Grinspan v. Grinspan (In re Grinspan)

• Decision Date: 08 February 2019
• Docket Number: Adv. Pro. No.: 14-8116-las,Case No.: 13-76084-las
• Parties: IN RE: Isaac J. GRINSPAN, Debtor. Isaac J. Grinspan, Plaintiff v. Tomor Grinspan and David J. Seidemann, Defendants.
• Court: United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — Eastern District of New York

597 B.R. 725

IN RE: Isaac J. GRINSPAN, Debtor.

Isaac J. Grinspan, Plaintiff

v.Tomor Grinspan and David J. Seidemann, Defendants.

Case No.: 13-76084-las

Adv. Pro. No.: 14-8116-las

United States Bankruptcy Court, E.D. New York.

Signed February 8, 2019

Richard V. Kanter, Melville, NY, for Plaintiff.

Scott Fleischer, Jordan Pilevsky, LaMonica Herbst & Maniscalco LLP, Wantagh, NY, Paul M. Sod, Lawrence, NY, Marian C. Rice, L'Abbate Balkan Colavita & Contini, Garden City, NY, for Defendants.

MEMORANDUM DECISION AFTER TRIAL

Louis A. Scarcella, United States Bankruptcy Judge

Plaintiff Isaac Grinspan commenced this adversary proceeding against his ex-spouse, Tomor Grinspan, and her attorney, David J. Seidemann, to recover damages under 11 U.S.C. § 362(k) for an alleged violation of the automatic stay imposed under 11 U.S.C. § 362(a).¹ Plaintiff alleges defendants willfully violated the automatic stay when they continued to litigate a motion to hold plaintiff in contempt in the parties' state court matrimonial action after plaintiff filed his chapter 7 bankruptcy petition. Plaintiff's view is that litigation of the contempt motion, which sought to enforce a money judgment consisting of attorneys' fees awarded to Tomor as a result of plaintiff's alleged default under their divorce agreement, is not exempt from the automatic stay under § 362(b)(2)(B) as an act to collect a domestic support obligation. Plaintiff also asks the Court to permanently enjoin defendants from litigating the contempt motion. In response, defendants argue that while matters were proceeding in state court post-petition, no action was taken by them to enforce the pre-petition money judgment. Additionally, defendants argue that even if their actions in the state court proceeding post-petition are construed as a demand for payment of the money judgment, those actions sought to collect upon a domestic support obligation and are exempt from the automatic stay under § 362(b)(2)(B). Last but not least, defendants contend that if their post-petition conduct is not exempt from the automatic stay, such conduct was not taken in willful violation of the stay.

The Court has jurisdiction over this matter under 28 U.S.C. § 1334 and the Standing Order of Reference entered by the United States District Court for the Eastern District of New York pursuant to 28 U.S.C. § 157(a), dated August 28, 1986, as amended by Order dated December 5, 2012, effective nunc pro tunc as of June 23, 2011. This is a core proceeding under 28 U.S.C. § 157(b)(1) in which final orders or judgment may be entered by the Court. See In re Jean-Francois , 532 B.R. 449, 451 (Bankr. E.D.N.Y. 2015).

Having considered the parties' pretrial submissions and the evidence presented at trial, the Court makes the following findings of fact and conclusions of law pursuant to Rule 52(a) of the Federal Rules of Civil Procedure, made applicable here by Bankruptcy Rule 7052. To the extent that a finding of fact includes a conclusion of law, it is deemed a conclusion of law and vice versa.

For the following reasons, the Court finds in favor of plaintiff. Defendants willfully violated the automatic stay and, by statute, are liable for actual damages, including costs and attorneys' fees under § 362(k). The Court reserves judgment on actual damages pending submission of supplemental briefing, and will issue a separate order scheduling a hearing to determine the amount of appropriate damages. The Court declines to award plaintiff punitive damages and dismisses plaintiff's request for permanent injunctive relief as moot.

I. Findings of Fact

The following findings of fact are based on the trial record, which include the trial testimony, exhibits entered into evidence, and the parties' stipulation of certain facts.²

A. Pre-Petition State Court Proceedings

Plaintiff and Tomor are former spouses and have two children together. Stip. ¶¶ 2, 3. They entered into a divorce stipulation of settlement (the "Settlement") dated July 27, 2010. Defs.' Ex. A; Stip. ¶ 4. The Settlement provides that if either plaintiff or Tomor failed to comply with their respective obligations under the Settlement, the defaulting party will reimburse the non-defaulting party for legal fees incurred in connection with enforcing the Settlement, so long as the non-defaulting party prevails. Stip. ¶ 5; see Defs.' Ex. A at 41 ("[T]he defaulting party ... agrees to indemnify the non-defaulting party against and/or to reimburse him/her for any and all expenses, costs, and reasonable attorneys' fees resulting from or made necessary by the bringing of any suit or other legal proceeding to enforce any of the terms, covenants or conditions of this [Settlement]."). If the non-defaulting party loses, he or she must reimburse the legal fees incurred by the other party. Defs.' Ex. A at 41. On May 3, 2011, a judgment of divorce was entered. Defs.' Ex. B; Stip.¶ 6. The judgment of divorce incorporated the Settlement. Stip. ¶ 6.

