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Nature of Suit Code: 0
Nature of Suit: other
Cause of Action: 

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1 Honorable Howard R. Tallman, United States Bankruptcy Judge, United

States Bankruptcy Court for the District of Colorado, sitting by designation.

FILED

U.S. Bankruptcy Appellate Panel

of the Tenth Circuit

March 16, 2007

Barbara A. Schermerhorn

Clerk PUBLISH

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE TENTH CIRCUIT

IN RE TARA BUSHAW SCROGGIN,

Debtor.

BAP No. KS-05-127

LAWRENCE ATHLETIC CLUB,

Appellant,

Bankr. No. 04-24305-13

 Chapter 13

v. OPINION

TARA BUSHAW SCROGGIN and

WILLIAM H. GRIFFIN, Trustee,

Appellees.

Appeal from the United States Bankruptcy Court

for the District of Kansas

Lynn D. Lauver (H. Kent Hollins with him on the brief), of the Bankruptcy

Clinic, Topeka, Kansas, for Appellant.

Jonathan C. Becker, Lawrence, Kansas, for Appellee Tara Bushaw Scroggin.

Before CLARK, CORNISH, and TALLMAN1

, Bankruptcy Judges.

CORNISH, Bankruptcy Judge.

Creditor Lawrence Athletic Club (“LAC”) appeals a judgment of the United

States Bankruptcy Court for the District of Kansas entered in favor of Tara

Bushaw Scroggin (“Debtor”) for damages and sanctions resulting from LAC’s

willful violation of the automatic stay. Debtor filed a motion to dismiss the

BAP Appeal No. 05-127 Docket No. 4-1 Filed: 03/16/2007 Page: 1 of 12
2 LAC used the Law Office of H. Kent Hollins to perform its debt collection. 

Therefore, references to LAC should be construed to include its representative,

Kent Hollins.

3 Conflicting testimony in the record is that the release was sent on October

19, 2004, or on October 15, 2004. The actual date is not important to our

analysis. The document allegedly sent by LAC in mid-October was never

received by the state court.

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appeal as moot which is also before this Court. For the following reasons, we

determine that: 1) the appeal is not moot, so we must address the merits of the

case; and 2) based on the merits, the judgment of the bankruptcy court should be

affirmed.

I. BACKGROUND FACTS

LAC2

 obtained a money judgment against Debtor in Douglas County,

Kansas state court in June, 2004. In September, 2004, LAC obtained a state court

order allowing garnishment of Debtor’s wages. LAC forwarded the order to

Debtor’s employer, Wal-Mart, who began garnishing Debtor’s paycheck. Debtor

filed her Chapter 13 bankruptcy action on October 12, 2004. Notice of the

bankruptcy action was mailed to LAC on October 13, 2004. Nevertheless,

garnishment of Debtor’s paycheck continued. 

According to LAC, it sent a document entitled “Release of Garnishment” to

the Douglas County District Court on October 19, 2004.3

 However, LAC did not

send a copy of the release to Debtor, Debtor’s attorney, or Wal-Mart. LAC’s

rationale for not immediately serving a copy of the release on these persons was

that it was waiting for the court to return a file-stamped copy which it would then

forward to Wal-Mart. 

Debtor filed a motion for turnover to recover funds that had been garnished

from Debtor’s October 15th and October 30th paychecks. The funds were

promptly received by Debtor before a hearing was held on the motion. Therefore,

the first motion for turnover was withdrawn. Still, garnishment of Debtor’s

BAP Appeal No. 05-127 Docket No. 4-1 Filed: 03/16/2007 Page: 2 of 12
4 In 2000, the Kansas Legislature enacted a new Code of Civil Procedure for

Limited Actions (chapter 61). The Kansas Judicial Council prepared forms

reflecting the provisions of the new code. The forms were approved by the

Supreme Court of Kansas by Administrative Order No. 159 and copies thereof

appear as Attachment I to the Appellant’s Brief.

