Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-04-00036/USCOURTS-ca10-04-00036-0/pdf.json

Parties Involved:
Mark R. Stewart
Appellee
Unified People's Federal Credit Union
Appellant
Jennifer Nicol Yates
Appellee
Michael Dale Yates
Appellee

Document Text:

* This order and judgment is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estoppel. 10th Cir. BAP

L.R. 8018-6(a).

FILED

U.S. Bankruptcy Appellate Panel

of the Tenth Circuit

January 11, 2005

Barbara A. Schermerhorn

Clerk NOT FOR PUBLICATION

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE TENTH CIRCUIT

IN RE MICHAEL DALE YATES, also

known as Mike Yates, and JENNIFER

NICOL YATES, also known as Jennifer

Nicol Norman, also known as Jennifer

Nicol Williams,

Debtors.

BAP No. WY-04-036

UNIFIED PEOPLE'S FEDERAL

CREDIT UNION,

Appellant,

Bankr. No. 04-20069

 Chapter 13

v. ORDER AND JUDGMENT*

MICHAEL DALE YATES, JENNIFER

NICOL YATES, and MARK R.

STEWART, Trustee,

Appellees.

Appeal from the United States Bankruptcy Court for the District of Wyoming

Before BOHANON, CORNISH, and MICHAEL, Bankruptcy Judges.

PER CURIAM.

The Appellant appeals the order of the bankruptcy court granting the

Debtors’ motion for turnover and imposition of sanctions for a willful violation of

the automatic stay. The Appellees did not appear on appeal.

BAP Appeal No. 04-36 Docket No. 39 Filed: 01/11/2005 Page: 1 of 12
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Background

The Appellant, a secured creditor, lawfully repossessed a truck of the

Debtors pre-petition. Post-petition, it refused to turn over the truck upon an

informal demand. It maintained that it was entitled to retain possession of the

truck until it received adequate protection or until a plan was filed or confirmed. 

Almost two months after the petition, the Appellant filed a motion for relief from

the stay regarding various pieces of collateral, including the truck. At

approximately the same time, the Debtors moved for turnover of the truck and

sought sanctions against the Appellant for violation of the automatic stay.

The matter was set for hearing. At the hearing, both sides presented

evidence and argument. The bankruptcy court briefly took the matter under

submission and later made a ruling on the record. The bankruptcy court’s ruling

did not include any explicit findings of fact. The bankruptcy court found that 

Appellant had willfully violated the automatic stay, ordered the Appellant to turn

over the truck, and also ordered the Appellant to pay the Debtors’ attorney’s fees.

The Appellant then filed its notice of appeal.

Because the record did not contain evidence of damages, the bankruptcy

court permitted the Debtors’ counsel to submit a statement of attorney’s fees and

later entered an order granting the Debtors’ attorneys fees. At appellate

argument, the Appellant stated that it had paid those fees.

Discussion

This appeal raises several issues, including:

1. Is the order from which the Appellant appeals a “final order” since

the bankruptcy court held the Appellant willfully violated the

automatic stay but deferred quantifying the award?

2. Is it proper for this Court to review a decision when the bankruptcy

court failed to make findings of fact?

3. Did the bankruptcy court err in holding that the Appellant violated

BAP Appeal No. 04-36 Docket No. 39 Filed: 01/11/2005 Page: 2 of 12
1 Diviney v. Nationsbank of Tex., N.A. (In re Diviney), 225 B.R. 762, 769

(10th Cir. BAP 1998) (internal citations omitted). See also Safety Nat’l Cas. Corp. v. Kaiser Aluminum & Chem. Corp. (In re Kaiser Aluminum Corp.), 303

B.R. 299, 303 (D. Del. 2003) (“As for the question of whether a party has

willfully violated the automatic stay, courts have concluded that such questions

are questions of fact. Accordingly, the Bankruptcy Court's determination that a

stay was willfully violated is reviewed for clear error.”) (internal citations

omitted).

