Opinion
Bankruptcy Case No. 02-93903
March 14, 2003
OPINION
This matter having come before the Court on a Motion to Compel Compliance with the Automatic Stay and Motion for Sanctions filed by Debtor on February 11, 2003, and Response to Motion for Sanctions and for Sanctions and Counter Claim for Attorney's Fees filed by Champaign Celltelco, d/b/a Cellular One, on March 4, 2003; the Court, having heard arguments of counsel and being otherwise fully advised in the premises, makes the following findings of fact and conclusions of law pursuant to Rule 7052 of the Federal Rules of Bankruptcy Procedure.
In his Motion, the Debtor seeks sanctions against Creditor, Champaign Celltelco, a partnership, d/b/a Cellular One, for its alleged failure to quash a bench warrant which was issued following the filing of Debtor's Chapter 7 bankruptcy on December 19, 2002, resulting in the Debtor's arrest. The Debtor seeks actual damages in the amount of $326, punitive damages in the amount of $1,000, and attorney's fees in the amount of $500. In response to the Debtor's Motion, Creditor has filed a Cross Claim against Debtor's attorney, David M. Ucherek, seeking attorney's fees based upon the allegation that David M. Ucherek failed to make a reasonable inquiry into the facts before filing the Motion for Sanctions and for his failure to dismiss the Motion after being informed of the facts and being presented with a request to withdraw the Motion.
The Motion for Sanctions filed by the Debtor is governed by 11 U.S.C. § 362(h), which states:
(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.
Judge Larry Lessen, in the case of In re Martin, Bankruptcy Case No. 97-71599
(Bankr.C.D.Ill. 1997), explained the purpose of the automatic stay as follows:
The automatic stay is a basic protection afforded to debtors, and its scope is intended to be broad. Checkers Drive-In Restaurants, Inc. v. Commissioner of Patents and Trademarks, 51 F.3d 1078 (D.C. Cir. 1995), cert. denied 116 S.Ct. 182 (1995); Maritime Elec. Co., Inc. v. United Jersey Bank, 959 F.2d 1194 (3d Cir. 1991), reh'g granted and opinion vacated (1992), opinion reinstated on reh'g (1992), reh'g denied (1992); Small Business Administration v. Rinehart, 887 F.2d 165 (8th Cir. 1989); In re Stringer, 847 F.2d 549 (9th Cir. 1988). As soon as the bankruptcy petition is filed, the automatic stay provisions take effect. Matter of Vitreous Steel Products Co., 911 F.2d 1223 (7th Cir. 1990), reh'g denied (1990); Rexnord Holdings, Inc. v. Bidermann, 21 F.3d 522 (2d Cir. 1994). The automatic stay gives the bankruptcy court the opportunity to harmonize the interests of both debtors and creditors while preserving a debtor's assets for repayment and reorganization of his or her obligations. In re Mac Donald, 755 F.2d 715 (9th Cir. 1985). The automatic stay also serves to protect the debtor's estate from being eaten away by creditors' lawsuits and seizures before the trustee has had an opportunity to marshal the estate's assets and to distribute them equitably among the creditors. In re Nelson, 994 F.2d 42 (1st Cir. 1993). Another fundamental purpose of the automatic stay is to protect the debtor from actions by his creditors. In re Martin, 162 B.R. 710 (Bankr.C.D.Ill. 1993).
This Court, in the case of In re Norder, Bankruptcy Case No. 02-93330 (Bankr. C.D.Ill. 2002), citing the cases of In re Woodside, 161 B.R. 969 (Bankr.S.D.Ill. 1994; In re Atkins, 176 B.R. 998 (Bankr.D.Minn. 1994); and In re Halas, 249 B.R. 182 (Bankr. N.D. Ill. 2000), found that, following the filing of a Chapter 7 bankruptcy petition, a creditor has an affirmative duty to see that any bench warrants issued in an underlying State Court proceeding are withdrawn or quashed. The Debtor has cited the Norder Opinion as authority for the sanctions sought in his Motion.
Although it is clear that a creditor has an affirmative duty to seek withdrawal or to quash any bench warrants in an underlying State Court proceeding following the filing of a Chapter 7 bankruptcy petition, the facts of the instant case do not rise to the level of the conduct found in the Norder case or the cases cited therein. In the instant case, there is evidence that, after receiving notice of the Debtor's bankruptcy filing, the Creditor, through its attorneys, sought to have the bench warrant quashed. Unfortunately, for some unexplained reason, the warrant was not quashed, and the Debtor was subsequently arrested in February 2003. Based upon the facts of this case, the Court is unable to find that the Creditor breached its affirmative duty to have the bench warrant quashed or that the Creditor acted in a willful way to violate the automatic stay under 11 U.S.C. § 362. As such, the Court finds that the Motion to Compel Compliance with the Automatic Stay and Motion for Sanctions must be denied.
Turning to the Cross Claim against Attorney David M. Ucherek for sanctions pursuant to Rule 9011(b) of the Federal Rules of Bankruptcy Procedure, the Court finds that, under the circumstances of this case, David M. Ucherek's filing of the Motion to Compel Compliance with the Automatic Stay and Motion for Sanctions was not unreasonable. A review of the record of the State Court proceeding leaves the Court to conclude that Debtor's counsel would not have known that Creditor's counsel attempted to quash the bench warrant at issue from a reading of that record. Further, the Court finds that Debtor's counsel was not under a duty to withdraw the Motion to Compel Compliance with the Automatic Stay and Motion for Sanctions prior to a hearing on the merits. This matter involved a factual dispute which was not resolved until the Court determined that the evidence presented by the Creditor concerning its attempts to quash the bench warrant at issue was credible. As such, the Court finds that the Cross Claim Against Attorney David M. Ucherek for Sanctions Pursuant to 9011(b) of the Federal Rules of Bankruptcy Procedure should also be denied.
ORDER
For the reasons set forth in an Opinion entered on the 14th day of March 2003;
IT IS HEREBY ORDERED that:
A. The Motion to Compel Compliance with the Automatic Stay and Motion for Sanctions filed by Debtor on February 11, 2003, is DENIED; and,
B. The Cross Claim Against Attorney David M. Ucherek for Sanctions Pursuant 9011(b) filed by Champaign Celltelco, a partnership, d/b/a Cellular One, on March 4, 2003, is DENIED.