Bererhout et al v. City of Malden, Treasurer

UNITED STATES BANKRUPTCY COURT
FOR THE
DISTRICT OF MASSACHUSETTS
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
In re
OUADIA BERERHOUT AND
JENNIFER FIORITA, 	Chapter 13
Debtors 	Case No. 09-18956- JNF
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
OUADIA BERERHOUT AND
JENNIFER FIORITA,
Plaintiffs
v. 	Adv. P. No. 09-01314
CITY OF MALDEN,
Defendant
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
MEMORANDUM
I. INTRODUCTION
The matter before the Court is a Motion for Reconsideration filed by the City of
Malden (the “City”). 	The City seeks reconsideration of an order of this Court entered
on October 2, 2009 pursuant to which the Court found the City in contempt for violating
the automatic stay by failing to take necessary and appropriate action to enable Ouadia
Bererhout and Jennifer Fiorita (the “Debtors”) to renew their motor vehicle registration
with 	the 	Commonwealth 	of 	Massachusetts 	(the 	“Commonwealth”). 	The
Commonwealth had blocked renewal as a result of an “administrative hold” resulting
from the City’s notification to the Commonwealth of the Debtors’ nonpayment of
parking tickets. See Mass. Gen. Laws ch. 90, § 20A 1/2.
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The issue presented is whether the City received adequate and appropriate
notice of the “Debtors’ Ex Parte Motion for Temporary Restraining Order to Enforce
Automatic Stay”1 and the hearing on that motion, where Debtors’ counsel served the
City Treasurer with notice of a hearing scheduled to take place on October 1, 2009 at
11:00 a.m. by facsimile late in the afternoon of September 30, 2009.
The Court conducted a hearing on the Motion for Reconsideration on May 18,
2010. 	In 	addition, 	the 	Court 	conducted 	a 	pretrial 	conference 	in 	the 	adversary
proceeding commenced by the Debtors against the City on October 9, 2009. 	Neither
party requested an evidentiary hearing on the Motion for Reconsideration, and neither
party disputed the facts necessary to determine the Motion for Reconsideration. At the
conclusion of the hearing, the Court took the Motion for Reconsideration under
advisement, scheduled a trial on damages for September 27, 2010, and continued
generally the Amended Application of Debtor’s Counsel for Compensation filed in
conjunction 	with 	the 	contempt 	matter 	pending 	the 	outcome 	of 	the 	adversary
proceeding.
For the reasons set forth below, the Court finds that notice was adequate under
the circumstances and, accordingly, denies the Motion for Reconsideration.
1 The Court recognizes that the Debtors’ Ex Parte Motion for Temporary Restraining
Order to Enforce Automatic Stay could be considered an improper pleading as Fed. R.
Bankr. P. 7001(7) and Fed. R. Bankr. P. 7065 contemplate the filing of a complaint when
an injunction or restraining order is sought, and the Debtors filed their motion in the
main case. Because of the exigencies set forth in the motion, the Court scheduled a
hearing prior to the commencement of an adversary proceeding. See Agean Fare, Inc. v.
Commonwealth of Massachusetts (In re Aegean Fare, Inc.), 33 B.R. 745, 746, n.1 (Bankr.
D. Mass. 1983).
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II. PROCEDURAL BACKGROUND
On September 21, 2009, the Debtors filed a voluntary Chapter 13 petition. 	On
Schedule F – Creditors Holding Unsecured Nonpriority Claims, the Debtors listed the
City as the holder of claims arising from unpaid parking tickets totaling $340. The City
contends that it is owed $1,050, although it did not file a proof of claim and the deadline
for doing so has passed. See Fed. R. Bankr. P. 3002(c).