2 See 28 U.S.C. § 158.

3 See Shimer v. Fugazy (In re Fugazy Express, Inc.), 982 F.2d 769 (2d Cir. 1992); Colon v. Hart (In re Colon), 941 F.2d 242 (3rd Cir. 1991); Calcasieu

Marine Nat’l Bank v. Morrell (In re Morrell), 880 F.2d 855 (5th Cir. 1989); In re

Fox, 762 F.2d 54 (7th Cir. 1985); Guy v. Dzikowski (In re Atlas), 210 F.3d 1305

(11th Cir. 2000); Graham v. W. Va. (In re War Eagle Constr. Co.), 249 B.R. 686

(S.D. W. Va. 2000); United States v. Midway Indus. Contractors, Inc. (In re Midway Indus. Contractors, Inc.), 178 B.R. 734 (N.D. Ill. 1995).

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the automatic stay?

I. Standard of Review

The applicable standard of review is well-settled:

Whether a party's actions have violated the automatic stay is a

question of law which is reviewed de novo. We review the

bankruptcy court's finding that a creditor's action constituted a

willful violation of the stay for clear error. An award of sanctions

for a violation of the automatic stay is reviewed for an abuse of

discretion.1

II. Is the order from which the Appellant appeals a “final order” since 

the bankruptcy court held the Appellant willfully violated the 

automatic stay but deferred quantifying the award?

The threshold procedural issue is whether the order here is final since it

does not fix the amount of attorney’s fees for violation of the automatic stay. If

we conclude it is not a final order, then we have no jurisdiction to hear this

appeal.2

 We determine that the order is final and that we have jurisdiction to

consider the merits of the appeal.

This is an issue of first impression in this circuit. Courts in other circuits

that have grappled with this issue have reached differing conclusions.3

 One line

of cases holds that an order that decides the merits but defers quantification of

attorney’s fees is a final, appealable order. These courts conclude that a decision

BAP Appeal No. 04-36 Docket No. 39 Filed: 01/11/2005 Page: 3 of 12
4 See In re Colon, 941 F.2d at 245-46. 

5 See In re Fugazy Express, Inc., 982 F.2d at 776; In re Morrell, 880 F.2d at

856-57; In re Fox, 762 F.2d at 55; In re Atlas, 210 F.3d at 1307-08; In re War

Eagle Constr. Co., 249 B.R. at 688; In re Midway Indus. Contractors, Inc., 178

B.R. at 736. 

6 See In re Morrell, 880 F.2d at 856-57.

7 See id. at 197-98.

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on the merits is separate and distinct from the issue of attorney’s fees.4 The

second line of cases holds that there is no final order where quantification of

attorney’s fees is deferred to a later time.5

 These courts reason that this holding

eliminates unnecessary duplicative litigation and thus preserves judicial

resources.6

We find the first line of cases most persuasive. It comports with the

Supreme Court’s decision in Budinich v. Becton Dickinson & Co., 486 U.S. 196

(1988), which arose from this circuit. In Budinich, the petitioner was awarded a

money judgment against the respondent, but filed various new trial motions and a

motion for attorney’s fees. The district court denied the motions and found the

petitioner was entitled to attorney’s fees, but deferred quantifying the amount

pending further briefing. Some months later, the district court entered an order

on the attorney’s fees, and the petitioner filed his notice of appeal. The notice of

appeal concerned all of the petitioner’s post-trial motions.

The respondent then moved to dismiss the appeal because the petitioner had

failed to appeal timely the district court’s order denying the motions for new trial. 

The Tenth Circuit agreed and dismissed the appeal except for the portion of the

appeal regarding attorney’s fees.7

 The Supreme Court upheld the Tenth Circuit’s

decision, concluding that:

Now that we are squarely confronted with the question, however, we

conclude that the § 1291 effect of an unresolved issue of attorney's

fees for the litigation at hand should not turn upon the

characterization of those fees by the statute or decisional law that

BAP Appeal No. 04-36 Docket No. 39 Filed: 01/11/2005 Page: 4 of 12
8 Id. at 201-02.

