### NOT FOR PU BLICA TION

U NIT E D ST A T E S BA NK RU PT CYA PPE L L A T E PA N E L

OF T HE NINT H CIRCU IT In re: ERI KARO DRIGU EZ,

Deb to r. ERI KARO DRIGU EZ,

A p pellant,

v. N A TIO N A L FU N DIN G, IN C .,

A p pellee. BA P N o . N C -19-1191-FBTa Bk. N o . 18-10674

M E M ORA ND U M *

A rgued and Sub m itted o n March 26, 2020

Filed – A pril 2, 2020 A ppeal fro m the United States Bankruptcy C o urt fo r the N o rthern Distric t o f C alifo rnia Ho no rab le C harles N o vak, C hief Bankruptc y Judge, Presiding 

# FIL ED
APR 2 2020 SUSAN M . SPRAUL, CLERK U. S. B KCY

. APP. PANEL O F T HE NI NT H C I RCUI T

*Thi s di sposi ti on i s not appr opr i ate for publi cati on. Although i t may be ci ted for whatev er per suasiv e v alue i t may hav e, seeFed. R. App. P. 32.1, i t has no pr ecedenti al v alue, see9th Ci r . BAP Rule 8024-1.A ppearanc es: Tho m as Philip Kelly, III argued o n b ehalf o f appellant; Jennifer E. Duty o n the b rief fo r appellee.
Befo r e: FA RIS, BRA N D, and TAY LO R , Bankruptcy Judges. INT ROD U CT I ON The b ankruptcy c o urt held that c redito rN atio nal Funding, Inc
. willfully vio lated the auto m aticstay when it levied chapter 7 1 deb to r Erika R o driguez’s b ank ac c o unts. Ms. Ro driguez so ught to rec o ver $29,000 in atto rneys’ fees and $2,500 in c o sts, b ut the c o urt awarded $7,875 and $81, respec tively, b ec ause she had failed tom itigate her dam ages b efo re filing a
m o tio n fo r c o ntem p t. Ms. R o d riguez appeals, arguing that the b ankruptcy c o urt sho uld have awarded her the full am o unt o f her c laim ed fees and c o sts and did no t pro vide adequate reaso ns fo r disc o unting her award. The b ankruptcy c o urt ac ted within its disc retio n. W e A FFIRM.

F A C T U A L BA CK GROU N D A . Prepetition ev e nts In 2018, Ms. Ro driguez defaulted o n a b usiness lo an fro mN atio nal Funding. N atio nal Funding ob tained a $130,060 default judgment against

1 Unless specifi ed other wi se, all chapterand secti on r efer ences ar e to the Bankr uptcy Code, 11 U.S
. C. §§ 101-1532, and all “Rule” r efer ences ar e to the Feder al Rules of Bankr uptcy Pr ocedur e. 2her in state c o urt, and the state c o urt pro m ptly issued a writ o f exec u tio n.

O n A u gust 1, N atio nal Funding sent instruc tio ns to the So no m a C o unty Sheriff’s Departm ent to levy Ms. R o d r iguez’s b ank ac c o unts. B. M s . Rodriguez’sbankruptcy c as e Ms. R o d riguez filed a chapter 7 petitio n o n O c tob er 1, 2018. Her
c redito r m atrix inc luded N atio nal Funding, c a re o f its atto rney, Jennifer E. Duty. She also filed a no tic e o f stay o f pro c eedings in the state c o urt ac tio n. N atio nal Funding c o nc eded that it knew o f Ms. R o driguez’s petitio n b y O c tob er 2. N evertheless, o n that date, it sent the sheriff’s o ffic e new instruc tio ns to enfo rc e the writ o f exec utio n. O n O c tob er 10, a staff atto rney fo r N atio nal Funding, Tara Muren, personally learned o f Ms. R o d riguez’s b ankruptcy c ase. She c laim ed that she direc ted her legal assistant toc o ntac t the sheriff’s o ffic e to term inate the levy that day. Fo r whatever reaso n, the sheriff’s o ffic e did no t rec eive no tic e o f the levy term inatio n. O n o r aro und O c tob er 22, it levied Ms. Ro driguez’s
chec king and savings ac c o unts, rec o vering a to t a l o f $236.41. Ms. R o d riguez attem pted to withdraw funds after the levy, which resulted in a $35 o verdraft fee. N either the sheriff’s o ffic e no r N atio nal Funding has ever returned the funds to Ms. Ro driguez. C. M s . Rodriguez’sm otion for c ontem pt Ms. R o d riguez no tified her atto rney, Tho m as P. Kelly III, that the sheriff’s o ffic e had levied her ac c o unts. Mr. Kelly did no t c o ntac t N atio nal
3Funding o r o therwise info rm ally attem pt to reso lve the stay vio latio n.

