In re Lunden

524 B.R. 410, 2015 Bankr. LEXIS 126, 2015 WL 225398
CourtUnited States Bankruptcy Court, D. Massachusetts
DecidedJanuary 15, 2015
DocketNo. 14-40412-HJB
StatusPublished

This text of 524 B.R. 410 (In re Lunden) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. Massachusetts primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Lunden, 524 B.R. 410, 2015 Bankr. LEXIS 126, 2015 WL 225398 (Mass. 2015).

Opinion

MEMORANDUM OF DECISION

HENRY J. BOROFF, Bankruptcy Judge.

Before the Court is a request filed by Kristen L. Lunden, the debtor in this Chapter 7 case (the “Debtor”), seeking sanctions as compensation for a creditor’s failure to redact from one of its filings certain 'of her personal .identifying information in contravention of the redaction requirements contained in Federal Rule of Bankruptcy Procedure (“Bankruptcy Rule” or “Rule”) 9037(a). In ruling on the sanctions request, the Court must first determine whether Rule 9037(a) was actually violated. Assuming a violation of the rule is established, the Court must then decide whether sanctions are appropriate in this ease, and, if so, the amount of sanctions that should be imposed.

I. FACTS AND POSITIONS OF THE PARTIES

The Debtor commenced this case under Chapter 7 of the United States Bankruptcy Code (the “Bankruptcy Code” or the “Code”)1 on March 7, 2014. In the schedules and statements filed with the petition, the Debtor disclosed her interest in real property located in Athol, Massachusetts that serves as her primary residence (the “Property”), and claimed an exemption of “up to $5,820.00” in any equity in the Property pursuant to § 522(d)(1). Schedule C — Property Claimed as Exempt, ECF No. 1.

On March 19, the Debtor filed a motion to avoid a judicial lien against the Property (the “Motion to Avoid”) held by Lenkar, LLC (“Lenkar”). In the Motion to Avoid, the Debtor estimated the fair market value of the Property as ranging between $141,704 and $148,971, based upon a comparative market analysis attached to the motion. Given that the balance of the mortgage debt secured by the Property was approximately $162,000, the Debtor argued that there was no non-exempt equity available to satisfy Lenkar’s lien, that the lien impaired her exemption, and that the lien was accordingly avoidable in its entirety pursuant to § 522(f).

Lenkar, through its attorney, Russell Chernin, filed an objection to the Motion to Avoid (the “Objection”), arguing that the value of the Property was actually $180,000, which after deduction of the mortgage lien and the Debtor’s claimed exemption would leave $12,180 in equity to at least partially satisfy Lenkar’s lien. In support of the asserted higher value for the Property, Attorney Chernin attached as an exhibit to the Objection a copy of a “Financial Statement of Judgment Debtor” (the “Financial Statement”) that had previously been submitted in conjunction with proceedings against the Debtor by Lenkar [413]*413in the Small Claims Session of the Trial Court of Massachusetts (the “state court proceeding”). The Financial Statement, completed by the Debtor and executed on November 5, 2013, contained an estimate of the fair market value of the Property in the amount of $180,000. But that document, filed by Attorney Chernin without redaction, also contained the Debtor’s full social security number, home telephone number, address, and date of birth.

The following day, having received notice of the filed Objection, the Debtor’s Attorney, David Nickless, contacted Attorney Chernin via email, demanding that Attorney Chernin notify the Court of his error in filing the Financial Statement on the public docket without redaction and request that the Court remove it from the public record. In that initial email to Attorney Chernin, Attorney Nickless also requested indemnification for any damages incurred by the Debtor on account of the public filing of the unredacted document.

Attorney Chernin responded by refusing to withdraw the Opposition, claiming that the Financial Statement was an “admission by Ms. Lunden as to all matters contained thereon.” Motion to Strike Ex. 1, ECF No. 14. Attorney Chernin then apologized for not “noticing” that the document contained the Debtor’s social security number, but claimed that even if he had noticed its presence, he “would be most reluctant to modify a document signed by someone else’s client.” Id. He did state, however, that he would not oppose any request to the Court by the Debtor to have the social security number redacted.

Less than pleased with this response, Attorney Nickless replied that if Attorney Chernin did not take steps to have the document struck from the record or redacted, Nickless would file a motion to have the exhibit removed and would seek payment for damages arising from the violation of the Debtor’s privacy rights. By the end of the business day, Attorney Chernin had not brought the unredacted filing to the Court’s attention and later that evening, Attorney Nickless, on behalf of the Debtor, filed the “Debtor’s Emergency Motion (A) to Strike from the Public Record and this Court’s Electronic Filing System the Exhibit to Opposition of Len-kar, LLC to Debtor’s Motion to Avoid Judicial Lien and (B) for Sanctions” (the “Motion to Strike,” “Request for Sanctions”).

In the motion, the Debtor requested that the Court immediately strike the Financial Statement from the public docket and asked the Court to award to the Debt- or “current and potential future damages, including but not limited to the attorney’s fees and costs to correct Lenkar’s error, and potential future identity theft.” Motion to' Strike 1-2, ¶ 6. On the morning of March 27, the Court granted the Motion to Strike and removed the Financial Statement from the public docket, as it contained information required to be redacted by Bankruptcy Rule 9037(a),2 and sched[414]*414uled a further hearing on the Request' for Sanctions.3

On March 31, Attorney Chernin filed an opposition to the Debtor’s Request for Sanctions (the “Sanctions Objection”), and both parties have since filed post-hearing briefs. Attorney Chernin first disputes the assertion that the filing of the Financial Statement ran afoul of Bankruptcy Rule 9037. He argues that the Financial Statement qualifies as an “official record of a state court proceeding,” and is thus exempt from the redaction requirement under Rule 9037(b)(3). Attorney Chernin further asserts that he was relieved of any obligation to redact the document pursuant to Bankruptcy Rule 9037(g), because the Debtor previously filed the Financial Statement in small claims court without redaction. According to Attorney Cher-nin, he “simply used an already existing public record to support [Lenkar’s] position” and that “[t]he information that the debtor seeks to redact was already made public by the debtor before Lenkar included it in its opposition.” Sanctions Obj. 1 ¶ 4, ECF No. 19 (emphasis supplied). And at the hearing on the Request for Sanctions, Attorney Chernin further asserted that he was, in fact, able to obtain a copy of the Financial Statement by simply calling the state court and asking for it.

The Debtor says the redaction exception contained in Rule 9037(g) does not apply to the Financial Statement. First, the Debt- or argues, Bankruptcy Rule 9037(g) applies only to documents submitted to the bankruptcy court, not documents previously submitted to other courts. And, more importantly, says the Debtor, the Financial Statement was never (prior to the filing of the Objection) made available to the public. Instead, the Debtor maintains that the Financial Statement was submitted as a confidential document in connection with the state court proceeding.

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Cite This Page — Counsel Stack

Bluebook (online)
524 B.R. 410, 2015 Bankr. LEXIS 126, 2015 WL 225398, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-lunden-mab-2015.