9 In re Colon, 941 F.2d at 245 (citing White v. N.H., 455 U.S. 445 (1982)). 

10 Id. See also Dunn v. Truckworld, Inc., 929 F.2d 311, 312 (7th Cir. 1991) (“Budinich adopts a sharp line: the merits and awards of fees are always distinct for purposes of finality. The whole point of the case was to end case-by-case

inquiries into the relation between the merits and the fee award. The Supreme

Court chose a rule to enable both the parties and the court of appeals to know

with certainty when the time for appeal begins and ends.”).

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authorizes them.

. . . 

[N]o interest pertinent to § 1291 is served by according different

treatment to attorney's fees deemed part of the merits recovery; and a

significant interest is disserved. The time of appealability, having

jurisdictional consequences, should above all be clear. We are not

inclined to adopt a disposition that requires the merits or nonmerits

status of each attorney's fee provision to be clearly established before

the time to appeal can be clearly known. Courts and litigants are

best served by the bright-line rule, which accords with traditional

understanding, that a decision on the merits is a "final decision" for

purposes of § 1291 whether or not there remains for adjudication a

request for attorney's fees attributable to the case.8

Heeding the holding in Budinich, the Court of Appeals for the Third

Circuit, in a case very similar to this appeal, held that “the determination of the

merits is to be viewed separately from the decision on the right to fees and of

course their quantification.”9

 Relying on Budinich, the Third Circuit remarked:

We read . . . [Budinich] to treat attorneys' fees apart from the merits for purposes of appeal, and we think this is so even though these

proceedings were instituted to assert a violation of the bankruptcy

stay provisions. In view of Budinich, our conclusion is not altered

by the source of the authority for the fees or by the fact that the

source of authority purports to make attorneys' fees part of the

damages.10

The Tenth Circuit has recognized the effect of the holding in Budinich

BAP Appeal No. 04-36 Docket No. 39 Filed: 01/11/2005 Page: 5 of 12
11 See Tyler v. City of Manhattan, 118 F.3d 1400, 1402 n.1 (10th Cir. 1997) (citing Budinich and noting that “[t]he judgment in this case, ordering injunctive relief, resolved all remaining issues on the merits and effectively ended the

litigation. The fact that the original judgment left open the issue of costs and

attorney fees did not deprive the judgment of finality for purposes of appeal.”). 

12 We are aware of the Tenth Circuit’s decision in Lampkin v. Int'l Union, United Auto. Workers (UAW), 154 F.3d 1136 (10th Cir. 1998), which discusses at length Budinich. In Lampkin, a jury returned a verdict for an employee-plaintiff that the unions-defendants had breached their duty to the employee. The unions

sought relief under Rule 50 of the Federal Rules of Civil Procedure, which the

district court denied on March 22, 1996. It later entered a judgment on May 14,

1996, in favor of the employee for attorney’s fees as compensatory damages, and

the unions filed their appeal on May 28, 1996.

The Tenth Circuit sua sponte raised the issue of whether it had jurisdiction where the notice of appeal was filed more than 30 days after entry of the March

22 order and concluded that it did have jurisdiction since “[u]nder the

circumstances of this case the award of attorneys' fees is an award of

compensatory damages for breach of the duty of fair representation . . . which

only incidentally happens to be measured in this instance solely by the attorneys'

fees incurred by the plaintiff Lampkin.” Id. at 1140.

The Tenth Circuit carefully considered Budinich and concluded that “[i]n

spite of the Court's recognition of the need for a bright-line rule, the holding is

not universally applicable.” Id.

We construe Lampkin to apply to the unusual circumstances of that case in which the attorney’s fees were inseparable from the merits. See Barr v. Nat’l

Conference of Bar Exam'rs, 1999 WL 317547, 182 F.3d 931 (10th Cir. 1999) (unpublished decision) (noting the unusual facts of Lampkin are distinguishable). In our view, the bankruptcy court’s conclusion that the Appellant violated the

automatic stay and award of attorney’s fees against the Appellant is separate and

collateral to the quantification of those fees. Unlike Lampkin, the amount of the

fees here was separable from the merits. Therefore, Lampkin is inapplicable to this case.