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wages continued, forcing her to file a “Second Motion for Turnover Pursuant to

11 U.S.C. § 542 Combined with a Motion of Subordination under 11 U.S.C.

§ 510(c) and for Damages and Attorney Fees under 11 U.S.C. § 362(h)” (“Second

Turnover Motion”) to recover monies withheld from Debtor’s November 15th,

November 30th, and December 14th paychecks. A hearing on the Second

Turnover Motion was set for December 21, 2004. 

In the meantime, Debtor’s counsel contacted LAC to obtain a copy of the

Release of Garnishment. Debtor’s counsel then took the release to the courthouse

to get it file stamped, and returned a file stamped copy to LAC. The state court’s

records indicate that the Release of Garnishment was first filed on December 6,

2004. This was the filing done by Debtor’s counsel. Contrary to LAC’s

assertions, the state court never received the copy of the Release of Garnishment

allegedly sent by LAC in mid-October.

At the December 21, 2004, hearing on Debtor’s Second Turnover Motion,

LAC took the position it had done everything it possibly could do to stop the

garnishment of Debtor’s wages. According to LAC, to terminate a wage

garnishment in Kansas, all that is required is to file the “Release of Garnishment”

document authorized pursuant to Administrative Order No. 159 of the Supreme

Court of the State of Kansas.4

 The bankruptcy court admonished LAC that it

could in fact do more: it could procure an order releasing the garnishment from

the state court and send a file stamped copy of the court’s order to Wal-Mart. 

Specifically, the bankruptcy court stated “the creditor can, and should, undertake

additional action to procure the order from the District Court Judge.” Transcript

of Proceedings held December 21, 2004, at 11, ll. 7-9, in Appellant’s App. at 68.

BAP Appeal No. 05-127 Docket No. 4-1 Filed: 03/16/2007 Page: 3 of 12
5 The date Wal-Mart first received a copy of the Release of Garnishment

from LAC is uncertain. There was testimony by LAC’s garnishment manager at

the hearing on this matter that LAC faxed Wal-Mart a copy of the non-file

stamped release of garnishment on November 30, 2004. Transcript of

Proceedings held December 13, 2005, at 33, in Appellant’s App. at 116. But,

there was no physical evidence submitted to corroborate this testimony. The

garnishment manager also testified that she attempted to call Wal-Mart on

November 30, 2004, December 16, 2004, and January 3, 2005. Id. at 33-34, in

Appellant’s App. at 116-17. Interestingly, however, at the December 21, 2004,

hearing on the Second Turnover Motion, LAC’s counsel did not have a copy of

the Release of Garnishment that had allegedly been sent to Wal-Mart. Transcript

of Proceedings held December 21, 2004, at 11, in Appellant’s App. at 68.

6 LAC actually opposed the motion, and after the order was entered, filed a

motion for reconsideration.

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Additionally, the bankruptcy court ordered LAC to pay Debtor the funds

garnished from her November 15th, November 30th, and December 14th

paychecks, notwithstanding that LAC had not yet received the withheld proceeds

from Wal-Mart. LAC appealed that order to this Court (“First Appeal”). 

However, while the First Appeal was pending, LAC received the garnishment

proceeds from Wal-Mart and turned them over to Debtor. Therefore, the First

Appeal was dismissed as moot.

The evidence in the record on appeal indicates it was not until January 6,

2005, that LAC finally sent a copy of the Release of Garnishment to Wal-Mart.5

See Attachment III-4 to Appellant’s Brief. As a result, Debtor’s December 30,

2004, and January 11, 2005, paychecks were again garnished. Debtor was

therefore forced to file a third and fourth motion for turnover. Notwithstanding

the bankruptcy court’s admonition, LAC took no further action to insure a proper

release of the garnishment. Because of this failure, Debtor filed a motion in state

court for an order releasing the garnishment. A hearing was set on the motion for

January 14, 2005, and an order releasing garnishment was entered January 19,

2005.6

 Debtor then forwarded the court order to Wal-Mart and the garnishment of

her wages finally ceased.

