3:10-mp-00001

3:10-mp-00001Wvnb6 mar 2012

Testo completo

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
IN RE:
GLORIA JEAN WOLFE,
Debtor.
___________________________________
IN RE:
SANDRA E. KUHNS and
STACIA FULLER.
___________________________________
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Case No. 09-1326
Chapter 7
Misc. Proc. No. 3:10-01
MEMORANDUM OPINION
The Office of the United States Trustee (“USTE”) seeks to enjoin Sandra Kuhns and Stacia
Fuller (“Kuhns and Fuller”) under § 110(j)(3) of the Bankruptcy Code and/or the court’s general
contempt powers from acting as bankruptcy petition preparers (“BPPs”); impose fines against Kuhns
and Fuller; direct Kuhns and Fuller to refund all fees collected from prospective debtors who filed
petitions after December 29, 2009; and assess any actual damages that may have been suffered by
any debtor plus an additional $2,000.00 for fraudulent and deceptive conduct.1
Kuhns and Fuller, acting pro se, contend that, among other things, they should not be
enjoined because this court lacked authority to set a reasonable fee to be charged by BPPs, they
believed the effect of the court’s December 29, 2009 order was stayed pending their appeal to the
District Court, and they acted on the advice of counsel in taking certain actions in violation of the
court’s December 29, 2009 order and § 110.
Before the USTE filed its motion, the court entered an order to show cause, but the court1
consolidated for hearing purposes the USTE’s motion and its order to show cause.
1
Dated: Monday, March 05, 2012 3:34:17 PM
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For the reasons stated herein, the court will grant the USTE’s motion, in part, and otherwise
finds that Kuhns and Fuller failed to show cause as to why they did not violate this court’s December
29, 2009 order and/or § 110 of the Bankruptcy Code.
I. BACKGROUND
On July 20, 2009, the USTE filed its first motion for an injunction and other relief in the
above-captioned bankruptcy case. After several continuances — granted in an effort to allow the
parties an adequate opportunity to settle the issues raised in the USTE’s motion — the court held a
December 10, 2009 evidentiary hearing to consider the USTE’s motion. At that hearing, the parties
informed the court that all of the issues raised by the USTE’s motion were settled but one; the only
issue remaining for the court’s consideration was the reasonableness of fees charged by Kuhns and
Fuller. At the conclusion of the evidentiary hearing — at which Ms. Kuhns and Ms. Fuller were both
present and represented by counsel — the court ordered that $150.00 was a reasonable fee for
Kuhns’s and Fuller’s authorized services in the cases before the court, and any excess fee collected
was to be refunded to their clients. The court’s holding regarding the fee was memorialized in its
December 29, 2009 order, which also incorporated the terms agreed upon by the parties regarding
authorized services provided by BPPs, permissible advertising, and the imposition of fines.
Additionally, the court ordered that, in addition to the remedies provided by § 110, violations of the
December 29, 2009 order or any provisions of the Bankruptcy Code — including further violations
of § 110 — be punishable pursuant to the general contempt powers of the court.
Regarding permissible services to be provided by BPPs, the parties agreed, and the court
ordered, that BPPs may only perform secretarial or word-processing services, limited to typing or
transcribing; and may only provide prospective debtors with Official Forms or questionnaires to be
completed by the debtor. The court explicitly ordered that BPPs may not provide to prospective
debtors any other documents, pamphlets, or brochures regarding bankruptcy law and procedure, and
may not provide a prospective debtor with any advice or information, whether written or oral,
regarding bankruptcy law or procedures.
As the order relates to permissible advertising by BPPs, the parties agreed and the court
ordered that BPP’s advertisements not contain the word ‘legal’ or ‘paralegal’ or any similar term;
be published under any category containing advertisements by attorneys; or include the name “Fuller
2
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and Kuhns” or any other business name that implies or suggests the BPPs are a law firm. The order
also precludes BPPs from using advertisements that suggest their services can be anything more than
merely typing or transcribing written information, precludes BPPs from suggesting they can provide
any advice regarding bankruptcy law or procedure, and precludes the use of the following terms:
advise, consult, advocate, guidance, counsel, or similar terms.
