Tony E. Butts and Stacey Y Butts

The court may take judicial notice of the docket and the content of the bankruptcy1
schedules and other documents filed in the case for the purpose of ascertaining the timing and
status of events in the case and facts not reasonably in dispute. See Fed. R. Evid. 201; In re
Scholl, 1998 WL 546607, at *1 n. 1 (Bankr. E.D. Pa. Aug. 26, 1998). See also In re Indian Palm
Associates, 61 F.3d 197, 205 (3d Cir. 1995).
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UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF PENNSYLVANIA
IN RE: 	TONY E. BUTTS 	: 	Chapter 7
STACEY Y. BUTTS 	:
:
Debtor(s) 	: 	Bky. No. 05-10104ELF
:
O P I N I O N
BY: ERIC L. FRANK, United States Bankruptcy Judge
I. INTRODUCTION
Before me is the Motion to Set Aside Judgment For Attorneys’ Fees, filed by
Northeastern Title Loans, Inc. (“NTL”). Attorneys’ fees were awarded to the Debtors’ counsel
after the entry of a prior order holding NTL in contempt of court for violation of the automatic
stay provision of the Bankruptcy Code, 11 U.S.C. §362(a). NTL alleges that it was not properly
served in the matter and that the court orders should be set aside because they are void.
I will deny NTL’s motion.
II. PROCEDURAL HISTORY
On January 3, 2005, the Debtors commenced this case by filing a chapter 13 bankruptcy
petition. 	On January 12, 2005, the Debtors filed a Motion to Turn Over Property (“the Turnover1
Motion”).
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The Order was entered by my predecessor on this court, the Hon. Kevin J. Carey,2
before his appointment to the United States Bankruptcy Court for the District of Delaware.
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In the Turnover Motion, the Debtors alleged that they had entered into a loan agreement
with NTL, borrowing $2,515 at an interest rate of 365% per annum. The transaction was secured
by the Debtors’ automobile. The Debtors further alleged that:
C 	as of the commencement of the case, the automobile was in the possession of
“Alliance,” an agent of NTL;
C 	at the time the bankruptcy petition was filed, they gave notice to NTL and
Alliance of the case by sending NTL letters dated January 3, 2005 and January 4,
2005, which were faxed and mailed to it by first class U.S. Mail;
C 	they offered to provide adequate protection of NTL’s interest in the automobile
through the purchase of collision insurance, providing for the replacement lien on
the property, and cash payments in excess of any depreciation;
C 	in response to the Debtors, Alliance demanded payment of $1450.00 as the fee
for impounding and storage of the automobile before it would turn over the
automobile to the Debtors .
A hearing was held on the Turnover Motion on February 22, 2006. On that day, the court
signed an order directing NTL to turn over the automobile to the Debtors forthwith and holding
NTL in contempt of court. 	No one appeared on behalf of either NTL or Alliance at the February2
22, 2005 hearing. The docket also reflects that the Debtors’ counsel was directed to submit an
affidavit of attorney’s fees to be acted upon the court without further hearing.
On February 26, 2005, the Debtors’ counsel, Philip E. Horvitz (“Mr. Horvitz”) filed an
affidavit which identified the services he had provided in connection with the Turnover Motion.
Mr. Horvitz requested an award of $1,120.00 in counsel fees based upon the expenditure of 6.4
hours at an hourly rate of $175.00. On March 7, 2005, the court entered an order awarding Mr.
Horvitz the requested $1,120.00 in attorney’s fees pursuant to 11 U.S.C. §105(a), “to be paid by
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The Motion to Set Aside Judgment also speaks briefly to the merits of the Turnover3
Motion, stating that it “NEVER HAD POSSESSION either in fact nor constructively” of the
Debtors’ vehicle. NTL Motion to Set Aside Judgment ¶ 1 (emphasis in original). Given the
evidence presented at trial, it is difficult to understand how NTL could make this allegation,
much less “shouting out” the allegation as it did using all capitals in its written submission. The
evidence presented by NTL’s own witnesses during the hearing on the Motion to Set Aside
Judgment was unequivocal and demonstrated that NTL advised Debtor Tony E. Butts in writing
that it had repossessed his automobile, that the repossession was effected by NTL’s agent and
that NTL believed that it had the authority to direct its agent to release the repossessed vehicle.
See Part III, Findings of Fact 3, 7, 10. I draw no legal conclusions from the disparity between
NTL’s written submissions to the court and the evidence presented in the evidentiary hearing.
