Bankruptcy Judge John E. Waites demanded $10,000 in sanctions under Rule 9011 for filing a Section 362(k) complaint asking for $50,000 in actual and punitive damages. The debtor owed about $900 to his doctor but did not list it in his chapter 13 papers. Six weeks after filing, the doctor’s office sent him a letter asking him to call, saying the debt was in default and might be sent to collections.
The debtor’s counsel informed the doctor’s office about the bankruptcy filing, but the office staff failed to save the change electronically. The debtor scheduled the debt and sent notices to the doctor. Two months later, the doctor’s computer system automatically sent the same letter again asking for payment. Without contacting the doctor’s office again, debtor’s counsel initiated an adversary proceeding asking for $50,000 in damages. The complaint alleged that the stay violation was flagrant, willful, intentional, wanton aggressive, devious, deceptive, manipulative, oppressive and abusive. The complaint went on to say that the debtor “would show” that the second collection letter was sent “with the express intent to annoy, threaten, cause harm, abuse, intimidate or harass.” The doctor admitted violating the automatic stay but contended it was in error.
The doctor’s lawyer sent the debtor’s counsel a draft of a motion for sanctions for violation of rule 9011(b). The debtor’s counsel did not withdraw the complaint or accept a settlement offer, so the doctor’s lawyer filed the sanctions motion. The sanctions motion pointed to the strident claims in the complaint and alleged that it was filed without an investigation reasonable in the circumstances and for an improper purpose, namely, to seek a settlement or payment rather than stop a stay violation.
There are numerous other cases in which this debtor’s attorney filed complaints seeking tens of thousands of dollars in damages based on “similar allegations of egregious conduct” arising from collection letters.
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