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Lumetta v. Arborlake Homeowners Association

United States District Court, S.D. California

May 12, 2017



          Hon. Anthony J. Battaglia United States District Judge

         Appellant Albina G. Lumetta (“Lumetta”) appeals the United States Bankruptcy Court's Order denying her Application for an Order to Show Cause (“OSC”). (Doc. No. 1.) Lumetta contends that Appellee Arborlake Homeowners Association's (“AHA”) affirmative action of sending out a case management conference letter after Lumetta's debts had been discharged is a willful violation of the discharge injunction. (See generally Doc. No. 33.) Specifically, on appeal, Lumetta asserts that AHA had an unqualified duty to dismiss her state court action, an OSC should have been issued, Lumetta had no duty to mitigate her damages, and that it was improper for the bankruptcy court to deny Lumetta discovery. (Id.) For the reasons stated more fully below, the Court AFFIRMS the bankruptcy court's ruling denying the OSC.

         I. BACKGROUND

         On January 8, 2014, AHA sued Lumetta and her husband, John Paul Lumetta (“Mr. Lumetta”), in San Diego County Superior Court (the “State Court Action”) for numerous causes of action and seeking damages for delinquent monthly assessments, late charges, pre-judgment interest, and attorney's fees and costs. (Doc. No. 3-1 at 328; Doc. No. 33 at 4; Doc. No. 39 at 9.)[1] On August 25, 2014, Lumetta retained Doan Law Firm (“Doan”) to file for Chapter 7 relief. (Doc. No. 3-1 at 328; Doc. No. 33 at 4.) Thereafter, on September 4, 2014, Doan sent AHA a cease and desist order indicating that Lumetta would soon be seeking bankruptcy protection. (Doc. No. 3-1 at 130.) AHA responded to the cease and desist letter via email on September 12, 2014. (Doc. No. 33 at 4.)

         Lumetta then filed her Chapter 7 petition, without her husband as a co-debtor, on October 31, 2014. (Doc. No. 3-1 at 9.) AHA received notice of the bankruptcy filing on November 5, 2014. (Id. at 138.) Two days later, AHA filed a notice of stay of proceedings as to Lumetta in the State Court Action. (Id. at 228.)

         On January 9, 2015, the state court held a trial readiness conference in which it indicated that because Lumetta and Mr. Lumetta were married, it wished to stay the entire action as to both of them. (Id. at 142, 148-150, 328.) Accordingly, AHA then filed a second notice of stay of proceedings as to the entire case on January 14, 2015. (Id. at 226.) Despite the second stay, Lumetta continued to receive various state court documents between January 9, 2015, and January 21, 2015. (Id. at 328.) Lumetta's bankruptcy then continued to follow its normal course with discharge entered on February 9, 2015. (Id. at 80.)

         On March 11, 2015, AHA, through its attorney Elizabeth Call[2] (“Ms. Call”), filed a Notice of Termination or Modification of Stay (the “Notice of Termination”) in the superior court. (Id. at 158; Doc. No. 41-1 at 9.) Ms. Call signed this notice as the “declarant” and under penalty of perjury. (Id.) Moreover, under question three, Ms. Call stated that the January 14, 2015 notice was vacated by the order of another court. (Id.) Additionally, under question five, Ms. Call represented that the stay had been vacated, was no longer in effect, or was modified with regard to all parties. (Id.) Lastly, the Notice of Termination included a printout from Lumetta's bankruptcy docket showing that her debts were discharged. (Doc. No. 3-1 at 257.)

         On July 10, 2015, Ms. Call attended a status conference. (Doc. No. 33 at 6; Doc. No. 39 at 9.) Neither Lumetta nor Mr. Lumetta attended. (Doc. No. 39 at 9.) During this status conference, AHA contends that Ms. Call told Judge Timothy Taylor that Lumetta's discharge had been entered.[3] (Id.; Doc. No. 3-1 at 259-60.) Judge Taylor then continued the case status conference to August 21, 2015, and ruled that if Lumetta and Mr. Lumetta did not appear at the continued status conference that their answers would be striken. (Doc. No. 3-1 at 239.) Judge Taylor then ordered Ms. Call to serve a notice of his ruling on Lumetta. (Id. at 239, 260.)

