Althea Wright

UNITED STATES BANKRUPTCY COURT FOR PUBLICATION
EASTERN DISTRICT OF NEW YORK
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In re: Case No. 04-18487-CEC
ALTHEA WRIGHT, Chapter 7
a/k/a Althea A. Wright,
a/k/a Althea Ann Marie Wright,
Debtor.
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DECISION
Jeffrey I. Stark, Esq.
Charles Juntikka & Associates
11 West 42nd Street
New York, New York 10036
Harvey Sharinn, Esq.
Sharinn & Lipshie, P.C.
200 Garden City Plaza
Suite 506
Garden City, New York 11530
CARLA E. CRAIG
United States Bankruptcy Judge
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This matter comes before this Court on the motion of Althea Wright, also known as
Althea A. Wright and Althea Ann Marie Wright, for an order requiring Sharinn and Lipshie, P.C.
to pay actual damages, pursuant to 11 U.S.C. §362(h), for the firm's willful violation of the
automatic stay. The Debtor asserts that Sharinn and Lipshie failed to remove a lien the firm had
placed on Ms. Wright's checking account, even after it had received notification of the filing of
Ms. Wright's bankruptcy petition.
For the reasons set forth below, Ms. Wright's motion is granted.
Jurisdiction
This Court has jurisdiction over this core proceeding pursuant to 11 U.S.C. §§ 1334(b)
and 157(b)(2)(C) and the Eastern District of New York standing order of reference dated August
28, 1986. This decision constitutes the Court's findings of fact and conclusions of law following
a trial on the merits to the extent required by Fed. R. Bankr. P. 7052.
Facts
On March 17, 2004, prior to the filing of Ms. Wright's voluntary petition, Sharinn and
Lipshie obtained a default judgment against Ms. Wright on behalf of Capital One Bank.
Pursuant to the default judgment, Sharinn and Lipshie arranged to have a lien placed on Ms.
Wright's checking account, which she kept with Washington Mutual Bank.
On June 8, 2004, Ms. Wright filed a voluntary petition for relief under chapter 7 of the
Bankruptcy Code. Both Capital One and Sharinn and Lipshie were listed as creditors on Ms.
Wright's petition pursuant to §521(1) of the Bankruptcy Code and Federal Rule of Bankruptcy
Procedure 1007(a)(1).
On June 12, 2004, the clerk of this Court notified by mail all listed creditors, including
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"Doc." refers to documents listed on the bankruptcy court's docket, by docket number.
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Capital One and Sharinn and Lipshie, of Ms. Wright's bankruptcy and the date on which the first
meeting of creditors was to be held. On June 22, 2004, Ms. Wright's attorney, Charles W.
Juntikka and Associates, LLC, also mailed a letter to Sharinn and Lipshie that informed the firm
of the filing of Ms. Wright's petition and the imposition of the automatic stay. The Juntikka
firm's letter requested the immediate removal of Sharinn and Lipshie's lien on Ms. Wright's bank
account. When the lien was not removed, the Juntikka firm sent a second letter the next week
again requesting the removal of the firm's lien.
Despite this abundance of notice that Ms. Wright had filed a bankruptcy petition, Sharinn
and Lipshie did not remove the lien on Ms. Wright's account.
Sharinn and Lipshie acknowledges that the firm received the Court's notice of the filing
of Ms. Wright's petition on June 14, 2004 (Doc. No. 16; ¶10), however, they deny having1
received either of the Juntikka firm's letters.
On July 9, 2004, this Court signed an order to show cause pursuant to which Sharinn and
Lipshie was ordered to appear on July 28, 2004, to explain why the firm should not be held in
contempt for their refusal to comply with the automatic stay by removing the lien on Ms.
Wright's bank account. (Doc. No. 6.)
Sharinn and Lipshie asserts that, on July 13, 2004, almost 1 month after they received
notice of Ms. Wright's petition from the clerk of this Court, it sent a general release letter to
Washington Mutual. (Doc. No. 16; ¶13). Sharinn and Lipshie states that its failure to send the
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release letter to Washington Mutual sooner was due to "an oversight and inadvertent error." Id.
at ¶14. In any event, the lien on Ms. Wright's checking account was not removed.