The merits of the court’s order directing turnover of the vehicle and holding NTL in contempt is
not before me. The only issue is whether NTL is entitled to relief from the order due to defective
service of the Turnover Motion.
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Defendants Northeast Title Loans and Alliance within thirty (30) days hereof.”
On March 24, 2005, the court received a letter from a representative of Alliance on
letterhead which set forth the name of the company as “Alliance Recovery Systems, LLC.” The
letter was docketed on March 30, 2005 as a “motion to reconsider order.” After a hearing on
April 19, 2005 and by order dated April 22, 2005, the court vacated the February 22, 2005 and
March 7, 2005 orders to “eliminate [the] finding of contempt or awarding of attorneys’ fees as to
Alliance.” The April 22, 2005 Order did not address NTL or its obligations under the prior court
orders.
On September 14, 2005, the court entered an order confirming the Debtors’ chapter 13
plan. On March 31, 2006, NTL filed a Motion to Set Aside Judgment For Attorney’s Fees (“the
Motion to Set Aside Judgment”). In the Motion to Set Aside Judgment, NTL asserted that it had
not been served with the Turnover Motion. In the Motion to Set Aside Judgment, NTL asserts
that service was not effected properly under “F.R.C.P. 4 and 5" and that in any event, it lacked
actual notice of the Turnover Motion. 	On April 10, 2006, the Debtors’ counsel filed a response3
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In the response, the Debtors’ counsel pointed out that while NTL asserted that it lacked4
notice of the motions filed in the bankruptcy case, NTL certainly had known about the case itself
for some time, as it filed a proof of claim on May 25, 2005, more than seven (7) months before
filing the Motion to Set Aside Judgment.
Below, I will make reference to the notes of testimony of June 7, 2006 as “N.T.”5
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to the Motion to Set Aside Judgment, denying the material allegations. 4
A hearing on the Motion to Set Aside Judgment was held on June 7, 2006. At the
hearing, NTL presented the testimony of four (4) witnesses: John Henry, NTL’s area manager
responsible for the management of four (4) NTL business locations in Delaware; Valerie Henry,
the manager of the NTL office located in New Castle, Delaware; Timothy Newell, NTL’s Vice
President for Field Operations; and Mr. Horvitz, counsel for the Debtors.
At the conclusion of the hearing, I requested that the parties submit memoranda to me.
NTL’s attorney stated that he wished to order the notes of testimony. 	Based on the colloquy I5
had with the parties, I entered an order on June 9, 2006 which provided that NTL would file its
memorandum 14 days after the notes of testimony were docketed and that the Debtors would file
their memorandum 21 days after the filing and service of NTL’s memorandum. The notes of
testimony were docketed on July 12, 2006. Thus, NTL’s memorandum was due on July 26,
2006.
On July 26, 2006, the due date of its Memorandum of Law, NTL filed what it styled a
Motion to Set Aside Judgment for Attorney’s Fees (“the July 26 	Motion”). I find the filing ofth
the July 26 	Motion peculiar because NTL’s prior Motion filed on March 31, 2006 was alsoth
called a Motion to Set Aside Judgment for Attorneys Fees. Attached to the July 26 	Motion asth
an exhibit was a copy of the notes of testimony from the June 7, 2006 hearing. The July 26th
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Motion was also accompanied by a Memorandum of Law. Significantly, the July 26 	Motionth
was not accompanied by a Notice of Motion, Response Deadline and Hearing Date pursuant to
L.B.R. 9014-3(h) and L.B.F. 9014-3. Thus, it appears that NTL did not take any action to self-
schedule the July 26 	Motion for a hearing. See L.B.R. 9014-3(c). I also observe that the Julyth
26 	Motion contained the exact same prayer for relief as the prior Motion filed on March 31,th
2006. From all of these circumstances, I conclude NTL’s purpose in filing its documents on July
26, 2006 was to comply with the June 9, 2006 scheduling order and I have reviewed all of the
documents submitted by NTL before issuing this decision.
With the filing of NTL’s Memorandum of Law on July 26, 2006, the Debtor’s
Memorandum of Law was due on August 16, 2006. After an extension of time was granted to
the Debtors, they filed their Memorandum of Law on September 7, 2006.
III. FINDINGS OF FACT
Based upon my observation of the witnesses who testified at the June 7, 2006 hearing, the
substance of their testimony and the exhibits offered into evidence, I make the following findings
of fact:
1. 	On September 30, 2004, Debtor Tony E. Butts (individually, “Mr. Butts”) entered into an
installment loan and security agreement with NTL.
