Samantha Lynn Masi

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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF IDAHO
______________________________________________________
In Re:
Bankruptcy Case
SAMANTHA L. MASI, 	No. 05-00412
Debtor.
______________________________________________________
SUPPLEMENTAL MEMORANDUM OF DECISION
______________________________________________________
In a written decision issued after an evidentiary hearing, the Court
concluded in this case that Creditors Mike McCormick and West Coast Car
Company willfully violated 11 U.S.C. § 362(a) in their collection activities against
Debtor Samantha Masi, and that Debtor was entitled to an award of actual and
punitive damages. Mem. of Decision, Docket No. 55. Debtor’s only actual
damages were her legal fees and costs incurred in prosecuting the stay violation
motion. However, insufficient evidence of the amount of those fees and costs had
been submitted at the time the Court decided Debtor’s motion should be granted.
As a result, the Court granted Debtor and her attorney (“Counsel”) an opportunity
to supplement the record to prove up those fees and costs. Debtor’s attorney has
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now submitted his affidavit and billing recordings showing that Debtor’s fees and
costs total $5,190.00. See Docket Nos. 59, 60, 63. Creditors filed a response to
these submissions. Docket No. 64. In this supplement to the Court’s prior
decision, the Court now determines the amount of actual and punitive damages
Debtor should be awarded.
Determining Actual Damages
When an award of actual damages under 11 U.S.C. § 362(h) consists
of the debtor’s legal fees, the strictures of 11 U.S.C. § 330 are a guide to the award
of those fees. Eskanos & Adler, P.C., v. Roman (In re Roman), 283 B.R. 1, 11
(B.A.P. 9 th Cir. 2002) (“We endorse the use of the principles in § 330 as a guide
for awarding attorneys’ fees under § 362(h).”); In re Risner, 04.4 I.B.C.R. 172,
175 (Bankr. D. Idaho 2004). Section 330 limits fees to reasonable compensation
for the actual, necessary legal services provided to Debtor. An award of fees under
§ 330, in turn, implicates the requirements of 11 U.S.C. § 328, and Fed. R. Bankr.
P. 2016(b) and 2017(b).
Counsel’s submissions, Docket No. 63, are inadequate and defective
in several respects. First of all, Counsel’s itemization of his services and time
spent is replete with “lumped entries.” Eight of the nineteen entries in Counsel’s
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1 See Docket No. 63 (entries dated 2-25-05; 2-28-05; 4-5-05; 4-7-05; 4-11-05; 4-
27-05; 4-28-05; and 5-4-05).
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itemization lump multiple tasks together.1 For example, the February 28, 2005,
entry indicates that Counsel spent four hours drafting the motion for sanctions, an
accompanying affidavit in support, and speaking with Debtor via telephone. What
is not clear is how much of that four hours Counsel spent on each of the three
discrete tasks. Because Counsel has not segregated the amount of time spent on
each of the lumped tasks, the Court is unable to determine whether the time spent
was reasonable within the guidelines of § 330 and the case law interpreting it.
This Court has repeatedly identified the lumping of time entries as improper. See,
e.g., In re Anderson, 03.1 I.B.C.R. 14, 15–16 (Bankr. D. Idaho 2002); High
Country Bed & Breakfast, Inc. v. Amresco Independence Funding, Inc. (In re High
Country Bed & Breakfast, Inc.), 02.2 I.B.C.R. 89, 90 (Bankr. D. Idaho 2002); In re
Haskew, 01.2 I.B.C.R. 62, 65 (Bankr. D. Idaho 2001) (“Lumping compensable
services together with noncompensable services makes it difficult if not impossible
to determine the amount of time actually spent on the compensable services. In
such situations, the Court may deny compensation requested in the lumped
entry.”).
Counsel’s itemization also suffers from a garden-variety lack of
critical information. To illustrate, the April 27, 2005, entry shows Counsel spent
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2 While it appears otherwise, assuming Counsel included travel time, he should
have charged his client a reduced rate for that time. High Country Bed & Breakfast, Inc.,
02.2 I.B.C.R. at 90.
3 See Docket No. 63 (entries dated 5-4-05; 5-12-05; and 5-13-05).
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three and one-half hours attending the hearing on the “motion for sanctions” under
§ 362(h) and speaking with someone named “Ruth” on the telephone. The identity
of “Ruth,” and Counsel’s need to speak with her, are not at all apparent from
Counsel’s submissions. There is no way for the Court to judge whether Counsel’s
time was necessary to prosecute Debtor’s motion. In particular, this entry is
troublesome since the hearing on Debtor’s motion (which the Court attended)
consumed only approximately one hour and forty-five minutes. Allowing Counsel
a generous half hour for travel time,2 his telephone conversation with “Ruth”
presumably lasted one and one-quarter hours. There is nothing in the record to
show why such a lengthy conference with this mystery woman amounted to a
reasonable, necessary service.
