OLICK et al v. NORTHAMPTON COUNTY et al
Filing
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MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE WILLIAM H. YOHN, JR ON 10/26/2011. 10/26/2011 ENTERED AND COPIES MAILED TO PRO SE, UNREPS, E-MAILED.(kk, ) Modified on 10/26/2011 (kk, ).
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IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
In re THOMAS OLICK,
Debtor.
THOMAS OLICK,
Plaintiff-Appellant,
v.
NORTHAMPTON COUNTY et al.,
Defendants-Appellees.
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CIVIL ACTION NO. 10-7492
MEMORANDUM
YOHN, J.
October 26, 2011
This bankruptcy appeal arises from an adversary proceeding brought by Thomas Olick
against Northampton County, the Easton Area School District, Palmer Township,1 and the City
of Easton. Olick appeals from the judgment of the bankruptcy court denying his motion for
summary judgment and granting summary judgment in favor of Northampton County and the
Easton Area School District. Olick also contends that the bankruptcy court erred in concluding
that the City of Easton, which was not served with process, is not a defendant in this adversary
proceeding. For the reasons that follow, I will affirm the judgment of the bankruptcy court.
1
On June 8, 2010, the bankruptcy court approved a stipulation of settlement between
Olick and Palmer Township, and this adversary proceeding against Palmer Township was
discontinued with prejudice.
I.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY2
Olick filed a Chapter 13 bankruptcy petition in the United States Bankruptcy Court for
the Eastern District of Pennsylvania on February 9, 2007.
On August 6, 2007, Northampton County filed two proofs of claim in the bankruptcy
proceedings. The first, claim no. 7, was for $1,881.79 in unpaid taxes for the years 2006 and
2007 on property owned and resided in by Olick and his wife at 4014 Crestview Avenue. The
second, claim no. 8, was for $5,952.84 in unpaid taxes for the years 1995, 1996, 2004, 2006, and
2007 on property owned by Olick and his sons at 1220-22 Chidsey Street. Olick filed objections
to the two claims on August 9, 2007. On October 10, 2007, after a hearing on Olick’s objections,
the bankruptcy court allowed claim no. 7 as a secured claim in the amount of $1,553.82 and
disallowed claim no. 8 in its entirety.3
By order dated January 22, 2008, the bankruptcy court confirmed Olick’s fifth amended
bankruptcy plan, which provided for payment over time of the allowed claims, including the
allowed portion of Northampton County’s claim no. 7, by the bankruptcy trustee. On February
18, 2008, in accordance with the confirmed plan, Northampton County received a payment of
$269.26 from the trustee. As a result, the remaining amount due on claim no. 7 was $1,284.56.
2
Except as otherwise noted, the following facts are undisputed and are drawn largely
from the bankruptcy court’s recitation of undisputed facts, see Olick v. Northampton County,
Adv. No. 09-0312 (Bankr. E.D. Pa. Nov. 9, 2010), as well as the settlement agreement entered
into by the parties in connection with an earlier adversary proceeding initiated by Olick against
defendants (see Appellant’s Ex. G, Stipulation of Settlement of Adversary Proceeding (Apr. 21,
2009) (“Stipulation of Settlement”)).
3
While the bankruptcy court stated that claim no. 7 was for taxes on 4014 Crestview
Avenue, Olick contends that the allowed portion of claim no. 7 actually included unpaid taxes for
2006 on three properties: 4014 Crestview Avenue ($941.89), 1209-15 Chidsey Street ($161.38),
and 1220-22 Chidsey Street ($450.55). (See, e.g., Appellant’s Ex. L at 2.)
2
On September 22, 2008, Olick filed an adversary complaint against the Northampton
County Tax Claim Bureau, the City of Easton, the Easton Area School District, and Northampton
County alleging that they were wrongfully seeking to collect pre-petition claims for taxes outside
the bankruptcy proceedings in violation of the bankruptcy court’s orders (adversary case no. 080264). Olick asserted claims against the defendants for filing fraudulent proofs of claim,
conversion, violation of the automatic stay, and harassment. The matter was resolved by a
“Stipulation of Settlement of Adversary Proceeding” dated April 21, 2009, and approved by the
bankruptcy court by orders dated June 16, 2009, and July 2, 2009. The settlement agreement
provides, in relevant part:
a. Northampton County, the Northampton County Tax Claim Bureau, the City of
Easton and the Easton Area School District will not take any action of any nature
to collect claims for taxes that were due as of the date of filing of the Chapter 13
Bankruptcy Petition and acknowledge that to the extent that those claims are
allowed, they will be fully satisfied upon receipt of the amounts allowed by the
Bankruptcy Court from the Trustee in Bankruptcy.
