Gary R Risner and Beeman Law Offices

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AUTHENTICATE
U.S. GOVERNME
INFORMATION
GPO

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U.S. Bankruptcy Court
District of Idaho

Filed: December 16, 2004
at 1:30 p.m.

By; JC

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF IDAHO

IN RE )
GARY RISNER and Case No. 04-02310
MARIA RISNER, )
Debtors. MEMORANDUM OF DECISION
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PROCEDURAL BACKGROUND

Gary and Maria Risner (“Debtors”) filed a voluntary petition for chapter 7
relief on June 29, 2004. Doc. No. 1. The chapter 7 trustee filed a “no asset”
report. Doc. No. 6, The time for objecting to discharge expired on Scptember 28,
and Debtors’ discharge was entered on October 4, 2004, Doc. No. 23.

Debtors have filed several motions asserting that their creditors and/or their
creditors’ collection agents violated the automatic stay of § 362(a) between the
filing on June 29 and their discharge on October 4.' In the motion presently before

the Court, Debtors target creditor Nampa Radiologists, P.A. (“NR”). See Doc. No.

' See § 362(a) (stay arises upon filing); § 362(c)(2)(C) (stay terminates as to debtor upon
discharge).

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29. Debtors’ motion sought damages, attorney’s fees and costs, and punitive
damages. Jd.

Debtors filed a previous motion for sanctions against NR and scheduled it
for an October 4, 2004 hearing. See Doc, Nos, 13, 15. NR did not appear at the
October 4 hearing. Debtors submitted that matter upon (a) the Court’s files, (b)
Exhibit 3 introduced at the hearing, and (c) the hearing testimony of Maria Risner.
The Court took the motion under advisement and, upon its review of the record,
determined that Debtors’ service of the motion did not satisfy the requirements of
Fed. R, Bankr, P, 7004(b)(3). On October 5, 2004, it denied the motion without
addressing the merits. See Doc, No, 26,

On October 7, 2004, Debtors filed a new motion against NR, properly
served it, and set a hearing for November 1. See Doc. Nos. 29, 30, NR responded,
and appeared at the November | hearing on the contested matter.

At that hearing, NR offered in lieu of testimony the affidavits of Steven
Hippler, NR’s attorney, and Paul Dewitt, the president of Practice Management,
Inc, (“PMI”), the company that handles NR’s billmgs. See Doc. Nos. 33, 34.
Debtors, through their attorney Kelly Beeman, accepted all the factual assertions

found in those affidavits without dispute and waived cross examination.’

? NR was prepared to present testimony at the November |] hearing in support of its
objection ta Debtors’ second motion. However, due to Debtors’ agreement, the affidavits suffice.
Compare Fed. R. Bankr. P. 9014(d) (stating that “[tlestimony of witnesses with respect to

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Debtors did not present any evidence at the November 1, 2004 hearing.
Instead, Mr. Beeman indicated they would rely on the testimony and exhibit
introduced at the October 4 hearing on their previous motion.

At the November 1 hearing, Mr. Beeman orally withdrew Debtors’ claim
for punitive damages.’ The parties presented legal arguments on the remaining
issues and the matter was taken under advisement. To the extent required by rule,
the following constitutes the Court's findings of fact and conclusions of law.
FACTS

When Debtors’ bankruptcy was filed on June 29, 2004, they listed creditor
“Nampa Radiologists, P.A.” at an address of “P.O. Box. 9649, Boise, ID, 83707.”
Doc. No. 1 at schedule F. The Bankruptcy Noticing Center’s (“BNC”) certificate
of service reflects first class mail service on NR on July 2, 2004, using an address
of “P.O. Box. 9649, Boise, ID 83707-4649".

Although addressed to NR, the post office box was actually that of NR’s

billing agent, PMI. Doc. No. 33 at 1-2.* When PMI received notice of Debtors’

7(,..continued)
disputed material factual issues shall be taken in the same manner as testimony in an adversary
proceeding.”) (emphasis added).