2. 	In the transaction between Mr. Butts and NTL, Mr. Butts borrowed $2,500.00 and financed
a total of $2,515.00. The loan was repayable in a single payment of $3,269.50 due on
October 30, 2004. The annual percentage rate in the transaction was 365%. In the
transaction, Mr. Butts gave NTL a security interest in his automobile. (Exhibit B-1, Part 3).
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3. 	On or prior to December 22, 2004, NTL repossessed the automobile owned by Mr. Butts.
(Exhibit B-1, Part 1, 2).
4. 	The repossession was effected through Alliance Recovery Systems, LLC, a company hired
by NTL and which acted as NTL’s agent. (N.T. 59-60; Exhibit B-2).
5. 	On December 22, 2004, NTL mailed Mr. Butts a “Notice of Repossession.” (Exhibit B-1,
Part 1, 2). The Notice of Repossession advised Mr. Butts inter alia of:
C 	his “right to redeem” the vehicle;
C 	his right to retrieve his license plate and other items of personal property from the
vehicle;
C 	the amount needed to redeem the vehicle; and
C 	NTL’s intention to sell the vehicle by auction if not redeemed by January 5, 2005.
6. 	The Notice of Repossession also stated:
Please address all correspondence to:
NORTHEASTERN TITLE LOANS
1560 NORTH DUPONT HIGHWAY
NEW CASTLE, DE 19720
7. 	The fax number for NTL’s office in New Castle Delaware is 302-326-2215. (N.T. 11, 30).
8. 	On January 3, 2005, the Debtors filed a chapter 13 bankruptcy petition in this court.
(Docket Entry #1).
9. 	Upon the filing of a bankruptcy case, it is NTL’s corporate policy to immediately release a
repossessed automobile to the bankruptcy debtor without any conditions. (N.T. 55).
10. On January 3, 2005, Mr. Horvitz faxed a letter to NTL, to the attention of “Val,” sent to
NTL’s correct fax number. In the letter, Mr. Horvitz gave NTL notice of the bankruptcy
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filing, requested release of Mr. Butts’ automobile and requested a copy of the “loan
documents.” The letter also was sent to NTL by first class mail. (Exhibit B-1).
11. NTL received Mr. Horvitz’s January 3, 2005 faxed letter and, on the same day, faxed back
to Mr. Horvitz a copy of the installment loan and security agreement between Mr. Butts and
NTL. (Exhibit B-1, Part 3; N.T. 17-18).
12. Also on January 3, 2005, NTL’s area manager, John Henry, issued a written Authorization
to Release Vehicle (“the Authorization”). The Authorization was directed to “Alliance” and
stated that Mr. Butts “has satisfied Northeastern Title Loans monetary requirements and
may redeem his/her vehicle . . . .” The Authorization states in pre-printed form:
“Additionally, Debtor is aware daily fees for storage, payable to you, may apply.”
Handwritten on the form is the statement:
*Debtor to pay storage!
JH
13. Due to the storage fees, Mr. Butts was unable to obtain immediate possession of his
automobile. As a result, Mr. Horvitz spoke by telephone with Valerie Henry and John
Henry on separate occasions. Both conversations were acrimonious. (N.T. 9-10, 27-28).
14. On January 12, 2005, the Debtors filed the Turnover Motion. (Docket Entry #5).
15. On January 12, 2005, Mr. Horvitz served NTL with: (a) the Turnover Motion and (b)
Notice of the Turnover Motion, Response Deadline and Hearing Date by first class mail
(collectively, “the Turnover Motion Documents”) addressed to:
Attention: Val
NORTHEASTERN TITLE LOANS
1560 NORTH DUPONT HIGHWAY
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I make this finding based, in part, on NTL’s witnesses’ admission that the New Castle,6
Delaware office generally receives its mail and the rebuttable presumption in the law that
properly addressed mail is received by the addressee. E.g., Hegner v. United States, 285 U.S.
427, 430, 52 S.Ct. 417 (1932); In re Bodnar, 1998 WL 480856, at *7 (E.D. Pa. Aug. 13, 1998);
In re Main, 157 B.R. 786 (Bankr. W.D. Pa. 1992). In addition, my finding is based on my
assessment of the credibility of NTL’s witnesses. See n.8, infra.
-8-
NEW CASTLE, DE 19720
(Exhibit B-1, Part 5).
