In Re Wrobel
- Reporters:
- , ,
- Before:
- Squires
MEMORANDUM OPINION
JOHN H. SQUIRES, Bankruptcy Judge.
This matter
comes before
the Court on the motions of Lesly F. Datlow (“Datlow”) for leave to file a claim and to lift the automatic stay, and on the motion of Angelica B. Wro-bel (the “Debtor”) for sanctions under
I. JURISDICTION & PROCEDURE
The Court has jurisdiction to entertain these motions pursuant to
II. FACTS & BACKGROUND
The Debtor originally filed a petition under Chapter 13 of the Bankruptcy Code on March 14, 1995 (“Original Chapter 13”). On June 21, 1995, the Court entered an order dismissing the Original Chapter 13 on motion of the trustee. The case was subsequently closed and the trustee discharged on July 14, 1995.
The Debtor filed a second petition under Chapter 13 of the Bankruptcy Code on July 24, 1995 (“Current Chapter 13”). See Dat-low’s Exhibit No. 18. The Debtor submitted a proposed plan under her Current Chapter 13 on August 10,1995. This plan was subsequently amended on October 24, 1995, and the amended plan was confirmed on November 15, 1995. 1 See Debtor’s Exhibit No. 9. The last day for filing claims in the Current Chapter 13 was January 9,1996.
The current motions arose out of post-decree proceedings in the Circuit Court of Cook County, County Department, Domestic Relations Division (“State Court”). On May 26,1995, Datlow, in her representative capacity as the attorney for the Debtor’s ex-husband, John G. Wrobel (“John”), filed an emergency petition to limit removal in State Court to prevent the Debtor from removing her son from the jurisdiction. 2 See Datlow’s Exhibit No. 4. Judge Aubrey F. Kaplan heard arguments on this motion that same day and entered an order that denied the Debtor permission to remove her son from the jurisdiction. See Datlow’s Exhibit No. 5. The following day, on May 27, 1995, the Debtor removed her son in violation of Judge Kaplan’s order.
On June 13, 1995, Datlow, again in her representative capacity as attorney for
On August 22, 1995, Judge Kaplan held a hearing on sanctions. On the following day, Judge Kaplan entered an order that sentenced the Debtor to 21 days in incarceration and imposed a fine of $850.00. See Datlow’s Exhibit No. 9 and Debtor’s Exhibit No. 4. Judge Kaplan stayed enforcement of the judgment, however, and granted Datlow leave to file a petition for fees incurred in connection with the removal proceedings. See Debtor’s Exhibit No. 5 and Datlow’s Exhibit No. 10.
On January 8, 1996, Judge Kaplan held a hearing on what, if any, fees would be awarded against the Debtor as a sanction for the indirect criminal contempt of court and awarded Datlow $3,110.25 in attorneys’ fees. See Datlow’s Exhibit No. 11 and Debtor’s Exhibit No. 10. The award in the form of an order was entered on January 10, 1996, one day after the deadline for filing claims in the Debtor’s Current Chapter 13. See Datlow’s Exhibit No. 12 and Debtor’s Exhibit No. 11. On January 12, 1996, Judge Kaplan entered an order amending the January 8 order to reflect that the fees had been awarded pursuant to section 508(b) of the Illinois Marriage and Dissolution Act. See Datlow’s Exhibit No. 13 and Debtor’s Exhibit No. 12. These fees were the only penalty assessed against the Debtor as a result of the contempt finding — Judge Kaplan never reinstated the sentence nor the fine originally ordered on August 22, 1995. On March 15, 1996, Datlow filed motions for leave to file a claim and to lift the automatic stay. See Debtor’s Exhibit No. 15.
The Debtor asserts that throughout these proceedings, Datlow was aware that the Debtor had filed the Current Chapter 13. In support of this allegation, the Debtor submits her response to Datlow’s petition for Attorney’s Fees, which was filed in State Court on September 26, 1995.
See
Debtor’s Exhibit No. 7. In that pleading, the Debtor asserted that “petitioner and respondent were forced to file a Chapter 7 bankruptcy and [the Debt- or] has filed a Chapter 13 in an attempt to save her home.”
