UNITED STATES BANKRUPTCY COURT 

EASTERN DISTRICT OF VIRGINIA 

Richmond Division 

In re: James Douglas Charity, Jr., and Case No. 16-31974-KLP 

 Regina Parker Charity, Chapter 13 

Debtors. 

James Douglas Charity, Jr., and 

Regina Parker Charity, 

 Plaintiffs, 

v. A.P. No. 16-03121-KLP 

NC Financial Solutions of Utah, LLC, 

d/b/a NETCREDIT, 

 Defendant. 

In re: Collin Edmonds and Case No. 16-32554-KRH 

 Bobbie Lane Edmonds, Chapter 13 

 Debtors. 

Collin Edmonds and 

Bobbie Lane Edmonds, 

 Plaintiffs, 

v. A.P. No. 16-03122-KLP 

NC Financial Solutions of Utah, LLC, 

d/b/a NETCREDIT, 

 Defendant. 

In re: Mekeanna Shindrell Lane, Case No. 16-32672-KLP 

 Debtor. Chapter 13 

 

Mekeanna Shindrell Lane, 

 Plaintiff, 

v. A.P. No. 16-03150-KLP 

NC Financial Solutions of Utah, LLC, 

d/b/a NETCREDIT, 

 Defendant. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 1 of 77
2

MEMORANDUM OPINION 

These three adversary proceedings involve similar claims for damages 

resulting from willful violations of the automatic stay by NC Financial 

Solutions of Utah, LLC, d/b/a NetCredit (“NetCredit” or the “Defendant”). 

The individual plaintiffs (individually, the “Plaintiff” and jointly, the 

“Plaintiffs”) are seeking actual damages pursuant to § 362(k)(1) of the 

Bankruptcy Code, 11 U.S.C. § 362(k)(1),1 including compensatory damages, 

punitive damages, and attorneys’ fees. The cases were tried consecutively on 

January 12, 2017. In all three cases, NetCredit admitted liability, and the 

issues at trial were limited to a determination of the appropriate amount of 

damages. 

Prior to trial, a consent order was entered in each case granting a 

motion to bifurcate the claim for attorneys’ fees from the other damage claims 

and providing that an award of attorneys’ fees would be addressed pursuant 

to a subsequent motion process. At the conclusion of the trials, the Plaintiffs 

were instructed to submit their requests for attorneys’ fees within twenty-one 

days, and the Defendant was allowed an additional fourteen days to respond. 

The Court also ordered NetCredit to submit financial information pertaining 

to its value within twenty-one days, allowing the Plaintiffs fourteen days 

thereafter to respond. 

1 All subsequent references to the Bankruptcy Code or references to single statutory sections 

are to 11 U.S.C. §§ 101-1532, unless otherwise noted. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 2 of 77
3

In each adversary proceeding, on February 2, 2017, the Plaintiffs filed 

a “Consolidated Application by Counsel for Plaintiffs for Award of Attorney 

Fees and Reimbursement of Expenses” (the “Application”), to which 

NetCredit objected. On that same date, NetCredit submitted the required 

financial information pertaining to its value and moved that the information 

be filed under seal. The Plaintiffs objected to the motion to file the 

documents under seal. 

A hearing on the Application and NetCredit’s request to seal its 

financial information was held on March 1, 2017. The Court denied 

NetCredit’s motion to seal and took the Application under advisement. 

Following the March 1 hearing, counsel for each of the three law firms 

collectively representing the Plaintiffs filed Disclosures of Compensation 

pursuant to section 329(a) of the Bankruptcy Code, and Bankruptcy Rule 

2016(b), Fed. R. Bankr. P. 2016(b),2 in each case. On March 16, the Plaintiffs 

submitted supplemental, post-trial briefs on the “outstanding issues,” and on 

March 30, NetCredit filed responsive briefs. The matters are ripe for 

adjudication on all issues. 

Jurisdiction and Venue 

The Court has subject matter over each of these adversary proceedings 

pursuant to 28 U.S.C. §§ 157(a) and 1334 and the General Order of Reference 

from the U.S. District Court for the Eastern District of Virginia dated August 

2. All subsequent references to the Bankruptcy Rules will be to Fed. R. Bankr. P. unless 

otherwise noted. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 3 of 77
4

15, 1984. These are core proceedings under 28 U.S.C. § 157(b)(2)(A) and (O) 

in which final orders and judgments may be entered by a bankruptcy judge 

subject to the right of appeal under 28 U.S.C. § 158. Venue is proper in this 

Court pursuant to 28 U.S.C. § 1408. 

Findings of Fact 

These cases involve similar facts and common issues of law. 

Nevertheless, each of the Plaintiffs is seeking discrete compensatory 

damages. In each case, the parties submitted joint stipulations of 

uncontroverted facts that were supplemented by additional evidence in the 

form of testimony and exhibits offered at trial. 

Joint Stipulations Applicable to All Cases 

The following identical stipulations were submitted in each case: 

The parties stipulate that NetCredit violated the automatic stay in 11 

U.S.C. § 362 by contacting the [Debtor/Debtors] more than once and by 

withdrawing money from the [Debtor’s/Debtors’] bank account after 

NetCredit received notice of the Debtor’s/Debtors’] bankruptcy. 

NetCredit had knowledge the automatic stay was in effect and failed to 

stop its collection communications and ACH withdraws which had the 

effect of violating the stay. 

The parties further agree NetCredit reserves the right to argue that no 

damages should be assessed for certain communications with the 

[Debtor/Debtors] that NetCredit contends were not violations of the 

automatic stay. The parties agree the trial will be about damages to be 

awarded, including whether to assess punitive damages. 

Common Facts 

Before filing bankruptcy, Mekeanna Lane, Bobbie Edmonds, and 

Regina Charity (jointly, the “Borrowers”) each obtained an unsecured loan (in 

principal amounts ranging from $2,100.00 to $4,020.00) from NetCredit and 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 4 of 77
5

signed a document entitled Consumer Installment Loan Agreement (the 

“Agreement”).3 The Agreement provided that the Borrowers would pay semimonthly installments of principal and interest to NetCredit. The Agreement 

also authorized NetCredit to receive payment by electronic funds transfer 

from a bank account through the ACH network (the “ACH Authorization”).4 

Payments were automatically withdrawn when due. 

At the time of their bankruptcy filings, each Borrower had an active 

ACH Authorization in place. In each case, NetCredit, after receiving notice of 

the bankruptcy filing, continued to demand payment and continued to 

withdraw funds from the Borrowers’ bank accounts.5

Mekeanna Lane (Adv. Pro. No. 16-03150-KLP) 

Stipulated Evidence

The parties stipulated to the following:6

On April 21, 2016, Mekeanna Lane borrowed $2,100.00 

from NetCredit and subsequently commenced paying NetCredit 

by allowing it to electronically withdraw semimonthly payments 

from her bank account. On May 27, 2016, Ms. Lane filed a 

Chapter 13 bankruptcy case. NetCredit received the Notice of 

3 The material provisions contained in each of the loan documents at issue, aside from the 

loan and repayment amounts, and annual percentage rates, are the same if not identical. 

4 The Agreement provides that NetCredit obtains a “security interest in the ACH 

Authorizations.” It also states that the ACH Authorization is not required in order to enter 

into the loan transaction and, if implemented, may be terminated no later than three 

business days after receiving a termination request. 

5 Plaintiffs James and Regina Charity were not customers of a bank but rather of a credit 

union. For simplicity, that credit union account is included in any reference to the Plaintiffs’ 

“bank accounts.” 

6 The stipulated facts are not a verbatim reproduction of the parties’ stipulation filed with 

the Court but rather a summary of the relevant stipulated facts. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 5 of 77
6

Bankruptcy from the Bankruptcy Notice [sic] Center on June 1, 

2016.

On June 10, 2016, and again on June 24, 2016, NetCredit 

withdrew $83.94 from Ms. Lane’s bank account. On those same 

days, NetCredit sent emails to Ms. Lane thanking her for recent 

ACH payments. On June 30, 2016, NetCredit sent an email to 

Ms. Lane acknowledging the cancellation of her ACH 

authorization. The subject line on the June 30 email stated 

“Your Payment Authorization Has Been Revoked.” The email 

included the following language: 

Please understand that the cancellation of your electronic 

authorization does not relieve you of your obligation to 

repay your loan, and that all payments are still due on 

your scheduled installment dates. Call our Customer 

Support Team . . . to set up arrangements for your next 

payment via check, debit/credit card, Western Union or 

Money Gram. 

Remember that we report payment activity to major 

credit bureaus, and making full and on-time payments 

toward your loan may help you build positive credit 

history. Conversely, late payments could hurt your credit 

score or damage your credit health. 

On June 28, 2016, Ms. Lane filed her adversary 

proceeding. On June 30, NetCredit reversed the June 24 ACH 

debit and returned $83.94 to Ms. Lane. On July 6, 2016, 

NetCredit sent an email to Ms. Lane stating that it had initiated 

a refund to her bank account “for the debit that occurred after 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 6 of 77
7

your bankruptcy filing.” On July 22, 2016, NetCredit, through 

counsel, returned $83.94 to Ms. Lane for the June 10 ACH debit. 

Evidence Presented at Trial 

Ms. Lane filed bankruptcy because she was behind on her mortgage 

payments, credit cards and automobile payments and, despite working 

overtime, was unable to catch up. The income from her employment is the 

sole source of funds to support herself and her nine year old son. She filed 

under chapter 13 in order to consolidate her debts into a single, more 

manageable payment and ultimately obtain a discharge. 

Sometime after filing her petition, Ms. Lane accessed her bank account 

electronically and learned that a payment had been withdrawn by NetCredit. 

This worried and confused her because she understood that the debits from 

her bank account would cease when she filed bankruptcy. In order to replace 

the funds and cover outstanding checks, she borrowed money from her 

mother. 

A second postpetition debit by NetCredit required Ms. Lane to again 

borrow money from her mother. Although her mother has not asked for 

repayment, borrowing from her mother embarrassed Ms. Lane and made her 

feel like a burden, as she knew that her mother had limited resources. She 

worried that something might be wrong with her bankruptcy case. She was 

upset and angry. 

Ms. Lane testified that she had to sign up for overtime to increase her 

income, requiring her to work extra hours. Because of this, she spent less 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 7 of 77
8

time with her son. Ms. Lane makes $28.92 per hour. She missed seven hours 

of work in order to appear at the trial. 

NetCredit’s sole live witness was Joseph Banks, the Bankruptcy 

Manager for an entity known as Enova International, Inc. (“Enova”). 

NetCredit is an online lender that is wholly owned by Enova. Enova also 

owns at least three other subsidiaries,7 including an entity known as 

CashNetUSA, a United Kingdom entity (the “UK entity”), and a “business 

unit” known as Headway. Measuring by volume of loans to customers, 

NetCredit is smaller than CashNetUSA and the UK entity, although Mr. 

Banks testified that “its volume kind of exploded in the last couple of years.” 

As the bankruptcy manager for Enova, Mr. Banks is responsible for 

delegating and overseeing tasks, making personnel decisions, managing his 

team to ensure that each are properly performing his or her duties, 

conducting quality assurance tasks, conducting planning related to 

bankruptcy business practices, and resolving “escalated” customer 

complaints. 

As bankruptcy manager, Mr. Banks supervises a team of four Enova 

employees. Each individual is solely responsible for bankruptcy-related 

duties for one of the four Enova subsidiaries specified by Mr. Banks. One of 

7 At trial, when questioned as to the subsidiaries of Enova, Mr. Banks testified as follows: 

THE COURT: And how many different subsidiaries does it have? 

THE WITNESS: It's up there. So, strictly for bankruptcy, I manage 

our CashNetUSA entity, our UK entity, NETCREDIT, and -- yeah, 

those three, including -- yeah, and then one more: our business unit, 

where we do business --Headway. So, it's four. 

Tr. 109:18-24. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 8 of 77
9

these individuals is solely responsible for managing all the NetCredit 

accounts of customers who have filed bankruptcy. At the time of Ms. Lane’s 

filing, the individual assigned to handle all of NetCredit’s bankruptcy related 

duties was Dansler Dover. 

Mr. Banks testified that NetCredit has tens of thousands, possibly 

hundreds of thousands, of customers. He estimated that close to ten 

thousand of those customers have filed bankruptcy. Mr. Dover was assigned 

all responsibilities relating to these customers, including the processing of 

bankruptcy notices and the preparation and filing of proofs of claim. In 

addition, Mr. Dover was tasked with taking phone calls from customers in 

bankruptcy, which Mr. Banks estimated to average 20 calls a day. 

NetCredit’s bankruptcy representatives utilize and are primarily 

guided by a computer-based application known as a “Wiki.” Mr. Banks 

described the Wiki as “a website where our representatives or our employees 

can search for information . . . . [I]t has our business practices, policies and 

procedures. And the bankruptcy best practices are held . . . on our Wiki.”8 

Mr. Dover, as the designated person to manage bankruptcies for NetCredit, 

was instructed to follow the “business practices” and “process” as set forth on 

the Wiki.9 

When a representative is informed that a customer has filed 

bankruptcy, Enova’s standard practice requires that a bankruptcy case be 

8 Tr. 57:21. Unless otherwise noted herein, all transcript references are to the transcript of 

the trial held January 12, 2017, and docketed in each adversary proceeding. 

9 Tr. 60:21-25. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 9 of 77
10

“opened” by accessing the Wiki and entering the relevant information on the 

customer’s account.10 This process is intended to ensure that no further 

collection action takes place, and if postpetition ACH withdrawals have 

already occurred, ensures that refunds to the customers are initiated.11

According to Mr. Banks, the postpetition collection action that took 

place in Ms. Lane’s case occurred because Mr. Dover did not access and follow 

the correct process on the Wiki. He did not open a bankruptcy case and did 

not terminate the ACH Authorization.12 Mr. Dover’s employment was 

terminated, and the funds improperly debited from Ms. Lane’s account were 

returned to her. 

Mr. Banks stated that after discovering Mr. Dover’s mistakes, a 

quality assurance check was initiated. He did not, however, identify any 

changes in NetCredit’s business practices resulting from the quality 

assurance check. Aside from the opening of a bankruptcy case on the Wiki 

and a return of the postpetition withdrawals to Ms. Lane, no remedial action 

was taken. 

NetCredit relies upon the efficacy of its automated system, the Wiki, 

and the adherence by its employees to its use in order to comply with 

bankruptcy-related requirements. The Wiki generates automated standard 

form emails to customers in response to certain prompts.13 An email similar 

10 Tr. 58:13-24. 

11 Tr. 58-59. 

12 Tr. 61:2-6. 

13 Tr. 61:12-19. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 10 of 77
11

to the “Your Payment Authorization Has Been Revoked” email sent to Ms. 

Lane (stating that “cancellation of your electronic authorization does not 

relieve you of your obligation to repay your loan, and . . . all payments are 

still due on your scheduled installment dates”) is automatically generated 

and routinely sent to customers whose ACH Authorization has been revoked, 

even if the ACH Authorization was revoked because the customer has filed 

bankruptcy.14 Mr. Banks believes that the purpose of this email is not to 

collect a debt and that if he were in bankruptcy he would not think that this 

email was an attempt to collect a debt. He does not think the words of the 

email show an attempt to collect a debt.15 NetCredit has not changed the 

text of this form email and intends to use it whenever an ACH is cancelled for 

a client who has declared bankruptcy.16 

James and Regina Charity (Adv. Pro. No. 16-03121-KLP)

Stipulated Evidence 

The parties stipulated to the following:17 

On March 19, 2015, Regina Charity borrowed $4,020.00 

from NetCredit and subsequently commenced repaying 

NetCredit by allowing it to withdraw semimonthly payments 

14 Tr. 62:11-25; 63:1. 

15 Tr. 66:20. 

16 Tr. 66:21-25. Mr. Banks testified that changing the text of the email is a “technology 

process . . . an exhaustive process. It would take drafting a new email, it would take our dev 

(sic) team to initiate the new email, it would take dev work to initiate the process to review 

the automations. So, it – it would take a process.” When asked if NetCredit had started the 

process, Mr. Banks replied “no.” Tr. 67:7-8. 

17 The stipulated facts are not a verbatim reproduction of the parties’ stipulation filed with 

the Court but rather a summary of the relevant stipulated facts. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 11 of 77
12

electronically from her credit union account. On April 20, 2016, 

James and Regina Charity filed a joint Chapter 13 bankruptcy 

case. NetCredit received the Notice of Bankruptcy Filing from 

the Bankruptcy Notice [sic] Center on April 22, 2016. 

On April 25, 2016, NetCredit sent an email with the 

subject line “Friendly Reminder regarding your NetCredit 

account” to Mrs. Charity. The email notified Mrs. Charity that 

her account was past due and that she should make a payment. 

On April 29, May 2, May 13, and May 16, 2016, NetCredit 

sent emails to Mrs. Charity thanking her for her recent 

payments. On May 18, 2016, NetCredit sent another “Friendly 

Reminder” email to Mrs. Charity advising her that her account 

was past due. 

On May 18, 2016, NetCredit sent an email with the 

subject line “Bankruptcy Documentation Received” to Mrs. 

Charity. The email stated that NetCredit had received 

documentation related to Mrs. Charity’s bankruptcy filing and 

that notification had been routed to its bankruptcy department. 