On July 21, 2004, Sharinn and Lipshie made an application to this Court for an
adjournment of the hearing on Ms. Wright's order to show cause. The Juntikka firm objected to
the adjournment because the lien on Ms. Wright's account remained in place. On July 22, 2004,
Sharinn and Lipshie faxed a letter to Washington Mutual instructing the bank to release Ms.
Wright's account, which the bank did that same day.
Discussion
Section 362(a) of the Bankruptcy Code provides an automatic stay of litigation, lien
enforcement and other actions that are attempts to collect pre-petition claims. Section 362(a) of
the Bankruptcy Code states, in pertinent part,
(a) Except as provided in subsection (b) of this section, a petition
filed under section 301, 302, or 303 of this title...operates as a stay,
applicable to all entities of...
(2) the enforcement, against the debtor or against property
of the estate, of a judgment obtained before the commencement of
the case under this title
11 U.S.C. §362.
Violations of the automatic stay against the estate of an individual are governed by
§362(h) of the Bankruptcy Code. 11 U.S.C. §362(h). Section 362(h) of the Bankruptcy Code
states "[a]n 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." Id.; In re Robinson, 228 B.R. 75, 80 (Bankr. E.D.N.Y. 1998)
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("An additional finding of maliciousness or bad faith on the part of the offending creditor is not
necessary to support an award of actual damages but would warrant the further imposition of
punitive damages pursuant to section 362(h)").
The party seeking damages for violation of the automatic stay must prove the following
elements: (1) that a bankruptcy petition was filed, (2) that the debtor is an individual, (3) that the
creditor received notice of the petition, (4) that the creditor's actions were in willful violation of
the stay, and (5) that the debtor suffered damages. Garland v. Lawton (In re Garland), 2001
Bankr. LEXIS 2186 (Bankr. D. Vt. 2001) (citations omitted). The moving party must prove each
of these elements by a preponderance of the evidence. In re Robinson, 228 B.R. at 81 (citations
omitted).
It is not disputed that Ms. Wright is an individual and that she filed a bankruptcy petition.
Nor is it disputed that Sharinn and Lipshie had notice, and therefore, actual knowledge, of the
bankruptcy filing. (Doc. No. 16; ¶10.) See In re Robinson, 228 B.R. at 84 (holding that the
receipt of the notice of bankruptcy from the clerk of the court is sufficient for a creditor to be
deemed to have knowledge of the bankruptcy proceeding.) However, Sharinn and Lipshie does
dispute that its actions amounted to a willful violation of the automatic stay. Sharinn and Lipshie
asserts that, in mailing a general release letter to Washington Mutual, even one mailed 1 month
after the firm had actual knowledge of the bankruptcy, it did everything it was required to do
under the Bankruptcy Code. This assertion is incorrect.
In Crysen/Montenay Energy Co. v. Esselen Assoc., Inc. (In re Crysen/Montenay Energy
Co.), 902 F.2d 1098, 1105 (2d. Cir. 1990), the Second Circuit held that "any deliberate act taken
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by a creditor in violation of the automatic stay, which the violator knows to be in existence,
justifies an award of actual damages." A failure to act by a creditor, such as a failure to release a
restraint on the debtor's bank account, where the creditor had knowledge of the bankruptcy filing,
may likewise be a violation of the automatic stay.
Courts in this Circuit have held that §362(h) should be liberally construed to ensure that
debtors receive the protection of the automatic stay. In re Robinson, 228 B.R. at 81 n.5 (citations
omitted). If §362(h) were limited to violators who had an actual intent to violate the stay, "the
deterrent effect of the damages remedy, and the relief it affords wronged debtors, would be
compromised inappropriately." Id.
Sharinn and Lipshie argues that the Juntikka firm did not make a good faith effort to
inform them that Washington Mutual had not lifted the lien on Ms. Wright's checking account.
This argument is without merit. It was not the Juntikka firm's responsibility to ensure that the
lien on Ms. Wright's account had been removed; rather, that responsibility rested solely with
Sharinn and Lipshie.
