In re Leiba

• Decision Date: 27 April 2015
• Docket Number: Case No. 14–41062 CEC
• Citation: 529 B.R. 501
• Parties: In re: Brian C. Leiba aka Brian Christopher Leiba, Debtor.
• Court: U.S. Bankruptcy Court — Eastern District of New York

529 B.R. 501

In re: Brian C. Leiba aka Brian Christopher Leiba, Debtor.

Case No. 14–41062 CEC

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

Signed April 27, 2015

Peter A. Joseph, 177 Waverly Place #5F, New York, New York 10014, Counsel for the Debtor

Karamvir Dahiya, Dahiya Law Offices, LLC, 75 Maiden Lane, Suite 506, New York, New York 10038, Counsel for Icilda Vickers–Baker

DECISION

CARLA E. CRAIG, Chief United States Bankruptcy Judge

This matter comes before the Court on the motion of the debtor, Brian C. Leiba (the “Debtor”), for sanctions against Icilda Vickers–Baker (“Vickers–Baker”) for violation of the automatic stay pursuant to 11 U.S.C. § 362(k). Because Vickers–Baker violated the automatic stay by commencing and continuing a state court action to collect on a pre-petition debt, and because she acted willfully after receiving notice of the Debtor's bankruptcy filing, causing damages to the Debtor, the motion for sanctions is granted.

JURISDICTION

This Court has jurisdiction of this core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A), (G), and (O), 28 U.S.C. § 1334, and the Eastern District of New York standing order of reference dated August 28, 1986, as amended by order dated December 5, 2012. This decision constitutes the Court's findings of fact and conclusions of law to the extent required by Federal Rule of Bankruptcy Procedure 7052.

BACKGROUND

The following facts are not in dispute.

The Debtor filed this case on March 10, 2014. (Chapter 7 Voluntary Petition, 14–41062–CEC, ECF No. 1.) The Debtor's schedules included an unsecured claim by Vickers–Baker. (Schedule F, 14–41062–CEC, ECF No. 1.) The Debtor also attached a mailing matrix to his petition which included Vickers–Baker at 198–16 118th Avenue, St. Albans, New York 11412. (Chapter 7 Voluntary Petition, 14–41062–CEC, ECF No. 1.) On March 12, 2014, the Bankruptcy Noticing Center mailed out Official Form 9A, which is a Notice of Chapter 7 Bankruptcy Case, Meeting of Creditors, & Deadlines (the “Notice”). (BNC Certificate of Mailing—Meeting of Creditors Notice Date 03/12/2014, 14–41062–CEC, ECF No. 5.) The Notice was mailed to Vickers–Baker at the St. Albans address. Id. The Notice provided general information about the bankruptcy filing, including the following information about the automatic stay:

Creditors May Not Take Certain Actions: In most instances, the filing of the bankruptcy case automatically stays certain collection and other actions against the debtor and the debtor's property. Under certain circumstances, the stay may be limited to 30 days or not exist at all, although the debtor can request the court to extend or impose a stay. If you attempt to collect a debt or take other action in violation of the Bankruptcy Code, you may be penalized. Consult a lawyer to determine your rights in this case.

Id. On the back of the Notice, further explanations are provided, including more information about the automatic stay under the section entitled “Creditors Generally May Not Take Certain Action”:

Prohibited collection actions are listed in Bankruptcy Code § 362. Common examples of prohibited actions include contacting the debtor by telephone, mail or otherwise to demand repayment; taking actions to collect money or obtain property from the debtor; repossessing the debtor's property; starting or continuing lawsuits or foreclosures; and garnishing or deducting from the debtor's wages. Under certain circumstances, the stay may be limited to 30 days or not exist at all, although the debtor can request the court to extend or impose a stay.

Id. Additionally, the Notice provided the date, time, and location of the meeting of creditors. Id.

On June 26, 2014, the Debtor appeared for an adjourned meeting of creditors (the “Meeting of Creditors”).¹ (Mot. For Sanctions for Violation of the Automatic Stay, 14–41062–CEC, ECF No. 26 at ¶¶ 2–3; Aff. Re: documents served on debtor 6.26.14, 14–41062–CEC, ECF No. 31 at ¶ 3.) While the Debtor was seated in the trustee hearing room waiting for the trustee to arrive, Vickers–Baker and one of her daughters approached the Debtor and served him with a summons and complaint for a state court action Vickers–Baker commenced on June 6, 2014. (Mot. For Sanctions for Violation of the Automatic Stay, 14–41062–CEC, ECF No. 26 at ¶ 3). The state court action is based on alleged damages Vickers–Baker claims occurred pre-petition. (Aff. Re: documents served on debtor 6.26.14, 14–41062–CEC, ECF No. 31 at 6.) The Debtor's counsel also provided copy of an affidavit of service of the summons and complaint in the state court action sworn to by Lorna Gordon (the “Affidavit of Service”). (Aff. Re: documents served on debtor 6.26.14, 14–41062–CEC, ECF No. 31 at 4.) The affidavit states that Ms. Gordon served the summons and complaint upon the Debtor on June 26, 2014 at the 271–C Cadman Plaza East, which is the address of this Court, and is also where meetings of creditors are held. Id. On July 10, 2014, a copy of the summons and complaint was also mailed to the Debtor at an address not listed in the Debtor's petition. Id. at 8 and ¶ 4.

