## United States B ankru ptcy A ppel late P ane l Fo r the Eighth Circuit

___________________________

No. 1 4-6027

____ ____ ____ ____ ____ ____ ___ In re: Cy ril M . Gra

y
lll lll lll lll lll lll lll

De bto r

----- ----- ----- ----- ----- -----
Eldo n K.. Bu gg; Da

nny Bu gg
lll lll lll lll lll lll lll Cr ed

ito rs - A ppe lla nts
v. Cy ril M . Gra y
lll lll lll lll lll lll lll

De bto r - App el le e

____ ____ ____ Appe al from

Uni te d Sta te s B an krupt cy Co urt for the W es te rn Dis tric t of Ark an sa s - Hot Springs

____ ____ ____ Subm itt ed : Oc tob er 7 , 201 4 File d: Nove m

be r 24, 2 014 (corre ct ed on D ec em

be r 15, 2 014)

____ ____ ____

Be fore FEDE RM AN, C hie f Judg e, KR ESSEL a nd SC HER

MER , B an krupt cy Judg es

.

____ ____ ____

KRE SSEL, B an krupt cy

Jud ge The ap pe lla

nts , Eldo n Bu gg an d Da nny Bu gg, ap pe al from an orde r of the ba nkrupt cy co urt findi ng tha t the y ha d wil lfull y vio la te d the au toma tic sta

y an daw ardi ng ac tual an d puni tiv e da m ag es

. For the rea sons be low, we affirm the aw ard

of a ct ua l da m ag es but

rev ers e the a

wa rd of pu

nit ive da m ag es

.

BAC KGR OUND 1
On Oc tob er 14, 2013 , the de bto r, Cy ril M. Gray , file d a Ch ap te r 13 pe tit ion

. At the tim e of fili ng, the de bto r wa s liv ing in rent al prope rty owne d by the Bu ggs. Ac co rding to the Bu ggs, the de bto r ha d fai le d to pa y an y r en t sin ce Ma

y 2013

. On
Nove m be r 13 , 2013 , the Bu ggs file d a m oti on to “ Te rm ina te Sta y , Alt erna tiv el y for Orde r of Posse ssi on, an d Mot ion for D ecl ar ation of Non-Sta y an d for Im

m ed ia te He ari ng o n B oth

Mo tio ns.” A he ari ng wa s se t for De ce m be r 18, 2 013.

On De ce m

be r 17, 2013 , the de bto r filed a mo tio n requ es tin g tha t the
De ce m be r 18 he ari ng be co nti nue d. We cannot te ll from the rec ord whe the r the
Bu ggs ei the r co nse nte d to or obj ec te d to thi s co nti nua nc e. In an y ca se , the he ari ng

wa s co nti nue d to Ja

nua ry 23, 2014

. The n, on Ja nua ry 21, 2014 , the Bu ggs m ad e the ir own m oti on to co nti nue the he ari ng. The co urt gran te d the requ es t an d the he ari ng wa s po stp one d a ga in t o Fe brua ry 20, 2014

.

A he ari ng on the mo tio n wa s fina lly he ld on Februa ry 20, 2014

. Appa

rent ly the co nt in ua nc es al lowe d the pa rtie s tim e to ne got ia te be ca use whe n the y ap pe are d in co urt the y an noun ce d tha t a se ttl em en t ha d be en reac he d. The y ag ree d to

m odi fy the st ay as to the Bu ggs, effe ct ive fourte en da y s aft er the en try of the orde r.

1 In rec iti ng the ba ck ground we are ha m pe red by the inc om

ple te rec ord, inc lud ing the la ck of c om ple te tra nsc ripts

. 2It wa s not unt il Ma rch 19, 2014 that th e ba nkruptc y co urt iss ue d a writt en orde r regard in g th e pa

rtie s’ ag ree m en t

. The orde r spe ci fie d tha t the sta y wa s 2

te rm ina te d in r eg ards to the de bto r’s int ere st in his princ ipa l res ide nc e. The orde r al so sta te d that F ed era l Ru le of Ba nkrupt cy Proce dure 4001 (a)(3) ap pli ed , the refore , th e orde r was not e ffec tiv e unt il fourte en

da y s a fte r its e ntry

.

