Michael Joseph Sindram

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF COLUMBIA
In re
MICHAEL JOSEPH SINDRAM,
Debtor.
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Case No. 08-00559
(Chapter 7)
Not for Publication in
West’s Bankruptcy Reporter
MEMORANDUM DECISION RE MOTION FOR CLARIFICATION AND MODIFICATION
OF ORDER AND FOR RELATED RELIEF AS TO SANCTIONS AGAINST PEPCO
This case commenced on August 19, 2008, as a chapter 13 case
and was converted to chapter 7 on September 22, 2008. 	This
addresses the debtor Sindram’s Motion for Clarification and
Modification of Order and for Related Relief as to Sanctions
Against PEPCO (Docket Entry (“DE”) No. 112). 	The motion relates
to the court’s order denying an earlier motion in which Sindram
sought damages against the Potomac Electric Power Company
(“PEPCO”) for allegedly violating the automatic stay by seeking
payment for electric service.
I
Sindram correctly observes that my decision addressing that
earlier motion failed to notice that the bills, albeit monthly
The document below is hereby signed.
Signed: April 13, 2009.
_____________________________
S. Martin Teel, Jr.
United States Bankruptcy Judge
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bills issued postconversion, 1 included a carryover balance from
prior periods preceding September 22, 2008, the date of
conversion of the case to chapter 7. 2
A.
Charges for Postconversion Service
As I observed in the prior decision, collection of a claim
for service on or after September 22, 2008, is unaffected by the
automatic stay as such a claim is not treated as arising prior to
the commencement of the case.
B.
Charges for Postpetition-Preconversion Service
Claims incurred postpetition and preconversion are treated
as though they are prepetition claims to the extent that they are
not administrative claims under 11 U.S.C. § 503(b). 	11 U.S.C.
§ 348(d). 	If PEPCO’s claim incurred postpetition and
preconversion is not treated as an administrative claim, it will
be treated as a prepetition claim. 	Sindram was not engaged in a
1 	PEPCO issued monthly bills on the respective dates of
October 31, 2008 (relating to the service period of September 29,
2008, to October 28, 2008); December 4, 2008 (relating to the
service period of October 28, 2008, to December 2, 2008); and
January 6, 2009 (relating to the service period of December 2,
2008, to January 3, 2009).
2 	The electric usage histories reflected in the bills makes
evident that PEPCO must have been including in its bills amounts
owed not only for the period of September 22, 2008, to September
29, 2008, but also amounts for service preceding the September
22, 2008, date of conversion of the case.
2
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business, with the electric service thereby an incident of
preserving the estate, and I will assume (without precluding
PEPCO from showing otherwise) that the claim for electric service
in the chapter 13 case was not an administrative claim. 	Upon
conversion, the claim, if non-administrative and hence a deemed-
prepetition claim, became subject to the provisions of the
automatic stay of § 362(a).
Under 11 U.S.C. § 366(b), the debtor was required to provide
adequate assurance of payment of his utility bills, and Ҥ 366(b)
has been read as an exception to the automatic stay, allowing a
utility to alter, refuse or discontinue service for failure to
provide adequate assurance of payment without recourse to the
bankruptcy court.” 	In re Jones 	369 B.R. 745, 748 (B.A.P. 1st
Cir. 2007). 	A utility can additionally terminate service for
failure to make postpetition payments for which adequate
assurance of performance could be demanded by the utility.
But once the case was converted to chapter 7, the deemed-
prepetition character of PEPCO’s postpetition-preconversion claim
(unless it was an administrative claim) removed those claims from
the category of postpetition claims that can serve as a basis to
terminate service and that can be billed without violating the
automatic stay. 	In re Jones, 369 B.R. at 751; In re Davis, 311
B.R. 922 (Bankr. M.D. Ga. 2004).
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C.
Charges for Prepetition Service
Moreover, it appears that the bills also included a carryover
charge for periods preceding the commencement of the case on
August 19, 2008. 	As observed in In re Kiriluk, 76 B.R. 979, 982
(Bankr. E.D. Pa. 1987):
While a cure or assurance of a prompt cure of a
prepetition default is required in order for a debtor
to assume an executory contract, see 11 U.S.C.
§ 365(b)(1), a debtor need not cure a prepetition default to
a utility company in order to maintain utility services.
See In re Gehrke, 57 B.R. 97 (Bankr. D. Or. 1985). 	Thus, by
virtue of § 362(a)(6), a utility cannot attempt to collect
upon its prepetition debt, yet it must continue to provide
service to the debtor, subject only to § 366(b).
Under 11 U.S.C. § 366(b), PEPCO was entitled to demand a deposit
as security, and such a demand would not have violated the
automatic stay. 	In re Santa Clara Circuits West, Inc., 27 B.R.
680, 683 (Bankr. D. Utah 1982). 	If the bills were treated as
demanding the amount of the prepetition claim as a deposit to
assure postpetition performance, no stay violation would have
arisen, and Sindram’s recourse would have been to challenge the
reasonableness of the deposit demand. 	Id. 	But the bills do not
purport to demand payment of the prepetition claim as a deposit
(to be held as a deposit for future services), and instead appear
to demand payment to be applied to the prepetition claim.
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II
Sindram’s Motion for Clarification and Modification of Order
and for Related Relief as to Sanctions Against PEPCO includes as
an exhibit a Notice of Intent to Disconnect Electric Services
dated January 21, 2009, which states that Sindram must pay
$291.10 to prevent discontinuation of his electric service. 	The
automatic stay was still in effect because Sindram was not issued
a discharge until January 23, 2009. 	PEPCO was not barred from
demanding payment for electric service provided after the date of
conversion, and if Sindram did not tender the amount owed for
such postconversion service, PEPCO was within its rights to
terminate service. 	Nevertheless, the $291.10 demanded appears to
have included amounts owed for services rendered pre-conversion
that PEPCO was stayed from collecting. 	The court will treat the
debtor’s motion for sanctions as including this additional
alleged violation of the automatic stay.
III
PEPCO’s opposition to Sindram’s motion for sanctions raised
defenses to the recovery of sanctions not addressed by the prior
decision. 	First, PEPCO contended that it was not given notice of
the case, but it is not clear that this applies to all of the
bills it issued.
Second, PEPCO contends that Sindram has not pled how he has
been damaged. 	Nor has Sindram pled facts showing that he
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attempted to mitigate any damages by contacting PEPCO to point
out its violation of the automatic stay. 	But Sindram alleges
that PEPCO willfully violated the automatic stay, and he is
entitled at a hearing to show his actual damages and to attempt
at a hearing to demonstrate that the circumstances are
appropriate for the imposition of punitive damages. 	11 U.S.C.
§ 362(k)(1).
IV
An order follows that vacates the prior order to the extent
that it denied Sindram’s motion with respect to the alleged
violation of the automatic stay with respect to demands for
payment of prepetition claims, but keeping in place the dismissal
of the balance of Sindram’s motion that sought relief not within
the subject matter jurisdiction of this court.
[Signed and dated above.]
Copies to: 	Office of U.S. Trustee; Debtor; Chapter 7 Trustee;
Jack E. Strausman, Esq.
Pepco Holdings, Inc.
701 Ninth Street, NW
Washington, D.C. 20068
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