Case No. 6:16-cv-00386-MC 

Bankr. No. 12-64782-fra13 (Bankr. D. Or.) 

Adv. No. 14-06218-fra 

______________________________________________________ 

UNITED STATES DISTRICT COURT 

DISTRICT OF OREGON 

______________________________________________________ 

In re JONATHON ELDON HUNSAKER and 

CHERYL LYNN HUNSAKER, 

Debtors. 

______________________________________________________ 

JONATHON ELDON HUNSAKER; CHERYL LYNN HUNSAKER 

Plaintiffs-Appellees, 

v. 

UNITED STATES OF AMERICA, 

Defendant-Appellant, 

______________________________________________________ 

ON APPEAL FROM THE JUDGMENT OF UNITED STATES BANKRUPTCY 

COURT FOR THE DISTRICT OF OREGON 

______________________________________________________ 

OPENING BRIEF OF APPELLANT ON REMAND 

______________________________________________________ 

BORIS KUKSO 

Trial Attorney, Tax Division 

U.S. Department of Justice 

P.O. Box 683 

Washington, D.C. 20044 

202-353-1857 (v) 

202-307-0054 (f) 

boris.kukso@usdoj.gov 

Attorney for Appellant 

BILLY J. WILLIAMS 

United States Attorney 

District of Oregon 

Of Counsel 

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TABLE OF CONTENTS

STATEMENT OF ISSUES ON REMAND .............................................................. 1

STANDARD OF REVIEW ....................................................................................... 1

STATEMENT OF THE CASE .................................................................................. 1

A. Proceedings below ......................................................................................... 1

B. Mrs. Hunsaker’s alleged harm ...................................................................... 4

C. Mr. Hunsaker’s alleged harm ........................................................................ 5

D. The ruling below ........................................................................................... 6

E. This court’s ruling and the subsequent appeal .............................................. 8

SUMMARY OF ARGUMENT ON REMAND ........................................................ 8

ARGUMENT ........................................................................................................... 11

A. Dawson was wrongly decided. .................................................................... 11

B. The Bankruptcy Court incorrectly held that the circumstances make it 

obvious that a reasonable person would suffer significant harm. ........................ 12

C. The evidence presented at trial does not support an award of damages for 

emotional distress. ................................................................................................ 19

CONCLUSION ........................................................................................................ 25

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STATEMENT OF ISSUES ON REMAND 

1. Whether the Court erred in concluding that the circumstances 

surrounding the automatic stay violations would obviously cause a reasonable 

person to suffer significant emotional harm, and, if so, whether the Court erred in 

awarding damages to Mr. and Mrs. Hunsaker. 

2. Whether the evidence supported an award of damages for emotional 

distress to Mr. and Mrs. Hunsaker. 

STANDARD OF REVIEW 

The Court reviews conclusions of law de novo and findings of fact for clear 

error. Miller v. United States, 363 F.3d 999, 1003-1004 (9th Cir. 2004). Questions 

of statutory interpretation are reviewed de novo, see, e.g., Beeman v. TDI Managed 

Care Servs., Inc., 449 F.3d 1035, 1038 (9th Cir. 2006). The Court reviews for an 

abuse of discretion the bankruptcy court’s decision whether to award damages. In 

re Snowden, 769 F.3d 651, 657 (9th Cir. 2014). 

STATEMENT OF THE CASE 

A. Proceedings below 

Mr. and Mrs. Hunsaker filed for Chapter 13 bankruptcy on November 5, 

2012 due to a dispute they had with the county regarding a parcel of property that 

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they owned. (App. 167.)1 The dispute lasted for approximately four years. Id. 

While Mr. Hunsaker could not remember exactly when the dispute ended, he 

believed it was not resolved until around November 2014. (App. 190-91.) Mr. 

Hunsaker described the land dispute as a “pain in the neck,” “stressful,” and “the 

main focus in [his] life.” App. 66-67. Mrs. Hunsaker also found the land dispute 

and Plaintiffs’ finances to be stressful. App. 208. 

