In re Koss

Decision Date24 March 2021
Docket NumberCase No. 19-70782
PartiesIn Re BRETT M. KOSS, Debtor.
CourtU.S. Bankruptcy Court — Central District of Illinois

Chapter 13

OPINION

Before the Court, after trial, is an amended motion for sanctions filed by the Debtor against Marketview Motors-Bloomington, Inc. d/b/a JD Byrider, Marketview Finance Corporation d/b/a CNAC, and Byrider Corporate. For the reasons set forth herein, both Marketview Motors-Bloomington, Inc. d/b/a JD Byrider and Marketview Finance Corporation d/b/a CNAC will be found to have willfully violated the automatic stay and will be sanctioned.

I. Factual and Procedural Background

Brett M. Koss ("Debtor") filed his voluntary petition under Chapter 13 on May 24, 2019. Relevant to the issues here, he scheduled an unsecured debt to an entity he identified as "Cnac-Il105" in the amount of $10,468. He listed the creditor as having an address at a post office box in Champaign, Illinois, and notice of the bankruptcy filing was sent to the creditor at that address.

On July 29, 2019, Marketview Motors-Bloomington, Inc., ("Marketview Motors") filed an unsecured claim in the amount of $10,468.89, asserting that the basis for its claim was a judgment it had obtained against the Debtor on February 13, 2019, in McLean County, Illinois.1 The claim also stated that Marketview Motors did business using the names JD Byrider and CNAC. The claim was signed and filed by Attorney Donald Parkinson. Marketview Motors made no objection to any of the Debtor's several Chapter 13 plans, and the Debtor's Second Amended Plan was confirmed on September 6, 2019.

In June 2020, the Debtor filed a motion seeking to have CNAC held in contempt and sanctioned for violations of the automatic stay. The motion claimed that, despite having received notice of the bankruptcy filing, CNAC had filed a petition for rule to show cause in the McLean County case on July 22, 2019, seeking to enforce its judgment against the Debtor. Further, the motion complained that the Debtor had received a notice dated April 9, 2020, stating that, if the Debtor did not appear for a state court hearing, a warrant for his arrest would issue. The motion also claimed that CNAC was improperly andincorrectly reporting information about the Debtor to credit reporting agencies. The motion said that repeated emails had been sent to Attorney Parkinson, but Attorney Parkinson had declined to take any action to resolve the issues on behalf of his clients. Both the motion and a notice of hearing were served on CNAC's registered agent.

At the hearing on the motion seeking to have CNAC held in contempt and sanctioned, only the attorney for the Debtor, Joe Pioletti, appeared. CNAC filed no written response to the motion, and no attorney appeared on its behalf.

Attorney Pioletti explained that, before filing the motion seeking sanctions, he had spent over a year trying to get CNAC to respect the automatic stay. He pointed out that attached to the motion were copies of the petition for rule to show cause signed and filed by Attorney Parkinson after the bankruptcy was filed and the notice issued April 9, 2020, threatening the Debtor with arrest if he failed to appear before the state court in the case being prosecuted by CNAC. He said that the Debtor was "freaking out" with concern about being arrested. He also said that, with respect to the improper credit reporting, he had been assured—apparently by Attorney Parkinson—that the matter would be fixed but that it had not been fixed. CNAC continued to report the Debtor as missing payments each month despite the provisions of the confirmed Chapter 13 plan. CNAC had told him—again, apparently through Attorney Parkinson—that instead of putting the account on an automatic hold for credit reporting purposes, it was monitoring the account each month and manually pushing back the due date each month. Despite thoserepresentations, however, CNAC repeatedly failed to do what it said it was going to do and continued to report monthly delinquencies.

In the absence of any appearance or objection by CNAC, an order was entered finding that CNAC's conduct in continuing to prosecute collection of the McLean County judgment and in inaccurately reporting credit information violated the automatic stay. CNAC was ordered to remedy both violations and provide proof of the remedies to Attorney Pioletti within thirty days. Further hearing was set to determine compliance with the order and to assess monetary sanctions. A copy of the order was mailed to CNAC's registered agent the day after it was entered.

