Denise Michelle Fitzpatrick

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UNITED STATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
LOS ANGELES DIVISION
In re
DENISE MICHELLE FITZPATRICK,
Debtor.
Case No.: 2:11-bk-44970
Chapter 7
MEMORANDUM OF DECISION REGARDING
THE AWARDING OF ATTORNEY’S FEES TO
PRO SE ATTORNEY LITIGANTS PURSUANT
TO 11 U.S.C. § 362(k)
INTRODUCTION
This matter came before the Court for the hearing of the “Motion for Contempt of Stay and for
Damages” (the “Contempt Motion”) filed by Debtor, Denise Michelle Fitzpatrick (“Debtor”), against
Global Business Centers (“GBC”). On January 26, 2012, Debtor filed the Contempt Motion in
response to GBC’s termination of its service agreement with Debtor for Debtor’s non-payment of her
past due balance, despite GBC’s actual knowledge of Debtor’s active bankruptcy matter. GBC
concedes that it violated the automatic stay under 11 U.S.C. § 362(a). The sole remaining issue is
whether, pursuant to 11 U.S.C. § 362(k), an attorney who represents herself in pro se may recover
attorney’s fees as part of a contempt order.
FILED & ENTERED
APR 04 2012
CLERK U.S. BANKRUPTCY COURT
Central District of California
BY DEPUTY CLERK	schramm
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FACTUAL BACKGROUND
On August 7, 2011, Debtor filed a voluntary Chapter 7 petition. Debtor, an attorney,
employed the services of GBC, a company which provided office space and utility services for herself
and her law firm since February of 2009. When Debtor filed for bankruptcy, she listed GBC as a
creditor and party to an executory lease agreement in her Schedules. GBC was also included in
Debtor’s creditor mailing matrix.
On August 26, 2011, Debtor received an email from GBC, informing her that unless proper
payment was made, her account would be terminated on August 30 because of a past due balance.
Debtor responded to GBC’s email on the same day, informing GBC of her bankruptcy and intent to
pay future balances as they became due. In response, GBC stated that it was unaware of Debtor’s
bankruptcy and unilaterally terminated its contract with Debtor at the direction of its upper
management and attorney. GBC offered that the contract would be reinstated only if Debtor was
willing to reinstate the past due debt. In response to GBC’s demand, Debtor forwarded GBC a copy
of the Case Commencement Notice and reiterated her intent to pay for all post-petition services.
Nevertheless, service was not restored. Later that afternoon, Debtor discovered that the office
telephone number for her law firm had been disconnected. GBC confirmed in an email that the
contract was cancelled and utility services had been terminated. Moreover, the email stated that
Debtor’s mail would be held for 30-days, after which time it would be returned to the sender.
On September 3, 2011, Debtor sent a formal written demand to GBC to reinstate both Debtor’s
telephone and mail services. Debtor tried to have her mail forwarded by USPS, but when attempting
to do so, she was notified that the mail could not be forwarded because her prior address was
designated as a commercial mail receiving agency (“CMRA”). Debtor contends that at the time she
contracted with GBC, she was neither informed of GBC’s CMRA designation nor of the limits
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imposed thereby. Debtor further argues that the USPS imposes a mandatory obligation to all CMRAs
to re-mail mail to former customers for at least six months after termination of the agency
relationship, but GBC has failed to comply with this requirement.
On February 21, 2012, GBC filed an opposition to Debtor’s motion. In its opposition, GBC
conceded its violation of the stay, but contended that the requested amount of damages was excessive
and without basis. GBC argued that when Debtor filed for bankruptcy, the GBC employee
responsible for Debtor’s account became frightened and terminated the agreement, allegedly unaware
that this termination constituted a violation of the automatic stay. GBC claimed that this violation was
an unfortunate decision made by someone who was uninformed about the law. On February 28, 2012,
Debtor filed a response to GBC’s opposition. Debtor contended that she was entitled to actual
damages because GBC’s acts tarnished Debtor’s professional reputation and caused her to undergo
emotional consequences, which included severe lack of sleep, overwhelming stress, and hair loss.
Debtor further argued that she was also entitled to punitive damages because GBC turned a blind eye
to the law even after consulting with its upper management about Debtor’s bankruptcy.
On March 7, 2012, the Court denied Debtor’s motion for actual and punitive damages since
Debtor offered no evidence in support of the amount of the damages she allegedly incurred, nor did
the situation warrant the imposition of punitive damages. The Court then asked GBC to provide a
brief in support of its objection to a pro-se attorney’s ability to recover attorney’s fees, to which
Debtor was to respond within the requisite time frame set forth by the Court.