> Although he withdrew the claim at hearing, Mr. Beeman explicitly threatened pursuit
of punitive damages in an October 22 letter to Mr. Hipplet. See Doc. No. 34 at Ex. C. NR was
therefore prepared to address the factual matters related to that issue. Mr. Beeman was
unprepared to proceed on this contention.

4 PMI explained that it places its phone number and address on its clients’ billings “so

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bankruptcy, it immediately reviewed Debtors’ accounts and “zeroed out” all
outstanding balances. Unfortunately, a pre-pctition medical procedure was still
being reviewed by NR to determine the proper billing code and possible insurance
coverage, This charge had not yet posted to Debtors’ account. NR’s
determination was made after PMI received notice of Debtors’ bankruptcy,
reviewed all Debtors’ accounts and zeroed out all balances. Once that
determination was made, the charge (of $100.00) was posted and a bill was
generated and sent to Debtors in August. Doc. No. 33 at 2-3. PMI sent another
reminder billing statement mn early September, /d at 3.

Debtors’ response to these two bills was to file a § 362(h) motion. Doc. No.
13. Mr. Beeman made no attempt to contact the creditor by telephone or letter to
alert the creditor to the stay violation, determine why the creditor had so acted,
request that the bills cease, or otherwise resolve the matter.

In mid-September, a billing clerk at PMI received Debtors’ first motion
regarding violation of the stay. The clerk did not understand the significance of
ihis pleading, and concluded it simply identified that a bankruptcy had been filed.
He therefore reviewed Debtors’ accounts and, consistent with policy, zeroed out

the same including the charge at issue. Doc. No. 33 at 3. No further actions were

‘(...continued)
that inquiries are addressed to PMI to insure a centralized and accurate response to billing
inquiries, complaints and notices of bankruptcies.” Doc. No. 33 at 2.

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taken by PMI regarding Debtors’ first motion, and no further collection efforts
were made.

When Debtors properly served their second motion on NR through its
registered agent, NR promptly responded by contacting PMI’s president, Mr.
Dewitt, who then contacted Mr. Hippler. NR and PML, through Mr. Hippler,
attempted to negotiate a resolution with Mr, Beeman.

The conversation, initiated by Mr. Hippler, was the first contact Mr.
Beeman ever had with NR, PMI or any attorney for them. It is undisputed that,
had Debtors or Mr. Beeman called the billing agent and indicated a bankruptcy
existed, “the bill would have immediately been zeroed out, an apology made, and
any damage rectified.” Doc. No. 33 at 5. Not only was this assertion made by Mr.
Dewitt and not contested, its accuracy was demonstrated through PMI’s response
to Debtors’ first motion. Jd. at 4-5.

DISCUSSION AND DISPOSITION

A stay violation occurred. But the Court will not award damages, fees or
costs, nor impose other sanction, for that violation. This may seem incongruous,
but it is a conclusion driven by several factors.

A. Creditors should not violate the stay, and face consequences if
they do

This Court has previously noted that “the stay is one of the fundamental

debtor protections under the Code, and that it ‘stops all collection efforts.”"” In re

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Aughenbaugh, 02,4 1,B.C.R. 157, 158 (Bankr. D. Idaho 2002) (quoting Franchise
Tax Bd. vy. Roberts (In re Roberts), 175 B.R. 339, 343 (9th Cir. BAP 1994)).
The reach of the automatic stay is broad. It prohibits any act

taken against the debtor or to recover a claim against the debtor, The

stay requires the creditor to maintain the status quo ante and to

remediate acts taken in ignorance of the stay.
Id. (quoting Roberts); see also Eskanos & Adler, P.C. v. Leetien, 309 F.3d 1210,
1214 (9th Cir. 2002) (“The scope of protections embodied in the automatic stay is
quite broad, and serves as one of the most important protections in bankruptcy
law.’"); In re Wiersma, 03.1 LB.C.R. 42, 44 (Bankr. D. Idaho 2003) (“Respect by
all involved for the automatic stay is critical to the fair and effective functioning of
the reorganization process.”).