Me an whil e, the Bu ggs ap pa rent ly be lie ve d that th e sta y te rm ina te d on Ma

rch 6, 2014

. They de ci de d tha t the fourte en da y pe riod be ga

n runni ng on Februa

ry 20, th e da te of the he ari ng. Ac co rding ly , on Ma rch 8, 2014 , the Bu ggs ev ic te d th e de bto r. The y ch an ge d the loc ks an d five da ys la te r the y rem ove d his pe rsona l
prope rty a nd t owe d hi s tru ck

from the pre m ise s, da

m ag ing it in the proc es s.

On April 4, 2014 , the de bto r filed a “ Mot ion for Co nte m pt for Viol at ion of the Auto m at ic Sta y .” Afte r som e proc ed ural de la y s a tria l wa s he ld on June 10, 2014

. Da nny Bu gg ap pe ared pe r so nally

. Eldo n Bu gg did not ap pe ar but an
at to r ne y ap pe are d on his be ha lf for the lim ite d purpos e of requ es ting a

co nti nua nc e. The requ es t for a co nti nua nc e wa s de nie d an d Eldo n Bu gg’ s at torne y

wa s ex cu se d. The m at

te r proc ee de d to tria l an d at its co nc lus ion a rulin g wa s rea d
ont o th e rec ord.

O n June 16, 2014 , the ba nkrupt cy jud ge iss ue d an orde r gran tin g the de bto r’s m oti on. The orde r is en tit le d “ Orde r Gran tin g Mot ion for Co nte m pt for Viol at ion of the Auto mati c S ta y at § 362(a ).” This is a m isn om er. Co nte m pt is not

a rem ed y for a vio la tio n of the au tom at ic sta y

. Co nte m

pt is a rem ed

y for vio la tin g
The de la y in iss uin g th is o rder wa s du e to t he pa rtie s’ de la y in subm itt ing a 2 propos ed orde r rega

rding the ir a gree m en t.

3co ur t orde rs, not sta tut es

. Se e Sosn e v. Re ine rt & Dure e, P.C

. (In re Ju st Brakes Co rp. Sy s., Inc. ) , 108 F.3d 881, 885 (8th Ci r. 1997 ) (ci tin g Mora tzk a v. VISA (In re Ca lst ar, Inc. ) , 159 B.R

. 247 (Ba nkr. D. Mi nn. 1993 )). The ba nkrupt cy co urt did

no t ho ld the Bu ggs in co nte m pt. Inste ad , it is cl ea

r tha t the co urt aw ard ed th e de bto r da m ag es unde r § 362(k). The Bu ggs we re orde red to (1) ret urn the de bto r’s
truc k or pa

y $7,0 00, joi ntl y an d se ve ral ly , for it s va lue, (2) pa y $422 , joi ntl y an d

se ve r al ly, for da m ag e sus ta ine d to the truc k durin g towi ng, (3) ret urn al l of the de bt or ’s pe rsona l prope rty or pa y $100 pe r da

y , joi ntl y an d se ve ral ly , unt il th e
prope rty is ret

urne d, (4) pa

y $300 , joi ntl y an d se ve ral ly , for da mage s inc urred from the dis positi on of the pe rsona l prope rty , (5) pa y $2,5 00, joi ntl y an d se ve ral ly , for th e de btor’s at

torne y ’s fee s, an d la stl y (6) Eldo n Bu gg wa s orde red to pa y $2,0 00
to the de bto r as puni tiv e da m ag es

. Th e ba nk ruptc y co urt al so res erve d the right to hol d th e Bu ggs in c ont em pt a t a la te r tim e if th ey

did not c om ply wit h th e orde r.

On June 24 an d June 27, 2014 , Da nny Bu gg an d Eldo n Bu gg , res pe ct ive ly , file d m oti ons for rel ie f from the June 16, 2014 orde r. Bo th m oti ons we re de nied. On Ju ly 7, 2 014, the Bu ggs file d a ti m el y not ic e of a

ppe al

.

STANDAR

D OF R EVIEW

A ba nkrupt cy co urt’ s findi ngs of fac t ar e r ev ie we d for cl ea r error an d its

co nc lus ion s of la

w are revi ew ed de novo

. Jo hnso n v. Fors (In re Fo rs ) , 25 9 B.R

. 131, 135 (B.A. P. 8th Ci r. 20 01) (ci tin g Sny de r v. De wo sk in (In re Mahe ndra

) , 131 F.3d 750 , 75 4 (8th Ci r. 1997 )). An aw ard of sa nc tio ns is revi ew ed for an ab use of dis cre tio n. Gard

en v. Cen tr al Ne bras ka Hous ing Co rp. , 719 F.3d 899 (8th Ci r.

