Atlantic Medical Management Services, Inc. and Atlantic Skin and Cosmetic Surgery Group, P.C.

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
In re 	: 	Chapter 11
A TLANTIC M EDICAL M ANAGEMENT 	:
S ERVICES , I NC . and A TLANTIC S KIN
AND C OSMETIC S URGERY G ROUP , P.C., 	: 	Case No. 07-14283 (JKF)
(Jointly Administered)
Debtors. 	:
________________________________
MEMORANDUM OPINION
BY: 	J EAN K. F ITZ S IMON
United States Bankruptcy Judge
Before the court is the motion (“Motion”) of debtors, Atlantic Medical
Management Services, Inc. (“Atlantic Medical”) and Atlantic Skin and Cosmetic
Surgery Group, P.C. (“Atlantic Skin”), against Dr. Jonathon Pontell for violation of
the automatic stay as well as Dr. Pontell’s cross-motion (“Cross-Motion”) for
adequate protection. The Motion asserts that Dr. Pontell violated the automatic
stay by taking property from Atlantic Skin’s offices (the “Offices”). The Cross-
Motion contends that Dr. Pontell is entitled to adequate protection for certain
personal property which belongs to him, but which Atlantic Skin continues to use
in the operation of its medical practice.
Case 07-14283-jkf Doc 308 Filed 04/08/08 Entered 04/09/08 09:07:37 Desc Main
Document Page 1 of 32

Debtors filed a post-hearing brief in support of their Motion and a reply brief. Dr. Pontell filed a	1
post-hearing brief and a reply brief. Thereafter, Dr. Pontell filed a Motion to Strike Debtor’s Reply Brief on
the grounds that it “im properly attem pts to introduce factual statem ents and docum ents after the
evidentiary record was closed at the conclusion of the hearing on January 16, 2008.” On March 17, 2008,
the Court granted the Motion to Strike in part by ordering the exhibits from Debtors’ Reply Brief to be
stricken from the record.
The following item s on the W ritten Account were not identified in the Motion:	2
3 Blepharoplasty sets
3 Rhinoplasty sets
6 Scissors (including 2 dressing scissors)
10 Suture rem oval sets (including staple rem overs)
5 Bipolar forceps with cords
Suction m achine
Prescription surgical loops
Instrum ent cabinet
2 Calculators
2 Mirrors
Personal Item s (diplom as, desk with 3 chairs, plants, personal photos, m usic CD’s, 2 CD
players, personal papers)
See Statem ent of Jonathan Pontell, M.D. Pursuant to Order Dated January 23, 2008. See also Post-Trial
Mem orandum of Jonathon Pontell, M.D. at 4 (listing item s on the W ritten Account that were not identified
in the Motion). The item s listed above from the W ritten Account, with the exception of Dr. Pontell’s
“Personal Item s,” shall be referred to as the “Subsequently Identified Item s.”
2
An evidentiary hearing was held on these matters on January 16, 2008. At
the conclusion of the hearing, the Court took the matter under advisement and
granted the parties the opportunity to file post-hearing briefs which they did. 1
Shortly thereafter, the Court entered an Order directing Dr. Pontell to file a written
account (“W ritten Account”) of any and all items he removed from the Offices on
or after the date upon which Debtors filed their bankruptcy cases. The W ritten
Account which Dr. Pontell filed contains a number of items that were not
mentioned in the Motion. 2
Upon consideration, the Motion shall be granted in part and the Cross-
Motion shall be denied.
Case 07-14283-jkf Doc 308 Filed 04/08/08 Entered 04/09/08 09:07:37 Desc Main
Document Page 2 of 32

The facts for which citations to the Motion are given were adm itted by Dr. Pontell in his	3
response to the Motion. The facts for which no citation is given were established at the hearing on this
m atter.
The 1999 Agreem ent was not adm itted into evidence at the hearing on the Motion but it was	4
attached as an exhibit to the Com plaint and Dr. Pontell specifically referred to it in his Cross-Motion. See
Cross-Motion at ¶ 27. Moreover, Dr. Pontell cited the 1999 Agreem ent in his post-trial m em orandum in
support of his contention that the 10 surgical packs, surgical headlam p and sm oke evacuator (with
attached pedal) are owned by him . See Post-Trial Mem orandum of Jonathon Pontell, M.D., at 5.
3
BACKGROUND
Debtors
Atlantic Skin provides dermatology services to its patients. (Motion ¶ 8). 3
Prior to filing for bankruptcy, it also provided plastic surgery treatment to its
patients through its employee, Dr. Pontell. (Motion ¶ 9). When it filed for
bankruptcy, Atlantic Skin was treating patients at four locations, including its
locations in Malvern, Pennsylvania (the “Malvern Office”) and W ilmington,
Delaware (the “W ilmington Office”). (Motion ¶11).
Atlantic Medical provides the administrative and management services for
Atlantic Skin. (Motion ¶ 10). It also purchases the medical equipment and
supplies which are used in Atlantic Skin’s practice.
Dr. Pontell and the 1999 Employment Agreement
Dr. Pontell is a plastic surgeon. In September of 1999, he entered into an
employment agreement (the “1999 Agreement”) with Delaware Valley
Dermatology Associates, P.C. (“DVDA”). 	Under the terms of this agreement,4
Dr. Pontell was entitled to earn an ownership interest (ranging from a 1/3 interest
Case 07-14283-jkf Doc 308 Filed 04/08/08 Entered 04/09/08 09:07:37 Desc Main
Document Page 3 of 32