16. NTL’s office in New Castle, Delaware generally receives mail that is properly addressed to
it. (N.T. 35).
17. There are no corporate officers of NTL who maintain their offices in New Castle Delaware.
(N.T. 28).
18. 	According to corporate policy, no individual who is employed in NTL’s office in New
Castle Delaware is authorized to receive legal process on behalf of NTL. (N.T. 9, 25, 47,
53).
19. According to corporate policy, when NTL’s office in New Castle, Delaware receives notice
of a bankruptcy filing, the Delaware office retrieves the subject loan file and forwards it to
the NTL’s corporate office in Atlanta, Georgia. (N.T. 9, 11, 30, 42, 53, 57).
20. According to office policy in the New Castle, Delaware office of NTL, upon receipt of legal
documents, such as the Turnover Motion Documents, the office manager telephones the in-
house corporate counsel in Atlanta, Georgia and faxes or mails the documents received to
counsel (N.T. 36, 40, 55-56).
21. NTL received mail delivery of the Turnover Motion Documents in its New Castle, Delaware
office.6
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I make this finding as I have no reason to believe that company policy was not followed7
in this case.
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22. NTL staff in the New Castle, Delaware office forwarded the Turnover Motion Documents to
NTL’s legal department in Atlanta, Georgia in accordance with NTL corporate policy.7
23. On February 22, 2005, the court held a hearing on the Turnover Motion. No one appeared on
behalf of either NTL or Alliance at the February 22, 2005 hearing. On that day, the court
signed an order directing NTL to turn over the automobile to the Debtors forthwith and
holding NTL in contempt of court. (Docket Entry #13, 14).
24. On February 25, 2005, Mr. Horvitz faxed a letter to NTL, to the attention of “Val”, sent to
NTL’s correct fax number. In the letter, Mr. Horvitz referred to the court’s order of
February 22, 2005, requested that NTL “honor the Order of Court” and stated his intention
to file a Motion for Sanctions if the automobile was not turned over within the week. 	The
letter also was sent to NTL by first class mail at its New Castle, Delaware office as set forth
on the Notice of Repossession. (Exhibit B-1, Part 6).
25. On February 28, 2005, Mr. Horvitz faxed a letter to NTL, this time to the attention of John
Henry. The letter was faxed to NTL’s correct fax number. In the letter, Mr. Horvitz
requested turnover of the automobile by March 4, 2005 in order to avoid the filing of a
Motion for Sanctions. The letter also was sent to NTL by first class mail at its New Castle,
Delaware office as set forth on the Notice of Repossession. (Exhibit B-1, Part 7).
26. On March 7, 2005, Mr. Horvitz faxed another letter to NTL, again to the attention of John
Henry. The letter was faxed to NTL’s correct fax number. In the letter, Mr. Horvitz
requested that NTL comply with the terms of the court’s March 4, 2005 Order. The letter
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I do not credit the testimony of John Henry and Valerie Henry that they never saw any8
of the faxes sent by Mr. Horvitz to the NTL office on February 25, 2005, February 28, 2005 and
March 7, 2005. I find the testimony to be incredible in light of the fact that Mr. Horvitz used the
correct fax number each time. I also find it significant that NTL promptly responded to Mr.
Horvitz, the first time he faxed a letter to NTL back on January 3, 2005 (by immediately faxing
back to Mr. Horvitz a copy of the underlying loan documents between NTL and the Debtors, as
requested by Mr. Horvitz). The unbelievable testimony of these witnesses regarding the faxes of
February 25, 2005, February 28, 2005 and March 7, 2005 causes me to mistrust the accuracy of
the balance of their testimony, including their testimony that the Delaware office never received
the Turnover Motion Documents, which were sent by first class mail. In addition, there was a
relatively objective way to ascertain whether NTL received the Turnover Motion Documents.
Had those documents been received in the New Castle, Delaware office, company policy dictated
that they be forwarded to the legal department in Atlanta, Georgia. Although NTL went to the
trouble of flying a corporate officer, Timothy Newell, from Atlanta to Philadelphia for the
hearing in this court, Mr. Newell did not bring the file relating to the Debtors with him. He did
not even take the trouble of reviewing the file before coming to court. If corporate policy had
been followed in this case, the bankruptcy related documents sent to the Delaware office by Mr.
