By order of the Bank ruptcy Appe llate Panel, the prec edential effec t of t his de c isi on is l im ite d to thec as e an d p ar tie s p ur su an t to 6th C i r
. B A P L B R 8 0 1 3 -1 (b). S

ee a l s o 6 th C i r
. B

A P L B R 8 0 1 0 -1 (c).

F ile Nam e: 11b0001n.06

BA NK RU P TC Y A P P ELLA TE P AN EL OF THE SI XT H C IR CU IT

I n re: AL EXAND ER GREENSPAN and ) FRI DA GREENSPAN, ) ) De bto rs
. ) ) No. 10-8019 )

_____________________________________ ) ) ) GEORGE L . BA DOVI CK, ) ) Ap pe lla nt, )

) v. ) ) AL EXAND ER GREENSPAN and ) FRI DA GREENSPAN, ) )

Ap pe lle e s. ) ) )

Appea l from the United States B ankruptc y Court fo r t he No rt he rn Di str ic t of

Oh io Case No. 07- 10774
Dec ided and F iled: Febr

uary 2, 2011
B e fo re : F UL TO N, Mc I VO R, a nd RH OD ES, B ank

ru ptc y Ap pe llate Pane l Judg e s.

____________________ CO UN SEL
O N B RI E F: Jonatha

n P. B lake ly , WE STO N H URD L L P, Cl e ve land , O hio , f or Ap pe lla nt.- 2- ____________________ OP IN ION

____________________ STEVEN RHODES, B ankr uptcy Appellate Pane l J udg e. Attorne y Geor g e L . Ba dovick appea ls an order

of the ba nkruptcy court awa

rding attorney fee s and expenses to c hapter 7 debtors Alexander a

nd Fr ida Gre enspan f

or B adovick’ s violation of the debtors’ discharg e injunction. F or the re asons that follow, we aff irm the order

of the ba nkruptcy court.
I. ISS UE ON AP P EAL
The issue on a

ppeal is whe ther the ba

nkruptcy court a bused its discret i o n i n awarding the d eb t o rs ’ a t t o rn ey

fe es an d ex p en s es as a s an ct i o nfo r B ad o v i ck ’s v i o l at i o no f t h e d i s ch ar ge injunction.

II. JU RI SDI CT ION AND STANDARD OF RE VI EW
Th e Un ite d St a te s D istri c t Co ur t f or the No rt he rn Di str ic t of

Oh io h a s a

uth or ize d a

pp e a ls t o the Pane l, a

nd ne ith e r p art

y ha s ti mel y ele cte d to h a ve thi s a pp e a l he ard

by the dis tr ic t c ourt

. 28 U.S.C. §§ 158(b)(6), ( c)( 1). A fi n al o rder of the ba nkruptcy court may

be appe aled a s of rig ht pursuant to 28 U.S.C. § 158(a)( 1). F or purpose s of appe al, an or der is final if it “ends the litigation on the merits and lea

ves nothing for the c ourt to do but ex ecute the judg ment.” Mi dla nd Asph alt Corp. v. United States , 4 8 9 U. S

. 794, 798, 109 S. Ct . 1494, 1497 (1989) ( citations omitt ed). The bankruptc y

court’s or der imposing sanctions is a final, a ppeala ble orde r. See B -Line, LLC v. W inge rte r ( In re W ingerter ), 594 F .3d 931, 936 (6th Cir. 2010).
A bankr uptcy court’s imposition of sanctions is review ed for an abuse of discre tion. Id. An abuse of discretion is established when the revie wing court is le ft with a definite a nd firm conviction that the court below commit ted a c lear err or of judg ment. Mich. Div.-M onument Builders of N. Am. v. Mic h. Cemete ry Ass’n , 524 F.3d 726, 739 ( 6th Cir. 2008) (citation s o m i t t ed ). “An a buse of discretion occ urs only

when the [trial] court relies upon clear ly err oneous findings of fa ct or whe n it impro p er l y ap p l i es the law or uses an e rrone ous leg al standar d.” Kay e v . A gr ipo ol, In c . ( In re Murray, Inc .) , 392 B.R. 288, 296 (B .A.P. 6th Ci r. 2008). “‘The question is not how the review ing court would have rule d, but rather whether a re asonable p er s o n could ag ree with the bankruptc y1. No forma l adver sary proce eding was filed. Rather, the truste e simply neg otiated with the de bto rs
.