Id.
at ¶ 16. The Debtor also testified that she delivered to her state court attorneys a copy of her Current Chapter 13 petition to be delivered to Datlow. No testimony was submitted that those attorneys had, in fact, delivered same to Datlow. The Debtor, however, testified that she saw a copy of the Current Chapter 13 petition among Datlow’s papers at a subsequent hearing before the State Court. The Debtor, however, could not explain how she knew the documents were copies of the Current Chapter 13 petition. The Debtor seeks damages, costs, and fees against Datlow under
Datlow asserts and testified at trial that she was only aware of the Debtor’s Original Chapter 13, and that she did not become aware of the Current Chapter 13 until the Debtor stated that she had filed the Current Chapter 13 in open court during the January 12, 1996 hearing before Judge Kaplan after the bar date for filing claims had passed. In support of her assertion she notes that she was never listed as a creditor in the Current Chapter 13 and thus never received notice from the Court or the Debtor regarding the Chapter 13 proceedings. Likewise, she asserts and testified that when she asked the Debtor’s state court attorneys whether the Debtor was currently in bankruptcy, Datlow was advised that the Original Chapter 13 case had been dismissed. They did not men
III. DISCUSSION
Upon the filing of a petition under the Bankruptcy Code, 11 .U.S.C.
A. Datlow’s attorneys’ fees were awarded as part of a State Court criminal contempt proceeding and, as such, are excepted from the stay pursuant to
Section 508(b) of the Illinois Marriage and Dissolution Act states that:
In every proceeding for the enforcement of an order or judgment when the court finds that the failure to comply with the order or judgment was without cause or justification, the court shall order the party against whom the proceeding is brought to pay the costs and reasonable attorney’s fees of the prevailing party.
“Civil contempt is coercive in nature rather than punitive; the finding of civil contempt results from failure to do something which the court has ordered for the benefit or advantage of another party to the proceeding, and the court acts to compel the contemnor to obey the order for the benefit of that other party.” In re Marriage of Depew, 246 Ill.App.3d 960, 966, 186 Ill.Dec. 482, 487, 616 N.E.2d 672, 677 (5th Dist.1993). “In contrast, criminal contempt is an act committed against the majesty of the law in disrespect of the court or its process, and the court acts to preserve its dignity by punishing the wrongdoer.” Id. “Criminal contempt sanctions are imposed for the purpose of punishing past misconduct.” Id.
In the current instance, Judge Kaplan determined that the Debtor had com
B. The Court is without power to waive the deadline for filing a claim against the estate and as such cannot grant Datlow leave to file her claim.
C. The Court finds cause to lift the automatic stay and allow Datlow to collect her claim outside of the bankruptcy court.
A bankruptcy court may modify the automatic stay “for cause, including the lack of adequate protection of an interest in
The Seventh Circuit has adopted a three prong “balancing of the equities” test to determine whether cause exists to modify the stay. The bankruptcy court must determine (1) whether any great prejudice will result to either the bankruptcy estate or the debtor if the stay is modified, (2) whether the hardship to the creditor if the stay is not lifted outweighs the hardship of the debtor, and (3) whether the creditor has a likelihood of prevailing on the merits. Id.; see also Healthfirst v. Martha Washington Hosp. (In re Martha Washington Hosp.), 157 B.R. 392, 395 (N.D.Ill.1993); In re Pro Football Weekly, Inc., 60 B.R. 824, 826 (N.D.Ill.1986).
In this case, if the automatic stay is lifted, Datlow will be able to pursue her claim for $3,110.25. This would be prejudicial to the Debtor because the bar date for filing claims has already passed, but would not affect the estate. Datlow would otherwise be precluded from recovering her unscheduled claim. Denial of the stay lift, however, would permit the Debtor, who committed the contemptuous act that gave rise to this fee award, to receive a windfall. Denial of the stay modification would be especially inequitable in light of the fact that the Debtor conspicuously failed to give notice of her Current Chapter 13 to the State’ Court and Datlow until her first State Court appearance after the deadline for filing claims had passed. The fees awarded Datlow are now final and not subject to further appeal.