On September 30, 2009, the Debtors filed a motion requesting a temporary
restraining order against the City. In their motion, the Debtors alleged that the City was
“putting a hold” on the registration of their vehicle at the Commonwealth’s Registry of
Motor Vehicles. As a consequence, the Debtors maintained that the City was violating
the automatic stay, adding that the deadline for registering their vehicle was October 1,
2009. 	The Debtors also alleged that “[t]he City of Malden has received notice of the
order 	of 	relief 	from 	this 	[the 	Debtors’ 	attorney’s] 	office 	by 	telephone, 	and, 	on
information and belief, from the debtors who personally appeared there with a copy of
the petition in hand.” 	In support of their request for emergency consideration, the
Debtors represented that Ms. Fiorita was eight months pregnant and that they required
the vehicle to transport her to the hospital.
The Court scheduled a hearing on the Debtors’ motion for the following day,
October 1, 2009, at 11 a.m. 	Debtors’ counsel filed a certificate of service, in which he
stated:
I, Daniel Gindes do hereby state that I served the Notice of
Hearing for Debtors’ 	Motion for a Temporary Restraining
Order with the ECF system on September 30, 2009, and that
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it will therefore be served upon all relevant parties, and that
I served the City of Malden Treasurer by Fax to (781) 397-
1593.
The Court conducted the hearing as scheduled. 	The City did not appear. 	The
Court also found that “[t]he debtor’s attorney represented in open court that he gave
notice of the emergency hearing to the City of Malden (the “City”) Treasurer’s Office by
facsimile transmission on September 30, 2009. 	A representative of the City did not
appear at the hearing.” 	Accordingly, the Court granted the motion, finding that “the
automatic stay prevents the City from placing a hold on the debtors’ renewal of their
motor vehicle registration(s).” See 11 U.S.C. §§ 362(a) and 525. The Court also ordered
the City and Commonwealth to “take all necessary and appropriate action to renew the
Debtors’ vehicle registration(s).” The Court scheduled a further hearing for October 8,
2009 at 9:30 a.m.
Late in the day on October 1, 2009, the Debtors commenced an adversary
proceeding against the City by filing “Debtors’ Verified Complaint For Contempt And
Violation Of The Automatic Stay.” 	Additionally, they filed Debtors’ Motion For Short
Order of Notice seeking an emergency hearing. 	The Court granted the motion and
scheduled an emergency hearing for October 2, 2009 at noon before Judge Frank Bailey.
The Court ordered that “[a] representative of the City of Malden shall appear personally
at the hearing or shall file a Motion to appear telephonically. 	Debtor’s counsel shall
give immediate fax and telephonic notice of this order to such representative.” 	The
Debtors’ attorney filed a Certificate of Service in which he stated:
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I Daniel Gindes do hereby certify that on October 2, 2009, I
served a copy of the Notice of Hearing/Order issued this
morning 	by 	Judge 	Feeney 	to 	the 	Treasurer 	and 	Legal
department of the City of Malden to:
legal@townofmalden.org
treasurer@townofmalden.org[.]
I also state that I called the City Legal Department, and left a
message 	on 	an 	answering 	system. 	I 	also 	called 	the
Treasurer’s Office, and was told they would not attend the
hearing 	because 	that 	was 	the 	legal 	department’s
responsibility.
On October 2, 2009, Judge Bailey conducted the emergency hearing. Counsel to
the City was present. At the conclusion of the hearing, Judge Bailey entered an order in
which he stated:
[c]ounsel to the City of Malden (the “City”) represented at the hearing that
it had actual notice of the Court’s Temporary Restraining Order dated
10/1/09 (Doc. No. 18) (the “Order”), entered in the Debtor’s main case,
which required that, inter alia, the City “shall take all necessary and
appropriate action to renew the Debtor’s vehicle registrations(s).”
The City orally moved for reconsideration on the basis of deficient service. 	The Court
found that the City failed to “assert any legal ground for vacating the finding . . . that
the City was in violation of the automatic stay.” 	The Court denied the City’s motion
“without prejudice to renewal.” 	The Court fined the City $250 per calendar day,
commencing on October 2, 2009, for each day that it failed to comply with the October
1, 2009 order by releasing the hold. The Court also scheduled a status conference for
October 8, 2009, to consider the award of “attorney’s fees and costs and compensation
and/or punitive damages.”
