Miller v. District of Columbia et al

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF COLUMBIA
In re
GREEN MILLER, JR.,
Debtor.
____________________________
GREEN MILLER, JR.,
Plaintiff,
v.
DISTRICT OF COLUMBIA, et
al.,
Defendants.
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Case No. 96-00431
(Chapter 11)
Adversary Proceeding No.
08-10028
Not for publication in
West’s Bankruptcy Reporter
MEMORANDUM DECISION RE DISTRICT OF
COLUMBIA’S MOTION SEEKING TO DISPOSE OF PROCEEDING
This decision addresses the Motion to Dismiss Adversary
Proceeding or, in the Alternative, Motion for Summary Judgment
The document below is hereby signed.
Signed: December 03, 2009.
_____________________________
S. Martin Teel, Jr.
United States Bankruptcy Judge
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1 	There is no return of service demonstrating that the
summons and complaint were served on the other defendant, Lynn C.
French who is alleged to have served as Administrator of the D.C.
Homestead Program. 	Accordingly, I will treat the District as the
sole defendant at this juncture.
2
filed by the defendant, the District of Columbia. 1 	For the
reasons set forth below, I will grant in part and deny in part
the defendant’s motion.
I
The background facts are not in dispute. 	Throughout the
1990's, the plaintiff, Green Miller, Jr., owned four properties
located at (a) 1330 Belmont Street NW, (b) 1332 Belmont Street
NW, (c) 2560 University Place NW, and (d) 6920 Eighth Street NW,
on which he owed back taxes. 	The District of Columbia conducted
tax sales on the two Belmont Street properties (“Belmont
Properties”) in June 1991, November 1991, June 1992, November
1992, and June 1995. 	The statutory redemption period on the
properties expired in January 1996.
On April 2, 1996, Miller filed for bankruptcy relief in this
court, activating the protection of the automatic stay of 11
U.S.C. § 362(a). 	Thereafter, on June 7, 1996, the District sent
Miller notice of impending transfer of the Belmont Properties to
occur on July 7, 1996, if the properties were not redeemed by
that time. 	Miller failed to redeem, and the mayor deeded the
Belmont Properties to the Homestead Housing Preservation Program
(“HHPP”) on August 8, 1996.
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3
On September 20, 1996, the District filed a suit to quiet
title on the Belmont Properties in the District of Columbia
Superior Court. 	Upon becoming aware of Miller’s pending
bankruptcy case, however, the Superior Court dismissed the quiet
title proceeding.
In August 1998, Miller became aware that the District had
transferred title to the Belmont Properties to HHPP. 	Then, on
June 11, 2002, the District quitclaimed the properties back to
Miller. 	On March 26, 2004, Miller entered into a contract for
the sale of the Belmont Properties for $2.1 million and
ultimately consummated the sale.
Finally, on November 13, 2006, Miller filed his complaint
against the District in the United States District Court for the
District of Columbia, seeking, among other things, damages
against the District for violating the automatic stay. 	The
District Court dismissed all of Miller’s claims except the claim
for automatic stay violation, which it referred to this court for
disposition. 	In his complaint, Miller asks for (a) compensatory
damages, (b) damages for lost rent from the time the District
held title to the properties, (c) damages for stress and mental
anguish, and (d) punitive damages. 	For ease of organization, I
will address the District’s motion as applied to each of the
claims for damages.
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2 	Compensatory damages are also recoverable in some
instances for a violation of the automatic stay based on the
court’s civil contempt power, but the instances in which damages
are recoverable, and the damages that are recoverable under the
statutory remedy, are at least as extensive as under the civil
contempt remedy. 	Any dismissal of claims based on the statutory
remedy necessarily requires a dismissal as well of claims based
on the court’s civil contempt power.
4
II
A.
Compensatory Damages
Under 11 U.S.C. § 362(h) (re-numbered in 2005 as 11 U.S.C. §
362(k), pursuant to an amendment that was not made effective as
to this case), 	“[a]n individual injured by any willful violation
of a stay provided by this section shall recover actual damages,
including costs and attorney’s fees, and, in appropriate
circumstances, punitive damages.” 2 	Miller has claimed
compensatory damages in the amount of $4,171,343, which is profit
he alleges he would have earned had he been able to develop the
Belmont Properties while the District held title. 	In its motion,
the District argues that Miller is not entitled to compensatory
damages because Miller’s lack of financial capacity was the
proximate cause of his loss of business opportunity, not the
District’s alleged violation of the stay. 	Specifically, the
District avers that Miller “lacked the financial capacity to
obtain financing from NationsBank, or anyother financial
institution, to develop the Belmont Properties.”