It also stated that “[o]nce we have confirmed your bankruptcy 

filing status, we will ensure that no further collections efforts 

will be made on your account.” 

On May 21, 2016, NetCredit sent an email to Mrs. 

Charity stating that “per her request” it had canceled her ACH 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 12 of 77
13

Authorization. This communication included the following 

language: 

Please understand that the cancellation of your electronic 

authorization does not relieve you of your obligation to 

repay your loan, and that all payments are still due on 

your scheduled installment dates. Call our Customer 

Support Team . . . to set up arrangements for your next 

payment via check, debit/credit card, Western Union or 

Money Gram. 

Remember that we report payment activity to major 

credit bureaus, and making full and on-time payments 

toward your loan may help you build positive credit 

history. Conversely, late payments could hurt your credit 

score or damage your credit health. 

Between April 22 and May 18, 2016, NetCredit’s records 

reflect that it made nine telephone calls to the Charity’s home 

phone number, nine calls to another phone number for Mrs. 

Charity, and nine calls to Surry County High School, Mrs. 

Charity’s employer.18 The call records indicate that most calls 

were not answered, and on most occasions no messages were 

left. NetCredit’s records also indicate that during the last call, 

placed on May 18, Mrs. Charity spoke with a representative and 

informed NetCredit of her bankruptcy. 

18 Mrs. Charity testified that phone calls from NetCredit to her place of employment were 

directed to the school office and, in some instances the calls would come to her in her 

classroom, which embarrassed her in front of her coworkers. On cross examination, however, 

Mrs. Charity admitted that any NetCredit calls to her classroom had been received before 

her bankruptcy filing, as she had retired on July 1, 2015, and was no longer working at 

Surry County High School at the time of her filing. NetCredit’s call log indicates that no 

messages were left in connection with the calls to Surry County High School after the 

bankruptcy filing. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 13 of 77
14

On April 29 and again on May 2, 2016, NetCredit 

withdrew $175.22 from Ms. Charity’s credit union account 

through an authorized and regularly scheduled ACH debit. On 

May 13 and again on May 16, 2016, the credit union charged a 

$30.00 overdraft fee. The credit union also charged a stoppayment fee of $25.00 on May 18, 2016. 

On July 1, 2016, NetCredit was served with the 

Complaint in this Adversary Proceeding. On July 22, 2016, 

NetCredit, through its counsel, returned $350.44, representing 

the post-petition credit union account withdrawals, to Mr. and 

Mrs. Charity. 

Evidence Presented at Trial 

Mr. and Mrs. Charity filed bankruptcy because Mr. Charity was out of 

work due to injury and the couple was behind on their bills. They had been 

receiving calls from bill collectors and were facing a foreclosure on their 

home. The bankruptcy was intended to provide relief from creditors’ calls, 

stop the foreclosure, and enable them to pay their debts through the Chapter 

13 trustee. 

Mrs. Charity testified that she was upset and angry when she 

continued to receive calls from NetCredit after her bankruptcy filing, 

although she did not answer most of the calls or they were received by her 

husband. She wondered whether her attorneys were properly representing 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 14 of 77
15

her and whether the Chapter 13 trustee was making payments as she had 

been told he would. 

Mrs. Charity discovered the post-bankruptcy debits of her credit union 

account by checking her account online. She borrowed money from her 

husband in order to prevent checks she had written from bouncing.19 She 

had to call other creditors to seek delays in payment and on at least one 

occasion placed a stop payment to prevent further debits from NetCredit. 

Her fear that NetCredit would continue to make withdrawals prompted her 

to close her credit union account, relying upon the advice of counsel. 

On May 18, 2016, Mrs. Charity and Jennifer Williams, a 

representative of NetCredit who works in Enova’s call center, spoke by 

telephone. At that time, Ms. Williams asked Mrs. Charity for the name and 

telephone number of her bankruptcy attorney, verified Ms. Charity’s email 

address and demanded proof of Mrs. Charity’s bankruptcy filing within seven 

business days before NetCredit would cease collection action. This 

conversation further confused Mrs. Charity because she had understood that 

creditor action would cease automatically. NetCredit’s demands caused her 

to again question whether her attorneys were properly advising her. 

19 The Joint Stipulations submitted in this case state that NetCredit debited “the Debtors’ 

bank, Hampton Roads Educators’ Credit Union” suggesting that the account which was 

debited was a joint account of Mr. and Mrs. Charity; however, Mrs. Charity’s testimony, in 

which she consistently referred to the account as “my account,” along with testimony that 

she borrowed money from Mr. Charity to replenish the account so as to avoid overdrafts, 

establishes that Mr. Charity did not share an interest in that account. In his testimony, Mr. 

Charity acknowledged that it was his wife’s account that had been debited. As a result, Mr. 

Charity was not directly impacted by the account debits. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 15 of 77
16

Mrs. Charity testified that NetCredit’s actions affected her work 

performance,20 created tension and loss of sleep, made her short tempered 

and adversely affected her relationship with her husband and daughter. 

After NetCredit ceased collection activities, she testified that these problems 

largely disappeared. 

Mr. Charity’s testimony corroborated that the decision to file 

bankruptcy stemmed from his work-related injury. He recalled Mrs. Charity 

asking him for money to cover shortfalls resulting from NetCredit’s debit of 

her credit union account. He confirmed that NetCredit continued to call their 

home phone following the bankruptcy filing but stated that he avoided 

answering most of the calls or would just hang up the phone. 

Mr. Charity stated that Mrs. Charity’s attitude and spirit were 

negatively impacted by NetCredit’s actions, which adversely affected her 

interactions with their children. Their marital relationship and sex life were 

also negatively affected. Mr. Charity testified that Mrs. Charity’s stress was 

manifested in physical ways, such as developing knots and wrinkles in her 

face and other changes to her appearance “even to the point that she had hair 

falling out of her head.”21 He added that in their forty years of marriage, he 

had never seen her so dispirited. 

20 Once again, it appears unlikely that Mrs. Charity’s work-related symptoms were caused by 

the postpetition actions of NetCredit, since Mrs. Charity had retired before she filed her 

bankruptcy case. 

21 Tr. 144:22. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 16 of 77
17

Joseph Banks’ prior testimony in the Lane case was incorporated into 

the record of the Charity case by agreement. In supplemental testimony, Mr. 

Banks added that the automatic stay violations in this case occurred because 

Dansler Dover failed to properly follow Enova’s business practices related to 

bankruptcy. He also testified that NetCredit’s collection calls to customers 

are computer-generated. A record is kept of the call, including the date and 

time, and all calls are recorded. The system is designed to terminate 

telephone calls automatically once a bankruptcy case is opened. He further 

testified that once Mrs. Charity informed Ms. Williams of her bankruptcy, 

Ms. Williams should have “open[ed] a case and utilize[d] the proper 

scripting.”22

Mr. Banks testified that the May 18, 2015, email with the subject line 

“Bankruptcy Documentation Received” was sent to Mrs. Charity by Ms. 

Williams after their telephone conversation. Ms. Williams chose the text of 

this email from an “email bank” contained on the Wiki. The email informed 

Mrs. Charity that after NetCredit confirmed her bankruptcy no further 

collection activity would take place. Mr. Banks stated that Ms. Williams 

chose the incorrect email from the email bank and should have sent an email 

stating that Mrs. Charity had informed NetCredit of her bankruptcy instead 

of stating that NetCredit had received documentation of the bankruptcy.23 

22 Tr. 163:11-12. 

23 “It's just that in this email it starts off: ‘We have received documentation related to your 

bankruptcy filing.’ And . . . Ms. Charity didn't send us documentation; she called. So I'm 

saying that Jennifer Williams sent the wrong email. It's purely schematics (sic). . . . She just 

sent the wrong email. She went -- she -- so there's a list of emails for bankruptcy. Instead of 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 17 of 77
18

Collin Edmonds and Bobbie Lane Edmond (Adv. Pro. No. 16-03122-KLP) 

Stipulated Evidence 

The parties stipulated to the following:24 

On March 28, 2016, Bobbie Lane Edmonds borrowed 

$3,000.00 from NetCredit and subsequently commenced paying 

NetCredit by allowing it to electronically withdraw semimonthly payments from her bank account. On May 20, 2016, 

Mr. and Mrs. Edmonds filed a Chapter 13 bankruptcy case. 

NetCredit received the Notice of Bankruptcy from the 

Bankruptcy Notice [sic] Center on May 25, 2016. 

On May 31 and June 15, 2016, NetCredit sent emails to 

Mrs. Edmonds thanking her for her recent payments. On June 

20 and June 28, 2016, NetCredit sent emails to Mrs. Edmonds 

with the subject line “Friendly Reminder regarding your 

NetCredit account,” notifying her that her account was past due 

and that she should make a payment. 

On July 5, 2016, NetCredit sent Mrs. Edmonds an email 

with the subject line “Important Information about your 

NetCredit account.” The email notified Mrs. Edmonds that her 

sending an email that merely says you have contacted us and informed us you filed 

bankruptcy, she sent an email that says we have received documentation.” Tr. 159:8-12,19-

24. 

24 The stipulated facts are not a verbatim reproduction of the parties’ stipulation filed with 

the court but rather a summary of the relevant stipulated facts. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 18 of 77
19

account was unpaid and that her failure to pay might adversely 

affect her credit standing. 

Between June 18 and July 6, 2016, NetCredit’s records 

reflect that it made fifteen telephone calls to Mrs. Edmonds’ cell 

phone and fourteen calls to Mrs. Edmonds’ work phone. The call 

records indicate that most calls were not answered. On most 

occasions, including all of the calls to Mrs. Edmonds’ work 

phone, messages were left. 

On May 31, 2016, NetCredit withdrew $132.69 from Mrs. 

Edmonds’ bank account through a regularly scheduled ACH 

Authorization.25 On that same day, Mrs. Edmonds incurred an 

overdraft fee of $144.00 as a result of the ACH debit. 

The Edmondses’ amended complaint against NetCredit 

was filed on June 30 and served on NetCredit on July 5, 2016. 

NetCredit, through its counsel, returned $132.69 to the 

Edmondses on July 22, 2016. 

Evidence Presented at Trial 

 The Edmondses26 filed bankruptcy because they had gotten behind on 

their mortgage after paying for a new furnace. They also had IRS debt and 

“lots of credit cards.”27 Another creditor had attached her bank account. 

25 Mr. Edmonds’ testimony establishes that the bank account debited by NetCredit was 

owned solely by Mrs. Edmonds. Tr. 188:19-21. 

26 Mrs. Edmonds is the mother of Plaintiff Mekeanna Lane. 

27 Tr. 174:8-19. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 19 of 77
20

They were receiving numerous calls from creditors. They understood that 

filing bankruptcy would allow them to pay what they could afford, stop the 

calls from creditors and relieve them from the stress they were under. 

Mrs. Edmonds routinely checks her bank account status each morning. 

On May 31, 2016, she discovered that her account was overdrawn by $544.00 

and that NetCredit had debited her account $132.69. She found this very 

upsetting because she had thought that filing bankruptcy would prevent 

something like this from happening. Part of the overdraft was $144.00 that 

was charged in bank fees as a result of the NetCredit debit. She was unable 

to deposit sufficient funds to bring her account current, and her bank 

subsequently closed the account. 

On June 15, 2016, Mrs. Edmonds received an email from NetCredit 

thanking her for an ACH payment of $132.69. Mrs. Edmonds was aware that 

her bank account did not have funds available for this debit and assumed it 

would add to her overdraft. 

A few days later, Mrs. Edmonds began receiving collection calls from 

NetCredit at home and at work. The calls at work were particularly 

disruptive and affected her disposition. The phone calls were also upsetting 

to Mr. Edmonds, though he usually reported them to Mrs. Edmonds and 

didn’t answer them himself. 

Before trial, Mrs. Edmonds started working in a new department with 

her employer. She took two days off from work to attend the trial in this 

adversary proceeding, which made her nervous about how her new 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 20 of 77
21

supervisors would perceive her work habits. She works five days a week and 

makes $63,000.00 annually. 

Joseph Banks’ prior testimony in the Lane case was incorporated into 

the record of the Edmonds case by agreement. In supplemental testimony, 

Mr. Banks testified that the postpetition collection calls and ACH debits took 

place because the bankruptcy representative for NetCredit, Dansler Dover, 

did not follow business practices related to NetCredit’s bankruptcy process. 

He acknowledged that NetCredit had attempted, without success, to debit 

Mrs. Edmonds’ bank account on June 15, 2016. In order to “fix” NetCredit’s 

mistakes, the funds improperly debited from Mrs. Edmonds’ account were 

returned to her and Mr. Dover was terminated from his employment. Mr. 

Banks also initiated “quality-assurance checks related to NetCredit and 

bankruptcy.”28 In connection with the quality-assurance check, Mr. Banks 

did not verify how many cases Mr. Dover mishandled nor did he investigate 

how many times NetCredit engaged in improper postpetition conduct with a 

debtor who had declared bankruptcy. 

A couple of months before Mr. Dover’s mishandling of the Charity 

bankruptcy, Mr. Banks had discussed Mr. Dover’s job performance with him. 

He had additional conversations with Mr. Dover after receiving the complaint 

in the Charity case. Mr. Banks had thought his conversations with Mr. 

Dover about the importance of not violating the automatic stay were 

adequate steps to address Mr. Dover’s performance problems at that time. 

28 Tr. 194:20-25; 195:1-2. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 21 of 77
22

Conclusions of Law 

The parties agree that in each of the three cases before the Court 

NetCredit willfully violated the automatic stay.29 As stipulated by the 

parties, the only issues here are to what extent the Court should award 

damages. 

The remedies for willful violations of the automatic stay are set forth 

in § 362(k)(1) of the Bankruptcy Code. That section provides generally that 

“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.” An award of 

actual damages is mandatory. Ojiegbe v. Walter (In re Ojiegbe), 539 B.R. 474, 

479 (Bankr. D. Md. 2015).30 The burden is on the debtor to establish 

damages by a preponderance of the evidence, and the award “must be 

29 Each case includes this stipulation. “The parties stipulate that NetCredit violated the 

automatic stay in 11 U.S.C. § 362 by contacting the Debtors more than once and by 

withdrawing money from the Debtors’ bank account after NetCredit received notice of the 

Debtors’ bankruptcy. NetCredit had knowledge the automatic stay was in effect and failed to 

stop its collection communications and ACH withdraws which had the effect of violating the 

stay.” 

 In order to establish that a violation was willful, a creditor “need not act with specific 

intent but must only commit an intentional act with knowledge of the automatic stay. See 

Budget Service, 804 F.2d at 292–93; In re Atl. Business & Community Corp., 901 F.2d 325, 

329 (3d Cir. 1990).” Citizens Bk. of Md. v. Strumpf (In re Strumpf), 37 F.3d 155, 159 (4th Cir. 

1994), rev’d on other grounds, 516 U.S. 16 (1995). The above stipulation establishes that 

NetCredit had knowledge of the automatic stay and thereafter deliberately continued 

collection action. Though the word “willful” is not specifically included in the stipulation, 

NetCredit’s acceptance of the stipulation is tantamount to admitting that its violations of the 

stay were “willful.” See Scott v. Wells Fargo Home Mortg., Inc., 326 F.Supp.2d 709, 718 (E.D. 

Va. 2003) (“Willful conduct refers to deliberateness of conduct and knowledge of bankruptcy 

filing, not to specific intent to violate court order.”). 

30 “The award of actual damages is mandatory upon a finding of a willful violation of § 362.” 

Ojiegbe v. Walter (In re Ojiegbe), 539 B.R. 474, 479 (Bankr. D. Md. 2015) (quoting In re 

Clayton, 235 B.R. 801, 810 (Bankr. M.D.N.C. 1998)). 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 22 of 77
23

founded on concrete, non-speculative evidence.” Id. (quoting In re Seaton,

462 B.R. 582, 595 (Bankr. E.D. Va. 2011)).31 

Compensatory Damages 

Actual damages include those actually incurred by the debtor. 

Skillforce, Inc. v. Hafer, 509 B.R. 523, 534 (E.D. Va. 2014). Actual losses may 

include lost time damages, out-of-pocket expenses and emotional damages. 

In re Ojiegbe, 539 B.R. at 479. 

Although emotional distress is generally included as an available 

component of “actual damages” under § 362(k),32 courts are divided over 

when it is appropriate to award emotional distress damages. This Court, in 

In re The Original Barefoot Floors of America, Inc., 412 B.R. 769, 776-77 

(Bankr. E.D. Va. 2008) and more recently in In re Seaton, 462 B.R. 582, 600-

603 (Bankr. E.D. Va. 2011), after noting the absence of definitive precedent in 

the Fourth Circuit, examined cases decided by other circuit courts and the 

decisions of other courts within the Fourth Circuit before concluding that 

damages for emotional distress may be allowed under § 362(k)(1). 

31See also Warren v. Dill (In re Warren), 532 B.R. 655, 660-61 (Bankr. D.S.C. 2015) 

(reviewing the split of opinion regarding the burden of proof to apply in an action for willful 

violation of the automatic stay and concluding that the majority of courts have adopted the 

preponderance of the evidence standard). 