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On October 7, 2009, the City filed the Motion for Reconsideration. 	The City
alleged that service by fax and email was “not compliant with any service rule.” 	In
particular, the City pointed to Fed. R. Civ. P. 4(j)(2) and Mass. R. Civ. P. 4(d)(3) and
asserted that “notice for all actions must be done by mail or in person delivery.” 	In
seeking reconsideration under Fed. R. Civ. P. 60(b)(6), the City conceded that the
violation of the automatic stay was moot because it had voided 14 tickets. In support of
its motion, the City submitted an affidavit of Anne Kerkentzes. 	In her affidavit, Ms.
Kerkenzes stated, among other things, the following:
1. 	My current title is Law Clerk.
2. 	The Plaintiffs, Ouadia Bererhout and Jennifer Fiorita owed the City of
Malden $1,050.00 in parking assessments.
3. 	Based upon my research, on October 5, 2009, the City voided 14 tickets
and cleared them at the registry on Jennifer R Fiorita.
4. 	The Plaintiffs’ attorney did tell me he would be filing legal paperwork
and did not indicate a court appearance.
5. 	Plaintiffs’ attorney never asked who the city attorney was despite
speaking with me on several occasions. In addition, he said he got the
city treasurer’s fax number from the city website. If he was able to do
that, he could have easily located the name of the city solicitor as well.
See Exhibit A+B
6. 	Only 	after 	he 	indicated 	that 	he 	had 	faxed 	information 	to the
Treasurer’s Office on October 1, 2009 and I did call them to locate the
fax [sic]. However, the city records will disagree on the time. He sent
the faxes well after business hour of city hall [sic].
7. 	The Plaintiff’s Attorney indicated in bankruptcy court that he called
here 20-30 times. 	That is false. 	He called here no more than 5 times
total.
On October 7, 2009, the Debtors filed an Application of Debtors’ Counsel For
Compensation, with legal fees of $5,355.00 and costs of $304.
On October 8, 2009, the Court conducted a status conference. The Court ordered
the City to pay the Debtors $750, representing a fine of $250 per day for the three days
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between the entry of October 1, 2009 order and the City’s compliance with it on October
5, 2009. The Court further ordered the City to send the Debtors a letter confirming that
the tickets had been voided. 	In addition, the Court determined that the Debtors’
application 	for 	further 	injunctive 	relief 	was 	moot 	as 	their 	automobile 	had 	been
registered. 	The Court postponed consideration of the Application for Fees as it
contained mathematical errors.
On May 18, 2010, this Court held a hearing on the Motion for Reconsideration
and conducted a status conference in the adversary proceeding. The Court scheduled a
trial with respect to the Debtors’ damages for September 27, 2010. The Court also took
the City’s Motion for Reconsideration under advisement and continued generally
Debtors’ Counsel’s Application pending the outcome of the adversary proceeding.
III. POSITION OF PARTIES
The City, in support of its Motion for Reconsideration, argues that the Debtors
failed to comply with the applicable procedural rules governing service. 	According to
the City, these rules require either personal delivery or delivery by certified mail, citing
Fed. R. Civ. P. 4(j)(2) and Mass. R. Civ. P. 4(d)(3), as incorporated by Fed. R. Bankr.
7004. The City claims that service by email, phone and fax are deficient under the rules.
Furthermore, the City stresses that the Debtors “have provided no evidence they
complied with the rules.”
The Debtors respond by saying the City was given “adequate notice.” 	At the
May 18, 2010 hearing, the Debtors’ lawyer argued:
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This matter was quick moving. 	I filed papers with the Court regarding
the repeated, blatant, and undeniable violation of the automatic stay by
the City. I called the Clerk’s Office and was told to fax over notice of the
hearing to the defendants. I did it immediately. It was late in the day, but
that was because I had been in court on another matter that morning.