4
to 100% ownership depending on the amount of his gross receipts) in equipment
which DVDA purchased on his behalf. According to Dr. Pontell, he was well
aware of the terms of the 1999 Agreement. As Dr. Pontell explained, the reason
that he was “intimately” familiar with the provisions of the 1999 Agreement was
that, shortly after the first year of his appointment under that agreement, the
physicians who owned DVDA thought that he was doing much better with the
contractual arrangement than DVDA was. They wanted to reduce his salary
substantially, but he refused. In order to get out of the 1999 Agreement,
according to Dr. Pontell, the physicians dissolved DVDA. At the time, Dr. Pontell
reviewed the 1999 Agreement multiple times with his attorney. Dr. Pontell
testified that : (i) he was very well aware of the ownership rights which the 1999
Agreement gave to him; and (ii) the paragraph which granted him ownership
rights in the 1999 Agreement was “very clear.”
The 2001 Employment Agreement
In June of 2001, Atlantic Skin and Dr. Pontell entered into an employment
agreement (the “2001 Agreement”). (Motion ¶ 13). None of the provisions of the
2001 Agreement state that Dr. Pontell was to acquire an ownership interest in
any of the equipment or supplies which Debtors purchased for Dr. Pontell’s use.
Paragraph 10(C) of the 2001 Agreement addresses Dr. Pontell’s
compensation with subparagraph 10(C)(1)(f) focusing on “surgical supplies and
Case 07-14283-jkf Doc 308 Filed 04/08/08 Entered 04/09/08 09:07:37 Desc Main
Document Page 4 of 32

5
equipment used exclusively by [Dr. Pontell].” 2001 Agreement ¶ 10(C)(1)(f). This
subparagraph obligated Atlantic Skin to pay all expenses related to its practice,
including the expenses for purchasing surgical supplies and equipment related to
Dr. Pontell’s “facial plastic and reconstructive surgery activities,” but capped the
costs which Atlantic Skin was obligated to pay for such surgical supplies and
equipment at “Five Percent (5%) of Receipts per annum.” 2001 Agreement
10(C)(1)(f). Dr. Pontell testified that the costs which Atlantic Skin expended
under Subparagraph 10(C)(1)(f) never got anywhere close to this cap. Based on
this paragraph, Dr. Pontell contends that he owns the surgical supplies and
equipment which Atlantic Skin purchased that were used exclusively by him.
Debtors’ Financial Problems and their Bankruptcy Filings
In May of 2007, Atlantic Skin notified its physician employees, including
Dr. Pontell, that it was in financial distress and that it was, therefore, adopting
new operating guidelines that would reduce the physicians’ compensation.
(Motion ¶ 14). After June 1, 2007, Dr. Saruk, who was the CEO of both Debtors,
and C.J. Papathomas, who was the business manager of both Debtors, had
many conversations with Dr. Pontell about the financial condition and prospects
of the Debtors. (Motion ¶ 15).
By letter dated June 28, 2007, Dr. Pontell, through his lawyers, asserted
that Atlantic Skin was in material breach of the 2001 Agreement and stated that,
Case 07-14283-jkf Doc 308 Filed 04/08/08 Entered 04/09/08 09:07:37 Desc Main
Document Page 5 of 32

6
unless Atlantic Skin cured the breach, Dr. Pontell’s employment would terminate
30 days thereafter. (Motion ¶ 16). Thirty days after the date of the letter was
July 27, 2007.
By letter dated July 23, 2007, Dr. Pontell advised Atlantic Skin that: (i) he
intended to maintain possession of the cell phone (“Cell Phone”) that was used
by his Patient Care Coordinator; (ii) Atlantic Skin would have the Cell Phone
contract changed to his name and billing address; and (iii) depending upon which
practice opportunity he decided to accept, he may need to take certain equipment
and instruments that he didn’t own and may also want to take some supplies with
him that Atlantic Skin had ordered for him. (Exhibit D-2, paragraphs numbered 4
and 5). Dr. Pontell suggested in the letter that the parties arrive at a price for the
equipment and instruments that he wanted to take. At the time Dr. Pontell wrote
this letter, he believed that some of the equipment and items which he wanted to
take with him upon his departure from Atlantic Skin were owned by Atlantic Skin.
On July 26, 2007, the Debtors filed their bankruptcy petitions at 6:19 p.m.
and 6:26 p.m. (Motion ¶ 4). Pursuant to a motion by the Debtors, their
bankruptcy cases are being jointly administered.
Dr. Pontell’s Removal of Equipment and Supplies
On July 26, 2007, after Debtors had filed their bankruptcy petitions,
Dr. Pontell removed the following items from the Wilmington office: five surgical
Case 07-14283-jkf Doc 308 Filed 04/08/08 Entered 04/09/08 09:07:37 Desc Main
Document Page 6 of 32

At the hearing, Dr. Pontell testified that: (i) he started packing up the item s which he took from	5
the W ilm ington Office after seeing his last patient at 4:00 p.m .; (ii) at som e point during the evening, he
took a break to have dinner; and (iii) he left the W ilm ington Office at approxim ately 10:00 p.m .
7
packs; some instruments out of six surgical packs (“Additional Instruments”);
several packs of promotional brochures for plastic surgery procedures; a surgical
headlamp; and a pedal used in the operation of a smoke evacuator. 	(Motion5
¶ 24).
The surgical packs which Dr. Pontell removed contained older instruments
that he testified were his from his employment at DVDA as well as newer
instruments from Atlantic Skin’s practice. Some but not all of the instruments
from Atlantic Skin’s practice were embossed with Dr. Saruk’s name or the name
of the practice.
Dr. Pontell testified that, when he began his employment with Atlantic Skin,
he brought ten surgical packs that he owned from his employment with DVDA to
the practice at Atlantic Skin. He explained that the packs which he removed from
Atlantic Skin’s office contained older instruments from his days at DVDA as well
as newer instruments from Atlantic Skin’s practice because, from the first day that
any new packs were used, the old and new instruments ended up mixed together
by the end of the day. Elaborating on this point, Dr. Pontell explained that he
used about 7 to 9 surgical packs daily in treating patients. After he used each
pack, he would put the dirty instruments in a pile. At the end of the day, the
Case 07-14283-jkf Doc 308 Filed 04/08/08 Entered 04/09/08 09:07:37 Desc Main
Document Page 7 of 32