On September 22, 2014, the Debtor's counsel sent a letter to Vickers–Baker informing her that the state court action was a violation of the automatic stay and that proceeding with the action would result in sanctions (the “Letter”). (Mot. For Sanctions for Violation of the Automatic Stay, 14–41062–CEC, ECF No. 26 at ¶ 4; Affidavit Re: costs and attorney's fees, 14–41062–CEC, ECF No. 42 at 4.) The Debtor's counsel sent the Letter to Vickers–Baker via certified mail, return receipt requested, to Vickers–Baker's St. Albans address. (Mot. For Sanctions for Violation of the Automatic Stay, 14–41062–CEC, ECF No. 26 at 6 and ¶ 5.) The Letter was returned as unclaimed. Id. Because Vickers–Baker failed to discontinue her prosecution of the state court action, the Debtor's counsel was required to appear in Queens Civil Court on September 29, 2014 and November 17, 2014. (Aff. Re: costs and attorney's fees, 14–41062–CEC, ECF No. 42 at ¶ 2(ii).)

On November 22, 2014, the Debtor's counsel filed the motion for sanctions against Vickers–Baker with a notice of hearing scheduled for December 16, 2014 (the “Motion”). (Mot. For Sanctions for Violation of the Automatic Stay, 14–41062–CEC, ECF No. 26). On December 5, 2014, Mr. Karamvir Dahiya (“Dahiya”) filed a notice of appearance on behalf of Vickers–Baker. (Notice of Appearance and Request for Notice, 14–41062–CEC, ECF No. 30.) Dahiya did not file opposition prior to the December 16, 2014 hearing. At the hearing, Dahiya appeared and requested an opportunity to submit opposition to the motion on behalf of Vickers–Baker. On December 22, 2014, the Court entered a scheduling order which adjourned the hearing on the Motion to February 5, 2015 and which gave Dahiya until January 16, 2015 to submit opposition to the Motion. Dahiya again failed to submit opposition to the Motion. At the February 5, 2015 hearing, Dahiya failed to appear; Vickers–Baker, however, appeared and informed the Court that Dahiya was feeling sick. (Hr'g Tr. 2:7–11, February 5, 2015, 14–41062–CEC, ECF No. 52.) The Court granted the unopposed Motion and issued an order directing the Debtor's counsel to file an affidavit regarding the damages incurred as a result of the violation of the automatic stay by Vickers–Baker, including counsel's time records and any other documentary evidence of damages. (Order Granting Mot. For Sanctions, 14–41062–CEC, ECF No. 39.) That order gave Vickers–Baker an opportunity to object to any of the proposed items of damages sought by the Debtor's counsel, but also stated that the Court would not consider any opposition to the merits of the Motion.Id.

On February 18, 2015, the Debtor's counsel filed an affidavit regarding costs and attorney's fees (the “Affidavit of Damages”). (Aff. Re: costs and attorney's fees, 14–41062–CEC, ECF No. 42.) On March 12, 2015, Dahiya filed an affirmation in opposition to the Affidavit of Damages (the “Opposition”). (Affirmation in Opp'n regarding damages etc., 14–41062–CEC, ECF No. 47.)

DISCUSSION

1. THE ACTIONS TAKEN BY VICKERS–BAKER VIOLATED THE STAY

It is axiomatic that the automatic stay is triggered by filing a bankruptcy petition. 11 U.S.C. § 362. Among the actions automatically stayed is “the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title....” 11 U.S.C. § 362(a)(1). Here, there is no doubt that Vickers–Baker violated the automatic stay. The Debtor filed his petition on March 10, 2014 and Vickers–Baker commenced the state court action on June 6, 2014, after the automatic stay went into effect. (Chapter 7 Voluntary Petition, 14–41062–CEC, ECF No. 1; Mot. For Sanctions for Violation of the Automatic Stay, 14–41062–CEC, ECF No. 26 at ¶ 3.) The claims asserted by Vickers–Baker in the state court action were based on pre-petition claims against the Debtor and the action could have been commenced before the commencement of the Debtor's bankruptcy case. (Aff. Re: documents served on debtor 6.26.14, 14–41062–CEC, ECF No. 31 at 6.) Vickers–Baker commenced the action after the automatic stay went into effect by filing the summons and complaint upon the Debtor and then continued the action by serving, or causing service of, those documents upon the Debtor, at the meeting of creditors held pursuant to § 341 in this case. (Aff. Re: documents served on debtor 6.26.14, 14–41062–CEC, ECF No. 31 at 4.)

Vickers–Baker not only violated the automatic stay by commencement and continuation of the state court action, but also by her failure to discontinue the state court action. “It is well settled that a creditor has an affirmative duty under § 362 to take the necessary steps to discontinue its collection activities against a debtor.” In re Crawford, 388 B.R. 506, 526–527 (Bankr....