Opinion ID: 200684
Heading Depth: 2
Heading Rank: 2

Heading: Coerciveness of the Threat

Text: 11 Having agreed with the parties that negotiations regarding discharge are not per se violations of the automatic stay, we turn to the settlement negotiations in this case to determine whether Premier's statement regarding Diamond's real estate license could have constituted impermissible coercion or harassment. Jamo, 283 F.3d at 399. 2 A 12(b)(6) dismissal would be appropriate only if it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. Medina-Claudio v. Rodríguez-Mateo, 292 F.3d 31, 34 (1st Cir. 2002) (internal quotation and citation omitted). 12 In evaluating the coerciveness of a statement made in the course of negotiations, this Court has not enunciated a specific test, but does look at the immediateness of any threatened action and the context in which a statement is made. See Jamo, 283 F.3d at 402 (citing In re Brown, 851 F.2d 81, 86 (3d Cir.1988)) (considering creditor's references to foreclosure in context and deciding they were not coercive because, rather than signaling immediate action, they indicated that foreclosure was not on the [creditor's] agenda). 13 Here, Premier's alleged statement could reasonably be deemed tantamount to a threat of immediate action against Diamond. Jamo, 283 F.3d at 402. Premier's statement placed Diamond between a rock and a hard place. If he prevailed in the § 727 proceeding, as he ultimately did, he would face an administrative proceeding and quite possibly the revocation of his real estate license, the source of his livelihood. If Premier prevailed in the § 727 proceeding, then Diamond would suffer because he would not obtain a discharge of his debts. Thus, Diamond would lose either way. In this situation, where an unsecured creditor's statement functionally forces the debtor to treat a professional license as collateral, a dismissal on the pleadings is unacceptable because the statement could be found to be coercive by a trier of fact. 3 14 Premier presents several arguments against the statement's coerciveness, but we find none of them convincing. First, Premier argues that the statement, which was a one-time communication, 4 did not threaten immediate action because it was conditioned on the outcome of the adversary proceeding. We cannot agree. Filing of the administrative proceeding to have Diamond's license revoked at the time of the statement likely would have violated the automatic stay, thus making truly instantaneous action to that effect risky if not impossible. See 11 U.S.C. § 362(a)(1) (barring initiation of administrative or other proceeding against the debtor once bankruptcy petition has been filed). In light of the procedural block to an immediate filing of revocation proceedings, the statement threatened action that was as immediate as possible, and sufficiently imminent to be potentially coercive. 15 Second, Premier argues that the communication could not be considered coercive because it occurred between counsel during an administrative proceeding, not reaffirmation. The fact that the statement was made by Premier's attorney to Diamond's attorney does not detract from its coerciveness. In Jamo, the statements at issue were also between counsel, but the Jamo Court did not find this fact relevant to the coerciveness determination. Id. at 402. Similarly, we do not find it determinative that the statement was made to Diamond's counsel rather than to Diamond himself, particularly where counsel swiftly communicated the threat to his client. Although we doubt Premier's proposition that statements made in an adversary context should be given greater leniency, we leave that issue for the district court's consideration on remand. 16 Finally, Premier would have us find that it was unreasonable for Diamond to perceive the threat as coercive, and further that Diamond's complaint is insufficient because it failed to allege Premier lacked a good faith basis for a complaint to the Real Estate Commission. 5 If the threat was an empty one — in other words if it lacked a good faith basis — we do not think that Premier would have made it at all. Further, Premier cannot have it both ways, arguing it had a good faith basis for making the threat while simultaneously claiming that the threat was an empty one. 17 We conclude that the alleged statement could be found coercive, and Diamond could indeed prove a set of facts — that Premier made the statement and that it coerced Diamond to settle — that would entitle him to relief. We note, however, that because Diamond would have had to defend against the § 727 discharge proceeding regardless of the statement's coerciveness, his damages are unclear. The remedy issue is one the district court should examine more closely on remand.