As a result of LAC’s violation of the automatic stay and the continued

BAP Appeal No. 05-127 Docket No. 4-1 Filed: 03/16/2007 Page: 4 of 12
7 Debtor could no longer afford the rent on her apartment and was forced to buy out her lease in the amount of $1,500 and move in with her mother. See

Transcript of Proceedings held December 13, 2005, at 17-18, in Appellant’s App. at 100-101. Additionally, Debtor had to borrow $250 from her boyfriend and

$300 from her mother. Id. at 19-20, in Appellant’s App. at 102-103.

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garnishment of her wages, Debtor sustained damages7 and incurred attorney fees. 

Therefore, Debtor asked the bankruptcy court to award her damages, attorney

fees, and sanctions for violation of the stay. The bankruptcy court held a hearing

on the matter on December 13, 2005. On December 28, 2005, the bankruptcy

court entered its order awarding Debtor both compensatory and punitive damages

as follows: $2,000 in actual damages; $2,498.47 in attorney fees incurred in

connection with the First Appeal; $727.39 in attorney fees incurred in connection

with obtaining the state court order releasing garnishment; $1,851.10 in attorney

fees incurred in connection with the motions for turnover and sanctions

evidentiary hearing; and $5,000 in punitive damages. Accordingly, the

bankruptcy court entered judgment against LAC in the total amount of

$12,076.96. 

LAC immediately appealed the judgment. However, LAC did not seek a

stay of the judgment pending appeal until March 7, 2006. Further, LAC did not

give notice of its request for stay to Debtor until May 22, 2006. The bankruptcy

court denied LAC’s motion for stay on June 6, 2006. LAC also filed a request for

emergency stay with this Court, which was denied. After the appeal was taken to

this Court, Debtor fully satisfied her judgment by obtaining a non-wage

garnishment order from the state court and garnishing LAC’s checking account. 

This resulted in the judgment being paid in full. After the appeal was fully

briefed, Debtor moved this Court to dismiss the appeal as moot. Therefore, both

LAC’s appeal of the judgment against it and Debtor’s motion to dismiss the

appeal are currently before this Court for decision. 

BAP Appeal No. 05-127 Docket No. 4-1 Filed: 03/16/2007 Page: 5 of 12
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II. JURISDICTION

This Court has jurisdiction to hear timely-filed appeals from “final

judgments, orders, and decrees” of bankruptcy courts within the Tenth Circuit,

unless one of the parties elects to have the district court hear the appeal. 28

U.S.C. § 158(a)(1), (b)(1), and (c)(1); Fed. R. Bankr. P. 8002. Neither party

elected to have this appeal heard by the United States District Court for the

District of Kansas. The parties have thus consented to appellate review by this

Court. 

A decision is considered final “if it ‘ends the litigation on the merits and

leaves nothing for the court to do but execute the judgment.’” Quackenbush v.

Allstate Ins. Co., 517 U.S. 706, 712 (1996) (quoting Catlin v. United States, 324

U.S. 229, 233 (1945)). In this case, the decision of the bankruptcy court imposed

damages and sanctions for willful violation of the automatic stay. Nothing

remains for the bankruptcy court’s consideration. Thus, the decision is a final

order for purposes of review.

III. STANDARD OF REVIEW

Whether a party’s actions violate the automatic stay is a question of law. 

Diviney v. Nationsbank of Tex., N.A. (In re Diviney), 225 B.R. 762, 769 (10th Cir.

BAP 1998) (quoting In re Edwards, 214 B.R. 613, 618 (9th Cir. BAP 1997)). We

review the bankruptcy court’s legal conclusions de novo. De novo review

requires an independent determination of the issues, giving no special weight to

the bankruptcy court’s decision. Salve Regina Coll. v. Russell, 499 U.S. 225, 238

(1991). 