Horvitz would have been forwarded to NTL’s Atlanta office. Therefore, an examination of the
Atlanta file may have revealed whether NTL’s Atlanta office ever received the Turnover Motion
Documents from its local management in Delaware. From NTL’s apparent failure to undertake
this most simple investigation, I draw the inference that a review of the file in Atlanta would
have revealed evidence contrary to NTL’s position. See In re Hammeken, 316 B.R. 723 (Bankr.
D. Ariz. 2004); In re Osborne, 257 B.R. 14 (Bankr. C.D. Cal. 2000). See also United States v.
Knox, 68 F.3d 990 (7 	Cir. 1995).th
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also was sent to NTL by first class mail at its New Castle, Delaware office as set forth on the
Notice of Repossession. (Exhibit B-1, Part 8).
27. NTL received the fax transmissions sent by Mr. Horvitz on February 25, 2005, February 28,
2005 and March 7, 2005.8
IV. DISCUSSION
A.
By filing the Turnover Motion on January 12, 2005, the Debtors invoked Fed. R. Bankr. P.
9013 and 9014. Rule 9013 provides that a request for an order, except when an application is
authorized by the rules, shall be made by written motion. Rule 9014(b) provides that a motion
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In making this argument, NTL states that the New Castle, Delaware office location “is9
not the corporation’s correct address.” NTL’s Pre-Trial Memorandum at 4. Rather, NTL says
that the correct address is set forth in its proof of claim filed on April 25, 2005: 3440 Preston
Ridge Road, Alpharetta, GA 30005. Of course, the proof of claim was filed more than three
months after the Turnover Motion.
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“shall be served in the manner provided for service of a summons and complaint by Rule 7004.”
Rule 7004(b)(3) provides that service may be made within the United States by first class mail
postage prepaid:
Upon a domestic or foreign corporation or upon a partnership or other unincorporated
association, by mailing a copy of the summons and complaint to the attention of an
officer, a managing or general agent, or to any other agent authorized by appointment or
by law to receive service of process and, if the agent is one authorized by statute to
receive service and the statute so requires, by also mailing a copy to the defendant.
In this case, the Debtors served the Turnover Motion by mailing it, along with Notice of the
Motion, to NTL at its business address in New Castle Delaware. The mailing was marked to the
attention of “Val,” the individual who, as it turned out, was the manager of NTL’s New Castle,
Delaware office.
NTL asserts that the judgment should be set aside as void because service was invalid. In
particular, NTL argues that by mailing the Turnover Motion Documents to a local office of NTL,
to the attention of “Val,” the Debtors failed to serve an officer or an agent who was authorized to
receive service of process. NTL also argues that the defective service renders void the court’s
order of February 22, 2005. NTL’s Pre-Trial Memorandum of Law at 3-4. 9
To be sure, there is legal authority which supports the proposition that the requirements of
the rule authorizing nationwide service of process by first class mail on corporations should be
strictly enforced. E.g., In re Schoon, 153 B.R. 48, 49 (Bankr. N.D. Cal. 1993) (requiring “literal
compliance” with the rule). 	Compare In re Sun Healthcare Group, Inc., 2004 WL 941190, at *2
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I also observe that the “narrow construction” cases under Rule 4 tend to involve mail10
service on a corporation, either sent to a post office box without reference to any corporate
officer, e.g., In re Lenox Healthcare, Inc., or a mailing addressed with a reference to a generic
corporate title, e.g., In re Schoon. In this case, by comparison, Mr. Horvitz attempted to make
service by sending process to a specific individual, Valerie Henry, with whom he had spoken by
telephone. Thus, as explained in the text below, the issues in this case are whether Ms. Henry
was an appropriate individual to receive service and whether she received the papers. Cf. In re
Golden Books Family Entertainment, Inc., 269 B.R. 300 (D. Del. 2001) (service found improper
because the movant did not mail the documents to any specific individual even though the
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(Bankr. D. Del., Apr. 30, 2004) (same); with In re Lenox Healthcare, Inc., 319 B.R. 819, 821-22
(Bankr. D. Del. 2005) (observing that courts have required “strict compliance” with Rule
7004(b)(3), but also observing that “[c]ourts vary on the specificity required”). Further, failure to
comply with the requirements of Rule 4 may render a default judgment void. See In re Sun
Healthcare Group, Inc., 2004 WL 941190, at *3 (declining to consider diligence of defendant in
asserting motion under Rule 60(b)(4) and Fed. R. Bankr. P. 9024).
Other courts have viewed Rule 4 through a different prism, seeing it as “a flexible rule that
should be liberally construed so long as a party received sufficient notice of the complaint.”