- 3- court’s de cision; if rea sonable pe rsons could diffe r as to th e i s s u e, t h en there is no abuse of discretion.’” In re W

inge rte r, 5 9 4 F. 3 d

at 9 3 6 (q u o t i n g Barlow v. M.J. W aterman &Assocs., Inc

. ( In re M .J. W aterman &Assocs., Inc

. ), 227 F .3d 604, 608 (6th Cir. 2000)).

III . F AC TS
On Februa

ry 8, 2007, Alexander and Fr ida Greenspan filed a petition for r elief unde r cha pter 13 of the Ba

nkruptcy Code. Their case was conver ted to one under chapte r 7 on April 13, 2007, and David Simon was appointed trustee

. After rec eiving notice of the debtors’ bankruptc y case , attorney Geor g e B adovick f

iled a proof

of cla im in the amount of $5,686.94 for fee s he was owed for leg al service s per fo rm ed for

various businesses owne d by the debtors. Pre -petition, Ba dovick sued the debtors to collec t on leg al fe es owe d in c onnection with commer cial litigation. That lawsuit resulted in a judg ment ag ainst the debtors for $5,686.84 plus interests and costs. Prior to filing for

bankruptc y

protec tion, the debto rs s o ld their home in Russell, Ohio and

we re a tte mpt ingto p ur c ha se a ne w h ome in S olo n, Oh io. B e c a us e the de bto rs we re havin g pr ob le ms obtaining a

mortg ag e to purc hase the Solon home, their friends Dr . And Mrs. I g or L ant sberg obtained a mor

tga g e to financ e the Solon proper ty for them. As part of

this transaction, the de btors transfe rre d $120,000 to the L antsberg s for a down pay

ment. The L anstberg s then took titl e to the proper ty . The debtors, howeve r, resided in the home and paid all related expenses. The title to the proper ty was subseque ntly

transfe rre d to FGAGL imited, L L C, an Ohio limit ed liability company in which Dr. I g or L an t s b er g holds a 95% intere st, and debtor Ale x ander Gre enspan holds a 5% int e re st.
I n con n ec t i o n with the administration of the debtors’ bankruptc y case , the trustee a sserted that the $120,000 transf

er from the debtors to the L antsbergwas fr audulent pursua nt to provisions of Chapter

1336 of the Ohio Revised C o d e. T h e t rust ee a nd the debtors e ng ag ed in neg otiations 1 which re sulted in the debtors off eringto compromise the trustee’ s claims for $80,000, a sum which was to be f

unded by loans to the debtors fr om friends a nd relatives. Wi th that o ff er in hand, on Aug ust 30, 2007, the trustee file d a M o t ion to Com promise Controversy . The motion included a- 4-

Notice of Hea ring and opportunity

to object, and a

matrix , which included Ba dovick, of those to be

serve d with a copy

of the motion.
On Se p t e mb e r 2 8 , 2 0 0 7 , t h e b an kr u p t c y c o u rt e n t e r e d an o r d e r g r an t i n g t h e M o tio n to Compromise. Pay

ments to unsecure d cre ditors of the debtors w ere made at the rate of 14.831% f rom the settlement proce eds. As an unsec ured c reditor, B adovick r ece ived his pro rata pay ment in the amount of $843.43.
On Octobe r 15, 2 0 07, the debtors r ece ived their discha rg e. On Oc tober 17, 2007, the bankruptc y

court posted the N otice of O rder o f Di s charg e with a Cer tificate of Service . The Certificate of Servic e indicate d that Ba dovick was se rved w ith the notice. On May 1, 2009, repr esente d by attorney P. Ry an Parker , Ba dovick filed a complaint in the Court of Common P leas, Cuy ahog a County ag ainst the debtors, F GAG L imited, L L C, a nd Dr. I g or L ants be rg . T he c omp la int a sse rt e d a

fr a ud ule nt c on ve y anc e c la im, c ivi l c on sp ir a c y c la im, and

c ivi l RI CO claim related to the pre -petition fra udulent conveyance of t he Solon home. I n response to the complaint, the debtors obtaine d counsel, Mar y Ann Rabin, who t hroug h phone ca lls and letters urg ed both Parker , and Badovick directly , to dismi ss the complaint. On J une 19, 2009, the c omplaint was dismiss ed. On Aug ust 7 , 2 0 0 9 , actingas his own counse l, Ba dovick filed a second c omplaint in the Court of Common P l eas, Cuy ahog a County , ag ainst the same de fenda nts. This second complaint

a g a in as se rt e d cla ims re la te d to th e pr e -p e tit ion tr ans fe r c omp ro mis e d b y the tr us te e . H ow e ve r, in this complaint, Badovick stated that “[d]efendants, Alexander Gre enspan and Fr ida Gre enspan, a re named he rein a s nece ssary parties a s d es cr i b ed in Civi l Rule 19. No money judgme nt is being soug ht ag ainst them.” After re ceivingservice of this second c omplaint, the debtors ag ain re tained Rabin. On September