13 See Phelps v. Washburn Univ., 807 F.2d 153 (10th Cir. 1986) (holding an appeal of an award of attorney’s fees for which an amount has not been fixed was

premature and not a final order). See also, Thomas v. Metroflight, Inc., 814 F.2d

1506 (10th Cir. 1987) (finding the facts similar to Phelps, but deciding not to impose the rule in Phelps retroactively).

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although it has not considered its application under these facts.11,12 Earlier

decisions from the Tenth Circuit are contrary to Budinich.

13 However, both

Phelps and Thomas were decided before the Supreme Court announced its

decision in Budinich, and we believe it clearly controls in this case.

Here, the issue of attorney’s fees is separate and collateral to the merits of

BAP Appeal No. 04-36 Docket No. 39 Filed: 01/11/2005 Page: 6 of 12
14 See e.g., Morrell, 880 F.2d at 857. 

15 See In re Atlas, 210 F.3d at 1307. 

16 Id. at 1308.

17 Budinich, 486 U.S. at 202. 

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the case because the bankruptcy court’s decision on whether the Appellant had

violated the automatic stay effectively ended the litigation. We therefore hold

that we have jurisdiction since the order from which the Appellant appeals is

final.

Our holding rejects the line of cases that holds that there is no final order

until attorney’s fees have been quantified. Those cases reject the approach we

adopt because they claim it causes duplicative litigation and wastes judicial

resources.14 The Court of Appeals for the Eleventh Circuit followed the line of

cases contrary to our decision here in In re Atlas, 210 F.3d at 1308. The Eleventh

Circuit acknowledged Budinich but ruled that the Supreme Court’s decision in

Liberty Mutual Insurance Co. v. Wetzel, 424 U.S. 737 (1976) controlled.15 The

Eleventh Circuit reasoned that:

Therefore, we conclude that Wetzel controls the disposition of this

case, not Budinich. This case does not fall within the parameters of Budinich because this case concerns an award of damages, not just attorney's fees, which has not yet been assessed. This distinction is

crucial to our analysis.16

We do not agree with the Eleventh Circuit because it fundamentally ignores

the Supreme Court’s teaching in Budinich for the need of “a uniform rule that an

unresolved issue of attorney's fees for the litigation in question does not prevent

judgment on the merits from being final” and that “[c]ourts and litigants are best

served by the bright-line rule.”17 Also, the Supreme Court decided Budinich after

Wetzel. Moreover, Wetzel involved a situation where the trial court found

liability but granted no relief whatsoever, which is clearly not the case before

BAP Appeal No. 04-36 Docket No. 39 Filed: 01/11/2005 Page: 7 of 12
18 See Wetzel, 424 U.S. at 742 (“They requested an injunction, but did not get one; they requested damages, but were not awarded any; they requested attorneys'

fees, but received none.”).

19 Fed. R. Civ. P. 52(a).

20 Fed. R. Bankr. P. 9002(1). See Fairchild v. IRS (In re Fairchild), 969 F.2d

866, 868 (10th Cir. 1992). 

21 Patton v. Shade, 263 B.R. 861, 865 (C.D. Ill. 2001) (citing Matter of Gledhill, 76 F.3d 1070, 1077-78 (10th Cir.1996)). 

22 Fed. R. Bankr. P. 7052. 

23 Fed. R. Bankr. P. 9014. See Fairchild, 969 F.2d at 868. 

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us.18

In conclusion, we hold that we have jurisdiction to entertain the

Appellant’s appeal even though the order it appeals did not quantify attorney’s

fees. The attorney’s fees were a separate and collateral issue apart from the

merits of the bankruptcy court’s order on the merits.

III. Is it proper for this Court to review a decision when the bankruptcy 

court failed to make findings of fact?

