Violations of the Automatic Stay Are Substantive Bankruptcy Rights and Are Not Appropriate for Arbitration

Violations of the Automatic Stay Are Substantive Bankruptcy Rights and Are Not Appropriate for Arbitration

Before the Court is Defendant’s Motion to Compel Arbitration and Stay Related Contested Matter (“Arbitration Motion”)  filed by Cellco Partnership d/b/a Verizon Wireless (“Verizon”). Verizon seeks an order staying this Court’s further consideration of the Motion for Contempt filed by Debtors  and compelling the Debtors to arbitrate the Motion for Contempt. The Debtors filed Debtors’ Response in Opposition to Verizon Wireless’ Motion to Compel Arbitration  (“Debtors’ Response”), in which the Debtors oppose arbitration of the Motion for Contempt.

The Debtors filed a Chapter 7  petition and  listed “Verizon” as a creditor with a pre-petition general unsecured claim of $797.39. The Court granted the Debtors a discharge.

The Debtors  filed a Motion for Contempt, in which whey alleged that Verizon violated the automatic stay in 11 U.S.C. § 362 and the discharge injunction in 11 U.S.C. § 524. The Debtors alleged that Verizon sent 4 post-petition collection letters demanding payments and called them so often that they changed their wireless provider.  The Debtors also alleged that Verizon’s collection agency demanded payment from them post-discharge.

Verizon responded to the Motion for Sanctions by claiming that it did not receive proper notice of the Debtors’ bankruptcy filing because the Debtors sent notice to Verizon at a payment lock box. Despite the Debtors’ improper notice, Verizon issued the Debtors a credit of $834.97 for pre-petition charges, leaving an account balance of $0.00 as of that date.

The Court scheduled the issues of whether Verizon willfully violated the automatic stay and the discharge injunction for an evidentiary hearing on July 19, 2017.

Verizon alleged that, prior to the Petition Date, one of the Debtors entered into a contract with Verizon for multiple lines of wireless telecommunications services (“Contract”). Verizon further alleged that the Contract “contained a valid and binding agreement to arbitrate claims ‘arising out of or relating to’ the contract.”  In addition to filing the Motion for Contempt, Verizon asserts that the Debtors also filed an action in state court. Verizon stated that it has served a written demand upon the Debtors’ counsel to arbitrate the disputes in the State Court Action.



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