597 B.R. 725
Bankr. E.D.N.Y.2019Background
- Isaac Grinspan filed Chapter 7 on December 3, 2013; a prepetition state-court money judgment for $18,372.61 (attorneys' fees + interest) had been entered against him in August 2013 pursuant to a divorce settlement default clause.
- Tomor Grinspan (ex-spouse) and her attorney David Seidemann had filed a contempt motion in state court (return date Dec. 5, 2013) seeking enforcement of that money judgment and answers to an information subpoena.
- Debtor’s counsel notified Seidemann of the bankruptcy; the parties stipulated Seidemann and Tomor had actual notice at least by Dec. 5, 2013. The contempt motion remained active and the parties continued to appear in state court post-petition; briefs and a reply were filed seeking full relief.
- Defendants argued their post-petition conduct was exempt from the automatic stay under 11 U.S.C. § 362(b)(2)(B) because the money judgment was a "domestic support obligation" (DSO); plaintiff argued it was not a DSO and that enforcement via contempt is not "collection."
- The state court never ruled that the judgment was a DSO; defendants withdrew the contempt motion and the money judgment was later vacated. The bankruptcy court found a willful stay violation and reserved determination of actual damages; injunctive relief was dismissed as moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did defendants' post-petition actions violate the automatic stay (§ 362(a))? | Continued prosecution of the contempt motion and filings after the petition were acts to continue a judicial proceeding, enforce a prepetition judgment, and collect a prepetition claim — all barred. | Defendants claimed their post-petition activity did not enforce the judgment or was otherwise permissible. | Court: Yes. Post-petition litigation and filings seeking enforcement/collection violated § 362(a)(1),(2),(6). |
| Is the money judgment a "domestic support obligation" under § 101(14A)? | Grinspan: The attorneys' fee award was a contractual indemnity/penalty provision to incentivize compliance, not in the nature of alimony/support. | Defendants: Matrimonial attorneys' fees can be DSOs; the judgment should be treated as support collection. | Court: No. The fee award arose from an indemnification/default clause, not intended as alimony/maintenance/support; it is not a DSO (more akin to obligations under § 523(a)(15)). |
| If the judgment is a DSO, does § 362(b)(2)(B) permit continuing contempt/enforcement proceedings as "collection"? | Grinspan: "Collection" under § 362(b)(2)(B) is narrower than "enforcement"; contempt enforcement is not protected and remains stayed. | Defendants: "Collection" plainly includes active enforcement (contempt); exception should be read broadly. | Court: Adopts narrow reading. "Collection" does not encompass enforcement by contempt; § 362(b)(2)(B) does not except contempt/enforcement proceedings from the stay. |
| Were defendants' violations "willful" under § 362(k) and thus subject to damages? | Seeks damages (actual, costs, fees; punitive if warranted). | Defendants argued lack of actual knowledge initially and that conduct was permissible. | Court: Willful violation found (defendants had actual notice by Dec. 5 and intentionally acted); awards of actual damages required (amount reserved). No punitive damages — conduct not malicious or in bad faith. |
Key Cases Cited
- Metro. Stevedore Co. v. Rambo, 521 U.S. 121 (U.S.) (describes the automatic stay as providing debtor a "breathing spell")
- Crysen/Montenay Energy Co. v. Esselen Assocs., 902 F.2d 1098 (2d Cir.) (willful stay violation defined; encourages seeking declaratory relief before violating stay)
- Russello v. United States, 464 U.S. 16 (U.S.) (textualist canon: inclusion/omission in statute is deliberate)
- Weber v. SEFCU (In re Weber), 719 F.3d 72 (2d Cir.) (creditor willfully violates § 362 when it knows of petition and intentionally takes the proscribed act)
- Picard v. Fairfield Greenwich Ltd., 762 F.3d 199 (2d Cir.) (acts taken in violation of the stay are void and without effect)
- Gilman v. Golio (In re Golio), 393 B.R. 56 (Bankr. E.D.N.Y.) (attorneys' fees awarded under indemnification clause not necessarily domestic support obligation)
- Rogowski (In re Rogowski), 462 B.R. 435 (Bankr. E.D.N.Y.) (matrimonial attorneys' fees may be DSO where state law frames such awards as support)