete

disregard of her discharge. The court finds that Wade and Cox are both individually

culpable for the knowing, willful and malicious violation Fields’ discharge

injunction and are in civil contempt. See Cox, 239 F.3d at 915; Butler v. National

Bank (In re Butler), 2011 Bankr. LEXIS 676, *29 (Bankr. C.D. Ill. Mar. 2, 2011).

In their answer to Fields’ complaint, the Defendants acknowledge the

garnished funds they hold belong to Fields and expressed a willingness to return

the monies to her. Nevertheless, as of the current date, more than a year and a half

after the state court garnishment hearing, they continue to withhold these funds,

$781.19, from Fields. The court finds the delay in returning the garnished funds to

Fields a sign of the Defendants’ refusal to acknowledge her bankruptcy discharge.

7

The facts in this adversary proceeding establish their failure to return the

garnished funds as a continuing knowing, willful, and malicious violation of the

discharge injunction.

Fields testified at trial that due to the state court proceedings pursued by the

Defendants and having to attend the trial in this court she had to miss three days of

work. She stated her employer pays her $15.40 per hour, or $123.20 per day. In

total, she has lost $369.60 in income because of the Defendants actions to collect on

a discharged debt. Also, Fields needlessly had to suffer the expense of reopening her

bankruptcy case and prosecuting this adversary proceeding. The court finds any

costs to Fields arising from the prosecution of this adversary proceeding should be

reimbursed by the Defendants because of their willful and knowing violation of

Fields’ bankruptcy discharge. All this could have been avoided had the Defendants

paid attention to Fields’ bankruptcy discharge and stopped their efforts to collect a

discharged debt.

Conclusion

The court finds that both of the Defendants, Christy Lynn Wade and Douglas

Cox, have knowingly, willfully, and maliciously violated Merri Christine Fields’

bankruptcy discharge injunction by taking action to collect a discharged debt and

are in contempt of court. The court ORDERS that:

(1) The in personam judgment against Merri Christine Fields issued by Cass

County Superior Court in cause number 09D01-1407-CC-218 violates Fields’

bankruptcy discharge injunction and is void per 11 U.S.C. § 524(a)(1).

8

(2) The Defendants must return the garnished funds they hold, $781.19, to

Plaintiff Merri Christine Fields, and reimburse her for $369.60 in lost wages.

The Defendants are to jointly make full payment to Fields of $1,150.79 within

30 days of the date of this memorandum of decision and order.

The court further ORDERS that Fields is entitled to recover her attorney fees

and costs in this adversary proceeding jointly and severally from the Defendants.

The court directs Fields’ attorney to file a verified application for fees arising from

this adversary proceeding no later than March 20, 2018, with notice to the

Defendants. Absent an objection within seven days of service the notice of the fee

application, the court may approve the fees for joint and several payment by the

Defendants without additional notice or hearing.

SO ORDERED.

/s/ HARRY C. DEES, JR. HARRY C. DEES, JR., JUDGEUNITED STATES BANKRUPTCY COURT

9