DISCUSSION
Pursuant to 11 U.S.C. § 362(a), the filing of a bankruptcy case causes an automatic stay to
immediately go into effect and prevents creditors (and other parties) from taking most actions against
property of the bankruptcy estate, the debtor, and debtor’s property. 11 U.S.C. § 362(k) further
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provides that “an individual injured by any willful violation of a stay provided by this section shall
recover actual damages, including costs and attorneys’ fees, and, in appropriate circumstances, may
recover punitive damages.” The Ninth Circuit has not ruled specifically on the issue of the
appropriateness of awarding fees to an attorney who represents herself in a bankruptcy proceeding, in
relation to a § 362(k) claim. However, other courts have provided guidance on the awarding of
attorney’s fees in other statutory contexts.
Whether a pro se litigant who is an attorney is entitled to recover attorney’s fees may depend
on the nature of the statute under consideration and the policy underlying the statute’s attorney’s fees
provision. Kay v. Ehrler, 111 S.Ct., 1435, 1437 (1991). In Kay, the Supreme Court held that a pro se
litigant may not be awarded attorneys’ fees under 42 U.S.C.A. § 1988, even when the litigant is also
an attorney, because the statutory policy of furthering the successful prosecution of meritorious claims
is better served by a rule that creates an incentive to retain counsel. Id. at 1437-38. The Court
reasoned that a skilled lawyer who represents himself is at a disadvantage in a contested litigation
because he is “deprived of the judgment of an independent third party” in formulating his legal
arguments, theory of the case, and responses to unforeseen developments in the courtroom. Id. at
1438. Moreover, the Court explained that a rule that authorized the recovery of attorney’s fees to pro
se litigants would actually create a disincentive to employ counsel whenever the litigants considered
themselves competent to litigate on their own behalf. Id.
A number of courts have applied the Kay decision to preclude fee awards to pro se attorney
litigants under other federal statutes. See US Dept. of Justice v. Hudson, 626 F.3d 36, 38-39 (2d Cir.
2010) (holding that debtor was not entitled to recover attorney’s fees under IRC § 362 because an
attorney, as defined, is “one who is designated to transact business for another” and debtor could not
have acted as an agent for himself); see also United States v. McPherson, 840 F.2d 244, 245 (4th Cir.
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1988) (concluding that a pro se attorney who represents himself in a tax case is not entitled to recover
attorney’s fees under 26 U.S.C. § 7430 because the statute was drafted specifically to compensate only
actual-out-of-pocket expenses or debts which would have to be paid).
In this case, Debtor contends that the courts’ decisions in the Kay and Hudson cases should not
be controlling because they pertained to a singular fee shifting statute and were not intended to reach
beyond that narrow application. In support of her argument, Debtor provided a published opinion in
which the court denied attorney’s fees strictly on the basis that the successful litigant was not an
attorney, stating that under § 362, statutory attorneys’ fees cannot be awarded to pro se litigants unless
such a person is, in fact, an attorney.” In re Dugas, 2009 Bankr. LEXIS 3231, 40-42, citing McLean
v. Int’l Harvester Co., et al., 902 F.2d 372, 374-76 (5th Cir. 1990).
Debtor’s reasoning is flawed for the following three reasons. First, neither Dugas nor McLean
stands for Debtor’s asserted proposition that a pro se litigant is entitled to attorney’s fees when such a
person is actually an attorney. Instead, in McLean, the court awarded attorney’s fees to a non-attorney
pro se litigant, acknowledging that this was a “novel circumstance.” Mclean, 902 F.2d at 375.
Plaintiff, McLean, was a vice-president of the defendant, International Harvester Co., Inc.
(“Harvester”). Id. at 373. Harvester entered a guilty plea to one count of conspiracy of violating the
Foreign Corruption Practices Act (FCPA), but because plaintiff was initially named as a co-
conspirator in this action and later had the counts dropped, plaintiff moved to have his name expunged
from the records of Harvester’s guilty pleas. Id. The court held that even though this non-attorney
litigant plaintiff was pro se, he may be able to recover attorney’s fees. Id. at 375. The court reasoned
that plaintiff’s main contention was that defendant made him believe that an attorney provided by
defendant, pursuant to its indemnification obligations, would not represent plaintiff loyally and
zealously. Id. Therefore, if plaintiff reasonably believed that, based on defendant’s conduct, he could
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not entrust his defense to the counsel provided by defendant because defendant refused to provide
adequate and loyal counsel, the court deemed it equitable to indemnify plaintiff for the time he spent
conducting his own defense. Id.
In this case, Debtor’s reliance on the McLean case in support of her proposition is misplaced.
The court in McLean did not declare that pursuant to § 362, pro se litigants may only be awarded
attorney’s fees if they are attorneys. Instead, the case involved a non-attorney litigant who was trying
to recover attorney’s fees. The court explicitly recognized that the case presented a novel
circumstance and did not address the issue of pro se litigant attorneys attempting to recover attorney’s
fees.