Debtors’ counsel also sent written com m unications to Harry J. Giacom etti, Esquire, who had	6
also represented Dr. Pontell, advising him that Debtors’ counsel believed that Dr. Pontell had violated the
autom atic stay by rem oving item s from the Offices, that he should return the item s and that he should
(continued...)
8
operating room technician would clean the instruments, sort them into packs
without regard to whether she was mixing older instruments with newer
instruments and then sterilize them.
On the morning of Friday, July 27, 2007, Debtors’ counsel had a telephone
conversation with Fran McGinley, Esquire, who had represented Dr. Pontell at
some point during the summer of that year, to advise her of the Debtors’
bankruptcy filings and that it was Debtors’ counsel’s belief that Dr. Pontell had
removed property from the Malvern or W ilmington offices in violation of the
automatic stay. On the morning of the same day, Debtors’ counsel also had a
telephone conversation with Dr. Pontell’s wife who is an attorney and with whom
he was instructed by Dr. Pontell to have all further communications. (Exhibit
D-3). By e-mail at 12:52 p.m., Debtors’ counsel sent Mrs. Pontell a letter
confirming their conversation. (Exhibit D-4). In the letter, Debtors’ counsel
advised Mrs. Pontell that Debtors had filed for bankruptcy the previous day and
that Dr. Pontell should return any equipment which he removed the previous day
from the Wilmington Office. (Id.) 	Debtors’ counsel also asked for a list of
equipment which Dr. Pontell took. (Id.). Dr. Pontell failed to comply with these
requests. 6
Case 07-14283-jkf Doc 308 Filed 04/08/08 Entered 04/09/08 09:07:37 Desc Main
Document Page 8 of 32

(...continued)	6
provide Debtors with a list of the item s that he rem oved.
9
Later that same day, namely Friday, July 27, 2007, Dr. Pontell removed the
following items from the Malvern Office: a smoke evacuator; five more surgical
packs, an antique table, an antique wall unit, the Cell Phone and a transcription
voice recorder. (Motion ¶ 26). The antique table and antique wall unit belong to
Dr. Pontell. (Id.).
Dr. Pontell did not take any original patient charts with him when he left his
employment with Atlantic Skin. He did, however, have copies of the charts made
and took the copies with him.
By e-mail dated Monday, July 30, 2007, Dr. Pontell, through his wife,
notified Atlantic Skin that, in addition to the surgical instruments which Dr. Pontell
claimed belonged to him, he had taken the computer (the “Computer”) which he
used in the practice, the Cell Phone and a digital camera from the Malvern Office.
(Motion ¶ 37 & Exhibit D-5). 	Debtors’ counsel responded to the e-mail by again
reminding Mrs. Pontell that the removal of any equipment or supplies was a
violation of the automatic stay and asking again for a list of the items which
Dr. Pontell took from the Offices. (Exhibit D-6). Dr. Pontell never returned any of
the items which he took from the Offices and never complied with Debtors’
request to provide them with a list of the items taken, although he testified that he
had at least a partial list of the items.
Case 07-14283-jkf Doc 308 Filed 04/08/08 Entered 04/09/08 09:07:37 Desc Main
Document Page 9 of 32

10
The Computer and the Surgery Simulation Software
The Computer which Dr. Pontell took with him was purchased by him, but
he was reimbursed for its cost by the practice. The Computer has plastic surgery
simulation software on it that Dr. Pontell uses for his patients. While the original
software was purchased by DVDA, Atlantic Skin or Atlantic Management
purchased upgrades to the software which were loaded on the Computer.
On the Computer are “before” and “after” pictures for the individuals upon
whom Dr. Pontell operated. After Debtors filed for bankruptcy, Dr. Pontell was
asked to provide Debtors with these pictures. He agreed to comply with the
request if he was supplied with a hard drive on which he would copy the hard
drive from the Computer. This exchange did not occur.
Dr. Pontell testified that he uses the Computer every day in treating
patients and for documenting pre- and post-operation images. He further stated
that he could not do his job properly without using the Computer. Furthermore, at
the end of July, he had patients that he had seen at Atlantic Skin’s practice who
were scheduled for medical and surgical treatment with him. He needed the
Computer to continue treating these patients.
The Cell Phone
The Cell Phone was originally purchased by Jill Gallogly while she was the
Patient Care Coordinator for Dr. Pontell. When she purchased the phone, the
contract was put in her name and listed her social security number. However,
Case 07-14283-jkf Doc 308 Filed 04/08/08 Entered 04/09/08 09:07:37 Desc Main
Document Page 10 of 32

11
she was reimbursed for the cost of the phone by the practice. Initially, the
monthly statements for the phone’s service were sent to Ms. Gallogly, but the
address for the monthly statements was subsequently changed to Atlantic Skin.
From the beginning, the practice paid the monthly bills for the phone service.
W hen she left her position with Dr. Pontell at Atlantic Skin, she passed the phone
along to the individual who replaced her. During the summer of 2007, Dr. Pontell
contacted Ms. Gallogly and asked her whether she would be willing to transfer
the contract for the phone to him. She agreed to do so and took the steps
necessary to have the contract put it in Dr. Pontell’s name.
After Dr. Pontell left Atlantic Skin, the practice was without a plastic
surgeon. As of the hearing date in this matter, Atlantic Skin was trying to recruit a
plastic surgeon. If it is successful in doing so, the practice will again advertise
that it provides plastic surgery. It wants to retain the phone number attached to
the Cell Phone because it spent substantial money advertising the number. If
patients make referrals for plastic surgery to Atlantic Skin and provide that phone
number in connection with the referral, the call will go to Dr. Pontell instead of to
Atlantic Skin.
The Surgical Chair
In March of 2004, either Atlantic Medical or Atlantic Skin purchased a
surgical procedure chair for the Malvern Office. In his cross-motion, Dr. Pontell
Case 07-14283-jkf Doc 308 Filed 04/08/08 Entered 04/09/08 09:07:37 Desc Main
Document Page 11 of 32