On January 11, 2010, Kuhns and Fuller, acting pro se, appealed this court’s December 29,
2009 order as it related to the determination regarding the reasonableness of the fees charged by them
as BPPs in the cases then before the court. Although Kuhns and Fuller appealed this court’s2
December 29, 2009 order, neither party acted to stay the effect of the order pending the disposition
of the appeal. Kuhns and Fuller submitted their appellate brief to the District Court on May 14,
2010, after receiving the District Court’s order to show cause requiring them to submit a brief by that
day or have their appeal dismissed. On May 18, 2010, the District Court entered an order affirming3
this court’s decision regarding the reasonableness of fees charged by BPPs, and mailed a copy of its
order to Ms. Kuhns at 106 E. South Maple Avenue, Martinsburg, WV, 25401, the same address
where she accepted service of the District Court’s order to show cause. The District Court’s
memorandum opinion affirming this court, sent by certified mail, was returned as unclaimed. Upon
receiving the returned mail, the Clerk of the District Court did not take further action.
On November 23, 2010, the court was copied with correspondence from Anita Casey,
Executive Director of the West Virginia State Bar (the “State Bar”), to Ms. Kuhns. The letter
indicated that, upon review by the Unlawful Practice of Law Committee of the State Bar (the
“Committee”) of an August 31, 2010 advertisement in The Martinsburg Journal, Kuhns and Fuller
The Notice of Appeal filed by Kuhns and Fuller appears to be signed by Sandra Kuhns2
on behalf of herself, Stacia Fuller, and their business, Fuller and Kuhns - Bankruptcy Petition
Preparers Service. Kuhns and Fuller each signed their Statement of Issues on Appeal and their
appellate brief.
Service of the District Court’s order was accepted by Ms. Kuhns at 106 E. South Maple3
Avenue, Martinsburg, WV, 25401. Also, at the hearing in this matter conducted on September 7,
2011, Ms. Kuhns authenticated her signature, which appears on a certified mail receipt made part
of the record as the USTE’s Exhibit 11, acknowledging her receipt of the Notice of General
Guidelines for Appearing Pro Se in Federal Court issued by the District Court.
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were believed to be in violation of this court’s December 29, 2009 order. The Committee directed
Ms. Kuhns and her office to immediately cease and desist from any activity in conflict with the
court’s order, including improper advertising. Upon receiving the State Bar’s letter regarding Kuhns
and Fuller, the court initiated a miscellaneous proceeding against Kuhns and Fuller, and ordered
them to show cause as to why they did not violate this court’s December 29, 2009 order and/or § 110
of the Bankruptcy Code. According to Kuhns and Fuller, their receipt of this court’s December 1,
2010 order to show cause was the first time they were made aware of the District Court’s ruling upon
their appeal challenging this court’s ruling regarding the reasonableness of their fees.4
The USTE filed its current motion on January 13, 2011, at which time the court conflated
proceedings on its order to show cause and the USTE’s motion, and held a September 7, 2011
evidentiary hearing to consider its order to show cause and the USTE’s motion.
II. DISCUSSION
The USTE seeks to enjoin Kuhns and Fuller under § 110(j)(3), and/or the court’s general
contempt powers as set forth in § 105(a) of the Bankruptcy Code for allegedly violating the court’s
December 29, 2009 order by, among other things, not refunding fees; charging prospective debtors
more than $150.00; engaging in improper advertising; providing prohibited services to prospective
debtors; and failing in their responsibility to truthfully and accurately disclose their compensation
as required by § 110(h)(2). The USTE also seeks to impose fines under § 110(l)(1), direct the refund
of fees, and award damages under § 110(i).5
To the extent that Kuhns and Fuller assert that they were unduly prejudiced by their4
failure to receive the District Court’s May 18, 2010 affirming this court’s memorandum opinion
regarding the reasonableness of fees charged by them in time to take an appeal to the United
States Court of Appeals for the Fourth Circuit, their argument fails for two reasons: (1) the
address on record with the District Court was the 106 E. South Maple Avenue address where Ms.