In May 2013, Tomor sought to enforce plaintiff's obligations under the Settlement and plaintiff sought to decrease his child support payments. Defs.' Ex. E at 2. Thereafter, Nassau County Supreme Court Judge Edward Maron entered a Consent Order, dated July 1, 2013, that required plaintiff to reinstate his child support payments and to cure any arrears, pay for one of his children's therapy, and restore Tomor as the beneficiary of his life insurance policy. Defs.' Ex. E ¶¶ 2, 12, 19; Stip. ¶ 8. The Consent Order also provided that plaintiff must pay Tomor $ 18,000 for attorneys' fees she incurred during the enforcement proceeding. Defs.' Ex. E ¶ 25.

Plaintiff defaulted under the Consent Order, and Tomor obtained a money judgment against plaintiff in the amount of $ 18,372.61, which consisted of the attorneys' fees owed to Tomor plus accrued interest (the "Money Judgment"). Defs.' Ex. I; Stip. ¶ 9. On or about September 9, 2013, defendant Seidemann, Tomor's attorney in the post-judgment phase of her state court matrimonial action, served plaintiff with an "Information Subpoena." Defs.' Ex. J; Stip. ¶¶ 7, 10. Plaintiff did not respond to the Information Subpoena or fulfill his obligations set forth in the Consent Order, which included payment of the Money Judgment. Stip. ¶ 11. As a result, on or about November 14, 2013, Seidemann moved by order to show cause to hold plaintiff in contempt for his alleged non-compliance with the Consent Order and for him to be imprisoned, again seeking to enforce the Money Judgment and obtain answers to the Information Subpoena (the "Contempt Motion"). Pl.'s Ex. 6; Stip. ¶ 11; Tr. 17:14-18:1. The Contempt Motion did not request relief related to custody or visitation rights of plaintiff and Tomor's children. Stip. ¶ 12. The return date of the Contempt Motion was December 5, 2013. Stip. ¶ 13.

On December 2, 2013, plaintiff, by his then-counsel in the state court proceeding, Steven Borofsky, submitted answers to the Information Subpoena. Stip. ¶ 14. However, Seidemann was dissatisfied with plaintiff's answers. Seidemann emailed Borofsky and stated "[he] will give [plaintiff] till [sic] Thursday to answer [the Information Subpoena] again truthfully. Otherwise, [he] will seek his incarceration." Stip. ¶ 15.

B. Plaintiff's Bankruptcy Case and Post-Petition State Court Proceedings

Plaintiff filed a chapter 7 bankruptcy petition on December 3, 2013. Stip. ¶ 1. On the petition date, plaintiff's bankruptcy counsel, Richard Kanter, faxed Seidemann a letter and called Seidemann's cellphone to advise him of plaintiff's bankruptcy filing. Pl.'s Ex. 9; Tr. 133:18-24, 134:7-139:1. However, Seidemann testified that he was not in his office on December 3 to receive the fax, Tr. 135:5-7, and that he was not definitively told by Kanter during the phone call that plaintiff actually filed a bankruptcy petition, Tr. 134:2-6. Although Seidemann claimed he did not have actual knowledge of the bankruptcy filing on December 3, the parties stipulated that both Seidemann and Tomor had actual notice of the filing "at least prior to December 5, the return date of the Contempt Motion." Stip. ¶ 16. Seidemann testified to the same. Tr. 146:14-16.

On December 5, 2013, the parties appeared in state court on the Contempt Motion. Stip. ¶ 18. Debtor arrived in state court on this day under the impression that he would be sent to jail if he did not pay the Money Judgment. Tr. 106:10-107:10. Although it is defendants' position that the Contempt Motion was exempt from the automatic stay, Stip. ¶ 17, Seidemann advised Judge Maron that it's possible that the relief he was seeking in the Contempt Motion was subject to the stay, Tr. 171:6-9. In spite of this awareness, Seidemann continued to prosecute the Contempt Motion in its entirety. Adv. Dkt. No. 34-13 at 24:9-16. Seidemann testified that Judge Maron was going to carry the motion "to the end of time," Tr. 173:12-13, and Borofsky stated it to be "the practice of Judge Mar[o]n to carry ... motions when he's not sure what to do with them," Adv. Dkt. No. 34-13 at 31:8-10. At the December 5 hearing, Judge Maron asked the parties to file briefs on the applicability of the automatic stay to the Money Judgment, and entered an order that directed the parties to appear for a conference on January 4, 2014 and appointed Jeffrey Halberich as the children's attorney. Adv. Dkt. No. 34-13 at 38:7-17, 41:4-7; Stip. ¶ 19; Tr. 265:14-19. Thereafter, Seidemann submitted a brief and a proposed order to Judge Maron. Defs.' Ex. O. Borofsky did not file a brief because he was relieved as plaintiff's counsel shortly after the hearing and replaced by Danielle Seid-Vazana.

Following the December 5 hearing, there were five court appearances by the parties: December 19, January 14, February 6, April 17, and April 29. Stip. ¶ 20; Tr. 256:24-257:2. There are no transcripts or other records of any of these hearings because of more than forty appearances before Judge Maron, the parties were on the record "twice, maybe three times at most." Tr....