42013 ) (ci tin g Sc hwartz v. Ku jaw a (In re Ku

jaw a) , 270 F.3d 578, 581 (8th Ci r. 2001 )).

JUR ISDICTION The Bu ggs first argu e that th e ba nkrupt cy co urt did not ha ve juris dic tio n

ove r the de bto r’s m oti on f or co nte m

pt. Ac co rding to the Bu ggs, the ir ac tio ns onl y affe ct ed ex em

pt pe rsona l prope rty an d ba nkr up tc y co urts do not ha ve juris dic tio n

ove r prope rty

tha t do es not be lon g to the e sta

te . The Bu ggs are m ist ak en

.
Subje ct m at

te r juris dic tio n is gove rned by 28 U.S.C

. § 13 34 , whic h provi de s: (a)

.... the dis tric t co urt sha ll ha ve origi na l an d ex cl usi ve

juris dic tio n of a ll ca se s un de r tit le 11. (b) ....n otwith stand ing an y Ac t of Co ngre ss tha t co nfers

ex cl usi ve juris dic tio n on a co urt or co urts ot he r tha n the dis tric t co urts, the dis tric t co urts sha ll ha ve origi na l but
not ex cl us ive juris dic tio n of al l ci vil proc ee din gs ari sin g unde r tit le 11, or ari sin g in or r el at ed to ca se s unde r tit le 11.

Pursua nt to the de le ga tio n powe rs in 28 U.S.C

. § 157(a ), “ [e] ac h dis tric t

co urt m ay provi de tha t an y or al l ca se s un de r ti tle 11 an d an y or al l proc ee din gs unde r tit le 11 or ari sin g in or rel at ed to a cas e un de r tit le 11 sha ll be refe rred to the ba nkrupt cy jud ge s for the distric t.” “ Ba nkrupt cy jud ge s m ay he ar an d de te rm ine

5al l cas es un de r title 11 an d al l co re proc ee din gs ari sin g unde r tit le 11, or ari sin g in

a ca se und er t itl e 11 ... ” 28 U. S.C. § 15 7(b)(1).

In thi s ca se , the ba

nkrupt cy co urt ha d bot

h the juris dic tio n an d the au tho rity
to de ci de the de bto r’s m oti on. The de bto r ini tia te d an ac tio n th at hin ge d sol el y on whe the r the re w as a w ill ful vio la tio n of the au tom at ic sta

y

. This ac tio n is cre at ed by 11 U.S.C § 362(k). Thus , it cl ea rly ari se s un de r ti tl e 11. The ba

nkrupt cy co urt ha s juris dic tio n to he ar “ al l ci vil proc ee din gs ari sin g unde r tit le 11.” 28 U.S .C. § 1334 (b). Addi tio na lly , thi s is a co re proc ee din g pursu an t to 28 U.S.C

. § 157(b)(2), whic h th e ba

nkrupt cy c ourt h ad the a uth ority to de te rm ine

.

3

SECT ION 362 (e) The Bu ggs argu e tha t the ba nkruptcy co urt co uld not ha ve prope rly found the m in vio la tio n of the au tom at ic sta y be ca use the sta

y ha d la pse d by ope rat ion of
11 U.S.C

. § 362(e )(2) lon g be fore the y ev ic te d the de bto r. Spec ific al ly, the Bu ggs
argu e tha t the stay la ps ed on Ja

nua ry 12, 2014 , 60 da

y s aft er the ir Nove m

be r 13, 2013 m oti on wa s file d. As a m at te r of la w, if the sta

y te rm ina te d on Ja

nua ry 12 the n the ir ac tio ns to ev ic t the de bto r on Ma rch 8 co uld no t ha ve co nstitu te d a vio la tio n of t he sta y

.