The protections embodied in the stay are enforced through § 362(h), which
provides:

(h) 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.

For injured debtors to recover under § 362(h), the creditors’ stay violations

must be willful, Under the case law, it is clear that once a creditor or actor learns

or is put on notice of a bankruptcy filing, any actions intentionally taken thereafter

’ Eskanos & Adler states: “Consistent with the plain and unambiguous meaning of the
statute, and consonant with Congressional intent, we hold that § 362(a)(1) imposes an affirmative
duty to discontinue post-petition collection actions.” 309 F.3d at 1213.

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are “willful” within the contemplation of § 362(h). Eskanos & Adler, 309 F.3d at
1215; Zn re Jacobson, 03.2 1.B.C.R,119 (Bankr D. Idaho 2003). The question is
thus whether the actor tended the action, not whether the actor intended to
violate the stay. Eskano & Adler, 309 F.3d at 1214-15. Associated Credit Servs.,
Inc. v. Campion (in re Campion), 294 B.R. 313 (9th Cir. BAP 2003), states:

There need be no proof of specific intent to violate the stay or to injure.

To the contrary, a good faith belief that the stay is not being violated “is

not relevant to whether the act was ‘willful’ or whether compensation

must be awarded,”
294 B.R. at 316 (footnote omitted); see also Jacobson, 03.2 1.B.C.R. at 121
(“Specific intent to violate the stay is not a required element in finding a willful
violation,”) (citing Goichman v. Bloom (In re Bloom), 875 F.2d 224 (9th Cir.
1989)); Aughenbaugh, 02.4 .B.C.R. at 163.

The decisions of this Court, including those referenced above, amply prove
that stay violations are not tolerated, and that the Court is not adverse to imposing
serious sanction for transgression.° Why, then, are no sanctions warranted here?

The answer is found in a close review of the conduct of the creditor and its

agent, and of the conduct of Debtors and their counsel.

5 See, e.g., In re Andrus, 04.3 LB,C.R. 137, 2004 WL 2216493 (Bankr, D, Idaho 2004)
(actual damages of $850.30, attomey’s fees and costs of $6,590.40, and punitive damages of
$10,000.00); Zz re Daniels, 316 B.R. 342 (Bankr. D, Idaho 2004) (actual damages of $135.00,
attorney’s fees and costs of $2,850.00, punitive damages of $1,350.00).

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B. Who violated the stay, and how

PMI admits that it sent two separate post-petition bills to Debtors regarding
a prepetition debt owed to NR. While Mr. Dewitt avers that “in no way did PMI
act knowing that a bankruptcy existed when a bill was generated and sent
subsequent to the filing of a bankruptcy,” the evidence is to the contrary, PMI
admits receiving the BNC notice of Debtors’ bankruptcy; in fact, it zeroed out all
open balances on Debtors’ account in response to that notice.

PM1 is actually arguing that it failed to appreciate that the bankruptcy
encompassed the charge that was determined, post-bankruptcy, not to be covered
by Debtors’ medical insurance. But the post-petition determination did not vary
the prepetition nature of the $100.00 charge.

PMI was already on notice of Debtors’ June 29, 2004 bankruptcy when it
generated the two bills on this charge. “Once a creditor knows of the existence of
the automatic stay, forgetting about it does not erase the knowledge,” Campion,