While Mr. and Mrs. Hunsaker’s bankruptcy was pending, the Internal 

Revenue Service (“IRS”) sent notices of intent to levy to the Hunsakers on 

December 2, 2013, February 10, 2014, September 1, 2014, and December 8, 2014 

(together “the Notices”). (App. 253.) The IRS did not actually levy on Mr. 

Hunsaker’s social security benefits or Mr. and Mrs. Hunsaker’s state tax refund (or 

any other rights to property). (App. 74.) 

Mr. and Mrs. Hunsaker initiated this adversary proceeding on December 5, 

2014, alleging that the IRS willfully violated the automatic stay imposed by 11 

U.S.C. § 362 by sending the Notices. (App. 3-6.) Plaintiffs claimed that as a result 

of the receipt of the Notices, Mr. and Mrs. Hunsaker suffered “actual damages in 

the form of time spent, attorney fees, emotional distress, anger, anxiety, worry, 

frustration, among other negative emotions.” (App. 6.) Plaintiffs sought 

 

1 “App.” references are to the appendix filed as ECF No 13-1 through 13-13.

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compensatory damages for emotional distress, punitive damages, and costs and 

reasonable attorney’s fees. (Id.) 

The United States moved for summary judgment. (App. 14-17.) The United 

States never alleged that the Notices did not violate the automatic stay, but claimed 

that sovereign immunity had not been waived for an award of either punitive 

damages or damages for emotional distress. (Id.; App. 18-40.) Additionally, the 

United States alleged that even assuming sovereign immunity had been waived, 

Mr. and Mrs. Hunsaker could not meet their burden to establish that they are 

entitled to an award for emotional-distress damages. (Id.) The Bankruptcy Court 

held that the United States had not waived sovereign immunity for punitive 

damages, but denied the United States summary judgment on the emotionaldistress damages claim. (See App. 144; 255 n.3.) 

The matter was tried on January 6, 2016. Counsel for Mr. and Mrs. 

Hunsaker clarified that his clients were not seeking damages for any economic 

injuries in this adversary proceeding, but rather sought damages purely for 

emotional distress. (App.162-63.) Mr. and Mrs. Hunsaker each testified as to their 

own and each other’s damages. (App. 169-217.) They did not introduce any 

medical records or provide any corroborating evidence as to their damages other 

than their own testimony. 

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B. Mrs. Hunsaker’s alleged harm 

Mrs. Hunsaker has suffered from migraine headaches for years, beginning 

prior to filing for bankruptcy. (App. 209.) Mr. and Mrs. Hunsaker claim that Mrs. 

Hunsaker suffered from increased migraine headaches as a result of receiving one 

or more of the Notices, although they are unsure which of the four letters initially 

triggered this reaction. (App. 175, 177, 199-200, 203-204.) Specifically, after 

receiving a Notice, Mrs. Hunsaker would “get[] stressy,” (App. 175,) and “call[] 

her mother and stuff and ... her neck [would] get[] stiff, [and] she [would] get[] a 

headache.” (App. 176, see also App. 184.) Mrs. Hunsaker also testified that she 

was “emotionally upset” as a result of the Notices. (App. 199.) 

Mrs. Hunsaker has been prescribed migraine medication for many years, 

which she only takes if she has a migraine and only if over-the-counter medication, 

like Advil, does not work to stop the headache. (App. 209-10.) When Mrs. 

Hunsaker gets a migraine, it could last for “a day or two” if her medication does 

not stop it. (App. 184.) Mrs. Hunsaker testified that “usually” her medicine works 

to stop her headaches. (App. 199-200.) With medication, Mrs. Hunsaker was able 

to “keep carrying on” with her normal life. (App. 200.) 

There was no evidence that Mrs. Hunsaker sought additional medical care 

due to the Notices. However, if Mrs. Hunsaker has longer, more frequent, or more 

intense migraine headaches, it would lead to taking more medication. (App. 209-

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10.) Mrs. Hunsaker agreed that the best record of when she would get migraines 

would be her prescription records. (App. 210.) Mrs. Hunsaker’s prescription 

records establish that she refilled her migraine medication less frequently during 

the time period that the IRS sent the Notices than either before or after the Notices 

were sent.2

 (App. 134-36, App. 211-13.) Mrs. Hunsaker also used fewer hours of 

sick leave and vacation time in 2014 (the year that three of the four Notices were 

received) than she did in previous years. (App. 137, 214-15.) Thus, it follows that 

either Mrs. Hunsaker had fewer migraines during this time, or she was able to stop 

the on-set of the migraine by taking over-the-counter medication. Furthermore, to 

the extent that Mrs. Hunsaker did have increased migraines during this time period, 

the bankruptcy process in general may have been a contributing factor. (App. 193.) 

