IN THE UNITED STATES BANKRUPTCY COURT

FOR THE WESTERN DISTRICT OF PENNSYLVANIA

IN RE:

THOMAS J. NEE, : Case No. 14-22944-TPA

Debtor :

: Chapter 13

THOMAS J. NEE, :

Plaintiff : Adv. No. 14-2244-TPA

:

v. : Related to Doc. Nos. 13, 16, 26

:

STERLING ROSS & ASSOCIATES, LLC :

and JARED GALLERIA of JEWELERS, :

Defendants :

Appearances: Brian C. Thompson, Esq., for the Debtor/Plaintiff

Sterling Ross & Associates, LLC, no appearance

Jared Galleria of Jewelers, no appearance

MEMORANDUM OPINION

On January 15, 2015, the Debtor filed an Amended Complaint for: I. Violation of the

Automatic Stay Under 11 U.S.C. Section 362, II. Contempt of Court, III. Violation of the

Pennsylvania Fair Credit Extension Uniformity Act, and IV. Violation of the Fair Debt Collection

Practices Act (“Amended Complaint”) at Doc. No. 13.1 Named as Defendants in the Amended

Complaint are Jared Galleria of Jewelers (“Jared”) and Sterling Ross and Associates, LLC

(“Sterling”).

The docket shows that service of the Amended Complaint and Summons was made

1 The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157(a) and 1334.

The claim of violation of the automatic stay is a core proceeding pursuant to 28 U.S.C. §157(b)(2)(A)

and the statutory fair debt claims are core proceedings pursuant to §157(b)(2)(O).

1

FILED

CLERK

U.S. BANKRUPTCY 

COURT - WDPA 4/13/15 2:03 pm

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on both Defendants by U.S. mail on January 19, 2015. Neither of the Defendants responded in any

manner and the Debtor then filed a Motion for Default Judgment (“Motion”) on February 18, 2015. 

See Doc. No. 16. The Court set a hearing date and response deadline on the Motion. Once again,

neither Defendant responded and the Debtor filed a certificate of no objection on March 2, 2015. 

An initial hearing on the Motion was held on March 4, 2015, following which the Court issued two

orders on March 9, 2015. The first order effectively granted the Motion in part by finding that Jared

and Sterling had violated the automatic stay. Doc. No. 25. The second order scheduled an

evidentiary hearing for April 6th for the purposes of determining damages. Doc. No. 26. Copies of

both of those orders were served on the two Defendants by the Debtor.

The Debtor and his attorney appeared at the evidentiary hearing, but once again

neither Defendant appeared or responded in any way. Through a combination of an offer of proof

presented by the Debtor’s attorney, and attested to by the Debtor, as well as some direct testimony

given by the Debtor, a record was established at the hearing. That record, together with the factual

allegations in the unrebutted Amended Complaint,2 provide a fairly clear picture of the relevant

events.

The Debtor filed a voluntary Chapter 13 bankruptcy petition on July 22, 2014.

Schedule F lists Jared as an unsecured creditor. Jared was also listed on the mailing matrix filed by

the Debtor, and so would have received notices in the case. On September 23, 2014, the Debtor

2 The default in answering or otherwise responding by the Defendants allows the Court

to accept the factual allegations in the Amended Complaint as true, except those relating to the

amount of damages. See, e.g., DIRECTV, Inc. v. Pepe, 431 F.3d 162, 165 (3d Cir. 2005). Legal

issues remain subject to adjudication. Id.

2

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 received an e-mail from Sterling which identified a debt, Account No. 321270742, with a balance

due of $1,089.05 that the Debtor allegedly owed to Jared. See Amended Complaint at ¶9 and Exhibit

A. The e-mail stated that Sterling had “assumed the responsibility of obtaining a final decision

regarding the above-mentioned account.” The Amended Complaint alleges that Sterling was acting

as the agent of Jared with respect to this debt. See Amended Complaint at ¶16. Between the content

of the e-mail itself, and the factual allegations of the Amended Complaint to which the Defendants

have never responded, the Court concludes that Sterling was acting as the agent of Jared in this

matter.

After identifying the debt, the Sterling e-mail demands immediate payment and

threatens that “further action” will be taken against the Debtor “if necessary.” The next day

someone from Sterling made a dunning and verbally abusive telephone call to the Debtor, telling

him that if the debt was not paid an application for an arrest warrant against him would be filed. The

Debtor informed the caller that he was in bankruptcy, but that had no effect. The Debtor testified

at the April 6th that there were “three or four” such calls over the course of a couple of days, all of

a similar tenor. During one of the calls the person from Sterling even stated that he knew who the

Debtor’s attorney was, and the judge assigned to the case, but he still demanded payment. 