Kuhns accepted service of the District Court’s May 14, 2010 order to show cause, and it is a
party’s responsibility to correct a wrong address on record with the court, see USAA Federal
Savings Bank v. Otto, 409 B.R. 912, 916 (Bankr.D.Minn. 2009); and (2) although Kuhns and
Fuller may not have received notice of the District Court’s ruling until December 2010, any right
to appeal that they may have possessed could still have been pursued at that time. Fed. R. App.
P. 4(a)(5)(A)(ii) and/or (6).
The court need not address the USTE’s requests for the refund of fees, because the court5
ordered a refund in its December 29, 2009 order, and thus, no further analysis regarding the
4
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Kuhns and Fuller assert that this court lacked authority to set a reasonable fee to be charged
by BPPs; the effect of the court’s December 29, 2009 order was stayed pending their appeal to the
District Court; they acted on the advice of counsel in taking certain action in violation of the court’s
December 29, 2009 order and § 110; and there is a need for their services such that they should not
be enjoined from acting as BPPs.6
Regarding the USTE’s request that Kuhns and Fuller be enjoined from acting as BPPs, the
court, as part of its contempt power, may enjoin a BPP that has failed to comply with a previous
order of court issued under § 110 of the Bankruptcy Code. 11 U.S.C. § 110(j)(3). Additionally, the
court is free to issue sua sponte any order that is necessary or appropriate to carry out the provisions
of the Bankruptcy Code or enforce court orders, § 105(a), and the court is mindful that § 110 was
enacted not as a legitimization of BPPs as a profession, but rather as a consumer protection statute
for the benefit of debtors. See In re Evans, 413 B.R. 315, 322-23 (Bankr. E.D.Va. 2009).
Although the USTE brought its motion on multiple grounds, the court finds it sufficient to
dispose of the motion based on violations of the December 29, 2009 order regarding the refund of
fees, the filing of fraudulent disclosures of compensation, improper advertising, and unauthorized
services provided by Kuhns and Fuller.
Here, the court explicitly ordered that the reasonable value of authorized services provided
by Kuhns and Fuller in the 15 cases then before the court was $150.00. The court further ordered
Kuhns and Fuller to refund any amounts paid by their clients in excess of the $150.00 reasonable
refund of fees is warranted. Similarly, the court will not address the USTE’s request for an award
of damages under § 110(i), because no evidence of damages was presented to the court at the
September 7, 2011 evidentiary hearing.
Regarding cases filed after December 29, 2009, the USTE did not file motions in those
cases seeking the refund of fees, and, although those cases may be evidence of Kuhns’s and
Fuller’s violation of the court’s December 29, 2009 order, the court will not order the refund of
fees in cases not properly before the court. As stated in paragraph 16 of the December 29, 2009
order, the parties agreed that Kuhns and Fuller would refund fees to other debtors for whom
Kuhns and Fuller acted as BPPs; the parties currently have no such agreement. See 11 U.S.C. §
110(h)(3) (contemplating disallowance of fees in excess of the value of any services rendered
during the 12-month period preceding the date of the filing of the petition)(emphasis added).
Although Kuhns and Fuller, pro se, may not represent each other, the court will address6
their arguments together due to their substantial similarity.
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fee. Although the parties could not agree on a reasonable fee for authorized BPP services, the7
parties agreed that the refund of fees in excess of the reasonable fee determined by the court would
occur by June 30, 2010. At the September 7, 2011 evidentiary hearing on the USTE’s current motion
to enjoin Kuhns and Fuller, Sandra Kuhns testified that she and Ms. Fuller did not refund the fees
in excess of the $150.00 reasonable fee established in the court’s December 29, 2009 order, thus
violating the order. More importantly, Kuhns and Fuller each testified that they continued to charge
and accept fees in excess of $150.00 in cases for which they rendered services after December 29,
2009, but only disclosed a $150.00 fee on the disclosures of compensation filed by their clients.
