Bloomberg Law’s® Bankruptcy Law News publishes case summaries of the most recent important bankruptcy law decisions, tracks major commercial bankruptcies, and reports on developments in bankruptcy...
By Diane Davis
A creditor’s attorney didn’t violate the automatic stay in bankruptcy by giving legal advice to the creditor after the debtor’s Chapter 13 plan was approved, the U.S. Bankruptcy Court for the Northern District of California held.
“While the act of providing legal advice may lead to impermissible collection efforts, it does not, in and of itself, violate the automatic stay,” Judge Charles Novack wrote Jan. 30.
There are few cases addressing this issue, and most find that “merely counseling a client does not violate the automatic stay,” the court said.
Bankruptcy Code Section 362(a)(6) stays “any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case.”
The scope of the automatic stay is broad and plays a vital role in giving a debtor a “breathing spell” from his or her creditors by stopping all collection efforts, harassment, and foreclosure actions.
Section 362(k) allows for the recovery of actual damages, including costs and attorney’s fees, for willful violations of the automatic stay.
Sarah-Jane Parker filed Chapter 13 to stay Bayside Court Owners Association’s claims against her for pre-petition homeowner assessments. She surrendered her interest in her condominium unit, and her Chapter 13 plan was confirmed.
The confirmation of her Chapter 13 plan terminated the automatic stay as to the secured claims against the unit, but Scott Jordan, Bayside’s attorney, asked the court for relief from the automatic stay so it could enforce its lien against her unit and it was granted.
Parker wanted to recover damages for a violation of the automatic stay. According to Parker, Bayside and its attorney violated it by developing a legal strategy where it was able to seize control of her unit while she still owned it and retain the rent, and increase the unit’s liability for common area expenses.
It was undisputed that Jordan knew of Parker’s bankruptcy filing and the automatic stay that applied to creditor’s actions, the court said. Jordan provided on-going legal advice regarding Parker’s bankruptcy and participated to some degree in developing a strategy by which Bayside could recover from Parker’s discharge and failure to pay her assessments.
There was no evidence that Jordan undertook specific actions as agent or litigation counsel that violated the automatic stay, the court said. He provided advice, which Bayside accepted and implemented.
Marlene A. Fong, Fong & Fong PC, Alameda, Calif., represented Parker; Trustee Martha G. Bronitsky represented herself.
The case is In re Parker , 2018 BL 31165, Bankr. N.D. Cal., 14-44083 CN Chapter 13, 1/30/18 .
To contact the reporter on this story: Diane Davis in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Jay Horowitz at email@example.com
Copyright © 2018 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)