b. Should the [sic] Northampton County, the Northampton County Tax Claim
Bureau, the City of Easton or the Easton Area School District take any steps to
collect the prepetition claim for taxes, through inadvertence or otherwise, this
Stipulation of Settlement shall be deemed a full defense to any such claim or
actions and may be presented to specified public agency or authority as proof that
all prepetition claims for taxes that are allowed will be satisfied through the
bankruptcy process and no other.
(Stipulation of Settlement ¶ 19.)
On September 10, 2009, BAC Tax Services Corporation (“BAC”), an agent for Bank of
America, the mortgagee with respect to Olick’s property at 4014 Crestview Avenue, requested
from Northampton County information regarding outstanding real-estate taxes on the property. In
response to this inquiry, Northampton County prepared a certification stating that the total tax
3
balance then due on the property was $12,978.81. This amount reflected post-petition taxes owed
as well as pre-petition taxes. Soon thereafter, Northampton County received checks from Bank of
America totaling $12,978.81.4
On October 7, 2009, after learning that Bank of America had paid the outstanding taxes,
Olick filed an adversary complaint and initiated this adversary proceeding against Northampton
County, Palmer Township, and the Easton Area School District alleging fraud, conversion,
violation of the automatic stay, harassment, breach of contract, and violation of the Racketeer
Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1961–1968.
On December 10, 2009, he filed a motion seeking leave to amend his adversary
complaint. Among other things, he sought to add the City of Easton as a defendant. While his
motion to amend was pending, Olick served the amended complaint on the City of Easton and
the other defendants. On January 8, 2010, the City of Easton filed a motion to strike the amended
adversary complaint.5
On January 13, 2010, the bankruptcy court granted Olick’s motion to amend his adversary
complaint and to add the City of Easton as a defendant. The bankruptcy court ordered the City of
Easton to file a notice advising Olick and the court whether it consented to the court’s exercise of
personal jurisdiction over it without the necessity of service of the amended complaint and
4
The checks were from Countrywide Home Loans, which was acquired by Bank of
America, and BAC. (See Appellant’s Ex. J (letter from Shirley O’Brien to T W Olick (Sept. 29,
2009).) Two checks were received on September 14, 2009; a third check was received on
September 24, 2009. (Id.)
5
The Easton Area School District, Northampton County, and Palmer Township, however,
filed answers to the amended complaint, notwithstanding that the bankruptcy court had not yet
ruled on Olick’s motion to amend.
4
summons. The bankruptcy court further ordered that if the City of Easton did not consent to the
court’s exercise of personal jurisdiction over it, Olick was to promptly serve the City of Easton.
On March 1, 2010, the City of Easton filed a notice stating that it did not consent to the
bankruptcy court’s exercise of personal jurisdiction over it without service of process. Olick filed
an objection to the City of Easton’s notice but did not serve the amended complaint and
summons upon the City of Easton. Because the City of Easton was not served with process after
Olick was granted leave to file his amended complaint, the bankruptcy court concluded that the
City of Easton was not a defendant in this adversary proceeding.
On March 29, 2010, during the pendency of this adversary proceeding, Olick filed a
motion in his bankruptcy proceeding to have claim no. 7 declared paid in full and to discontinue
further distributions by the trustee on that claim. By order dated April 28, 2010, the bankruptcy
court granted the motion.6
On June 8, 2010, the bankruptcy court approved a stipulation of settlement between Olick
and Palmer Township, and this adversary proceeding against Palmer Township was discontinued
with prejudice.
On June 23, 2010, Olick filed a motion for summary judgment as to all claims against the
remaining two defendants, Northampton County and the Easton Area School District. The Easton
Area School District filed a cross-motion for summary judgment as to all claims against it on
August 3, 2010, and Northampton County filed a cross-motion for summary judgment as to all
6
After Bank of America paid the outstanding tax balance, Northampton County received
only one distribution from the bankruptcy trustee—a payment in the amount of $18.07 on March
8, 2010. Northampton County returned the payment to the trustee on April 12, 2010. (See
Appellant’s Ex. R (notice that tax payment was being returned and copy of check from trustee).)