Although the terms of the court’s December 29, 2009 order did not establish a fixed fee of
$150.00, it certainly provided a guidepost. But even if Kuhns and Fuller could have demonstrated
entitlement to a higher fee in subsequent cases, there are no circumstances where the signing of
fraudulent disclosures of compensation is appropriate or permissible. Thus, not only did Kuhns and
Fuller violate the court’s December 29, 2009 order as it relates to the reasonable fee in the cases then
before the court, they also violated § 110(h)(2) of the Bankruptcy Code by submitting fraudulent
disclosures of compensation in cases filed after the court’s December 29, 2009 order. Specifically,
Ms. Kuhns testimony showed that she submitted at least 39 fraudulent disclosures of compensation
in violation of § 110(h)(2) of the Bankruptcy Code and the court’s December 29, 2009 order. To8
the extent that Kuhns and Fuller assert that any amount charged above $150.00 represents
administrative fees for things other than typing a bankruptcy petition, § 110(h)(2) requires disclosure
The court’s December 29, 2009 order lists 15 cases, including the above-captioned case7
of Ms. Wolfe, in which Kuhns and Fuller were ordered to refund a total of $5,550.00 by June 30,
2010.
The testimony of Ms. Fuller, and that of her mother, clearly demonstrates that she had8
knowledge of and assisted in the preparation of several cases in which fees in excess of $150.00
were charged but not disclosed; a practice that Ms. Fuller, like her mother, attempted to vindicate
at the hearing.
Moreover, although Ms. Kuhns signed and submitted the vast majority of disclosures of
compensation in cases which Kuhns and Fuller acted as BPPs, Ms. Fuller did admit to submitting
at least one fraudulent disclosure of compensation.
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of any fee received from the debtors, not just those fees connected with the typing of the petition.9
See In re Evans, 413 B.R. 315, 324 (Bankr.E.D. Va. 2009) (“The plain language of the statute does
not limit the fee received to only fees incurred in connection with typing the petition and schedules.”
(citing In re Kaitangian, 218 B.R. 102, 114 (Bankr.S.D.Cal. 1998))).
Once again, the court’s December 29, 2009 order found $150.00 to be the reasonable value
of authorized services performed by Kuhns and Fuller only in the cases then before the court.
Nothing in the December 29, 2009 order can be construed as a general prohibition against Kuhns and
Fuller receiving compensation greater than $150.00 in appropriate cases, and to the extent Ms. Kuhns
and Ms. Fuller believed they were entitled to greater compensation in a case after the court’s
December 29, 2009 order, such compensation should have been disclosed, and in appropriate
circumstances may have been allowed. The filing of fraudulent disclosures in that regard, however,
is most troublesome and readily sanctionable under § 110 and by the court’s general contempt power
afforded under § 105(a) of the Bankruptcy Code.
Regarding the advertising of Kuhns and Fuller, the court finds such advertising to be violative
of the court’s December 29, 2009 order. The USTE’s Exhibit 6 and 7 contain photocopies of
advertisements placed in The Martinsburg Journal and The Buyer’s Guide — both periodicals local
to the Martinsburg, WV area — by Kuhns and Fuller. Each advertisement was placed by Kuhns and
Fuller after entry of the court’s December 29, 2009 order: in The Buyer’s Guide on January 27, 2010,
March 24, 2010, and January 5, 2011, and in The Martinsburg Journal on March 14, 2010, and
September 12, 2010. The court finds these advertisements to be violative of its December 29, 2009
order. Specifically, the advertisements improperly contain the name “Fuller & Kuhns,” suggest legal
Specifically, the provision mandates that9
A declaration under penalty of perjury by the bankruptcy petition preparer shall be
filed together with the petition disclosing any fee received from or on behalf of the
debtor within 12 months immediately prior to the filing of the case, and any unpaid
fee charged to the debtor. If rules or guidelines setting a maximum fee for services
have been promulgated or prescribed under paragraph (1), the declaration under this
paragraph shall include a certification that the bankruptcy petition preparer complied
with the notification requirement under paragraph (1).
11 U.S.C. § 110(h)(2).
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consequences of filing bankruptcy, and otherwise suggest that Kuhns and Fuller’s services include
more than merely typing or transcribing written information.