32 In Lansaw v. Zokaites (In re Lansaw), 853 F.3d 657, 664-68 (3d Cir. 2017), the Third 

Circuit recently held that damages for emotional distress are available under § 362(k), 

joining the First , Ninth and Eleventh Circuits, which it noted have expressly ruled that 

damages for emotional distress may be recovered under § 362(k), citing Lodge v. Kondaur 

Capital Corp., 750 F.3d 1263, 1271 (11th Cir. 2014); Dawson v. Wash. Mut. Bank, F.A. (In re 

Dawson), 390 F.3d 1139, 1148 (9th Cir. 2004), abrogation on other grounds recognized in 

Gugliuzza v. FTC (In re Gugliuzza), 852 F.3d 884, 896 (9th Cir. 2017); Fleet Mortg. Grp., Inc. 

v. Kaneb, 196 F.3d 265, 269 (1st Cir. 1999). The court in Lansaw further noted that the 5th 

and 7th Circuits have not ruled out the possibility that such damages may be recoverable 

under certain circumstances, citing Young v. Repine (In re Repine), 536 F.3d 512, 522 (5th 

Cir. 2008); Aiello v. Providian Fin. Corp., 239 F.3d 876, 880 (7th Cir. 2001). 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 23 of 77
24

In Seaton, Judge St. John found that a number of courts, recognizing 

that emotional damages may be more easily manufactured than other types 

of damages, have held that emotional damage awards under § 362(k) must be 

supported by “specific information” rather than “generalized assertions.” 462 

B.R. at 601 (citing Young v. Repine (In re Repine), 536 F.3d 512, 521-22 (5th 

Cir. 2008); Fleet Mortg. Grp., Inc. v. Kaneb, 196 F.3d 265, 270 (1st 

Cir.1999)).33 Judge St. John held that the appropriate standard is that 

genuine emotional distress damages should be compensable, even in the 

absence of related financial loss, but only if the debtor can clearly establish 

that he suffered a significant harm and demonstrates a causal connection 

between the significant harm and the actions taken in violation of the stay. 

462 B.R. at 603.34 This standard has been adopted by other circuits and is 

the standard that should be applied in the instant cases.35 

33 At least one circuit court has held that emotional injury is not compensable unless it can 

be linked to a causally related financial injury. See Aiello v. Providian Fin. Corp., 239 F.3d 

at 880. 

34 In In re Seaton, 462 B.R. 582, 602 (Bankr. E.D. Va. 2011), Judge St. John quoted Page 

Ventures, LLC v. Ventura–Linenko (In re Ventura–Linenko), No. 3:10–cv–138–RCJ–RAM, 

2011 WL 1304464, at *9 (D. Nev. Apr. 1, 2011) (“Fleeting or trivial anxiety or distress does 

not suffice to support an award; instead, an individual must suffer significant emotional 

harm. An individual must establish that he or she was injured by the violation to be eligible 

to claim actual damages.”) (internal citation omitted). 

35 See Lodge v. Kondaur Capital Corp., 750 F.3d at 1271 (The Eleventh Circuit opined that 

“we join other circuits in concluding that emotional distress damages fall within the broad 

term of ‘actual damages’ in § 362(k). We share, however, the Fifth, Seventh, and Ninth 

Circuits' caution that not every willful violation of the stay merits compensation for 

emotional distress and that a standard governing such claims is necessary. We thus hold 

that, at a minimum, to recover ‘actual’ damages for emotional distress under § 362(k), a 

plaintiff must (1) suffer significant emotional distress, (2) clearly establish the significant 

emotional distress, and (3) demonstrate a causal connection between that significant 

emotional distress and the violation of the automatic stay.”). The Court takes note of Judge 

Lee’s decision in Erhart v. Fina, (In re Fina), No. 1:12-cv-660 (GBL-TCB), 2012 WL 12870343 

(E.D. Va. Nov. 14, 2012), aff’d sub nom. Bradley v. Fina (In re Fina), 550 F. App’x 150 (4th 

Cir. 2014), finding that while emotional distress damages are generally not recoverable in 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 24 of 77
25

Mekeanna Lane’s Compensatory Damages 

After Ms. Lane’s bankruptcy filing, NetCredit withdrew $83.94 from 

her bank account on two separate occasions. All of the improperly withdrawn 

funds, totaling $167.88, were returned to Ms. Lane by NetCredit prior to the 

trial in this case. 

Ms. Lane established that she missed seven hours of work due to 

NetCredit’s improper actions. She makes $28.92 per hour. Accordingly, Ms. 

Lane’s actual damages include $202.44 in lost income. Ms. Lane presented 

no other evidence of financial loss associated with NetCredit’s actions. She 

claimed no other out of pocket expenses. 

Ms. Lane’s claim for damages for emotional distress is primarily based 

on the embarrassment and guilt she claims to have suffered by having to 

borrow money from her mother after NetCredit debited her bank account. 

NetCredit’s improper postpetition communications and the improper 

withdrawals caused her to feel confused and angry. Ms. Lane also testified 

that it was necessary to increase her hours at work in order to make up for 

her financial loss and that her increased time at work left her unable to 

devote as much time to her nine year old son as she would have liked. 

Applying the standard set forth in Seaton for an award of emotional 

distress damages, the Court finds that Ms. Lane has failed to establish that 

she suffered significant emotional harm as a result of NetCredit’s actions. 

civil contempt proceedings, such damages may be recovered in connection with automatic say 

violations provided the standards set forth in Seaton are met. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 25 of 77
26

Her assertions of emotional distress were vague, generalized, and otherwise 

not established with any degree of specificity.36

Ms. Lane’s claim that her relationship with her son suffered due to 

NetCredit’s actions is based on her assertion that debiting her bank account a 

total of $167.88, an amount that she was able to borrow from her mother and 

that was subsequently returned by NetCredit, required her to work extra 

hours and spend less time with her son. The Court does not find this claim of 

distress to be credible. Ms. Lane acknowledged that she had already been 

working overtime in an effort to avoid a bankruptcy filing. The additional 

hours worked after her bankruptcy filing that could be attributable to 

NetCredit’s automatic stay violations would have been relatively 

36 In Seaton, 462 B.R. at 603-04, Judge St. John offered some guidance as to how an 

individual may establish that he or she suffered significant emotional harm, quoting with 

approval the following language from Page Ventures, LLC v. Ventura–Linenko, 2011 WL 

1304464, at *9: 

A person may establish that he or she suffered significant emotional harm 

in several ways. First, the person could offer corroborating medical 

evidence. Second, non-experts, such as family members, friends, or 

coworkers may testify to manifestations of mental anguish. Third, if the 

violator engaged in egregious conduct, the significant emotional distress 

may be readily apparent without corroborative evidence. To illustrate, a 

creditor engaged in egregious conduct when he entered the debtor's home 

at night, doused the lights, and pretended to hold a gun to the debtor's 

head. Fourth, even if the conduct is not egregious, the circumstances may 

make it obvious that a reasonable person would suffer significant 

emotional harm. To illustrate, a debtor suffered emotional harm when she 

was forced to cancel her son's birthday party because her checking account 

had been frozen. 

Judge St. John found the plaintiffs’ claims of emotional distress in Seaton to be “problematic” 

and “disproportionate” to the acts committed by the creditor. 462 B.R. at 603. Likewise, the 

evidence presented by Ms. Lane falls short of establishing significant mental anguish 

resulting from NetCredit’s automatic stay violations. Ms. Lane’s testimony regarding the 

embarrassment occasioned by having to borrow money from her mother was neither credible 

nor convincing. The Court notes that her mother is Bobbie Lane Edmonds, a plaintiff in one 

of these associated cases who filed her bankruptcy one week before Ms. Lane and whose bank 

account was also improperly debited by NetCredit. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 26 of 77
27

inconsequential.37 More importantly, Ms. Lane again presented no evidence 

of specific harm to her relationship with her son but instead offered only 

generalized assertions. 

Ms. Lane incurred actual compensatory damages in the amount of 

$202.44 resulting from lost income. She has not met her burden of 

establishing by a preponderance of the evidence that she is entitled to 

damages for emotional distress. 

James and Regina Charity’s Compensatory Damages 

NetCredit withdrew $175.22 from Mrs. Charity’s credit union account 

on two occasions, once on April 29, 2016, and again on May 18, 2016, after 

Mr. and Mrs. Charity filed bankruptcy. On July 22, 2016, NetCredit 

returned $350.44 to Mr. and Mrs. Charity. Therefore, at the time of trial, all 

funds improperly withdrawn had been returned. 

Mrs. Charity incurred two overdraft fees of $30.00 each, along with a 

stop payment fee of $25.00, that were caused by NetCredit’s improper 

withdrawals from her credit union account. Those charges, totaling $85.00, 

were not reimbursed by NetCredit. Mr. and Mrs. Charity drove a total of 132 

miles to attend the trial.38 There is no evidence that Mr. and Mrs. Charity 

incurred any other financial losses as a result of NetCredit’s stay violations. 

37 Ms. Lane was already working overtime prior to her bankruptcy filing because she was 

behind on her mortgage payments, credit cards and automobile payments. Tr. 22-23. The 

impact on her ability to spend time with her son could not have been significantly affected by 

the temporary loss of $167.88 when her rate of pay was $28.92 per hour. 

38 Although no evidence of actual costs incurred for transportation was offered, the Court 

takes judicial notice that the standard mileage rates for business, medical and moving 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 27 of 77
28

NetCredit’s post-bankruptcy collection calls and credit union account 

withdrawals caused Mrs. Charity to suffer inconvenience, confusion, stress, 

disappointment, and anger. She was required to borrow money from her 

husband in order to replenish her credit union account and contend with 

other creditors whose payments were delayed. It became necessary to place a 

stop payment on her credit union account in order to prevent future 

unauthorized withdrawals. 

The effect that NetCredit’s continuing collection activities had on Mrs. 

Charity went beyond the normal stress and frustration that would ordinarily 

be associated with dealing with a creditor that fails to readily comply with a 

bankruptcy stay. In this case, NetCredit’s actions caused an emotional harm 

that was manifested by changes in Mrs. Charity’s behavior and physical 

appearance. Mr. Charity testified that there was a change in Mrs. Charity’s 

attitude and spirit that he had not previously seen during their forty years of 

marriage. He stated that her demeanor and appearance changed “even to the 

point that she had hair falling out of her head.” The evidence clearly 

establishes that Mrs. Charity incurred some degree of significant emotional 

harm as a result NetCredit’s stay violations. 

Despite Mr. Charity’s unchallenged testimony, the extent of Mrs. 

Charity’s emotional distress is difficult to ascertain. Without corroborating 

medical evidence or circumstances that would make the reasonable likelihood 

recognized by the Internal Revenue Service for 2017 is 53.5 cents per mile. IR-2016-169, 

December 13, 2016. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 28 of 77
29

of significant emotional harm obvious, it is difficult to distinguish the harm 

caused by a violation of the automatic stay from other sources of stress 

typically experienced by many debtors in bankruptcy.39 In Mrs. Charity’s 

case, her questionable contention that NetCredit’s stay violations led to workrelated stress and had adverse effects on her employment creates some 

uncertainty regarding the sources of her emotional distress. Mrs. Charity 

testified that she was employed as a teacher at Surry County High School 

and that the collection calls, some of which came to her in the classroom and 

others through the school office, were very embarrassing and frustrating. 

Her testimony was that these workplace calls contributed to the emotional 

distress she claims to have suffered due to NetCredit’s stay violations. The 

record is clear, however, that Mrs. Charity retired from teaching on July 1, 

2015, which was more than nine months before her bankruptcy filing. 

Therefore, the embarrassing calls to her place of employment must have 

occurred before she filed bankruptcy. Moreover, as she and Mr. Charity 

acknowledged, their bankruptcy filing was intended to provide relief from 

stressful creditor calls and foreclosure proceedings. It is therefore reasonable 

to conclude that some degree of Mrs. Charity’s emotional distress was derived 

from sources other than the stay violations. Mrs. Charity’s association of 

39 “Segregating the emotional distress experienced by a debtor from the automatic stay 

violation from other stress sources may be problematic.” In re Seaton, 462 B.R. at 602. The 

court in Seaton thus observed that “[t]his leads the Court to ponder whether the extent of the 

Seatons’ distress was not proximately caused by the removal and disposal of some items of 

their personality but, rather, represents the cumulative stress caused by Mr. Seaton’s injury, 

his unemployment, their son’s diagnosis of illness, their bankruptcy filing, and the 

embarrassment of their ouster from the Apartment, none of which is causally related to any 

stay violation here.” Id. at 603. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 29 of 77
30

NetCredit’s pre-bankruptcy workplace calls to her emotional damages claim 

bears this out. 

Although the Court concludes that Mrs. Charity has established by a 

preponderance of the evidence that she clearly suffered significant emotional 

harm, it can award only those actual damages proximately caused by 

NetCredit’s stay violations.40 In this case, as in Seaton, the amount of 

damages should be proportionate to the actions of NetCredit that took place 

after Mrs. Charity’s bankruptcy filing.41 Accordingly, the Court will award 

damages for emotional distress to Mrs. Charity in the amount of $1,000.00. 

Although the Amended Complaint includes Mr. Charity as a plaintiff 

and seeks actual damages on his behalf, it is clear that the debt to NetCredit 

was owed solely by Mrs. Charity, NetCredit’s post-bankruptcy collection 

actions were directed only at Mrs. Charity, and the improper withdrawal of 

funds were from a credit union account owned solely by Mrs. Charity.42 

Furthermore, Mr. Charity offered no evidence of actual damages on his own 

behalf.43 Mr. Charity has failed to meet his burden of proving by a 

40 See In re Seaton, 462 B.R. at 603. 41 Id. 42 The allegations in the Amended Complaint (Adv. Pro. No.16-03121-KLP, ECF Doc. No. 5) 

and its prayer for relief are premised largely on the erroneous contentions that (1) NetCredit 

wrongfully debited funds from a bank account owned jointly by Mr. and Mrs. Charity when, 

in fact, the bank account from which funds were debited was owned solely by Mrs. Charity, 

and (2) NetCredit’s claim is against both debtors when the debt is, in fact, owed solely by 

Mrs. Charity. Paragraphs 23-24 of the Joint Stipulation of Uncontroverted Facts (Adv. Pro. 

No.16-03121-KLP, ECF Doc. No. 32) are based on the same erroneous predicates. To the 

extent that the stipulations differ from the Court’s findings of fact, they are rejected. 

43 Mr. Charity’s testimony was largely confined to the effect that NetCredit’s actions had on 

his wife. He offered no evidence that he personally suffered any financial or emotional 

damages. To the extent that he fielded any post-bankruptcy collection calls to Mrs. Charity, 

he “just hung up.” 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 30 of 77
31

preponderance of the evidence that he incurred any actual damages. He is 

not entitled to an award for actual damages. 

Mrs. Charity has established by a preponderance of the evidence that 

she has incurred actual damages in the amount of $1,155.63, representing 

$85.00 in unreimbursed credit union charges, $70.63 in travel expenses44 and 

$1,000.00 for emotional distress. Accordingly, she is entitled to actual 

compensatory damages in the amount of $1,155.63. 

Collin and Bobbie Lane Edmonds’ Compensatory Damages 

Mr. and Mrs. Edmonds filed a joint Chapter 13 bankruptcy on May 20, 

2016. After receiving the Notice of Bankruptcy, NetCredit withdrew $132.69 

from Mrs. Edmonds’ bank account. She was charged an overdraft fee of 

$144.000 as a result of NetCredit’s withdrawal. NetCredit subsequently 

returned $132.69 to Mrs. Edmonds. She has not been reimbursed for her 

overdraft fee. 

Mrs. Edmonds testified that she used two vacation days in order to 

appear at trial. She is a salaried employee, making $63,800.00 annually. 

She drove fifteen miles each way to attend trial, which took place over one 

day. 

Much of the testimony at trial centered on the distress suffered by Mrs. 

Edmonds upon discovering that her bank account was overdrawn by $544.00 

after NetCredit withdrew $132.69 on May 31, 2016. Mrs. Edmonds testified 

that it was “very emotional” for her. Mr. Edmonds described it as upsetting. 

44 132 miles at 53.5 cents per mile. See infra note 38. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 31 of 77
32

NetCredit also placed numerous postpetition collection calls to Mrs. 

Edmonds, both to her cell phone and to her workplace. Mrs. Edmonds was 

not particularly disturbed by the calls directed to her cell phone but felt 

harassed by the calls to her work phone; nevertheless, her only indication of 

any associated emotional harm was her testimony that it affected her in how 

she “carried herself“ at work. Mr. Edmonds described the calls as upsetting 

to both himself and his wife, although he did not answer the calls. 

Other than the overdraft fee of $144.00 and the expenses associated 

with attending the trial, Mrs. Edmonds presented evidence of no other 

unreimbursed expenses as a consequence of NetCredit’s actions. Mr. 

Edmonds presented no evidence of financial loss. 

Mrs. Edmonds’ claim for damages for emotional distress due to 

NetCredit’s stay violations fails on two accounts. First is her failure to 

demonstrate that she suffered significant harm. Mrs. Edmonds presented 

only generalized assertions that NetCredit’s actions were upsetting. 