4, 2009, the debtors f

iled a motion to reopen the ir bankruptc y case . The bankruptc y

court g rante d that mot i o n an d on November 20, 2009, the debtors f

iled a motion for B a do vic k to a

pp e ar a nd sh owc a us e wh y he sh ou ld not be he ld in co nte mpt purs ua nt to 1 1 U .S. C. § 524(a) (2) f

or violation of the injunction ag ainst the commenc ement or continuation of an ac tion- 5-

to collect a de bt that has bee n discharg ed in bankr uptcy . The mot ion also soug ht sanctions pursuant to Fede ral Rule of B ankruptc y Procedur e 9011.
The ba nkruptcy court he ld a hea

ring on the debtors’ motion on Dec ember 17, 2009, at which it issued an order scheduling discovery and an evidentiar y hear ing. D iscovery

ensued, inc luding the deposition of Ba dovick. On F ebrua ry 17, 2010, the cour

t held an evi d enti ary

hear ing, a

nd on Februar y 22, 2010, it e ntere d an order finding Ba dovick in c ontempt f or violating t h e d i s ch ar ge injunction. The court further found t hat t he viol ation would be ade quately addre ssed by

awa rding the debtors their

actua l attor n ey

fee s. I t did not address Rule 9011. Upon instructions of the ba nk ru ptc y c ourt , Ra bi n submi tte d a de ta ile d f

e e state me nt f

or $1 3, 23 0. 00 in f

e e s a nd $6 75 .8 6 in expenses. Over

the obj ection of Badovic k that the fe es we re e x cessive, the bankruptc y court e ntere d an orde r on Mar ch 21, 2010, aw ardingfee s in the amount of $12,510.00 and expenses in the amount of $675.85 as a

sanction ag ainst Ba dovick for violating the debtors’ discharg e inj unction. The c ourt d en i edo n l y

t h o s e f ee s at t ri b u t edt o t h e n o n -d eb t o r d ef en d an tDr

. I go r Lan t s b er g.
Ba dovick’s timely

appea l followed.

IV . D ISC USS ION
After a cha pter 7 de btor meets his oblig ations under the Ba nkruptcy Code, he is dischar g ed from all debts that a

rose p ri o r t o t h e fi l i n g of his bankruptc y case
. See 11 U.S.C. § 727(b). The bankruptc y

discharg e operates as an inj unction to preve nt any person or entity from commenc ing or

c on tin uin g an a c t to c oll e c t a

dis char ged deb t as a

pe rs on a l li a

bil ity of the de bto r. 11 U. S.C. § 524(a) (2). “ The purpose of the perma nent injunction is to effec tuate one of the primary

purposes of the B ankruptc y

Code: to a ffor d the debtor a financ ial ‘fr esh start.’” In re M iller, 247 B.R. 224, 228 (B ankr. E.D . Mich. 2000), aff’d , 2 8 2 F. 3 d 8 7 4 (6 t h C i r. 2 0 0 2 ) ( ci t i n g Gr e e n v . W e lsh , 956 F.2d 30 , 3 3 ( 2d

Cir. 19 92 )). Th e inj un c tio n is int e nd e d to pr e c lud e vir tua lly a ll a c tio ns to c oll e c t, including post-disc harg e lawsuits. In re Laf fe rty , 229 B.R. 707, 712 (B ankr. N .D. Ohio 1998).
Whil e ther e is no private r ight of action for violation of t he dis char g e inj unction, debtors may bring civil contempt char g es ag ainst a par ty they alleg e has violated t he injunction, and if c ontempt is established, they

may be aw arde d damag es as a sanction for

that contempt. Se e Pe rtu so v . F or d Motor Credit Co. , 233 F.3d 417, 421-23 (6th Cir. 2000) (de btor’s ave nue of r ecour se for violation- 6-

