Landlord Must Pay for Disposing of Tenant’s Belongings After Ch. 7

A weekly news service that publishes case summaries of the most recent important bankruptcy-law decisions, tracks major commercial bankruptcies, and reports on developments in bankruptcy reform in...

By Diane Davis

Oct. 13 — A Chapter 7 debtor’s former landlord must pay him $6,001, plus reasonable attorney’s fees and costs for destroying the debtor’s personal property after he filed for bankruptcy ( In re Calloway , 2016 BL 338622, Bankr. D.D.C., No. 16-00361 (Chapter 7), 10/11/16 ).

Judge S. Martin Teel Jr. of the U.S. Bankruptcy Court for the District of Columbia concluded in an Oct. 11 unpublished opinion that Walde Management, Inc. violated the automatic stay of Bankruptcy Code Section 362(a).

The court said the landlord should have procedures in place to prevent its agents from destroying debtor’s property once learning of a bankruptcy filing.

Walde Management lawfully evicted debtor Clement Christopher Calloway from his apartment before the debtor filed for bankruptcy, but violated the automatic stay after the petition had been filed by disposing of the debtor’s belongings in the trash.

The debtor notified the landlord and counsel that he had filed for Chapter 7 bankruptcy. In a Chapter 7 case, a debtor’s nonexempt assets are liquidated by a trustee and the proceeds are distributed to creditors.

The filing of a bankruptcy petition doesn’t operate as a stay against the continuation of an eviction of the debtor from the property if the lessor obtains a judgment for possession of the property before the filing of the bankruptcy petition, the court said, citing Section 362(b)(22). The debtor may obtain a 30-day grace period, however, following the filing of the petition, the court said.

Walde Management violated this 30-day stay by disposing of the debtor’s personal belongings, the court said.

The court awarded the debtor $1 in damages as the nominal value of the property because the debtor failed to present evidence as to its value, and most of the items had been infested by roaches.

The court also awarded the debtor $4,000 in emotional damages, and $2,000 in punitive damages.

The court said it would also award the debtor reasonable fees and costs incurred in pursuing the application regarding the violation of the automatic stay.

Debtor Clement Christopher Calloway aka Christopher Calloway, Washington, D.C., represented himself pro se; Chapter 7 Trustee: Wendell W. Webster, Webster & Fredrickson, PLLC, Washington, D.C.

To contact the reporter on this story: Diane Davis in Washington at DDavis@bna.com

To contact the editor responsible for this story: Jay Horowitz at JHorowitz@bna.com

Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.