294 BR. at 317.’ Therefore, PMI willfully violated the automatic stay and could

” It is clear that PMI has a procedure in place to deal with bankruptcy filings, and that its
system is largely effective. However, it also appears that once an initial review of a debtor's
accounts has been made and those accounts zeroed out, the file is not tagged or otherwise
identified in a way to prevent later postings and billings on other prepetition claims in violation
of the stay. Mr. Dewitt’s affidavit acknowledges that there have been other instances, like that
here, where a prepetition charge has been erroneously posted to a zeroed out account of a debtor.
See Doc. No. 33 at 4. The fact that such mistakes are possible leaves PMI open to liability for
stay violation, even if the error could be promptly rectified upon inquiry and even though actual
damages might be minimal. The point is thal PMI!’s intent not to violate the stay, and its
institution of processes to minimize such violations, do not innoculate it from liability. Campion,

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be liable for any damages adequately proven by Debtors.
Debtors, however, did not bring their motion alleging “willful violation”
against PMI; they brought both their first and second § 362(h) motions against NR.
NR never received direct notice of the bankruptcy. While the BNC
certificate of service lists NR, the evidence before the Court demonstrates that the
entity receiving mail at the address listed was PMI, not NR. See Doc. No. 33 at 238

One might expect NR to argue that, as it was directly unaware of the

bankruptcy, it could not have willfully violated the stay. NR did not do so. It
appears to appreciate that notice went to its selected and designated collection and
account servicing agent, which was granted responsibility for the account. General
principles of agency (though never argued or briefed by Debtors) support the idea

that NR is liable, under the facts of this case, for the conduct of its billing agent.”

%(,..continued)
294 BR. at 317-18.

® See also Doc. No. 33 at 4 (stating that Debtors’ second, properly served § 362(h)
motion was NR’s “first indication of any issue regarding bankruptcy or regarding an alleged stay
violation” and that “Nampa Radiologists had absolutely no. . . knowledge of the bankruptcy prior
to its service if [sic] the motion for sanctions that is currently pending that was served by certified
mail to its regisiered agent on October 7, 2004.").

° This Court has previously recognized a split of authority on whether a creditor-
principal should legally be responsible for the willful stay violation of its collection agent by
virtue of their agency relationship. See /n re McCain, Case No. 03-04624, Doc. No. 42 (Mem.
Dec.) at 6 (Bankr. D. Idaho Aug. 19, 2004) (comparing 7 re Withrow, 93 B.R, 436, 438 (Bankr.
W.DLN.C. 1988) and In re Atlas Mach & Iron Works, Ine,, 239 B.R. 322, 333-35 (Bankr. E.D.
Va. 1998)). Mr. Beeman should have been aware of this issue, as he was Debtors’ counsel in
MeCain.

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The Court concludes, particularly given NR’s implicit agreement,' that NR
is properly subject to the § 362(h) motion. Even so, there are other problems with
Debtors’ second motion which preclude relief against NR.

C. Actual damages must be suffered, and proved

In order to recover under § 362(h), debtors are required to prove their actual
damages. Jacobson, 03.2 1.B.C.R. at 121 (stating that the “amount of any actual
damages sought pursuant to § 362(h) must be proved” and that the debtor bears the
burden of proof).'’ The Court concludes that the only evidence properly before it
on the second motion 1s that presented by NR through the unopposed affidavits of
Mr. Dewitt and Mr. Hippler,

Debtors did not present any evidence at the November | hearing. Debtors
instead relied on the testimony of Mrs. Risner and the exhibit presented at the
October 4 hearing on their first motion against NR.

NR objects to the Court considering that evidence since it was not present at
the hearing to cross examine the witness or otherwise participate. NR’s absence
from the first hearing was through no fault of its own; NR was not present because

it was not properly served in accord with Rule 7004. See Doc. No, 26 (Mem,

* Accord McCain, Doc. No. 42 at 6 (finding creditor liable for acts of collection agent in
absence of objection or “effective opposition” by creditor).