Wilen I.Y.M., L.C. v. Colter & Peterson, 1998 WL 1093900, at *2 (D.N.J. 1998) (quoting
Direct Mail Specialists, Inc. v. Eclat Computerized Technologies, Inc., 840 F.2d 685, 688 (9th
Cir. 1988)). See also Stranahan Gear Company, Inc. v. NL Industries, Inc., 800 F.2d 53, 56 (3d
Cir. 1986) (“[w]hen there is actual notice, every technical violation of the rule or failure of strict
compliance may not invalidate the service of process”).
I find it unnecessary to use any broad presumptions as the basis for ruling in this case.
Rather, I conclude that the appropriate rules of decision may be derived from the purpose and
text of the Rule 7004(b)(3), as well as the construction accorded to the rule by courts in this
district.10
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respondent’s responsible party was well known to the movant).
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The purpose of the rule has been summarized as follows:
The fundamental purpose for requiring proper service of process is to ensure that the
defendant is both placed on notice of the commencement of the legal action and afforded
an opportunity to present his objections. Mullane v. Central Hanover Bank & Trust Co.,
339 U.S. 306, 314 (1950); Tarbox v. Walters, 192 F.Supp. 816, 817 (E.D. Pa. 1961);
Sechrist v. Palshook, 97 F.Supp. 505, 507 (M.D. Pa.1951). The notice provided by the
service of process must be reasonably calculated to convey the required information and
must afford the defendant a reasonable period of time in which to make an appearance.
Mullane, 339 U.S. at 134. In the context of serving a corporation, service is proper if
made on an individual whom one could reasonably expect will forward notice of the
pending lawsuit to his corporate superiors. Alloway v. Wain-Roy Corp., 52 F.R.D. 203,
204 (E.D. Pa. 1971). The burden of demonstrating proper service of process lies on the
plaintiff/server. Gottlieb v. Sandia American Corp., 452 F.2d 510, 513 (3d Cir.), cert.
denied, 404 U.S. 938 (1971).
Baldwin v. Celotex Corp., 1986 WL 13299, *1 (E.D. Pa. Nov. 17, 1986).
Rule 7004(b)(3) refers to service on a “managing or general agent” as well as an “other
agent authorized by appointment or by law to receive service of process.” In its pre-trial
submission and at trial, NTL placed great emphasis on the fact that as a matter of corporate
policy, no employee in the Delaware office was authorized to accept service of legal process.
However, the rule is written in the disjunctive, suggesting that a “managing or general agent”
may be served in compliance with the rule and that such a person may be distinct from an “other
agent authorized by appointment or by law to receive service of process.” As the court observed
in Wilen I.Y.M., L.C.:
[Rule 4] does not require that service be made solely on a restricted class of formally
titled officials, but rather permits it to be made “upon a representative so integrated with
the organization that he will know what to do with the papers. Generally, service is
sufficient when made upon an individual who stands in such a position as to render it fair,
reasonable and just to imply the authority on his part to receive service.”
1998 WL 1093900, at *2 ( quoting Top Form Mills, Inc. v. Sociedad Nationale Industria
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Applicazioni Viscosa, 428 F.Supp. 1237, 1251 (S.D.N.Y. 1977).
As suggested by the court in Wilen I.Y.M., L.C., the meaning of the term is based on a
functional analysis of the operation of the defendant corporation and the role played by the
individual who actually received delivery of process. It is not determined by abstract or
formalistic corporate policy. Therefore, for purposes of the case at bench, the critical term in
Rule 7004(b)(3) is “managing or general agent” and the issue is whether the Debtors’ service of
the Turnover Motion Documents on Valerie Henry, the manager of NTL’s New Castle, Delaware
office, constituted service on a general or managing agent.
The test for evaluating whether an individual is a “managing or general agent” was concisely
summarized by a district judge in this district as follows:
In order to qualify as a “managing or general agent,” the individual should be “a
responsible party in charge of any substantial phase of the corporation's operations.” That
person should perform duties which are sufficiently necessary to the corporation's
operations and occupy a position of sufficient responsibility so that it is reasonable to
assume the individual will forward the summons and complaint to organizational
superiors.