Although one might argue that the numerous phone calls placed to her place 

of employment were egregious, Mrs. Edmonds’ general assertions that the 

calls distracted her and affected how she carried herself at work do not 

support a determination that NetCredit’s actions were so egregious as to 

have caused her significant emotional harm. 

Second, Mrs. Edmonds has failed to demonstrate that the overdraft of 

her bank account, which she described as a “very emotional” episode, was 

proximately caused by NetCredit’s stay violation. NetCredit debited the sum 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 32 of 77
33

of $132.69 and, as a consequence, her bank charged an overdraft fee of 

$144.00, for a total reduction in her account of $276.69. Mrs. Edmonds 

testified, however, that her account was overdrawn by $544.00. It follows 

that the overdraft did not occur solely as a result of NetCredit’s actions but 

would have occurred, albeit to a lesser extent, even if NetCredit had not 

made the withdrawal. 

Mrs. Edmonds incurred actual compensatory damages in the total 

amount of $415.25, resulting from bank overdraft charges in the amount of 

$144.00, lost income in the amount of $255.2045 and $16.0546 in travel 

expenses. She has not met her burden of establishing by a preponderance of 

the evidence that she is entitled to damages for emotional distress. 

Mr. Edmonds’ claim suffers from the same deficiencies as that brought 

by Mr. Charity. The debt to NetCredit was owed solely by Mrs. Edmonds, the 

bank account that was debited was owned solely by Mrs. Edmonds, and the 

post-bankruptcy collection activities were directed only at Mrs. Edmonds. 

Mr. Edmonds has failed to meet his burden of proving by a preponderance of 

the evidence that he incurred any actual damages. He is not entitled to an 

award for actual damages. 

45 Although there is no direct evidence of Mrs. Edmond’s hourly rate of pay, the Court 

calculated her rate of pay to be $31.90 per hour on the basis of her annual salary and 

calculated her lost income on the basis of missing eight hours (one full day) of work. See 

Skillforce, Inc. v. Hafer, 509 B.R. 523, 534 (E.D. Va. 2014) (“[A]ssuming a 40-hour work week 

and 50 work weeks per year, an annual income of $73,000 amounts to hourly earnings of 

$36.50.”). Although Mrs. Edmonds testified that she arranged to take two days of vacation to 

attend trial, the trial was completed in one day. 

46 Calculated at the rate of 53.5 cents per mile for a 30 mile round trip. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 33 of 77
34

Punitive Damages 

Section 362(k)(1) of the Bankruptcy Code provides that an individual 

injured by a willful violation of the stay may, in “appropriate circumstances,” 

recover punitive damages.47 At least one Plaintiff in each of the three 

adversary proceedings was injured by NetCredit’s willful violation of the 

automatic stay. Accordingly, the Court must determine whether the 

circumstances are appropriate for an award of punitive damages. 

The term “appropriate circumstances” is not defined in § 362. In Green 

Tree Servicing, LLC, v. Taylor (In re Taylor), 369 B.R. 282, 289 (S.D. W.Va. 

2007), Judge Copenhaver, after noting the lack of uniform guidance on what 

is meant by “appropriate circumstances,” listed several standards that courts 

have adopted. Some courts have awarded punitive damages after 

determining that the creditor acted in “arrogant defiance of federal law.” 

Id.48 Other courts have considered four factors: (1) the nature of the 

defendant's conduct, (2) the defendant's ability to pay, (3) the motives of the 

defendant, and (4) any provocation by the debtor. Id.49 In Seaton, Chief 

Judge St. John indicated that punitive damages would be appropriate if the 

47 The “good faith belief” exception set forth in § 362(k)(2) is inapplicable to this case. 

48 Citing In re Curtis, 322 B.R. 470, 486 (Bankr. D. Mass. 2005); In re Pawlowicz, 337 B.R. 

640, 648 (Bankr. N.D. Ohio 2005); In the Matter of Mullarkey, 81 B.R. 280, 284 (Bankr. 

D.N.J. 1987). 

49 Citing Heghmann v. Indorf (In re Heghmann), 316 B.R. 395, 405 (B.A.P. 1st Cir. 2004) 

(citing In re Sumpter, 171 B.R. 835, 845 (Bankr. N.D. Ill. 1994)); In re B. Cohen & Sons 

Caterers, Inc., 108 B.R. 482, 487–88 (E.D. Pa. 1989). See also Rawles v. Wych (In re Rawles), 

No. 08-00555, 2009 WL 2924005 at *2 (Bankr. D. Md. June 18, 2009). 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 34 of 77
35

court were to find egregious or vindictive conduct “resembling a specific 

intent” to violate the stay.50 

Applying any of these standards, it is appropriate to award punitive 

damages in these cases. NetCredit is an institutional creditor that has not 

only repeatedly violated the automatic stay in cases involving multiple 

debtors in clear disregard of the provisions of the Bankruptcy Code, but it has 

given no indication that it will discontinue doing so. 

NetCredit designated Joseph Banks to be its sole representative to 

appear and testify on NetCredit’s behalf. His testimony essentially 

constitutes the entirety of NetCredit’s defense. 

Mr. Banks, Enova’s bankruptcy manager, oversees a team of four 

individuals, each individual having sole responsibility for managing all of the 

bankruptcy accounts of a particular Enova subsidiary. One of those 

individuals is solely responsible for managing all of the bankruptcy accounts 

for NetCredit, an online lender wholly owned by Enova. Mr. Banks 

estimated that the individual assigned to NetCredit is responsible for close to 

ten thousand bankruptcy accounts. 

When the violations occurred in these cases, the individual responsible 

for managing NetCredit’s bankruptcy accounts was Dansler Dover. Mr. 

Dover’s responsibilities included processing bankruptcy notices, preparing 

50 In re Seaton, 462 B.R. at 604 (quoting Rountree v. Nunnery (In re Rountree), 448 B.R. 389, 

419 (Bankr. E.D.Va. 2011)). 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 35 of 77
36

and filing proofs of claim and handling all telephone calls from customers 

who filed bankruptcy. 

NetCredit’s bankruptcy processes are managed by a computer based 

application known as a Wiki, and NetCredit’s acts and omissions are totally 

dependent on the efficacy of the application and its appropriate 

implementation by the bankruptcy representative. If either the application 

or the individual utilizing it is deficient, then the processes for managing 

bankruptcy accounts will be compromised. The evidence in these cases is 

that both the Wiki and Mr. Dover’s performance were deficient. 

Mr. Banks testified that Mr. Dover’s employment was terminated 

because he did not follow the business practices that were included on the 

Wiki. Before the stay violations took place in these cases, Mr. Banks had 

found it necessary to have discussions with Mr. Dover regarding his poor job 

performance; however, he took no remedial actions other than to point out 

Dover’s mistakes.51 Mr. Banks further testified that he commenced “qualityassurance checks for NetCredit bankruptcy to mitigate risk and assure that 

this doesn’t occur again.”52 On cross examination, however, he admitted that 

the quality assurance program was not implemented until after months after 

51 Mr. Banks: “I let him know what he was supposed to be doing. I asked him why wasn’t he 

doing what he is supposed to be doing. So I did everything that I was supposed to on my end. 

So correcting, the only thing I could correct other than doing his job for him would be sitting 

next to him and watching him do his job, and we all know as leaders, as managers, that’s not 

efficient. There’s no way I could do his job for him and hold his hand. He was put in the 

position, as any other adult is, to function in his role day to day, and that’s what I expected of 

him.” 

Question: “But you never took any steps to find out how many other people he harmed.” 

Mr. Banks: “No.” 

Tr. 198:18-199:7. 

52 Tr. 156:10-12. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 36 of 77
37

he was made aware of these stay violations and only after litigation had been 

commenced.53 Upon being pressed further, Mr. Banks also acknowledged 

that the department charged with implementing the quality assurance 

program would not be responsible for revising the system-generated 

correspondence that routinely results in stay violations.54 After hearing Mr. 

Banks’ testimony, the Court is of the opinion that the “quality assurance 

program” was designed primarily to create the erroneous perception for 

purposes of this litigation that NetCredit has taken significant steps to 

prevent future stay violations. 

Mr. Banks’ testimony demonstrates that NetCredit’s bankruptcy 

department is understaffed, undertrained, and inadequately supervised. It 

also establishes that NetCredit has not implemented appropriate measures to 

address these inadequacies or the deficiencies inherent in the application 

utilized to manage its bankruptcy cases. His testimony concerning the 

routine practice whereby, in response to receiving a bankruptcy notice and 

terminating an ACH Authorization, NetCredit generates correspondence 

advising the bankrupt customer that “cancellation of your electronic 

authorization does not relieve you of your obligation to repay your loan, and 

that all payments are still due on your scheduled installment dates” is 

particularly telling: 

53 Tr. 161:16-21; 164:1-19. 

54 Tr. 166:6-8. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 37 of 77
38

Question: If I remember right, you testified that 

NetCredit had some purpose for sending this email but 

that the purpose was not to collect a debt? 

Banks: Right. 

Question: If you got this email, would you think this 

email was an attempt to collect a debt? 

. . . 

Banks: Are you asking me personally? If I received this 

email and I were in bankruptcy, I would not think that 

this email was an attempt to collect a debt, because I 

would know that I was in bankruptcy and that I shouldn’t 

pay on this debt. So no. 

Question: Do you think the words of this email, by their 

words, show an attempt to collect a debt? 

Banks: Again, no. If I were in bankruptcy, I would not 

think that this email was an attempt to collect a debt, 

because I would know that I was in bankruptcy and that I 

shouldn’t pay on this debt. So, no. 

Question: When you mentioned what changes have been 

made at NetCredit because of this case, have any changes 

been made in the text of this email that goes out 

whenever ACH is cancelled for a client who has declared 

bankruptcy? 

Banks: No. 

Question: What would it take to get changes made in this 

email? 

Banks: So, that’s a bit of a technology process. It’s an 

exhaustive process. It would take drafting a new email, it 

would take our dev (sic) team to initiate the new email, it 

would take dev work to initiate the process to review the 

automations. So, it - - would take a process. 

Question: Have you started that process? 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 38 of 77
39

Banks: No.55

Mr. Banks’ testimony establishes that NetCredit’s system is designed 

so that every customer, including those in bankruptcy, whose ACH 

Authorization is terminated receives correspondence demanding future 

payment. Even if Mr. Dover had properly employed the software application, 

a stay violation was inherently designed to take place.56 Moreover, NetCredit 

has not taken steps to initiate the process necessary to prevent future stay 

violations because it would be “an exhaustive process.” 

It is difficult to comprehend how Mr. Banks, the individual in charge of 

managing all of the bankruptcy accounts for Enova and its subsidiaries, 

would fail to recognize that sending correspondence to a customer who has 

filed bankruptcy stating that “all payments are still due on your scheduled 

installment dates” is not an “act to collect . . . or recover a claim against the 

debtor that arose before commencement of the case.”57 It is even more 

baffling that Mr. Banks would continue to display this fundamental 

misunderstanding throughout the trial of these cases. Yet, it is evident that 

Mr. Banks remains of the opinion that there is no flaw in NetCredit’s 

bankruptcy related procedures. And if Mr. Banks, who is in charge of 

55 Tr. 66:9-67:8. 

56 Noncompliance with the automatic stay is not excusable whether fault lies with an 

automated system that has been put in place or with the employee charged with operating it. 

Associated Credit Servs., Inc. (In re Campion), 294 B.R. 313, 317 (B.A.P. 9th Cir. 2003) (“We 

perceive no difference as a practical matter between a computer program that does not 

perform tasks accurately and a clerical employee who does not perform tasks accurately. In 

either event, the employer bears the risk of the consequences.”). 

57 11 U.S.C. § 362(a)(6). 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 39 of 77
40

supervising Enova’s bankruptcy team,58 lacks a basic understanding of the 

prohibitions associated with the automatic stay, then one may infer that his 

lack of understanding permeates these entities.59

The Court finds that NetCredit, as an institution, either does not fully 

grasp or refuses to acknowledge the importance and purpose of the automatic 

stay.60 The Court further finds that NetCredit presently has no intention of 

implementing the changes necessary to prevent future violations. Such 

conduct constitutes a reckless disregard of NetCredit’s statutory duties in 

arrogant defiance of federal law. 

The Agreements executed by the Plaintiffs in these cases and attached 

as Exhibit A to each Joint Stipulation of Uncontroverted Facts contain 

identical provisions authorizing the lender to electronically debit installment 

payments from the borrowers’ bank accounts. It is logical to conclude that 

many, if not most, of NetCredit’s customers have likewise agreed to ACH 

Authorizations in order to make installment payments. Since NetCredit has 

approximately ten thousand customers who have filed bankruptcy,61 it 

58 Mr. Banks testified that he has been at Enova for ten years and has served as bankruptcy 

manager for six years. Before he was bankruptcy manager, he was a quality assurance 

analyst whose responsibility was to make sure that Enova’s representatives were following 

compliance rules and regulations. Tr. 52-54. 

59 Mr. Banks testified that CashNetUSA, another subsidiary of Enova, employs the same 

processes related to the automatic stay as does NetCredit. Tr. 68:3-12. 

60 “The automatic stay is a bedrock principle upon which the Code is built; the importance of 

§ 362 cannot be over-emphasized.” In re Garner, No. 09-81998, 2010 WL 890406, at *2 

(Bankr. M.D.N.C. Mar. 9, 2010) (unreported decision) (citing Grady v. A.H. Robins Co., 839 

F.2d 198, 200 (4th Cir. 1988)). The Court finds that NetCredit, as a sophisticated creditor, is 

aware of the statutory obligations associated with the automatic stay in bankruptcy but has 

chosen to disregard them. 

61 Mr. Banks testified as follows: 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 40 of 77
41

follows that there likely are thousands of customers whose bankruptcies have 

triggered a termination of automatic withdrawals and who would have 

received correspondence from NetCredit informing them that despite their 

bankruptcy filings they remain obligated to make their installment 

payments. 

NetCredit’s failure to employ and properly train an adequate number 

of employees to manage its accounts in bankruptcy, coupled with its 

unwillingness to contribute the resources necessary to correctly deploy the 

software applications utilized in its bankruptcy processes, suggests that 

NetCredit’s business model favors concentrating its resources on originating 

loans and collecting payments on active accounts while devoting minimal 

resources to borrowers who have filed bankruptcy.62 Even if this is not an 

THE COURT: And do you know how many bankrupt account -- 

bankruptcy accounts NETCREDIT would have – 

THE WITNESS: It would be -- 

THE COURT: -- at any one time? 

THE WITNESS: -- again, approaching probably tens of thousands of 

customers, if, you know -- yeah, probably close to that. 

THE COURT: Tens of thousands of customers of 

NETCREDIT who have filed bankruptcy? 

THE WITNESS: Yeah. So, it could be in the high single thousands, 

approaching tens of thousands of customers, something like that. 

THE COURT: All right, so, it could be roughly -- 

THE WITNESS: 5- to 10,000 customers. 

THE COURT: -- 10,000, give or take, bankruptcy customers? 

THE WITNESS: Yes, customers -- 

THE COURT: And -- 

THE WITNESS: -- in bankruptcy. 

Tr. 106:24-107:17. 

CashNetUSA, being a larger subsidiary, would likely also have thousands of customers that 

have filed bankruptcy. 

62 The Agreements executed by the debtors in these cases provide for annual percentage 

rates approaching 100% per annum. The unsecured status and high interest rates reflected 

in these loans indicates that NetCredit’s customer base is comprised primarily of higher risk 

borrowers with a relatively greater risk of default. Mr. Banks testified that preparing and 

filing proofs of claim is not a priority. Tr. 98:21-22. This further suggests that NetCredit 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 41 of 77
42

accurate assessment of its business plan, it is evident that NetCredit’s 

attention to its customers who have filed bankruptcy is wholly inadequate. 

The Court is not bound by specific statue or precedent when 

determining the amount of punitive damages to award under § 362(k)(1). 

“Although the Supreme Court has emphasized that punitive damage awards 

violate due process when they constitute an arbitrary deprivation of property, 

the Court has repeatedly ‘decline[d] . . . to impose a bright-line ratio which a 

punitive damages award cannot exceed.’” Saunders v. Equifax Info. Servs., 

L.L.C., 469 F.Supp.2d 343, 348 (E.D. Va. 2007), aff’d sub nom. Saunders v. 

Branch Banking & Trust Co. of Va., 526 F.3d 142 (4th Cir. 2008) quoting 

State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 425 (2003). See 

also Cisson v. C.R. Bard, Inc. (In re C.R. Bard, Inc.), 810 F.3d 913, 931 (4th 

Cir. 2016).63 Unlike compensatory damages, which address a party’s 

“concrete loss,” punitive damages aim at “deterrence and retribution.” 

Saunders, 469 F.Supp.2d at 348, quoting State Farm Mut. Auto. Ins. Co. v. 

Campbell, 538 U.S. 408, 416 (2003). 

The Supreme Court has identified “three guideposts” that a lower 

court should consider when evaluating punitive damages awards: (1) the 

degree of reprehensibility of the defendant’s misconduct, (2) the disparity 

intentionally devotes minimal resources to its bankruptcy accounts in favor of maximizing its 

return on accounts not in bankruptcy. 

