Tashira F Walters

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEW MEXICO
In re:
TASHIRA F. WALTERS,
Debtor. 	No. 7-11-14435 SA
-and-
In re:
MARYELLEN LOUVANNA MORA,
Debtor. 	No. 7-11-14442 SA
MEMORANDUM OPINION AND ORDER FIXING LIABILITY
The matter before the Court relates to this Court’s
jurisdiction over a bankruptcy petition preparer and arises under
Bankruptcy Code section 110. 	It is therefore a core matter 1 on
which the Court may enter final orders. 	In Martin v. Pamela
Brown, Southwest Bankruptcy Services 2, Adv. No. 09-1075-S (Bankr.
D. N.M. 2010), this Court entered the following Permanent
Injunction against Pamela Brown and Southwest Bankruptcy
Services:
IT IS ORDERED that Pamela Brown, Southwest Bankruptcy
Services and any person or entity acting in concert
with either or both of them is permanently restrained
and enjoined from, directly or indirectly, 1) acting as
a bankruptcy petition preparer, or 2) soliciting,
assisting, advising, providing legal guidance, advice,
assistance, or consultation of any kind to any person
1The Court has subject matter and personal jurisdiction
pursuant to 28 U.S.C. §§1334 and 157(b); and these are
findings of fact and conclusions of law as may be required by
Rule 7052 F.R.B.P.
2The adversary actually consisted of eleven different
adversaries that were consolidated for trial and later
unconsolidated for entries of the different judgments.
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in connection with the filing or prosecution of any
bankruptcy case or any document in any bankruptcy case,
whether for a fee or for free, in the District of New
Mexico, including the preparation of documents for
filing in federal jurisdictions outside of the District
of New Mexico pursuant to 11 U.S.C. § 110(j)(2)(A) and
(B).
IT IS FURTHER ORDERED that this injunction is a
continuing, permanent injunction and that it may be
terminated only by the Order of a United States
District Court or Bankruptcy Court upon motion
therefor.
IT IS FURTHER ORDERED that the Court shall retain
jurisdiction over this matter for all purposes,
including to enable any party to the Injunction to
apply to the Court at any time for such further orders
and directions as may be necessary or appropriate for
the construction or implementation of this Injunction;
to enable the Court on it’s own motion or upon
appropriate motion by either party, with service on the
other, to modify the provisions of the Injunction or to
enforce compliance with any of the provisions of the
Injunction or to punish violations of any of the
provisions of the Injunction.
On March 7, 2012 the United States Trustee filed identical
motions in the two cases noted above pursuant to Bankruptcy Code
Section 110 for an order holding Pamela Brown in contempt for
violating the permanent injunction. 	See Walters case, doc 26;
Mora case, doc 14. 	Each motion seeks a fine from Pamela Brown
in the amount of $5,000 for violating the injunction and also
requests that the Court require her to pay fines in other cases
where she has violated the permanent injunction.
Ms. Brown was personally served with the Motions and a
notice of hearing to be held April 16, 2012. 	See Affidavits of
service; Walters case, doc 28; Mora case, doc 16. 	She failed to
appear at the hearing. 	The Court entered orders (Walters case,
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doc 31; Mora case, doc 19) granting the motions for contempt.
The Court found that Ms. Brown had been enjoined by the Court
from acting as a bankruptcy petition preparer and that, in
violation of the injunction, she continued to conduct business as
a bankruptcy petition preparer. 	The orders also set June 11,
2012 as the date for a hearing on liability.
On June 11, 2012 the United States Trustee appeared with the
above listed Debtors to present testimony and documentary
evidence relating to damages and violations of the Bankruptcy
Code. 	Following the presentation the Court requested the United
States Trustee to file exhibits setting forth a summary of the
evidence. 	Those exhibits were filed. 	See Walters case, doc 38;
Mora case, doc 26. 	The Court has reviewed these exhibits and
find that they accurately reflect the oral testimony and
documentary evidence presented at the hearing. 	In the Walters
case, the Court finds that Pamela Brown violated section 110
eight times. 	In the Mora case, the Court finds that Pamela Brown
violated section 110 eight times. 	Additionally, the Court finds
that Pamela Brown violated the express terms of the permanent
injunction by serving as a bankruptcy petition preparer in each
of the two cases.
Bankruptcy Code section 110(l)(1) provides:
A bankruptcy petition preparer who fails to comply
with any provision of subsection (b), (c), (d), (e),
(f), (g), or (h) may be fined not more than $500 for
each such failure.