C. Mr. Hunsaker’s alleged harm 

What bothered Mr. Hunsaker most about the Notices was the fact that his 

wife would “get all stressy and have a migraine headache.” (App. 177-78.) Mr. 

Hunsaker testified that the Notices were “a lot stressier” than the bankruptcy 

process in general. (App. 185.) Mrs. Hunsaker believed that her husband was 

 

2

 For example, Mrs. Hunsaker waited from January 2, 2014 until July 28, 2014—a period of 207 

days—to refill her migraine medication, even though one of the Notices was received during that 

period. Similarly, Mrs. Hunsaker waited from July 28, 2014 until February 9, 2015—a period of 

196 to again refill her migraine medication, despite the fact that not one, but two Notices were 

received during that period. Both prior to January 2, 2014, and after February 9, 2015, Mrs. 

Hunsaker refilled her migraine medication more frequently. (See App. 134-36.) 

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“upset” by the letters because “his temples [would] go in and out” and he would 

“grind[] his teeth.” (App. 198-99.) Beyond grinding his teeth, Mrs. Hunsaker stated 

that Mr. Hunsaker was “not a happy boy.” (App. 205-06.) Additionally, Mr. 

Hunsaker “voiced his frustration” as a result of the letters. (App. 201.) But Mrs. 

Hunsaker also testified that Mr. Hunsaker was “maintaining his cool.” (App. 199.) 

Despite regular doctor’s visits, Mr. Hunsaker did not seek medical care as a result 

of the Notices. (App. 194.) 

After receiving each Notice, Mr. or Mrs. Hunsaker called their attorney, 

Keith Karnes. (App. 183-84, 186, 209.) Within a day or two, Mr. Karnes would get 

back to Mr. and Mrs. Hunsaker, and advise them that because there was an 

automatic stay in place, the IRS could not collect. (App. 183, 209.) Both Mr. and 

Mrs. Hunsaker testified that hearing back from Mr. Karnes would ameliorate their 

concern. (App. 191-92, 209.) 

D. The ruling below 

The Bankruptcy Court held that Mr. and Mrs. Hunsaker had established 

entitlement to emotional-distress damages under In re Dawson, 390 F.3d 1139 (9th 

Cir. 2004). It explained that, under Dawson, emotional-distress damages are 

allowable for a violation of the automatic stay where an individual “(1) suffer[s] 

significant harm, (2) clearly establish[es] the significant harm, and (3) 

demonstrat[es] a causal connection between the significant harm and the violation 

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of the automatic stay (as distinct, for instance from the anxiety and pressures 

inherent in the bankruptcy process.” (App.225-226, quoting Dawson, 390 F.3d at 

1148). Because the Ninth Circuit in Dawson was “concerned with limiting 

frivolous claims” (id. at 226, quoting Dawson 390 F.3d at 1148), the Bankruptcy 

Court held that “the term ‘significant harm’ or ‘significant emotional harm’ means 

simply that assertion of the claim is not frivolous, and that the injury is not trivial 

or insubstantial.” (Id.) 

Applying that standard, the Bankruptcy Court ruled that Mr. and Mrs. 

Hunsaker need not provide corroborating evidence because the circumstances—

receipt of the four Notices—would “obviously” cause a reasonable person to suffer 

significant harm. (App. 256-57.) The Bankruptcy Court further held that “[t]he 

injuries described by the Plaintiffs at trial, particularly Mrs. Hunsaker’s migraine 

headaches, were clearly established as neither trivial nor insubstantial.” (Id.) 

However, the Bankruptcy Court did not elaborate on what injuries Mr. Hunsaker 

had, other than noting that the Notices exacerbated his stress. (Id.) The Bankruptcy 

Court awarded Mrs. Hunsaker emotional-distress damages in the amount of $3,000 

and Mr. Hunsaker emotional-distress damages in the amount of $1,000. (App. 257, 

259-60, 270-71.) 