For example, the advertisements contain the following phrases suggesting the legal
consequences of filing bankruptcy: “Get a fresh start for the New Year! Call Today!”; “Judgments.
Garnishments. Foreclosures. Not able to afford an attorney?”; “Creditors Calling - Threats of
Repossession? Foreclosure? Garnishments?” The advertisements also contain the following phrases
that suggest Kuhns and Fuller are able to provide services in addition to merely typing and
transcribing written information: “We File Bankruptcy under the US Bankruptcy Code”; “Not able
to afford an attorney? Call us before it’s too late!”; “Not Able To Afford An Attorney? WE CAN
HELP! 24/7.” Thus, Kuhns and Fuller violated the court’s December 29, 2009 order as it relates to
permissible advertising, because they are advertising as if Kuhns and Fuller is more than a
typing/transcription service.
As it relates to permissible services to be provided by BPPs, the court’s December 29, 2009
order constrains the permissible services to merely secretarial or word-processing services, limited
to typing or transcribing written documents or information. Here, Kuhns and Fuller provided
improper services after the court’s entry of its December 29, 2009 order. For example, Ms. Kuhns
testified at the September 7, 2011 evidentiary hearing that when preparing a petition with judgment
creditors, she was required to list the judgment on the petition three times — once each for the
judgment creditor, counsel for the judgment creditor, and the court where the judgment was rendered.
Ms. Kuhns’s testimony in that regard evidences that the prospective debtors did not complete the
petition for Ms. Kuhns’s typing or transcription before meeting with her, but took information to Ms.
Kuhns for her use in preparing the petition and schedules. Ms. Kuhns also testified that in the case
of Robert P. Williams she was asked by Mr. Williams to amend his petition to remove property from
Mr. Williams’ Statement of Financial Affairs and place the property on Schedules A and D.
Moreover, Ms. Kuhns testified generally about her practice of receiving bills and pay stubs of
prospective debtors in preparing bankruptcy petitions. The court finds these practices to be violative
of its December 29, 2009 order, because Kuhns and Fuller are only permitted to perform secretarial
or word-processing services; BPPs are only permitted to type or transcribe forms filled out by
prospective debtors, not use information provided by the prospective debtors to complete the petition
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and schedules.
Although Kuhns and Fuller acknowledge violations of the court’s December 29, 2009 order,
they assert that this court lacked authority to set a reasonable fee that they can charge prospective
debtors. Specifically, Kuhns and Fuller assert that only the Supreme Court of the United States or
the Judicial Conference of the United States possess the authority to set fees to be charged by BPPs.
Kuhns and Fuller are correct that “the Supreme Court may promulgate rules under [§] 2075
of title 28 . . . for setting a maximum allowable fee chargeable by a bankruptcy petition preparer.”
11 U.S.C. § 110(h)(1). But, “the court shall disallow and order the immediate turnover to the10
bankruptcy trustee any fee referred to in paragraph (2)— (i) found to be in excess of the value of any
services rendered by the bankruptcy petition preparer . . . ; or (ii) found to be in violation of any rule
or guideline promulgated . . . under paragraph (1).” 11 U.S.C. § 110(h)(3)(A).
Here, the court’s December 29, 2009 order does not attempt to set a maximum allowable fee
to be charged by BPPs, but specifically finds the reasonable value of services provided by these
preparers — typing and transcription services — to be $150.00 for cases then before the court.
Therefore, Kuhns’s and Fuller’s argument regarding the court’s authority to set a maximum
allowable fee to be charged by BPPs is misplaced, because the court did not set a maximum
allowable fee to be charged by BPPs. Rather, the court found the reasonable value of services
provided by Kuhns and Fuller to be $150.00 and ordered the excess fees refunded, which Kuhns and
Fuller ignored. Moreover, § 110(h)(1) permits the Supreme Court of the United States or the Judicial
Conference of the United States to set a maximum allowable fee chargeable by a BPP; § 110(h)(1)
does not, however, proscribe action by a bankruptcy court. Indeed, § 110(h)(3)(A) is mandatory as
it relates to a court’s disallowance of fees in excess of the value of the authorized services provided
by Kuhns and Fuller. Nevertheless, the court’s findings on the USTE’s current motion are not based
on a determination regarding excessiveness of fees charged in cases after December 29, 2009, but
rather Kuhns’s and Fuller’s failure to refund the fees in the cases that were the subject of the court’s
December 29, 2009 order, and their lack of disclosure in cases filed after December 29, 2009, in
Neither the Supreme Court, nor the Judicial Conference has taken any action to10
promulgate rules or guidelines for setting a maximum allowable fee pursuant to § 110(h)(1), and
the statute imposes no mandatory duty upon them to do so.