63 A defendant must be given adequate notice of a claim for punitive damages. See Philip 

Morris USA v. Williams, 549 U.S. 346 (2007). Here, NetCredit was made aware of the 

Plaintiffs’ intentions to seek significant punitive damages from the inception of these cases 

and throughout the proceedings. NetCredit knew after conceding that it had committed 

violations of the automatic stay that the trial would be confined to determining the damage 

awards. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 42 of 77
43

between the actual or potential harm suffered and the punitive damages 

award (the ratio between punitive and compensatory damages), and (3) the 

difference between the punitive damages awarded and civil penalties 

authorized or awarded in comparable cases. State Farm, 538 U.S. at 418;

accord Cisson v. C.R. Bard, Inc., 810 F.3d at 931; Saunders, 469 F.Supp.2d at 

350.64 In short, a punitive damages award “must be based on the facts and 

circumstances of the defendant’s misconduct” and the punishment must be 

“reasonable and proportionate to the amount of harm caused.” Saunders, 469 

F.Supp.2d at 350 (citing State Farm, 538 U.S. at 425-26). 

The reprehensibility of a defendant’s conduct, the first of the Supreme 

court’s guideposts, may be assessed by considering various factors including, 

but not limited to, whether the conduct “evinced an indifference to or a 

reckless disregard” for the rights of others, whether the target of the conduct 

was financially vulnerable and whether the conduct involved repeated 

actions. State Farm, 538 U.S. at 418 (citing BMW of N. Am., Inc. v. Gore, 517 

U.S. 559 (1996)).65 In each of these cases, NetCredit’s conduct showed a 

64 These “guideposts” are also considered in determining whether a defendant receives proper 

notice of possible penalties. May v. Nationstar Mortg., LLC, 852 F.3d 806, 816 (8th Cir. 

2017). 

65 Some of the other factors described in State Farm’s reprehensibility analysis, such as 

whether the misconduct involved physical harm or threats to the health and safety of others, 

may have less relevance in the context of automatic stay violations. See Saunders v. Branch 

Banking & Trust Co. of Va., 526 F.3d 142, 152-53 (4th Cir. 2008), aff’g Saunders v. Equifax 

Info. Servs., L.L.C., 469 F.Supp.2d 343 (E.D. Va. 2007) (“FCRA violations result in economic 

and emotional harm, but such violations will very infrequently cause physical harm or 

endanger the health and safety of others.”). Nevertheless, “[t]he presence of just one 

indicium of reprehensibility is sufficient to render conduct reprehensible and support an 

award of punitive damages.” May v. Nationstar Mortg., LLC, 852 F.3d at 816. See also 

Saunders, 526 F.3d at 153 (“The third factor [the ‘financial vulnerability’ of ‘the target of the 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 43 of 77
44

reckless disregard of the rights of the Plaintiffs, targeted individuals who 

were financially vulnerable (debtors in bankruptcy) and involved repeated 

actions.66 Therefore, under Fourth Circuit standards, NetCredit’s conduct is 

“sufficiently reprehensible to justify an award of punitive damages.” 

Saunders, 526 F.3d at 153. 

The second guidepost involves the actual harm suffered by the 

Plaintiffs compared to the punitive damages award. Without including the 

Plaintiffs’ attorneys’ fees, this consideration would seem to favor a more 

modest punitive damages award in light of the relatively small compensatory 

damages awarded in these cases. Various courts, including the Fourth 

Circuit, have recognized, however, that the ratio of compensatory to punitive 

damages has less significance when the amount of compensatory damages is 

relatively small. 

Our sister circuits agree that when a jury only awards nominal 

damages or a small amount of compensatory damages, a punitive 

damages award may exceed the normal single digit ratio because a 

smaller amount “would utterly fail to serve the traditional purposes 

underlying an award of punitive damages, which are to punish and 

deter.” Kemp v. Am. Tel. & Tel. Co., 393 F.3d 1354, 1364–65 (11th Cir. 

2004) (allowing punitive damages award of $250,000 accompanying 

compensatory damages of $115.05); see also Abner v. Kan. City S. 

R.R., 513 F.3d 154, 165 (5th Cir. 2008) (affirming punitive damages 

award of $125,000 accompanying nominal damages of $1); Mathias v. 

Accor Econ. Lodging, Inc.,347 F.3d 672, 674–78 (7th Cir. 2003) 

conduct’] is certainly present, and a single factor can provide justification for a substantial 

award of punitive damages.”). 

66 NetCredit’s unwillingness to implement the changes necessary to prevent future automatic 

stay violations portends that similar violations will continue. See Saunders, 526 F.3d at 153 

(The defendant’s “intentional misconduct and longstanding refusal to correct its errors are 

more reprehensible than negligence or a mistake quickly corrected.”). See also Bains LLC v. 

Arco Prods. Co., 405 F.3d 764, 775 (9th Cir. 2005) (reasoning that a company's failure to 

remedy or address the effects of a statutory violation supports a punitive damages award). 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 44 of 77
45

(affirming $186,000 punitive damages award accompanying 

compensatory damages of $5,000); Lee v. Edwards, 101 F.3d 805, 811 

(2d Cir. 1996) (rejecting ratio analysis because “the compensatory 

award here was nominal, [so] any appreciable exemplary award would 

produce a ratio that would appear excessive by this measure”). Thus, 

we do not rely upon the challenged ratio to foreclose the punitive 

damages award here. 

Saunders, 526 F.3d at 154. Despite the small amount of compensatory 

damages awarded in these cases, the award of punitive damages must be 

significant enough to punish the violator and serve as a meaningful 

deterrent. Id. Thus, a sum based on a modest multiple of the parties’ actual 

damages is insufficient. 

The third guidepost requires an examination of amounts awarded in 

comparable cases. Penalties for automatic stay violations vary depending on 

the circumstances and the parties involved; as such, there are few 

opportunities for comparison. There are, however, numerous cases in which 

violations of the automatic stay have resulted in considerable punitive 

damage awards. See, e.g., Sundquist v. Bank of Am., N.A. (In re Sundquist), 

566 B.R. 563 (Bankr. E.D. Cal. 2017), appeal docketed, No. EC-17-1103 

(B.A.P. 1st Cir. Apr. 11, 2017) (awarding debtors $1,074,581.50 in actual 

damages and $45,000,000.00 in punitive damages);67 In re Johnson, No. 15-

50053, 2016 WL 659020 (Bankr. W.D.N.C. Feb. 17, 2016) (awarding debtors 

$300 in actual damages for expenses in traveling to and from court, legal fees 

of $3,297.23 and $54,000.00 in punitive damages, calculated at $100 per 

67 There are also counter-motions to alter or amend the judgment pending in the bankruptcy 

court. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 45 of 77
46

phone call for 540 calls made to debtors over a six month period in violation 

of the automatic stay). 

One of the primary purposes of awarding punitive damages for 

automatic stay violations is to deter future misconduct. Saunders, 526 F.3d 

at 152; In re Johnson, 2016 WL 659020 at *4 (“In determining the amount of 

a punitive damages award, the court is primarily concerned with changing 

the behavior that resulted in the stay violation, so the amount awarded 

should motivate the creditor to correct its conduct. Deterrence to others may 

be a relevant factor as well.”) (internal citation omitted); In re Riddick, 231 

B.R. 265, 269 (Bankr. N.D. Ohio 1999) (“[T]he primary purpose of punitive 

damages is to cause change in the [offending party’s] behavior.”). The 

amount of punitive damages assessed in these cases must be sufficient to 

motivate NetCredit to devote the resources necessary to correct the 

deficiencies in its bankruptcy procedures. 

The Plaintiffs are seeking an award of punitive damages in the 

approximate amount of $600,000.00 in each of these cases.68 The Plaintiffs 

argue that these awards would be appropriate given that Enova, NetCredit’s 

parent company, has a net worth of $233,000,000.00.69 The Court does not 

have reliable evidence that the value of NetCredit, as an independent entity, 

approaches that of its parent company;70 however, the parent company’s 

68 Tr. 215. 

69 Joseph Banks testified that Enova has a value of $233,000,000 but did not give a separate 

value for NetCredit. Tr. 133:24-25; 134:1-6. 

70 When Mr. Banks’ testified as corporate designee of NetCredit during his deposition on 

December 21, 2016, he was unable to provide information regarding the net worth of 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 46 of 77
47

value reflects the existence of considerable worth in its subsidiaries. 

NetCredit has tens of thousands, perhaps hundreds of thousands of 

customers.71 While it is smaller than Enova’s other subsidiaries, “its volume 

kind of exploded in the last couple of years.”72 Therefore, the Court has 

sufficient information available to consider NetCredit’s value as one factor in 

determining punitive damages awards, particularly since awarding punitive 

damages in these cases is intended to deter future misconduct.73

NetCredit. ECF Doc. No. 59, deposition Tr. 134:7-9. Despite NetCredit’s failure to provide 

such information in response to discovery requests, the Plaintiffs took no action to compel its 

production. No evidence of NetCredit’s individual value was presented during the trials. 

Instead, the Plaintiffs initially argued that the value of Enova should be attributed to 

NetCredit for purposes of determining the appropriate amount of punitive damages. At the 

conclusion of the trials, the Court instructed NetCredit to submit evidence of its value. On 

February 3, 2017, NetCredit provided affidavits from Enova’s Chief Financial Officer, 

accompanied by an unaudited balance sheet and income statement, representing NetCredit’s 

net worth as of December 31, 2016, to be $879,631 and its net income for the year ending on 

December 31, 2016, to be $39,764. Adv. Pro. No. 16-03121, ECF Doc. No. 89. The financial 

information provided by NetCredit has little probative value in itself because it contains 

almost no details. The balance sheet and income statement show that NetCredit has no 

liabilities which, in turn, establishes that Enova’s accounting methods do not routinely 

designate separate assets and liabilities for its subsidiaries. In response to NetCredit’s 

submission, the Plaintiffs point to publicly available materials concerning Enova’s finances 

that the Plaintiffs contend cast doubt on the accuracy of the financial information provided 

by Enova’s Chief Financial Officer. The Plaintiffs now argue that NetCredit’s net worth 

should be disregarded for purposes of determining the punitive damages awards. See

Plaintiffs’ Supplemental Brief on Outstanding Issues, Adv. Pro. No.16-03121-KLP, ECF Doc. 

No. 94. The Court has considered the net value of Enova, the substantial number of accounts 

owned and managed by NetCredit, and the financial information provided. Taken together, 

they indicate that NetCredit has significant size and worth. NetCredit’s value and its ability 

to pay damages, however, is only one consideration in the Court’s determination of the 

appropriate amounts to award in punitive damages. See Varela v. Ocasio (In re Ocasio), 272 

B.R. 815, 825-26 (B.A.P. 1st Cir. 2002) (the inquiry should also take into account “the nature 

of the creditor's conduct, the nature and extent of harm to the debtor, the creditor's ability to 

pay damages, the level of sophistication of the creditor, the creditor's motives, and any 

provocation by the debtor.”) (internal citation omitted). 

71 Tr. 106:17-23. 

72 Tr.110: 2-6. 

73 See Achterberg v. Creditors Trade Ass’n (In re Achterberg), Adv. Proc. No. 15-9054, 2017 

WL 473829 at *15 (Bankr. E.D. Cal. Feb. 3, 2017) (Debtors did not provide court with 

financial information; however, court determined that sufficient information had been 

provided to enable the court to determine appropriate punitive damages, including evidence 

that the creditor maintained “ongoing business operations of significant economic size.”). 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 47 of 77
48

The Court does not consider NetCredit’s value to be a reason to 

consider reducing the punitive damages awards. NetCredit chose not to 

introduce reliable evidence of its net worth and, therefore, failed to meet its 

burden to do so.74

NetCredit’s conduct is sufficiently reprehensible to impose punitive 

damages awards in each of these cases, and its size and sophistication 

suggest that a substantial award is necessary to deter it from routinely 

engaging in future stay violations. Nevertheless, the amounts sought by the 

Plaintiffs are too high. The Court is of the opinion that the goals of 

punishment and deterrence may be achieved by a more measured response 

than that sought by the Plaintiffs, albeit one that not only properly addresses 

NetCredit’s harm to the Plaintiffs but also recognizes its societal harm. 

In recent years, courts, legislators, and commentators have questioned 

whether the traditional model of giving large punitive damage awards solely 

to a claimant who is already receiving compensatory damages properly serves 

the interests of justice.75 If the claimant is already being made whole by the 

compensatory award, many argue that it is appropriate to consider the extent 

to which societal interests are implicated and to allocate a portion of a 

74 “Under federal law, the Defendants - not Plaintiff - have the burden of introducing evidence 

of net worth for purposes of minimizing a punitive damages award.” Morris v. Bland, No. 

5:12-cv-3177-RMG, 2014 WL 12637911, at *11 (D.S.C. Dec. 31, 2014). See also Kemezy v. 

Peters, 79 F.3d 33, 34 (7th Cir. 1996) (adopting majority view that under federal law a 

plaintiff seeking punitive damages is not required to introduce evidence of the defendant’s net 

worth). 

75 See Sundquist v. Bank of Am., N.A. (In re Sundquist), 566 B.R. 563, 614 n.107 (Bankr. E.D. 

Cal. 2017), appeal docketed, No. EC-17-1103 (B.A.P. 1st Cir. Apr. 11, 2017); see also Justin A. 

Reddington, To Caesar What is Caesar’s: An Audacious Claim for Punitive Damages Reform 

in Patent Law, 10 Lib. U.L. Rev. 201 (2015). 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 48 of 77
49

punitive damages award to an entity that furthers those interests. 

Otherwise, the claimant receives a windfall in the form of this societal 

interest component.76

The dilemma involved in achieving the goal of awarding sufficient 

punitive damages for automatic stay violations without simultaneously 

providing an individual windfall was recently confronted by Judge Klein in 

Sundquist v. Bank of Am., N.A. (In re Sundquist), 566 B.R. 563 (Bankr. E.D. 

Cal. 2017), appeal docketed, No. EC-17-1103 (B.A.P. 1st Cir. Apr. 11, 2017). 

There, Judge Klein, after examining the judicial, legislative and scholarly 

support for split recoveries of punitive damage awards, concluded “that 

76 In his dissent in Smith v. Wade, Chief Justice Rehnquist stated: 

[a] fundamental premise of our legal system is the notion that damages are 

awarded to compensate the victim—to redress the injuries that he or she 

actually has suffered. . . . [T]he doctrine of punitive damages permits the 

award of “damages” beyond even the most generous and expansive 

conception of actual injury to the plaintiff. 

Smith v. Wade, 461 U.S. 30, 57-58 (1983) (internal citations omitted). See also Sundquist, 

566 B.R. at 618 (“allowing the individual to pocket the societal interest component smacks of 

too much of a windfall for the individual . . . [but] limiting punitive damages to an amount 

that is not perceived as too big a windfall to stomach enables the wrongdoer to avoid paying 

the societal component of punitive damages that are genuinely deserved.”). 

 At least one other court in this circuit has lamented the traditional means by which 

punitive damages have been awarded. 

Finally, there is a feature of the punitive damages procedure which, if it does not 

render it constitutionally suspect, at least serves to make it morally wrong, and that 

is the fact that the proceeds of a punitive damages award go not into the public 

coffers as do all other fines and forfeitures but into the pockets of the successful 

plaintiff and his attorney. 

. . . 

And so, while this court could live very comfortably with a procedure which would 

allow tortfeasors in or out of the commercial world to be assessed punitive damages 

for wrongful conduct provided such damages when collected would inure to the 

benefit of the offended citizenry and not just the person who brought the action, the 

confused state of the law in the area of punitive damages and the reluctance of the 

courts to solve the problem by what this court considers the proper application of 

constitutional principles, insures that nothing is going to happen until Congress, the 

state legislatures, or both, step in and enact corrective legislation. 

Tudor Associates, Ltd., II v. AJ and AJ Servicing, Inc., 843 F.Supp. 68, 80 (E.D.N.C. 1993), 

aff’d in part and rev’d in part, 36 F.3d 1094 (4th Cir. 1994). 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 49 of 77
50

§ 362(k)(1) permits a portion of punitive damages awarded to an individual 

injured by willful violation of the automatic stay to be channeled . . . to 

entities that serve the interests of preventing the willful violator’s 

transgressions in the future.” Id. at 618. 

The decision in Sundquist to allocate a portion of the punitive damages 

award to entities serving societal interests was based, in part, on federal 

common law.77 The court pointed to circuit court precedent in Engquist v. 

Oregon Department of Agriculture, 478 F.3d 985 (9th Cir. 2007), aff’d on other 

grounds, 553 U.S. 591 (2008), in which the Ninth Circuit struck down 

constitutional and common law challenges to Oregon’s statutory allocation of 

a portion of a punitive damages award in a tort case to the Oregon Criminal 

Injuries Compensation Account. 478 F.3d at 999-1007. 