of inj un c tio n is to b ri nga c tio n a g a ins t c re dit or fo r c on te mpt ); Cha mb e rs v . G re e np oin t Cr e dit ( In

re Cha mb e rs ), 324 B .R. 326, 329 (Ba nkr. N.D. O hio 2005). “The modern tre nd in civil contempt proce eding s is for cour

ts to award a ctual dama g es for violations of § 524's discha rg e injunction, and, wh e re ne c e ssa

ry to ef fe c tuate the purp os e s of the dis c ha rg e inj un c tio n, a

de bto r m ay

be e nti tle d to

rea sonable attorney

fee s.” Miles v. Clarke (

In re M iles ), 357 B.R. 446, 450 (B ankr. W.D. Ky . 2006) (c itatio ns omi tte d) ; In re M iller , 247 B.R. at 228 ( “This Court ag ree s that a debtor w ho is injured by a willful violation of the discharg e injunction is entit led to damag es, including rea sonable attorney fe e s. Othe rw ise the dis c ha rg e inj un c tio n w ou ld b e e sse nti a lly wi tho ut m e anin g or

e ff e c t.” ); se e als o Ha rd yv . U nit e d S tat es ( In re Hardy ), 97 F.3d 1384, 1389 (11th Cir. 1996) (“[M]odern trend is for courts to awa

rd ac tual damag es for

violation of § 524 based on the inhe rent contempt power of the court.” ) Following an evide ntiary h ea ri n g i n this case, the ba nkruptcy court found that Ba dovick violated t he debtors’ discharg e inj unction. The c ourt stated that B adovick “ intended to pre ssure the debtors to pay

the dischar g ed debt by

naming them as def

endants in [the second] lawsuit, forcing them ag ain to reta in counsel to r epre sent them, and also by naming their g ood friend D r. L antsberg as a de fenda

nt. I n doing so, he violated the disc harg e injunction.” (B ankruptc y Court Memorandum of Opinion and Or der, F eb. 22, 2010, Doc ket # 126 at 13.) F inding, howe ver, that the debtors had not shown that they

suffe red a

ny actua l damag es, t he bankruptcy court re jected the debtors’ pr ay er for a n awa rd of $10,000. The court found instea d that th e v i o lation of the dischar g e injunction would be “a dequate ly

addre ssed” by

awa rdin g the debtors’ their ac tual attorney fee s, and orde red debtors’ c ounsel to submit a detailed fe e stateme nt. Once the require d fee statement wa s submitt ed, the b an k ru p t cy co urt awa rded f ees in the a

mount of $12,510.00 and expenses in the amount of $ 6 7 5

. 8 5 , d en y i n g o n l y

t h o s e f ee s ($ 7 2 0 ) at t ri b u t ed t o t h e n o n -d eb t o r d ef en d an t Dr

. I go r Lan t s b er g.
Ba dovick has not appe al e d th e b a nk r u ptcy court’s or der f

inding him in contempt for violating the debtors’ dis ch ar ge injunction, and dete rmining that the violation should be addresse d by

awa rding the debtors their actua l a ttorney fee s. He ha s appea led only the cour t’s subsequent orde r
awa rd ingthe $1 2, 51 0. 00 in f

e e s and $6 75 .8 5 in

e xpe ns e s. Ac c or din g to B a do vic k, the re a so na ble

a t t o r n e y f e e s w h i c h m ay b e aw ar d e d a s a s an c t i o n , ar e n o tn e c e s s ar i l y actual leg al expenses incurr ed,

and , th e re fo re , in

de te rm ini ngthe a mou

nt o f a tto rn e y fe e s to im pose a s a

sa nc tio n, the c ourt

mus t consider the amount nece ssary to deter the attorney from future violations, the amount the debtor wa s- 7-

forc ed to expend beca

use of the attorney ’s unre asonable conduct, the miti gat i n g actions of the op p o s i n g party , and the attorney ’s ability to pay the sanc tions. Badovick a rg ues that bec ause the bankruptc y court did not consider these fa ctors, its awa

rd of attorney

fee s was an a

buse of discr etion.