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E. This court’s ruling and the subsequent appeal 

The United States appealed the Bankruptcy Court’s judgment awarding Mr. 

and Mrs. Hunsaker emotional distress damages, arguing that Dawson was wrongly 

decided, that the Hunsakers’ emotional distress was insufficient to award 

emotional-distress damages and that sovereign immunity bars the Hunsakers’ 

claims altogether. ECF No. 13.This Court reversed the judgment of the Bankruptcy 

Court, ruling that sovereign immunity bars the Hunsakers’ claims for emotional 

distress. ECF No. 19. 

The Hunsakers appealed and the Ninth Circuit reversed, concluding that 

sovereign immunity does not preclude an award of emotional distress damages 

against the United States for willful violation of the automatic stay. ECF No. 23. 

Accordingly, the case was remanded to this Court with instructions to consider the 

government’s challenge to the merits of the Hunsakers’ claims for emotionaldistress damages. Id. Pursuant to this Court’s scheduling order (ECF No. 25), the 

United States submits this brief challenging the merits of Hunsaker’s claims. 

SUMMARY OF ARGUMENT ON REMAND 

The United Stated maintains that In re Dawson, 390 F.3d 1139 (9th Cir. 

2004) was wrongly decided, but also recognizes that this Court is bound by the 

decision. Therefore the United States restates its argument that Dawson was 

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wrongly decided briefly to preserve the possibility that the United States may ask 

the Court of Appeals for en banc consideration to overrule Dawson. 

To establish a claim for emotional-distress damages under Dawson, an 

individual “must (1) suffer significant harm, (2) clearly establish the significant 

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

the violation of the automatic stay (as distinct, for instance, from the anxiety and 

pressures inherent in the bankruptcy process).” 390 F.3d at 1149. 

Previously, this Court noted: “Mr. Hunsaker likely never suffered an injury 

sufficient to support an award of emotion distress damages under § 362(k),” and 

that the Court was “skeptical whether Mrs. Hunsaker established the required 

causal connection between the notices and her migraines. ECF No. 19 at 3. 

However, the Court declined to rule on those issues because it held that sovereign 

immunity barred their claims entirely (id.). Turning to the merits, the Court should 

now overturn the Bankruptcy Court’s judgment because the record establishes that 

Mr. and Mrs. Hunsaker failed to satisfy Dawson’s standard in two ways. 

First, the Bankruptcy Court incorrectly held that no corroborating evidence 

was necessary in this case because the circumstances make it obvious that a 

reasonable person would suffer significant harm. This issue is important to the 

United States, various agencies of which are a frequent target of damages motions. 

This is due partly to the counter-intuitive meaning given to “willful violation” by 

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most courts, under which any “willful act” that violates the stay following notice of 

a bankruptcy is a willful violation, making good faith irrelevant. As a result of this 

almost strict-liability test, coupled with the availability of attorney’s fees, stayviolation damages claims against entities with deep pockets have become a 

“cottage industry,” as many courts have observed. The Bankruptcy Court’s holding 

that the circumstances here—mailing four Notices and without any actual levy, 

collection, or extraordinary harassment such as repeated telephone calls—would 

“obviously” cause a reasonable person to suffer significant harm could open the 

United States up to an exponential number of challenges for minor stay violations. 

That is partly because attorney’s fees are generally not available unless there is 

some other form of injury justifying suit in the first place and emotional distress 

can satisfy that requirement (at least in this circuit). As reflected by the numerous 

cases holding that mailing letters alone is not sufficient to abrogate the need for 

corroborating evidence, this was clearly not Congress’s intent. 

The second misapplication of Dawson is that the Bankruptcy Court 

incorrectly held that Mr. and Mrs. Hunsaker suffered significant harm. The 

evidence at trial established only that Mr. Hunsaker was upset, frustrated, and 

concerned, which cannot legally be considered significant harm. Moreover, Mr. 