'' See also Eskanos & Adler, P.C. v. Roman (In re Roman), 283 B.R. 1, 8-9 (9th Cir.
BAP 2002) (injury under § 362(h) means actual damages, and requires proof of an actual harm or
loss suffered),

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Dec.) at 5-6. The Court cannot consider testimony and exhibits admitted at
hearing on a prior, improperly served motion when the creditor was not present
due to such improper service and now objects. Accord Beneficial Cal, Inc. y.
Villar (In re Villar), No, 04-1081, 2004 WL 2587803 (9th Cir. BAP Oct, 20, 2004)
(failure to properly serve in compliance with Rule 7004 violates due process rights
of adverse party).!”

Therefore, the Court has no evidence of Debtors’ actual damages, and
cannot award any under § 362(h). Accord McCain, Doc. No. 42 at 7 (refusing to
award damages absent testimonial or other competent proof).

D. Attorney’s fees and costs alone may constitute damages, but not
here

It is true that under § 362(h), a debtor need not prove actual damages apart
from his attorney’s fees, which are alone recoverable. Jacobson, 03.2 I.B.C.R. at
121 (citing Eskanos & Adler, 309 F.3d at 1215-16), However, in this case, there
are problems with awarding such damages,

There is no affirmative evidence regarding attorney’s fees and costs. There
is no testimony or affidavit from Mr. Beeman addressing his fees, nor is there any
other itemization of time spent by him. There exists no adequate evidentiary basis

for a finding of actuaily and reasonably incurred fees in the litigation with NR.

? Upon pointed questioning, Mr. Beeman ultimately admitted the Court should not
consider evidence admitted at a hearing where the opposing side was not present because it had
not been properly served.

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Accord McCain, Doc. No, 42 at 8. The Court is left with Mr. Beeman’s assertion
at the October 4 hearing that there was a $300.00 fee component to Mrs. Risner’s
damages consisting of two hours of his time at a rate of $150.00 per hour."

Both Mr. Beeman and Mr. Hippler generally debated the issue of
reasonable attorney’s fees on November 1, even sans evidence. Given the nature
of this case and several others in which Mr. Beeman has prosecuted (or filed and
then settled) § 362(h} motions, the Court feels compelled to comment.

1. The apparent charges for the generation of multiple, form
§ 362(h) motions are unsupported and facially excessive

NR contends that Mr, Beeman’s § 362(h) motions are essentially boiler
plate forms, requiring little time to prepare. The Court agrees. In this case alone,
Mr. Beeman filed four motions for sanctions regarding alleged violations of the
automatic stay, not including the re-served NR motion or an “amended” motion
against one of the other three creditors.’* In comparing the motion presently
before the Court, Doc. No. 29, with the others, the Court easily concludes that
“form pleadings” were used. The basic structure and wording of the pleadings are

identical, Tn fact, in some places, the form was not even modified to correctly

'? The Court is not persuaded that Mr. Beeman’s performance in this case deserves
compensation at $150.00 per hour, However, as no fees will be award, the Court will not further
address the question of reasonable rate.

4 See Doc. No. 7 (motion re: Saltzer Medical); Doc. No. 10 (motion re: Transworld
Systems/American Mint); Doc. No. 13 (first motion re: NR); Doc. No. 16 (motion re: Shell Oil).
see alsa Doc. No. 19 (amended motion re: Saltzer Medical); Doc. No. 29 (second motion re:
NR),

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identify the targeted creditor. See Doc. Nos. 13, 16 and 29 at 4c (each stating,
erroneously, that the motion was served on creditor “American Mint”). The
attorney time necessary to generate such pleadings, even if their preparation and
filing were justified, is minimal.

There is further support for the idea that these pleadings are not drafted with
an eye to the specific conduct at issue, nor reflect much particularized attention to
a given creditor’s acts. For example, a “form” allegation is found in each motion,
where Mr. Beeman writes that his debtors “believe on information that
Creditor... has no procedure in place to identify bankruptcy cases and ensure
observance of the automatic stay.” See, e.g., Doc. Nos, 7, 10, 13, 16, 29 at 2, 4g.