Precedent similar to Engquist exists in the Fourth Circuit. In Cisson 

v. C.R. Bard (In re C.R. Bard, Inc.), 810 F.3d 913, 931 (4th Cir. 2016), the 

Fourth Circuit upheld a district court’s ruling that a Georgia split-recovery 

statute directing that seventy-five percent of any punitive damages award 

resulting from a product liability judgment be paid to the state does not 

violate the Takings Clause of the Fifth Amendment. Id. at 931-32.78 The 

77 More specifically, in Sundquist the court referred to “the ‘common law evolution’ rationale” 

(citing Li v. Yellow Cab Co., 532 P.2d 1226, 1238-39 (Cal. 1975)) that permits judicial 

innovation such as that in Dardinger v. Anthem Blue Cross & Blue Shield, 781 N.E.2d 121, 

144-45 (Ohio 2002), in which the Ohio Supreme Court found that common law permitted the 

court to redirect part of a punitive damages award to a public purpose linked to the 

defendant’s misconduct. 566 B.R. at 615-16. 

78 In addition to finding that the Georgia statute does not violate the Takings Clause, the 

district court held that the statute does not violate the Equal Protection Clause of the 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 50 of 77
51

Fourth Circuit held, as did the district court from which the appeal arose, 

that the plaintiff failed to show that she has “a constitutionally protected 

property interest” in the punitive damages award. Id., citing Washlefske v. 

Winston, 234 F.3d 179, 184 (4th Cir. 2000).79

Neither statutory dictate nor binding precedent mandates that 

punitive damages awarded under § 362(k)(1) may only be directed to the 

Plaintiffs in these cases. The amount of punitive damages required to 

redress the harm caused to the parties and serve the legitimate societal 

interests is greater than “what principles of fairness would justify” awarding 

solely to the Plaintiffs. See Sundquist, 566 B.R. at 614. Accordingly, this 

Court will adopt the conclusions and methodologies espoused in Sundquist

and apply them to these cases. 

After determining that § 362(k)(1) permits the court to channel a 

portion of a punitive damages award to public service organizations, Judge 

Klein addressed the appropriate allocation and determined that “[a] solution 

based on common sense is to direct to a public purpose the portion of 

legitimate punitive damages that exceed what private victims ought to be 

allowed to retain—the societal interest component of punitive damages.” 

Fourteenth Amendment. Cisson v. C.R. Bard, Inc., No. 2:11-cv-00195, 2015 WL 251437, at 

*2-3 (S.D. W. Va. Jan. 20, 2015). 

79 The circuit court acknowledged the Ninth Circuit’s decision in Engquist but stated that it 

did not need to apply that decision because the plaintiff in its case made “no claim that her 

right to punitive damages [arose] from the common law or [was] otherwise fundamental.” 

810 F.3d at 932. However, the district court, relying on Engquist, had held that the plaintiffs 

held no property interest in the punitive damages award. Cisson, 2015 WL 251437, at *4 

(“The only federal court to confront the issue of whether punitive awards qualify as property 

for purposes of the Takings Clause has agreed with this conclusion, largely relying on the 

contingent and discretionary nature of punitive damage awards.”). 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 51 of 77
52

Sundquist, 566 B.R. at 616. He further concluded that the public purpose 

should be aimed at redressing the underlying misconduct. Id.

In Sundquist, the court noted the disadvantages consumers have in 

finding effective legal representation capable of competing with counsel 

typically representing sophisticated creditors and found that the societal 

component of the punitive damages award should be directed to entities 

focused on consumer law education and “leading public service consumer law 

organizations.” Id. Similarly, NetCredit’s conduct in these cases reflects the 

need to direct additional resources to financially distressed consumers who 

have limited means to defend themselves against aggressive creditors.80

NetCredit’s actions have been equally egregious in each of these cases. 

Mekeanna Lane, Regina Charity and Bobbie Lane Edmonds will be awarded 

punitive damages pursuant to § 362(k)(1) in the amount of $100,000.00 each. 

Of the $100,000.00 that each is to receive, each of these Plaintiffs is enjoined 

to deliver $37,500.00 to the National Consumer Law Center and $37,500.00 

to the Legal Services Corporation of Virginia81 (minus all taxes, if any, each 

plaintiff must pay on account of those sums). There shall be a remittitur of 

the § 362(k)(1) punitive damages to $15,000.00 to each plaintiff if, and only to 

80 In Sundquist, the court observed that the circumstances in its case, which involved 

egregious violations of the automatic stay, encompassed issues of general consumer law and 

consumer bankruptcy law. 566 B.R. at 617. 

81 The National Consumer Law Center is a nonprofit, public interest organization that that 

promotes access to justice for low-income and other disadvantaged consumers including in 

the area of bankruptcy. The Legal Services Corporation of Virginia (LSCV) provides grants 

to a statewide network of nonprofit organizations including nine regional legal aid programs 

and a statewide support center. LSCV’s purpose is to develop, fund, coordinate and oversee 

the delivery of civil legal services to the poor in Virginia. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 52 of 77
53

the extent that, NetCredit contributes $37,500.00 to the National Consumer 

Law Center and $37,500.00 to the Legal Services Corporation of Virginia on 

account of each of these Plaintiffs. 

Attorneys’ Fees

“[A]n individual injured by any willful violation of [the automatic] stay 

shall recover actual damages, including costs and attorneys’ fees . . . .” 11 

U.S.C. § 362(k)(1) (emphasis added). The plain language of the statute states 

that attorneys’ fees are actual damages under this section. Duby v. United 

States (In re Duby), 451 B.R. 664, 674 (B.A.P. 1st Cir. 2011). In order to be 

recoverable, however, the attorneys’ fees must be shown to be reasonable and 

necessary. Skillforce, Inc. v. Hafer, 509 B.R. at 534 (citing In re Seaton, 462 

B.R. at 605). Furthermore, “before the analysis of reasonableness and 

necessity of claimed attorneys’ fees even begins, a debtor must first 

demonstrate, by a preponderance of the evidence, that she is actually liable 

for the claimed fees.” Skillforce at 534. 

The Plaintiffs in these cases are each represented by the same 

attorneys. These attorneys, on behalf of all of the Plaintiffs, submitted the 

Application, which includes declarations and exhibits documenting hours 

spent by the attorneys and their staff multiplied by their hour rates. Along 

with subsequent filings that include additional declarations and exhibits, the 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 53 of 77
54

Application constitutes the request for awards of attorneys’ fees and expenses 

pursuant to § 362(k)(1).82

Counsel for the Plaintiffs contend that the Court should apply the 

“lodestar” method described in Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 

(2010), which is based on multiplying the reasonable number of hours spent 

by the attorneys and their employees by reasonable hourly rates, to 

determine what constitutes reasonable fees. “The Supreme Court has 

indulged a ‘strong presumption’ that the lodestar number represents a 

reasonable attorneys’ fee. The Court recently explained that this 

presumption can only be overcome ‘in those rare circumstances where the 

lodestar does not adequately take into account a factor that may properly be 

considered in determining a reasonable fee.’” McAfee v. Boczar, 738 F.3d 81, 

89-90 (4th Cir. 2013), quoting Perdue, 559 U.S. at 542. 

The Application sets forth a combined lodestar amount of 

$169,326.29.83 A supplemental application (the “Supplemental Application”) 

filed in each case increased this amount by $19,347.00 to $188,673.29. In the 

Supplemental Application, Plaintiffs’ counsel seeks an upward enhancement 

82 The Application was filed in each of these adversary proceedings. Subsequently, a 

“Supplement to Consolidated Application by Counsel for Plaintiffs for Award of Attorney 

Fees and Reimbursement of Expenses” (the “Supplemental Application”) that included 

documentation of additional fees incurred since the filing of the Application was filed in each 

case. 

 Finally, in each of the adversary proceedings, Plaintiffs filed a separate “Supplemental 

Brief on Outstanding Issues.” Those supplemental briefs include documentation of 

additional fees incurred since the filing of the Supplemental Application and, for the first 

time, identify the portion of the fees attributable to each adversary proceeding. 

83 Initially, the Application stated that counsel had incurred $170,811.29 in fees. In 

subsequent filings, this amount was corrected to $169,326.29. In addition, the Application 

seeks reimbursement of $2,691.05 in expenses and costs. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 54 of 77
55

of the lodestar amount of $188,673.29 by a multiple of 1.5 to $283,009.94 plus 

reimbursement of expenses and costs in the amount of $2,691.05. 

In each of the adversary proceedings, Plaintiffs also filed a separate 

“Supplemental Brief on Outstanding Issues” (hereinafter referred to 

respectively as the “Charity Supplemental Brief,” the “Edmonds 

Supplemental Brief” and the “Lane Supplemental Brief” and, collectively, as 

the “Supplemental Briefs”). The Charity Supplemental Brief represents that 

the “lodestar” attributable to the Charity case is $71,423.43. The Edmonds 

Supplemental Brief asserts a lodestar amount of $70,511.43 and the Lane 

Supplemental Brief sets forth a lodestar of $69,471.93. Their combined 

amounts total $211,406.79. Presumably, after their most recent supplement, 

the Plaintiffs are seeking combined fees in the enhanced amount of 

$317,110.19, which reflects a multiplier of 1.5 on the combined lodestar 

amounts. 

NetCredit objects to the Application, arguing that the Plaintiffs have 

failed to demonstrate that they have incurred damages in the form of 

attorneys’ fees and that the amounts being sought are neither reasonable nor 

necessary. First, NetCredit asserts that the fees should be denied due to the 

failure of Plaintiffs’ counsel to comply with the rules applicable to retention 

and disclosure of compensation. Second, NetCredit maintains that if fees are 

to be awarded, the amount of fees sought by Plaintiffs’ counsel is excessive 

and, were the Court to properly apply the lodestar method, the appropriate 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 55 of 77
56

fee amount would be $139,419.82.84 Finally, NetCredit contends that the 

Plaintiffs should be denied their combined claim for reimbursement of costs 

and expenses in the amount of $2,691.05 because the claim has not been 

adequately substantiated. 

Section 329(a) of the Bankruptcy Code provides that “[a]ny attorney 

representing a debtor in a case under this title, or in connection with such a 

case . . . shall file with the court a statement of the compensation paid or 

agreed to be paid . . . .” Bankruptcy Rule 2016(b) requires that the statement 

be filed and transmitted to the U.S. Trustee within 14 days after the order for 

relief or, where a supplemental statement is required, within 14 days after 

any payment or agreement not previously disclosed.85 The phrase “in 

connection with” has been broadly interpreted to include any services that 

affect the bankruptcy estate. See In re Frye, No. 15-10242, 2017 WL 1364973, 

at * 6 (Bankr. D. Vt. Apr. 12, 2017); In re Gorski, 519 B.R. 67, 72 (Bankr. 

S.D.N.Y. 2014) (“[I]f it can be objectively determined that the services 

rendered or to be rendered by the attorney have or will have an impact on the 

bankruptcy estate,” then those services are considered to be “in connection 

with” the bankruptcy case).86 An action based on a violation of the automatic 

84 This amount does not address the additional amounts subsequently requested in the 

Supplemental Application and the Charity Supplemental Brief, Edmonds Supplemental 

Brief and Lane Supplemental Brief. 

85 Rule 2016-1(B) of the Local Bankruptcy Rules for the United States Bankruptcy Court for 

the Eastern District of Virginia (the “Local Bankruptcy Rules”) requires each attorney 

representing a debtor to file an Attorney’s Disclosure Statement not later than 14 days after 

the filing of a petition or the date that counsel is engaged. 

86 See In re Hackney, 347 B.R. 432, 442 (Bankr. M.D. Fla. 2006) (subsequently amended in 

non-relevant part at No. 6:03-bk-02488-ABB, 2006 WL 3804678 (Bankr. M.D. Fla. Sept. 26, 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 56 of 77
57

stay “is at the heart of enforcement of bankruptcy law.” Sundquist, 566 B.R. 

at 596. Each of these adversary proceedings involves a claim for damages for 

automatic stay violations, and the outcome of each will have an effect its 

bankruptcy estate. Consequently, all of the attorneys representing the 

debtors in these adversary proceedings are representing the debtors “in 

connection with” their bankruptcy cases and are therefore required to comply 

with Bankruptcy Rule 2016(b). Furthermore, all fees sought by counsel are 

subject to review, regardless of the source of payment. Burd v. Walters (In re 

Walters), 868 F.2d 665, 668 (4th Cir. 1989) (“We are of [the] opinion that any 

payment made to an attorney for representing a debtor in connection with a 

bankruptcy proceeding is reviewable by the bankruptcy court 

notwithstanding the source of payment.”). 

2006)) (“ Both an objective review of the evidence in this matter and Counsel's own admission 

establish his services, whether he classified them as “bankruptcy” or “non-bankruptcy” 

services, had an impact on the bankruptcy. All of Counsel's services were in connection with 

the Debtors' bankruptcy case and the fees related to his services are subject to review.”). 

 In these cases, counsel for the Plaintiffs acknowledges that their services will impact the 

bankruptcy estates. The following statement is included in Plaintiffs’ Supplemental Brief on 

Outstanding Issues in Adv. Pro. No. 16-03121-KLP, ECF. Doc. No. 94, p. 3: 

Plaintiffs’ confirmed chapter 13 plan provides for a dividend of 100% to their general, 

unsecured creditors. Any significant punitive damages award would help to facilitate 

the successful completion of that plan. Because of this, any amount of a punitive 

damages award available to Plaintiffs, after taxes, would benefit both Plaintiffs and 

the general unsecured creditors who filed proofs of claim in Plaintiffs’ case. 

Plaintiffs’ Supplemental Brief on Outstanding Issues in Adv. Pro. No. 16-03122-KLP, ECF. 

Doc. No. 93, p.3, and Plaintiff’s Supplemental Brief on Outstanding Issues in Adv. Pro. No. 

16-03150-KLP, ECF Doc. No. 84, p. 3, contain the following statement: 

Plaintiff[s] is [are] aware that any significant punitive damages award could be the 

subject of a trustee’s motion for plan modification under 11 U.S.C. § 1329. If such a 

motion were granted, Plaintiff[s] expects[s] that, after taxes are paid, the most 

immediate beneficiaries of a punitive damage award would be the general unsecured 

creditors who filed proofs of claim. If that occurs, the amount of additional plan 

funding that would provide a 100% dividend to these general unsecured creditors is 

$15,367.42 [$13,413.44]. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 57 of 77
58

All of the Plaintiffs are represented by the same three law firms.87 On 

March 2, 2017, a member of each law firm filed a substantially identical 

document entitled “Disclosure of Compensation of Attorney for Plaintiffs in 

Adversary Proceedings” in each of the three adversary proceedings (the 

“Attorney Disclosures”).88 The Attorney Disclosures generally conform to the 

standardized Local Form 2030edva89 that is acceptable for use in disclosing 

the compensation of an attorney for a chapter 13 debtor in this District, 

pursuant to § 329(a) and Bankruptcy Rule 2016(b). Each of the Attorney 

Disclosures provides that counsel has “agreed to accept the Lodestar amount, 

calculated using my current hourly rate as of the date fees are awarded, plus 

expenses.” Each of the Attorney Disclosures lists the source of compensation 

paid or to be paid as “Other” and states “[f]ees to be paid by Defendants upon 

approval by the Court.” Each Attorney Disclosure also provides that “[f]ees 

approved by the Court will be shared on a pro rata basis, based upon the 

respective attorneys’ Lodestar amounts, between [the three law firms].” Each 

87 Boleman Law Firm, P.C., Consumer Litigation Associates, P.C., and the Law Office of Dale 

W. Pittman, P.C. 

88 The Attorney Disclosures were filed only in the adversary proceedings and not in the 

underlying chapter 13 cases. (Adv. Pro. No. 16-03121-KLP, ECF Doc. Nos. 90, 91, 93; Adv. 

Pro. No. 16-03122-KLP, ECF Doc. Nos. 89, 90, 92; Adv. Pro. No. 16-03150-KLP, ECF Doc. 

Nos. 79, 80, 83). The Boleman Law Firm, P.C., however, represents the Plaintiffs in their 

underlying bankruptcy cases and filed the appropriate disclosure in each of the Plaintiffs’ 

cases contemporaneously with the filing of their chapter 13 bankruptcies. In each case, the 

Boleman Law Firm elected to request compensation pursuant to Local Bankruptcy Rule 

2016-1, which authorizes counsel to seek additional compensation in connection with 

representation in an adversary proceeding, to be computed on “a time and effort basis.” 

Local Bankruptcy Rule 2016-1(C)(1)(a) and (C)(3)(a). 

89 Local Form 2030edva, as well as Local Form 2030R13edva used for chapter 13 cases filed 

in the Richmond Division of this Court, substantially conform to Director’s Form B2030 

issued by the Director of the Administrative Office of the United States Courts pursuant to 

Bankruptcy Rule 9009 for use in connection with the disclosure of compensation of an 

attorney for the debtor. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 58 of 77
59

of the Attorney Disclosures also contains a certification that the 

representations therein are “an accurate statement of any agreement or 

arrangement for payment . . . for representation of the debtor(s) in this 

adversary proceeding.” The proof of service attached to each Attorney 

Disclosure certifies that it was served on the debtor/plaintiff, the standing 

chapter 13 trustee and the U.S. Trustee. But for their untimeliness, the 

Attorney Disclosures appear to satisfy the requirements of § 329(a) and 

Bankruptcy Rule 2016(b).90 The Attorney Disclosures establish that in each 

case the Plaintiffs have agreed to compensate their attorneys based on the 

“Lodestar” method (hourly rates multiplied by the reasonable number of 

hours expended), subject to approval by the Court. 