5
claims against it on August 19, 2010. In a memorandum and order dated November 9, 2010, the
bankruptcy court denied Olick’s motion for summary judgment and granted summary judgment
in favor of Northampton County and the Easton Area School District as to all counts.
This appeal followed.
II.
STANDARD OF REVIEW
The district courts have jurisdiction to hear appeals from final judgments and orders of
the bankruptcy courts. Under the Federal Rules of Bankruptcy Procedure, a district court, sitting
as an appellate tribunal, “may affirm, modify, or reverse a bankruptcy judge’s judgment, order, or
decree or remand with instructions for further proceedings.” Fed. R. Bankr. P. 8013. In so doing,
the district court applies a clearly erroneous standard to review a bankruptcy court’s factual
findings and a de novo standard to review its conclusions of law. See In re Siciliano, 13 F.3d 748,
750 (3d Cir. 1994).
The Federal Rules of Bankruptcy Procedure import into adversary proceedings the
standard for summary judgment set forth in Federal Rule of Civil Procedure 56, see Fed. R.
Bankr. P. 7056, pursuant to which a motion for summary judgment shall be granted “if the
movant shows that there is no genuine dispute as to any material fact and the movant is entitled
to judgment as a matter of law,” Fed. R. Civ. P. 56(a). “Where the record taken as a whole could
not lead a rational trier of fact to find for the nonmoving party, there is no ‘genuine issue for
trial.’” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting
First Nat’l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 289 (1968)). To defeat a motion for
summary judgment, the nonmoving party must show more than “[t]he mere existence of a
6
scintilla of evidence” for elements on which it bears the burden of production, Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 252 (1986), and may not “rely merely upon bare assertions,
conclusory allegations or suspicions,” Fireman’s Ins. Co. v. DuFresne, 676 F.2d 965, 969 (3d
Cir. 1982). When evaluating a motion for summary judgment, the court “is not to weigh the
evidence or make credibility determinations.” Petruzzi’s IGA Supermarkets, Inc. v.
Darling-Delaware Co., 998 F.2d 1224, 1230 (3d Cir. 1993). “The evidence of the nonmovant is
to be believed, and all justifiable inferences are to be drawn in his favor.” Anderson, 477 U.S. at
255.
III.
DISCUSSION
As a preliminary matter, Olick contends that the bankruptcy court improperly concluded
that the City of Easton is not a defendant in this adversary proceeding. Because Olick did not
serve his amended complaint upon the City of Easton after the bankruptcy court granted him
leave to file an amended complaint, I agree with the bankruptcy court that the City of Easton is
not a defendant in this action. The relevant facts are undisputed, and the bankruptcy court did not
make any errors of law. As a general rule, where an amendment requires leave of the court, an
amended complaint has no legal effect until the court grants such leave, see 6 Charles Alan
Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 1484, at 685 (3d
ed. 2010), and thus, contrary to Olick’s contentions, it is of no consequence that Olick served the
City of Easton while his motion to amend his complaint was still pending.
As to the claims against Northampton County and the Easton Area School District, in his
amended adversary complaint Olick asserts seven claims against these two defendants: fraud
7
(count I); filing of fraudulent proofs of claim (count VII); conversion (count II); violation of the
automatic stay (count III); breach of contract (count V); harassment (count IV); and violation of
RICO (count VI). The bankruptcy court granted summary judgment in favor of Northampton
County and the Easton Area School District on all seven counts, and Olick now challenges the
bankruptcy court’s judgment as to each claim. I conclude that the bankruptcy court properly
granted summary judgment in favor of these two defendants, and I will thus affirm the judgment
of the bankruptcy court, although with respect to some claims I will do so on different grounds,
see Fairview Township v. EPA, 773 F.2d 517, 525 n.15 (3d Cir. 1985) (“It is well settled that we
[can] affirm the district court on any basis which finds support in the record.” (internal quotation
marks omitted) (alteration in original)).
