In re Topfer
| Decision Date | 03 January 2019 |
| Docket Number | Case No.: 5-18-bk-01968 RNO |
| Citation | 595 B.R. 52 |
| Parties | IN RE: Evelyne Ruetimann TOPFER, Alleged Debtor in an Involuntary Case That Has Been Dismissed |
| Court | U.S. Bankruptcy Court — Middle District of Pennsylvania |
Lisa M. Doran, Doran & Doran, P.C., Wilkes-Barre, PA, for Alleged Debtor.
Nature of Proceeding: Request for Judgment Under 303(i) of the Bankruptcy Code
A husband and wife are parties to a divorce action in state court which is nearly four years old. The husband filed an involuntary bankruptcy petition against his wife. The involuntary petition was dismissed because of numerous deficiencies. The wife now seeks the award of professional fees and punitive damages. Professional fees are awarded in the amount of $ 4,360.00 and punitive damages are awarded in the amount of $ 2,000.00.
This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 157 and § 1334. This is a core proceeding under 28 U.S.C. § 157(b)(2)(A).
An involuntary Chapter 7 bankruptcy proceeding was commenced by an Involuntary Petition ("Involuntary Petition") filed by Kurt Alan Topfer ("Topfer") against Evelyne Ruetimann Topfer ("Ruetimann"), the putative debtor. ECF No. 1. On May 10, 2018, a summons was issued to Ruetimann by the Bankruptcy Clerk pursuant to Federal Rule of Bankruptcy Procedure 1010. ECF No. 4.
On May 10, 2018, an order was entered to show cause why the case should not be dismissed for failure to comply with the requirements of 11 U.S.C. § 303(b).2 ECF No. 5. A hearing on the Order to Show Cause was set for June 13, 2018.
A show cause hearing was held on June 13, 2018. At the conclusion of that hearing, an order was entered dismissing the Involuntary Petition. The dismissal order provided that the Court would retain jurisdiction to consider any request for judgment filed under § 303(i) for damages. The dismissal order further provided that any request for judgment could be filed within ninety days of the Court's order.
On June 29, 2018, Topfer filed a one-page document titled "Motion Relief from a Judgment or Order Involuntary Petition" ("Reconsideration Motion"). ECF No. 22. The Reconsideration Motion provided, in part, "PLAINTIFF WILL MOVE FOR THE COURT for an order to reconsider the judgment entered on June 13th, 2018, on the grounds that, or pursuant to Federal Rule Civil Procedure 60, and said grounds have resulted in a miscarriage of justice, ...". ECF No. 22. A Brief was filed in support of the Reconsideration Motion. ECF No. 23. Ruetimann filed a Brief opposing the Reconsideration Motion. ECF No. 26.
On July 20, 2018, a hearing was held on the Reconsideration Motion whereby Topfer sought reconsideration of the dismissal of the Involuntary Petition. On that date, an order was entered denying the Reconsideration Motion. ECF No. 28.
On September 10, 2018, Ruetimann filed a Request for Judgment Under § 303(i) of the Bankruptcy Code ("Request for Judgment"). ECF No. 30. The Request for Judgment seeks the award of attorney's fees and costs, as well as punitive damages, in favor of Ruetimann and against Topfer.
Topfer did not file any written response to the Request for Judgment. A hearing on the Request for Judgment was held on December 18, 2018. At the hearing, Ruetimann's counsel proffered what two witnesses would testify to if called to the stand. The first proffer concerned Attorney Ruth Borland, Ruetimann's counsel in the divorce action. It was proffered that Attorney Borland was prepared to testify in support of the additional attorney's fees incurred by reason of the Involuntary Petition.
The second proffer concerned Juliane von Schmeling, who has Ruetimann's power of attorney. Ruetimann resides in Switzerland, and von Schmeling attended court hearings and assisted in communications between legal counsel and Ruetimann.
Ruetimann did not attend the hearing on the Request for Judgment. Her counsel argued Ruetimann suffered emotional distress by being thrown into an involuntary bankruptcy proceeding. She also argued that the Involuntary Petition was filed in bad faith and would, thus, also sustain an award of punitive damages. Attached to the Request for Judgment are detailed time records showing the services rendered, the time expended, and the amounts charged by Attorney Borland and Ms. von Schmeling.