Although the failure to timely or properly comply with the rules 

governing disclosure of compensation may justify the imposition of sanctions, 

including the denial of attorneys’ fees,91 it would not be appropriate to deny 

the Plaintiffs’ claims for attorneys’ fees in these cases due to the untimely 

filing of at least two of the Attorney Disclosures. First, just as reducing 

punitive damages solely to avoid a perceived windfall to the individual 

bringing the action would enable a wrongdoer to avoid paying the societal 

component of punitive damages, a denial of attorneys’ fees based solely on the 

90The applicable rules contemplate that the disclosures are to be filed in the underlying 

chapter 13 cases rather than solely in the adversary proceedings; however, the Attorney 

Disclosure was in each case served on the U.S. Trustee as required by Bankruptcy Rule 

2016(b). 

91 See In re Vernon-Williams, 343 B.R. 766, 799 (Bankr. E.D. Va.), aff’d in part and rev’d in 

part sub nom. Boleman Law Firm, P.C. v. U.S. Trustee, 355 B.R. 548 (E.D. Va. 2006); In re 

Hackney, 347 B.R. at 443. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 59 of 77
60

untimely filing of disclosures of compensation by Plaintiffs’ counsel would 

primarily benefit NetCredit, the wrongdoer in these cases.92 Second, the law 

firm whose services comprise the majority of fees incurred timely filed Rule 

2016(b) disclosures in each of the Plaintiffs’ underlying chapter 13 cases that, 

by reference to the Local Rules of this Court, indicated that fees for 

representation in adversary proceedings would be determined on the basis of 

time and expense.93 Finally, counsel for the Plaintiffs have indicated that 

they will seek payment only to the extent that NetCredit is the source of their 

compensation.94 

A sanction for failure to comply with the disclosure requirements of 

§ 329 and Rule 2016(b) “should be ‘commensurate with the egregiousness of 

the conduct’ and will depend on the particular facts of each case.”95 To the 

extent that at least two of the law firms representing the Plaintiffs in these 

cases failed to timely file their disclosures, their conduct was not egregious 

and does not warrant the denial of their fees. Consequently, the attorneys’ 

fees that are awarded to the Plaintiffs in these cases constitute fees actually 

incurred by the Plaintiffs and are a component of actual damages recoverable 

92 See Sundquist, 566 B.R. at 618. “In any event, [the creditor] is in no position to complain 

because its conduct necessitated the fees.” Id. at 595. 

93 In each chapter 13 case, the Boleman Law Firm, P.C. timely complied with LBR 2016-

1(C)(1)(a) and (C)(3)(a)’s disclosure requirements. These provisions authorize counsel to seek 

additional compensation in connection with representation in an adversary proceeding as 

determined on “a time and effort basis.” Local Bankruptcy Rule 2016-1(C)(3)(d). 

94 While this consideration may appear to address § 329 and Rule 2016(b) insofar as their 

purpose is to protect debtors from overreaching by their attorneys, it does not excuse the 

failure to comply with the mandates of these provisions. Moreover, it overlooks the reality 

that while the intended source of the fees to be paid to the attorney may be NetCredit, the 

contractual obligation to pay is that of the Plaintiffs. 

95 Hackney, 347 B.R. at 443, quoting Mapother & Mapother, P.S.C. v. Cooper (In re Downs),

103 F.3d 472, 479-80 (6th Cir. 1996). 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 60 of 77
61

under § 362(k)(1). See Warren v. Dill (In re Warren), 532 B.R. 655, 664 

(Bankr. D.S.C. 2015). 

The Court must now consider the amount of attorneys’ fees to be 

awarded in each of these adversary proceedings. Attorneys’ fees are 

recoverable under § 362(k)(1) only to the extent that they are reasonable and 

necessary. Skillforce, Inc. v. Hafer, 509 B.R. at 534 (citing Seaton, 462 B.R. 

at 605).96 What constitutes “reasonable” attorneys’ fees in the context of a 

fee-shifting statue such as § 362(k)(1) was recently and thoroughly analyzed 

by the Judge Davis of the Eastern District of Virginia in Denton v. PennyMac 

Loan Services, LLC, Civil Action No. 4:16cv32, 2017 WL 2113138 (E.D. Va. 

May 15, 2017).97 He instructed that the calculation of a reasonable attorney’s 

fee should begin with employing “the lodestar method by multiplying the 

number of reasonable hours expended times a reasonable rate.” Id. at *3, 

quoting McAfee v. Boczar, 738 F.3d at 88 (citation omitted).98 The lodestar 

figure should then be evaluated under the twelve factors set forth in Johnson 

v. Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir. 1974).99 To 

96 “While there are a variety of ways to determine attorney’s fees, the common denominator 

regarding fees in bankruptcy courts is that fees should not exceed the ‘reasonable’ value of 

services rendered. . . . The ‘reasonable’ value of services, of necessity, is determined on a 

case-by-case basis in light of the peculiar circumstances of each case, as modulated by the 

sound discretion of the bankruptcy court.” Sundquist, 566 B.R. at 594 (citations omitted). 

97 In Denton, Judge Davis had before him a motion for attorneys’ fees in connection with an 

action for violation of the Fair Credit Reporting Act. Denton v. PennyMac Loan Servs., LLC, 

No. 4:16cv32, 2017 WL 2113138, at *1 (E.D. Va. May 15, 2017). 

98 See also Warren v. Dill, 532 B.R. at 664 (citing Robinson v. Equifax Info. Servs., 560 F.3d 

235, 243 (4th Cir. 2009) (“The Court determines the amount of reasonable attorney’s fees to 

be awarded by applying the lodestar method: determining the number of hours reasonably 

spent on the case and multiplying that number by a reasonable hourly rate.”). 

99 The twelve Johnson factors include: 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 61 of 77
62

the extent that these factors have already been included in the lodestar 

analysis, the lodestar figure is not adjusted by applying these factors again. 

2017 WL 2113138, at *4 (citing McAfee v. Boczar, 738 F.3d at 91). The next 

step involves excluding fees related to unsuccessful claims that have no 

relationship to successful claims. Id. (citing Robinson v. Equifax Info. Servs., 

560 F.3d 235, 243 (4th Cir. 2009)). The final step requires the court to 

consider reducing the award if the relief obtained is limited compared to the 

overall scope of the litigation. Id. (citing McAfee v. Boczar, 738 F.3d at 92).100

According to the Plaintiffs, the combined lodestar for the three 

adversary proceedings is $211,406.79.101 The Plaintiffs are seeking an 

enhanced combined amount of $317,110.19 in attorneys’ fees, which reflects a 

multiplier of 1.5 on the combined lodestar amounts. 

In each case, NetCredit has objected to the fees requested by the 

Plaintiffs (the “Fee Objection”),102 contending that “the appropriate fee 

(1) the time and labor expended; (2) the novelty and difficulty of the 

questions raised; (3) the skill required to properly perform the legal 

services rendered; (4) the attorney's opportunity costs in pressing the 

instant litigation; (5) the customary fee for like work; (6) the attorney's 

expectations at the outset of the litigation; (7) the time limitations 

imposed by the client or circumstances; (8) the amount in controversy and 

the results obtained; (9) the experience, reputation and ability of the 

attorney; (10) the undesirability of the case within the legal community in 

which the suit arose; (11) the nature and length of the professional 

relationship between attorney and client; and (12) attorneys' fees awards 

in similar cases. 

Denton, 2017 WL 2113138, at *4. 

100 In Seaton, Judge St. John considered a factor similar to the final step described in Denton,

stating that “[t]he proportionality of the attorney’s fees sought to the damages incurred by a 

debtor is a significant factor in determining reasonableness.” 462 B.R. at 605. 

101 See supra page 55. 

102 Adv. Pro. No. 16-03121-KLP, ECF Doc. No. 82, p. 13; Adv. Pro. No. 16-03122-KLP, ECF 

Doc. No. 80, p. 13; Adv. Pro. No. 16-03150-KLP, ECF Doc. No. 72, p. 13. NetCredit’s analysis 

precedes the supplemental fee requests filed by the Plaintiffs. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 62 of 77
63

amount is reduced to $139,419.82” when the lodestar analysis is calculated in 

accordance with Fourth Circuit precedent. Accompanying its Fee Objection is 

a detailed analysis of the time entries submitted by Plaintiffs’ counsel in 

which NetCredit designates numerous charges as unnecessary, duplicative, 

inaccurate, or unrelated to the Plaintiffs and issues involved in these 

adversary proceedings.103 NetCredit objects to an enhancement of the 

lodestar, claiming that it is neither justified by the circumstances nor 

authorized by law. NetCredit further argues that the award of attorneys’ 

fees should be reduced because the amounts claimed are disproportionate to 

the damages incurred by the Plaintiffs. 

Although NetCredit does not appear to object to a combined award of 

attorneys’ fees and costs pursuant to a consolidated application, it is 

undisputed that these three adversary proceedings were neither 

substantively nor procedurally consolidated, the parties having agreed that 

the matters should be tried consecutively but separately.104 It is also a 

matter of record that at approximately the same time that these cases were 

filed, the attorneys representing these Plaintiffs filed nearly identical causes 

of action in this Court against NetCredit on behalf of two similarly situated 

103 See Exhibit 4 to Fee Objection. NetCredit generally does not dispute the reasonableness 

of the hourly rates charged by Plaintiffs’ counsel with the exception of one attorney whose 

rate NetCredit contends should be reduced by $25 per hour. NetCredit’s analysis includes 

the modest adjustment to this attorney’s hourly rate. 

104 In connection with identical Motions in Limine filed in each case, the Court agreed to 

bifurcate the determination of appropriate fee awards from the trials of these cases and allow 

the claims for attorneys’ fees to be presented at a combined hearing after the conclusion of 

the trials. The orders granting the Motions did not consolidate the fee applications but 

merely provided that those applications would be heard at a later date. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 63 of 77
64

clients.105 These two cases, along with a third case (collectively, the “Settled 

Cases”) filed by the attorneys representing the Plaintiffs, were scheduled to 

be tried on the same dates that the Plaintiffs’ cases were tried but were 

settled prior to trial.106 Despite the fact that none of these six cases were 

substantively or procedurally consolidated, counsel for the Plaintiffs, by their 

own admission, failed to separately maintain contemporaneous time and 

billing records for each case, instead electing to combine their timekeeping 

records. Although NetCredit does not object to a consolidated application, it 

contends that some of the fees included in the Application are attributable to 

services rendered to other clients including those involved in the Settled 

Cases. 

Although an analysis of the Johnson factors would ordinarily be the 

next step in calculating a reasonable fee award, an in-depth analysis such as 

that conducted by the court in Denton is not necessary in this case. The 

Court has reviewed the pleadings, exhibits, and declarations filed in 

connection with the claims for attorneys’ fees and finds little attention given 

by any party to many of the twelve factors, save for the hourly rates, the 

experience of the attorneys involved, and efforts to justify or dispute the need 

105 Johnson v. NC Fin. Solutions of Utah, LLC, Adv. Pro. No. 16-03152-KLP, and Smith v. 

NC Fin. Solutions of Utah, LLC, Adv. Pro. No.16-03144-KLP). 

106 Two additional substantially similar cases were subsequently filed by the same attorneys 

on behalf of other clients (In re Munoz, Case No. 16-32061 (Motion for Damages for Violation 

of the Automatic Stay, ECF Doc. No. 21) and Fudala v. NC Fin. Solutions of Utah, LLC (In re 

Fudala), Adv. Pro. No. 16-03303), although the Fudala case was scheduled to be tried at a 

later date. The Johnson, Smith and Munoz cases were also scheduled to be tried 

consecutively on the same dates that the instant cases were tried. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 64 of 77
65

for the amount of time and attention expended. For the most part, there is 

no dispute over the hourly rates of the attorneys.107

NetCredit’s objection to the requested fee enhancement is well 

founded. The Plaintiffs have cited no case where reasonable attorneys’ fees 

were awarded as damages pursuant to § 362(k)(1) were increased by the use 

of a multiplier. The Plaintiffs’ reliance on the Fourth Circuit’s decision in 

Berry v. Schulman, 807 F.3d 600 (4th Cir. 2015), cert. denied, 137 S. Ct. 77 

(2016), is misplaced. Berry involved a large class action settlement under the 

Fair Credit Reporting Act that involved years of litigation and a negotiated 

settlement that provided for a fee enhancement. Id. at 617.108 

Even if the Court does have the discretion to award an enhancement 

such as that being sought by the Plaintiffs, it would not elect to do so in these 

cases. Although the Plaintiffs have called attention to NetCredit’s improper 

business practices, there is no evidence that extraordinary results were 

obtained as a result of these cases. In Berry, the “sea change” in the 

defendant’s business practices referenced by the court was supported by 

expert testimony. Id. at 618. In contrast, the “sea change’ in NetCredit’s 

business practices the Plaintiffs claim to have produced is limited to quality 

assurance measures that the Court has found to be of dubious benefit. The 

107 NetCredit asserts that one associate’s hourly rate of $325-$350 should be adjusted 

downward by $25. Although NetCredit has also questioned the increase of two other 

attorneys’ hourly rate during the course of these proceedings ($475 per hour to $550 per 

hour, an increase of approximately 18% that legitimately could be questioned), it is not 

seeking an adjustment of these attorneys’ rates. 

108 “[T]he fact that only one of the approximately 200 million members of the (b)(2) Class 

objects to the award of attorneys’ fees is relevant to our decision.” Berry v. Schulman, 807 

F.3d 600, 618 (4th Cir. 2015), cert. denied, 137 S. Ct. 77 (2016). 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 65 of 77
66

Plaintiffs’ contention that there is “even more change . . . on the horizon” is 

speculative.109 There is no basis, either factual or legal, to award a fee 

enhancement.110

The Court also finds merit in other objections to the Application raised 

by NetCredit, particularly those occasioned by the failure of Plaintiff’s 

counsel to maintain contemporaneous time records in each case. It bears 

stating again that these cases were not consolidated for purposes of trial or 

otherwise.111 During the course of their representation of the Plaintiffs, 

these attorneys were representing other clients and comingling time entries 

for those clients’ with time entries attributable to the Plaintiffs. Numerous 

time entries refer to “cases” without sufficient information to determine 

whether the matter involves one or more of the Plaintiffs, one or more of the 

Settled Cases, or otherwise. The explanations given by the attorneys 

concerning their method of allocating their time and billing among their 

clients vary; however, it is apparent that these allocations were made in 

hindsight and it is clear that anyone reviewing them, including their clients, 

would have no way of verifying their accuracy or reasonableness. 

109 Application, p. 11. 

110 Some of the documents submitted in connection with the Application indicate that at least 

one of the law firms representing the Plaintiffs contemplated a voluntary reduction of its fee 

request. The Declaration of L. Lee Byrd attached to the Application states that the Boleman 

Law Firm is “self-discounting the actual charges by 10% [as] an appropriate exercise of 

billing judgment.” ¶ 6. The Court is unable to discern, however, where such an adjustment 

has actually been applied. 

111 Cf. Maddux v. Midland Credit Mgmt., Inc., 567 B.R. 489, 490-91 (Bankr. E.D. Va. 2016); 

(Pretrial Order, Maddux v. Midland Credit Mgmt. Inc., Case No. 15–33574–KRH (Bankr. 

E.D. Va. July 14, 2016) (ECF Doc. No. 55). 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 66 of 77
67

In Denton v. PennyMac Loan Services, the district court commented on 

the inability of a court to evaluate the reasonableness of an attorneys’ work 

when counsel has submitted insufficient documentation. “It is the obligation 

of counsel to ‘maintain billing time records in a manner that will enable a 

reviewing court to identify distinct claims.’” 2017 WL 2113138, at *13, 

quoting Hensley v. Eckerhard, 461 U.S. 424, 437 (1983). 

This Court has made clear what it expects in connection with 

applications seeking supplemental compensation112 in chapter 13 cases. See

In re Vernon-Williams, 343 B.R. 766 (Bankr. E.D. Va. 2006), aff’d in part and 

rev’d in part sub nom. Boleman Law Firm, P.C. v. U.S. Trustee, 355 B.R. 548 

(E.D. Va. 2006); In re Hackney, 347 B.R. 432, 442 (Bankr. M.D. Fla. 2006)

(subsequently amended in non-relevant part at No. 6:03-bk-02488-ABB, 2006 

WL 3804678 (Bankr. M.D. Fla. Sept. 26, 2006)). “[I]t is not overly 

burdensome to expect [a law firm] to keep contemporaneous and accurate 

time records for each individual case in which the firm seeks supplemental 

compensation; certainly, it is more practical to expect the applicant than the 

Court to justify fee Awards.” In re Vernon-Williams, 343 B.R. at 797-98. We 

have also indicated our disapproval of the practice of “averaging out” client 

expenses because to do so “is unfair to the individual debtors and creditors, 

whose interests are case-specific.” Id. at 806 (citing In re Williams, 102 B.R. 