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A party is entitled to summary judgment when there is no
“genuine issue of material fact” and the undisputed facts warrant
judgment for the moving party as a matter of law. 	Fed. R. Civ.
P. 56 (c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986).
In addressing a motion for summary judgment, “the court must view
the evidence in the light most favorable to the party against
whom summary judgment is sought and must draw all reasonable
inferences in [its] favor.” 	Matsushita Elec. Indus. Co. Ltd. v.
Zenith Radio Corp., 475 U.S. 574, 587 (1986). 	Whether any
disputed issue of fact exists is for the court to determine.
Balderman v. United States Veterans’ Admin., 870 F.2d 57, 60 (2d
Cir. 1989). 	The moving party has the initial burden of
demonstrating the absence of a disputed issue of material fact.
Celotex v. Catrett, 477 U.S. 317, 323 (1986). 	Once such a
showing has been made, the non-moving party must present
“specific facts showing that there is a genuine issue for trial.”
Fed. R. Civ. P. 56(e). 	The party opposing summary judgment “may
not rely on conclusory allegations or unsubstantiated
speculation.” 	Scotto v. Almenas, 143 F.3d 105, 114 (2d Cir.
1998). 	Moreover, not every disputed factual issue is material in
light of the substantive law that governs the case. 	“Only
disputes over facts that might affect the outcome of the suit
under the governing law will properly preclude summary judgment.”
Anderson, 477 U.S. at 248.
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6
The Statement of Material Facts in Support of the District’s
Motion for Summary Judgment establishes these facts:
1. 	Miller and his company, GM II, encountered serious
financial difficulties beginning in 1992.
2. 	By the middle of 1993, Miller and GM II had $200,000 in
outstanding loans from NationsBank.
3. 	In November 1994, Miller wrote to NationsBank and
requested an extension of the loans until 1998, the
disbursement of additional funds, and NationsBank’s
participation in developing the Belmont Properties.
4. 	Miller was not successful in restructuring his loans or
obtaining financial assistance from NationsBank to
develop the Belmont Properties.
5. 	In 1995, the outstanding loans that NationsBank had
made to GM II had reached maturity and the Bank
informed Miller that it would no longer extend his
loans.
6. 	Based on Miller’s payment defaults, NationsBank
determined that Miller could not maintain the loan at
prevailing interests rates and that he was a bad risk
for NationsBank.
7. 	Miller’s financial problems were not limited to his
relationship with NationsBank. 	The Department of
Housing and Urban Development initiated foreclosure
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proceedings on 2566 University Place NW due to Miller’s
payment defaults.
8. 	Riggs National Bank foreclosed on two of Miller’s other
rental properties in 1994.
9. 	Miller was unable to pay his property taxes.
10. 	Miller had insufficient operating capital to meet his
personal and family obligations and had no other source
of income.
These facts, the District contends, show that Miller was not
creditworthy and therefore could not develop the Belmont
Properties. 	Because Miller could not develop the properties, the
defendant argues, the District was not the proximate cause of the
compensatory damages Miller is claiming and therefore not liable.
The District has met its initial burden under Celotex to
show an absence of material facts in dispute regarding Miller’s
ability to develop the Belmont Properties during the period when
the District held title and, therefore, the District being the
proximate cause of Miller’s lost profits. 	Consequently, the
burden now shifts to Miller under Fed. R. Civ. Proc. 56(e) to
demonstrate that there is a genuine issue of material fact
regarding his compensatory damages.
In response to the District’s motion, Miller filed his own
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3 	It is important to note that Miller filed this motion
pro se, although he was represented by counsel at the time.
Though this is a grounds for striking the motion, because the
motion does nothing to rebut the District’s motion, I opt to
forego striking it.
4 	It bears noting that actions in violation of the
automatic stay are void. See In re Henneghan, No. 03-01216, 2009
WL 2855835, at *3 (Bankr. D.D.C. June 15, 2009). 	Even if the
void title of the District were a cloud on Miller’s title, he
could easily have obtained a judgment from this court decreeing
that the District’s title was void. 	Any damages incurred in
pursuing such a decree would have been minimal. 	A debtor cannot
claim huge damages for violation of the automatic stay when the
debtor failed to take steps to mitigate those damages. 	See In re
GeneSys, Inc., 273 B.R. 290, 296 (Bankr. D.D.C. 2001).