As set forth in the order, a telephonic status on the motion seeking sanctions was subsequently held to determine compliance with the order. No one appeared for CNAC. The Debtor appeared by one of Attorney Pioletti's associates who reported that no action had been taken in the McLean County case; the matter was still pending with the Debtor still subject to potential arrest for his failure to appear. With respect to the credit reporting issue, the Debtor had checked his credit report and discovered that CNAC had initiated some corrections to the report, but no communication had been received by Attorney Pioletti regarding the corrections as required by the prior order. The Debtor's attorney requested that further sanctions issue due to CNAC's failure to comply with the prior order. Monetary sanctions in the amount of $2500 plus $1000 in attorney fees were requested.

Finding that CNAC had not complied with the prior order, a further sanctions order was entered. The new order awarded $1000 in sanctions to be paid to the Debtor and $750 in fees to be paid to the Debtor's attorney. The sanctions and attorney fees were to be paid within fourteen days, and a further hearing was set to determine if CNAC had complied with the order. A copy of the new order was mailed to CNAC's registered agent on the day it was entered.

Shortly after the entry of the second sanctions order, Attorney Parkinson filed a document labeled as a Statement to the Court ("Statement") on behalf of Marketview Motors and Marketview Finance Corporation d/b/a CNAC ("Marketview Finance"). In the Statement, Attorney Parkinson said that, although neither Marketview Motors nor Marketview Finance were parties to the pending motion for sanctions, he believed clarifications from them were needed. He asserted that both Marketview Motors and Marketview Finance were simply franchise holders who used software provided by an unnamed corporate entity to report credit information through the corporate office to credit reporting agencies. He said that "CNAC/J D BYRIDER"—an entity not previously mentioned by either party—is in Indiana and complained that the Debtor's attorney served Bob Brady—again, a person not previously named anywhere—who has nothing to do with the transactions at issue. As to the actual credit reporting problem, he provided no explanation or defense.

With respect to the McLean County case, Attorney Parkinson said that an unnamed McLean County judge had determined that the Defendant—the Debtor—would likely not complete his bankruptcy and therefore refused toremove the case from his docket and was requiring that either the Debtor or his attorney periodically appear for a status. Attorney Parkinson claimed that it would be improper for him to appear and provide a status on the case. He suggested that he had told the Debtor's attorney that he should appear in the McLean County case or send the Debtor in to do so. Attorney Parkinson said that the notice that contained the threat of arrest of the Debtor was issued by the state court and not by him personally. He acknowledged that his clients did not want to dismiss the state court collection proceedings because the matter could end up back under state court jurisdiction if the bankruptcy was dismissed.

Attorney Parkinson, in the Statement, asked: "Who is CNAC?" He said that Attorney Pioletti had failed to answer that question and thereby misled the Court. Nevertheless, he said that he had a check in the amount of $1750 ready to tender to the Debtor's attorney. All that would be required for the check to be delivered, according to Attorney Parkinson, would be for the Debtor to report to this Court that Attorney Parkinson's clients had fully complied with all prior court orders.

One day before the next scheduled status, Attorney Parkinson filed a Further Statement to the Court ("Further Statement"). In his Further Statement, he repeated the assertions from the Statement that neither Marketview Motors nor Marketview Finance were parties to the pending sanctions motion and that both were simply franchise holders using an unnamed corporate entity's software to report to credit reporting agencies. Hecomplained that Attorney Pioletti had not responded to his offer to pay the $1750 in previously ordered sanctions in exchange for a representation to this Court of full compliance with prior orders.

Further hearing on the motion for sanctions and to determine compliance with prior orders was held on September 15, 2020, as scheduled. The Debtor appeared by his attorney. Attorney Parkinson did not appear; no one appeared for CNAC.

Attorney Pioletti reported again that no action had been taken in the McLean County case to remedy the problems there, and, although the Debtor had determined that corrected information was now appearing on his credit report, he had not had any affirmative contact from CNAC about ongoing reporting. Further, the monetary sanctions and attorney fees ordered to be paid by the prior order had not been paid.

With respect to the Statement and Further Statement filed by Attorney Parkinson, Attorney Pioletti said that he had made an effort to determine the correct party to name and serve in his sanctions motion. He said that the Debtor had dealt with CNAC and that the inaccurate credit reporting was made in the name of CNAC. He said that he had checked the online records of the Illinois Secretary of State and had served the...

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