UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF INDIANA

FORT WAYNE DIVISION

RUSSELL D. ROSCO and )

BONNIE R. ROSCO, )

)

 Debtors/Appellants, )

)

 v. ) CIVIL NO. 1:15cv147

)

ANTHONY LOCKHART, )

)

 Appellee. )

OPINION AND ORDER

This matter is before the court on an appeal of the Bankruptcy Court’s June 1, 2015

decision. The Debtors/Appellants, Russell D. Rosco and Bonnie R. Rosco (“the Roscos”),

proceeding pro se, filed their brief on June 18, 2015. However, as the Roscos had not complied

with all of the procedural requirements for pursuing an appeal, this court entered an order on

August 13, 2015 explaining the procedural requirements and setting deadlines for the

requirements to be met. The Roscos complied with the order, which enabled the Bankruptcy

Court to transmit the record to this court on September 28, 2015. As part of this transmittal, a

briefing schedule was set, in which Appellants were given until November 2, 2015 to file their

brief. Nothing further has been filed, and thus the court will decide the appeal based on the June

18 brief. The court notes here that the Appellee, Anthony Lockhart (“Lockhart”), is also pro se.

Standard of Review

A bankruptcy court’s legal conclusions are reviewed de novo and its findings of fact for

clear error. Kovacs v. U.S., 614 F.3d 666, 672 (CA 7, 2010). Where the Bankruptcy Code

commits a decision to the discretion of the bankruptcy court, the reviewing court reviews that
decision only for abuse of discretion. In re Fortney, 36 F.3d 701, 707 (CA 7, 1994). A court

abuses its discretion when its decision is premised on an incorrect legal principle or a clearly

erroneous factual finding, or when the record contains no evidence on which the court rationally

could have relied. Wiese v. Cmty Bank of Cent. Wis., 552 F,3d 584, 588 (CA 7, 2009). A finding

is “clearly erroneous” when although there is evidence to support it, the reviewing court on the

entire evidence is left with the definite and firm conviction that a mistake has been committed. In

re Smith, 582 F3d 767, 777 (CA 7, 2009). If the bankruptcy court’s account of the evidence is

plausible in light of the record viewed in its entirety, the reviewing court will not reverse its

factual findings even if the reviewing court would have weighed the evidence differently. Stamat

v. Neary, 635 F3d 974, 979 (CA 7, 2011).

Discussion

As the Roscos’ brief is skimpy on the background facts, the court has gleaned the

following facts from the Bankruptcy Court’s decision, as supported by the record. 

Debtors filed a petition for relief under Chapter 7 of the Bankruptcy Code on July 26,

2013, shortly before a hearing in the Allen Superior Court in an eviction proceeding brought by

the Appellee herein, Lockhart, effectively staying that proceeding. The Roscos received a

discharge on November 12, 2103, and had already vacated the rented premises as of October 3.

On April 1, 2014, the Roscos sued Lockhart in Allen Superior Court, Small Claims

Division, seeking the return of a $1590 security deposit. Lockhart responded with a counterclaim

for unpaid rent, damages to the property and various expenses, totaling $5,486. The Roscos then

responded in turn with a suit in the Bankruptcy Court, asserting that Lockhart’s counterclaim

violated the discharge injunction. As Bankruptcy Judge Grant explained in detail in his decision,

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asserting a right of setoff or recoupment is not a violation of the discharge injunction, and the

Roscos had no basis to complain that Lockhart’s counterclaim violated the discharge injunction. 

11 U.S.C. § 553(a); In re Buckmaier, 127 B.R. 233, 237 (9 Cir. BAP 1991). th

The Roscos had also complained to the Bankruptcy Court that, after litigation

commenced, they repeatedly attempted to mail something to Lockhart. Lockhart, however,

refused to accept the mailings and, in at least one instance, scrawled an obscenity across the

envelope the Roscos had addressed to him, and mailed it back to them. Again, as Judge Grant

explained, Lockhart did not violate either the discharge injunction or the automatic stay, as a

creditor may properly respond to communication initiated by the debtor. In re Henry, 266 B.R.

457, 473 (Bankr. C.D. Cal. 2001).

As the remaining complaints by the Roscos all occurred prior to their discharge, the

Bankruptcy Court noted that they could not possibly constitute a violation of an injunction that

had not yet gone into effect. The Bankruptcy Court nevertheless discussed these claims, out of

deference to the parties’ pro se status, and explained in some detail why Lockhart’s vulgar and

insulting emails to the Roscos were not violations of the automatic stay as they were not attempts

to collect a pre-petition debt. Likewise, Lockhart’s comments on his Facebook page and on

Craigslist, in which Lockhart vents his anger against the Roscos and warns other landlords to be

wary of them, were not communications intending to collect a pre-petition debt and were not

violations of the automatic stay. Finally, when the Roscos had “Claudia” pose as a prospective

landlord of the Roscos and ask Lockhart for a reference, Lockhart told her many negative things. 

Again, this was not a violation of the automatic stay, as Lockhart did nothing more than respond

to an inquiry initiated by the debtor. In any event, the Roscos had failed to offer any proof at trial

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that they had suffered any damages as a result of Lockhart’s actions, and thus the Bankruptcy

Court noted that even if they had proven that Lockhart had done something wrong, they would

still lose the case. In re Morris, 514 B.R. 658, 667 (Bankr. N.D. Ala. 2014).

In their brief before this court, the Roscos allege they were denied discovery and denied

the “right to determine issues”. This court has carefully reviewed the Roscos’ assertions and has

concluded that the Roscos simply fail to understand the Bankruptcy Court’s decision. The

Roscos seem to believe that if they had been permitted to go into more detail about Lockhart’s

actions, they would have won at trial. However, it is clear, as a matter of law, that the Roscos

could not prevail because Lockhart’s actions were not violations of the automatic stay or the

discharge injunction. None of the evidence the Roscos assert they were prevented from

discovering or presenting would have changed the outcome. In fact, the Roscos have failed to

explain to the court how they believe any of the evidence they discuss would show that Lockhart

had attempted to collect a pre-petition debt in an impermissible way.

The Roscos’ complaints with regard to “denial of right to determine issues” is even more

vague. Although the Roscos list pages and pages of things they would have done differently at

trial if they had been able to present certain evidence or prepare better for trial, the Roscos fail to

explain how any of this would change the outcome of the trial. And this is so because, as a

matter of law, the actions taken by Lockhart were not violations of anything. No matter how

much digging the Roscos do or how many times they beat a dead horse, the fact remains that

Lockhart acted within the proper scope of bankruptcy law.

Accordingly, the decision of the Bankruptcy Court will be affirmed.

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Conclusion

On the basis of the foregoing, the decision of the Bankruptcy Court is hereby

AFFIRMED.

 

 Entered: December 16, 2015.

 s/ William C. Lee 

 William C. Lee, Judge

 United States District Court

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