R ather, Mr. Kelly (o n b ehalf o f Ms. R o d riguez) filed a m o tio n fo r c o ntem pt (“C o ntem pt Mo tio n”) against N atio nal Funding in the b ankruptcy c o urt. Ms. Ro driguez argued that she had given N atio nal Funding no t ic e o f her b a nkruptc y filing, b ut it nevertheless vio lated the auto m aticstay b y levying her b a nk ac c o unts. N atio nal Funding o ppo sed the C o ntem pt Mo tio n and b lam ed the levy entirely o n the sheriff’s o ffic e. It c laim ed that it had c anc elled the levy b y pho ne, m ail, and e-fax and pro vided c o p ies o f the undated levy term inatio n request. It argued that it did no t willfully vio late the auto m atic stay and that dam ages were no t warranted b ec ause Ms. Ro driguez did no t
c o ntac t N atio nal Funding to try to reso lve the stay vio latio n am ic ab ly. A t the hearing o n the C o ntem pt Mo tio n, the b ankruptcy c o urt questio ned whether N atio nal Funding had do cu m entatio n pro ving when it sent the no tic e o f levy term inatio n to the sheriff’s o ffic e; c o unsel replied that there was an e-m a il b ut no o ther fax c o nfirm a tio n. Ms. R o driguez’s
c o u nsel represented that the sheriff’s o ffic e info r m ed himthat it had no t
rec eived any c anc ellatio n no tic e fro mN a tio nal Funding. Due to the fac tual disputes, the c o urt set a c o ntinued hearing and allo wed the parties to
c o nduc t disc o very. Ms. R o driguez’s c o unsel did no t objec t. The parties depo sed Ms. Ro driguez and the sheriff’s o ffic e’s representative, Ruth C o o per, and filed supplem ental b riefs.
4A t the c o ntinued hearing o n the C o ntem pt Mo tio n, the b ankruptcy

c o u rt no ted that there was still a question o f fac t ab o ut whether and when N atio nal Funding attem p ted to term inate the levy. Mr. K elly initially insisted that there was nofac tual dispute. Eventually, when it b ec am e c lear that the c o urt wo uld no t dec ide the issue ab sent an evidentiary hearing, he agreed to a hearing: “Y es, as tothe So no m aC o unty Sheriff’s state o f kno wledge and at what po int did they rec eive no tic e, if any, fro mN atio nal Funding? ” Ms. C o o per, Ms. Ro driguez, and Ms. Muren (the N atio nal Funding staff atto rney) testified at the evidentiary hearing. Ms. C o o per reiterated that the sheriff’s o ffic e did no t have any rec o rd o f N atio nal Funding
c o ntac ting it to term inate the levy prio r to O c tob er 28, 2018. C o nversely, Ms. Muren testified that she perso nally b ec am e aware o f Ms. R o driguez’s b ankruptcy c ase o n O c tob er 10 and instruc ted her assistant to term inate the levy that day. She explained that she c reated a do cum ent direc ting the sheriff’s o ffic e to halt the levy, whic h her assistant sent via e-fax. She said that she did no t realize that the sheriff’s o ffic e had levied the b a nk ac c o u nts until she reviewed the C o ntem pt Mo tio n. In its written o rder, the b ankruptcy c o urt fo und that N atio nal Funding “c learly vio lated the auto m aticstay” and that its failure tosto p the levy was a willful vio latio n b ec ause it knew o f the auto m atic stay and its effo rts to term inate the c o llec tio n effo rts were inadequate. It awarded
5Ms. R o driguez $236.41 plus the $35 overdraft fee. Ho wever, it dec lined to

