Underwood v. DeLay (In Re DeLay)

48 B.R. 282, 1984 U.S. Dist. LEXIS 15810
CourtDistrict Court, W.D. Missouri
DecidedJune 18, 1984
Docket83-4254-CV-C-5
StatusPublished
Cited by21 cases

This text of 48 B.R. 282 (Underwood v. DeLay (In Re DeLay)) is published on Counsel Stack Legal Research, covering District Court, W.D. Missouri primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Underwood v. DeLay (In Re DeLay), 48 B.R. 282, 1984 U.S. Dist. LEXIS 15810 (W.D. Mo. 1984).

Opinion

ORDER

SCOTT 0. WRIGHT, Chief Judge.

This is an appeal from the Bankruptcy Court’s decision holding Appellant Underwood in contempt of Court. Pursuant to its findings that Underwood twice violated the automatic stay provision, 11 U.S.C. § 362(a), and once violated the injunctive provisions of the discharge order, 11 U.S.C. § 524(a), the Bankruptcy Court ordered Underwood to pay a fine of $250.00 for each violation, resulting in total fine of $750.00. In addition, the court ordered Underwood to pay Appellee DeLay $1,000.00 as “compensatory damages” and an additional $1,000.00 for attorney’s fees. Finally, the court ordered Underwood to pay the costs in the proceeding in the amount of $306.00. See In re DeLay, 25 B.R. 898 (Bankr.W.D.Mo.1982).

Underwood asserts that the Bankruptcy Court erred in each of its contempt findings. Underwood also contends that the monetary penalties imposed by the Bankruptcy Court, particularly the $2,000.00 payable directly to Appellee DeLay, are excessive and unwarranted. In response, DeLay agrees with the Bankruptcy Court that Underwood violated the automatic stay and discharge provisions by instituting criminal proceedings against DeLay, and argues that the contempt citations and sanctions ordered below should be upheld.

This case is deemed to have been referred from this Court to the Bankruptcy Judge pursuant to an order entered by the United States District Court for the Western District of Missouri, adopting an Emergency Resolution to provide for the administration of the bankruptcy system. The resolution provides that

[i]n conducting review, the district judge may hold a hearing and may receive such evidence as he deems appropriate and may accept, reject, or modify, in whole or in part, the order of judgment of the bankruptcy judge, and need give no deference to the findings of the bankruptcy judge. At the conclusion of the review, the district judge shall enter an appropriate order of judgment.

Emergency Resolution (c)(5)(B). Since the present matter was not decided by the Bankruptcy Court until December 27, 1982, the decision below was rendered subject to the emergency rule. See Emergency Resolution (d).

I. Background

Thé debtor, Wayne DeLay, filed a voluntary joint Chapter 7 petition on August 17, 1981. One of the scheduled general creditors was T & J Distributors, Inc. (hereinafter referred to as “T & J”), a business located in California, Missouri. Appellant Underwood is the president of T & J.

DeLay and T & J had a longstanding business relationship. DeLay was an independent travelling salesman; T & J was one of his suppliers. DeLay would obtain various items of merchandise which had already been ordered by customers or to restock the supply in his van. He would sign a receipt for the merchandise, load it into his van, and proceed along his sales route. At the end of each week he would *284 fill out a report listing all of the T & J merchandise he had sold and pay T & J for the merchandise after deducting his commission.

DeLay testified that it was his practice to record a sale on a T & J invoice if the sale was of T & J merchandise. He similarly used the invoices of other distributors if he sold their merchandise. He sometimes used his own invoice if the sale involved his own merchandise. DeLay also testified that at least some of his customers did not like Mr. Underwood and would not knowingly purchase T & J merchandise. In those cases, DeLay testified, he would record the transaction on his own invoice.

In May of 1981, DeLay obtained some welding rods from T & J in the usual manner. The welding rods were sold to the MFA store in Tipton, Missouri. DeLay testified that the store manager was one of his customers who refused to deal with •Underwood directly, so he billed MFA on his own invoice and received a check for $336.15 payable to himself. He subsequently deposited the check into his own bank account.

Shortly thereafter, DeLay and Underwood had a falling out and ended their business relationship. DeLay returned all unsold T & J merchandise from his storage garage and van. DeLay filled out a final sales report which did not include the money he had been paid by the MFA store. DeLay testified that he kept the money to offset a debt owed to him by Underwood.

On August 17, 1981, DeLay and his wife filed a voluntary joint Chapter 7 bankruptcy petition. T & J was scheduled as a general creditor. On August 24, 1981, the Clerk of the Bankruptcy Court mailed a notice of the § 341 meeting of creditors to T & J. The notice included notice of the automatic stay. On August 25, Underwood’s attorney, Mr. Kay, sent a collection letter to DeLay. Although this letter was technically a violation of the automatic stay, the Bankruptcy Court did not hold Underwood in contempt on the basis of the letter.

The Bankruptcy Court did find Appellant in contempt, however, on the basis of a conversation between Underwood and DeLay on September 25,1981. This conversation occurred just prior to the § 341 meeting of creditors. DeLay testified that he was standing outside the room where the meeting of creditors was to take place when Underwood confronted him. DeLay and his attorney at that time, Mr. Pletz, both testified that Underwood was quite belligerent and demanded payment of his claim. Mr. Pletz further testified that, when DeLay said that any debt was subject to the bankruptcy process, Underwood threatened to bring criminal charges against DeLay.

Underwood testified that he felt like his old friend, DeLay, had in effect “spit on [him]” by using the bankruptcy system to avoid payment of the debt. Approximately one week later, on September 30, 1981, Underwood filed a complaint with the Sheriff of Moniteau County, Missouri. Underwood accused DeLay of criminal conversion in connection with the debtor’s retention of funds from the welding rod sale. It was brought out at trial that Underwood’s attorney with respect to the bankruptcy proceeding was also the prosecuting attorney at Moniteau County. The Bankruptcy Court found that Underwood’s filing of the criminal complaint on September 30 was in violation of the automatic stay and held Underwood in contempt on that basis.

A warrant for DeLay’s arrest was issued one month after the filing of the complaint. DeLay was arrested on December 11, 1981 in Jefferson City, Missouri, where he was attending his discharge hearing before the Bankruptcy Court. Underwood accompanied the deputy sheriff of Cole County, Missouri, for the purpose of identifying DeLay. Although Underwood testified that he had written off DeLay’s debt after the September 25 meeting of creditors and had not sought to use the criminal process to obtain satisfaction of his claim, the Bankruptcy Court made its third finding of contempt on the basis of Underwood’s participation in the arrest.

*285 DeLay spent four or five hours in the Jefferson City jail before being released on a $500 bond.

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Cite This Page — Counsel Stack

Bluebook (online)
48 B.R. 282, 1984 U.S. Dist. LEXIS 15810, Counsel Stack Legal Research, https://law.counselstack.com/opinion/underwood-v-delay-in-re-delay-mowd-1984.