The City’s response during the hearing was as follows:
[T]he City doesn’t deny it received notice. It’s just saying it was improper.
* * *
I dispute that they received it the day before. 	They received it, I believe,
the day of, because it was sent after business hours to the City Treasurer
instead of the City Solicitor.
IV. DISCUSSION
A. Grounds for Reconsideration under Fed. R. Bankr. P. 9023 and 9024
The City cites both Fed. R. Bankr. P. 9023, which makes Fed. R. Civ. P. 59
pertaining to new trials and altering or amending judgments applicable to bankruptcy
cases, and Fed. R. Bankr. P. 9024, which makes Fed. R. Civ. P. 60 pertaining to relief
from a judgment or order applicable to bankruptcy cases. 	Because the City failed to
address the requirements of either rule other than to argue that a motion to reconsider
is an appropriate vehicle for addressing its view that the genesis of the contempt
finding was defective service, the Court shall address Rule 60.
According to the court in Hovis v. Grant/Jacoby, Inc. (In re Air South Airlines,
Inc.), 249 B.R. 112 (Bankr. D.S.C. 2000),
The decision of whether to grant a motion for relief from judgment under
the standard set forth in Rule 60(b) lies within the discretion of the Court.
See, e.g. Augusta Fiberglass Coatings, Inc. v. Fodor Contracting Corp., 843
F.2d 808, 810 (4th Cir.1988); Park Corp. v. Lexington Ins. Co., 812 F.2d 894,
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896 (4th Cir.1987). In determining whether a judgment should be set aside
under the standard of Rule 60(b), the Court must engage in a two-pronged
process. First, the moving party must satisfy three requirements: (1) the
motion must be timely filed; (2) the moving party must have a meritorious
defense to the action; and (3) the setting aside of the judgment must not
unfairly prejudice the nonmoving party. See Nat’l Credit Union v. Gray, 1
F.3d 262, 264 (4th Cir.1993); Park Corp., 812 F.2d at 896. Once the
requirements of the first prong have been met, the moving party must
next satisfy one of the six grounds for relief set forth in Rule 60(b). See
Park Corp., 812 F.2d at 896.
249 B.R. at 115-15. In the First Circuit, “[r]elief under Rule 60(b) is available . . . when
exceptional circumstances exist to justify extraordinary relief.” Rodriguez Camacho v.
Doral Fin. Corp. (In re Rodriguez Camacho), 361 B.R. 294, 301 (B.A.P. 1st Cir. 2007)
(citing Simon v. Navon, 116 F.3d 1, 5 (1st Cir. 1997)). Additionally, “‘a party who seeks
recourse under Rule 60(b) must persuade the trial court, at a bare minimum, that his
motion is timely; that exceptional circumstances exist, favoring extraordinary relief; that
if the judgment is set aside, he has the right stuff to mount a potentially meritorious
claim or defense; and that no unfair prejudice will accrue to the opposing parties should
the motion be granted.’ ” 361 B.R. at 301 (citing Karak v. Bursaw Oil Corp., 288 F.3d 15,
19 (1st Cir. 2002)).
Although its Motion for Reconsideration was timely filed, the Court finds that
the City had no meritorious defense to the Debtors’ request for injunctive relief, and the
Debtors would be unfairly prejudiced were the Court to reconsider the finding of
contempt and the fines imposed. 	In view of the substantive and procedural law
applicable in bankruptcy cases, the Debtors should not have had to seek injunctive relief
in the first instance. 	Once they filed their Ex Parte Motion for Temporary Restraining
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Order to Enforce Automatic Stay, the applicable procedural rules permitted this Court
to conduct an emergency hearing on notice appropriate in the particular circumstances.
B. Procedural Requirements of Service in Bankruptcy Cases
The procedural requirements of service are set forth in the Bankruptcy Code, the
Federal Rules of Bankruptcy Procedure, the Local Bankruptcy Rules for the United
States Bankruptcy Court for the District of Massachusetts, as well as in the Federal and
Massachusetts Rules of Civil Procedure.