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motion for summary judgment. 3 	Even electing to treat Miller’s
motion for summary judgment as an opposition to the District’s
motion, Miller’s motion does nothing to demonstrate that there is
a material issue of fact outstanding regarding whether he had the
means to develop the properties in the first instance. 	Rather,
Miller’s motion sets out facts that could constitute a violation
of the automatic stay, but provides no evidence as to the extent
of any damage he suffered or in any way seeks to rebut the
District’s argument that he could not have procured financing to
develop the properties. 	Because Miller has failed to meet his
burden under Rule 56(e) to show that there is a material fact in
issue regarding whether the District alleged violation of the
automatic stay were the proximate cause of the compensatory
damages he suffered, summary judgement in favor of the District
on the issue of compensatory damages is appropriate. 4
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5 	Again, however, Miller’s damages would be limited by his
failure to take steps to mitigate his damages.
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B.
Lost Rental Damages
The next damages that Miller claims in his complaint are
damages for lost rent on the Belmont Properties for the time the
District held title to them. 	The summary judgment portion of the
District’s motion, addressing the compensatory damages that
Miller claims, rests on two arguments that do not suffice to
support summary judgment as to the claim for lost rent. 	The
first argument, that this court should give collateral estoppel
effect to rulings in Miller’s adversary proceeding against
NationsBank, only speaks to Miller’s ability to develop the
properties. 	Nothing in this argument speaks to his ability to
rent the properties as, say, a parking lot, which could have been
impaired because he did not hold title to the properties.
Moreover, the second argument, that Miller could not obtain
financing, likewise does not speak to his ability to rent the
properties during the time the District held title.
Consequently, summary judgment as to the lost rent claim is
improper. 5
Alternatively, however, the District also argues that the
court should dismiss the case. First, the district argues that
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dismissal is proper because Miller’s claims should be barred by
the doctrine of laches. 	Second, the District asks the court to
dismiss based on Miller’s failure to prosecute and for discovery
abuses.
The purpose of a motion to dismiss is “to test the legal
sufficiency of the complaint.” Kingman Park Civic Ass'n v.
Williams, 348 F.3d 1033, 1040 (D.C. Cir. 2003). In deciding a
motion to dismiss, although the court “must construe the
allegations and facts in the complaint in the light most
favorable to the plaintiff . . . ,” Gustave-Schmidt v. Chao, 226
F. Supp. 2d 191, 195 (D.D.C. 2002), the complaint must
nevertheless plead “enough facts to state a claim to relief that
is plausible on its face,” Bell Atlantic Corp. v. Twombly, 550
U.S. 544 (2007), and “the court need not accept inferences drawn
by plaintiffs if such inferences are unsupported by the facts set
out in the complaint . . . . [nor must it] accept legal
conclusions cast in the form of factual allegations.” 	Kowal v.
MCI Communications Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994).
In deciding a motion to dismiss, “the Court may only consider the
facts alleged in the complaint, documents attached as exhibits or
incorporated by reference in the complaint, and matters about
which the Court may take judicial notice.” 	Gustave-Schmidt, 226
F. Supp. 2d at 196.
Regarding the District’s laches argument, a motion to
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dismiss is not the proper way to raise it. 	To prevail on a
defense of laches, the party asserting the defense has the burden
of proving a “(1) lack of diligence by the party against whom the
defense is asserted, and (2) prejudice to the party asserting the
defense." Nat'l R.R. Passenger Corp. v. Morgan, 536 U.S. 101, 121
(2002). 	These are, by their nature, factual inquiries, E.E.O.C.
v. Great Atlantic & Pacific Tea Co., 735 F.2d 69, 81 (3d Cir.
1984), and therefore inappropriate for resolution through a
motion to dismiss, see Major v. Plumbers Local Union No. 5, 370
F. Supp. 2d 118, 128 (D.D.C. 2005); Nat’l Fair Housing Alliance,
Inc. V. Prudential Ins. Co. Of Am., 208 F. Supp. 2d 46, 48
(D.D.C. 2002). 	Moreover, it is inappropriate to treat the
District’s motion to dismiss as a motion for summary judgment.
Although the District included exhibits accompanying its motion,
none of them address the prejudice to the District.
Consequently, dismissal of Miller’s claim for lost rent on the
basis of laches is inappropriate at this time.
Regarding the District’s motion to dismiss for lack of
prosecution and discovery abuses, dismissal of the adversary
proceeding is also improper on these bases. 	First, there has
been no failure to prosecute this case by Miller. 	Except for
missing a hearing allegedly due to illness, a failure that I have
dealt with separately, Miller has acted to prosecute this
adversary proceeding. 	Moreover, the District has failed to
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demonstrate why Miller’s alleged discovery abuses would warrant
dismissing the case.