Second, Debtor’s argument that decisions such as Kay and Hudson are not controlling because
the cited decisions pertained only to a particular statute and were not intended by the respective courts
to be extended beyond such cases is unpersuasive. The Ninth Circuit has interpreted the Kay decision
broadly to apply to other fee-shifting statutes. The fact that the Court in Kay explicitly stated, “[w]e
granted certiorari to resolve . . . whether a pro se litigant who is also a lawyer may be awarded
attorney’s fees under § 1988,” has been construed by the Ninth Circuit to broadly apply to pro se
litigants. Elmwood v. Drescher et al, 456 F.3d 943, 947 (9th Cir. 2006) (citing Kay, 111 S. Ct. at
1436). The Ninth Circuit also agreed that effective prosecution could suffer where a pro-se attorney-
litigant is too emotionally and personally involved in contested litigation to respond rationally. Id. at
948. The Ninth Circuit, the controlling authority in this case, directly contradicts Debtor’s contention,
which is why Debtor’s argument must be rejected.
Finally, an examination behind the purpose of a § 362(k) stay provides additional support for
why Debtor should not be allowed to recover attorney’s fees. The Ninth Circuit has held that
Congress’ purpose for the automatic stay is two fold: (1) it enables a debtor to try to reorganize during
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a break from collection efforts and (2) protects creditors by preventing creditors from racing to
“devour” the debtor’s estate at the expense of fellow creditors. See In re Dawson, 390 F.3d 1139,
1147 (9th Cir. 2004) (citing United States v. Dos Cabezas Corp., 995 F.2d 1486, 1491 (9th Cir.
1993)). The Ninth Circuit further held that permitting a debtor to collect attorney’s fees incurred in
prosecuting a damages action would further neither the financial nor the non-financial goals of the
automatic stay. Sternberg v. Johnston, 595 F.3d 937, 948 (9th Cir. 2009). The Sternberg court
reasoned that the court has never said that a stay should aid the debtor in pursuing his creditors, even
those creditors who violate the stay, because “the stay is a shield not a sword.” Id.; See, e.g., Hillis
Motors, Inc., v. Hawaii Auto. Dealers’ Ass’n., 997 F.2d 581, 585 (9th Cir. 1993) (“it is designed to
effect an immediate freeze of the status quo by precluding and nullifying post-petition actions . . . in
nonbankruptcy fora against the debtor . . .”). Here, Debtor’s attorney fees are not related to either of
the two articulated goals of the automatic stay. Instead, the requested fees are damages that stem from
the violation of the stay, which have been held to be non-recoverable due to Debtor’s lack of
quantitative evidence in support of the actual damages sought.
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CONCLUSION
For the above mentioned reasons, pursuant to 11 U.S.C. § 362(k), Debtor, an attorney who
represented herself in this case, cannot recover attorney’s fees as part of a contempt order. Debtor to
submit an order consistent with this Memorandum of Decision and the Court’s ruling denying actual
and punitive damages in this matter.
###
United States Bankruptcy Judge
DATED: April 4, 2012
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NOTICE OF ENTERED ORDER AND SERVICE LIST
Notice is given by the court that a judgment or order entitled (specify) MEMORANDUM OF
DECISION was entered on the date indicated on the first page of this judgment or order and will be
served in the manner indicated below:
I. SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING (ANEF@) B Pursuant
to controlling General Order(s) and Local Bankruptcy Rule(s), the foregoing document was served on
the following person(s) by the court via NEF and hyperlink to the judgment or order. As of_____, the
following person(s) are currently on the Electronic Mail Notice List for this bankruptcy case or
adversary proceeding to receive NEF transmission at the email address(es) indicated below.
• Frank J Alvarado bknotice@nickpachecolaw.com
• Denise M Fitzpatrick df@benchmarklegal.net
• Mehrdaud Jafarnia bknotice@mccarthyholthus.com, mjafarnia@mccarthyholthus.com
• Gerald S Kim cdcaecf@bdfgroup.com
• Ramesh Singh claims@recoverycorp.com
• Alberta P Stahl (TR) trusteestahl@earthlink.net,
astahl@ecf.epiqsystems.com;trusteestahl\;\;\;.net@cacbapp.cacb.circ9.dcn
• United States Trustee (LA) ustpregion16.la.ecf@usdoj.gov
• Darlene C Vigil cdcaecf@bdfgroup.com
• Marc Weitz marcweitz@weitzlegal.com
Service information continued on attached page
II. SERVED BY THE COURT VIA U.S. MAIL: A copy of this notice and a true copy of this
judgment or order was sent by United States Mail, first class, postage prepaid, to the following
person(s) and/or entity(ies) at the address(es) indicated below:
Service information continued on attached page
III. TO BE SERVED BY THE LODGING PARTY: Within 72 hours after receipt of a copy of this
judgment or order which bears an AEntered@ stamp, the party lodging the judgment or order will
serve a complete copy bearing an AEntered@ stamp by U.S. Mail, overnight mail, facsimile
transmission or email and file a proof of service of the entered order on the following person(s) and/or
entity(ies) at the address(es), facsimile transmission number(s), and/or email address(es) indicated
below:
Service information continued on attached page
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