Dr. Pontell argues that the Motion should be denied because paragraph 19 of the Motion	7
alleges that “m ost of the equipm ent taken by Pontell was purchased by Debtor [Atlantic] Skin” even
though there are no supplies or equipm ent listed on Atlantic Skin’s Schedule B. The Court finds this
argum ent unpersuasive. First, Dr. Pontell violated the autom atic stay by rem oving property from the
Offices. As explained above, the issue of who owned the property is irrelevant to that conclusion.
Second, while paragraph 19 of the Motion alleges that Atlantic Skin owned m ost of the equipm ent taken
by Dr. Pontell, the Motion also specifically: (i) refers to the com puter as “Debtors’ com puter;” (ii) alleges
that Atlantic Managem ent upgraded the sim ulation software that was on the com puter; and (iii) asserts
that “[s]om e of the Rem oved Property is clearly owned by Debtors.” See Motion ¶¶ 38, 41. In addition, in
the Motion’s prayer for relief, Debtors seek, inter alia, an Order requiring Dr. Pontell to “return im m ediately
to Debtor [Atlantic] Managem ent all property he or his agents rem oved from Debtors’ Prem ises[.]” Motion
at pg. 12(c).
12
included the surgical procedure chair as one of the items which he owns that
Debtors still have in their possession.
DISCUSSION
I. Debtors’ Motion
A. Whether Dr. Pontell violated the automatic stay?
Debtors contend that Dr. Pontell violated the automatic stay by removing
property from the Offices. 	Dr. Pontell disagrees, asserting the stay was not7
violated as a matter of law because the property which he removed was not
“property of the estate” since he owned it. Even assuming, for purposes of
argument, that Dr. Pontell owned all of the property which he removed from the
Offices, his removal of it still constituted a violation of the stay.
The automatic stay is one of the fundamental debtor protections supplied
by the Bankruptcy Code.” University Medical Center v. Sullivan (In re University
Medical Center), 973 F.2d 1065, 1074 (3d Cir. 1992). Codified in § 362, the stay
Case 07-14283-jkf Doc 308 Filed 04/08/08 Entered 04/09/08 09:07:37 Desc Main
Document Page 12 of 32

13
prohibits, inter alia “any act to obtain possession of property of the estate or of
property from the estate or to exercise control over property of the estate” after
the filing of a bankruptcy petition. 11 U.S.C. § 362(a)(3). 	This provision applies
to “property of the estate” and “property from the estate.” This latter phrase
includes “property in possession of the debtor” even though the property is not
part of the estate. In re The Moore & W hite Co., Inc., 83 B.R. 277, 281 (Bankr.
E.D. Pa. 1988); Emerson Quiet Kook Corporation v. Marta Group, Inc. (In re
Marta Group, Inc.), 33 B.R. 634, 642 (Bankr. E.D. Pa. 1983). See also Proyectos
Electronicos, S.A. v. Alper, 37 B.R. 931, 932 (E.D. Pa. 1983) (noting that
§362(a)(3) stays any action to obtain possession of “property over which the
estate has control or possession.”).
In Cuffee v. Atlantic Business and Community Development Corporation
(In re Atlantic Business and Community Corporation), 901 F.2d 325 (3d Cir.
1990), the Third Circuit observed that “[t]he language of Section 362 makes clear
that mere possession of property at the time of filing is sufficient to invoke the
protection of the automatic stay.” Id. at 328. See also Chrysler, LLC. v. Plastech
Engineered Products, Inc. (In re Plastech Engineered Products, Inc.), 382 B.R.
90, 106 (Bankr. E.D. Mich. Feb. 19, 2008) (noting that personal property need not
be “owned” by the debtor for the automatic stay to apply); In re The Moore &
W hite Co., Inc., 83 B.R. at 281 (ruling that the automatic stay applies to personal
property in which the debtor holds a mere possessory interest); Turbowind, Inc. v.
Case 07-14283-jkf Doc 308 Filed 04/08/08 Entered 04/09/08 09:07:37 Desc Main
Document Page 13 of 32

14
Post Street Management (In re Turbowind, Inc.), 42 B.R. 579, 585 (Bankr. S.D.
Cal. 1984) (finding it unnecessary to determine whether debtor had a property
interest in machines because “[t]he language of §362 is clear that mere
possession of property is sufficient to invoke the protections of the automatic
stay.”). Therefore, regardless of whether Debtors own the property which
Dr. Pontell removed, he violated the stay by taking it from the Offices and
retaining it in his possession.
B. 	Whether Dr. Pontell willfully violated the stay?
Section 362(k) provides for “actual damages” for a willful violation of the
automatic stay. This section states, in pertinent part:
[A]n individual injured by any willful violation of a stay
provided by this section shall recover actual damages,
including costs and attorneys’ fees, and, in appropriate
circumstances, may recover punitive damages.
11 U.S.C. § 362(k). In Cuffee, the Third Circuit defined the term “willful” as it is
used in the foregoing provision as follows:
A “willful violation” does not require a specific intent to
violate the automatic stay. Rather, the statute provides
for damages upon a finding that defendant knew of the
automatic stay and that the defendant’s actions which
violated the stay were intentional. Whether the party
believes in good faith that it had a right to property is not
relevant to whether the act was “willful” or whether
compensation must be awarded.
901 F.2d at 329 (quoting In re Bloom, 875 F.2d 224, 227 (9th Cir. 1989)).
Case 07-14283-jkf Doc 308 Filed 04/08/08 Entered 04/09/08 09:07:37 Desc Main
Document Page 14 of 32

15
It is unclear from the record whether Dr. Pontell knew that Debtors had
already filed for bankruptcy when he took the property from the Wilmington
Office. Therefore, he may have innocently violated the stay on that day.
However, after he had notice of the filings, he continuously refused to return the
property to the Debtors or even provide them with a list of the property which he
had taken. Consequently, even if his violation of the stay was originally innocent,
it became willful by his refusal to remedy the violation. In re Gagliardi, 290 B.R.
808, 819 (Bankr. D. Colo. 2003) (“Even an innocent stay violation (one committed
without knowledge of the stay) becomes willful, if the creditor fails to remedy the
violation after receiving notice of the stay.”). Moreover, when he removed the
property from the Malvern Office, he had knowledge of the Debtors’ filings.
Debtors’ counsel notified Dr. Pontell’s wife (with whom Dr. Pontell directed
Debtors’ counsel to communicate) on the morning of July 27, 2007, that Debtors
had filed for bankruptcy and sent an e-mail to her confirming their conversation.
Therefore, Dr. Pontell willfully violated the stay on July 27, 2007, when he
removed property from the Malvern Office.
C. 	What damages, if any, are Debtors entitled to recover?
Pursuant to § 362(k)(1), “an individual injured by any willful violation of the
stay” is entitled to “recover actual damages, including costs and attorneys’ fees[.]”
11 U.S.C. § 362(k)(1). While this subsection “refers to an individual,” the
Case 07-14283-jkf Doc 308 Filed 04/08/08 Entered 04/09/08 09:07:37 Desc Main
Document Page 15 of 32

