In re Harbaugh

512 B.R. 901, 2014 WL 3378577
CourtUnited States Bankruptcy Court, S.D. Ohio
DecidedApril 16, 2014
DocketNo. 13-53842
StatusPublished

This text of 512 B.R. 901 (In re Harbaugh) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, S.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Harbaugh, 512 B.R. 901, 2014 WL 3378577 (Ohio 2014).

Opinion

OPINION AND ORDER ON MOTION FOR SANCTIONS

C. KATHRYN PRESTON, Bankruptcy Judge.

This matter came on for hearing before the Court on March 21, 2014, upon the Motion to Enforce Settlement Agreement and for Sanctions (Doc # 66) filed on behalf of Debtor Ernest Eugene Harbaugh (hereinafter, “Debtor”), the objection thereto (Doc # 76) filed by Deborah J. Harbaugh (hereinafter, “Ms.Harbaugh”) and another objection thereto filed on behalf of Ms. Harbaugh by her counsel. Present at the hearing were Mina Nami Khorrami representing Debtor, and Kenneth M. Richards representing Ms. Har-baugh. Also present were Debtor and Ms. Harbaugh. At the conclusion of the hearing, the Court granted the Motion to the extent that it sought enforcement of a settlement agreement, and a separate order will be entered memorializing the Court’s order. The Court took under advisement the request for sanctions.

The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334 and General Order 05-02 entered by the Unit[903]*903ed States District Court for the Southern District of Ohio, referring all bankruptcy matters to this Court. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A), (L) and (0).

This is the latest skirmish in a long running battle between Debtor and his former wife Ms. Harbaugh. The facts underlying this latest dispute may be summarized as follows: Debtor filed a petition for relief under Chapter 13 of the Bankruptcy Code on May 10, 2013. Ms. Har-baugh was listed as a creditor and duly notified of the bankruptcy case. In due course, Debtor proposed a Chapter 13 Plan (hereinafter, the “Plan”). Ms. Har-baugh objected to confirmation of the Plan (Doc. # 19) on several grounds: that Debt- or has possession of certain marital assets that were to be divided in accordance with the divorce decree, that Debtor failed to accurately disclose his income and living expenses in his schedules, and that Debtor has failed to pay his domestic support obligations to her. The objection also requested that this Court determine that the bankruptcy court proceedings would not “interfere or delay ... proceedings which are scheduled” in the domestic court or that court’s “ability to enter further orders”.1

Ms. Harbaugh filed four proofs of claim: (a) Claim # 6-1 in the amount of $153,196.99; (b) Claim #7-1 in the amount of $22,996.01, (c) Claim #8-1 in the amount of $30,025.00, and (d) Claim # 9-1, stating “amount to be determined.” All of the claims arise from domestic court proceedings in connection with the parties’ divorce, property settlement and Debtor’s spousal support obligations. Debtor objected to all of Ms. Harbaugh’s proofs of claim (Docs. # 37, 38, 39 and 40).

Trial was scheduled to be held on December 2, 2013, on Ms. Harbaugh’s objection to confirmation of the Plan and all of Debtor’s objections to Ms. Harbaugh’s claims. Shortly prior to trial, the parties notified the Court that the disputes had been settled. In light of the contentious history between the parties, the Court requested that counsel state the terms of the settlement on the record, which they did. Counsel represented that all disputes between the parties in the bankruptcy court were resolved and would be the subject of an agreed order to be tendered to the Court. Counsel acknowledged that there may be certain lingering issues before the domestic court which remain outstanding, and there was no intention to address those in the agreed order, but if the parties wanted or needed to resolve those issues, they would await the conclusion of the bankruptcy proceeding.

In early December, counsel for Debtor tendered to Ms. Harbaugh’s counsel a proposed agreed order; Ms. Harbaugh’s attorney transmitted it to Ms. Harbaugh. Ms. Harbaugh expressed concern over certain language of the document, but then communications between Ms. Harbaugh and her counsel ceased until late February 2014, without Ms. Harbaugh specifying to her counsel what her concerns were. Counsel for Debtor reached out to counsel [904]*904for Ms. Harbaugh several times, inquiring about the status of the agreed order, but was unable to get any meaningful response. During that time period, Ms. Harbaugh experienced some health concerns and/or problems that demanded her attention, although she was not rendered physically or mentally impaired by her malady or medical treatment, nor required to take medication that impaired her judgment. She believes that she was depressed during this time, but did not seek medical attention for that condition and was not taking medication for it.

Although Ms. Harbaugh declined to sign the proposed order and would not authorize her counsel to do so, and was not in contact with her counsel, she authored a letter to the Chapter 13 Trustee, complaining of issues that she raised or should have raised in her objection to confirmation or should have raised in other timely motion practice. Debtor’s counsel was required to expend time to research and draft a response, at significant cost to Debtor in legal fees.

Finally, unable to submit an agreed order to the Court as required by the local rules and the Court, and because the issues presented impediments to confirmation of the Plan, counsel for Debtor was forced to file a motion to enforce the settlement. Only after the motion was filed did Ms. Harbaugh reestablish contact with her counsel on or about February 25, 2014. Ms. Harbaugh’s counsel filed a response on her behalf, but Ms. Harbaugh also filed her own response, in which she indicated dissatisfaction with the settlement and articulated more complaints about Debtor and the case that she should have raised in her objection to confirmation or some other motion. Neither response articulated a defense to the motion.

At the hearing, counsel for Debtor and counsel for Ms. Harbaugh both confirmed that the agreed order crafted by Debtor’s counsel accurately memorialized the agreement between the parties. After some discussion about the parameters of the agreement and Ms. Harbaugh’s concerns, the Court granted the motion to enforce the settlement. At the Court’s request, counsel for Debtor submitted the draft agreed order, and it has been entered by the Court.2

Inasmuch as counsel for Debtor has been compelled to expend time pursuing finalization of the agreed order, defending Ms. Harbaugh’s new attacks on Debtor, and filing and prosecuting the motion to enforce the settlement, counsel is seeking an award of attorney’s fees from Ms. Har-baugh.

As the United States Supreme Court has noted, a court may assess attorney’s fees under its inherent powers “when a party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons.” Chambers v. NASCO, Inc., 501 U.S. 32, 45-46, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991) (internal quotation marks and citations omitted). It can be appropriate as well to award fees when the conduct is “tantamount to bad faith[.]” Roadway Express, Inc. v. Piper, 447 U.S. 752, 767, 100 S.Ct. 2455, 65 L.Ed.2d 488 (1980). The Sixth Circuit has adopted a three-part [905]*905test to determine the propriety of imposition of sanctions under the bad faith standard. Big Yank Corp. v.

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Related

BDT Products, Inc. v. Lexmark International, Inc.
602 F.3d 742 (Sixth Circuit, 2010)
Roadway Express, Inc. v. Piper
447 U.S. 752 (Supreme Court, 1980)
Chambers v. Nasco, Inc.
501 U.S. 32 (Supreme Court, 1991)

Cite This Page — Counsel Stack

Bluebook (online)
512 B.R. 901, 2014 WL 3378577, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-harbaugh-ohsb-2014.