Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-almb-2_12-ap-03066/USCOURTS-almb-2_12-ap-03066-0/pdf.json

Parties Involved:
Krystle Nicole Sanders
Plaintiff
Community Cars
Defendant

Document Text:

UNITED STATES BANKRUPTCY COURT

MIDDLE DISTRICT OF ALABAMA

In re Case No. 11-32826-DHW

Chapter 13

KRYSTLE NICOLE SANDERS,

Debtor.

KRYSTLE NICOLE SANDERS,

Plaintiff,

v. Adv. Proc. 12-03066-DHW

COMMUNITY CARS, INC.,

Defendant.

*********

COMMUNITY CARS, INC.,

Counterclaim Plaintiff,

v.

KRYSTLE NICOLE SANDERS,

Counterclaim Defendant.

MEMORANDUM OPINION

In this complaint, Krystle Nicole Sanders, (hereinafter “Sanders”) 

seeks damages against Community Cars, Inc. (hereinafter “Community 

Cars”) for its alleged willful violation of the automatic stay. Community 

Cars asserts a counterclaim against Sanders for breach of contract, unjust 

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enrichment, and wrongful possession.1

 At trial, Sanders was represented 

by counsel, Nicholas H. Wooten, and Community Cars was represented by 

its attorneys, H.C. Ireland, III and Robert W. Heath. For the following 

reasons, the court finds that Community Cars willfully violated the 

automatic stay for which Sanders’ damages are $6,136 plus reasonable 

attorney’s fees. Further, the court finds that Community Cars is not entitled 

to damages for Sanders’ breach of contract.

Jurisdiction

The court’s jurisdiction in this adversary proceeding is derived from 

28 U.S.C. § 1334 and from an order of The United States District Court for 

this district wherein that court’s jurisdiction in title 11 matters was referred 

to the bankruptcy court. See General Order of Reference [of] Bankruptcy 

Matters (M.D. Ala. April 25, 1985). Further, because this adversary 

proceeding involves an alleged violation of the automatic stay, this is a core 

proceeding under 28 U.S.C. § 157(b)(2), thereby extending this court’s 

jurisdiction to the entry of a final order of judgment.

Factual Findings

Sanders purchased a vehicle on credit from the defendant on an 

unspecified date and subsequently filed a chapter 13 for relief in this court 

on October 27, 2011. In the matrix of creditors that accompanied her 

petition, Sanders listed Community Cars with a Post Office Box 680280 

Prattville, Alabama 36068 mailing address. On October 30, 2011, notice of 

Sanders’ bankruptcy was mailed to Community Cars by the Bankruptcy 

Court from the National Bankruptcy Noticing Center using the address 

furnished by Sanders.

Community Cars shares Post Office Box 680280 with Larry Puckett 

Chevrolet, Inc. Both of these businesses are primarily owned by Larry 

Puckett. Duke Caro, the manager of Community Cars, does not have a 

key to the post office box. Typically, either Holly Taylor Foster2(hereinafter 

“Foster”) or another employee of Larry Puckett Chevrolet goes to the Post 

 

1

Prior to trial, the court granted Community Cars’ motion for partial summary judgment on the breach of 

contract count of its counterclaim. However, liquidation of the damages, if any, for that breach was left at 

issue for trial.

2

Foster is a comptroller for both Community Cars and Larry Puckett Chevrolet, however her office is at 

Larry Puckett Chevrolet and most employees of Community Cars are unaware that she is also employed 

by Community Cars.

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Office and picks up the mail from the post office box. After the mail is 

retrieved, it is taken to Larry Puckett Chevrolet where it is sorted between 

the two companies. Community Cars’ mail is then placed in a separate tray 

where an employee of Community Cars stops in to pick it up. However, the 

mail is not placed in an envelope or fastened together in any manner; and 

the walkway in which the tray is located is open to an unspecified number 

of other employees.

Community Cars follows a four step procedure upon receiving a 

notice of bankruptcy. First, a note is placed in the computer stating that the 

debtor for that account is not to be called for collection purposes; second, a 

proof of claim form is completed and submitted to the Bankruptcy Court; 

third, the bankruptcy notice is placed in the file for the account to which it 

pertains; and fourth, the file is placed in a separate filing cabinet which 

holds all of the accounts which are currently in bankruptcy. At the time 

Sanders’ car was repossessed, none of these steps had been taken for her 

account with Community Cars.