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The majority position of courts addressing this issue have found
that each violation carries a separate fine. 	In re Herrera, 2012
WL 4088863 at *6 (Bankr. D. Colo. 2012):
This Court agrees with the majority position: “[t]he
petition, the schedules, the statement of intention,
the statement of financial affairs, and the
verification of creditor matrix are each a separate
‘document for filing’ and may each give rise to
separate violations of the statute.” 	In re Springs,
358 B.R. 236, 242 (Bankr. M.D. N.C. 2006).
Bankruptcy Code section 110(i)(1) provides:
If a bankruptcy petition preparer violates this
section or commits any act that the court finds to be
fraudulent, unfair, or deceptive, on the motion of the
debtor, trustee, United States trustee (or the
bankruptcy administrator, if any), and after notice and
a hearing, the court shall order the bankruptcy
petition preparer to pay to the debtor--
(A) the debtor's actual damages;
(B) the greater of--
(i) $2,000; or
(ii) twice the amount paid by the debtor to
the bankruptcy petition preparer for the
preparer's services; and
(C) reasonable attorneys' fees and costs in moving
for damages under this subsection.
The Court also finds that, by willfully ignoring the
permanent injunction against her, Ms. Brown acted in a fraudulent
and deceptive manner, justifying the $2,000 awards.
The United States Trustee also seeks “an order holding
Pamela Brown in contempt for violating the terms of the permanent
injunction in this case and fine her $5,000 for each violation of
the permanent injunction.” 	The Court finds that the bankruptcy
court lacks jurisdiction to assess these sanctions. 	While this
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Court could award sanctions if they were civil in nature, what
the United States Trustee seeks is a criminal sanction for
blatant violations of the Bankruptcy Court’s injunction.
[W]hether a contempt is civil or criminal
turns on the character and purpose of the
sanction involved. 	Thus, a contempt sanction
is considered civil if it is remedial, and
for the benefit of the complainant. 	But if
it is for criminal contempt the sentence is
punitive, to vindicate the authority of the
court.
International Union, United Mine Workers of America v.
Bagwell, 512 U.S. 821 827–28, 114 S.Ct. 2552, 129
L.Ed.2d 642 (1994) (internal quotations and citations
omitted). 	In civil contempt, “the contemnor is able to
purge the contempt and obtain his release by committing
an affirmative act, and thus carries the keys of his
prison in his own pocket.” 	Id. at 828, 114 S.Ct. 2552
(internal quotations and citations omitted). 	On the
other hand, “a completed act of disobedience that the
contemnor cannot avoid” is criminal in nature. Id.
(internal quotations and citations omitted).
Lucre Management Group, LLC v. Schempp Real Estate, LLC (In re
Lucre Management Group, LLC), 365 F.3d 874, 876 (10 th Cir. 2004).
The Tenth Circuit has not ruled on a bankruptcy court’s ability
to enter criminal contempt sanctions. 	See Mountain America
Credit Union v. Skinner (In re Skinner), 917 F.2d 444, 447 n.2
(10 th Cir. 1990)(“The order at issue here was one for civil
contempt only; we express no opinion as to whether bankruptcy
courts have authority to enter sanctions for criminal contempt.”)
Compare, e.g., In re Rodriguez, 2007 WL 593582 at *7-8 (W.D.
Texas 2007):
2. Bankruptcy Courts in the Fifth Circuit may not
conduct criminal contempt proceedings.
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In contrast to their authority to conduct civil
contempt proceedings, bankruptcy courts in the Fifth
Circuit do not have the authority to conduct criminal
contempt proceedings. 	See In re Hipp, Inc., 895 F.2d
1503, 1521 (5th Cir. 1990) (“Bankruptcy courts have no
inherent or statutory power-and none is granted them by
11 U.S.C. § 105 or by 28 U.S.C. § 157 or by Rule
9020-to preside over section 401(3) criminal contempt
trials for violation of bankruptcy court orders or to
acquit, convict, or sentence for such offenses. 	Not
only must the acquittal or conviction and sentence for
such offenses be by the district court, but all
critical stages of the trial of such offenses must
likewise be before that court”). 	Criminal contempt
proceedings “should be governed by Fed.R.Crim.P. 42(b),
and heard by the district court (or by that court and a
jury). 	Rule 42(b) would appear to contemplate that the
district court that decides the criminal contempt will
hear the evidence and conduct the trial.” 	Id. at 1520.
