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Bankruptcy Appellate Panel, the Precedential Effect of This Decision Is Limited to the Case and Parties Pursuant to 6Th Cir By order of the Bankruptcy Appellate Panel, the precedential effect of this decision is limited to the case and parties pursuant to 6th Cir. BAP LBR 8024-1(b). See also 6th Cir. BAP LBR 8014-1(c). File Name: 21b0003n.06 BANKRUPTCY APPELLATE PANEL OF THE SIXTH CIRCUIT ┐ IN RE: FRANK R. RAGONE, JR., │ Debtor. │ ___________________________________________ │ > No. 20-8013 FRANK R. RAGONE, JR., │ Plaintiff-Appellee, │ │ v. │ │ │ STEFANIK & CHRISTIE, LLC; JOHN R. CHRISTIE, │ Defendants-Appellants. │ ┘ Appeal from the United States Bankruptcy Court for the Northern District of Ohio at Toledo; No. 5:13-bk-51335; Adv. Proc. No. 3:18-ap-03070—John P. Gustafson, Judge. Decided and Filed: May 13, 2021 Before: CROOM, DALES, and WISE, Bankruptcy Appellate Panel Judges. _________________ COUNSEL ON BRIEF: John R. Christie, LEWIS, BRISBOIS, BISGAARD & SMITH, LLP, Cleveland, Ohio, for Appellant Stefanik & Christie, LLC and in propria persona. Mark H. Knevel, KNEVEL LAW CO. LPA, Garfield Heights, Ohio, for Appellee. CROOM, J., delivered the opinion of the court in which WISE, J., joined. DALES, J. (pp. 13–16), delivered a separate opinion concurring in part and dissenting in part. No. 20-8013 In re Ragone Page 2 _________________ OPINION _________________ JIMMY L. CROOM, Bankruptcy Appellate Panel Judge. The issue in this appeal is whether the appellants, Stefanik & Christie, LLC (“Stefanik & Christie”), and attorney John R. Christie (“Christie”) (collectively, “Appellants”), committed a sanctionable violation of 11 U.S.C. § 5241 by continuing to pursue garnishment on a discharged debt and failing to turnover improperly garnished funds. The bankruptcy court applied the Supreme Court’s decision in Taggart v. Lorenzen, __ U.S. __, 139 S. Ct. 1795 (2019), and concluded that the Appellants’ refusal to terminate the garnishment proceedings and failure to return the monies garnished post-discharge were objectively unreasonable. The bankruptcy court sanctioned the Appellants $4,275.39 (the amount of funds garnished post-discharge from Ragone’s wages) and $10,580.00 in attorney fees Ragone incurred in attempting to stop the garnishment and recover the improperly garnished funds through both state and bankruptcy court proceedings. In sanctioning the Appellants in this case, the bankruptcy court correctly interpreted the discharge injunction set forth in § 524(a)(1) and (2), the law governing violations of the discharge injunction, and the standard for imposing sanctions thereunder. It also correctly determined that Christie could be held personally liable for the actions he took as counsel for Stefanik & Christie. Lastly, Appellants did not identify any erroneous factual findings by the bankruptcy court. For the reasons set forth below, we AFFIRM. ISSUE ON APPEAL The sole issue on appeal is whether the bankruptcy court erred in its determination that Christie, individually, and Stefanik & Christie committed sanctionable violations of the discharge injunction in § 524(a).2 1Unless otherwise noted, all references are to title 11 of the United States Code. 2The Appellants raise a number of issues on appeal, many of which relate to the § 362(a) automatic stay. The bankruptcy court dismissed Ragone’s § 362 claim with prejudice; consequently, the Appellants’ arguments related thereto are moot. No. 20-8013 In re Ragone Page 3 JURISDICTION AND STANDARD OF REVIEW The Bankruptcy Appellate Panel of the Sixth Circuit has jurisdiction to decide this appeal. The United States District Court for the Northern District of Ohio has authorized appeals to the Panel, and no party has timely elected to have this appeal heard by the district court. 28 U.S.C. § 158(b)(6), (c)(1). A final order of the bankruptcy court may be appealed as of right pursuant to 28 U.S.C. § 158(a)(1). “Orders in bankruptcy cases qualify as ‘final’ when they definitively dispose of discrete disputes within the overarching bankruptcy case.” Ritzen Grp., Inc. v. Jackson Masonry, LLC, __ U.S. __, 140 S. Ct. 582, 586 (2020) (citing Bullard v. Blue Hills Bank, 575 U.S. 496, 501 (2015)). An order finding a party in contempt and imposing sanctions is a final order for purposes of appeal. Wicheff v. Baumgart (In re Wicheff), 215 B.R. 839, 843 (B.A.P. 6th Cir. 1998) (citing U.S. Abatement Corp. v. Mobil Expl. & Producing U.S., Inc. (In re U.S. Abatement Corp.), 39 F.3d 563, 566–67 (5th Cir. 1994)). The bankruptcy court’s determination that the Appellants violated the discharge injunction presents a mixed question of law and fact. Ford Motor Credit Co. LLC v. Morton (In re Morton), 410 B.R. 556, 559 (B.A.P. 6th Cir. 2009). The court’s interpretation of § 524 is reviewed de novo. Id. “Under a de novo standard of review, the reviewing court