award her em o tio nal distress dam ages b ec ause her disc o m fo rt and
emb a rrassm ent were “m o m entary and slight.” The b ankruptcy c o urt instruc ted Mr. Kelly to file do cum ents in suppo rt o f the request fo r fees and c o sts. It also direc ted b o th parties to address whether Ms. Ro driguez satisfied her duty tom itigate her dam ages. D . T he feesand c os ts award Ms. R o d riguez filed a m o tio n fo r atto rneys’ fees and c o sts (“Fees Mo tio n”) c laim ing $29,610 in atto rneys’ fees and $2,564.34 in c o sts. She argued that N atio nal Funding’s strategy o f “m aximumc o nfro ntatio n” pro lo nged the dispute and required signific ant wo rk. She further argued that she did no t need to m itigate her dam a ges, b ec ause N atio nal Funding
c aused the injury and failed topro vide any evidenc e that it wo uld have do ne anything differently even if she had c o ntac ted it. N atio nal Funding o ppo sed the Fees Mo tio n and argued that Ms. R o driguez failed to m itigate her dam ages b y filing the C o ntem pt Mo tio n witho ut c o ntac ting N atio nal Funding and refusing to engage in settlem ent discussio ns. The b ankruptcy c o urt held a hearing o n the Fees Mo tio n and ruled that Ms. Ro driguez was entitled toreaso nab le atto rneys’ fees b ut no t the full am o unt c laim ed. It fo und that, had Ms. Ro driguez reached o ut to N atio nal Funding prio r to filing the C o ntem pt Mo t io n, “there’s little do ub t
6that N atio nal Funding wo u ld have pro m ptly returned the funds that the

sheriff rem o ved fro mher b ank ac c o unts.” The c o urt stated that it was “no t ado pting a per se rule that requires deb to rs to send a c ease and desist letter b efo r e filing a Sec tio n 362(k) m o tio n, b u t in this instanc e, that wo uld have b een a far m o re appro priate m etho d to take. Y o u do n’t need a ho use to squash a m o s quito, and that’s exac tly what I have here . . . .” The b ankruptcy c o urt awarded Ms. Ro driguez $7,875 in atto rneys’ fees and $81.64 in c o sts. It explained that it was awarding fees and co sts
o nly thro ugh the first hearing o n the C o ntem pt Mo tio n, o r ro ughly twenty ho urs, which represented “m o re than eno ugh [tim e] to understand the
sc o pe o f the prob lem, to c o ntac tN atio nal Funding, and to reso lve this. A nd that’s what sho uld have b een do ne.” Ms. R o d riguez tim ely appealed. JU RISD ICT ION The b ankruptcy c o urt had jurisdictio n pursuant to28 U .S.C . §§ 1334 and 157(b )(2)(A ). W e have jurisdic tio n under 28 U .S.C . § 158. ISSU E Whether the b a nkruptcy c o urt erred in awarding Ms. Ro driguez less than the full am o unt o f atto rneys’ fees and c o sts that she incurred while pro secuting the C o ntem pt Mo tio n. ST A ND A RD OF RE V I E W W e review the am o unt o f sanc tio ns im po sed fo r a willful vio latio n o f

7the stay, inc luding an award o f atto rneys’ fees and c o s ts, fo r an ab use o f

disc retio n. Eska no s &Adler, P.C . v. Leetien , 309 F.3d 1210, 1213 (9th Cir. 2002) (c iting F ra nchise Tax Bd. v. R o berts (In re R o berts) , 175 B.R . 339, 343 (9th C ir. BA P 1994)); see Am .’s S ervicing C o . v. S chwa r tz -Ta lla rd (In re S chwa r tz -Ta lla r d) , 803 F.3d 1095, 1101 (9th Cir. 2015) (en b anc ) (“[C ]o urts awarding fees under § 362(k) thus retain the disc retio n to elim inate
unnec essary o r plainly exc essive fees.” (c itatio n o m itted)). To determ ine whether the b ankruptcy c o u rt ab used its disc retio n, we c o nduc t a two -step inquiry: (1) we review de no vo whether the b ankruptcy c o u rt “identified the c o rrec t legal rule to apply to the relief requested” and (2) if it did, we c o nsider whether the b ankruptcy c o urt’s applic atio n o f the legal standard was illo gic al, im plausib le, o r witho ut suppo rt in inferenc es that m ay b e drawn fro mthe fac ts in the rec o rd. United S ta tes v. Hinkso n , 585 F.3d 1247, 1262-63 &

n.21 (9th C ir. 2009) (en b a nc ).