To the extent that Dr. Pontell owns any of the item s which he is being required to return to the	8
Debtors, he is entitled to file a m otion for relief from the stay seeking perm ission to lawfully rem ove such
item s from Debtors’ Offices. If he chooses to do so, Debtors shall be entitled to offer evidence on the
issue of ownership as to any of the item s for which they were unsuccessful at proving ownership at the
hearing on January 16, 2008.
16
language has “uniformly been held to be applicable to a corporate debtor.”
Cuffee, 901 F.2d at 329 (citing Budget Service Co. v. Better Homes of Va., 804
F.2d 289, 292 (4th Cir. 1986)).
As relief for Dr. Pontell’s wilful violation of the stay, Debtors seek: (i) the
return of all property which Dr. Pontell removed from their Offices; (ii) attorneys’
fees and costs; (iii) additional actual damages which Debtors suffered as a result
of Dr. Pontell’s violation of the stay; and (iv) punitive damages.
(1) Return of Property
Debtors contend that Dr. Pontell should be ordered to return the items
which he removed from the Offices or pay compensatory damages equal to the
replacement value of any missing property. The Court agrees. Dr. Pontell shall
be ordered to return all of the property (except for his personal property) which he
removed from the Offices since he violated the automatic stay by taking it. Upon
the commencement of Debtors’ bankruptcy cases, Dr. Pontell was required by
law to seek leave from this Court by filing a motion for relief from the automatic
stay before removing property from the Debtors’ Offices. 8
Case 07-14283-jkf Doc 308 Filed 04/08/08 Entered 04/09/08 09:07:37 Desc Main
Document Page 16 of 32

In Debtors’ Reply Brief in Support of the Motion for Recovery of Property and Dam ages as a	9
Result of Pontell’s Violation of the Stay, Debtors state: “To the extent that the Court rules that the Debtors
have the burden of proof on ownership, they reserve the right to present additional evidence in support of
the m otion.” Debtors’ Reply Brief at 4 n.1. Debtors had the opportunity to present evidence in support of
their Motion at the hearing on January 16, 2008. Except for the issue of actual dam ages which the Court
(continued...)
17
(2) Attorneys’ Fees and Costs
Since Dr. Pontell willfully violated the stay, an award of reasonable
attorneys’ fees and costs is appropriate. 	See In re Mu’Min, 374 B.R. 149, 170
(Bankr. E.D. Pa. 2007) (ruling that debtor was entitled to actual damages in the
form of an award of reasonable counsel fees under § 362(k)); In re Gagliardi, 290
B.R. 808, 820 (Bankr. D. Colo. 2003) (awarding reasonable costs and attorneys’
fees as “actual damages” for violation of automatic stay). Debtors’ counsel shall
be directed to file an application for approval of such fees and costs. If the
Debtor pursues actual damages, the fees incurred therewith, if reasonable, also
shall be reimbursed by Dr. Pontell.
(3) 	Additional Actual Damages
At the hearing on the Motion, the Court advised the parties that, if the issue
of actual damages (exclusive of attorneys’ fees and costs) became relevant, an
additional hearing would be scheduled to afford them the opportunity to present
evidence of actual damages. To the extent Debtors established ownership of any
the items which Dr. Pontell removed from their Offices, the issue of actual
damages has become relevant. 9
Case 07-14283-jkf Doc 308 Filed 04/08/08 Entered 04/09/08 09:07:37 Desc Main
Document Page 17 of 32

(...continued)	9
advised the parties would be addressed, if necessary, at a subsequent hearing, it was Debtors’ obligation
to present all relevant evidence in support of their Motion, including evidence of ownership, at the hearing
on January 16th. Debtors will not be allowed a second bite at this apple. However, since the Motion did
not focus on the Subsequently Identified Item s, Debtors will be granted the opportunity at the hearing on
actual dam ages to offer evidence as to their ownership of the Subsequently Identified Item s and any
actual dam ages which they sustained relating to those item s assum ing they owned them .
The Motion also alleged that Dr. Pontell took patient charts with him but he specifically testified	10
at the hearing that he had the charts copied but left the original charts at Atlantic Skin. His testim ony on
the patient charts was not refuted. However, for privacy concerns, Dr. Pontell shall be directed to return
the copies which he m ade or had m ade of the aforem entioned patient charts except for the copies
pertaining to patients which he has treated since July 26, 2007.
18
At the hearing, the parties focused solely on the property which the Motion
mentioned since, at that point, Dr. Pontell still had not provided a list of all of the
property which he removed. The Motion specifically mentions the following
property: 10
(i) 	10 surgical packs (the “Surgical Packs”);
(ii) 	the Additional Instruments;
(iii) 	Several packs of promotional brochures for
plastic surgery procedures;
(iv) 	Surgical headlamp;
(v) 	Smoke evacuator and pedal;
(vi) 	Digital camera;
(vii) 	Transcription voice recorder;
(viii) 	Cell Phone;
(ix) 	Computer; and
Case 07-14283-jkf Doc 308 Filed 04/08/08 Entered 04/09/08 09:07:37 Desc Main
Document Page 18 of 32