I note that Olick bases his claims against the Easton Area School District on an agency
theory of liability, asserting that Northampton County acted as an agent of the Easton Area
School District for the collection of taxes owed to the school district.7 Because the claims against
the Easton Area School District are derivative of those against Northampton County, I turn first
to the claims against Northampton County.
7
In the settlement agreement in Olick’s first adversary proceeding against defendants, the
parties stipulated that “[t]he Northampton County Tax Claim Bureau acts as the agent for the
taxing authorities in the county for the collection of taxes referred to it and identified as
delinquent by various county taxing authorities, including but not limited to Northampton
County, the City of Easton, Palmer Township and the Easton Area School District.” (Stipulation
of Settlement ¶ 4.)
8
A.
Northampton County
1.
Fraud (Count I) and the Filing of Fraudulent Proofs
of Claim (Count VII)
Olick asserts, in count I of his amended adversary complaint, that Northampton County
committed fraud.
To establish fraud, or intentional misrepresentation, under Pennsylvania law, a plaintiff
must prove six elements: “(1) a representation; (2) which is material to the transaction at hand;
(3) made falsely, with knowledge of its falsity or recklessness as to whether it is true or false;
(4) with the intent of misleading another into relying on it; (5) justifiable reliance on the
misrepresentation; and (6) the resulting injury was proximately caused by the reliance.” Overall
v. Univ. of Pa., 412 F.3d 492, 498 (3d Cir. 2005) (quoting Gibbs v. Ernst, 647 A.2d 882, 889 (Pa.
1994)).
Olick alleges that Northampton County engaged in fraud by filing claims in his
bankruptcy proceeding for taxes that he had already paid—these allegations also form the basis
for his claim in count VII that Northampton County filed fraudulent proofs of claim. He argues
that the fact that the bankruptcy court determined that some of the taxes in claims no. 7 and no. 8
had already been paid, and therefore disallowed claim no. 8 and a portion of claim no. 7, is
conclusive proof that Northampton County filed fraudulent claims.8 But beyond his conclusory
allegation that Northampton County knew, or should have known, that these taxes had already
8
Although Olick asserts that the bankruptcy court disallowed the claims because they had
already been paid, the bankruptcy court’s order did not include its reasons for disallowing claim
no. 8 and disallowing a portion of claim no. 7. It is possible that the bankruptcy court explained
its reasons in the hearing held on those claims, but the transcript from that hearing was not
provided in the record on appeal.
9
been paid, Olick has offered no evidence from which a fact-finder could reasonably find that
Northampton County intentionally misrepresented the amount of taxes owed when it filed these
two claims. Accordingly, these claims of fraud and the filing of fraudulent claims must fail.9
The bankruptcy court construed Olick’s fraud claim as asserting only this theory of
liability and granted summary judgment in favor of Northampton County. But, although some
(perhaps most) of Olick’s allegations are difficult to discern, his amended complaint (and his
briefs to the bankruptcy court addressing the motions for summary judgment) may fairly be read
as asserting two other bases for his fraud claim.
Olick also asserts that Northampton County engaged in fraud when, in responding to
BAC’s inquiry regarding outstanding taxes on Olick’s property, Northampton County reported as
unpaid certain taxes that the bankruptcy court had disallowed. Northampton County concedes
that the tax balance reported to BAC included “pre-petition obligations that were not part of the
approved claims.” (Br. of Appellee Northampton County (“Northampton County’s Br.”) at 4
n.3.) But, even assuming that the inclusion of disallowed amounts in the tax certification
9
Several courts have held that there is no private cause of action against a creditor who
files a fraudulent proof of claim. See, e.g., Holloway v. Household Auto. Fin. Corp., 227 B.R.
501, 504–06 (N.D. Ill. 1998); Smith v. Oak Grove Util. Co. (In re Smith), Adv. No. 08-0137,
2009 WL 115293, at *4 (Bankr. D. Md. Jan. 16, 2009); Patrick v. Dell Fin. Servs., L.P. (In re
Patrick), 344 B.R. 56, 58–59 (Bankr. M.D. Pa. 2005). Although the Third Circuit has not
expressly addressed this issue, it has held that section 105(a) of the Bankruptcy Code (which
provides that a court “may issue any order, process or judgment that is necessary or appropriate
to carry out the provisions of this title,” 11 U.S.C. § 105(a)) does not afford debtors a private
cause of action to remedy alleged violations of section 506(b) (which allows oversecured
creditors to add reasonable attorney fees, interest, and costs to the amount of their secured claim,
see 11 U.S.C. § 506(b)). See Joubert v. ABN AMRO Mortg. Grp., Inc. (In re Joubert), 411 F.3d
452, 454–56 (3d Cir. 2005). In any event, I need not determine whether a cause of action exists
here, because Olick has presented no evidence that Northampton County filed a fraudulent proof
of claim.