Hartsoe v. KMart Retail Distribution Center, 2000 WL 21263, *2 (E.D. Pa. Jan.13, 2000) (per
Broderick, J.) (quoting Gottlieb v. Sandia American Corp., 452 F.2d 510, 513 (3d Cir.), cert.
denied sub. nom., Wechlser v. Gottlieb, 404 U.S. 938, 92 S.Ct. 274 (1971)) (other citations
omitted); accord, Wilen I.Y.M., L.C., 1998 WL 1093900, at *2 (the rule permits service “upon a
representative so integrated with the organization that he will know what to do with the papers”).
The ultimate question is “whether the individual’s role in the organization made service on the
individual fair and reasonable.” Meoli v. Message Center USA, 1998 WL 717418, at *1 (E.D.
Pa. Sept. 25, 1998) (per Kauffman, J.).
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Once the adequacy of service is questioned, the party who made service has the burden11
of establishing the validity of service. Hartsoe v. KMart Retail Distribution Center, 2000 WL
21263, at *2. For the reasons discussed above, I conclude that the Debtors have met that burden.
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Based on the record in this case, 	I am satisfied that Valerie Henry was of sufficient stature11
and held sufficient responsibility within NTL to merit her designation as a “managing or general
agent” for purposes of Rule 7004(b)(3). Ms. Henry held the title of “manager” of NTL’s field
office in New Castle, Delaware. She had significant responsibilities in that she was responsible
for the work of 10 customer service representatives. N.T. 27. She had substantial involvement
in cases in which a bankruptcy has been filed by an NTL customer and, in particular, when a
request for release of a repossessed automobile has been made by a bankruptcy debtor. See N.T.
42, line 24 to N.T. 43, line 8 (testimony suggesting that the other customer service
representatives regularly directed requests for release of automobiles to her attention). In fact,
Ms. Henry spoke with Mr. Horvitz about the dispute arising from the apparent obstacles Mr.
Horvitz encountered in effecting the release of Mr. Butts’ automobile after notice of the
bankruptcy filing had been provided to NTL. Consequently, I infer that Mr. Horvitz had a
reasonable basis to believe that Ms. Henry had decision making authority with respect to the
dispute giving rise to the contested matter in this case. At a minimum, Mr. Horvitz had a
reasonable basis to believe that Ms. Henry had “at least such status that common sense would
expect her to see that the summons [would get] promptly into the hands of the right corporate
people.” 	Wilen I.Y.M., L.C., 1998 WL 1093900, at *2. Most significantly, whether or not Mr.
Horvitz was subjectively aware of Ms. Henry’s precise role in the company, his instincts in
directing the Turnover Motion Documents to her attention led him to serve an appropriate
corporate representative. Ms. Henry completely understood her responsibilities with respect to
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documents received in connection with this legal dispute. She understood that she had the
responsibility to forward to NTL’s corporate counsel papers relating to bankruptcy generally and
court papers in particular. N.T. 33, 35.
The peculiarity in this case is that Ms. Henry denies ever seeing the Turnover Motion
Documents. However, she also denies ever seeing the fax Mr. Horvitz sent to her attention on
February 25, 2005. Her husband, John Henry, denies ever seeing the faxes sent to his attention
on February 28, 2005 and March 7, 2005. All of these faxes were sent to the correct fax
telephone number and alerted NTL to the fact that court orders had been entered in the
bankruptcy case. I find it impossible to believe that not one of these communications was
received. See n.8, supra.
Therefore, for the reasons set forth above, I conclude service of the Turnover Motion on
Valerie Henry, the manager of NTL’s New Castle, Delaware office satisfied the requirements of
Fed. R. Bankr. P. 7004(b)(3). 	Since service of the motion was valid, NTL’s argument that the
court’s order of February 22, 2006 was void must fail.
I have also found, based on the evidence presented, that NTL actually received the motion.
Pursuant to Fed. R. Civ. P. 60(b)(1), incorporated by Fed. R. Bankr. P. 9024, a court may set
aside an order based on “mistake, inadvertence, surprise, or excusable neglect.” 	Rule 60(b)(6)
authorizes relief for “any other reason justifying relief from the operation of the judgment.” In
some cases, after proper service has been effected, relief from an order may be appropriate if a
party comes forward with some type of reasonable excuse or its failure to act was due to some
type of honest mistake. See 10A C. Wright & A. Miller, Federal Practice & Procedure 3d §2695
(2006).
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NTL has neither invoked Rule 60(b) nor come forward with any explanation why it did not
respond to the Turnover Motion (other than its assertions, which I have rejected, that it was not
properly and actually served). Rather, for reasons which it has not chosen to explain, NTL’s
legal strategy has been to challenge the technical sufficiency of service. I have rejected NTL’s
factual assertions and legal arguments. Consequently, I will deny the Motion to Set Aside
Judgment insofar as it challenges the validity of the February 22, 2005 order.