At the hearing, the parties agreed that all item s at issue were owned by Dr. Pontell, DVDA or	11
one of the Debtors.
19
(x) 	Upgraded simulation software for the
Computer.
The issue is whether Debtors established ownership of any of these items.
Ownership of the Computer, the Upgraded Simulation Software,
Ten Surgical Packs and Additional Instruments
Based on the evidence in the record, Debtors established that Atlantic
Skin or Atlantic Medical purchased or paid for the Computer and the upgraded
simulation software used on it. The evidence further shows that, while Dr. Pontell
or DVDA owned 10 surgical packs when Dr. Pontell began working for Atlantic
Skin, the Surgical Packs which Dr. Pontell removed from the Offices contained a
mixture of older and newer instruments. The newer instruments were not owned
by Dr. Pontell or DVDA; accordingly, they were purchased by one of the Debtors
for Atlantic Skin’s practice. 	Moreover, since Dr. Pontell testified that he only11
brought ten surgical packs with him to Atlantic Skin’s practice, one of the Debtors
also owns the Additional Instruments which Dr. Pontell removed from the
W ilmington Office.
Dr. Pontell contends that even though the Computer, the upgraded
simulation software on it, some of the instruments in the Surgical Packs and the
Additional Instruments were purchased by one of the Debtors, he owns them
Case 07-14283-jkf Doc 308 Filed 04/08/08 Entered 04/09/08 09:07:37 Desc Main
Document Page 19 of 32

Paragraph 10.B. of the 2001 Agreem ent set Dr. Pontell’s “base salary.” At least initially, his	12
“base salary” was $300,000.
Calculation of the “bonus” is described in Paragraph 10.C.4 of the 2001 Agreem ent.	13
Paragraph 13 is specifically labeled “Other Benefits.”	14
20
pursuant to paragraph 10(C)(1)(f) of the 2001 Agreement. Having carefully
reviewed the 2001 Agreement, the Court is unpersuaded by this argument.
Paragraph 10 of the 2001 Agreement provides in relevant part:
A. For purposes of this Agreement, . . . . “Compen-
sation” shall include base salary, as defined in
Paragraph 10.B., additional (bonus) compensation as
may be payable to [Dr. Pontell] in accordance with
Paragraph 10.C and the cost of benefits specified in
Paragraph 13 and any other benefit [Dr. Pontell] is paid
by [Atlantic Skin], or indirectly when [Atlantic Skin]
reimburses [Dr. Pontell] for the cost of the benefit paid
by the [Dr. Pontell].
2001 Agreement ¶10(A). This paragraph specifically defines Dr. Pontell’s com-
pensation to include: (i) his base salary; 	(ii) additional (bonus) compensation12
payable in accordance with Paragraph 10.C.; 	(iii) the cost of benefits specified13
in Paragraph 13; 	and (iv) any other benefits provided to Dr. Pontell by Atlantic14
Skin. Not included in this definition is any ownership interest in the surgical
supplies or equipment which Atlantic Skin purchased for Dr. Pontell’s use.
Paragraph 10.C. sets forth the method for calculating Dr. Pontell’s
compensation. It also provides that Atlantic Skin was obligated to pay all
Case 07-14283-jkf Doc 308 Filed 04/08/08 Entered 04/09/08 09:07:37 Desc Main
Document Page 20 of 32

21
expenses related to its practice up to certain limits. The subparagraph states, in
pertinent part:
C. 	Physician’s compensation shall be calculated as follows:
1. [Atlantic Skin] shall determine the amount of
revenues collected by Corporation during the period
July 1, 2001 to December 31, 2001 and then each
calendar year thereafter that were related to medical
services rendered by Physician ("Receipts"). In addition,
Corporation shall pay all expenses related to the
Practice [which is defined to mean Atlantic Skin’s
practice]; provided, however, that Corporation's portion
of those expenses listed below related to Physician's
facial plastic and reconstructive surgery activities shall
be limited as follows (and prorated for the period from
July I, 2001 to December 31, 200I):
* * *
(f) The costs associated with surgical
supplies and equipment used exclusively by Physician
shall be capped at Five Percent (5%) of Receipts per
annum.
2. To the extent that the costs incurred in
connection with the items listed above exceed the fixed
limits, the excess amounts shall be referred to as "cost
overruns" for purposes of the Compensation formula.
The wages and benefits payable to the staff dedicated
to support Physician shall be subject to reviews and
raises in accordance with Corporation's policy and
procedures manual. The annual limits set forth in
subparagraphs (d) and (e) above will be subject to
increase based on Corporation's policy applied
uniformly to all Atlantic Physicians.
Case 07-14283-jkf Doc 308 Filed 04/08/08 Entered 04/09/08 09:07:37 Desc Main
Document Page 21 of 32

22
3. The following table will be used to determine
Physician's annual Compensation:
Compensation Earned and Payable
50% of Receipts up to $750,000, less cost overruns
55% of Receipts in excess of$750,000 but not exceeding
$1,000,000, less cost overruns
60% of Receipts in excess of$1,000,000, less cost overruns
4. By way of illustration, if Physician's Receipts
were $1,100,000 for the year, his Compensation would
be determined as follows:
50% of $750,000 	= $375,000
55% of $250,000 	= $137,500
60% of $I00,000 	= $ 60,000
Compensation 	$572.500
By way of further example, if the costs incurred for
Physician's surgical supplies and equipment were
$65,000, Compensation would be reduced by $10,000
as this category of expenses exceeded the cap of
$55,000. Physician would be entitled to $562,500 of
Compensation.
From the difference between the Compensation
and the cost overruns would be subtracted the salary
(and Corporation's share of the payroll taxes) paid to
Physician for the calendar year. The balance, if positive,
will be paid to Physician in the form of a bonus within
thirty (30) days after the books have been closed for the
period. The balance, if negative (that is, Physician has
drawn more in salary than the Compensation due), shall
be paid to Corporation by Physician within thirty (30)
days of the date the reconciliation is presented to
Physician by Corporation, or, in the alternative, if
mutually acceptable Physician may reduce his draw in
Case 07-14283-jkf Doc 308 Filed 04/08/08 Entered 04/09/08 09:07:37 Desc Main
Document Page 22 of 32