The Fifth Circuit has explicitly rejected the argument
that the district court can conduct a de novo review of
a bankruptcy court's criminal contempt finding under
Bankruptcy Rule 9020. 	See id. at 1521. 	(“Hence, we
conclude that de novo district court review-and
certainly where that review is wholly on the basis of
the bankruptcy court trial record-is not a sufficient
basis on which to predicate a section 401(3) criminal
contempt conviction for violation of a bankruptcy court
order, notwithstanding that the district court may
purport to itself render the judgment of conviction and
impose the sentence. On the contrary, such criminal
contempts must be tried before the district court”).
The Fifth Circuit held that bankruptcy courts cannot
hear or determine criminal contempts based on narrow
statutory construction that was motivated by
constitutional considerations. 	See id. at 1509.
(“[W]e now turn to consideration of the bankruptcy
court's power to hear and determine criminal contempts.
We conclude that the bankruptcy court lacks such power,
at least as to contempts not committed in (or near) its
presence, so that in the event of further prosecution
of this offense, the hearing and determination must be
before and by the district court. 	While our holding in
this respect is one of statutory construction and we do
not ultimately determine whether this result is
constitutionally mandated, our conclusion is
nevertheless influenced by the perception that the
constitutionality of the contrary position is subject
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to substantial question. 	We follow the settled rule
that federal statutes, where they may reasonably be so
construed without violence to their clear meaning,
should be given an interpretation that avoids serious
question as to their constitutional validity”).
(Bold in original.) 	And, the Tenth Circuit Bankruptcy Appellate
Panel specifically declared that sanctions for criminal contempt
were beyond the bankruptcy court’s jurisdiction. 	Armstrong v.
Rushton (In re Armstrong), 304 B.R. 432, 439 (10 th Cir. BAP
2004). 	This Court therefore concludes that it is without
jurisdiction to determine the criminal contempt motion. 	The
Court will, however, refer this matter to the United States
Attorney for review 3. 	Compare Berry v. United States Trustee (In
re Sustaita), 438 B.R. 198, 213 (9 th Cir. BAP 2010), aff’d, 460
Fed.Appx. 627 (9 th Cir. 2011)(Unpublished.)(Fact that bankruptcy
court referred matter to United States Attorney’s Office for
filing of criminal contempt proceedings against an individual did
not make the fines imposed by section 110 criminal in nature.
The statutory fines and penalties are civil in nature.)
3Some other courts transfer the record directly to the
District Court for review. 	See, e.g., Rodriguez, 2007 WL 593582
at *16 (District Court reverses bankruptcy court’s criminal
sanction order and remands to the bankruptcy court so that it may
certify the criminal contempt matter to the district court.);
Henkel v. Lickman (In re Lickman), 288 B.R. 291, 293 (Bankr. M.D.
Fla. 2003)(Court directs clerk to transmit the criminal contempt
matter to the district court for its consideration of the issues
raised.) 	The Court finds that referral to the United States
Attorney makes more sense. 	That agency can confer with the
United States Trustee to determine whether the criminal contempt
should be prosecuted and by which agency, without forcing the
issue on the District Court.
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SUMMARY
Therefore, the Court will award damages as follows:
A) 	to TASHIRA F. WALTERS, the sum of $4,000 for eight
violations of section 110(b) through (h) plus $2,000 for
violation of section 110(i)(1), for a total award of $6,000.
B) 	to MARYELLEN LOUVANNA MORA, the sum of $4,000 for eight
violations of section 110(b) through (h) plus $2,000 for
violation of section 110(i)(1), for a total award of $6,000.
IT IS ORDERED that Pamela Brown shall pay to each of the Debtors
at the addresses listed below, in cash or certified funds, the
amount of $6,000 on or before fifteen days after the entry of
this Order and shall file with the Court written proof that such
payments have been made, failing which the Court shall set this
matter for further hearings at which the imposition of further
sanctions will be considered.
IT IS FURTHER ORDERED that if the full amounts are not paid
within said fifteen days, interest shall accrue from the date of
entry of this Order to the date of payment at the current federal
post-judgment interest rate of 0.175% per annum.
IT IS FURTHER ORDERED that the Court will transmit a report of
this matter to the United States Attorney.
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Honorable James S. Starzynski
United States Bankruptcy Judge
Date entered on docket: October 15, 2012
Copies to:
United States Trustee
PO Box 608
Albuquerque, NM 87103-0608
Maryellen Louvanna Mora
17 C Saxon Rd
Los Lunas, NM 87031
Tashira F Walters
7627 Via Sereno SW
Albuquerque, NM 87121
Pamela Brown
2921 Carlisle Blvd. N.E., Suite 104
Albuquerque, NM, 87110
Office of the US Attorney
PO Box 607
Albuquerque, NM 87103-0607
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