Furthermore, the State Court also has an interest that must be weighed against the potential prejudice to the Debtor. This fee award arose because the Debtor committed an act of criminal contempt when she refused to comply with the State Court’s order. Judge Kaplan was required by
Likewise, Datlow is virtually certain to succeed on the merits. She has a judicial order that requires the Debtor to pay her $3,110.25. If the Debtor attempts to avoid this obligation, Datlow has adequate state law remedies that she may pursue to recover this claim. Thus, this Court finds cause to lift the automatic stay pursuant to
IV. CONCLUSION
For the reasons stated herein, the Debt- or’s motion is denied. Datlow did not violate the automatic stay when Judge Kaplan awarded her attorneys’ fees under
This Opinion constitutes the Court’s findings of fact and conclusions of law in accordance with
Notes
. In addition to these two petitions filed under Chapter 13 of the Bankruptcy Code, the Debtor and her then spouse, John Wrobel, previously filed for relief under Chapter 7 of the Bankruptcy Code on August 26, 1993. See Datlow‘s Exhibit No. 15. That case, which was assigned to Judge Jack B. Schmetterer, was closed on July 12, 1994, after a discharge was ordered on June 23, 1994.
. The Debtor also alleged that she filed an emergency motion in State Court for removal of her son, Andrew, to enable him to accompany the Debtor to the Philippines and attend the funeral of the Debtor‘s father. The Debtor, as evidence of this, submitted this motion to this Court. See Debtor‘s Exhibit 1. The copy is not stamped by the State Court and Datlow disputes that this motion was ever filed.
. Indirect contempt of court is a violation of a court‘s order outside of the courtroom and is dependent upon evidence of which the judge has no personal judicial notice. People v. Ramsell, 266 Ill.App.3d 297, 299, 203 Ill.Dec. 825, 827, 640 N.E.2d 975, 977 (2d Dist.1994). Direct contempt of court is a violation of a court’s orders within the presence of the judge and may also be awarded when a party admits an act of indirect contempt in the presence of the Judge. In re Marriage of Marshall, 278 Ill.App.3d 1071, 215 Ill.Dec. 599, 606-607, 663 N.E.2d 1113, 1120-21 (3d Dist.1996); Ramsell, 266 Ill.App.3d at 299, 203 Ill.Dec. at 827, 640 N.E.2d at 977.
. This Court cannot, as the Debtor invites, reanalyze the original award and find that Judge Kap-lan did not really intend the fee award to be mandatory pursuant to
. Even if this Court found that the proceedings did not fall within
The Debtor has failed to show, however, that Datlow had knowledge of the pending bankruptcy case. The Debtor‘s assertion that she had “filed a Chapter 13 in an attempt to save her home” is insufficient to put Datlow on notice of the Debtor‘s Current Chapter 13. In light of the multiple Chapter 13 filings, this statement was ambiguous and standing alone does not prove that Datlow had knowledge of the Current Chapter 13. Likewise, the Debtor presented no evidence that her state court or bankruptcy attorneys mailed or otherwise delivered to Datlow a copy of the Current Chapter 13 petition or advised her either orally or in writing of its pen-dency. The Debtor‘s uncorroborated and obviously biased testimony that she had seen the Current Chapter 13 petition in Datlow‘s possession was likewise inconclusive because the Debt- or did not indicate how she conclusively knew the papers were the Current Chapter 13 petition and not the Original Chapter 13 petition or other related documents. Because the Debtor failed to show that Datlow had knowledge of the Current Chapter 13, she failed to prove Datlow’s willful violation of the automatic stay.
.
(1) On motion of the United States, a state, or subdivision thereof before the expiration of such period and for cause shown, the court may extend the time for filing of a claim by the United States, a state, or subdivision thereof.
(2) In the interest of justice and if it will not unduly delay the administration of the case, the court may extend the time for filing a proof of claim by an infant or incompetent person or the representative of either.
(3) An unsecured claim which arises in favor of an entity or becomes allowable as a result of a judgment may be filed within 30 days after the judgment becomes final if the judgment is for the recovery of money or property from that entity or denies or avoids the entity‘s interest in property.
(4) A claim arising from the rejection of an executory contract or unexpired lease of the debtor may be filed within such time as the court may direct.
(5) If notice of insufficient assets to pay a dividend was given to creditors pursuant to Rule 2002(e), and subsequently the trustee notifies the court that payment of a dividend appears possible, the clerk shall notify the creditors of that fact and that they may file proofs of claim within 90 days after the mailing of the notice.
(6) In a chapter 7 liquidation case, if a surplus remains after all claims allowed have been paid in full, the court may grant an extension of time for the filing of claims against the surplus not filed within the time herein above prescribed.
Although Datlow’s claim, which is an unsecured claim that arose as a result of a judgment, could arguably fall into the category of exceptions in
. Some courts have held that if there was improper notice, the court may create an equitable exception under