23
the subsequent quarter(s) until the deficit is recovered
by Corporation.
2001 Agreement at ¶ 10(C). This subparagraph of ¶ 10 explains the method for
calculating Dr. Pontell’s “additional (bonus) compensation” to which paragraph
10(A) refers in defining Dr. Pontell’s compensation. While the subparagraph also
obligated Atlantic Skin to pay for all expenses (up to certain limits) associated
with its practice, including any surgical supplies and equipment used exclusively
by Dr. Pontell, it does not provide that Dr. Pontell acquired any ownership
interests in such supplies or equipment.
In direct contrast, the 1999 Agreement specifically provided for Dr. Pontell
to acquire an ownership interest in the equipment which DVDA purchased on his
behalf. Pararaph 12 of the 1999 Agreement stated, in relevant part:
If [Dr. Pontell]’s gross receipts for the first thirteen (13) months of his
employment exceed $300,000.00 but are less than $400,000.00,
[Dr. Pontell] shall have one-third (1/3) ownership of equipment DVDA
has purchased on [Dr. Pontell]’s behalf. If [Dr. Pontell]’s gross
receipts exceed $400,000.00 but are less than $500,000.00,
[Dr. Pontell] shall have two-thirds (2/3) ownership of said equipment.
Should gross receipts exceed $500,000, it is understood that
[Dr. Pontell] shall maintain full ownership in the equipment DVDA
has purcahsed on his behalf[.]
1999 Agreement ¶ 12. Dr. Pontell testified that he was intimately familiar with the
provisions of this earlier agreement and that he was well aware of the ownership
rights which the agreement gave to him. He further testified that the paragraph
Case 07-14283-jkf Doc 308 Filed 04/08/08 Entered 04/09/08 09:07:37 Desc Main
Document Page 23 of 32

24
which gave him ownership rights under the 1999 Agreement was very clear.
Consequently, Dr. Pontell knew the type of language that could have been
included in 2001 Agreement to provide him with an ownership interest in the
surgical supplies and equipment which Atlantic Skin purchased for his use. Yet,
such language is absent from the 2001 Agreement. This difference between the
1999 Agreement and the 2001 Agreement provides further support for the
conclusion that the 2001 Agreement failed to provide Dr. Pontell with any
ownership interest in equipment or supplies purchased for his use in Atlantic
Skin’s practice.
The Cell Phone
It is undisputed that the Cell Phone was originally purchased by Jill
Gallogly while she was employed by and for Atlantic Skin for her use as the
Patient Care Coordinator for Dr. Pontell and that she was reimbursed for its
purchase by the practice. Moreover, it was the practice which paid the monthly
service bills for the Cell Phone and not Ms. Gallogly. Soon after the purchase of
the Cell Phone, the address was changed on the monthly bills so that they were
sent to Atlantic Skin and not to Ms. Gallogly. Therefore, while the contract for the
Cell Phone may have remained in Ms. Gallogly’s name, the Cell Phone certainly
did not belong to her, as she acknowledged in her testimony. It was purchased
and is owned by one of the Debtors since the practice paid for the phone and for
Case 07-14283-jkf Doc 308 Filed 04/08/08 Entered 04/09/08 09:07:37 Desc Main
Document Page 24 of 32

25
the monthly service. This point is supported by the fact that when she left her
position at Altantic Skin, Ms. Gallogly did not take the telephone with her.
The Promotional Brochures, Surgical Headlamp, Smoke Evacuator
and Pedal, Digital Camera and Transcription Voice Recorder
Debtors failed to establish that the promotional brochures, the surgical
headlamp, the smoke evacuator and pedal, the digital camera and the
transcription voice recorder which Dr. Pontell removed from the Offices were
owned by either of them.
Summary
Based on the evidence in the record, Debtors established ownership at the
January 16th hearing of the following items: the Computer, the upgraded
simulation software, the Cell Phone, some of the instruments in the Surgical
Packs and the Additional Instruments. A hearing shall be scheduled at Debtors’
request to afford them the opportunity to present evidence of actual damages, if
any, which they sustained as a result of Dr. Pontell’s removal and retention of
these particular items.
(4) Punitive Damages
The bankruptcy court has discretion to impose punitive damages “in
appropriate circumstances” when it finds that a respondent committed a willful
Case 07-14283-jkf Doc 308 Filed 04/08/08 Entered 04/09/08 09:07:37 Desc Main
Document Page 25 of 32

Based upon Dr. Pontell’s career as a plastic surgeon, the Court concludes that a m odest award	15
of $750 is within his ability to pay.
26
violation of the stay. See Solfanelli v. Corestates Bank, N.A., 203 F.3d 197, 203
(3d Cir. 2000). See also 11 U.S.C. § 362(k)(1).
In this case, the Court concludes that punitive damages shall not be
granted for Dr. Pontell’s removal of equipment and items from the Offices.
Dr. Pontell’s motivation for removing property from the Offices was, at least in
part, to enable him to adequately serve his patients. Moreover, since the
commencement of Debtors’ bankruptcy cases, the relationship between Debtors
and Dr. Pontell has been adversarial. Both sides have contributed to the ill-will
between them and the continuing high-drama that has characterized their
conflicts.
However, punitive damages shall be granted for Dr. Pontell’s continuing
failure and refusal to provide Debtors with a list of the items which he removed
from the Offices despite Debtors’ counsel’s repeated requests that he do so.
Given that Dr. Pontell violated the automatic stay by removing the items from the
Offices, the Court finds Dr. Pontell’s conduct in failing and refusing to provide a
simple list of the items taken, which in no way would have jeopardized his
position, to be egregious. Punitive damages in the modest amount of $750.00
shall be awarded to Debtors. 15
Case 07-14283-jkf Doc 308 Filed 04/08/08 Entered 04/09/08 09:07:37 Desc Main
Document Page 26 of 32

27
II. Dr. Pontell’s Cross-Motion
In his Cross-Motion, Dr. Pontell contends that he owns the following
property and that Debtors have continued to retain possession of the property
without his permission:
8 Goretex chin implants
4 Goretex nasal implants
11 Moh’s surgical recon packs
3 blepharoplasty sets
3 rhinoplasty sets
2 mayo surgical stands
1 surgical procedure chair
miscellaneous supplies
Cross-Motion, Exhibit B. Dr. Pontell seeks adequate protection of his interest in
this property (“Retained Property”). Since Debtors denied the allegations of the
Cross-Motion, see Reply of Debtors to Response of Johnathon Pontell, M.D. and
Cross-Motion for Adequate Protection and Related Relief ¶¶ 27-30, Dr. Pontell,
as the movant of the Cross-Motion, had the burden to prove ownership of the
items listed above.
At the hearing in this matter, there was no evidence presented with regard
to ownership of any of the Retained Property except Mr. Papathomas’ very
specific testimony that Atlantic Medical purchased the surgical procedure chair for
the Malvern Office in March of 2004. Based on this testimony, Dr. Pontell does
Case 07-14283-jkf Doc 308 Filed 04/08/08 Entered 04/09/08 09:07:37 Desc Main
Document Page 27 of 32