Hunsaker’s harm was essentially vicarious—he was upset only because his wife 

was upset. It is almost unheard of in the law to award damages for causing 

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emotional distress to one individual by causing emotional distress to a relative, 

save perhaps for the tort of intentional infliction of emotional distress. Similarly, 

the Court found that Mrs. Hunsaker suffered significant harm, even though the 

evidence at trial established that any harm suffered did not last for a significant 

amount of time—a necessary component of significant harm. 

The Bankruptcy Court’s judgment should be reversed. 

ARGUMENT 

A. Dawson was wrongly decided. 

Under Section 362(k)(1) of the Bankruptcy Code, “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.” 11 U.S.C. § 362(k)(1). It is the position of the 

United States that the Ninth Circuit incorrectly interpreted the term “actual 

damages” to include damages for emotional distress, whether or not such damage 

resulted in any financial injury and/or that it incorrectly interpreted the word 

“injured” to include injury other than pecuniary injury (i.e., mental stress). 

Compare In re Dawson, 390 F.3d 1139, 1148 (9th Cir. 2004) with Aiello v. 

Providian Financial Corp., 239 F.3d 876, 879 (7th Cir. 2001) (holding that the 

term “actual damages” does not encompass damages for emotional distress, but 

rather is intended to only compensate for economic loss). The United States 

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recognizes that this Court is bound by Dawson and include this argument to 

preserve the possibility that the United States may ask the Court of Appeals for en 

banc consideration to overrule Dawson. 

B. The Bankruptcy Court incorrectly held that the circumstances make 

it obvious that a reasonable person would suffer significant harm. 

The Bankruptcy Court incorrectly held that no corroborating evidence was 

necessary in this case because the circumstances make it obvious that a reasonable 

person would suffer significant harm. To establish a claim for emotional-distress 

damages under Dawson, an individual “must (1) suffer significant harm, (2) clearly 

establish the significant harm, and (3) demonstrate a causal connection between 

that significant harm and the violation of the automatic stay (as distinct, for 

instance, from the anxiety and pressures inherent in the bankruptcy process).” 

Dawson 390 F.3d at 1149. Generally, to establish that an individual has suffered 

significant emotional harm, he or she may offer corroborating medical evidence or 

have family, friends, or coworkers “testify to manifestations of mental anguish and 

clearly establish that significant emotional harm occurred.” Dawson, 390 F.3d at 

1149. However, if significant emotional distress is readily apparent, corroborating 

evidence may not be necessary, such as where the violator engaged in egregious 

conduct or where the circumstances make it obvious that a reasonable person 

would suffer significant emotional harm. Id. at 1150 (citing In re Flynn, 185 B.R. 

89 (S.D. Ga. 1995)). 

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Although it held that the IRS had not engaged in any egregious conduct 

here, the Bankruptcy Court held that no corroborating evidence was needed 

because: 

Plaintiffs received four notices from the Internal Revenue Service, 

each of which indicated that the Service intended to take steps which 

would, once carried out, likely defeat their efforts to reorganize their 

finances through Chapter 13. The notices continued notwithstanding 

their attorney’s efforts to stop them, and it is not unreasonable that 

they were concerned that the Government might take the action 

threatened notwithstanding their attorney’s assurances. 

App. 256 (emphasis added). This passage misstates the Dawson standard, which 

requires that the circumstances make it obvious that a reasonable person would 

suffer significant emotional harm. Whether or not it was reasonable for Mr. and 

Mrs. Hunsaker to be “concerned,” concern is not significant harm. 

In Flynn, cited by Dawson as an example of when circumstances make it 

obvious that a reasonable person would suffer significant emotional harm, the IRS 

levied on a debtor’s bank account, which resulted in the debtor’s checking account 

being frozen and her having had to cancel a planned birthday party for her child. 

185 B.R. at 90. The Bankruptcy Court held that medical evidence was not 

necessary to support a claim for emotional-distress damages because it was clear 

that emotional harm had been suffered due to the stay violation: 

Although Debtor apparently did not suffer any out-of-pocket medical 

expenses or long-term physical or emotional harm as a result of the 

IRS' wrongful levy, the evidence was uncontradicted that she was 

forced to endure the stress of knowing that a number of her checks 

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would bounce and dealing with those payees, the emotional trauma of 

having to cancel a planned birthday party for her child, and the 

humiliation of being unable, without considerable difficulty and 

commotion, to negotiate a check for groceries at her neighborhood 

supermarket. 