Questioning of Mr. Beeman on November | established that there was no
investigation or any other “information” upon which this allegation was based.
Rather, he felt comfortable signing the pleadings making the assertion
(notwithstanding the requirements imposed on him by Fed. R, Bankr. P. 9011)
based solely on the fact that a post-petition bill was mailed by the creditor (e., a
bill was issued; ergo there was no procedure).'> The frailty of this sort of res ipsa
loquitor contention was illustrated by the evidence produced by NR and PMI in

this case. PMI had such a procedure in place, though due to the specific

'* This form contention exists not to establish a violation of stay or debtor’s damages. Its
presence is designed to present a basis for seeking punitive damages. This makes even more
disturbing the lack of pre-filing inquiry, investigation, or other basis for the certification under
Rule 9011 that there was evidentiary support for the allegation.

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circumstances surrounding the post-petition determination of insurance coverage
of the subject charge, that procedure failed.

Thus, it does not appear that significant amounts of time were invested in
generating these motions, supporting affidavits and service certificates. Certainly
it does not appear that the two hours of time Mr. Beeman mentioned was
required.’

2, The strategy and course of conduct undertaken impeaches
the idea of reasonableness

Even if the Court were to accept the idea that it took some amount of Mr.
Beeman’s time to generate the form pleadings and bring the motion before the
Court, the analysis would not end there, The Court must also evaluate the
reasonableness of claimed attorney's fees in tts assessment of § 362(h) damages.

The question of reasonableness here relates to the decision to file a motion

and commence a contested matter for damages (indeed, one for punitive damages)

© This is not the only case in which Mr. Beeman has filed such motions. As the Court
has noticed in several cases before it, the two hour figure has become something of a “standard”
charge. See, e.g., Jn re Rose Motley, Case No. 04-03116, Doc. No. 10 at 2; Doc. No. 13 at 2 (both
stating, in regard to different creditors in form § 362(h) motions, “My Attomey, Kelly I. Beeman,
informs me that he spent two (2) hours researching, preparing for and appearing in this case”);
but see id., Doc. No. 20 at 2 (claiming one hour, not two). Perhaps this is a result of Mr. Beeman
receiving $300.00 for two hours of work in A¢cCain, when the previously denied motion was
reasserted. See McCain, Doc. No. 54 (Sum, Ord.) at 4. There is, however, no presumptive fee
for presenting § 362(h) matters. The actval time spent must be established, through competent
evidence in each case and viz each creditor alleged to have violated § 362(a), and that time and
the fees charged must be shown to be reasonable. See id., Doc, No. 42 at 8.

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based solely on the receipt of two bills in the mail on a $100.00 account.’? More to
the point, it relates to the decision to commence litigation without ever contacting
the creditor to see if the matter could be promptly and inexpensively resolved and
the bills stopped.

If the attorney’s fees “would not have been incurred but for the bringing of
an [unnecessary] motion[,]” the Court can decline to award any attorney’s fees.
See McHenry v. Key Bank (In re McHenry), 179 B.R. 165, 168-69 (9th Cir, BAP
1995).'" McHenry was one of the earliest cases to note that the automatic stay “is
intended to be a shield protecting debtors and their estates, and should not be used

as a sword for their enrichment.” /d. at 169."

'? The assertion of a right to punitive damages is not adequately supported by the
allegations of the form motion. Evidence of “reckless or callous disregard of the law”, of
“malicious, wanton or oppressive” conduct, ot of “egregious, intentional misconduct” is required
to support an award of punitive damages. See Andrus, 04.3 I.B.C.R. at 145. In the present case,
there was no indication that Mr, Beeman had a cogent basis for making the allegation, much less
any indication that he was prepared to meet the evidentiary burden to prove it.