10
constituted an intentional misrepresentation, Olick has presented no evidence to support a finding
of justifiable reliance—there is no evidence that he took any action (or refrained from any action)
in reliance on this misrepresentation. Accordingly, this claim against Northampton County must
fail.
Finally, Olick asserts that Northampton County engaged in fraud by failing to inform the
bankruptcy trustee that Bank of America had paid the outstanding tax balance and by continuing
to seek payments from the bankruptcy trustee, in accordance with Olick’s confirmed plan, even
after Bank of America had paid the amount due. But here again, even assuming that there was a
misrepresentation, Olick has failed to submit any evidence that he relied on the misrepresentation
or that he suffered any injury as a result of such reliance. Although the bankruptcy trustee did
make a payment of $18.07 after Bank of America paid the outstanding tax balance, that payment
was returned to the trustee. And, upon Olick’s motion, the bankruptcy court declared claim no. 7
paid and ordered the trustee to discontinue distributions on that claim.
Summary judgment in favor of Northampton County on counts I and VII was thus proper,
and I will affirm the bankruptcy court’s judgment.
2.
Conversion (Count II)
Olick next asserts, in count II of his complaint, a claim for the common-law tort of
conversion. He claims that Northampton County has not applied the tax payments it received
from Bank of America, or from the bankruptcy trustee in accordance with his confirmed plan, to
his unpaid tax balance.
“[C]onversion is the deprivation of another’s right of property in, or use or possession of,
11
a chattel, or other interference therewith, without the owner’s consent and without lawful
justification.” Stevenson v. Economy Bank of Ambridge, 197 A.2d 721, 726 (Pa. 1964). Under
Pennsylvania law, “[m]oney may be the subject of conversion,” Pittsburgh Constr. Co. v.
Griffith, 834 A.2d 572, 581 (Pa. Super. Ct. 2003), but “only where the plaintiff had a property
interest in the money at the time of the alleged conversion,” Kia v. Imaging Scis. Int’l, Inc., 735
F. Supp. 2d 256, 270 (E.D. Pa. 2010).
Here, Olick asserts that Palmer Township and the Easton Area School District have
denied receiving payment of the taxes that Northampton County collected on their behalf and
thus contends that Northampton County has converted those funds for some other purpose.
As a preliminary matter, to the extent that Olick claims that Northampton County has
converted funds received from Bank of America, his claim must fail as a matter of law. Olick had
no interest in the funds paid by Bank of America and there is thus no basis for his conversion
claim. See Phila. Factors, Inc. v. Working Data Grp., Inc., 849 A.2d 1261, 1263 (Pa. Super. Ct.
2004) (holding that where plaintiff had previously sold its accounts receivable to a third party
and thus had no interest in such funds, plaintiff could not state a claim for conversion against
bank that mistakenly received payment from debtor and kept funds to decrease plaintiff’s
obligation at bank).
In any event, Olick has submitted no evidence to support his claim that Northampton
County converted funds received from either Bank of America or the bankruptcy trustee. As the
bankruptcy court noted, Northampton County marked as satisfied its claim for unpaid taxes,
including those taxes it was collecting on behalf of Palmer Township and the Easton Area School
District, thereby relieving the bankruptcy trustee of any obligation to make further payments on
12
that claim. And there is no evidence that either Palmer Township or the Easton Area School
District has attempted to collect from Olick or has otherwise asserted a claim against him for the
funds allegedly withheld by Northampton County. In short, Olick has failed to offer any evidence
from which a fact-finder could reasonably find that Northampton County converted the funds it
received.