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violation § 110(h)(2).
Regarding Kuhns’s and Fuller’s appeal of the court’s December 29, 2009 order, no action was
taken to stay the effect of this court’s order pending the appeal, and, thus, the court’s December 29,
2009 order remained in full force and effect. See A & H Holding Corp. v. O’Donnell (In re Abington
Realty Corp.), 530 F.2d 588, 589 (4th Cir. 1976) (holding that an appeal of a bankruptcy court order
does not stay the effect of the order unless a stay pending appeal is requested and received).
Although Kuhns and Fuller assert that they were unaware of the necessity to file a motion for stay
pending appeal, they are “not entitled to a general dispensation from the rules of procedure . . . .”
In re Laredo, 334 B.R. 401, 408 (Bankr.N.D.Ill. 2005); see FDIC v. Anchor Properties, 13 F.3d 27,
31 (1st Cir. 1994) (noting that a litigant’s pro se status does not absolve him from compliance with
the federal rules); see also In re Wright, 223 B.R. 886, 893 (Bankr.E.D.Pa. 1998) (“Although the
pleadings of pro se litigants are construed liberally, there is no lower standard when it comes to rules
of evidence and procedure.”).
Insofar as Kuhns and Fuller raise the “advice of counsel” defense, they assert that they were
advised by their former counsel that they could bifurcate the fee they charged into essentially two
categories: (1) a petition preparation fee of $150.00, and (2) administrative fees to help cover their
costs of operation, and that only the petition preparation fee needed to be disclosed to the court.
Notwithstanding the fact that their testimony regarding what their former counsel told them
is inadmissable as hearsay, they are unable to avail themselves of the “advice of counsel” defense,
because “[a] person who has knowledge of a court order and does not comply with it on the advice
of counsel does so at his own peril,” Walsh v. Bracken (In re Davitch), 336 B.R. 241, 252
(Bankr.W.D.Pa. 2006), and “[a] lawyer is the client’s agent, and the client is bound by the
consequences of advice that the client chooses to follow.” Cannon-Stokes v. Potter, 453 F.3d 446,
449 (7th Cir. 2006). Also, “the focus of the court’s inquiry in civil contempt proceedings is not on
the subjective beliefs or intent of the alleged contemnors in complying with the order, but whether
in fact their conduct complied with the order at issue.” In re Rountree, 448 B.R. 389, 417
(Bankr.E.D.Va. 2011).
Here, even if such evidence were admissible, it is irrelevant that Kuhns and Fuller allegedly
acted on advice of counsel in violating the court’s December 29, 2009 order by violating § 110 when
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they began bifurcating the fee they charged and only disclosing $150.00 to the court. They knew of
the order, and they violated the order. Moreover, the “advice of counsel” defense is only raised as
a defense to allegations in the USTE’s motion now pending before the court on the issue of fees.
Even if the “advice of counsel” defense was something Kuhns and Fuller could successfully raise,
because Kuhns and Fuller violated the court’s December 29, 2009 order and § 110 in several ways
other than regarding the fees charged, sufficient cause would still exist to find against them.