According to the Amended Complaint, the last demand for payment came on or about November 15,

2014.3

The e-mail and telephone calls from Sterling were clearly willful violations of the

automatic stay. See 11 U.S.C. §362(a)(6), 362(k). In addition, Sterling was acting as a “debt

3 The Debtor filed this adversary proceeding on November 19, 2014.

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collector” in this matter and the telephone calls it engaged in were violations of the Pennsylvania

Fair Credit Extension Uniformity Act (“FCEUA”), 73 P.S. §2270.1, et seq., and the Federal Fair

Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §1692, et seq. See 73 P.S. §2270.4(a) 

(incorporating by reference in FCEUA the FDCPA standards for debt collectors), and 15 U.S.C.

§1692e(4) (debt collectors may not make the false representation that nonpayment of the debt will

result in arrest or imprisonment). The Debtor is seeking all available damage remedies.4

As a first item of damage, the Debtor submitted evidence that attorney fees in the

amount of $2,178 were incurred in pursuing this adversary proceeding. The Court has reviewed the

time entries and found them to be reasonable and necessary. Attorney fees can be awarded for stay

violations, 11 U.S.C. §362(k), as well as under both the FCEUA, see 73 P.S. §2270.5(a) and 73 P.S.

§201-9.2(a) and the FDCPA, see 15 U.S.C. §1692k(a)(3). The Court will award attorney fees in

the amount sought.

As a second item of damage, the Debtor seeks actual damages for the emotional

distress he alleges to have suffered as a result of Sterling’s actions. The Debtor testified

convincingly to having lost sleep and incurred significant anxiety as a result of what happened,

4 The Amended Complaint also characterizes the conduct in question as “contempt of

court.” See Amended Complaint, Count II, Paragraphs 21-27. The statutory remedy provision for

violation of the automatic stay, currently found at 11U.S.C. §362(k), is essentially a codification of

the contempt remedy for stay violations that was employed prior to the remedy provision being

added to the Bankruptcy Code in 1984. See University Medical Center v. Sullivan, 125 B.R. 121,

126-27 (E.D. Pa. 1991) (noting that since the stay remedy provision was added to the Code

practitioners and courts have continued to use the rhetoric of contempt when seeking damages for

automatic stay violations). The Debtor has not argued that the remedies that might be available

under the rubric of contempt are any broader than the remedies under Section 362(k), hence the

Court views Count II of the Amended Complaint as redundant and need not discuss it any further.

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particularly the threat to have a warrant issued for his arrest. He is a police officer and he testified

that if such a warrant had actually been issued, as Sterling was threatening, he would have lost his

job even though such a warrant may have been groundless. A threat to one’s livelihood is a serious

matter. The Court finds that the Debtor did suffer mental and emotional distress as a result of

Sterling’s misconduct. 

Emotional distress damages are potentially available for a violation of the automatic

stay. See In re Lansaw, 2015 WL 224093 *7 (Bankr. W.D. Pa. 2015) (citing In re Wingard, 382

B.R. 892 (Bankr. W.D. Pa. 2008). The Debtor did not provide any medical testimony or other

corroborating extrinsic evidence to substantiate the mental distress he experienced. However, if the

stay violator’s conduct was “patently or obviously egregious” then emotional distress injuries may

be proven merely by credible debtor testimony alone, without resort to extrinsic corroborating

evidence. Id. The Court finds that the conduct of Sterling in this case was sufficiently egregious

such that Debtor’s credible testimony standing alone was enough to justify an award of damages for

emotional distress. Considering all relevant factors, the Court will award the Debtor damages of

$1,500 for the emotional distress he experienced as a result of the violation of the automatic stay.5

5 Damages for emotional distress are not available under the FCEUA. See Star v.

Rosenthal, 884 F. Supp. 2d 319, 331 n. 8 (E.D. Pa. 2012). Damages for emotional distress are

potentially available as actual damages under the FDCPA, but “absent any indication that mental

health treatment was needed or that the emotional distress somehow concretely affected the

plaintiff’s personal or professional life, actual damages for emotional distress should be minimal.” 

Manopla v. Bryant, Hodge and Associates, LLC, 2014 WL 793555 (D.N.J. 2014). Given that, the

Court elects not to rely on the FDCPA as the basis for its award of actual damages for emotional

distress. 

