SER Corporation v. Nimberg

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF COLUMBIA
In re
SER CORPORATION,
Debtor.
___________________________
SER CORPORATION,
Plaintiff,
v.
RAPID PAY, LLC, et al.,
Defendants.
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Case No. 04-01249
(Chapter 11)
Adversary Proceeding No.
04-10086
OPINION RE MOTION FOR SUMMARY JUDGMENT
The plaintiff’s motion for summary judgment, directed
against two of the defendants, Rapid Pay, LLC, and Stephanie S.
Nimberg, will be granted in part.
I
The plaintiff invokes § 362(h) of the Bankruptcy Code (11
U.S.C.) in seeking damages beyond the recovery of the seized
The order below is hereby signed.
Signed: December 19, 2005.
_____________________________
S. Martin Teel, Jr.
United States Bankruptcy Judge
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funds, that is, in seeking attorneys’ fees and punitive damages.
However, the plaintiff is a corporation, not an individual, and,
as this court has previously ruled, § 362(h) only permits
individuals damaged by violations of the automatic stay to
recover damages under § 362(h). In re Franklin Mortgage & Inv.
Co., 143 B.R. 295, 303 (Bankr. D.D.C. 1992). See also In re Just
Brakes Corporate Sys., Inc., 108 F.3d 881, 884 (8th Cir. 1997);
In re Jove Eng'g, Inc. v. I.R.S., 92 F.3d 1539, 1550 (11th Cir.
1996); In re Goodman, 991 F.2d 613, 619 (9th Cir. 1993); In re
Chateaugay Corp., 920 F.2d 183, 185 (2d Cir. 1990). But see In re
Atl. Bus. & Cmty. Corp., 901 F.2d 325, 329 (3d Cir. 1990); Budget
Serv. Co. v. Better Homes of Va., Inc., 804 F.2d 289, 292 (4th
Cir. 1986).
Nevertheless, a corporation may recover damages for
violation of the automatic stay by virtue of 11 U.S.C. § 105,
which permits the court to issue appropriate orders in
enforcement of the Bankruptcy Code. It is appropriate to issue
civil contempt orders to enforce the automatic stay provisions of
the Bankruptcy Code. The amended complaint invokes § 105 in
urging that § 362(h) be made applicable in this case. The court
rejects the contention that § 105 can override the plain language
of § 362(h) to make the remedies of that provision available to a
corporation. Nevertheless, § 105 is invoked in favor of
obtaining damages, and to the extent that such damages are
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recoverable for civil contempt, the amended complaint
sufficiently pleads a basis for recovery of such damages for
violation of the automatic stay.
II
With respect to the seizure of funds and the recording of a
lien, the motion for summary judgment sets forth clear and
convincing evidence of violation of the automatic stay by both
Rapid Pay, LLC, and Stephanie S. Nimberg. The plaintiff is thus
entitled to compensatory contempt sanctions, which include
recovery of the amount improperly seized and retained as well as
attorneys’ fees incurred in pursuing the contempt sanctions. The
plaintiff, however, is not entitled to recover punitive damages.
Although coercive contempt fines may be imposed to address civil
contempt, the plaintiff does not contend that the seized funds
are an identifiable res which may be traced and as to which a
coercive contempt sanction would thus be appropriate.
III
The malicious prosecution lawsuit that was pursued in New
York against the plaintiff's law firm does not appear to have
violated the automatic stay: it is not an action against the
debtor, and although it may have been brought in an attempt to
intimidate the plaintiff-debtor's law firm, that does not
constitute a violation of the automatic stay. However, the
malicious prosecution lawsuit grew out of the plaintiff’s pursuit
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through the law firm of this adversary proceeding which was
necessitated by the violations of the automatic stay. The
plaintiff, to the extent it was required, by reason of the terms
of its employment of the law firm or as a matter of law to
reimburse the law firm for attorneys’ fees and expenses incurred
by reason of the malicious prosecution lawsuit, is entitled to
include such reimbursement of fees and expenses as part of its
damages arising from the violations of the automatic stay. To
the extent that the plaintiff was not required to reimburse the
law firm, then the law firm itself would be the party to pursue
contempt sanctions (but the court does not decide if it would
have a valid contempt claim for an act–-the malicious prosecution
lawsuit--that in and of itself did not amount to a violation of
the automatic stay).
IV
The plaintiff is additionally entitled to recover the moneys
seized by the defendants on the alternative basis of the turnover
and accounting remedies invoked in the complaint, but obviously
not to a double recovery in addition to the contempt award.
[Signed and dated above.]
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5	O:\SER Corp vs Rapid Pay LLC Opinion re MFSJ.v2.wpd
Copies to:
All counsel of record; Office of United States Trustee; and:
Lawrence Morrison, Esq.
17 Battery Place, Suite 1330
New York, NY 10004
Stephanie S. Nimberg
6 Jodi Court
Cherry Hill, NJ 08003
Stephanie S. Nimberg
9 Quaker Road
Princeton Junction
New Jersey 08550
Rapid Pay, LLC
c/o Gerald Nimberg
6 Jodi Court
Cherry Hill, NJ 08003
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