We review the bankruptcy court’s finding that a creditor’s action

constituted a willful violation of the stay for clear error. Diviney, 225 B.R. at

769. A factual finding is “clearly erroneous” when “‘it is without factual support

in the record, or if the appellate court, after reviewing all the evidence, is left

with the definite and firm conviction that a mistake has been made.’” Las Vegas

BAP Appeal No. 05-127 Docket No. 4-1 Filed: 03/16/2007 Page: 6 of 12
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Ice & Cold Storage Co. v. Far W. Bank, 893 F.2d 1182, 1185 (10th Cir. 1990)

(quoting LeMaire ex rel. Le Maire v. United States, 826 F.2d 949, 953 (10th Cir.

1987)). In reviewing findings of fact, we are compelled to give due regard to the

opportunity of the bankruptcy court to judge the credibility of the witnesses. Fed.

R. Bankr. P. 8013. 

We review an award of sanctions for a violation of the automatic stay under

the abuse of discretion standard. Diviney, 225 B.R. at 769. “Under the abuse of

discretion standard[,] ‘a trial court’s decision will not be disturbed unless the

appellate court has a definite and firm conviction that the lower court made a

clear error of judgment or exceeded the bounds of permissible choice in the

circumstances.’” Moothart v. Bell, 21 F.3d 1499, 1504 (10th Cir. 1994) (quoting

McEwen v. City of Norman, 926 F.2d 1539, 1553-54 (10th Cir. 1991)). As with

the clearly erroneous standard, when applying the abuse of discretion standard,

deference is given to the bankruptcy court “‘because of its first-hand ability to

view the witness or evidence and assess credibility and probative value.’” Id.

(quoting McEwen, 926 F.2d at 1553-54).

IV. ANALYSIS

A. Mootness

After this appeal had been fully briefed and submitted to this Court,

Appellee filed a motion to dismiss the appeal on the ground of mootness. 

Therefore, this Court additionally must determine the jurisdictional issue of

whether the appeal is moot, including whether it is moot in the constitutional

sense, i.e., that there is no case or controversy. See U.S. Const. art. III, § 2, cl. 1;

Yellow Cab Coop. Ass’n v. Metro Taxi, Inc. (In re Yellow Cab Coop. Ass’n), 132

F.3d 591, 594 (10th Cir. 1997); In re L.F. Jennings Oil Co., 4 F.3d 887, 889 (10th

Cir. 1993); see also Arizonans for Official English v. Ariz., 520 U.S. 43, 73

(1997) (court has an obligation to satisfy itself that it has jurisdiction to hear an

appeal). 

BAP Appeal No. 05-127 Docket No. 4-1 Filed: 03/16/2007 Page: 7 of 12
8 A judgment debtor who is unable or is unwilling to post

a supersedeas bond retains the right to appeal even if the

judgment is executed. Should the judgment be reversed

on appeal, a district court may, on motion or sua sponte,

(continued...)

-8-

“‘[A] case is moot when the issues presented are no longer ‘live’ or the

parties lack a legally cognizable interest in the outcome.’” County of L.A. v.

Davis, 440 U.S. 625, 631 (1979) (quoting Powell v. McCormack, 395 U.S. 486,

496 (1969)). A controversy is no longer “live” when the reviewing court is not

capable of rendering effective relief or restoring the parties to their original

position. Mills v. Green, 159 U.S. 651, 653 (1895); see Church of Scientology of

Cal. v. United States, 506 U.S. 9, 12 (1992); In re Osborn, 24 F.3d 1199, 1203

(10th Cir. 1994); In re King Res. Co., 651 F.2d 1326, 1331-32 (10th Cir. 1980) (if

the only effect of reversal on appeal would be to order the impossible, court

should not address the merits of the appeal). “[I]f an event occurs while a case is

pending on appeal that makes it impossible for the court to grant ‘any effectual

relief whatever’ to a prevailing party, the appeal must be dismissed.” Osborn, 24

F.3d at 1203 (quoting Church of Scientology, 506 U.S. at 12 (quoting Mills, 159

U.S. at 653)). 

In this case, Debtor asserts that events have occurred since the bankruptcy

court’s judgment making it impossible for this Court to grant relief on appeal. 

Specifically, Debtor argues she has satisfied the judgment she obtained against

LAC by garnishing its checking account. Since the judgment has been paid in

full, Debtor contends the appeal is moot. We disagree.