"8 In McHenry, a creditor secured by debtors’ vehicle received, but misplaced, debtors’
bankruptcy notice. An employee of the creditor called debtors to discuss their delinquent car
payments. Debtors advised the caller of the bankruptcy and referred him to their attomey. Two
days later, the attommey was called by the creditor, The attorney confirmed the existence of the
filing, and advised the creditor that the debt would not be reaffirmed and the vehicle would be
surrendered, After learning that the vehicle would be surrendered, creditor contacted debtors, set
up a time to collect the vehicle, and finally repossessed the vehicle. Debtors’ counsel thereafter
brought a § 362(h) motion seeking fees, actual damages of $5,000.00 and punitive damages of
$15,000.00. Bankruptcy Judge Alfred C. Hagan, writing for the BAP, affirmed the court’s
determination that no damages, much less punitive damages, were warranted. McHenry
distinguished the cases relied on by debtors since, in those cases, “the bringing of the motion... .
may have been necessary to stop the continuing stay violations, thus justifying an award of
attorney's fees.” 179 B.R. at 168.

' In Eskanos & Adler, P.C. v. Roman (Ia re Roman), 283 B.R. 1 (9th Cir. BAP 2002),
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The concept of reasonableness was revisited in Eskanos & Adler, P.C. v.
Roman (in re Roman), 283 B.R, 1 (9th Cir, BAP 2002). The BAP there sustained
the bankruptcy court’s conclusion that debtor incurred $5.00 in actual damages
(the “travel cost” incurred by the debtor in going to her lawyer’s office). Jd. at 8-9.
The Panel then considered the bankruptcy court’s award of $1,000.00 in fees. It
“endorse[d] the use of the principles used in § 330 as a guide for awarding
attorneys’ fees under § 362(h).” /d. at 11, This requires, among other things, that
the services be “actually” performed and that the charge therefore is “reasonable”
in amount. See § 330(a)(1), (3).

Roman expressed “dismay” at the “cottage industry of precipitous section
362(h) litigation” where the moving party’s only claimed injuries are his fees
incurred in writing the motion. /d. at 11-12 (quotation marks omitted). It further
stated:

Consequently, there is also a consensus in the case law that, in

determining reasonable damages under § 362(h), the bankruptcy court
must examine whether the debtor could have mitigated the damages.

'"¢...continued}
discussed further in the text infra, the BAP summarized McHenry in these terms:

Basically, in McHenry the debtors did not have any actual damages or injury due to
the stay violation because their attorneys’ fees were incurred in the filimg of an
unnecessary motion for sanctions. This finding was more in the nature of a
reasonableness determination, which as we discuss below, is the standard for
awarding attorneys’ fees as damages.

id. at 10 1.10.

MEMORANDUM OF DECISION - 16

SAG TIA
(Rev. #/82)

SAO TAA
(Rev. 4/82)

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Courts especially scrutmize cases where the debtor’s only
injuries are those mcurred in litigating the motion for sanctions, and
where there exist no circumstances warranting punitive damages.

Id. at 12. The Panel found that, while the debtor was injured by the conduct of the
creditor, “[she] and her attorney were not entirely blameless” and “could have
merely telephoned [the creditor] and attempted to negotiate a reasonable
settlement.” Jd. at 13.”

While it is incumbent upon creditors to respect the automatic stay and cease
collection activity once they are made aware of a bankruptcy filing, debtors and
their attomeys cannot use a creditor’s harmless error to profit. The Court is
required only to compensate any actual, proven damages and reasonable attorney’s
fees, When a creditor’s conduct is not particularly egregious and the debtor makes
no effort to correct the problem before racing into Court, there is no absolute
requirement that sanctions be imposed.

The Court must evaluate the costs and fees claimed and determine if those
expenses could have been mitigated. Roman, 283 B.R. at 12, It has been made
sufficiently clear here that any brief communication by Debtors or Mr. Beeman

with PMI would have led to the prompt and full resolution of the matier. There

would have been no need to generate any pleadings in this case or attend any

* Roman notes that “[t]he bankruptcy court took all of this into consideration when it
adjusted Debtor’s fee request of $2,000, and limited the award to only $1,000 in attorneys’ fees.”
fa.