Olick also contends that because the taxes that Northampton County identified as unpaid
in response to BAC’s inquiry exceeded the allowed portion of Northampton’s claim,
Northampton County must have converted the payment it had previously received from the
bankruptcy trustee by either applying that payment to disallowed claims or otherwise using the
payment for some improper purpose. At the time of BAC’s inquiry, Northampton County had
already received a payment of $269.26 from the bankruptcy trustee, and as a result, the remaining
amount due on Northampton County’s claim no. 7 was $1,284.56. In response to BAC’s inquiry,
Northampton County prepared a certification stating that the total tax balance then due on the
specified property was $12,978.81. There is no dispute that this amount reflected post-petition
taxes owed as well as pre-petition taxes. Olick contends, however, that the pre-petition taxes
included in this total exceeded the remaining amount due on claim no. 7. Northampton County
concedes that the tax balance reported to BAC included “pre-petition obligations that were not
part of the approved claims.” (Northampton County’s Br. at 4 n.3.) But once again, Olick has
produced no evidence from which a fact-finder could reasonably find that Northampton
converted any funds received from the bankruptcy trustee. There is no evidence that
Northampton County failed to apply the $269.26 payment from the bankruptcy trustee to reduce
the unpaid balance of claim no. 7 to $1,284.56. Indeed, Cindy Hoffer, the tax claim supervisor
13
for Northampton County, stated in an affidavit that the balance reported to BAC “included the
sum of $1,284.56, which was the unpaid balance of the allowed Claim No. 7.” (Northampton’s
Br. Ex. 1, Aff. of Cindy Hoffer (July 14, 2010) ¶ 5.) And Olick has offered no evidence to
dispute her statement. In any event, even assuming that Northampton County misapplied the
trustee’s payment, Olick has failed to offer any evidence—beyond his conclusory
allegations—from which a fact-finder could reasonably find that Northampton County converted
the bankruptcy trustee’s payment.
Accordingly, I will affirm the bankruptcy court’s grant of summary judgment in favor of
Northampton County as to this claim.10
3.
Violation of the Automatic Stay (Count III)
Olick next asserts a claim for violation of the automatic stay under section 362 of the
Bankruptcy Code.
Section 362 of the Bankruptcy Code provides that the filing of a bankruptcy petition
operates as an automatic stay that protects the debtor and property of the bankruptcy estate. See
11 U.S.C. § 362(a). As relevant in this case, section 362 automatically stays
(3) any act to obtain possession of property of the estate or of property from the estate
or to exercise control over property of the estate;
. . . [and]
10
Olick also claims that Northampton County converted tax payments that he made
before he filed his bankruptcy petition. He contends that the bankruptcy court’s disposition of
claims no. 7 and no. 8 is evidence that Northampton County did not credit pre-petition amounts
paid against his outstanding tax balance. Although this allegation formed the basis for his fraud
claim in his amended adversary complaint, it does not appear that he asserted this conversion
claim in the bankruptcy court. In any event, this claim must fail because, beyond his conclusory
allegations, Olick has presented no evidence from which a fact-finder could reasonably conclude
that Northampton County converted Olick’s pre-petition tax payments.
14
(6) any act to collect, assess, or recover a claim against the debtor that arose before
the commencement of the case under this title.
11 U.S.C. § 362(a).
Olick claims that Northampton County violated the automatic stay by seeking payment
from Bank of America for pre-petition taxes. There is no merit to this claim. As the bankruptcy
court reasoned, Northampton County’s conduct is analogous to that of a creditor that sells its
claim against the debtor to a third party. And it is well established that such transfers do not
violate the automatic stay. See, e.g., In re Garcia, No. 10-23707, 2011 WL 2551184 (Bankr.
D.N.J. June 24, 2011); In re Layton, 220 B.R. 508, 515 (Bankr. N.D.N.Y. 1998); Citicorp Park
Assocs. v. Aetna Life Ins. Co. (In re Citicorp Park Assocs.), 173 B.R. 823, 824 (Bankr. D. Me.
1994). As one court has explained, “the automatic stay provisions of the Bankruptcy Code do not
prohibit a creditor of a debtor from transferring any interest or claim it might have against the
debtor’s bankruptcy estate to a third party.” Tidwell v. Slocumb (In re Georgia Steel, Inc.), 71
B.R. 903, 909 (Bankr. M.D. Ga. 1987). Rather, “[s]uch a transfer merely substitutes the party that
holds the interest or claim against the debtor’s bankruptcy estate, and such transfer does not serve
to increase or decrease the interest or claim the party asserts against the debtor’s bankruptcy
estate.” Id. Although Bank of America simply paid the tax claim rather than purchasing it from
Northampton County, the same reasoning applies here.11 And because there is no evidence that
Olick had any property interest in the funds used by Bank of America to pay the tax claim, I
11
In addition, merely accepting the payment of taxes from Bank of America cannot
constitute an “act to collect, assess, or recover a claim” against Olick by Northampton County,
and the bankruptcy court did not err in concluding that there was no evidence to support a finding
that Northampton County took any affirmative action to obtain the payment it received.
