Carol Curington Green and Terry Mike Green

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
RALEIGH DIVISION
IN RE:
CAROL CURINGTON GREEN
TERRY MIKE GREEN
DEBTORS
CASE NO.
06-01948-5-ATS
ORDER REGARDING MOTION FOR SHOW CAUSE ORDER
The matter before the court is the debtors' motion for Re-New Hearth & Fire, LLC and its
principal, E. Glenn Johnston, to show cause why the automatic stay has not been violated. A hearing took
place in Raleigh, North Carolina on April 10, 2007.
Carol Curington Green and Terry Mike Green filed a joint petition for relief under chapter 7 of the
Bankruptcy Code on November 30, 2006. Mr. Green was the principal of Mike Green Builders, Inc.,
which operated as a general contractor for residential construction. In 2006, Re-New installed fireplaces
in seven houses built by Mike Green Builders, and on July 28, 2006, Mr. Green delivered a check to Re-
New, Check No. 2061, in the amount of $5,390. Ex. G-1. Mr. Green advised Re-New that the check
would be covered by some upcoming sale closings, and asked that it not be deposited until after the
closings. At the closings, however, one of Mr. Green's creditors seized the sale proceeds such that the
SO ORDERED.
SIGNED this 13 day of April, 2007.
________________________________________
A. Thomas Small
United States Bankruptcy Judge
____________________________________________________________
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funds were never available to cover the check to Re-New. Re-New attempted to negotiate the check on
August 4, 2006, but it was returned for insufficient funds. Re-New again attempted to negotiate the check
in December 2006, but it still was not honored.
Mr. Green listed Re-New as an unsecured creditor with a claim in the amount of $5,425 in his
bankruptcy schedules. After Re-New tried to negotiate the check in December 2006, Mr. Green's
attorney, Ryan Dyson, sent Re-New a letter dated January 11, 2007, advising Re-New of Mr. Green's
bankruptcy and contending that the attempt to negotiate the check may have violated the automatic stay.
Specifically, the letter stated
Check #2061 given by Debtor to ReNew Hearth & Fire, LLC on July 28, 2006, was
presented to the Debtor's bank for payment on December 8, 2006. Notices of the
Debtor's bankruptcy filing were mailed out by the Bankruptcy Court on December 1,
2006. Please be advised that your actions are believed to be in violation of the automatic
stay . . . .
Ex. G-4. On January 17, 2007, Rosemary Charles of Re-New contacted Mr. Dyson's office, indicating
that Mr. Green had called Re-New several times about the debt owed to Re-New. Because Mr. Johnston
(Re-New's principal) knew of Mr. Green's bankruptcy, he wanted Mr. Dyson's permission to return Mr.
Green's calls. Ms. Charles also advised Mr. Dyson's office that Re-New was pursuing criminal charges
for the bad check. Ex. G-5.
In fact, Re-New did provide Check No. 2061 to the Wake County authorities. Mr. Johnston
testified that Ms. Charles delivered the check to the authorities prior to receiving the January 11, 2007,
letter from Mr. Dyson. A warrant for Mr. Green's arrest was issued on January 23, 2007, and Mr. Green
was arrested and processed on January 26, 2007. Ex. G-6. The charges were dismissed on February 19,
2007. Ex. G-7.
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Mr. Green contends that the criminal prosecution was a willful violation of the automatic stay
deserving of significant sanctions. Re-New denies that there was a stay in place with respect to this debt
because the check was drawn on the account of Mike Green Builders, Inc., Mr. Green had no personal
liability for the debt, and Re-New made no effort to pursue Mr. Green individually and did not report the
check to the authorities for the purpose of collecting the debt.
Clearly the check was drawn on the account of Mike Green Builders, Inc., and was presented to
the corporation's bank for payment. Mr. Green testified that he does not even have a personal bank
account. Mr. Johnston testified that no other information, besides the check itself, was provided to the
Wake County authorities. He further testified that he was not involved in the issuance of the arrest warrant
or the prosecution of Mr. Green, nor did he know that Mr. Green individually would be prosecuted when
the check was provided to the authorities. Mr. Johnston contends that his company has only conducted
business with Mike Green Builders, Inc., and that he had never met Mr. Green prior to the hearing on April
10, 2007.
Mr. Green contends that Mr. Johnston should have been on notice that the authorities were
pursuing Mr. Green individually when Mr. Johnston completed a "Victim Impact Statement" that indicated
Mr. Green was the criminal defendant. Ex. G-14. Mr. Green also contends that Mr. Johnston had a duty
to advise the authorities that the individual principal of Mike Green Builders, Inc., was in bankruptcy and
should not be prosecuted individually. Mr. Green further suggested that because Mr. Green listed the stock
of Mike Green Builders, Inc. as an asset on his bankruptcy petition, Re-New had an obligation to advise
the trustee that it intended to pursue criminal charges for the worthless check.
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1 Even this communication does not appear to have been an attempt to collect a debt. According
to Mr. Johnston, the worthless check had already been reported to the authorities, and informing Ms.
Gilbride of the prosecution was not a threat or an indication that the prosecution was tied to collection of
the debt.
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Mr. Green also insists that Re-New repeatedly failed to distinguish between Mike Green Builders,
Inc. and Mr. Green. Antonia Gilbride, an assistant in Mr. Dyson's office, testified with respect to her
memorandum related to a telephone conversation with Ms. Charles, Ex. G-5, and said that she believed
Re-New was pursuing criminal charges against Mr. Green individually.1 At the same time, however, Ms.
Gilbride authored the letter dated January 11, 2007, which states that Re-New attempted to collect on a
check given by "the Debtor" at the "Debtor's bank." Ex. G-4. In addition, the motion to show cause
nowhere indicates that the check was written on the corporate account and that Mr. Green had no
individual liability on the debt. And finally, the debt was listed on Mr. Green's bankruptcy schedules though
he was in no way liable for the debt. It appears that Mr. Dyson's office failed to acknowledge the
distinction between Mr. Green and his corporation, but there is no persuasive evidence that Re-New also
blurred the distinction.
To the contrary, Mr. Johnston testified that he has dealt with individuals in bankruptcy before, that
he understands the automatic stay, and that he never expected to collect the debt represented by the check.
When Mr. Green called Re-New about reducing the amount of the debt, Mr. Johnston asked Ms. Charles
to call Mr. Dyson to determine whether Mr. Johnston could return Mr. Green's phone calls. This is
consistent with an effort to observe, not violate, the automatic stay. Mr. Johnston credibly testified that he
had never reported a worthless check before, and that he did not know the procedure or how the
authorities would prosecute for a corporate account, and the court finds that Mr. Johnston and Re-New
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2 To impose these obligations on a creditor might create an impossible burden; had Mr. Green not
listed Re-New in his schedules, Re-New would not even have known about the bankruptcy. Most
individual debtors do not list debts for which they are not liable on their petitions, and most corporate
creditors would likely not know of the individual bankruptcy of a principal of the corporate debtor.
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did not take any action with the intention of having Mr. Green arrested and prosecuted individually. Any
mistake in prosecuting Mr. Green individually appears to have been by the district attorney, magistrate
judge or the process, not by Re-New or Mr. Johnston. The court further finds that filling out the Victim
Impact Statement was not an attempt to collect the debt or a knowing violation of the stay. The court
disagrees that Re-New had an obligation to notify the authorities of Mr. Green's bankruptcy or to notify
the trustee that it was pursuing collection against a corporation whose stock is an asset of the estate.2
Based on the foregoing, the court concludes that there was no willful violation of the automatic stay,
and the motion to show cause is DENIED.
SO ORDERED.
END OF DOCUMENT
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