MEMORANDUM OF DECISION - 17

SAD TA
(Rey. 8/82)

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hearings.”

Mr. Beeman apparently instructs his debtor clients to notify him of any
post-petition collection efforts. That is fully appropriate. But when bills or
telephone calls are received by his debtors, Mr. Beeman appears to elect to litigate
rather than simply making a call or writing a letter and solving the problem.” This
approach does not serve his clients’ best interests and, ultimately, it serves mostly
to generate fees.** The Court need not reward such behavior.

The Court has and will continue to impose sanctions for § 362 violations
when there is sufficient cause and competent evidence. This case does not present

such a situation,

*' Had this approach been taken, the “reasonable” fee would be for the time involved in
iwo brief phone calls: one from Debtors to Mr. Beeman and the other from Mr. Beeman to PMI.
At Mr. Beetnan’s suggested hourly rate of $150.00, that would generate a fee of $30.00 to
$45,00.

* The Court, of course, has no idea how many times Mr. Beeman might have solved stay
violation questions in this simpler, more expedient and cost effective way. It hopes that motions
like that now before it are the exception and not the rule.

However, the evidence in this present case indicates no communication was made with
NR or PMI before commencing litigation. In fact, im none of the § 362(h) motions in this case, or
in those filed in other cases before this Judge, is there any allegation that such communications
were made but for whatever reason proved unsuccessful. And, in questioning by the Court in
these matters, Mr. Beeman has taken the position that he is not required to make such contact.
His feeling is that the stay requires the creditor to behave and, if not, he is in essence free to “fire
[off the motion] first and ask questions later.”

* Even if initially driven by principled concern for debtors’ rights and the protective
function of § 362, the number of motions (far more than advanced by any other practitioner
before the Court) and the regularity of vacated hearings on those motions due to “settlements”
with the creditors, support the idea that the motivation has become primarily an economic one.
That such settlements are monetary, with Mr. Beeman and his clients splitting the proceeds, was
admitted hy Mr, Beeman during questioning.

MEMORANDUM OF DECISION - 18

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CONCLUSION
Debtors’ motion, Doc. No. 29, will be denied. An appropriate order will be
entered,

Dated this 10th day of December, 2004.

TERRY L. MYERS
CHIEF U.S. BANKRUPTCY JUDGE

MEMORANDUM OF DECISION - 19

SAO TIA
(Rev. S82)

AO T2A
Rev. 8/82)

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CERTIFICATE OF SERVI

1, the undersigned, hereby certify that I served by the methad indicated below, a true copy of the
document to which this certificate is attached, to the following named person(s) at the following
address(es), on the date shown below;

DATED; December 10, 2004
Case No. 04-02310 (Gary Risner)

Office of the U.S. Trustee
MK Central Plaza

720 Park Blvd., Suite 220
Boise, ID 83712

jeff. ¢ howe@lusdoj ov
gary. meclendon@usdoj.gov

OW.S. Mail O Facsimile ¥ Email

Kelly I. Beeman

Attorney at Law

710 4 W. Franklin, Suite 20)

Boise, ID 83702

aysurance(ab .
O U.S, Mail 0 Facsimile ” Email

Steven J. Hippler
GIVENS PURSLEY
P.O. Box 2720
Boise, [ID 83701-2720
“U.S. Mail O Facsimile D Email

Richard E, Crawforth
P.O, Box 190129

Boise, ID 83709
rcorawforth@cableonenct

OU.S. Mail O Facsimile ” Email

Chin B Corben.

Ann B, Canderan
dicial Assistant to Judge Myers

Note to Email service: A PDF version of the above decision/order was electronically transmitted 10 the parties
indicated above. Email service is provided as a courtesy only upon request ofa party. To review an electronic
image of the onginal of this document, ot to subscribe for email service of future decisions/orders from the
Bankrupley Judge, please access the Court’s Internet web sile, www.td uscourls gov,

MEMORANDUM OF DECISION - 20