Sec tio n 36 2(e) p rovid es :

Be ca use the ba nkrupt cy c ourt c onc lus ive ly

de ci de d th at

the a uto m at ic sta

y 3 ha d be en vio la te d, we a re c onfid en t t ha t t he a ppe al ed orde r is a fina l orde r. The fac t t ha t t he ba nkrupt cy c ourt re se rved

the right to hol d th e Bu ggs in c ont em pt a t the la te r tim e be ars no e ffec t on the fina lit

y of th e orde r. Howe ve r, ev en if th is i s not a fina l orde r, we gra nt t

he Bu ggs le av e to a

ppe al

. 6(1) Thirt y da y s aft er a requ es t unde r subs ec tio n ( d) of thi s se ctio n f or rel ie f from the sta

y of an y ac t ag ai nst prope rty of the es ta te unde r subs ec tio n (a) of thi s se ct ion, suc h sta y is te rm ina ted wit

h res pe ct to the pa

rty in int ere st
m ak ing suc h requ es t, unl es s the co urt, aft er not ic e an d a he ari ng, orde rs suc h sta

y co nti nue d in effe ct pe ndi ng the
co nc lus ion of

, or as a res ult of, a fina l he ari ng an d de te rm ina tio n un de r subs ec tio n (d) of t his se ct ion

.... (2) Noth wit hst an din g pa

ragra ph (1 ) , in a ca se unde r ch ap te r 7, 11, or 13 in whic h the de bt or is an ind ivi dua l, th e sta y unde r subs ec tio n (a) sha ll te rm ina te on the date th at is 60 da

y s aft er a requ es t is m ad e by a pa rty in int ere st u nde r subs ec tio n (d), un le ss – (A) a fina l de ci sio n is rend ere d by the co urt durin g the 60-da y pe riod b eg inn ing on t

he da te of th e requ es t; or (B) su ch 60 d ay pe riod i s e xte nde d --- (i) by ag r eem en t of al l pa rtie s in int ere st; or (ii) by the court for suc h spe ci fic pe riod of tim e as the co ur t f inds is
r equire d for good ca

use , as de sc ribe d in fi ndi ngs m ad e by

the c ourt.

Pursua nt to § 362(e )(1), the fai lure to hol d a prel im ina ry he ari ng wit

hin thi rty da y s of the da te of a r eq ue st for rel ie f woul d ha ve the effe ct of te rm ina tin g the sta y

. Se e Borg

-W arne r Ac ce

pta nce Co rp. v. Hall , 685 F.2d 1306 , 1308 (11th Ci r. 1982)

. S ect ion 362(e )(2) provi de s for the au tom at ic te rm ina tio n of the sta y in

an ind ivi dua l ca se if a f

in al de ci si on on the m oti on is not rend ere d wit hin 60 da y s aft er a requ es t for rel ie f is m ad e. Se e In re Au li ci no , 400 B.R

. 175, 179 (Ba nkr.
E.D. Pa . 200 8).

7Sec ti on 36 2( e) wa s en ac te d to prote ct cre dit ors. The le gis la tiv e his tory hig hli ght s C ongre ss’ int en t:

“ [s] ubse ct ion (e) provi de s a prot ec tio n for se cu re d

cr ed ito rs tha t is not av ai la

ble unde r pres en t la

w. The subs ec tio n sets a tim e ce rta in wit hin whic h the ba nkrupt cy co urt m

ust rule on the ad eq

ua cy of prote ct ion provi de d of t

he se cu red cre dit or’ s in te res t.”

H.R .Re p. No. 95-595 , 95 th Co ng

. , 1st Sess

. 344 (1977) (em pha sis ad de d). One

co ur t ha s sta

te d, “ [s] ec tio n 362(e ) wa s en ac te d to prev en t the prac tic e unde r the old
Ba nkr uptcy Ac t of ‘i nju

nc tio n by co nti nua

nc e. ’” Grun dy Na t’l Bank v. Vir gin ia Bank er ’s Ass ’n. (In re

Loone y) , 823 F.2d 7 88, 7 92 (4t

h C ir. 19 87).

W aiv er Howe ve r, thi s prote ct ion for cre dit ors is not ab sol ute

. Ma ny co ur ts ha ve he ld tha t it ca

n be wa ive d by the cre dit or , ex pl icit ly or im pli ci tly

. An im

pli ci t

wa ive r is ge ne ral ly found whe n the cre dit or ta kes so me action whic h is inh ere ntl y inc onsist en t wit

h ad he renc e to the tim e co nst rai nts of §362 (e). For ex am ple , the El ev en th Ci rcui t he ld tha t a cre dit or ha d im pli ci tly wa ive d his right s whe n the

cre dit or fai le d to obj ec t to the ab se nc e of a prel imin ar y he ar ing an d al so at te nde d the fina l he ari ng be y ond the tim e lim its set forth in § 362(e ). Borg -W arne r Ac ce pta nc e Co rp. v. Hall , 685 F.2d at 1308 ; se e al so In re Ramos , 357 B.R