Matter of Flynn, 169 B.R. 1007, 1023 (Bankr. S.D. Ga. 1994) aff'd in part, rev'd in 

part sub nom. In re Flynn, 185 B.R. 89 (S.D. Ga. 1995). But Flynn is easily 

distinguishable from the circumstances in this case as the IRS did not actually levy 

on Mr. and Mrs. Hunsaker’s assets. In contrast to the debtor in Flynn whose 

checking account was frozen as a result of the IRS levy, Mr. and Mrs. Hunsaker 

had no funds or other property seized and suffered no collateral consequences that 

could flow from lack of access to a bank account. The United States does not 

dispute that the Notices likely caused Mr. and Mrs. Hunsaker “concern,” as the 

Bankruptcy Court recognized, but the Notices did not meaningfully interfere with 

their normal life. 

In similar circumstances—where a creditor has mailed one or more 

collection notices—courts have routinely held that the circumstances do not make 

it obvious that a reasonable person would suffer significant emotional harm. See In 

re Aiello, 231 B.R. 684, 691 (Bankr. N.D. Ill. 1999) aff'd sub nom. Aiello v. 

Providian Fin. Corp., 257 B.R. 245 (N.D. Ill. 2000) aff'd, 239 F.3d 876 (7th Cir. 

2001) (holding that a creditor’s conduct in sending a threatening letter “was not so 

extreme and outrageous that this court can presume that emotional distress would 

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naturally follow”); In re Bourke, 543 B.R. 657, 665 (Bankr. D. Mont. 2015) 

(holding that “the circumstances in the instant case, where [a creditor] continued to 

send collection letters postpetition, by itself, do not make it obvious that a 

reasonable person would have suffered significant emotional harm”); In re Van 

Durden, 2015 WL 3507074, at *4 (Bankr. N.D. Cal. June 2, 2015) (finding 

creditor’s mailing of three invoices was “likely to cause a reasonable person only 

fleeting annoyance, not significant emotional distress”); In re Dayley, 349 B.R. 

825, 830 (Bankr. D. Idaho 2006) (finding that the receipt of three billing 

statements from a creditor “may cause some distress” it did not cause “significant 

emotional distress beyond becoming temporarily upset”); In re Gorringe, 348 B.R. 

789, 792 (Bankr. D. Idaho 2006) (emotional distress was not “readily apparent to 

the Court” where the Creditor garnished Debtor’s bank account and sent letters); In 

re Bryant, 294 B.R. 791, 800 (Bankr. S.D. Ala. 2002) (finding no basis for 

emotional-distress damages where the IRS sent Notices). Compare with Lansaw v. 

Zokaites (In re Lansaw), 853 F.3d 657, 667 (3rd Cir. 2017) (stay violations were so 

egregious that a reasonable person could be expected to suffer some emotional 

harm where the offending creditor “repeatedly—at times, physically and in the 

presence of the children entrusted to the [debtors’] care—attempted to intimidate 

the [debtors]”) and with In re Bradford (2018 WL 6422858) (it is not unreasonable 

to expect debtor would suffer significant emotional distress where the offending 

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creditor threatened to destroy debtor’s personal property left in her car, stalked the 

debtor to the point where she felt unsafe to travel alone, and sent the debtor and her 

close family members “a number of profane, and at least one racially-charged, text 

messages in which [the creditor] taunted, harassed, and berated the debtor,” 

including one particularly troubling message that “could be read in modern urban 

parlance to include a threat of physical violence against—and harm to—the 

debtor.”). 

It is again useful to step outside the realm of bankruptcy stay violations and 

compare when emotional-distress damages are available to persons aggrieved by 

errors by creditors collecting debts. As noted above, emotional distress caused by 

wrongful debt collection is generally not actionable for damages where the errors 

do not reach actual collection, as opposed to mistaken demands for payment, 

unless those demands meet the standards for reckless or intentional infliction of 

emotional distress. See generally Joel E. Smith, Recovery by Debtor, Under Tort of 

Intentional or Reckless Infliction of Emotional Distress, for Damages Resulting 

from Debt Collection Methods, 87 A.L.R. 3d 201 (1978, and supplements). See 

also Restatement, Torts 2d, § 46. 

