In re Keaty

350 B.R. 723, 56 Collier Bankr. Cas. 2d 1573, 2006 Bankr. LEXIS 2651, 2006 WL 2818478
CourtUnited States Bankruptcy Court, W.D. Louisiana
DecidedSeptember 14, 2006
DocketNo. 05-51007
StatusPublished
Cited by2 cases

This text of 350 B.R. 723 (In re Keaty) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, W.D. Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Keaty, 350 B.R. 723, 56 Collier Bankr. Cas. 2d 1573, 2006 Bankr. LEXIS 2651, 2006 WL 2818478 (La. 2006).

Opinion

REASONS FOR DECISION

GERALD H. SCHIFF, Bankruptcy Judge.

Thomas S. Keaty (“Debtor”) filed a voluntary petition for relief under chapter 13 of the Bankruptcy Code1 on April 18, 2005 (“Petition Date”), and on that day an order for relief was duly entered. An Order Confirming Chapter 13 Plan was entered on December 28, 2005.

Shortly following confirmation, the Debtor filed his Motion For Contempt Against Roy Raspanti (“Contempt Motion”), seeking appropriate sanctions for an alleged violation of the automatic stay. A hearing on the Contempt Motion was held on July 17, 2006. After hearing the evidence and argument of counsel, the matter was taken under advisement.

JURISDICTION

The case has been referred to this court by the Standing Order of Reference entered in this district which is set forth as Rule 83.4.1 of the Local Rules of the United States District Court for the Western District of Louisiana. No party in interest has requested a withdrawal of the reference. The court finds that this is a core proceeding pursuant to 28 U.S.C. § 157(b)(2).

These Reasons for Decision constitute the Court’s findings of fact and conclusions of law pursuant to Rule 7052, Federal Rules of Bankruptcy Procedure.

LAW and DISCUSSION

Upon the filing of a petition for relief under the Bankruptcy Code, “all entities” are enjoined from taking certain actions against the debtor and his or her property. Section 362(a). The provision of section 362 relevant to the instant matter provides:

(а) Except as provided in subsection (b) of this section, a petition [for relief] ... operates as a stay, applicable to all entities, of—
* * *
(б) any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case under this title;

The Motion alleges that Mr. Raspanti violated section 362(a)(6) in two respects: (a) Bruce Danner, on behalf of Mr. Ras-panti, contacted Elizabeth Alston, an attorney representing the Debtor in a matter not related to this case, regarding settlement of Mr. Raspanti’s claim against the Debtor,2 and (b) the filing by Mr. Raspanti [725]*725of a Motion To Lift Stay Order (“Lift Stay Motion”) to permit the filing of a suit against the Debtor based upon alleged post-petition conduct.

A. Mr. Danner’s Involvement.

Considerable background needs to be understood in order to put the contact between Mr. Danner and Ms. Alston in perspective. In a prior case under chapter 7 filed by the Debtor3, Mr. Raspanti had filed a complaint to determine discharge-ability pursuant to section 523. Mr. Ras-panti’ s motion for summary judgment in that matter was set for hearing on Tuesday, April 19, 2005. The hearing was not held, however, as the instant chapter 13 was filed the preceding day.

A letter from Ms. Alston to Mr. Raspan-ti, dated April 18, 2005, refers to their “telephone conversation on Friday,” which would have been April 15. The letter transmitted a settlement proposal which obviously was in continuation of their earlier conversation. The conversation between Mr. Raspanti and Ms. Alston, being before the Petition Date obviously cannot support a claim of violation of the automatic stay in this case. The offer of settlement was apparently rejected, however, and there were no further contacts until January 2006.

In the interim, the chapter 13 case proceeded, ultimately resulting in the Debt- or’s chapter 13 plan being confirmed at a hearing held on December 21, 2005; the entry of an order of confirmation occurred on December 28.

Another telephone conversation between Mr. Raspanti and Ms. Alston took place. According to Ms. Alston’s billing records, this occurred on January 3, 2006. As this conversation was beyond the allegations of the Contempt Motion, however, the court excluded this “incident” as a basis for contempt.

Mr. Danner and Mr. Raspanti have been friends since their law school days. Mr. Danner and Ms. Alston both practice in the same locale and have enjoyed both a professional and personal relationship. Subsequent to Mr. Raspanti’s January 3 conversation with Ms. Alston, he and Mr. Danner visited. At that time Mr. Danner learned of Mr. Raspanti’ s contacts with Ms. Alston regarding the Keaty litigation, and, having a mutual relationship with both attorneys, he suggested that he might assist in getting the matter resolved. Mr. Raspanti agreed, and Mr. Danner thereafter contacted Ms. Alston to convey a settlement offer on behalf of Mr. Raspanti. This apparently occurred on January 9, 2006, which date is corroborated both by Ms. Alston’s letter on the same day to Mr. Keaty, and by Ms. Alston’s billing records. It is this contact on January 9, 2006, of which the Debtor complains.

As stated above “any act to collect ... or recover a claim against the debtor that arose before the commencement of the case” constitutes a violation of the automatic stay of section 362. Mr. Keaty argues that Mr. Danner’s telephone call to Ms. Alston to convey a settlement offer was sufficient conduct to constitute the “act” proscribed by the statute. For the following reasons, the court disagrees.

While a telephone call might constitute a violation of section 362(a)(6), the circumstances of this case dictate otherwise. First of all, Mr. Danner’s involvement was only as a mutual friend of Mr. Raspanti and Ms. Alston — his role was no more than that of a “good Samaritan.” He did not act as Mr. Raspanti’s attorney— he opened no file, made no written notes, and did not bill for his services. He only [726]*726acted in an effort to facilitate settlement between Messrs. Raspanti and Keaty. While a good Samaritan may well cross the line and violate section 362, in view of the prior settlement efforts of the parties, the court does not view his involvement as doing so.

Further, the prior settlement negotiations, while having occurred some time in the past, suggest an environment where such contact should not be deemed viola-tive of section 362(a)(6). The issue of whether settlement negotiations violated section 362(a)(6) was discussed by the court in the case of In re Diamond, 346 F.3d 224, 227 (1st Cir.2003):

“The automatic stay is one of the fundamental protections that the Bankruptcy Code affords to debtors.” Jamo v. Katahdin Federal Credit Union (In re Jamo), 283 F.3d 392, 398 (1st Cir.2002). Under 11 U.S.C. § 362(a)(6), the filing of a bankruptcy petition operates as an automatic stay of “any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case.” Section 727 is a specific exemption from the automatic stay to allow for a challenge to discharge.
Whether settlement negotiations pertaining to a challenge to discharge violate the automatic stay is an issue of first impression in this Court.

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Bluebook (online)
350 B.R. 723, 56 Collier Bankr. Cas. 2d 1573, 2006 Bankr. LEXIS 2651, 2006 WL 2818478, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-keaty-lawb-2006.