. 669, 673, n.2 (Ba

nkr. S.D. Fla

. 2006 ) (a le nde r’s requ es t to subm it a brie f was implici t

co nse nt to hol d a fina l he ari ng m ore tha n th ir ty da

y s aft er the m oti on to m odi fy the
sta y wa s file d); Ise be rg v. Ex ch an ge Na t’l Bank and Trust Co

. of Ch ic ago (In re W ilm et te Part

ne rs) , 64 B.R

. 958, 961 (Ba nkr. N.D. Ill. 1983 ) (cre dit or im pli ci tly

wa ive d its right to obj ec t to the tim el ine ss of th e he ar in gs whe n it did not oppo se

8the co nti nua nc e of the he ari ng be y ond the 30 da y tim e lim it); Smal l v. Barc lay Prop er tie s (In re Smal l) 38 B. R. 14 3, 147 (Ba nkr. D. Md. 1984 ) (im

pli ed wa ive r whe re cre dit or filed disco ve ry requ es t to whic h res pons es we re due be y ond the thi rty da y per iod ); In re McN

ee ly , 51 B.R

. 816, 821 (Ba nkr. D. Uta

h 1985 ) (a

cre dit or who f

ai ls to sc he dul e a fina l he ari ng wit hin the 30-da

y pe riod m ay im pli ed ly wa ive its right to au tom at ic te rm ina tio n unde r § 362(e )); J. H. St re ik er & Co
., Inc. v. Se Sid

e Co
., Ltd. (In re Se Sid

e Co

. Ltd.) , 15 5 B. R. 112, 117 (E.D. Pa. 1993 ) (cre dit or wa ive d th e ti me lin es s provi sio ns of § 362(e ) by ag ree ing to a brie fing sc he dul e whic h prev en te d the co urt from rulin g wit hin tim e fram e provi de d by § 36 2( e)); In re Auli ci no , 400 B.R

. 175 (Ba nkr. E.D. Pa. 2008 ) (cre dit or wa s de em ed to ha ve im pli ci tly co nse nte d to the tol lin g of the § 362(e ) tim e pe riod whe n he ag ree d to a brie fing sc he dul e tha t w as be yond of whe n the
st ay w as se t to ex pire ); W ed ge wo od Inve

stme nt Fund

, Ltd. v. W

ed ge wo od Re alt

y Grou p, Ltd. (In re W

ed gewo od Re alt

y Grou p, Ltd.) , 878 F.2d 639 (3rd Ci r. 1989 ) (rec ogni zi ng im

pli ci t wa ive r whe n cre dit or take s som e ac tio n whic h is inh ere ntl y inc onsi ste nt w ith

a dhe renc e to t

he ti m e co nst

rai nts of se ct ion

362 (e)).

Afte r a ca

reful revi ew of th e rec ord it is cl ea r tha t the Bu ggs ac te d inc onsi ste ntl y wit

h the tim e co nst

rai nts of § 362(e ). First, the Bu ggs did not obj ec t
to the de bto r’s requ es t for a co nti nua nc e. W hil e fai lin g to ob

je ct to a co nti nua

nc e

m ay se em inn oc uou s, it wa s en ough to co nvi nc e bot h the co urt an d the de bto r tha t the Bu ggs be lie ve d the y we re sti ll boun d by the st ay. The ir la te r co nduc t al so de m onst rat ed tha t the y be lie ve d tha t the sta y wa s sti ll in effe ct

. Not on ly di d th e Buggs co nti nue to work on res olv ing the m at te r but the y al so ev en tua lly m ad e th ei r

own m oti on for a co nt in ua nc e. The Bu ggs’ requ es t for a co nti nua nc e, in an d of

9its el f, flie s dire ctly in the fac e of the argu m en t tha t the sta y ha d la pse d on Ja

nua ry 12

. Why woul d the Bu ggs as k for a co nti nua nc e if the m oti on wa s m oot by
ope rat ion of § 3 62(e )?

Afte r bot h co nti nua

nc es we re gran te d the Bu ggs co nti nue d to ne got ia te wit h the de bto r. As a res ult , by the tim e of the fina l he ari ng a se ttl em en t ha d be en

rea ch ed

. Aga in, why did the Bu ggs co m e to an ag ree m en t wit h the debto r if the
sta y ha d al rea dy te r mina te d? In fac t, why did the y pa rtic ipa te in the he ari ng at al l? The Bu ggs ca

nnot sudd en ly , m ont

hs la te r , to th e surpris e of the co urt an d the de bto r, argu e tha t the sta y ha d ex pire d due to the co nt in ua nc es, one of whic h the y requ es te d th em se lve s.