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. Sucre v. MIC Leasing Corp. (In re
Sucre), 226 B.R. 340, 347 (Bankr. S.D.N.Y. 1998). "The provisions of the automatic stay place
the responsibility to discontinue any pending collection proceedings squarely on the shoulders of
the creditor who initiated the action." Id., citing In the Matter of Sams, 106 B.R. 485, 490 (Bankr.
S.D. Ohio 1989) ("Based on the language of §362(a) many courts have emphasized the obligation
incumbent upon creditors to take necessary steps to halt or reverse pending state court actions or
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Although punitive damages were requested in the motion papers, this portion of Ms. W right's request for
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relief was withdrawn at the trial.
other collection efforts commenced prior to the filing of a bankruptcy petition . . . ."). By failing
to coordinate with Washington Mutual or otherwise take the necessary steps to ensure that the
lien on Ms. Wright's account was immediately released, Sharinn and Lipshie willfully violated
the automatic stay.
At the hearing, Ms. Wright testified that she suffered monetary damages as a result of her
inability to access her checking account for more than one month after she filed her petition. The
damages included, among other things, fees she was forced to pay to cash her paycheck and, of
course, her lawyer's fees in connection with this matter.
As Sharinn and Lipshie willfully violated the automatic stay, the Court must award Ms.
Wright actual damages pursuant to §362(h). 11 U.S.C. §362; Crysen/Montenay Energy, 9022
F.2d at 1105; Sucre, 226 B.R. at 349. An award of actual damages under §362(h) is intended to
compensate a debtor for damages sustained as a result of a willful violation of the automatic stay.
Id., citing In re Cox, 214 B.R. 635, 642 (Bankr. N.D. Ala. 1997) ("The term 'actual damages' is
synonymous with the term 'compensatory damages.'").
Attorneys' fees are included in the award of actual damages awarded pursuant to §362(h).
11 U.S.C. §362. Although the language of §362(h) does not limit the amount of attorneys fees
and costs to be awarded, "courts have determined that such an award must be 'reasonable and
necessary,' and that courts should 'closely scrutinize the fees requested by attorneys for
unnecessary and excessive charges.'" Sucre, 226 B.R. at 351.
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While Ms. Wright was not able to itemize her damages at the hearing, the Court
instructed the Juntikka firm to submit appropriate affidavits to this Court attesting to any fees and
expenses incurred by Ms. Wright as a result of the lien remaining on her checking account. The
Juntikka firm has yet to submit any affidavits. Accordingly, the Juntikka firm is ordered to
submit such affidavit or affidavits within 10 days of the entry of this decision.
Conclusion
For the foregoing reasons, the Court finds that Sharinn and Lipshie willfully violated the
automatic stay. The Court will award fees and expenses to Ms. Wright subject to its review of
the affidavit which this Court has ordered the Juntikka firm to submit herein.
Dated: Brooklyn, New York
August 5, 2005
s/Carla E. Craig
CARLA E. CRAIG
United States Bankruptcy Judge
Case 1-04-18487-cec Doc 18 Filed 08/05/05 Entered 08/08/05 17:21:40

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NEW YORK
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In re: Case No. 04-18487-CEC
ALTHEA WRIGHT, Chapter 7
a/k/a Althea A. Wright,
a/k/a Althea Ann Marie Wright,
Debtor.
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MAILING CERTIFICATE
I, Vivian Greene, Judicial Assistant to the Honorable Carla E. Craig, hereby
affirm that on August 5, 2005 a copy of an Order was delivered to the parties named below by
United States Postal Service first class mail, telecommunication, facsimile or any other delivery
method, as follows:
Jeffrey I. Stark, Esq.
W endy Selwanes, Esq.
Charles Juntikka & Associates
11 W est 42nd Street
New York, NY 10036
Attorneys for Debtor
Harvey Sharinn, Esq.
Sharinn & Lipshie, P.C.
200 Garden City Plaza
Suite 506
Garden City, NY 11530
Dated: Brooklyn, New York
August 5, 2005
s/Vivian Greene
Vivian Greene
Case 1-04-18487-cec Doc 18 Filed 08/05/05 Entered 08/08/05 17:21:40