Rule 52 provides that “[i]n all actions tried upon the facts without a jury or

with an advisory jury, the court shall find the facts specially and state separately

its conclusions of law thereon.”19 Bankruptcy Rule 9002(1) defines an “action” to

include contested matters.20 A motion for sanctions under § 362(h) is a contested

matter governed by Bankruptcy Rule 9014.21 Rule 52 is made applicable to

adversary proceedings by Bankruptcy Rule 7052.22 Unless the bankruptcy court

directs otherwise, which it did not do in this case, Rule 9014 provides that

Bankruptcy Rule 7052 applies to any proceedings concerning a contested matter.23

Thus, under Rule 52(a), as adopted by Bankruptcy Rules 7052 and 9014, in ruling

on a motion for sanctions under § 362(h), a bankruptcy court is required to make

findings of fact and conclusions of law. This rule “serves to (1) engender care on

the part of trial judges in ascertaining the facts; and (2) make possible meaningful

BAP Appeal No. 04-36 Docket No. 39 Filed: 01/11/2005 Page: 8 of 12
24 Joseph A. ex rel. Wolfe v. N.M. Dep't of Human Servs., 69 F.3d 1081, 1087

(10th Cir. 1995.) See also Colo. Flying Acad., Inc. v. United States, 724 F.2d

871, 877 (1984) (“The Rule [52(a)] is designed to provide the appellate court with

a clear understanding of the basis of the trial court's decision and to aid the trial

court in considering and adjudicating the facts.”).

25 Kelley v. Everglades Drainage Dist., 319 U.S. 415, 421-22 (1943).

26 Wolfe, 69 F.3d at 1087 (internal citations omitted). See also Roberts v.

Metro. Life Ins. Co., 808 F.2d 1387, 1390 (10th Cir. 1987) (“[Under Rule 52(a)], the trial court must include as many of the subsidiary facts as necessary to permit

us to determine the steps by which [it] reached its ultimate conclusion. Where the

trial court provides only conclusory findings, unsupported by subsidiary findings

or by an explication of the court’s reasoning with respect to the relevant facts, a

reviewing court simply is unable to determine whether or not those findings are

clearly erroneous.”) (internal citations and quotation omitted).

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appellate review.”24 

The standard for making findings of fact has been articulated by the

Supreme Court as follows: 

It may be that adequate evidence as to these matters is in

the present record. On that we do not pass, for it is not

the function of this court to search the record and

analyze the evidence in order to supply findings which

the trial court failed to make. Nor do we intimate that

findings must be made on all of the enumerated matters

or need be made on no others; the nature of the

evidentiary findings sufficient and appropriate to

support the court's decision as to fairness or unfairness

is for the trial court to determine in the first instance in

the light of the circumstances of the particular case. We

hold only that there must be findings, stated either in the

court's opinion or separately, which are sufficient to

indicate the factual basis for the ultimate conclusion.25

In the Tenth Circuit, “the touchstone for whether findings of fact satisfy Rule

52(a) is whether they are 'sufficient to indicate the factual basis for the court's

general conclusion as to ultimate facts' so as to facilitate a 'meaningful review' of

the issues presented. If a district court fails to meet this standard–i.e. making

only general, conclusory or inexact findings–we must vacate the judgment and

remand the case for proper findings.”26 “It will be sufficient if the findings of

fact and conclusions of law are stated orally and recorded in open court following

the close of the evidence or appear in an opinion or memorandum of decision

BAP Appeal No. 04-36 Docket No. 39 Filed: 01/11/2005 Page: 9 of 12
27 Fed. R. Civ. P. 52(a).

28 Recorded Transcript of Hearing Proceedings, March 16, 2004, Appendix W, Appellant’s Corrected Appendix to Opening Brief, at 83, 130. 

29 In re Fitch, 217 B.R. 286, 288 (Bankr. S.D. Cal. 1998).

30 U.S. Const. art. III, § 2; see generally United States v. Chavez-Palacios, 30

F.3d 1290, 1292 (10th Cir. 1994).

31 Preiser v. Newkirk, 422 U.S. 395, 401 (1975); Chavez-Palacios, 30 F.3d at

1292-93 (10th Cir. 1994).