Only aft er the co nte m

pt proc ee din gs we re ini tia te d did the Bu ggs argu e tha t the sta y ha d ex pire d by ope rat ion of § 362(e ). They are too la te

. The ir ac tio ns

we re inc onsi sten t w ith an int en t on the ir pa rt to ins ist tha

t the co urt en te r ei the r a fina l orde r or an orde r co nt inuing the sta y pe ndi ng co nc lus ion of the fina l he ari ng with in the § 362(e ) tim efra m e. If the Bu ggs be lie ve d tha t the sta y ha d la pse d on Ja nua ry 12 the n the y shou ld ha ve m ove d to en force the ir right s at th at ti me

. The y fai le d to do so an d the refore the Bu ggs ha ve wa ive d an y right th ey may have onc e
poss es se d un de r § 362 (e).

Ju dic ial Est oppe l

The Bu ggs are al so ba

rred by jud ic ia l es top pe l from cl ai m ing tha t the sta y ha d ex pire d unde r § 362(e ). The doc trine of jud ic ia l es top pe l “ prote ct s th e int eg rity of the jud ic ia l proc es s.” Total Pe tro le um, Inc

. , v. D av is , 822 F.2d 734,

10738 n. 6 (8th Ci r. 1987 ). Judi ci al es top pe l is an eq uit ab le doc trine inv oke d by a

co urt at its dis cre tio n. Ne w H am ps hi re v. Main e , 532 U.S. 742, 750 (2001) (quot ing Russ el l v . Rol

fs , 893 F.2d 1 033, 103 7 (C .A.9 1 990)).

The Suprem e Co urt ha s la id out thre e non-e xha ust ive facto rs for de te rm ini ng the ap pli ca

bil ity of jud ic ia l es top pe l: (1) the pa rty ’s posi tio n is cl ea

rly inc ons is te nt wit h its ea rlie r posi tio n; (2) the pa

rty suc ceede d in pe rsua din g a co urt to ac ce pt tha t
pa rty ’s ea rlie r po si tio n, so tha t jud ic ia l ac ce pta nc e of an inc onsi ste nt posi tio n in a la te r proc ee din g woul d cre at e the pe rce pti on th at ei th er the first or the se co nd co urt

wa s m isl ed ; an d (3) the pa rty se ek ing to asse r t an incon sis te nt posi tio n woul d de rive an unfa ir ad

va nta ge or im

pose an unfa ir de trim en t on the oppo sin g pa rty if
not e sto ppe d. Id.

Th e Buggs m ove d for a co nti nua nc e an d in doi ng so the y repre se nte d to th e

co urt tha t m ore tim e wa s ne ce ssa ry

. Th e co ur t acc ep te d thi s posi tio n an d gran te d th e requ es t. The co nti nua nc e al lowe d the Bu ggs the be ne fit of ex tra tim e to

suc ce ssful ly ne got ia te wit h the de bto r. On ap pe al the y now in co nsi ste ntl y argu e tha t the y sta

y ha d au tom at ic al ly la

pse d. Unfortu

na te ly for the Bu gg s, the y ca nnot ch an ge the ir m ind s a cc ordin g to wha t i s be ne fic ia l for t he m a t t he m om en t.

It se em s obvi ous tha t the de bto r woul d not ha ve as ke d f

or a co ntinua

nc e an d

ce rta inl y woul d ha ve obj ec te d to the Bu ggs’ requ es t for a co nti nua nc e if the y we re

aw are tha t the Bu ggs were pla nni ng to invoke the ir r igh ts unde r § 362 ( e)

. To al low the Bu ggs to sudd en ly argu e § 362(e ) woul d im pose an unf

ai r de trim en t on the de bto r. For the se rea sons , the Bu ggs are ba rred by jud ic ia l es top pel from as se rting the ir righ ts u

nde r § 362 (e).