While it is true that LAC’s requests for stay to the bankruptcy court and

this Court were denied and the judgment was not superseded by an appeal bond, a

remedy on appeal still exists. If this Court were to reverse the bankruptcy court’s

order, it could order Debtor to disgorge the funds she garnished from LAC’s

checking account. See Strong v. Laubach, 443 F.3d 1297 (10th Cir. 2006).8

BAP Appeal No. 05-127 Docket No. 4-1 Filed: 03/16/2007 Page: 8 of 12
8 (...continued)

order the judgment creditor to restore the benefits

obtained.

Strong v. Laubach, 443 F.3d 1297, 1299 (10th Cir. 2006) (citations omitted).

9 This is a pre-BAPCPA case and is governed by the version of 11 U.S.C.

§ 362 in effect prior to October 17, 2005.

10 The text of the “standard form” is one sentence: “The judgment creditor

hereby releases the garnishment order issued on or about __________ in this

action.” The form is to be signed only by the judgment creditor. The form was

prepared by the Kansas Judicial Council and approved by the Supreme Court of

Kansas. See supra note 4. LAC further contends that the forms approved by

(continued...)

-9-

Since the appeal is not, as Debtor contends, moot, we must now address the

merits of the case.

B. Merits of the Case

Title 11 U.S.C. § 362(h) provides in pertinent part: “(h) An 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(h) (emphasis

added).9

 “[A] garnishing creditor has an affirmative duty to release the

garnishment of a debtor’s wages as soon as it learns of the pending bankruptcy.” 

In re Pulliam, 262 B.R. 539, 542 (Bankr. D. Kan. 2001). On appeal, LAC asserts

it did not willfully violate the automatic stay because it did everything it was

required to do to release the garnishment of Debtor’s wages. LAC characterizes

its conduct as a “ministerial” or “technical stay violation,” and therefore argues

the bankruptcy court erred in awarding damages, attorney fees and sanctions. 

Appellant’s Brief at 8, 12. We strongly disagree.

According to LAC, the only action necessary to release a garnishment in

Kansas is to file a “Release of Garnishment” form signed by the judgment

creditor, and further, that a court order closing a garnishment case is

“improper.”10 Id. at 10. LAC contends the court “displayed an ignorance of

BAP Appeal No. 05-127 Docket No. 4-1 Filed: 03/16/2007 Page: 9 of 12
10 (...continued)

Administrative Order 159 provide all the forms necessary for a limited actions

(chapter 61) case, and there is no court order for releasing the garnishment. 

Appellant’s Brief at 6. 

11 See supra note 5, for LAC’s claim the release of garnishment was sent to

Wal-Mart on November 30, 2004. Even if it was sent on November 30, 2004, this

was still more than six weeks after being notified of Debtor’s bankruptcy and

after Debtor had filed the first of its four motions for turnover.

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chapter 61 garnishments done in State Court.” Id. As proof of its position, LAC

attaches to its brief letters from other Kansas attorneys confirming they use the

same release of garnishment procedures as LAC. See id. at Attachments III-6, 7

& 8. 

We need not address whether LAC’s contentions are correct, because even

if they are, LAC failed to timely serve a copy of the Release of Garnishment on

either Debtor or Wal-Mart. Kansas statutes require that a copy of the release of

garnishment be provided to the defendant and the garnishee. Kan. Stat. Ann.

§ 61-3507(b) (2005). Even though LAC was immediately notified of Debtor’s

bankruptcy, Debtor’s counsel did not receive a copy of the Release of

Garnishment until he contacted LAC to request one. Moreover, the evidence in

the record on appeal indicates it was not until January 6, 2005, that LAC finally

sent a copy of the Release of Garnishment to Wal-Mart. This was twelve weeks

after Debtor’s notice of bankruptcy was mailed to LAC.11 Merely filing the

Release of Garnishment with the state court, as LAC alleges it did on October 19,

2004, is not enough. A judgment creditor must communicate the release to the

garnishee in order to effectuate termination of the garnishment. 