Fed. R. Civ. Proc. 37(b)(2)(A)(v) empowers the court to
dismiss a proceeding where a party has disobeyed a discovery
order. 	Nothing in the District’s motion alleges that Miller has
violated a discovery order of this court. 	To be sure, the
District has alleged practices by Miller that might rise to the
level of an abuse of discovery and would warrant the court
issuing an order compelling discovery, but until Miller is in
violation of such order, dismissal under Rule 37(b)(2)(A)(v) is
inappropriate.
Nor is dismissal under Rule 37(d) appropriate. 	Rule 37(d)
allows the court to dismiss a case when a party fails to attend
his own deposition, or utterly fails to serve answers,
objections, or written responses to interrogatories. 	All the
District alleges in its motion is that it was not satisfied with
Miller’s answers in the depositions and his responses to
interrogatories, not that he failed to attend the deposition or
utterly failed to respond to the interrogatories. 	Consequently,
dismissal is improper under Rule 37(d)
Finally, the District has cited to nothing that provides the
court with the authority to dismiss a case because of a pattern
of alleged discovery abuses. 	Moreover, Miller’s conduct in this
adversary proceeding to date has not risen to such a level that
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6 	The District has not addressed whether damages for stress
and mental anguish are recoverable under § 362(k), (or what was
§ 362(h) when this alleged violation of the stay occurred).
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would warrant dismissal at this time. 	Accordingly, the
District’s motion to dismiss on this basis also fails.
C.
Damages for Stress and Mental Anguish
Miller’s third claim of damages is for stress and mental
anguish. 	In its motion, the District asserts the same bases for
dismissal as I addressed in the lost rental income section.
First, for the reasons stated above, the summary judgment
portion of the District’s motion only speaks to Miller’s ability
to obtain financing to develop the Belmont Properties and
therefore does not provide a basis to dismiss these damages.
Nothing in the motion speaks to or is relevant to a determination
of whether the District’s alleged violation of the stay caused
Miller to suffer damages for stress and mental anguish.
Accordingly, summary judgment on this basis is inappropriate. 6
Second, also for the reasons stated above, the motion to
dismiss portion of the District’s motion does not provide a basis
for the relief the District requests. 	Again, because the defense
of laches is by its nature a factual determination, a motion to
dismiss is not the appropriate way to raise it. 	Moreover,
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because the District did not attach exhibits that speak to the
prejudice the District allegedly suffered as a result of Miller’s
delay, I cannot treat the motion to dismiss as a motion for
summary judgment. 	Finally, again for the reasons stated above,
Miller has not failed to prosecute this case and the alleged
abuses of discovery do not rise to a level that would warrant
dismissal at this time. 	Accordingly, the District’s motion to
dismiss or alternative motion for summary judgment with regards
to Miller’s claims of damages for stress and mental anguish must
also fail.
D.
Punitive Damages
Miller’s final claim is for punitive damages in the amount
of $1.5 million. 	The District seeks to dispose of these damages
under the summary judgment and motion to dismiss theories
outlined above. 	I need not reach those grounds, however, because
§ 106(c)(3) of the Bankruptcy Code prevents Miller for recovering
punitive damages from the District. 	Section 106(a) abrogates the
sovereign immunity of a governmental unit under various sections
of the Bankruptcy Code, including under § 362. 	But § 106(c)(3)
provides that:
The court may issue against a governmental unit an order,
process, or judgment under such sections or the Federal
Rules of Bankruptcy Procedure, including an order or
judgment awarding a money recovery, but not including an
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award of punitive damages.
Id. (emphasis added). 	Section 101(27) defines “governmental
unit” 	to include any “State; Commonwealth; District; Territory;
[or] Municipality; . . . [and any] department, agency, or
instrumentality of . . . a State, a Commonwealth, a District, a
Territory, [or] a municipality.” As a matter of law, then,
Miller’s punitive damages claim is appropriately dismissed.
III
For the foregoing reasons, I will grant the District’s
motion for summary judgment on Miller’s claim for compensatory
damages and its motion to dismiss Miller’s claim for punitive
damages. 	I will deny, however, the District’s motion to dismiss
and motion for summary judgment on Miller’s claims for damages
for stress and mental anguish and Miller’s claim for lost rental
income. 	An order follows.
[Signed and dated above.]
Copies to: All counsel of record.
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