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A third potential item of damage is the statutory damage provided for in the FCEUA

and the FDCPA. In evaluating this item, the Court is mindful that remedies available under the

FCEUA are not to be cumulative with the FDCPA, and debt collectors who violate both the FCEUA

and the FDCPA are thus not to incur cumulative penalties. See 73 P.S. §2270.5(c). The Court must

therefore determine what statutory damages would be available under each of the two statutes and

arrive at a statutory damage amount that does not offend this non-cumulative principle.

A violation of the FCEUA is deemed to be also a violation of the Pennsylvania

Unfair Trade Practices and Consumer Protection Law (“UTP”), 73 P.S. §201-1, et seq., and the

remedies under the UTP are thus available to a person harmed by the FCEUA violation. Pursuant

to 73 P.S. §201-9.2(a) a person aggrieved by a UTP violation may “recover actual damages or one

hundred dollars ($100), whichever is greater.” The court also has the discretion to award up to three

times the actual damages sustained. In the present case, the award to the Debtor under the FCEUA

would be the statutory damage of $100, because that is greater than the actual damages of $0 which

are available under the statute. See footnote 5, supra. It is unclear whether that amount could be

trebled, but even if so, the maximum recovery for the Debtor under the FCEUA for statutory

damages would be $300.

Under the FDCPA, regardless whether any actual damages are awarded, a court is

permitted to award statutory damages of up to $1000. See 15 U.S.C. §1692k(a)(2)(A). This is a

“per lawsuit” limit, not a “per violation” limit. Manopla, supra. Whether such statutory damage

should be allowed, and if so in what amount, is committed to the Court’s discretion. Id. In the

present case, Sterling’s violation was egregious, and not simply a technical one. Baseless and

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abusive threats to have an arrest warrant issued on a vulnerable debtor should not be tolerated. Even

when told of the Debtor’s bankruptcy filing the threats persisted. Under the facts presented, the

Court finds that the maximum $1000 in statutory damage available under the FDCPA is appropriate,

and as that amount is greater than the maximum of $300 that would be available under the FCEUA,

that amount will be awarded.

The final item of potential damage to be considered is punitive damages. Punitive

damages are potentially available for a stay violation, Lansaw supra, at * 12-13. Punitive damages

are not available under the FDCPA, Desmond v. Phillips & Cohen Associates, Ltd., 724 F. Supp.

2d 562 (W.D. Pa. 2010), and they do not appear to be available under the FCEUA either, beyond

the possibility of treble actual damages. See Samuel-Bassett v. KIA Motors America, Inc., 357 F.3d

392, 401 (3d Cir. 2004). Whether or not to award punitive damages for a stay violation is

discretionary with the Court. See, e.g., In re Sturman, 2011 WL 4472412 (S.D.N.Y. 2011) (even

where punitive damages might be appropriate, the law is clear that bankruptcy court has

considerable discretion in granting or denying punitive damages). 

In the present case, the Court finds that Sterling acted with actual knowledge that it

was violating the stay, or at least with reckless disregard as to whether it was doing so. An award

of punitive damages would therefore be appropriate, but the Court believes that a cautious approach

is in order here, given the rather sparse evidence that was presented at the April 6th hearing,

particularly the lack of any evidence as to ability to pay. As a result, the Court will award nominal

punitive damages in the amount of $500.

To sum up, total damages of $5,178 will be awarded, consisting of the following:

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• Attorney fees of $2,178

• Actual damages for violation of the automatic stay of $1,500

• Statutory damages for violation of the FDCPA of $1,000

• Punitive damages of $500 for violation of the automatic stay

One other issue need to be addressed. Although all of the actions complained of by

the Debtor here were done by Sterling, the Debtor asks that Jared be held jointly liable on the

judgment because Sterling was acting as its agent and Jared was “complicit” with what Sterling was

doing. See Amended Complaint at ¶¶16, 20. The Court has previously found that Sterling was

acting as Jared’s agent in this matter. The majority view seems to be that under general principles

of agency law a creditor-principal can be held liable for the acts of an agent who willfully violates

the automatic stay when those acts are within the scope of the principal-agent relationship. See In

re Theokary, 444 B.R. 306, 323-24 (Bankr. E.D. Pa. 2011) (citing cases). The Court will follow this

majority view and impose joint and several liability on Sterling and Jared.

An appropriate Order follows.

Dated: April 13, 2015 ________________________________

 Thomas P. Agresti, Judge

United States Bankruptcy Court

Case administrator to serve:

Brian Thompson, Esq.

Debtor

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