B.
In its post-trial Memorandum of Law, NTL raises an issue that was not emphasized in its
March 31, 2006 Motion or during the trial of this matter.
NTL suggests that separate and apart from the validity of the entry of the February 22, 2006
Order, the entry of the March 7, 2005 Order awarding Mr. Horvitz fees was without notice to
NTL and denied NTL due process of law. As NTL conceptualizes it, the court denied Mr.
Horvitz’ request for counsel fees on February 22, 2006, thus requiring that any request for fees be
requested by motion after notice and hearing. NTL argues that Mr. Horvitz requested and
obtained an “ex parte order.” NTL does correctly observe that the docket does not show that Mr.
Horvitz served NTL with the “Affidavit of Time Expended to Prepare and Present the Motion to
Turn over Property Pursuant to 11 U.S.C. §542” which he filed on February 26, 2005.
I find NTL’s argument mischaracterizes the court’s decision on February 22, 2006 and is
therefore, without merit .
As a starting point, there is no dispute that the Turnover Motion requested an award of
counsel fees in the prayer for relief. Since I find that NTL was properly served with the Turnover
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In this case, the Debtors requested an order holding NTL in contempt for violation of12
the automatic stay which resulted in the court hearing on February 22, 2006. In a number of
reported decisions in which debtors have filed similarly styled motions, courts have invoked 11
U.S.C. §362(k) and stated that the remedy for a willful violation of the automatic stay may
include monetary damages, attorneys’ fees, costs and punitive damages. E.g., In re Alvarez, 319
B.R. 108, 111 (Bankr. W.D. Pa. 2004); In re Bowen, Bowen 2000 WL 708961, *5 (Bankr. E.D.
Pa.. May 26, 2000). See generally In re Atlantic Business & Community Corp., 901 F.2d 325 (3d
Cir. 1990). Section 362(k) expressly provides that attorney’s fees are included in the “actual
damages” which are compensable for a willful violation of the automatic stay. Therefore, I
conclude that attorneys’ fees are “an element of damages to be proved at trial” within the
meaning of Fed. R. Bankr. P. 7054 when a party seeks to remedy a violation of the automatic
stay. As such, there was no requirement that a separate motion be filed in this case. As I
conceptualize the events, Judge Carey simply allowed the record made on February 22, 2006 to
be supplemented by the submission of another document before issuing his ruling.
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Motion, NTL was on notice that the Debtors were seeking an award of counsel fees. While it is
true that Judge Carey deleted the language in the Debtors’ proposed order awarding fees, it is
disingenuous for NTL to interpret that action as a denial of the request. Judge Carey specifically
made a separate entry on the docket which stated “Affidavit of Attorney Fees tbs. Ct. to act
without further hearing.” This docket entry expresses the court’s intent to award counsel fees. I
infer that Judge Carey deferred that decision until receipt of additional detail, in written form, of
the services rendered by Mr. Horvitz and the amount of time expended.
In short, an award of counsel fees could have been made on February 22, 2006 without
violation of NTL’s due process rights. NTL was on notice of the hearing and did not attend. The
court’s request for a written submission in order to liquidate the amount of counsel fees that it
had determined to award did not require the filing of a separate motion. See Fed. R. Bankr. P.
7054 (incorporated by reference by Fed. R. Bankr. P. 9014) (award of attorneys’ fees shall be by
motion “unless the substantive law governing the action provides for the recovery of such fees as
an element of damages to be proved at trial”).12
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An order consistent with this Opinion will be entered.
Date: 	September 18, 2006
ERIC L. FRANK
U.S. BANKRUPTCY JUDGE
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UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF PENNSYLVANIA
IN RE: 	TONY BUTTS 	: 	Chapter 7
STACEY BUTTS 	:
:
Debtor(s) 	: 	Bky. No. 05-10104ELF
:
O R D E R
AND NOW, it is hereby ORDERED that the Opinion dated September 18, 2006 shall
replace the Opinion issued by the Court on September 12, 2006 to correct references therein to a
footnote on pages 8 and 16.
It is further ORDERED that the Order dated September 12, 2006, that was issued with
the Opinion dated September 12, 2006, remains in effect.
Date: 	September 18, 2006
ERIC L. FRANK
U.S. BANKRUPTCY JUDGE
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