28
not own the chair and, therefore, he has no right to possess it. His Cross-Motion
shall be denied.
CONCLUSION
The Motion shall be granted in part and the Cross-Motion shall be denied.
Dr. Pontell shall be ordered to return all of the items which he removed from the
Offices except for his personal items and Debtors shall be awarded punitive
damages against Dr. Pontell in the amount of $750.00. Debtors’ counsel shall be
directed to file a fee application and, if they so desire, a request for a hearing on
the issue of actual damages as to the items of which they have proven
ownership.
Case 07-14283-jkf Doc 308 Filed 04/08/08 Entered 04/09/08 09:07:37 Desc Main
Document Page 28 of 32

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
In re 	: 	Chapter 11
A TLANTIC M EDICAL M ANAGEMENT 	:
S ERVICES , I NC . and A TLANTIC S KIN
AND C OSMETIC S URGERY G ROUP , P.C., 	: 	Case No. 07-14283 (JKF)
(Jointly Administered)
Debtors. 	:
________________________________
ORDER
AND NOW, this 8th day of April, 2008, upon consideration of the Motion of
Debtors for an Order of Contempt for Violation of the Automatic Stay Pursuant to
11 U.S.C. §362(a), and for the Recovery of Damages, Legal Fees and Costs for
W illful Violation of the Stay Pursuant to 11 U.S.C. § 362(k) (“the Motion”) and the
Cross-Motion for Adequate Protection and Related Relief (the “Cross-Motion”) by
Dr. Pontell against Debtors;
AND a hearing having been held on the Motion and Cross-Motion on
January 16, 2008,
AND the parties having filed post-hearing briefs and reply briefs;
It is hereby ORDERED, for the reasons set forth in the accompanying
Memorandum Opinion, that:
1. 	The Motion is granted in part.
2. 	The Cross-Motion is denied.
Case 07-14283-jkf Doc 308 Filed 04/08/08 Entered 04/09/08 09:07:37 Desc Main
Document Page 29 of 32

2
3. 	W ithin thirty (30) days hereof, Debtors’ counsel shall file
with the Clerk of Court and serve upon opposing
counsel, in accordance with the Local Rules of
Bankruptcy Procedure, an application for reasonable
attorneys’ fees and costs incurred in filing and litigating
the Motion. Dr. Pontell shall have fifteen (15) days to
file an objection to the application. If an objection is
timely filed, then the application shall be scheduled for a
hearing. If no objection is filed, then the application
shall be ruled upon without a hearing.
4. 	W ithin five (5) days hereof, Dr. Pontell shall have the
name on the contract for the cell phone changed to
Altantic Skin.
5. 	W ithin seven (7) days hereof, Dr. Pontell shall return all
of the items which he removed from the Debtors’ offices
(including the Subsequently Removed Items as defined
in the Accompanying Memorandum Opinion) except for
the following personal items: Dr. Pontell’s antique table,
his antique all unit, his diplomas, his desk with three
chairs, his plants, personal photos, music CD’s, two CD
players and his personal papers.
6. 	Dr. Pontell shall return the computer to Debtors with all
material existing thereon as of July 26, 2007, including
but not limited to the original and upgraded simulation
software, patient information and before & after pictures.
Dr. Pontell shall copy for himself and then delete any
information from the computer pertaining to his current
patients to protect their privacy interests. Dr. Pontell
shall not copy or delete any other material from the
computer, including but not limited to, the original or
upgraded simulation software, patient information and
patient before & after pictures.
7. 	Dr. Pontell shall return the cell phone to Debtors with all
information existing thereon.
Case 07-14283-jkf Doc 308 Filed 04/08/08 Entered 04/09/08 09:07:37 Desc Main
Document Page 30 of 32

3
8. 	Dr. Pontell shall return all copies of the patient charts
which he took with him from the Debtors’ offices except
for charts pertaining to patients who have been under
his care since July 26, 2007.
9. 	A hearing limited to the issue of actual damages shall be
held upon request by the Debtors. At such hearing,
Debtors shall be entitled to present evidence of actual
damages, if any, which they sustained as a result of
Dr. Pontell’s removal and retention of the following
specific items: the computer, the upgraded simulation
software, the cell phone, the ten surgical packs and the
Additional Instruments (as defined in the Accompanying
Memorandum Opinion). In addition, to the extent
Debtors were required, as a result of Dr. Pontell’s
removal and retention of the Subsequently Identified
Items (as defined in the accompanying Memorandum
Opinion) to replace such items for the practice, Debtors
shall be granted the opportunity at the hearing on actual
damages to present evidence: (i) that they needed these
items for their practice during the period when
Dr. Pontell possessed them; (ii) of the date upon which
they replaced each of the items, if any; and (iii) of the
amount which they paid to replace them.
10. 	Punitive damages are awarded to Debtors in the amount
of $750.00. Dr. Pontell shall pay these damages to
Debtors within fifteen (15) days hereof.
______________________________
J EAN K. F ITZ S IMON
United States Bankruptcy Judge
Case 07-14283-jkf Doc 308 Filed 04/08/08 Entered 04/09/08 09:07:37 Desc Main
Document Page 31 of 32

4
Copies to:
Counsel for Debtors
Mary Elisa Reeves, Esquire
Knapp McConomy Merlie LLP
1216 Route 113, P.O. Box 487
Chester Springs, PA 19425
Counsel for Johnathon Pontell, M.D.
Leonard P. Goldberger, Esquire
Stevens & Lee, P.C.
1818 Market Street, 29th Floor
Philadelphia, PA 19103
United States Trustee
David M. Klauder, Esquire
U.S. Trustee Office
833 Chestnut Street, Suite 500
Philadelphia, PA 19107
Case 07-14283-jkf Doc 308 Filed 04/08/08 Entered 04/09/08 09:07:37 Desc Main
Document Page 32 of 32