D ISCU SSION A . T he bankruptcy c ourt did not abus e its dis c retion in awarding M s . Rodriguez les s than the full am ount of her feesand c os ts . Ms. R o d riguez argues that the b ankruptcy c o urt erred in disc o unting her award o f atto rneys’ fees and c o sts b ec ause she failed tom itigate her dam ages. W e disc ern no ab use o f disc retio n. Sec tio n 362(k) pro vides that “an individual injured b y any willful vio latio n o f a stay pro vided b y this sec tio n shall rec o ver ac tual dam ages,
8inc luding c o sts and atto rneys’ fees, and, in appro priate c ircum stanc es, m a y

rec o ver punitive dam a ges.” § 362(k)(1). The N inth C ircuit has held that, while the award o f atto rneys’ fees is m andato ry, c o urts have disc retio n to determ ine the reaso nab leness o f the award: A ltho ugh § 362(k) m akes such fee awards m andato ry rather than disc retio nary, we do no t think that feature o f the statute will result in unnec essary litigatio n b r o ught so lely to drive up the award. Only an award of feesreas onably inc urred is m andated by the s tatute ; c o urts awarding fees under § 362(k) thus retain the disc retio n to elim inate unnec essary o r plainly exc essive fees. In re S chwa rtz -Ta lla rd, 803 F.3d at 1101 (citatio n o m itted) (em phasis added). When c o nsidering atto rneys’ fees fo r a stay vio latio n, “[c ]o urts in
o ther c ircuits have applied the standard o f § 330 fo rc o m pensating pro fessio nals in b ankruptcy, which pro vides fo r ‘reaso nab le c o m pensatio n fo r ac tual, nec essary servic es.’” Eska no s &Adler, P.C . v. R o m a n (In re R o m a n) , 283 B.R . 1, 11 (9th C ir. BA P 2002) (c itatio ns o m itted). The reaso nab leness o f fees is determ ined b y using the “lo destar” appro ach 2 and b y c o nsidering the particular c ircum stanc es o f each c ase. Id. C o urts m ay alsoc o nsider the pro po rtio nality o f the atto rneys’ fee award in relatio n to the dam ages so ught. S ee In re Beebe

, 435 B.R . 95, 102 (Bankr. N
. D.N .Y . 2010) (dec lining to

2 The lodestar appr oach r equi res the bankr uptcy cour t to deter mine the r easonable amount of fees by multi plying the numberof hour s r easonably spent by the attor ney’s r easonable hour ly r ate. See Law Offices of David A. Boone v. Derham-Burk (In re Eliapo) , 468 F.3d 592, 598 (9th Ci r . 2006). 9award atto rneys’ fees b ec ause “[p]ro secutio n o f the willful stay vio latio n

sim ply was no t reaso nab le in this c ase to determ ine and enfo rc e appro priate sanc tio ns”). A dditio nally, we have no ted that the reaso nab leness inquiry requires
a c o urt to determ ine whether the deb to r c o uld have m itigated her dam ages: [I]n determ ining reaso nab le dam a ges under § 362(h) [no w § 362(k)], the b ankruptcy c o u rt must exam ine whether the deb to r c o uld have m itigated the dam ages. Generally, in determ ining the appro priate am o unt o f atto rneys’ fees to award as a sanc tio n, the c o u rt lo o ks to two fac to rs: “(1) what expenses o r c o sts resulted fro mthe vio latio n and (2) what po rtio n o f tho se c o sts was reasonab le, as o ppo sed to c o sts that c o uld have b een m itigated.” In re R o m a n , 283 B.R . at 12 (quo ting In re GeneS ys, Inc. , 273 B.R . 290, 296 (Bankr. D.C . 2001)). In the present c a se, Mr. Kelly represented that he had b illed o ver $30,000 in fees and c o sts pro secu ting the C o ntem pt Mo tio n against N atio nal Funding. The b ankruptcy c o urt, ho wever, fo u nd that this am o unt
was unreasonab le and awarded $7,875 in fees and $81 in c o sts, representing wo rk thro u gh the first hearing o n the C o ntem pt Mo tio n. Ms. R o d riguez argues that the b ankruptcy c o urt im po sed a “m eet and c o nfer requirem ent fo rstay vio latio n m o tio ns.” She c o ntends that the b ankruptcy c o urt “stated a rule that wou ld have required a third no t ic e o f
10the [auto m aticstay] b y m andating a further m eet and c o nfer letter fro m