11DAMA GES FOR VIOLATION OF T HE STAY

The Ba nkrupt cy Co de provi de s for the r ec ove ry of da m ag es for an ind ivi du al injured by a vio la tio n of the au tom at ic sta

y

. Spec ific al ly , § 362(k)(1)
sta te s, “ an ind ivi dua l inj ured by an y wil lful vio la tio n of a sta y pr ov id ed by thi s

se ct ion sha ll rec ove r act ua l dam ag es , inc lud ing co sts an d at torne y s’ fee s, an d, in
ap propria te c irc um sta

nc es , m ay rec ove r puni tiv e da m ag es .”

A de bto r se ek ing da m ag es unde r § 362(k ) must de m onst rat e, by a
prep ond era

nc e of the ev ide nc e, tha t a cre dit or ac te d wil lfull y in vio la tio n of the
sta y an d tha t an inj ury res ult ed from tha t co nduc t. Ca rte r, et

. al., v. Fir st Na t’l Bank of Cr os et t (

I n re Ca rte r) , 502 B.R

. 333 (B.A. P. 8th Ci r. 2013 ). The Eigh th Ci rcui t ha s he ld tha t “ [a] wil lful vi ol at io n of the au tom at ic sta y oc cu rs whe n the

cre dit or act s de libera

te ly wit h know le dge of the ba

nkrupt cy pe tit ion .” Kn aus v. Co nc ordi a Lumbe r Co

. (In re Kn aus) , 889 F.2d 773 (8th Ci r. 1989 ) (ci tin g Apon te

v. Aung st (In re Apon te

) , 82 B.R

. 738, 742 (Bank r

. E.D. Pa. 1988 )). A wil lful vio la tio n doe s not requ ire a findi ng of spe cif ic in tent. In re Ca rte r , 502 B.R

. at 33 6 (quot ing Asso ci ate d Cr ed it Se rv s. v. Ca mpio n (In re Ca mpio n) , 294 B.R

. 31 3, 316 (B.A. P. 9t h Ci r

. 20 03 ) ). In oth er words, if the cre dit or is aw are of the ba nkrupt cy fili ng, an y int en tiona l act th at res ult s in a vio la tio n of the sta y is wil lful. Se e 3 COLLI ER S O N BANKRU PTCY ¶ 362. 12 (Ala n N. Re sni ck &
He nry J. Som m er e ds., 16t

h e d.)

The Bu ggs argu e th at the ba nkrupt cy co urt’ s de ci sio n is errone ous be ca use the ac t of “ sa fel y sto ring de btor’s pe rsona l prope rty an d ha vin g his truc k towe d

12bot

h fal l unde r the spe ci fic ex ce pti on of § 362(b)(4).” However , § 36 2( b)(4)
pe rm its a gov er

nme nta l uni t to co mm ence or co nti nue an ac tio n or proc ee din g to

en force suc h gove rnm en ta l uni t’ s pol ic e an d regu la tory powe r rega

rdle ss of § 362(a ). Obvi ousl y , the Bu ggs are not a go ve r nmen ta l uni t, an d the refore , thi s

ex ce pti on d oe s no t a

ppl y to the m

.

The ba nkrupt cy co urt ha d to de te rm ine two thi ngs: (1) whe the r the Bu ggs ha d know le dge of the ba nkrupt cy pe tit ion , an d (2) whe ther the Bu ggs ac te d de lib era te ly

. Bo th of the se el em en ts are ea sil y m et

. First, it is cl ear tha t the Bu ggs ha d kn ow le dg e of the de bto r’s ba nkrupt cy pe tit ion

. The Bu ggs the m se lve s do not
argu e oth erwi se

. The y pa rtic ipa te d in the proc ee din gs an d ev en file d a m oti on for rel ie f from

the sta y

. Sec ond, it is al so undi sput ed tha t the Bu ggs act ed de li be rat el y whe n the y

ev ic te d the de bto r. A wil lful vio la tio n of the st ay does not requ ire a spe ci fic findi ng of int en t to vio la te the sta y , the refore, it is irrel ev an t tha t the Bu ggs we re

m ist ak en as to whe the r the sta y ha d te rm ina te d at the tim e th ey ev icte d the de bto r. It is en ough tha t the y ac te d de lib era te ly whe n the y ch an ge d the locks , to ok
po ssess ion of the de bto r’s pe rsona l prope rty an d towe d his truc k. The ba nkru pt cy

co ur t’ s findi ng tha t the Bu ggs wil lfull y vio la te d the au tom at ic sta y is not cl earl y

errone ous.