Additionally, assuming LAC’s argument that a court order is not required

for releasing a garnishment is true, it does not mean a court order cannot be

obtained. The Kansas limited actions statutory scheme may be meant to

streamline garnishment procedures, but it certainly does not preclude judicial

intervention. Therefore, LAC could have in fact obtained an order releasing

BAP Appeal No. 05-127 Docket No. 4-1 Filed: 03/16/2007 Page: 10 of 12
-11-

garnishment from the state court, and ultimately, it was Debtor who was forced to

get the court order to finally end the garnishment. Also, at the December 21,

2004, hearing on the Second Turnover Motion, the bankruptcy court informed

LAC it had a duty to do more – go to the state court and procure an order

releasing the garnishment. Still, LAC sat back and waited for Debtor to obtain its

own order from the state court. This, Debtor was not required to do.

With regard to § 362(h), this Court has previously held that “[a] ‘willful

violation’ does not require a specific intent to violate the automatic stay. Rather,

the statute provides for damages upon a finding that the defendant knew of the

automatic stay and that the defendant’s actions which violated the stay were

intentional.” Diviney v. Nationsbank of Tex., N.A. (In re Diviney), 225 B.R. 762,

774 (10th Cir. BAP 1998) (quoting Inslaw, Inc. v. United States (In re Inslaw,

Inc.), 83 B.R. 89, 165 (Bankr. D.D.C. 1998). In this case, there is no doubt that

the postpetition garnishment of Debtor’s wages was a violation of the automatic

stay. It is not necessary to show a specific intent. It is uncontroverted that LAC

was immediately notified of Debtor’s bankruptcy. Further, LAC’s refusal to take

affirmative action to get the garnishment stopped cannot be seen as anything other

than intentional conduct.

We must affirm the bankruptcy court’s finding that LAC’s conduct was

willful unless we conclude the finding was clearly erroneous. Diviney, 225 B.R.

at 774. Under the circumstances presented, the bankruptcy court’s finding is

factually supported, and it was correct in concluding that Debtor was entitled to

damages and attorney fees.

In addition to finding that LAC willfully violated the stay, the bankruptcy

court found that the violation was egregious. Therefore, it awarded Debtor

punitive damages. Our review of the bankruptcy court’s award of sanctions for a

violation of the automatic stay is for abuse of discretion. Diviney, 225 B.R. at

769. 

BAP Appeal No. 05-127 Docket No. 4-1 Filed: 03/16/2007 Page: 11 of 12
-12-

In this case, Debtor was compelled to file four turnover motions. 

Moreover, it was Debtor who filed the Release of Garnishment with the state

court, and Debtor who sought and obtained the state court order releasing the

garnishment. LAC did nothing, notwithstanding that at the December 21, 2004,

hearing, the bankruptcy court informed counsel that LAC 

has a duty to do what any attorney would do and that is - - this isn’t

working, let me go straight to the District Court Judge, procure an

order that releases this garnishment, I’ll send it to Wal-Mart and this

matter is cleared up.

It’s not good enough to file [the release of garnishment] and step

back and say we can’t do anything else, because you know what? 

You can do something else. We’ll continue the matter of damages to

an evidentiary hearing with regard to violation of the automatic

stay . . . .

Transcript of Proceedings held December 21, 2004, at 13, ll. 4-13, in Appellant’s

App. at 70. In light of its actual knowledge of the continuing garnishment, LAC’s

inaction shows a reckless disregard of Debtor’s federally protected rights. We

cannot say the bankruptcy court made a clear error of judgment or exceeded the

bounds of permissible choice in the circumstances. Therefore, the bankruptcy

court did not abuse its discretion, and its award of punitive damages in the amount

of $5,000 is affirmed.

V. CONCLUSION

The order of the bankruptcy court awarding Debtor damages, attorney fees,

and sanctions for LAC’s willful violation of the automatic stay is affirmed.

BAP Appeal No. 05-127 Docket No. 4-1 Filed: 03/16/2007 Page: 12 of 12