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filed by the court.”27

In this case, we cannot meaningfully review the appealed order because the

bankruptcy court failed to make sufficient findings of fact for this Court to render

a decision on appeal. At the hearing on the Debtors' motion for turnover, the

court made reference to “several occasions” on which it had heard Chapter 13

cases where “the creditor will repossess the piece of collateral prior to the

bankruptcy being filed, and then is requested to return the collateral and refuses

to do so for a variety of reasons.”28 The court listed a number of the reasons

given by the Appellant for refusing to turn over the truck. Without making any

other findings of fact or conclusions of law, the court immediately granted the

Debtors' motion for turnover, and deferred the decision on sanctions, ordering

Debtors' attorney to file a motion on that issue. The court subsequently issued its

order granting Debtors' motion for sanctions, which again included no findings of

fact. 

It is true that the bankruptcy court in this case faced a common scenario:

“debtor buys car on credit, debtor defaults, creditor repossesses, debtor files a

petition and demands that the car be returned, creditor refuses to return car absent

showing of adequate protection.”29 If only life were that simple. The exercise of

the court's jurisdiction is dependant on the existence of a case or controversy.30

Federal courts are prohibited from rendering an advisory opinion.31 Instead, a

BAP Appeal No. 04-36 Docket No. 39 Filed: 01/11/2005 Page: 10 of 12
32 Preiser, 422 U.S. at 401 (internal quotation omitted).

33 See Roberts, 808 F.2d at 1390.

34 Appellant's Corrected Opening Brief at 7.

35 Id. at 1.

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court's “judgments must resolve a real and substantial controversy admitting of

specific relief through a decree of a conclusive character, as distinguished from

an opinion advising what the law would be upon a hypothetical state of facts.”32

This Court has no doubt that the decision rendered by the bankruptcy court in this

case was based on definite and articulable facts in a real and substantial

controversy. While the court likely considered all of the specific facts available

to it in reaching its decision to grant Debtors' motion for sanctions, this is not

reflected in either the oral or written orders made by the court. In its judgment

and order, the bankruptcy court made only conclusory findings, without providing

a reviewing court with any subsidiary findings or an explication of the court's

reasoning with respect to the relevant facts.33

In the absence of findings of fact to support the bankruptcy court's

decision, this Court is unable to review whether the bankruptcy court committed

clear error when it found that the Appellant willfully violated the automatic stay. 

This case, like all cases, did not strictly adhere to the standard script. For

example, although Debtors' attorney had made a demand for return of the truck on

more than one occasion, it also appears that the Debtors made oral representations

to the Appellant that they “had no intentions of attempting to keep” the truck and

denied any knowledge that their attorney was attempting to recover the truck.34

The Appellant claims that it made repeated unsuccessful attempts to contact the

Debtors' attorney in the days after the petition was filed.35 The truck at issue in

this case apparently had no engine, and was not in working condition during its

BAP Appeal No. 04-36 Docket No. 39 Filed: 01/11/2005 Page: 11 of 12
36 Id. at 5. 

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tenure under Appellant's control.36 Most importantly, it is unclear what, if any,

offer of adequate protection was provided by the Debtors to the Appellant in the

days and weeks following the petition date. In the absence of findings of fact

from the court, we are unable to ascertain what impact, if any, these facts may

have had on the court's judgment. This Court reiterates the statement made in

Kelley, that it is “not the function of this court to search the record and analyze

the evidence in order to supply findings which the trial court failed to make.”

IV. Did the bankruptcy court err in holding that the Appellant violated 

the automatic stay?

This Court is unable to review the judgment of the court below due to the

lack of findings of fact. Courts are divided on the issue of whether a creditor may

await a ruling by a bankruptcy court regarding the adequate protection of their

collateral under § 363(a)(3) before being required to return it to a debtor. We

acknowledge that this case presents a substantial question of law, which is an

issue of first impression in the Tenth Circuit. Due to the controversial nature of

the issue presented in this case, this Court will not proceed on the basis of

inadequate factual findings. 

Conclusion

 We VACATE the judgment entered below, and REMAND with directions

that the bankruptcy court make findings of fact and conclusions of law and enter

judgment in accordance with those findings and conclusions. 

BAP Appeal No. 04-36 Docket No. 39 Filed: 01/11/2005 Page: 12 of 12