15
conclude that Northampton County did not violate the automatic stay.12 Accordingly, I will
affirm the bankruptcy court’s judgment in favor of Northampton County as to this claim.
4.
Breach of Contract (Count V)
Olick similarly claims that Northampton County breached the settlement agreement from
a prior adversary proceeding brought by Olick against Northampton County and other defendants
by seeking payment from Bank of America for pre-petition taxes.
The bankruptcy court reasoned that Northampton County’s essential obligation under the
settlement agreement was to comply with the automatic stay. The settlement agreement provides,
in relevant part:
a. Northampton County, the Northampton County Tax Claim Bureau, the City of
Easton and the Easton Area School District will not take any action of any nature
to collect claims for taxes that were due as of the date of filing of the Chapter 13
Bankruptcy Petition and acknowledge that to the extent that those claims are
allowed, they will be fully satisfied upon receipt of the amounts allowed by the
Bankruptcy Court from the Trustee in Bankruptcy.
b. Should the [sic] Northampton County, the Northampton County Tax Claim
12
Olick also suggests that Northampton County violated the automatic stay by continuing
to publicly report as unpaid certain taxes that were disallowed by the bankruptcy court. It does
not appear that Olick properly presented this issue to the bankruptcy court, and the bankruptcy
court did not address it. In any event, Olick has presented no evidence that Northampton County
has attempted to collect such amounts. In support of his claim, Olick has submitted two realestate tax certifications prepared by Northampton County on May 6, 2010, for 1209-15 Chidsey
Street and 1220-22 Chidsey Street, which show unpaid tax balances. (See Appellant’s Ex. K
(exhibit attached to brief).) In his briefs to the bankruptcy court, Olick characterized these
exhibits as “public records” (see, e.g., id. at 6; Ex. R at 6), but he did not specify how he obtained
them or for what purpose they were prepared. Nowhere has he alleged that Northampton County
sent invoices to him or that Northampton County has otherwise attempted to collect these taxes.
See, e.g., Zotow v. Johnson (In re Zotow), 432 B.R. 252, 258–60 (B.A.P. 9th Cir. 2010). Contrary
to Olick’s suggestion, there is simply no evidence from which a fact-finder could reasonably find
that Northampton County has attempted to “coerce” him into paying these taxes. (Appellant’s
Reply Br. to the Answer Brief of the EASD at 20.)
16
Bureau, the City of Easton or the Easton Area School District take any steps to
collect the prepetition claim for taxes, through inadvertence or otherwise, this
Stipulation of Settlement shall be deemed a full defense to any such claim or
actions and may be presented to specified public agency or authority as proof that
all prepetition claims for taxes that are allowed will be satisfied through the
bankruptcy process and no other.
(Stipulation of Settlement ¶ 19.) Section 362 similarly provides that a bankruptcy petition
operates as a stay of “any act to collect, assess, or recover a claim against the debtor that arose
before the commencement of the case.” 11 U.S.C. § 362(a)(6). And just as the bankruptcy court
concluded that Northampton County did not violate the automatic stay, the court similarly
concluded Northampton County did not breach the settlement agreement.
Olick contends, however, that the settlement agreement must be read as prohibiting
Northampton County from receiving payment from a third party such as Bank of America, even
if such conduct would not violate the automatic stay. I disagree.