Regardless of Kuhns’s and Fuller’s appeal of the court’s December 29, 2009 order regarding
the reasonableness of fees charged — and/or their advice of counsel defense — the deception
exhibited by Kuhns and Fuller, along with Kuhns’s and Fuller’s violations of the court’s December
29, 2009 order as it relates to provisions of § 110 other than § 110(h)(3), are the gravamen of the
court’s decision to sanction Kuhns and Fuller. Importantly, Kuhns and Fuller failed to present any
evidence — in fact, the court can posit none that could be presented — that excuses the deliberate
hiding of information required to be disclosed. Without full disclosure, the bankruptcy process
cannot operate efficiently and provide the intended protection to be afforded debtors under the
provisions of § 110.
Having found that Kuhns and Fuller violated the court’s December 29, 2009 order and § 110
by failing to refund excess fees, engaging in impermissible advertising, providing prohibited services,
and submitting fraudulent disclosures of compensation, the only determination left to be made by the
court is that of an adequate remedy. Based on the egregiousness of Kuhns’s and Fuller’s conduct,
the court finds it appropriate to grant the USTE’s motion insofar as it seeks to permanently enjoin
Kuhns and Fuller from further acting as BPPs in this district.
Regarding the USTE’s request for the imposition of fines under § 110(l)(1), the court’s
December 29, 2009 order found ten specific violations of § 110 in this case resulting in a total fine
of $5,000.00. The parties agreed, however, to suspend the fines provided that Kuhns and Fuller
comply with the provisions of § 110 and the court’s December 29, 2009 order for a period not to
exceed six months. The order seems ambiguous in that regard, because “a period not to exceed six
months” could be one day, and it is likely that the parties intended that Kuhns and Fuller comply with
the December 29, 2009 order for a more substantial period of time. Nonetheless, because it appears
to the court that the imposition of the suspended $5,000.00 fine would be a futile gesture based on
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Kuhns’s and Fuller’s lack of financial wherewithal, the court will not impose the suspended11
$5,000.00 fine in the December 29, 2009 order.
Similarly, the court will not impose fines against Kuhns and Fuller for violations of §
110(l)(1) of the Bankruptcy Code that occurred after the court’s December 29, 2009 order. In that
regard, the court finds that Kuhns and Fuller committed several violations of § 110 after the court’s
December 29, 2009 order, but will not impose fines for those violations because it is apparent to the
court that the imposition of any fine will be an empty judgment given Kuhns’s and Fuller’s lack of
financial means. Moreover, because the court is permanently enjoining Kuhns and Fuller from acting
as BPPs in this district, the court finds the imposition of fines unnecessary to deter future conduct.
In that regard, the court finds that, based on the egregiousness of Kuhns’s and Fuller’s
violations of § 110 and the court’s December 29, 2009 order, permanently enjoining Kuhns and
Fuller from acting as BPPs in this district is the only effective way to vindicate the purposes behind
§ 110 and to otherwise protect the integrity of the bankruptcy process. Specifically, the court
previously allowed Kuhns and Fuller to continue acting as BPPs in accordance with its December
29, 2009 order — the terms of which, except for the reasonableness of the fee, were agreed to by
Kuhns and Fuller — but it is abundantly clear that Kuhns and Fuller did not comply with the terms
of the order, even those to which they agreed. Moreover, in the court’s view, their conduct in
divulging only a portion of the fees charged by them was nothing more than a clever ruse designed
to evade a perceived cap on fees. The court cannot tolerate or condone such deceptive behavior;
especially when it is accompanied by other misconduct.
III. CONCLUSION
For the reasons stated herein, the court finds that Kuhns and Fuller violated § 110 of the
Bankruptcy Code and the court’s December 29, 2009 order. Based on Kuhns’s and Fuller’s
violations, the court will permanently enjoin them from acting as BPPs in this district upon entry of
the order accompanying this memorandum opinion.
Both Ms. Kuhns and Ms. Fuller have each filed their own individual bankruptcy cases11
in this district. Ms. Kuhns has filed two personal cases within the last year (Case Nos. 11-bk-
1047 and 11-bk-1444), with the most recent being filed August 10, 2011. And Ms. Fuller has
one previous individual case (Case No. 09-bk-1017), which was closed January 3, 2011.
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Case 3:10-mp-00001 Doc 46 Filed 03/06/12 Entered 03/06/12 11:42:27 Desc Main
Document Page 12 of 12

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