Damages for emotional distress should not be available for violations of the 

stay unless either there is actual collection activity or threats that rise to a level of 

serious misconduct; such damages should not be available where the creditor has 

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merely mailed a few letters demanding payment and threatening collection if 

payment is not make—i.e., ordinary and rather benign debt collection efforts that 

likely reflect that the creditor’s employees sending the particular notices were 

unaware of the bankruptcy stay. In this regard, while Dawson held that economic 

injury was not a prerequisite to recover damages for emotional distress, the facts in 

Dawson include far more than letter demands. The bank’s violation of the stay 

included the commencement of an unlawful detainer action against the debtors. 

390 F.3d at 1144. Moreover, while egregious conduct was also not a pre-condition 

to demonstrating significant (non-fleeting) emotional distress, the Ninth Circuit 

recognized that egregious conduct might justify a finding that emotional distress 

was significant without corroborating evidence. Id. at 1150 (“In some cases 

significant emotional distress may be readily apparent even without corroborative 

evidence. For instance, the violator may have engaged in egregious conduct.”). The 

court gave as an example, a case where the “creditor entered the debtor's home at 

night, doused the lights, and pretended to hold a gun to the debtor's head.” Id. 

Continuing, the Ninth Circuit added that “even if the violation of the automatic 

stay was not egregious, the circumstances may make it obvious that a reasonable 

person would suffer significant emotional harm,” whereupon it cited the Flynn 

case where actual collection “forced [the debtor] to cancel her son's birthday party 

because her checking account had been frozen.” Id. 

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Here, there was no collection activity in this case that had collateral 

consequences that would make emotional distress “obvious,” as in Flynn. Nor was 

there egregious conduct anything like the example the Ninth Circuit gave for mere 

threats to collect without actual collection. The appropriate standard under Dawson 

is that emotional distress, without any pecuniary loss, is not actionable under 

§ 362(k) unless there is either actual collection or the threats to collect are 

egregious. 

This issue is important to the United States, various agencies of which are 

unfortunately a frequent target of damages motions. This is due partly to the 

counter-intuitive meaning given to “willful violation” by most courts, under which 

any “willful act” that violates the stay following notice of a bankruptcy is a willful 

violation, making good faith irrelevant. See In re Bloom, 875 F.2d 224, 227 (9th 

Cir. 1989). As a result of this almost strict-liability test, coupled with the 

availability of attorney’s fees, and in some jurisdictions emotional-distress 

damages, stay-violation damages claims against entities with deep pockets have 

become a “cottage industry,” as many courts have observed. See, e.g., In re 

Roman, 283 B.R. 1, 11 (9th Cir. BAP. 2002) (quoting In re McLaughlin, 96 B.R. 

554, 560 (Bankr. E.D. Pa.1989)); In re Sturman, 2011 WL 4472412 at *4 

(S.D.N.Y. 2011); In re Robinson, 228 B.R. 75, 85 (Bankr. E.D.N.Y. 1998) 

(quoting In re Putnam, 167 B.R. 737, 741 (Bankr. D.N.H.1994)); In re Cini, 492 

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B.R. 291, 318 (Bankr. D. Mont. 2013). Numerous other decisions express the same 

concern. The Bankruptcy Court’s holding that mailing four Notices demanding 

payment but without any actual levy, collection, or extraordinary harassment such 

as repeated telephone calls would “obviously” cause a reasonable person to suffer 

significant harm could open the United States up to an exponential number of 

challenges for minor stay violations. As reflected by the numerous cases holding 

that mailing letters alone is not sufficient to abrogate the need for corroborating 

evidence, this was clearly not Congress’s intent. As a legal matter, this Court 

should hold that the circumstances here are not sufficient to absolve Mr. and Mrs. 

Hunsaker of the requirement to present corroborating medical evidence in order to 

establish significant harm, because there was neither actual collection activity nor 

egregious conduct demanding payment. 