A ppellant’s c o unsel.” (N atio nal Funding rec eived no tic e o nc e fro mthe b ankruptcy c o urt when Ms. R o driguez filed her petitio n and again when she filed a no t ic e o f auto m a ticstay in the state c o urt c ase.) Ms. R o d riguez m isc o nstrues the b ankruptcy c o urt’s ruling. It never im po sed a “m eet and c o nfer” requirem ent and did no t dispute that N atio nal Funding had no tic e o f the auto m aticstay. Indeed, it stated that it was “no t ado pting a per se rule that requires deb to rs to send a c ease and desist letter b efo re filing a Sec tio n 362(k) m o tio n . . . .” R ather, the b ankruptcy c o urt evaluated the reaso nab leness and pro po rtio nality o f Ms. Ro driguez’s ac tio ns in light o f N atio nal Funding’s stay vio latio n. The c o urt fo und that this c a se invo lved a relatively m ino r vio latio n that N a tio nal Funding wo uld have quic kly rem edied, had Ms. R o driguez c o ntac ted it direc tly, rather than taking the m o re c o nfro ntatio nal ro ute o f filing the C o ntem pt Mo tio n. It fo und that her
ac tio ns resulted in needless litigatio n and, b y im plic atio n, unreaso nab ly large fees. These findings were no t c learly erro neo us. Ms. R o d riguez ac kno wledges that she had a duty to m itigate her dam ages b ut c o ntends that all o f the b illed atto rneys’ fees were appro priate. She argues that N atio nal Funding inc reased litigatio n c o sts b y

11pursuing a highly c o nfro ntatio nal and m eritless strategy. 3

W e are sym patheticto Ms. Ro driguez’s argum ents. Based o n o ur review o f the rec o rd, we are less o ptim isticthan the b a nkruptc y c o urt ab o ut N atio nal Funding’s respo nse to an info rm al request. N atio nal Funding’s respo nses were c o nsistently energetic and never c o nc iliato ry: it sent an am ended levy request to the sheriff o n the very day it first rec eived
no tic e o f the b ankruptcy filing; it m ade o nly ineffec tual (if any) effo rts to
c o r rec t its vio latio n until Ms. R o driguez filed her C o ntem pt Mo tio n; and it
m o unted a full-thro a ted, aggressive litigatio n strategy in respo nse to that
m o tio n. W e also no te that m o st o f Ms. R o driguez’s fees and c o s ts were inc urred during the disc o very, supplem ental b r iefing, and evidentiary hearing that N a t io nal Funding and the c o urt insisted were nec essary (and that Mr. Kelly initially argued were unnec essary). But we c an o nly review the c o ld paper rec o rd, and we dono t have the b enefit that the b ankruptcy c o u rt enjo yed o f first-hand ob servatio n o f the pro c eedings. W e c anno t say that the c o urt’s findings were illo gic al, im plausib le, o r witho ut suppo rt in the rec o r d. B. T he bankruptcy c ourt adequately explained the reduc ed award. Ms. R o d riguez argues that the b ankruptcy c o urt erred b y failing to

3 In her r eply br i ef, Ms. Rodr i guez ar gues that Nati onal Funding wai v ed the i ssue of who was at fault in dr i v ing the li ti gati on. But Nati onal Funding addr essed i ts posi ti on in i ts answer ing br i ef by asser ti ng that i t pr omptly took acti ons to cancel the lev y and pr ov i ding appr opr i ate ci tati ons to the r ecor d. 12explain the ratio nale b ehind the fees and c o sts award. We disagree.