Moreover, Counsel’s records give the Court additional, more
general, cause for concern. For example, the notion that Counsel should
reasonably spend close to seven hours revising and reviewing a post-hearing brief
that was only four and one-half pages long raises doubt that the itemization should
be relied upon at all.3 As a result, the Court will not engage in an item-by-item
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review of the entries, and will instead rely upon its own experience and familiarity
with the proceedings in setting a reasonable award of fees in this case. All things
considered, the Court concludes $2,500.00 represents a reasonable amount of fees
for the actual and necessary services that Counsel provided to Debtor in resolving
the stay violation issues.
But there is yet another issue that must be addressed before arriving
at a final award. Under Fed. R. Bankr. P. 2016(b), a debtor’s attorney must
disclose the substance of any new fee agreement with the debtor by filing a
supplemental disclosure statement not later than fifteen days after the agreement is
reached. Counsel’s initial Rule 2016(b) disclosure, Docket No. 2, indicated that he
agreed to accept $750.00 for representing Debtor in this case, that Debtor paid that
fee prior to the bankruptcy petition being filed, and that he was owed nothing
more. This initial statement also disclosed that Counsel’s representation was
limited to prepetition counseling, preparing and filing the necessary bankruptcy
papers, and representing Debtor at the first meeting of creditors.
Apparently, Debtor and Counsel struck a new fee agreement
concerning prosecution of the stay violation motion. But Counsel has never filed a
supplemental disclosure statement as required by Rule 2016. Since Counsel’s first
billing entry is dated February 25, 2005, Docket No. 63, Counsel is at least three
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4 Make no mistake: Counsel must file a proper supplemental Rule 2016(b)
disclosure. His continuing failure to do so may subject Counsel to additional sanctions.
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and one-half months tardy in complying with Rule 2016. While this delay is
serious enough, it is especially disappointing that Counsel has failed to comply
with the Rules since the Court expressly warned Counsel in its prior decision about
the need to file a supplemental disclosure. Mem. of Decision at 13 n.8, Docket
No. 55 (entered May 24, 2005).
In the past, the Court has reduced the fees of debtors’ attorneys by
10% for technical noncompliance with Rule 2016(b). See, e.g., In re Combe
Farms, Inc., 01.1 I.B.C.R. 7, 9 (Bankr. D. Idaho 2001). But a complete denial of
compensation is also a permissible sanction in appropriate cases. See Law Offices
of Nicholas A. Franke v. Tiffany (In re Lewis), 113 F.3d 1040, 1045 (9 th Cir. 1997);
In re Larson, 04.1 I.B.C.R. 15, 16 (Bankr. D. Idaho 2004); In re Combe Farms,
Inc., 01.1 I.B.C.R. at 9.
Under these circumstances, the Court concludes a 25% reduction in
allowed fees is appropriate. Counsel’s extended failure to comply with the Rules
even after the Court pointed out his transgression is inexcusable.4 Therefore,
Counsel will be allowed, and Creditors will be ordered to pay, $1,875.00 in
attorney fees. In addition to this amount, Counsel has incurred $150.00 in costs
that will also be allowed. Docket No. 63.
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In summary, the Court finds and concludes that Debtor incurred
$2,025.00 in actual damages.
Determining Punitive Damages
The considerations relevant to making an award of punitive damages
under § 362(h) have been expressed in the Court’s Memorandum of Decision,
Docket No. 55, and in In re Daniels, 04.4 I.B.C.R. 153, 158–59 (Bankr. D. Idaho
2004); In re Andrus, 04.3 I.B.C.R. 137, 144–46 (Bankr. D. Idaho 2004); and In re
Wiersma, 03.1 I.B.C.R. 42, 44 (Bankr. D. Idaho 2003). Having considered the
appropriate factors, including the nature and gravity of the stay violations, the
Court finds and concludes that Creditors should be required to pay Debtor an
additional $2,025.00 in punitive damages to punish Mr. McCormick and West
Coast for their illegal conduct, and to deter them and others from committing any
future violations of the § 362 automatic stay.
Conclusion
Mr. McCormick and West Coast are jointly and severally liable to
Debtor for her actual damages and for punitive damages. Debtor’s only actual
damages are Counsel’s fees and costs. Although Counsel submitted a billing
statement for more, Debtor’s actual damages, and Counsel’s right to collect from
Debtor, are limited to $1,875.00 in fees and $150 in costs. Additionally, punitive
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damages of $2,025.00 will be awarded to Debtor.
A separate order will be entered.
Dated: June 22, 2005
Honorable Jim D. Pappas
United States Bankruptcy Judge
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