Zombro v. SunTrust; AP No. 06 – 1166; April 14, 2008
This case involved a credit card account and a deed of trust at SunTrust bank.
The first legal issue the court addressed was whether or not the debtor would be allowed to amend their complaint against the bank. To this, the court decided that “Under the notice pleading approach adopted in Federal Rule of Bankruptcy Procedure 7008, the bank had sufficient notice both of the claim (violation of the discharge injunction) and the remedy (attorney’s fees) sought by the debtors as well as supporting allegations of fact. See Fed.R.Civ.P. 8(a)(2), made applicable by Fed.R.Bankr.P. 7008(a); Erickson v. Pardus, 127 S.Ct. 2197, 2200 (2007) (“Specific facts are not necessary; the statement need only ‘give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.’”) (internal quotation marks and citations omitted).”
The court then went through each fact that showed the bank was a notice of the claim for the discharge violation.
The debtor claimed six different actions by the bank that could have resulted in a discharge violation. “The court need not find that all six actions taken by the bank were willful and intentional violations of the discharge junction. One violation isn’t enough.” What the court found most disturbing was the letter reiterating the payoff figure and threatening the debtor by stating that further action might be taken. Suntrust cites the court’s opinion in Helmes v Wachovia Bank, N.A., 336 B.R. 105, 109 (Bankr.E.D.Va. 2005), which found that “it was not a per se violation and that there was no intentional violation of the discharge junction because the debtors file was mistakenly not flagged as a bankruptcy case.” The court pointed out that in Helmes the creditor properly corrected the error when it was brought to its attention. There was no pattern of discharge violations. The court, in that case, concluded from the totality of the circumstances that the errant credit report was not an act intended to collect a debt, but rather an excusable mistake.
Unlike the mistake in credit reporting in Helmes, which was not on its face an act to collect a discharge debt, the phone call, in this case cannot be characterized as anything but attempts to collect a discharged debt.
Importantly, “the bank is charged with the knowledge of the contents of its own records.” The failure to properly review the bank’s own records is not an excusable mistake. If it were, there would be no violations of the discharge junction, only “mistakes.” While prompt action by the court in Helmes was consistent with an innocent violation, the promptness in the correction of an error is not the determining factor. But finding willfulness or the lack of willfulness is.
Not every action that offends discharge junction is action. An honest mistake may be a legitimate defense. However, merely showing where the bank system went wrong is not enough. Here, the summary judgment record shows that the bank knew of the bankruptcy discharge and that information was easily and readily available to the bank employees working on the account.
The court noted the bank accounting practice to “charge-off,” removing the profit and losses from the bank’s balance sheet. It is not an acknowledgement that the debtor has been discharged. The court also noted that he discharged creditors acceptance of the voluntary payment from the debtor does not, without more, violate the discharge junction. If a debtor seeks to voluntarily repay the debt question Month creditor, the creditor does not violate discharge junction simply by responding to the request. However, if the bank knew that the request arose because of the erroneous credit bureau report or the title search or that the debtor’s asserted that the debt was discharged so they can request payoff out of compulsion, then the act of providing payoff may be a violation of the discharge stay. Furthermore, “the bank is charged with all the facts known to its collection divisions, even if they are geographically or operationally separated.”