I n support of his position, Badovick c ites to Jack son v. Law Firm o

f O’ Ha r a, Ruberg, Osborne &Taylor , 875 F.2d 1224 ( 6th Cir. 1989) and Braun v. Champion Credit Union ( In re Braun ), 152 B .R. 4 6 6 (N

. D. Oh i o 1993). Jack son and Braun do identify the fa ctors noted by Ba dovick as one s which shoul d be considered by a court when determining the amount of attorne y fee s to impose as sanctions. These case s, howeve r, ar e inapposite he re a s t h ey examine the imposit ion of an a

war d of attorne y

fee s as a sanction ag ainst an attorney who has violated his or her obligations under Fe dera l Rule of Ba nkruptcy Procedur e 9011. While the debtors’ motion included

an asse rtion that as an attorney Ba dovick should also be subjec t to sanctions under Rule 9011, the ba nk ru ptc y c ourt sanc tio ne d B a do vic k, no t fo r his a c tio ns a s an a tto rn e y un de r R ule 90 11 , b ut a s a
cre ditor of the debtor s. Neither the bankruptc y court’s or der f

inding that B adovick violated the discharg e injuncti o n an d deter mining that attorne y

fee s would be imposed as a sanction nor the court’s order

deter mining the amount of attorney fee s, makes any

mention of imposing sanc tions

un d e r Ru le 9 0 1 1

. T h e c o u rt’ s o r d e r s s p e c if ic a ll y s tate th a t th e s an c ti o n is b e in g im p o s e d for violating the disc harg e injunction.
Be cause the violation of the dischar g e injunction is a transg ression ag ainst the bankruptc y court’s or der, “ ‘broa d discretion is invested in the court in selec ting a n appropr iate sanc tion.’” In re Miles , 3 5 7 B. R

. at 4 5 0 (q u o t i n g In re Cha mb e rs , 324 B.R. at 329) . Reasonable attorney fee s are an appropriate sanction for violation of t he dis char g e injunction. In re M iles , 3 57 B .R. a t 45 0; In re Miller , 247 B.R. at 228. Badovic k argues that the a war d should be reduc ed or va cate d as excessive for the “prose cution of a routine motion.” Be y ond stating that it wa s “prose cution of a ro u tine motion,” he has provide d no support for his position that the fee s are excessive.
Ad dr e ssi ngthe same iss ue ra ise d by B a do vic k in oppo sit ion to the fe e state me nt o f d e bto rs ’ counsel, the ba

nkruptcy court re viewed the fee statement and state d: [C ]ounsel ex pended 41.7 hours of time at the hourly rate of $300.00 ($12,510.00) a

nd incurre d ex penses of $675.86 repr esenting the debtors. Mr. Ba dovick objects that this is an unr easona ble amount of time giv en the routine nature of the service s which counse l- 8- perf o rm ed. This time was spent r eviewingand re sponding to the second state court lawsuit, reope ning the chapte r 7 ca se, re moving the pending state cour

t lawsuit, and prosec uting the c ontempt proce edings, all servic es which c lear ly relate to Mr. B adovick’ s vio la tio n o f t

he dis c ha rg e inj un c tio n a

nd the de bto rs ’ e ff

or ts t o o bta in his c omp lia

nc e . A lth ou g h th e se ma tte rs we re no t par tic ula rl y complex, the services w ere nece ssary gi v en Mr. B adovick’ s persistenc e in pur suing the state court litigation, his opposition t o the motion to reopen, his opp o s i t i o n to the debtors’ r equest for a show cause order , and his position that the disput e be resolved thr oug h an evidentiar y hear ing. See McM

ahan & Co. v

. Po Folks, Inc ., 206 F.3d 627, 634 (6th Cir. 2000) (noting that an awa rd of sig nificant attorney fee s as a sanction for contempt was w arr anted whe re the contemnor’ s conduct make the under

taking “ar duous”). (Memora ndum of Opinion, Marc h 21, 2010, Docke t # 137 at 2.) The bankruptcy court a lso deducted $720.00 in fee s which it f

ound wer e not dir ectly related to the debtors, but r ather to non-debtors Dr

. L antsbergand F GAG.
The ba nkruptcy court c are fully

considere d the fee statement befor e deter mining the amount of attorne y

fee s to be imposed as sanctions. We find no abuse of discretion in the cour

t’s awa rding of the de btors’ ac tual attorney fee s incurre d as a sa

nction ag ainst Ba dovick for his violation of the debtors’ discha

rg e injunction.

V. CO NC LU SION
For the fore g oing r easons, the or der of the bankr uptcy court is AF FI RMED.