As previously discussed, Northampton County’s acceptance of payment from Bank of
America on the tax claim may be analogized to the sale of the claim to Bank of America. The
settlement agreement does not expressly prohibit Northampton County from transferring its
claim to a third party. And while the parties intended the settlement agreement to limit
Northampton County’s ability to collect pre-petition taxes owed by Olick, there is no reasonable
basis for concluding that Northampton County intended the settlement agreement to limit its
right to transfer its claim for such taxes to a third party. Moreover, it is unreasonable to interpret
the settlement agreement as permitting assignment of the claim to a third party but prohibiting
payment of the claim by a third party when, in light of the purpose of the settlement agreement,
there is no meaningful difference between the two transactions. I thus conclude, as a matter of
17
law, that the settlement agreement does not prohibit Northampton County from receiving
payment from Bank of America for pre-petition taxes.13, 14 Because Northampton County did not
breach the settlement agreement, the bankruptcy court properly granted summary judgment in
favor of Northampton County on Olick’s breach-of-contract claim, and I will affirm the
bankruptcy court’s judgment.
5.
Harassment (Count IV)
Olick next asserts a claim for harassment. But, as the bankruptcy court asserted,
harassment is not a recognized civil cause of action under Pennsylvania law, see DeAngelo v.
Fortney, 515 A.2d 594, 596 (Pa. Super. Ct. 1986) (declining to create a new cause of action for
harassment), and Olick’s harassment claim must therefore fail.
Olick contends that 18 Pa. Cons. Stat. Ann. § 2709 provides a statutory cause of action
for harassment. Section 2709, however, sets forth the elements of the crime of harassment; the
statute does not establish a civil cause of action.
13
“Where the meaning of a written contract is clear and unambiguous, its interpretation
and construction are for the court, not the [fact-finder].” Hewes v. McWilliams, 194 A.2d 339,
342 (Pa. 1963). But “where the language chosen by the parties is ambiguous, deciding the intent
of the parties becomes a question of fact for [the fact-finder].” Am. Eagle Outfitters v. Lyle &
Scott Ltd., 584 F.3d 575, 587 (citing Cmty. Coll. of Beaver Cnty. v. Cmty. Coll. of Beaver Cnty.,
Soc’y of the Faculty, 375 A.2d 1267, 1275 (Pa. 1977)). Thus, as a preliminary matter, a court
must determine, as a matter of law, whether the terms of a contract are clear or ambiguous. See
id. “A contract is ambiguous if it is reasonably susceptible of different constructions and capable
of being understood in more than one sense.” Hutchison v. Sunbeam Coal Corp., 519 A.2d 385,
390 (Pa. 1986).
14
Moreover, the bankruptcy court did not err in concluding that there was no evidence to
support a finding that Northampton County took “any action of any nature to collect claims for
taxes” in violation of the settlement agreement by merely accepting payment from Bank of
America.
18
In addition, in his reply briefs submitted to this court, Olick attempts, for the first time, to
characterize his harassment claim as a claim for malicious prosecution, or wrongful use of civil
proceedings, see 42 Pa. Cons. Stat. Ann. § 8351, and as a claim for abuse of process. A plaintiff,
however, may not assert new claims for the first time on appeal, see, e.g., In re Reliant Energy
Channelview LP, 594 F.3d 200, 209 (3d Cir. 2010), and accordingly, I will not address the merits
of these new claims.
Instead, because Pennsylvania law does not recognize a civil cause of action for
harassment, I will affirm the bankruptcy court’s grant of summary judgment in favor of
Northampton County as to this claim.
6.
RICO (Count VI)
Finally, Olick asserts a RICO claim against Northampton County. I will affirm the
bankruptcy court’s grant of summary judgment in favor of Northampton County on this count
because a RICO claim cannot be sustained against a municipality. See Genty v. Resolution Trust
Corp., 937 F.2d 899, 914 (3d Cir. 1991) (holding that because RICO's mandatory award of treble
damages is punitive in nature, municipalities are immune from suit under RICO).
B.
The Easton Area School District
Olick bases his claims against the Easton Area School District on an agency theory of
liability, asserting that Northampton County acted as an agent of the Easton Area School District
for the collection of taxes owed to the school district, and his claims against the Easton Area
School District are therefore derivative of his claims against Northampton County. Accordingly,
because his claims against Northampton County fail, his claims against the Easton Area School
19
District must similarly fail. I will therefore affirm the bankruptcy court’s grant of summary
judgment in favor of the Easton Area School District as to all claims against it.
IV.
CONCLUSION
For the reasons set forth above, I will affirm the bankruptcy court’s grant of summary
judgment in favor of Northampton County and the Easton Area School District. An appropriate
order accompanies this memorandum.
20
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