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Schwab v. Jackson

Court of Appeals of Georgia, Third Division

January 23, 2019

W. HENRY SCHWAB, JR.
v.
THEODORE JACKSON et al. W. HENRY SCHWAB, JR.
v.
THEODORE JACKSON et al.

          GOBEIL, COOMER and HODGES, JJ.

          GOBEIL, JUDGE.

         In case number A18A2071, W. Henry Schwab, Jr. appeals from the Superior Court of Fulton County's order dissolving a temporary restraining order ("TRO"), which had been imposed to prevent the appellees from proceeding with the judicial sale of Schwab's condominium (located at 37 28th Street, NW, #2, Atlanta, Georgia), and dismissing the case with prejudice. Specifically, following the defendants' filing of a motion for judgment on the pleadings and motion to dismiss for failure to state a claim, and, in the alternative, request for dissolution of the TRO, the trial court found that dismissal of the action on the pleadings, pursuant to OCGA § 9-11-12 (c), and/or for failure to state a cause of action, pursuant to OCGA § 9-11-12 (b) (6), was appropriate. Alternatively, the trial court noted that dismissal of the TRO "would also be appropriate under OCGA § 9-11-65 (b)." Schwab argues on appeal that: (1) the trial court did not apply the correct standard in ruling on the motion, failed to treat it as a motion for summary judgment, and denied Schwab an opportunity to be heard; (2) the trial court erred in dismissing the case with prejudice; and (3) the trial court erred in concluding that Schwab breached his obligations under his approved bankruptcy reorganization plan .

         Likewise, in case number A19A0112, Schwab appeals from the superior court's subsequent entry of an order imposing sanctions on Schwab for filing the underlying action, in violation of a Bill of Peace entered in prior litigation between the parties, which prevented Schwab in relevant part "from filing any lawsuit in this jurisdiction regarding the subject property[1] without the prior written approval of th[e] Court[.]" He argues on appeal that the trial court lacked jurisdiction to enter the sanctions order, and erred in concluding that his filing of the underlying petition violated the Bill of Peace .

         As relevant background, at 1:57 p.m. on April 30, 2018, Schwab, through his counsel, filed an Emergency Verified Petition for a TRO against Theodore Jackson, in his official capacity as the Fulton County Sheriff, The Wycliff Condominium Association, Inc., and one of its officers, Jennifer Kirsch (collectively "the defendants"). Schwab sought to temporarily restrain the defendants from proceeding with a judicial sale of his condominium, which was scheduled to take place the next day. He acknowledged that Kirsch and the condominium association previously obtained a judgment against him in 2014 and were seeking to execute that judgment through judicial sale of the condominium. However, he argued that the proposed sale violated the express terms of his plan of reorganization entered in his 2015 Chapter 11 bankruptcy proceeding by the United States District Court for the Northern District of Georgia. He asserted that the plan of reorganization provided for satisfaction of the 2014 judgment through a payment plan, and he had paid all obligations due under the plan and Kirsch had accepted his payments. He maintained that the bankruptcy court had confirmed the plan was binding on all creditors and ordered that all creditors were "restrained from commencing or continuing any suit or other proceeding against [Schwab] or [his] assets on a claim existing at the time of the filing of the [original Bankruptcy] petition." Thus, he asserted that, because the plan did not permit the judicial sale of his condominium and he was in compliance with his obligations under the plan, the defendants' actions in seeking the judicial sale violated the plan and should be restrained "at least for a sufficient time to permit the issues raised in this [c]omplaint to be more fully briefed and argued to and determined by the Court." Schwab attached several documents in support of his petition, including: the bankruptcy plan of reorganization, the bankruptcy court's order and final decree, and the Sheriff's Notice regarding the proposed sale of his condominium.

         Notably, Schwab's counsel acknowledged in a footnote of the petition that he "believed that a 'bill of peace' was entered" in 2014 litigation between Schwab and the condominium association and Kirsch, which required that Schwab obtain prior approval from the court "for further complaints or proceedings by [Schwab] in connection with those matters." However, counsel argued that the "bill of peace should not be construed to preclude the filing of the present Petition, given the fundamentally different issues on and posture of this matter in comparison with the previous litigation between those parties." Alternatively, counsel urged the court "to grant any permission that may be deemed necessary for the filing and receipt of the present Petition."

         A little over an hour later the superior court issued an ex parte emergency TRO, concluding that Schwab had "made a sufficient initial showing to justify the temporary relief sought" and enjoining the defendants from proceeding with the sale. The superior court did not discuss the Bill of Peace in its order.

         At 4:57 a.m the next day, the defendants filed a Motion for Judgment on the Pleadings and Motion to Dismiss for Failure to State a Cause of Action; or in the alternative, Dissolution of the TRO. They argued that Schwab's petition for an emergency TRO violated the Bill of Peace-the existence of which he had failed to disclose to the court-and, therefore, the action should be summarily dismissed and Kirsch was entitled to judgment on the pleadings, pursuant to OCGA § 9-11-12 (c). They also argued that the case should be dismissed for failure to state a claim upon which relief could be granted because Schwab lacked written permission of the court to file the action. Alternatively, on the merits of his claim, the defendants argued that Schwab was not entitled to the relief sought because he had violated the Chapter 11 bankruptcy reorganization plan by not making the monthly payments due to Kirsch for April 2017 through November 2017. The defendants acknowledged that Schwab paid all of the past due payments on the eve of a bankruptcy hearing in December 2017 and that Kirsch accepted those payments. Nevertheless, they argued that Kirsch was entitled to treat his prior non-payment under the plan and other conduct (threatening further litigation in violation of the Bill of Peace) as anticipatory repudiation of the other payments not yet due under the bankruptcy plan. Accordingly, the defendants requested that the action be dismissed on the pleadings and/or dismissed for failure to state a claim or, in the alternative, that the TRO be dissolved.