On February 7, 2012, Community Cars repossessed Sanders’ 

vehicle. When Sanders discovered her car was missing early that morning, 

she panicked, thinking that it had been stolen. Her mother suggested that 

it may have been repossessed, so she called her bankruptcy attorney’s 

office. An employee in the attorney’s office then contacted Community 

Cars, who confirmed the vehicle had been repossessed. When a 

representative of Community Cars was informed that Sanders had filed for 

bankruptcy, steps were taken to have the vehicle returned and it was

returned to Sanders later that same day.

After Sanders had called her bankruptcy attorney, she continued to 

suffer severe stress over the loss of her vehicle. She experienced chest 

pains, shortness of breath, headache, and a nose bleed. Her mother and 

brother were concerned and took her to the Emergency Room (“ER”) at

Baptist Hospital in Prattville, Alabama. At the ER, she was seen by Dr. 

Eiland, who treated her symptoms and recommended that she follow up 

with a primary care provider as her chest x-ray and CT scan showed that 

she may have either sarcoidosis or lymphoma. Sanders was released from 

the ER later in the afternoon, but followed up with her doctor and suffered 

similar symptoms for several months. She was eventually diagnosed with 

sarcoidosis.

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Sarcoidosis is an auto-immune condition which is often asymptomatic

and may go undiagnosed even after symptoms have presented. 

Sarcoidosis itself is not caused by stress, however the symptoms may 

increase or present during situations involving severe stress. Sanders had 

previously been seen at the ER for symptoms similar to those she 

experienced on February 7, 2012 and her sarcoidosis had developed prior

to that day. However, the stress caused by the repossession of her car 

brought on this particularly severe episode of sarcoidosis which lead to her 

diagnosis.

Due to this episode, she was unable to work for an extended period 

of time and eventually lost her job. She is working again, but her abilities 

are still limited due to continued pain caused by the sarcoidosis. Sanders 

is receiving ongoing treatment for her condition. Sanders’ medical bills 

from the ER on February 7, 2012 were $3,564 and she suffered a loss of 

wages of $72 for her missed work that day; she also suffered severe 

mental anguish which lead to symptoms of sarcoidosis resulting from the 

repossession of her car.

The notice of the order confirming Sanders’ chapter 13 plan was 

mailed on February 2, 2012. Community Cars receive the notification on 

February 7, 2012. While Community Cars had originally submitted 

affidavits stating that the repossession was on a date prior to receiving the 

notice, it has since admitted that the receipt of the confirmation notice and 

the repossession occurred on the same day. 

Sanders eventually surrendered the vehicle to Community Cars and it 

was not working at the time of the surrender. Community Cars sold the 

vehicle and now claims a deficiency of $5,684 plus fees and costs. 

Community Cars never notified Sanders that the car was to be sold nor 

provided her with notification of the disposition of the vehicle nor a 

calculation of the deficiency once the vehicle had been sold.

Legal Conclusions

I. Presumption of Notice

The filing of a bankruptcy petition operates as a stay of Aany act to 

collect, assess, or recover a claim against the debtor that arose before the 

commencement of the case.@ 11 U.S.C. ' 362(a)(6). Actions taken 

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subsequent to a debtor’s filing are in violation of the automatic stay 

irrespective of notice. See Borg–Warner Acceptance Corp. v. Hall, 685 

F.2d 1306 (11th Cir.1982). Further, intentional acts taken against a debtor 

or property of her bankruptcy estate after a case has been filed and with 

knowledge of same may be punishable as contempt of court, subjecting the 

actor to “actual damages, including costs and attorneys’ fees” for a willful 

violation of the automatic stay. See generally Carver v. Carver, 954 F.2d 

1573 (11th Cir. 1992), cert denied, 506 U.S. 986 (1992); see also Jove 

Eng'g, Inc. v. Internal Revenue Service, 92 F.3d 1539, 1555 (11th Cir. 

1996). In order for a defendant to willfully violate the automatic stay, 

specific intent to violate the stay is not required, rather the standard is met 

if the defendant has knowledge of the stay and intends the actions which 

constitute the violation. Goichman v. Bloom (In re Bloom), 875 F.2d 224, 

227 (9th Cir. 1989). 

A properly addressed and stamped letter mailed to a party 

establishes a rebuttable presumption that the letter was received by the 

party to whom it was addressed. In re Robinson, 228 B.R. 75, 81 (Bankr. 

E.D.N.Y. 1998). A party may rely on the court’s certificate of mailing in 

order to create this presumption. Id. Courts have used various standards 

to determined what is required to rebut the presumption. See CUNA

Mutual Insurance Group v. Williams (In re Williams), 185 B.R. 598, 600 

(B.A.P. 9th Cir. 1995). Some have held that denial of receipt along with

evidence of a standardized business practice upon receipt of a notice that 

has not been accomplished is enough to overcome the presumption that 

the notice was received. See id. Other courts have found that such 

evidence of a routine practice is simply another way of merely denying that 

the notice was received. See id.