Topfer argued that the Involuntary Petition was not frivolous and was filed without malicious intent. When questioned by me, he testified that he would not file another involuntary petition against Ruetimann. He also offered that he would not have filed the Involuntary Petition in the first place, if he had legal counsel. Topfer maintained that he thought that filing the Involuntary Petition would somehow aid in the payment of the homeowners' insurance premiums or the homeowners' association dues for two real properties which are jointly owned by Ruetimann and him.
Those readers who wish to gain a better understanding of the legal history between Topfer and Ruetimann can review In re Topfer , 587 B.R. 622 (Bankr. M.D. Pa. 2018) ("Adversary Proceeding"). That matter concerns an adversary proceeding filed in Topfer's own voluntary Chapter 7 case, which was commenced by a petition he filed on May 9, 2018. Topfer filed the adversary proceeding, by way of a notice of removal; whereby he removed from state court a divorce proceeding between Ruetimann and him which has been pending in the Court of Common Pleas of Luzerne County since June 14, 2015 ("Divorce Action"). In Topfer , I permissively abstained, granted Ruetimann limited relief from the automatic stay, and remanded the Divorce Action to state court.
Pursuant to Federal Rule of Evidence 201, I will take judicial notice of the underlying docket entries, and other matters not reasonably subject to dispute in this involuntary Chapter 7 case, as well as those in the voluntary Chapter 7 case filed by Topfer to Case No. 5-18-bk-01966 RNO. I also take judicial notice of the docket entries in the Adversary Proceeding. In re Harmony Holdings, LLC , 393 B.R. 409, 413 (Bankr. D.S.C. 2008) ; In re Paolino , No. 85-00759F, 1991 WL 284107, at *12 n.19 (Bankr. E.D. Pa., Jan. 11, 1991).
The Request for Judgment is now ripe for decision.
My Order of June 13, 2018, dismissed the Involuntary Petition. That Order contained nine numbered findings. Those findings included:
An involuntary petition can be filed by three or more entities holding at least $ 15,775.00 of non-contingent, unsecured and undisputed claims against the debtor. 11 U.S.C. § 303(b)(1) ; In re Forever Green Athletic Fields, Inc. , 804 F.3d 328, 333 (3d Cir. 2015) ; In re Express Car & Truck Rental, Inc. , 440 B.R. 422, 433 (Bankr. E.D. Pa. 2010).
Alternatively, if the debtor has fewer than twelve such creditors, an involuntary case may be commenced by a single creditor who holds a claim of at least $ 15,775.00. 11 U.S.C. § 303(b)(2) ; In re Taub , 438 B.R. 761, 770 (Bankr. E.D.N.Y. 2010) (); In re Tichy Elec. Co., Inc. , 332 B.R. 364, 372 (Bankr. N.D. Ia. 2005).
I repeated some of the findings from the dismissal order only to illustrate how deficient the Involuntary Petition was. Topfer has appeared pro se, as a self-represented party, throughout these proceedings and in his own voluntary Chapter 7 case. Clearly, Topfer has the right to represent himself. While I may read his papers more liberally, I cannot excuse his failure to meet threshold legal requirements.
During the June 13, 2018, show cause hearing, Topfer admitted that he did not consult with an attorney about the legal requirements before he filed the Involuntary Petition. Ruetimann's bankruptcy counsel has described the Involuntary Petition as "facially invalid." The Court agrees with that characterization.
The fact that the Involuntary Petition was filed with so many deficiencies suggests that the filing may have been done for an improper purpose, such as harassment or delay. Further, the filing suggests that Topfer failed to make a reasonable inquiry before he filed the Involuntary Petition.
The Bankruptcy Code provides:
11 U.S.C. § 303(i)(1).
It has been noted that the majority rule is that, typically, a judgment for costs and fees is entered upon the dismissal of an involuntary petition. In re Skyworks Ventures, Inc. , 431 B.R. 573, 576 (Bankr. D.N.J. 2010) ; In re Silverman , 230 B.R. 46, 50-51 (Bankr. D.N.J. 1998). I conclude that the majority rule is consistent with the statutory language of § 303(i). Here, the Involuntary Petition has been dismissed and Ruetimann clearly has not waived her right to seek a judgment for costs and fees. As noted above, attached to the Request for Judgment were itemizations of the professional fees and costs sought by Ruetimann. Topfer has not challenged any of the professional fees or costs.
I reviewed the time entries and the amounts charged by Attorney Borland, Ruetimann's divorce counsel. I find that the charges are reasonable and commensurate with the value of...
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