Section 102 of the Bankruptcy Code defines the term “after notice and a hearing”
as “such notice as is appropriate in the particular circumstances, and such opportunity
for a hearing as is appropriate in the particular circumstances.” 11 U.S.C. § 102(1)(A).
Rule 9013 of the Federal Rules of Bankruptcy Procedure governs the service of motions.
It provides:
A request for an order, except when an application is authorized by these
rules, shall be by written motion, unless made during a hearing. The
motion shall state with particularity the grounds therefor, and shall set
forth the relief or order sought. Every written motion other than one
which may be considered ex parte shall be served by the moving party on
the trustee or debtor in possession and on those entities specified by these
rules or, if service is not required or the entities to be served are not
specified by these rules, the moving party shall serve the entities the court
directs.
Fed. R. Bankr. P. 9013. 	Rule 9014 governs motions filed in contested matters. 	It
provides:
(a) Motion. In a contested matter not otherwise governed by these rules,
relief shall be requested by motion, and reasonable notice and opportunity
for hearing shall be afforded the party against whom relief is sought. No
response is required under this rule unless the court directs otherwise.
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(b) Service. The motion shall be served in the manner provided for service
of a summons and complaint by Rule 7004. Any paper served after the
motion shall be served in the manner provided by Rule 5(b) F. R. Civ. P.
Fed. R. Bank. P. 9014. 2 Rule 7004 of the Federal Rules of Bankruptcy Procedure permits
service of a summons and complaint by first class mail. 	It provides that, except in
certain circumstances,
(b) . . . service may be made within the United States by first class mail
postage prepaid as follows:
2 Rule 5(b) of the Federal Rules of Civil Procedure provides:
Service: How Made.
(1) Serving an Attorney. If a party is represented by an attorney, service
under this rule must be made on the attorney unless the court orders
service on the party.
(2) Service in General. A paper is served under this rule by:
(A) handing it to the person;
(B) leaving it:
(i) at the person’s office with a clerk or other person in charge or, if
no one is in charge, in a conspicuous place in the office; or
(ii) if the person has no office or the office is closed, at the person’s
dwelling or usual place of abode with someone of suitable age
and discretion who resides there;
(C) mailing it to the person’s last known address--in which event
service is complete upon mailing;
(D) leaving it with the court clerk if the person has no known address;
(E) sending it by electronic means if the person consented in
writing--in which event service is complete upon transmission, but
is not effective if the serving party learns that it did not reach the
person to be served; or
(F) delivering it by any other means that the person consented to in
writing--in which event service is complete when the person
making service delivers it to the agency designated to make
delivery.
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(6) 	Upon 	a 	state 	or 	municipal 	corporation 	or 	other
governmental 	organization 	thereof 	subject 	to 	suit, 	by
mailing a copy of the summons and complaint to the person
or office upon whom process is prescribed to be served by
the law of the state in which service is made when an action
is brought against such a defendant in the courts of general
jurisdiction of that state, or in the absence of the designation
of any such person or office by state law, then to the chief
executive officer thereof.
Fed. R. Bank. P. 7004(b)(6). In addition, Fed. R. Bank. P. 7004(a)(1) incorporates Fed. R.
Civ. P. 4(j)(2), which provides for service upon:
(j)(2) . . . A state, a municipal corporation, or any other state-created
governmental organization that is subject to suit must be served by:
(A) delivering a copy of the summons and of the complaint
to its chief executive officer; or
(B) serving a copy of each in the manner prescribed by that
state’s law for serving a summons or like process on such a
defendant.