The N inth C ircuit has repeatedly rec o gnized the trial c o urt’s disc retio n in awarding atto rneys’ fees b u t has c autio ned that “[i]t rem ains im po rtant, ho wever, fo r the distric t c o urt to pro vide a c o nc ise b ut c lear explanatio n o f its reaso ns fo r the fee award.” Ga tes v. D e ukm ejia n , 987 F.2d 1392, 1398 (9th C ir. 1992) (quo ting H ensley v. Eck

erha rt, 461 U .S. 424, 437 (1983)) (c ivil rights c laim s). This requires the c o urt “togive at least so m e indic atio n o f ho w it arrived at the am o unt o f c o m pensab le ho urs fo r which fees were awarded toallo w fo r m eaningful appellate review. A ltho ugh we do no t require ‘an elab o rately reaso ned, c alculated, o r wo rded o rder . . . [and] a b rief explanatio n o f ho w the c o urt arrived at its figures will do,’ ‘so m ething m o re than a b ald, unsuppo r ted am o unt is nec essary.’” Id. (c itatio ns o m itted). N evertheless, when c o nsidering an award o f atto rneys’ fees, the c o urt is no t required to go line-b y-line thro ugh the b illing rec o rds: [T]rial c o urts need no t

, and indeed sho uld no t, b ec o m e green-eyeshade ac c o untants. The essential go a l in shifting fees (to either party) is to do ro u gh justic e, no t to achieve auditing perfec tio n. Sotrial c o urts m ay take into ac c o unt their o verall sense o f a suit, and m a y use estim ates in c alculating and allo c ating an atto rney’s tim e. A nd appellate c o u rts must give sub stantial deferenc e to these determ inatio ns, in light o f “the distric t c o urt’s superio r understanding o f the litigatio n.” Fo x v. V ice, 563 U .S. 826, 838 (2011) (quoting H ensley , 461 U .S. at 437) (c ivil rights c laim s ).
13Ms. R o d riguez c o ntends that the b ankruptcy c o u rt failed to

“articulate any b asis why the fees and c o s ts so ught were unreaso nab le and
exc essive.” This is no t c o rrec t. A s discussed ab o ve, the b a nkruptc y c o urt fo und that a pho ne c all to N atio nal Funding’s c o u nsel m ight have reso lved the situatio n, so m o st o f the servic es Ms. Ro d riguez’s c o unsel rendered
were unnec essary. Ms. R o d riguez further argues that the c o urt did no t explain why it allo w ed fees and c o sts o nly up to the first hearing, partic ularly when the
c o u rt o rdered disc o very and additio nal hearings. She is inc o rrec t
. The c o urt explained that it was awarding fees thro ugh the first hearing and that twenty ho urs represented m o re than eno ugh tim e fo r Mr. Kelly to pro c eed
reaso nab ly b y c o nsulting with Ms. R o driguez, c o ntac ting N atio nal Funding, and reso lving the stay vio latio n. The c o urt fo u nd that $7,875, o r ro ughly twenty ho urs, was “genero u s” in light o f the am o unt o f wo rk it sho uld have taken to reso lve this issue. It was no t required to undertake a line-b y-line analysis o f Mr. K elly’s b ills, and we defer to the b a nkruptcy c o u rt’s judgm ent as to what c o nstituted a reaso nab le am o unt o f tim e. A s to the wo rk required b eyo nd the first hearing, Ms. R o driguez
c laim s that she did no twant disc o very and additio nal hearings. A s we have stated, we are sym patheticto her po sitio n. But we dono t b elieve that the b ankruptcy c o urt ab used its disc retio n b y requiring these pro c eedings to reso lve the fac tual disputes o r b y denying Ms. R o driguez’s request fo r
14fees fo r tho se pro c eedings b ased o n its no t-c learly-erro neo us finding that

Ms. R o driguez c o uld have avo ided tho se pro c eedings alto gether. In sum, the c o urt did no t ab use its disc retio n when it dec ided that Ms. R o driguez c o uld have rem edied the stay vio latio n with twenty ho urs o f atto rney tim e wo rth $7,875. CONCL U SION The b ankruptcy c o urt did no t err. W e A FFIRM.

15