In Re Miller

447 B.R. 425, 2011 Bankr. LEXIS 2327, 2011 WL 938379
CourtUnited States Bankruptcy Court, E.D. Pennsylvania
DecidedMarch 1, 2011
Docket16-12023
StatusPublished
Cited by23 cases

This text of 447 B.R. 425 (In Re Miller) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Miller, 447 B.R. 425, 2011 Bankr. LEXIS 2327, 2011 WL 938379 (Pa. 2011).

Opinion

STATEMENT SUPPORTING ORDER DATED MARCH 1, 2011, DENYING SANCTIONS MOTION

RICHARD E. FEHLING, Bankruptcy Judge.

I. INTRODUCTION

This case is about a motion for sanctions for violating the automatic stay. Responded creditor violated the automatic stay in May 2010 by sending invoices to Debtors. Respondent sent three further monthly invoices, in June, July, and August, 2010. Section 362(k)(l) of the Bankruptcy Code, 11 U.S.C. § 362(k)(l), 1 creates strict liability for certain of such action: If a creditor knows about a debtor’s bankruptcy, if the creditor takes action stayed by Section 362, and if the debtor suffers some injury, the debtor “shall recover actual damages, including costs and attorneys’ fees.”

Debtors suffered no injury upon receiving the invoices in 2010. They received the invoices for four months before telling their counsel in August 2010. When they finally told counsel about the invoices, moreover, they and their counsel did nothing for over five months, waiting until January 2011 to file their motion for sanctions. Without being asked or told to do so, the creditor ceased sending the invoices — the August invoice was the last one sent. Yet, the creditor had violated the automatic stay. Finally, Debtors do not aver in their motion, and Debtors did not testify at the hearing about, any injury whatsoever.

A condition precedent to Debtors’ request for actual damages and attorneys’ fees is that Debtors suffered some injury. They did not. Furthermore, Debtors’ precipitous filing of the motion for sanctions, and the resulting attorneys’ fees, were neither reasonable nor necessary and I will neither condone nor reward it. I will deny Debtors’ sanctions motion.

II. PROCEDURAL HISTORY

Some time before April 2010, Debtors were parties to certain state court landlord-tenant litigation in which they were the tenants. Arising out of that litigation *428 grew a dispute about Debtors’ non-payment of attorneys’ fees owed to their pre-bankruptcy counsel, Neil Ettinger, Esquire, and his law firm, Ettinger & Associates, LLC (together, “Ettinger”). 2 In the litigation to collect the attorneys’ fee, Et-tinger filed a complaint against Debtors. When Debtors failed to answer the complaint, Ettinger filed the so-called ten-day default notice 3 on April 22, 2010. The 10-day letter warned Debtors that default judgment would be entered against them after ten days if they did nothing.

Debtors initiated this Chapter 7 bankruptcy by filing their petition on April 30, 2010, staying the collection litigation, particularly the entry of default judgment. Debtors’ case proceeded unremarkably until late August 2010, shortly before the August 30, 2010, deadline for objections to dischargeability. On August 20, 2010, Et-tinger filed an adversary proceeding against Debtors’ seeking a determination of non-dischargeability of the debt owed as attorneys’ fees for the landlord-tenant litigation. The adversary proceeding has advanced to the pre-trial conference stage, which will be held next week, on March 9, 2011.

Nothing more happened in the main case until January 19, 2011, when Debtors’s counsel, Thomas L. Lightner, Esquire, filed Debtors’ Motion for Contempt for Breach of the Automatic Stay with Respect to Neil Ettinger and Ettinger & Associates, LLC. Mr. Lightner then filed, later in the same day, Debtors’ Amended Motion for Contempt, for Breach of the Automatic Stay with Respect to Neil Et-tinger and Ettinger & Associates, LLC. 4 I will refer to the original sanctions motion and the amended sanctions motion together as the “Sanctions Motion.”

Ettinger answered the Sanctions Motion by filing the Response to Debtor’s [sic] Amended Motion for Contempt for Violation of the Automatic Stay, on February 14, 2011. Ettinger revised the original answer and filed the Amended Response to Debtor’s [sic] Amended Motion for Contempt for Violation of the Automatic Stay on February 15, 2011. Although Ettinger did not expressly request that the original response be withdrawn, a colloquy in open court made it quite clear that counsel intended the amended response to supercede and replace the original response completely. The amended response includes three changes:

First, the original Ettinger response includes an admission of liability in Paragraph 5 that Ettinger decided to retract by revising it in the amended response. Original paragraph 5 reads, in part: “Admitted that Ettinger & Associates, LLC attempted to collect a debt which was in violation of the automatic stay.” Amended paragraph 5 reads, in part: “Admitted that if Ettinger & Associates, LLC attempted to collect a debt which was in violation of the automatic stay it would be liable.” Emphasis added to show the changed language.

Second, the original response reads, in part: “This was a clearly ministerial over *429 sight on the part of Ettinger & Associates, LLC billing department.” Amended paragraph 5, reads, in part: “If such a billing was sent, this was a clearly ministerial oversight on the part of Ettinger & Associates, LLC billing department and Debtors have not shown any actual damages.” Emphasis added to show the changed language.

Third, the WHEREFORE clause in the original response reads: “WHEREFORE, respondents respectfully request [sic] to enter an order finding that Ettinger & Associates, LLC solely is in contempt of the court and orders such relief as the court may direct including order payment of attorneys’ fees of approximately $75.00” The WHEREFORE clause in the amended response reads, ‘WHEREFORE, Respondent respectfully requests that this Honorable Court enter an order denying the Motion for Violation of the Automatic Stay [sic].” Emphasis added to show the changed language.

Mr. Lightner accepted the amendments and the silent withdrawal of the admissions in original paragraph 5. He did not advance any argument that they continue to constitute an admission.

I held the hearing on the Sanctions Motion dispute on February 17, 2011. At the close of hearing, I directed counsel to prepare and file uncomplicated letter briefs relating to Ettinger’s argument that a “plethora” of courts have refused to award sanctions pursuant to Section 362(k)(l) because they want to prevent the development of a “cottage industry” of such sanction claims. I also asked the parties to provide me with any decisions that considered a long (five-months in this case) delay in which counsel did nothing when told by his clients that the stay had been violated. At no time did I ask counsel for either a recap of the facts or the creation of a whole new set of facts.

Although both parties filed so-called “letter briefs” late in the afternoon on February 25, 2010, neither party complied with my directive for briefing.

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Cite This Page — Counsel Stack

Bluebook (online)
447 B.R. 425, 2011 Bankr. LEXIS 2327, 2011 WL 938379, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-miller-paeb-2011.