Fed. R. Civ. P. 4(j)(2). 	Rule 4(j)(2)(B) incorporates Rule 4(d)(4) of the Massachusetts
Rules of Civil Procedure, which permits service as follows:
Upon 	a 	county, 	city, 	town 	or 	other 	political 	subdivision 	of 	the
Commonwealth subject to suit, by delivering a copy of the summons and
of the complaint to the treasurer or the clerk thereof; or by leaving such
copies at the office of the treasurer or the clerk thereof with the person
then in charge thereof; or by mailing such copies to the treasurer or the
clerk thereof by registered or certified mail.
Mass. R. Civ. P. 4(d)(4). Notably, the City cited Mass. R. Civ. P. 4(d)(3), not (d)(4).
The above rules do not expressly address appropriate means of service when
exigent circumstances require emergency consideration of a motion. 	In other words,
the rules do not expressly provide for those circumstances when service by first class
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mail 	or 	personal 	service 	would 	be 	ineffective 	to 	provide 	the 	appropriate 	notice
contemplated by 11 U.S.C. § 102.
Massachusetts 	Local 	Bankruptcy 	Rule 	9013-1(g)(1)(C) 	specifically 	addresses
those circumstances. 	It sets forth the requirements applicable to notices of emergency
hearings. It provides:
The movant shall make a reasonable, good faith effort to advise all
affected parties of the substance of the motion for relief, and the request
for an emergency or expedited determination, prior to filing the motion
for emergency or expedited determination, prior to filing the motion for
emergency or expedited hearing, and, upon filing the motion, movant
shall file a certification attesting to the efforts so made, together with a
certificate of service of the motion setting forth the manner of service.
Promptly after obtaining the date and time of the hearing from the court,
movant shall advise all affected parties of the date and time of the hearing
and any objection deadline and shall file a certificate of service setting
forth the manner of service. 	Such reasonable, good faith efforts may include
providing notice by telephone, facsimile transmission or email in appropriate
circumstances. . . .
MBLR 9013-1(g)(1)(C)(emphasis supplied)
C. Service of the Ex Parte Motion for Temporary Restraining Order
The Debtors filed their Ex Parte Motion for a Temporary Restraining Order in the
main case nine days after they filed their Chapter 13 petition. 	In their Motion, they
alleged that the City had received notice of the filing of the bankruptcy petition through
telephonic notice by their counsel and hand delivery of their bankruptcy petition by the
Debtors. 	Additionally, they set forth grounds entitling them to the relief requested,
including Ms. Fiorita’s pregnancy.
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In Soares v. Brockton Credit Union (In re Soares), 107 F.3d 969 (1st Cir. 1997), the
United States Court of Appeals for the First Circuit determined that actions taken in
violation of the automatic stay are void. It stated:
The automatic stay is among the most basic of debtor protections under
bankruptcy law. See Midlantic Nat’l Bank v. New Jersey Dep’t of Envtl.
Protection, 474 U.S. 494, 503, 106 S.Ct. 755, 760, 88 L.Ed.2d 859 (1986); see
also S.Rep. No. 95-989, at 54 (1978), reprinted in 1978 U.S.C.C.A.N. 5787,
5840. It is intended to give the debtor breathing room by “stop[ping] all
collection efforts, all harassment, and all foreclosure actions.” H.R.Rep.
No. 95-595, at 340 (1977), reprinted in 1978 U.S.C.C.A.N. 5963, 6296-97; see
also Holmes Transp., 931 F.2d at 987; In re Smith Corset Shops, Inc., 696
F.2d 971, 977 (1st Cir.1982).
The stay springs into being immediately upon the filing of a bankruptcy
petition: “[b]ecause the automatic stay is exactly what the name implies-
‘automatic’-it operates without the necessity for judicial intervention.”
Sunshine Dev., Inc. v. FDIC, 33 F.3d 106, 113 (1st Cir.1994). It remains in
force until a federal court either disposes of the case, see 11 U.S.C. §
362(c)(2), or lifts the stay, see id. § 362(d)-(f). This respite enables debtors to
resolve their debts in a more orderly fashion, see In re Siciliano, 13 F.3d
748, 750 (3d Cir.1994), and at the same time safeguards their creditors by
preventing “different creditors from bringing different proceedings in
different courts, thereby setting in motion a free-for-all in which opposing
interests maneuver to capture the lion's share of the debtor's assets.”