Here, the parties do not dispute that Community Cars repossessed 

Sanders’ vehicle after she had filed her bankruptcy petition and thus 

violated the automatic stay. However, Community Cars claims that it did 

not have knowledge that Sanders had filed bankruptcy until they were 

called after her car was repossessed. The notice sent to Community Cars

was sent to the proper address for the company. Community Cars

presented evidence of procedures it follows upon receipt of a notice of 

bankruptcy and claims that since none of the four steps were accomplished 

for Sanders’ account, then it has overcome the presumption that it received 

the notice. However, even under the more lenient standard allowing 

evidence of an established procedure to rebut the presumption, Community 

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Cars fails to overcome the presumption due to its flawed mail procedures. 

Community Cars shares its post office box with another company, its mail 

is first taken to that company where it is left in a hallway which is accessed 

by any number of employees until it is picked up and transported back to its 

place of business. Only once the mail has arrived at Community Cars do 

the procedures for safeguarding bankruptcy notices begin. No procedure is 

followed to track the mail from the time when it is retrieved from the post 

office box until it arrives at Community Cars. Because Community Cars did 

not overcome the presumption of receipt of notice, the repossession of 

Sanders’ car constitutes a willful violation of the automatic stay.

II. Damages

A. Counterclaim Damages

Alabama law provides that prior to the sale of a debtor’s vehicle after 

default, the creditor must provide the debtor with notice of the disposition of 

the vehicle. Ala. Code § 7-9A-611 (1975). If there is a deficiency after the 

sale of the vehicle, the creditor is also required to give the debtor a written 

explanation of the calculation of the deficiency. Ala. Code § 7-9A-616. If 

the creditor fails to give the debtor the notice or the calculation, then in a 

consumer goods transaction, the creditor is liable for any damages that 

result due to non-compliance with the requirement, and statutory damages. 

Ala. Code § 7-9A-625 (1975). The official comment outlines three 

approaches that courts have used when determining a creditor’s 

consequences when it attempts to collect a deficiency after non-compliance 

with the article. Some courts have applied an absolute bar to the creditor’s 

collection of a deficiency; some courts have held that the debtor can offset 

against a claim for deficiency all the damages that are recoverable under 

the section; and a plurality of courts have held that the creditor is barred 

from recovering the deficiency unless it can overcome a rebuttable 

presumption that compliance would have resulted in an amount sufficient to 

satisfy the debt. See Folks v. Tuscaloosa Credit Union, 989 So.2d 531, 

536 (Ala. Civ. App. 2007).

The Alabama legislature revised this section of the code and such

revisions became effective in 2002. Id. at 535. Prior to the revisions, 

Alabama courts applied the offset approach in both consumer and nonconsumer transactions. Id. However, in the revisions, the legislature 

applied the rebuttable presumption to non-consumer transactions. Id. The 

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Alabama Court of Civil Appeals determined that this did not mean that it 

was required to apply the rebuttable presumption approach in consumer 

transactions, but that because the legislature did not modify the approach 

for consumer transactions, “it implicitly accepted the use of the setoff 

approach.” Id. at 537. The court also declined to require that the 

rebuttable presumption approach had to be used in consumer transactions, 

because the legislature provided that the adoption of the rebuttable 

presumption approach in non-consumer transactions was intended to 

“leave to the court the determination of the proper rules in consumer 

transactions.” Id. (internal quotation marks omitted). 

In this case, the court granted partial summary judgment to 

Community Cars stating that it is owed for the deficiency on the loan after 

the sale of Sanders’ car; the court left the determination of the amount of 

damages for the trial. (Doc. #25.) However, the evidence presented at the 

trial established that Community Cars did not comply with the provisions of 

Alabama law that require notification of the disposition and a calculation of 

the deficiency. In fact, the only evidence presented concerning the 

deficiency was testimony that it was in the amount of $5,684 plus attorney’s 

fees and that this amount took into account the amount that Community 

Cars received for the sale of the vehicle. No documentation was presented 

as to the value of the vehicle, the amount the vehicle was sold for, or the 

amount that the plaintiff owed on the loan prior to the sale of the vehicle. 

Nor did Sanders present any evidence to establish damages due to the 

non-compliance of Community Cars. In this situation, the court does not 

have enough evidence to apply either the rebuttable presumption or the 

offset approaches, and therefore will apply the absolute bar approach. Due 

to Community Cars’ failure to comply with the requirements set forth in the 

Alabama Code pertaining to the sale of a vehicle after default, Community 

Cars is barred from recovering any deficiency that remained after the sale 

of the vehicle.