         In support of their motion, the defendants attached several documents, including, among other items: (1) the order from the 2014 case entering the Bill of Peace;[2] (2) a consent order entered by the bankruptcy court in which the parties agreed that the amount of Kirsch's and the condominium association's secured claim was $58, 945 and that interest would accrue at the rate of 6.25% per year; (3) an order entered by the bankruptcy court in December 2017 declaring that the automatic stay was no longer in effect, and "abstain[ing] from making any determination about whether [Schwab] is in default under the Chapter 11 plan and what, if any, remedies are available to [Kirsch and the condominium associaton], which is more properly decided by the appropriate state court"; (4) e-mail correspondence from the time period during the bankruptcy proceeding regarding Schwab's non-payment of the monthly installments as set forth in the reorganization plan; (5) Kirsch's counsel's invoice for services rendered during the bankruptcy proceeding; and (6) the order and final decree entered by the bankruptcy court in February 2018 closing the Chapter 11 case.[3]

         At 9:49 a.m, a few hours after the defendants filed their motion, the superior court entered an order dismissing Schwab's action with prejudice, dissolving the TRO, and vacating the prior order.[4] In reaching its decision, the trial court took judicial notice of the Bill of Peace and a then-pending 2017 action filed by Schwab against Kirsch (Case no. 2017CV289939), and noted that the court had not given advance written permission in either the 2017 action or the underlying case as required by the Bill of Peace. The court further found that "Schwab did not disclose the existence of the Bill of Peace to this Court or try to show how it does not apply here, or what efforts he made to get the required permission." Thus, the court concluded that dismissal of the action was appropriate on the pleadings, or for failure to state a claim, or both, "as [Schwab was] lacking an essential element of any cause of action or pleading, i.e., written permission, that he could file against Defendants about the subject condominium," citing both OCGA § 9-11-12 (b) and (c). Finally, the court concluded that, even if the Bill of Peace did not exist, Schwab was not entitled to relief on the merits of his claim that the defendants' actions (in seeking to proceed with the judicial sale of his condominium) breached the Chapter 11 reorganization plan. Specifically, in concluding that he was not entitled to relief on the merits, the court referenced the exhibits attached to the defendants' motion and found as follows:

Kirsch shows that Schwab had an eight-month payment default, that she incurred condominium association enforcement expenses to get payments started, which was a four-month process in [Schwab's] Chapter 11 case (she demanded to be made whole for these enforcement expenses but Schwab refused), and that Schwab had a cashier's check with her name on it for $220, 000.00, but Schwab withheld Plan payments as long as he believed he could and only started payments on the eve of a bankruptcy hearing of December 2017 on the issue of confirming the lifting of stay. He had further begun sending notices to Kirsch about [] initiating the 2017 litigation, disobeying the injunction. Kirsch was entitled to treat Schwab's nonpayment and other conduct throughout the duration his non-payment of Plan installments as anticipatory repudiation, as not all of his performance under his Plan was due when Kirsch began to take steps in bankruptcy court to enforce the 2014 foreclosure judgment.

         Accordingly, the judicial sale of Schwab's condominium proceeded.[5]

         Seven days later, on May 8, 2018, Schwab filed an Emergency Motion to Reopen the Case along with supporting documents, requesting that the superior court reopen the case, vacate its prior order dismissing his action, set aside the sale of his condominium, and reimpose the TRO. Schwab argued that the prior order vacating the TRO and dismissing the case should be vacated because he was not provided with a minimum of two days' notice of the motion to dissolve the TRO as required under OCGA § 9-11-65 (b). He further argued that the Bill of Peace did not bar the action because this case involved whether the defendants were violating the terms of his Chapter 11 Bankruptcy Plan, and did not involve condominium maintenance or common area disputes which were subject to the Bill of Peace. Additionally, he argued that the confirmed Bankruptcy Plan extinguished the defendants' rights to immediate payment under the 2014 judgment and supplanted it with an installment contract, and the only remedy for a breach of this contract was for the defendants to bring suit for breach of contract or to enforce his obligation. Moreover, he argued that the defendants' acceptance of his late payments in December 2017 cured any prior default. Accordingly, he argued that the foreclosure sale of his condominium should be set aside because his plan payments were current and no default had been declared at the time the sale commenced. In addition, he argued that the sale was void, pursuant to OCGA § 9-13-60, because the condominium was subject to two superior/senior security deeds.

         The defendants filed responses opposing the motion, maintaining that the case should remain dismissed due to Schwab's lack of candor regarding the Bill of Peace and repeated violation thereof, his non-compliance with his own Chapter 11 Bankruptcy Plan, and filing the motion to reopen outside the term of court in which the challenged order was issued. They also filed a cross-motion, requesting that Schwab be found in contempt for violating the Bill of Peace. Schwab filed a reply, reiterating his arguments as to why his motion should be granted. The defendants filed a supplemental response, reiterating their arguments. A hearing was held on June 4, 2018. However, two days later, before the court ruled on the merits of Schwab's motion to reopen, he filed a notice of appeal from the order vacating the TRO and dismissing the case (Case Number A18A2071).[6] Accordingly, the court concluded that it no longer had jurisdiction to entertain his motion to ...


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