The opinion of the court was delivered by: DAVID HURD, District Judge
MEMORANDUM-DECISION and ORDER
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.
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
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.
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,
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
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