Ac tua l Da mage

s The Eigh th Ci rcui t ha s art ic ula te d, “ [t] o be cl ear ly errone ous, a de ci sio n

m ust stri ke us as m ore tha

n jus t maybe or proba

bly wrong; it m

ust

.... stri ke us as
wrong wit

h the force of a five -wee k-old , unre frige rat ed de ad f ish.” Papi o Ke no Cl ub, Inc. v. Ci ty of Papi ll ion (In re Papi o Ke no Cl ub, Inc .), 262 F.3d 725, 729

13( 8t h Ci r

. 2001 ) (quot ing Part s and Ele c. Moto rs, Inc. v. Ste rli ng Ele c. , Inc. , 86 6 F.2d 228, 233 (7th Ci r. 1988 )). In thi s ca se , the Bu ggs ha ve not pres en te d any

ev ide nc e tha t the ba

nkrupt cy co urt’ s fac tua l findi ngs as to ac tua l da m ag es we re cl ea rly erroneo us

. In fac t, the Bu ggs provi de d an inc om ple te rec ord wit

h no

ex hib its an d onl y pa

rtia l tra nsc ripts

. W ith the inc om ple te r eco r d provi de d, we

ca nnot sa y tha t the ba

nkrupt cy co ur t’s f

in di ng of ac tua l da m ag es wa s cl ea rly

errone ous.

Puni tiv e Damag

es
If the el em en ts of a wil lful vio la tio n are met “ the co urt m ust aw ard

co m pe nsa tory da m ag es the n de ci de whe the r puni tiv e da m ag es ar e ap pr opria te .” In

re Ande rson, 430 B.R

. 882 (Ba nkr. S.D. Iowa 2010 ). The Eigh th Ci rcui t ha s he ld tha t ap propria

te ci rcum sta

nc es to aw ard pun iti ve da m ag es requ ire s “ eg regi ous, int en tio na l miscondu ct on the vio la tor’ s pa rt.” Id

. ( quot ing Unit ed Sta te s v. Ke te ls en (

I n re Ke te lse n) , 880 F.2d 990, 993 (8th Ci r. 1989 )). In de te rm ini ng

w hethe r puni tiv e da m ag es are ap propria te , the co urt m ay co nsi de r “ the na tu r e of the cre dit or’ s co nduc t, the na ture an d ex te nt of ha rm to th e debto r, the cre dit or’ s ab ili ty to pa

y da m ag es , the le ve l of soph ist ic at ion of the cre dit or, the cre dit or’ s

m oti ve s, a

nd a ny provo ca tio n by the de bto r.” In re Ande rson, 430 B.R . a t 88 9.

The ba nkrupt cy co ur t or de red Eldo n Bu gg to pa y puni tiv e da m ag es in the

am ount of $2,0 00. In its oral rulin g, the ba nk r up tc y court sta

te d tha t the puni tiv e da m ag es ha d be en

“ oc ca sio ne d by Mr. El don Bu gg’ s co nsi ste nt ab dic at ion of respons ibi lit

y ....He ’s not he re tod ay

. He doe s not ge t the be ne fit of th e doub t on cre dib ili ty for his rea sons for

14not be ing he re, giv en his co nst an t as se rtion s tha t he ca n’ t, his as se rtion s of not know ing ab out prior he ari ng s f or whic h it is qui te ev id en t tha t he wa s ve ry m uc h aw are , an d his r ef

us al to be he re tod ay , le av ing his son es se nti al ly hung out to ac ce pt res pons ibi lit y or, whe n ap propria te , de fer res pons ibi lity to Mr. Eldo n Bu gg, refle ct s cl ea

rly that he kne w ex ac tly wha t he wa s doi ng... .”

The co urt did not m ak e spe ci fic finding s of fac t as to Eldo n Bu gg’ s m oti ve

or eg regi ous co nduc t in vio la tin g the sta y

. Eldo n Bu ggs fai lure to ap pe ar at th e June 10 tria l doe s not sa tis fy the Eigh th Ci rcui t te st of eg regi ous, int en tio na l

m isc ondu ct

. For the se rea sons , w e co nc lud e tha t the ba nkrupt cy co urt ab use d its dis cre tio n in

a wa rding pun iti ve da m ag es

.

CON CL USION The ba nkrupt cy co urt’ s de te rm ina tio n tha t the sta y ha d been vi ol at ed an d its

aw ard of ac tua l da m ag es is affirm ed

. Its aw ard of puni tiv e da m ag es ag ai nst Eldon
Bu gg i s re ve rse d.

________________________

15