B. Plaintiff’s Damages

Section 362 (k)(1) of the Bankruptcy Code allows an individual who 

has been injured by a willful violation of the automatic stay imposed by § 

362 (a)(3) to “recover actual damages, including costs and attorneys’ fees, 

and, in appropriate circumstances, may recover punitive damages.” 11 

U.S.C. § 362 (k)(1) As previously stated, a willful violation does not 

necessarily mean the defendant intended to violate the stay, simply that the 

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defendant had knowledge of the bankruptcy and intended the action which 

violated the stay. Goichman v. Bloom (In re Bloom), 875 F.2d 224, 227 

(9th Cir. 1989). Section 362 (k)(1) does not define the “appropriate 

circumstances” under which punitive damages are recoverable, however, it 

is “well-settled” that more than a willful violation of the stay is required in 

order to impose punitive damages. Credit Nation Lending Services, L.L.C. 

v. Nettles, 489 B.R. 239, 249 (N.D. Ala. 2013). “Appropriate 

circumstances” has been found to require “egregious, vindictive” or 

“malicious” conduct or “conduct accompanied by bad faith.” Id. (internal 

quotation marks and citation omitted). In the Eleventh Circuit, bankruptcy 

courts have not awarded punitive damages without finding weighty 

circumstances. In re McBride, 473 B.R. 813, 822 (S.D. Ala. 2012). 

Generally, punitive damages are not appropriate for a one-time incident, 

but rather for ongoing, vindictive or malicious conduct that causes 

“considerable and foreseeable” harm to the plaintiff. See id.

Sanders has argued Community Cars’ conduct was such that punitive 

damages are appropriate in this case. However, the bulk of Sanders’

evidence demonstrating any type of malice or vindictiveness is the

affidavits which misstate the date on which her car was repossessed. The 

date as stated on the affidavits is prior to the date on which Community 

Cars received notice of the confirmation of Sanders’ plan. Sanders

presented evidence that the date of the repossession was on the same 

date on which such notice was actually received. Community Cars

acknowledged that the dates stated on the affidavits were incorrect and 

claimed that it was confusion which led to the misstatement. The court 

finds that Community Cars did not intentionally misstate this date, but that it 

was due to misinformation or confusion on the part of the affiants. 

Additionally, Sanders’ car was returned the same day on which it was 

repossessed, as soon as Community Cars had verified that she had filed 

for bankruptcy. Therefore, the court has determined that although 

Community Cards did willfully violate the automatic stay, there is nothing in 

its conduct which shows the type of malice or weighty circumstances which 

would make punitive damages appropriate.

In this case, Sanders has requested compensatory damages of 

$3,564 for medical bills, $72 for one day loss of wages3, and damages for

 

3 Although Sanders testified to missing work for months and eventually losing her job, no evidence of further loss or 

reduction of wages has been presented, leaving any damages for such as speculative.

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mental anguish which manifested itself through physical harm; attorney’s 

fees and costs; and punitive damages. This sever episode of symptoms of 

Sanders’ sarcoidosis was brought on by the stress she experienced upon 

realizing that her car had been repossessed. However, sufficient evidence

was presented that she had symptoms of sarcoidosis prior to the car 

repossession, and sarcoidosis itself is not caused by stress. Therefore the 

court awards Sanders compensatory damages of $3,564 for medical bills, 

$72 for loss of wages, and $2,500 for the mental anguish that manifested 

itself in her physical symptoms. The court additionally awards Sanders

attorney’s fees and costs to be determined after her counsel has submitted 

an accounting of his time. For the reasons previously stated, the court 

does not award any punitive damages.

Conclusion

For the foregoing reasons, a separate order will enter finding a willful 

violation of the automatic stay and requiring Community Cars to 

compensate Sanders $3,564 for medical bills, $72 for lost wages, $2,500 

for mental anguish, and yet to be determined attorney’s fees. Community 

Cars is precluded from receiving damages for the deficiency owed after the 

sale of the car. 

Sanders’ attorney may file a statement of his reasonable fees no later 

than fourteen days from the date of this memorandum opinion. Community 

Cars will have fourteen days thereafter to file an objection to the statement 

of fees, if it has any, and if it does so, the matter will be set for hearing.

Done this the 3rd day of January, 2014.

/s/ Dwight H. Williams, Jr.

United States Bankruptcy Judge

c: Nicholas H. Wooten, Attorney for Plaintiff

H.C. Trey Ireland, III, Attorney for Defendant

Robert Wayne Heath, Attorney for Defendant

Curtis C. Reding, Trustee

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