Palazzola v. City of Toledo Department of Public Utilities

UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF OHIO
WESTERN DIVISION
In Re:
Lisa Palazzola and
Monte Palazzola
Debtors.
Lisa Palazzola, et al.,
Plaintiffs,
v.
City of Toledo, Department of
Public Utilities,
Defendant.
) 	Case No.: 09-37696
)
) 	Chapter 7
)
) 	Adv. Pro. No. 10-3254
)
) 	Hon. Mary Ann Whipple
)
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)
)
)
)
)
)
ORDER GRANTING MOTION FOR PRELIMINARY INJUNCTIVE RELIEF
This adversary proceeding came before the court for hearing on December 15, 2010, on Plaintiffs’
Motion for Preliminary Injunctive Relief [Doc. # 9], and Defendant’s response [Doc. # 10]. Plaintiffs,
Plaintiffs’ counsel, Defendant’s counsel and a representative of Defendant attended the hearing in person.
The parties had the opportunity to, and did, present testimony and other evidence in support of their
respective positions.
This preliminary injunction is being issued for the following reasons, see Fed. R. Bankr. P. 7065;
The court incorporates by reference in this paragraph and adopts as the findings
and orders of this court the document set forth below. This document has been
entered electronically in the record of the United States Bankruptcy Court for the
Northern District of Ohio.
Dated: December 17 2010
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Fed. R. Civ. P. 65(d)(1), as explained in more detail by the court at the conclusion of the hearing, see Fed.
R. Bankr. P. 7052; Fed. R. Civ. P. 52(a)(1), (2).
1. Defendant operates a municipal public utility supplying water and sewer services to its residents,
who have no other source for obtaining running water and sewer services. Plaintiffs, who are disabled, live
in the City of Toledo on a fixed income with their minor son, who is also disabled. They are customers of
Defendant’s municipal water and sewer utility. They received a discharge in the underlying Chapter 7 case,
which discharge included a pre-petition debt owed to Defendant for water and sewer services at their home.
Defendant received notice of the commencement of the Chapter 7 case and of Plaintiffs’ discharge. After
Plaintiffs received their discharge, on August 12, 2010, Defendant terminated water service to their home.
Plaintiffs 	established at the hearing a substantial likelihood of probability of success on the merits in
proving that Defendant violated the discharge injunction of 11 U.S.C. § 524(a)(2) in terminating water
service to Plaintiffs’ home, at least in part due to the discharged debt. The evidence indicates that Plaintiffs
had established a repayment plan for post-petition services before the shutoff, but that the last regular bill
Plaintiffs received from Defendant before shutoff included and appeared to reinstate the entire discharged
debt. Defendant 	then 	repeatedly demanded 	payment of amounts including the 	discharged debt as a
condition of restoring water service to the home, which amounts Plaintiffs cannot pay. Although Plaintiffs
did not plead in their complaint a cause of action for contempt of the discharge injunction, the court finds
that it was tried at the hearing by the implied consent of the parties. Fed. R. Bankr. P. 7015; Fed. R. Civ.
P. 15(b)(2).
2. Plaintiffs and their minor son have lived at the home without running water and, as a result,
without functioning sewer services since the August 12, 2010, shutoff. The conditions in which they subsist
at the home without running water and 	functioning sewer services are dire. Every day in which they
continue to live in such conditions constitutes irreparable harm to them and to their son. Water and sewer
services, for which Plaintiffs are obligated to pay, must be restored to their home to alleviate these dire
conditions.
3. The issuance of this preliminary injunction will not cause substantial harm to others. Plaintiffs’
unpaid post petition bills are not substantial, they were the apparent subject of a consensual repayment plan
before shutoff and other municipal rate payers will not be unduly negatively impacted should Plaintiffs
default again and in the event this injunction has been wrongfully entered. In contrast, the human harm to
Plaintiffs and their son is great in not having running water and functioning sewer services at their home.
The relative balance of the harm to the parties weighs strongly in Plaintiffs’ favor.
2
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4. The public interest will be served in granting this injunction. Based on the court’s finding that
Plaintiffs have shown a strong likelihood of success on the merits at least insofar as a contempt action, the
public has a strong interest in the integrity of the bankruptcy discharge and the fresh start it is intended by
Congress to provide, as well as in restoring basic human dignity and living conditions to a family if that
fresh start has been wrongfully eroded. Evidence at the hearing showed that the negative effects of the lack
of running water and sewer services at Plaintiffs’ home are spilling out into their neighborhood as well.
5. Pending determination of the merits of this action, this injunction is necessary to restore the status
quo ante as it existed between the parties immediately before municipal water service to Plaintiffs’ home
was terminated.
For the foregoing reasons and as otherwise stated by the court on the record at the hearing, good
cause appearing,
IT IS ORDERED that Plaintiff’s Motion for Preliminary Injunctive Relief [Doc. # 9] be, and hereby
is, GRANTED as follows:
1. Municipal utility service shall be reinstated by Defendant at 3593 Nearing, Toledo, Ohio, on or
before December 22, 2010, by 5:00 p.m., after an inspection of the water meter at that address and after
Plaintiffs sign a new contract for such service.
2. Defendant’s application of the $300 security deposit paid by Plaintiffs after commencement of
their Chapter 7 case to payment of water utility services provided prior to termination of such service on
August 12, 2010, shall be reversed. The security deposit shall be reinstated as such and no further security
deposit shall be required before service is resumed.
3. Continuation of municipal utility services at 3593 Nearing, Toledo, Ohio, is conditioned upon
the following:
a. 	Plaintiffs/Debtors timely paying bills for future ongoing utility services provided by
Defendant; and
b. 	Plaintiffs/Debtors repaying unpaid amounts owed for the provision of post-petition
municipal utility services prior to the date of this order at a rate of $50.00 per month. 	The
first such payment shall be made on or before January 15, 2010, and by the fifteenth of every
month thereafter until paid in full.1
1The evidence does not show the terms of the apparent post-petition repayment plan between the parties. The court
believes that the outstanding post-petition balance due after reversal of the application of the $300 deposit is approximately
$563.00. The unpaid account amount is subject to final reconciliation at trial or prior to trial at the filed written request of either
party.
3
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4. 	Nothing in this order shall 	preclude the termination of utility services in accordance with
Defendant’s standard procedures in the event that Plaintiffs do not pay for the future ongoing utility services
provided by Defendant.
5. In the event of Plaintiffs’ default with respect to the payment required in paragraph 3(b) of this
order, Defendant’s counsel shall send Plaintiffs and Plaintiffs’ counsel a 10-day notice of Defendant’s
intent to file an affidavit attesting to the default and a proposed order granting it leave to terminate
Plaintiffs’ utility service.
6. If the default in the repayment plan is not cured within that 10-day period, then upon the filing
of an affidavit by Defendant attesting to the default by Plaintiffs, an order shall be entered without further
hearing, granting Defendant leave to terminate Plaintiffs’ utility services.
7. Unless modified by other orders of the court, this injunction will remain in effect pending
determination of the merits of this action by this court.
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