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IN RE SARATOGA SPRINGS PLASTIC SURGERY

February 11, 2005.

In re SARATOGA SPRINGS PLASTIC SURGERY, PC, Debtor. ROBIN YARINSKY, Appellant,
v.
SARATOGA SPRINGS PLASTIC SURGERY, PC, Appellee.



The opinion of the court was delivered by: DAVID HURD, District Judge

MEMORANDUM-DECISION and ORDER

I. INTRODUCTION

  Robin Yarinsky ("Mrs. Yarinsky"), her attorney Wayne P. Smith, Esq. ("Attorney Smith"), and her former attorney Nancy Bunting, Esq. ("Attorney Bunting") appeal from orders of the United States Bankruptcy Court for the Northern District of New York finding that they willfully violated the automatic stay, awarding debtor Saratoga Springs Plastic Surgery, P.C. ("SSPS" or "debtor") compensatory damages, and setting forth the amount of compensatory damages. The consolidated appeals were taken on submission without oral argument.

  SSPS moved to strike appellants' brief and record on appeal. The motion to strike is wholly without merit and is denied.

  II. BACKGROUND

  The background and procedural history of this matter is set forth in a Memorandum-Decision and Order reversing the denial of permission to file a late appeal, familiarity with which is assumed. See Yarinsky v. Saratoga Springs Plastic Surgery, PC, 310 B.R. 493 (N.D.N.Y. 2004). The facts recited below are only those necessary for determination of this appeal.

  Honorable Jerry J. Scarano, New York State Supreme Court Justice ("Justice Scarano"), granted judgments against Steven Yarinsky, M.D. ("Dr. Yarinsky"), Mrs. Yarinsky's estranged husband and the sole principal of debtor, and SSPS in October 2000 and in December 2000. The judgments were for the amounts Dr. Yarinsky was in arrears for previously court-ordered child support, spousal maintenance, and counsel fees. Another Page 3 order entered in December 2000, further provided that all money judgments entered in the matrimonial action were to be filed against Dr. Yarinsky personally and against SSPS.

  SSPS filed for Chapter 11 bankruptcy protection on January 28, 2002.

  On December 17, 2002, Justice Scarano ordered a judgment in the amount of $20,000 for counsel fees against Dr. Yarinsky and SSPS. Justice Scarano further granted a judgment in favor of Mrs. Yarinsky for child support and maintenance arrearages against Dr. Yarinsky and SSPS in the amount of $151,691.58.*fn1

  Attorney Smith duly recorded the $151,691.58 judgment, caused restraining orders to be issued against the bank accounts of Dr. Yarinsky and SSPS, and filed a claim against debtor's bankruptcy estate based upon the judgment. Attorney Smith immediately moved the bankruptcy court for nunc pro tunc relief from the § 362 automatic stay, despite his belief that child support, spousal maintenance, and counsel fees were exempt. He refrained from any further actions to enforce the judgment against the debtor, pending a ruling on the motion for relief from the stay. It is also noteworthy that during the short time the SSPS account was restrained, it contained only 27 cents.

  On February 27, 2003, the Honorable Robert E. Littlefield, Jr., United States Bankruptcy Court Judge, orally denied the motion for relief from the stay and directed debtor to submit an order. Debtor submitted a written order to that effect on March 12, 2003. The order was entered on March 19, 2003.

  On the same day that it submitted the written order denying relief from the stay, March 12, 2003, SSPS moved for a finding that the automatic stay was violated and for Page 4 resultant compensatory damages. On April 23, 2003, debtor made an additional motion to extinguish the income execution, for compensatory damages, and for sanctions.

  On May 1, 2003, Bankruptcy Judge Littlefield issued a bench decision on debtor's motions, finding that the motion to extinguish the income execution was moot. However, he found that Attorney Smith, Attorney Bunting, and Mrs. Yarinsky willfully violated the stay. He determined that the state court judge had no authority to "do what he did" and there was no basis for enforcement of this state court order against property of the bankruptcy estate. Accordingly, he ordered Attorney Smith to cause the judgment to be extinguished, upon which the request for punitive damages would be denied. He further ordered that debtor was entitled to compensatory damages (attorneys fees and expenses); that debtor submit an affirmation of services within one week; and that Attorney Smith, Attorney Bunting, and Mrs. Yarinsky, who were jointly and severally liable for such damages, respond within two weeks. Pursuant to this briefing schedule the matter would be ready for decision on May 22., 2003 Thus, the motion was set down for oral decision on May 29, 2003. This oral decision was exemplified by written order filed on May 7, 2003. However, the written order provided that the affirmation of services was due within one week of that date, to wit: May 14, 2003. On May 16, 2003, the debtor filed and served the affirmation of services.

  As ordered by the bankruptcy court, Attorney Smith withdrew the income execution. He amended the income execution so it was directed only to Dr. Yarinsky, then re-issued it for execution on May 19, 2003. Due to mistake, the second income execution, although directed only to Dr. Yarinsky, referenced SSPS in the body of the text. Upon notification of the error, Attorney Smith immediately withdrew the second income execution (from the sheriff, before any account was restrained) and corrected it throughout. On May 28, 2003, at Page 5 debtor's ...


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