197, 199 (Bankr. N.D. Cal. 1989)) (holding with respect to a compensation 

112 Here, “supplemental compensation” refers to any amounts that exceed the “No-Look” Fee 

specified in Local Bankruptcy Rule 2016-1(C)(1)(a) and (C)(3)(a). 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 67 of 77
68

request by a trustee that “[a]s a matter of law, the Court finds that an 

expense is not ‘actual,’ and therefore not reimbursable under section 

330(a)(2), to the extent that it is based on any sort of guesswork, formula, or 

pro rata allocation.”). The “averaging out” of fees attributable to more than 

one client is equally problematic.113

The lack of case-specific contemporaneous records is not the Court’s 

only concern. Another is that not all of the services for which counsel is 

seeking compensation are directly related to stay violations. Each of the 

Plaintiffs’ schedules listed a cause of action against NetCredit “arising” in 

connection with origination of the loans. Time spent negotiating a recovery 

for claims that existed before their bankruptcy filings, even if NetCredit 

conditioned their resolution upon a potential settlement of the automatic stay 

violations, would not normally be recoverable as damages under § 362(k)(1). 

The Applications also include charges for services rendered in 

connection with motions to compel discovery brought by the Plaintiffs in each 

case. These motions sought the production of discovery related to the 

circumstances involved in making the loans rather than the stay violations. 

113 An attorney for one law firm has claimed that “trying to divide each task as it was 

performed into three parts was not always possible.” Supplemental Briefs, Second 

Supplemental Declaration of Mark C. Leffler in Support of Motion for Attorney’s Fees, ¶6. 

Most time entries, however, were not so insignificant nor do these difficulties excuse the 

failure to maintain separate accounts for each client. As Judge St. John stated in VernonWilliams, “[i]t is doubtless that practicing attorneys universally find no professional task 

more odious than the pain-staking maintenance of daily time records for their cases. 

However dreadful and monotonous, contemporaneously maintained time records are quite 

simply where every attempt to value an attorneys’ efforts begins . . . .” 343 B.R. at 798. Just 

as any client is entitled to receive accurate and properly recorded details of the fees and 

expenses he or she has incurred, a court tasked with approving those amounts must insist 

upon the same. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 68 of 77
69

The motions were denied.114 To the extent that fees related to these services 

were “spent on unsuccessful claims unrelated to successful ones” those 

amounts should be subtracted. Denton v. PennyMac Loan Services, 2017 WL 

2113138, at *3, quoting McAfee v. Boczar 738 F.3d at 88. 115 

The Court also questions why it was necessary for the Plaintiffs to 

employ three separate law firms to pursue what would appear to be relatively 

straightforward complaints to recover damages for these automatic stay 

violations. There is no indication that novel and difficult questions of law 

have been implicated. See Denton v. PennyMac Loan Services, 2017 WL 

2113138, at *9. The employment of three separate law firms in each of the 

adversary proceedings raises concerns of over-lawyering. A significant 

amount of travel time (two of the law firms’ offices are located outside of 

Richmond) was included in the Application. A substantial and questionable 

amount of time was spent on attorney conferences and communications. 

Multiple attorneys attended trial on behalf of the Plaintiffs.116 The 

explanations given by counsel regarding the individual roles of each attorney, 

114 Subsequent motions to compel brought by the Plaintiffs were denied on privilege grounds. 

115 At each trial, the Plaintiff(s) offered an exhibit (Exhibit 9 in Charity, Exhibit 6 in 

Edmonds and Exhibit 4 in Lane) purporting to show a pattern of NetCredit automatic stay 

violations. In each case, NetCredit objected to its introduction based upon Rule 901 of the 

Federal Rules of Evidence. The Court sustains NetCredit’s objection on the grounds that the 

chart lacks sufficient authentication. 

116 Plaintiffs’ counsel points to the Report and Recommendation of Magistrate Judge Lauck 

in Randle v. H&P Capital, Inc., No. 3:09cv608, 2010 WL 2944907 (E.D. Va. July 21, 2010), 

adopted in part 2010 WL 3834862 (E.D. Va. Sept. 23, 2010), aff’d in part and dismissed in 

part, 513 F.App’x 282 (4th Cir. 2013), in which Judge Lauck indicated that so long as each 

lawyer is being compensated for a distinct contribution and are not unreasonably doing the 

same work, employing more than one lawyer in federal court litigation is not improper. 2010 

WL 2944907, at *7. The Court cannot help but notice, however, that NetCredit employed 

only one law firm and, to the Court’s knowledge, only one attorney in the firm appeared in 

connection with these cases. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 69 of 77
70

the steps taken to avoid duplication, and the representations that on occasion 

attorneys did not charge for their time do not adequately alleviate these 

concerns. 

The Court in Seaton, when limiting its fee award, emphasized that the 

fees being sought were excessive in comparison to the Plaintiffs’ damages. 

“The proportionality of the attorney’s fees sought to the damages incurred by 

a debtor is a significant factor in determining reasonableness.” 462 B.R. at 

605. Concerns about proportionality are also reflected in the Johnson factor 

relating to the amount in controversy compared to the results obtained. 

In each of these cases, NetCredit conceded that it violated the 

automatic stay, leaving the issues at trial confined primarily to the amount of 

damages to be awarded. The compensatory damages were relatively modest. 

Yet, the Plaintiffs incurred combined attorneys’ fees in excess of $200,000, an 

amount that, even without a punitive damages award, would be strikingly 

disproportionate to the results obtained. The Court is aware that attorneys’ 

fees will not always be directly proportionate to the amount of damages 

recovered and is mindful of the need to encourage the “vigorous enforcement” 

of statutes protecting individuals from offending creditors.117 The Court also 

recognizes that the punitive damage awards in these cases temper the 

117 See Denton, 2017 WL 2113138, at *18, quoting Croy v. E. Hall & Assocs., P.L.L.C., No. 

5:06-CV-00107, 2007 WL 676698, at *3 (W.D. Va. 2007) (“requiring direct proportionality for 

attorneys fees would discourage vigorous enforcement of consumer protection statutes.”). See 

also In re Ojiegbe, 539 B.R. at 483-84 (“As a Ninth Circuit bankruptcy judge pointedly asked 

‘[w]hat good is it to be entitled to damages and attorneys’ fees for a violation of the automatic 

stay if it costs a debtor much more in unrecoverable fees to recover such damages and 

recoverable attorneys fees?’”) (quoting Bertuccio v. Cal. State Contrs. License Bd. (In re 

Bertuccio), No. 04-56255, 2009 WL 3380605 at *7 (Bankr. N.D. Cal Oct. 15, 2009)). 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 70 of 77
71

disproportionality. On balance, however, the fees incurred in comparison to 

the amounts in controversy seem disproportionate and would warrant a 

downward adjustment.118

The Court finds that acceptance of NetCredit’s $139,419.82 “Proposed 

Lodestar Calculation”119 sufficiently alleviates these concerns. No further 

adjustment will be imposed to the fees requested in the Application. In these 

cases, it would be inappropriate to award attorneys’ fees in an amount less 

than what NetCredit has conceded in the Fee Objection to be the 

“appropriate” fee amount.120 Thus, having carefully reviewed the 

Application, along with the accompanying declarations and exhibits, the Fee 

Objection and applicable law, the Court will award attorneys’ fees in the 

combined amount of $139,419.82, supplemented and apportioned as follows. 

As previously noted, the Fee Objection does not account for the 

additional attorneys’ fees included in the Supplemental Application and the 

Supplemental Briefs. Therefore, the fee awards will be increased to the 

extent the supplemental amounts requested are reasonable. 

The Supplemental Application seeks additional attorneys’ fees in the 

combined amount of $19,347.00. The Supplemental Briefs, for the first time, 

118 Having concluded that the fee award being sought in Seaton was “highly unreasonable,” 

the court commented that the case “well-illustrates the concerns voiced by other courts of 

fostering a ‘cottage industry’ built around satellite fee litigation.” 462 B.R at 605. 

119Exhibit 3 to the Fee Objection. 

120 The Court does not accept NetCredit’s contention that the hourly rate of Emily Kennedy 

should be reduced by $25. To the extent that this reduction is factored into NetCredit’s 

proposed lodestar amount, the Court will not correspondingly increase the award, because 

the increase is offset by the extraordinary increases in hourly rates charged by two attorneys 

while these cases were pending. See supra note 107. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 71 of 77
72

attribute separate “lodestar” amounts to each individual case.121 

Unfortunately, even though Plaintiffs seek separate fees, the supporting 

declarations and time submissions reflect a continued stubborn unwillingness 

by counsel to attribute time entries to individual cases. The explanations for 

how counsel arrived at the final apportionment are as problematic as the 

explanations given in the Application addressing the apportionment between 

these cases and the Settled Cases. 

It is unclear to what extent Plaintiffs, in the Supplemental Application 

and Supplemental Briefs, seek an increase of fees over the fees previously 

sought in the Application, since the amounts of the increases are not 

specifically set forth. However, by combining the amounts requested in the 

Supplemental Briefs and subtracting from that total from the amount sought 

in the Application,122 the Court calculates a combined supplemental request 

in the amount of $42,080.50.123 

Having reviewed the Supplemental Application, the Supplemental 

Briefs, and the objections filed by NetCredit, and applying the same rationale 

121 ECF Doc. No. 94 in Adv. Pro. No. 16-03121-KLP asserts that “[w]ith the supplemental 

time added, the initial lodestar attributable to the [Charitys] is $71,423.43. ECF Doc. No. 93 

in Adv. Pro. No.16-02122-KLP asserts a lodestar amount of $70,511.43 for the Edmondses, 

and ECF No. 84 in Adv. Pro. No. 16-03150-KLP asserts a lodestar amount of $69,471.93 for 

Ms. Lane. Plaintiffs’ counsel states that the separation of the amounts requested in “the 

three cases that were tried together” resulted in “additional work” requiring updates in the 

time submissions. The Court notes once again that these cases were not tried together. 

122 The corrected initial lodestar amount as stated in the Supplemental Application is 

$169,326.29 (calculated to be $168,606.44 by NetCredit, although NetCredit’s asserted 

correction is included in its proposed fee). The combined final request is $211,406.79. 

123 In its responses to the Supplemental Briefs, NetCredit itemizes the supplemental 

requests as $5,947.83 (Charity case), $6,467.16 (Lane case), and $6,467.16 (Edmonds case), 

for a total of $18,882.15. It contends that the combined supplemental request should be 

allowed in the amount of $15,553.65, a reduction of $3,328.50. However, the Court is unsure 

as to the basis of the figures cited by NetCredit. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 72 of 77
73

as previously employed in accepting NetCredit’s proposed fee reduction, the 

Court will award supplemental combined fees in the amount of $38,752.00.124 

This amount reflects NetCredit’s proposed reduction of $3,328.50 to the 

supplemental fee request. 

The combined total attorneys’ fees award is thus $178,171.22, which 

represents $139,419.82 awarded pursuant to the Application and a 

$38,752.00 supplemental award. NetCredit’s objections, to the extent not 

already sustained in arriving at this amount, will be overruled. 

The Court is aware of no logical means to apportion the attorneys’ fees 

award to the individual cases other than to prorate this amount on the basis 

of the amounts being sought by counsel in the individual cases. Accordingly, 

attorneys’ fees in the amount of $60,195.05 will be awarded in Adv. Pro. No. 

16-03121-KLP (Charity), $59,426.43 will be awarded in Adv. Pro. No. 16-

03122-KLP (Edmonds) and $58,550.34 will be awarded in Adv. Pro. No. 16-

03150-KLP (Lane).125 Attorneys’ fees shall not be payable by the Plaintiffs to 

counsel until those fees are received from NetCredit. 

NetCredit asserts that the Plaintiffs should be denied their claim for 

reimbursement of costs and expenses in the amount of $2,691.05 because 

there are no itemized statements or invoices accompanying the claim. 

Adequate documentation is required before litigation costs may be awarded. 

124 See Trimper v. City of Norfolk, 58 F.3d 68, 77 (4th Cir. 1995) (time spent defending claim 

to attorneys’ fees is compensable when party recovers attorneys’ fees under fee-shifting 

statute) (internal citation omitted). 

125 These numbers are derived by multiplying the total requested fees in each case by the 

ratio of $178,171.82 (the total amount of fees awarded) to $211,402.79 (the total amount of 

fees originally sought by Plaintiffs).

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 73 of 77
74

Trimper v. City of Norfolk, 58 F.3d 68, 77 (4th Cir. 1995) (“an unverified 

‘Chart of Expenses,’ with no receipts or bills attached” was insufficient 

documentation to award costs); Fernandes v. Montgomery Cty., No. SAG-10-

752, 2013 WL 6330705, at *7 (D. Md. Dec. 3, 2013) (merely listing litigation 

expenses “[w]ith no supporting documentation, such as vouchers, or receipts,” 

is insufficient to enable court to verify that the amounts are accurate and 

reasonable). The Plaintiffs have provided only a combined listing of costs and 

expenses with no supporting documentation. Therefore, they cannot be 

allowed. 

Conclusion 

Mekeanna Lane (Adv. Pro. No. 16-03150-KLP) 

Mekeanna Lane is awarded actual, compensatory damages in the 

amount of $202.44. Ms. Lane is also awarded punitive damages in the 

amount of $100,000.00. Of the $100,000.00 she is to receive, she is enjoined 

to deliver $37,500.00 to the National Consumer Law Center and $37,500.00 

to the Legal Services Corporation of Virginia (minus all taxes, if any, Ms. 

Lane must pay on account of those sums). There shall be a remittitur of the 

punitive damages to $15,000.00 to be fully retained by Ms. Lane if, and only 

if, NetCredit contributes $37,500.00 to the National Consumer Law Center 

and $37,500.00 to the Legal Services Corporation of Virginia on account of 

Ms. Lane. Ms. Lane is also awarded $58,550.34 in attorneys’ fees. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 74 of 77
75

James and Regina Charity (Adv. Pro. No. 16-03121-KLP) 

Regina Charity is awarded actual, compensatory damages in the 

amount of $1,155.63. Mrs. Charity is also awarded punitive damages in the 

amount of $100,000.00. Of the $100,000.00 she is to receive, she is enjoined 

to deliver to the National Consumer Law Center and $37,500.00 to the Legal 

Services Corporation of Virginia (minus all taxes, if any, Mrs. Charity must 

pay on account of those sums). There shall be a remittitur of the punitive 

damages to $15,000.00 to be fully retained by Mrs. Charity if, and only if, 

NetCredit contributes $37,500.00 to the National Consumer Law Center and 

$37,500.00 to the Legal Services Corporation on account of Mrs. Charity. 

Mrs. Charity is also awarded $60,195.05 in attorneys’ fees. 

James Charity is not entitled to recover damages associated with 

NetCredit’s violation of the automatic stay. He shall not, however, be liable 

for attorneys’ fees in connection with this adversary proceeding. 

Collin and Bobbie Lane Edmonds (Adv. Pro. No. 16-03122-KLP) 

Bobbie Lane Edmonds is awarded actual, compensatory damages in 

the amount of $415.25. Mrs. Edmonds is also awarded punitive damages in 

the amount of $100,000.00. Of the $100,000.00 she is to receive, she is 

enjoined to deliver $37,500.00 to the National Consumer Law Center and 

$37,500.00 to the Legal Services Corporation of Virginia (minus all taxes, if 

any, Ms. Edmonds must pay on account of those sums). There shall be a 

remittitur of the punitive damages to $15,000.00 to be fully retained by Mrs. 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 75 of 77
76

Edmonds if, and only if, NetCredit contributes $37,500.00 to the National 

Consumer Law Center and $37,500.00 to the Legal Services Corporation of 

Virginia on account of Mrs. Edmonds. Mrs. Edmonds is also awarded 

$59,426.43 in attorneys’ fees. 

Collin Edmonds is not entitled to recover damages associated with 

NetCredit’s violation of the automatic stay. He shall not, however, be liable 

for attorneys’ fees in connection with this adversary proceeding. 

Separate orders will be entered. 

Signed: August 14, 2017 /s/ Keith L. Phillips 

 United States Bankruptcy Judge 

Copies: 

James Douglas Charity, Jr. 

3660 Hog Island Road 

Surry, VA 23883 

Regina Parker Charity 

3660 Hog Island Road 

Surry, VA 23883 

Collin Edmonds 

8929 Hawkbill Rd. 

Richmond, VA 23237 

Bobbie Lane Edmonds 

8929 Hawkbill Road 

Richmond, VA 23237 

Mekeanna Shindrell Lane 

6225 Claudehart Road 

Richmond, VA 23234 

Thomas D. Domonoske 

Consumer Litigation Associates 

763 J. Clyde Morris Blvd, Suite 1-A 

Newport News, VA 23601 

Entered on Docket: August 15, 2017

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 76 of 77
77

Emily Connor Kennedy 

Boleman Law Firm, P.C. 

P.O. Box 11588 

Richmond, VA 23230 

Mark C. Leffler 

Boleman Law Firm, P.C. 

P.O. Box 11588 

Richmond, VA 23230 

Corey Simpson Booker 

LeClairRyan, A Professional Corporation 

SunTrust Plaza - 24th Floor 

919 East Main Street 

Richmond, VA 23219 

Dale W. Pittman 

THE LAW OFFICE OF DALE W. PITTMAN, P.C. 

The Eliza Spotswood House 

112-A West Tabb Street 

Petersburg, VA 23803 

Case 16-03122-KLP Doc 95 Filed 08/15/17 Entered 08/15/17 10:11:05 Desc Main

 Document Page 77 of 77