decides an issue independently of, and without deference to, the trial court’s determination.” Menninger v. Accredited Home Lenders (In re Morgeson), 371 B.R. 798, 800 (B.A.P. 6th Cir. 2007) (citation omitted). The court’s determination that a party violated the discharge injunction and the imposition of sanctions are reviewed for an abuse of discretion. Liberte Capital Grp., LLC v. Capwill, 462 F.3d 543, 550 (6th Cir. 2015) (citing Harrison v. Metro. Gov’t of Nashville, 80 F.3d 1107, 1112 (6th Cir. 1996)); B-Line, LLC v. Wingerter (In re Wingerter), 594 F.3d 931, 936 (6th Cir. 2010). “An abuse of discretion occurs only when the [trial] court relies upon clearly erroneous findings of fact or when it improperly applies the law or uses an erroneous legal standard.” Kaye v. Agripool, SRL (In re Murray, Inc.), 392 B.R. 288, 296 (B.A.P. 6th Cir. 2008) (internal quotation marks and citation omitted); see also Mayor of Balt., Md. v. West Virginia (In re Eagle-Picher Indus., Inc.), 285 F.3d 522, 529 (6th Cir. 2002) (“An abuse of discretion is defined as a ‘definite and firm conviction that the [court below] committed a clear error of judgment.’ ” (citation omitted)). “The question is not how the reviewing court would have ruled, No. 20-8013 In re Ragone Page 4 but rather whether a reasonable person could agree with the bankruptcy court’s decision; if reasonable persons could differ as to the issue, then there is no abuse of discretion.” Barlow v. M.J. Waterman & Assocs., Inc. (In re M.J. Waterman & Assocs., Inc.), 227 F.3d 604, 608 (6th Cir. 2000) (citation omitted). FACTS Although the history of the debt and the relationships among the various parties are somewhat convoluted, the facts germane to the appeal are relatively straightforward and, for the most part, undisputed. In April 2013, an Ohio State Court awarded Pizza Pan Elyria, LLC, a judgment against Ragone in the amount of $28,300.00, plus interest at the rate of 6.5% per annum from September 9, 2009, plus attorney’s fees and costs of the action (the “Judgment”). Ragone filed a chapter 7 petition for bankruptcy relief on May 8, 2013, in the Northern District of Ohio. During the bankruptcy case, the judgment creditor assigned the Judgment to Stefanik & Christie. Due to Ragone’s failure to file a certificate of attendance for the post-petition financial management course required by § 727(a)(11), the bankruptcy court administratively closed Ragone’s case without a discharge on February 8, 2014. On June 6, 2014, Christie filed an Order and Notice of Garnishment in a pending garnishment action (“Garnishment Action”) in the Cleveland Municipal Court. On June 19, 2014, Ragone filed a motion to reopen his bankruptcy case, along with proof of his attendance at the required financial management course. The bankruptcy court granted Ragone’s motion to reopen his case and issued an order of discharge on June 18, 2015, before closing the case again on June 23, 2015. Ragone’s wages continued to be garnished following his discharge. In March 2016, Ragone’s attorney, Robert C. Wentz (“Wentz”), contacted Christie via telephone to address the garnishment. At trial, Wentz testified that “Christie was not amenable to dismissing or terminating the wage garnishment” at that time. (Jan. 18, 2019 Aff. of Robert C. Wentz at 1, No. 20-8013 In re Ragone Page 5 Adv. Proc. No. 18-03070, ECF No. 25-1 at 47; see also Tr. of Aug. 12, 2019 Hr’g (“Trial Tr.”), Adv. Proc. No. 18-03070, ECF No. 64 at 15.) The Appellants did not dispute that Christie spoke with Wentz in March 2016; however, they claimed that Wentz failed to provide any documentation of Ragone’s discharge at that time. Consequently, Christie asserted that because he does not practice bankruptcy law, he wanted time “to investigate [the] matter further” before taking any action in the state court proceedings. (Trial Tr. at 21.) Christie also admitted that his investigation into the matter took “longer than maybe it could have” once he learned about Ragone’s bankruptcy discharge. (Id. at 108.) Ragone filed an “Emergency Motion to Stay Disbursements and Terminate the Wage Garnishment” (“Emergency Motion”) in the Garnishment Action on April 8, 2016, which he served on Christie that day along with a cover letter (“April 2016 Letter”) stating that the Judgment was discharged in his chapter 7 case. (April 2016 Letter at 1, Adv. Proc. No. 18-03070, ECF No. 25-1 at 49.) On May 17, 2016, the Appellants filed a brief in opposition to the Emergency Motion in the Garnishment Action. Three days later, Stefanik & Christie filed a motion to reopen Ragone’s bankruptcy case and revoke his discharge. Ragone filed a response3 indicating that he had no objection to reopening his case and that “the reopening of the case will assist in the resolution of issues arising subsequent to the closing [of] debtor’s bankruptcy.” (Resp.
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