         Lumetta received the Notice of Case Management Conference statement (the “Notice of CMC”) on July 13, 2015.[4] (Id. at 160-61.) The letter stated that: (1) a status conference was held on July 10, 2015; (2) there was no appearance by Lumetta or Mr. Lumetta; (3) a case management conference was set for August 21, 2015; (4) the stay would be lifted; and (5) if Lumetta and Mr. Lumetta failed to appear that their answers would be striken and AHA would be permitted to enter default against them both. (Id.)

         After receiving these notices, Lumetta contacted Doan on July 15, 2015. (Doc. No. 33 at 7.) Attorney Michael Doan, who was out of the country at the time, tried to assure Lumetta that the lawsuit was not proper. (Id.) Doan then contacted AHA on August 7, 2015, and demanded that they dismiss the State Court Action. (Id.) AHA responded electronically on August 10, 2015, and filed the dismissal on the same day. (Doc. No. 3-1 at 329; Doc. No. 41-1 at 21-23.) The state court did not enter the dismissal until August 11, 2015, and Doan and Lumetta received notice of the dismissal on August 28, 2015. (Doc. No. 3-1 at 329.)

         On August 26, 2015, Lumetta applied for an OSC with the bankruptcy court to determine why AHA should not be held in contempt for violating the discharge injunction. (Id. at 84-85.) Lumetta asserts that as a result of AHA's failure to immediately dismiss the State Court Action with prejudice, she ended up receiving: (1) numerous documents from state court; and (2) the Notice of CMC. (Id. at 86-90; Doc. No. 33 at 8.) This then allegedly caused Lumetta a variety of damages including: (1) actual damages for emotional distress, aggravation, exam resetting, delayed employment, and wasted time working on the lawsuit; (2) lost wages; (3) medical expenses; (4) damages similar to those recoverable in an action under the Rosenthal Fair Debt Collection Practices Act; and (5) attorney's fees and costs. (Doc. No. 3-1 at 90-93.)

         On October 5, 2015, after the bankruptcy court heard initial arguments on this matter, it issued a tentative ruling stating that it was inclined to grant the OSC and requested that both parties attend the hearing to discuss the deadlines for submitting evidence and briefing on the matter. (Id. at 193.) On December 23, 2015, the bankruptcy court requested additional briefing from both parties. (Doc. No. 33 at 9.) On February 24, 2016, the bankruptcy court continued the matter until the testimony of Ms. Call could be taken. (Doc. No. 3-1 at 241.)

         On March 17, 2016, Ms. Call testified that she served the Notice of CMC at the state court's request. (Id. at 261; Doc. No. 43 at 13.) Specifically, Ms. Call stated that she was not in the practice of challenging a state court judge's direct order. (Doc. No. 3-1 at 263.) Nor was it Ms. Call's custom to reengage Judge Taylor and correct him in regards to his rulings. (Id.) After Ms. Call's testimony, closing arguments were made by both parties and the matter was taken under submission. (Id. at 245.)

         On June 3, 2016, the bankruptcy court denied Lumetta's application for an OSC even though it agreed that a technical discharge violation was committed. (Id. at 338.) Specifically, the bankruptcy court denied Lumetta's application because it found that AHA had satisfied its burden in demonstrating why it was unable to comply with the discharge injunction and that Lumetta failed to mitigate her damages. (Id. at 338-339.)


         On July 14, 2016, Lumetta filed a notice of appeal from the bankruptcy appellate panel with this Court. (Doc. No. 1.) On September 3, 2016, AHA filed a motion to dismiss for lack of jurisdiction, (Doc. No. 5), which was denied on February 3, 2017, after the Court requested supplemental briefing. (Doc. Nos. 10, 18.)

         On February 13, 2017, Lumetta filed a motion for sanctions, (Doc. No. 20), and on March 10, 2017, filed an objection. (Doc. No. 28.) On March 12, 2017, AHA filed a motion to strike Lumetta's late filed Reply brief to her motion for sanctions. (Doc. No. 30.) On March 23, 2017, Lumetta filed an ex parte motion for extension of time to file her Reply in support of her motion for sanctions. (Doc. No. 35.) On April 19, 2017, the Court denied Lumetta's motion for sanctions, granted AHA's motion to strike, denied Lumetta's ex parte application, and denied AHA's cross-motion for sanctions. (See generally Doc. No. 50.) Briefing for this appeal was completed on April 3, 2017. (Doc. No. 45.) This Order follows.

         III. ...

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