Felisha Wilson

In re Gunter, No. 09-19047, docket 40.1
Docket 7.2
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
In re: ) Case No. 10-16328
)
FELISHA WILSON, ) Chapter 7
)
Debtor. ) Judge Pat E. Morgenstern-Clarren
)
) MEMORANDUM OF OPINION
) AND ORDER FINDING BRIDGEPORT
) BANKRUPTCY IN CONTEMPT AND
) IMPOSING DAILY FINE OF $1,000.00
An order entered on November 25, 2009 prohibits Bridgeport Bankruptcy from preparing
or assisting in the preparation of bankruptcy petitions to be filed in the Northern District of Ohio
without further order. That order has not been lifted or modified. On June 30, 2010, this court1
entered an order requiring Bridgeport Bankruptcy to appear and show cause as to why it should
not be held in contempt and sanctioned based on its having acted as a petition preparer in this
case. For the reasons stated below, Bridgeport Bankruptcy is found to be in civil contempt and2
sanctioned.
JURISDICTION
The court has jurisdiction under 28 U.S.C. § 1334 and General Order No. 84 entered by
the United States District Court for the Northern District of Ohio. This is a core proceeding
under 28 U.S.C. § 157(b)(2).
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FACTS AND DISCUSSION
In this district, the presumptive maximum fee for petition preparer services is $125.00.
General Order 05-3. A preparer that believes that the value of its services exceeds that amount is
required to file a motion requesting a higher fee.
On November 25, 2009, the Hon. Randolph Baxter entered an order in In re Gunter, no.
09-19047, prohibiting Bridgeport Bankruptcy from preparing or assisting in the preparation of
bankruptcy petitions to be filed in the Northern District of Ohio pending further order. Judge
Baxter’s order cites Bridgeport’s improper activities as a petition preparer, its failure to disgorge
excessive petition preparer fees to the debtors in that case as required by a previous court order,
and its failure to appear at hearing. He found Bridgeport in contempt and imposed a fine of
$44.00 a week for each week Bridgeport failed to comply with the disgorgement order. The
order also bars Bridgeport from serving as a bankruptcy petition preparer in this district without
further court order. The fine has not been paid and there is no later order permitting Bridgeport
to resume its activities in this district.
When the debtor filed this case on June 28, 2010, she disclosed that she paid Bridgeport
$149.00 to prepare her petition. By doing so, Bridgeport violated Judge Baxter’s order and also
charged a fee higher than that permitted by General Order 05-3. Additionally, Bridgeport failed
to provide the disclosures required by 11 U.S.C. § 110(b). As a result, this court ordered
Bridgeport to appear on July 29, 2010 to show cause why it should not be held in contempt for its
failure to comply with Judge Baxter’s order and why it should not be required to return the fees
paid by the debtor Felisha Wilson. Bridgeport failed to appear. The court, therefore, considers
whether Bridgeport is in contempt of court.
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In re Gunter, No. 09-19047, docket 40, 41. This court served its order on Bridgeport3
through the two methods Bridgeport makes publicly available. Docket 10-16328, docket 7, page
2.
3
The court’s contempt powers derive from “Bankruptcy Code § 105(a) and the inherent
power of a court to enforce compliance with its lawful orders.” In re Walker, 257 B.R. 493, 496
(Bankr. N.D. Ohio 2001) (citations omitted). Contempt must be shown by clear and convincing
evidence that the alleged contemnor violated a definite and specific court order which required
the performance or the nonperformance of an act with knowledge of that court order. Id. at 497.
“Willfulness is not an element of civil contempt and intent to disobey the order is irrelevant.” Id.
The alleged contemnor may defend by showing an inability to comply with the order. Id.
Bridgeport was served with Judge Baxter’s order and also with this court’s order. The3
terms of Judge Baxter’s order specifically prohibit Bridgeport from acting as a petition preparer
or assisting in the preparation of petitions in cases to be filed in this district. In violation of that
order, Bridgeport acted as a petition preparer in this case. Bridgeport also failed to appear in
court on July 29, 2010 as ordered by this court. These facts show clearly and convincingly that
Bridgeport had knowledge of both orders and failed to comply with them. Bridgeport was given
adequate notice and an opportunity to be heard on the contempt issue, yet failed to appear and
has not provided any explanation for its failure. The court, therefore, finds that Bridgeport is in
contempt based on its failure to comply with the two orders.
The next issue is the appropriate consequence for the contempt. A coercive per diem fine
is appropriate under the circumstances to encourage compliance with the court orders. Id. at 498.
The totality of the circumstances must be considered in determining the amount of the fine,
including these factors:
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1. The type of actions that led to the issuance of the [order],
and the consequences of non-compliance with the [order];
2. The reasons advanced . . . for non-compliance with the
[order] . . . and any good faith issues, even if those factors
do not serve as a defense to the contempt charge;
3. Whether [the parties] express[] an intention to promptly
comply with the [order];
4. The amount of time that has elapsed since the [order] was
entered; and
5. [The parties’] financial circumstances.
Id. (footnote omitted).
Bridgeport was ordered to refrain from acting as a petition preparer based on its failure to
disgorge excessive fees. Despite that, Bridgeport again charged excessive fees in this case, failed
to make required disclosures, and failed to appear in response to this court’s show cause order.
As Bridgeport’s continued activities as a petition preparer and its failure to comply with the
district’s compensation limitations and requirements are clearly detrimental to pro se debtors,
and because the earlier fine of $44.00 a week did not cause Bridgeport to reconsider its actions,
the court concludes that a more substantial daily fine must be imposed. Bridgeport is, therefore,
fined $1,000.00 a day until it files a request for hearing in this court to address its conduct in the
Northern District of Ohio.
CONCLUSION
For the reasons stated, Bridgeport Bankruptcy is found to be in civil contempt based on
its failure to comply with Judge Baxter’s order and with this court’s order. Bridgeport
Bankruptcy may file a request for a hearing for the purpose of explaining its failure to comply.
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A fine in the amount of $1,000.00 per day is imposed for each day until it files that request. The
fine is to be paid to the Clerk’s Office of the United States Bankruptcy Court at Cleveland.
IT IS SO ORDERED.
__________________________________
Pat E. Morgenstern-Clarren
United States Bankruptcy Judge
To be served by the clerk’s office on Bridgeport Bankruptcy at onedayforms@ureach.com
and at Bridgeportbankruptcy.com
and by email on Scott Belhorn, Esq., office of the United States trustee
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