Sunshine Dev., 33 F.3d at 114; see generally 3 Collier on Bankruptcy ¶
362.03 (15th rev. ed. 1996).
107 F.3d at 975.
In addition to the safeguards imposed by the automatic stay highlighted by the
First Circuit in Soares, 11 U.S.C.§ 525(a) provides in relevant part: “a governmental unit
may not deny, revoke, suspend, or refuse to renew a license permit, . . . or other similar
grant to . . . a person that is or has been a debtor under this title . . . solely because such
bankrupt or debtor is or has been a debtor under this title . . . or has not paid a debt that
is dischargeable in the case under this title.” 11 U.S.C. § 525(a). 	See also Jessamey v.
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Town of Saugus (In re Jessamey), 330 B.R. 80 (Bankr. D. Mass. 2005) (construing the
automatic stay to require creditors to take action to discontinue collection proceedings
that were commenced prepetition where the effect of failing to act would be to permit
those proceedings to continue postpetition.); Stmima Corp. v. Carrigg (In re Carrigg),
216 B.R. 303 (B.A.P. 1st Cir. 1998). 	Cf. State of California Employment Dev. Dept. v.
Taxel (In re Del Mission Ltd. ), 98 F.3d 1147 (9th Cir. 1996); Bertuccio v. California State
Contrators License Bd. (In re Bertuccio), 414 B.R. 604, 614 (Bankr. N.D. Ca. 2008); In re
Henry, 328 B.R. 664, 668 ( Bankr. E. D.N.Y. 2005); In re Abrams,, 127 B.R. 239 (B.A.P. 9th
Cir. 1991).
The emergency notice of the hearing was appropriate under the circumstances.
Because of the exigencies set forth in the Debtors’ Motion for a Temporary Restraining
Order, including Ms. Fiorita’s near-term pregnancy, and the law applicable to the facts
as alleged by the Debtors, this Court scheduled a hearing on the motion the day after it
was filed. Accordingly, the City’s Motion for Reconsideration lacks merit. The affidavit
of Ms. Kerkentzes establishes that the City was aware of the bankruptcy petition and
that the Debtors’ counsel had spoken with her office on numerous occasions prior to the
emergency hearing on October 1, 2009. 	On the day before the emergency hearing, the
Debtors gave notice to the City by fax, email and telephone. The City was given ample
time to file an objection and appear, which it failed to do. 	The City’s attempt to place
the burden on the Debtors to serve their emergency Ex Parte Motion for Temporary
Restraining Order to Enforce Automatic Stay either by mail or in person delivery would
subvert the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure which
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contemplate the ability of the bankruptcy court to respond quickly to emergencies. The
City’s actions also demonstrate ignorance of the automatic stay and its affirmative duty
to immediately cease its collections efforts. 	Moreover, when Judge Bailey denied its
oral motion for reconsideration at the October 2, 2009 hearing, it was alerted that the
grounds for its motion for reconsideration were deficient.
Not only did the City fail to appreciate the ramifications of the automatic stay, it
did not comply with the Court’s October 1, 2009 order until October 5, 2009. 	The
finding of contempt and the Court’s issuance of a $750 fine were justified under the
circumstances as service of the Ex Parte Motion for Temporary Restraining Order to
Enforce Automatic Stay was both adequate and proper, particularly as the City was
aware of the Court’s October 1, 2009 order at the time of the hearing on October 2, 2009
before Judge Bailey.
V. CONCLUSION
In view of the foregoing, the Court shall enter an order denying the City’s
Motion for Reconsideration.
By the Court,
Joan N. Feeney
United States Bankruptcy Judge
Dated: June 22, 2010
cc: Daniel Gindes, Esq., Jeremy R. Bombard, Esq.
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