C. The evidence presented at trial does not support an award of 

damages for emotional distress. 

As is explained above, debtors bore the burden clearly to prove significant 

harm and a causal connection between that harm and the four notices sent by the 

IRS. They did not carry that burden. 

The Bankruptcy Court incorrectly concluded that “[t]he injuries described by 

the Plaintiffs at trial, particularly Mrs. Hunsaker’s migraine headaches, were 

clearly established as neither trivial nor insubstantial, and are compensable under 

the Dawson standards.” To be compensable, Mr. and Mrs. Hunsaker had the 

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burden to show that their emotional distress was more than fleeting, trivial, or 

medically insignificant. Dawson, 390 F.3d at 1149 (citing In re Skeen, 248 B.R. 

312, 319 (Bankr.E.D.Tenn.2000) as holding that “‘[b]ecause the emotional distress 

suffered ... was fleeting, inconsequential, and medically insignificant, ... it is not 

compensable’”) (ellipses supplied by Dawson)). While the Bankruptcy Court held 

that Mr. and Mrs. Hunsaker’s distress was not “trivial,” the Bankruptcy Court 

failed to address whether their distress was fleeting or medically insignificant. 

Because the evidence at trial established that any emotional distress experienced by 

Mr. and Mrs. Hunsaker was both fleeting and medically insignificant, this Court 

should overturn the award of damages for emotional distress. 

Mr. and Mrs. Hunsaker failed to prove that their emotional distress lasted for 

a significant period of time. To be “significant,” emotional distress must last for a 

significant period of time or meaningfully interfere with the debtor’s normal life. 

See e.g., Dawson, 390 F.3d at 1149 (“Fleeting or trivial anxiety or distress does not 

suffice to support an award...”); Lodge v. Kondaur Capital Corp., 750 F.3d 1263, 

1272 (11th Cir. 2014) (holding that debtors failed to show that they suffered 

significant emotional distress as opposed to fleeting or trivial anxiety or distress 

where debtors failed to present evidence as to how long their emotional distress 

lasted); In re Grand, 2009 WL 790205, at *2 (Bankr. D. Haw. Jan. 23, 2009) 

(holding that the evidence did not support an award of damages although debtor’s 

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“fear and concern were undoubtedly genuine,” because debtor presented no 

evidence that her emotional distress lasted for a significant period of time or 

meaningfully interfered with her normal life.). Awarding damages despite the short 

duration of Mr. and Mrs. Hunsaker’s emotional distress stemming from their the 

receipt of the Notices was legal error. 

In Dayley, the Bankruptcy Court in Idaho faced similar circumstances: A 

creditor inadvertently mailed three-computer-generated billing statements to 

debtors during the pendency of their bankruptcy. 349 B.R. at 827. Debtors asserted 

that upon receipt of the billing statements, Ms. Dayley, a diabetic, exhibited signs 

of low blood sugar, which in turn caused Mr. Dayley considerable anxiety and 

distress. Id. at 828. However, while the billing statements caused debtors’ stress, 

neither was required to visit a doctor. Id. The Court concluded that the testimony 

did not establish that either debtor experienced significant emotional distress 

beyond becoming temporarily upset, and declined to award emotional-distress 

damages. Id. at 830. 

Similarly, here the evidence at trial established that while Mr. and Mrs. 

Hunsaker may have become temporarily upset upon receipt of the Notices, their 

concern was not long lasting. After receiving each Notice, they called their 

attorney, Keith Karnes. Within a day or two, Mr. Karnes would advise Mr. and 

Mrs. Hunsaker that because there was an automatic stay in place, the IRS could not 

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collect. Both Mr. and Mrs. Hunsaker testified that hearing back from Mr. Karnes 

would ameliorate their concern. See Buehler v. Dodd, 2015 WL 393477, at *3 

(Bankr. D. Or. Jan. 28, 2015) (noting that debtor’s fear of eviction should have 

stopped when her counsel advised her that eviction was unlikely). Moreover, Mrs. 

Hunsaker’s migraines, and Mr. Hunsaker’s vicarious harm from observing his 

wife’s distress, lasted at most for a day or two. Thus, Mr. and Mrs. Hunsaker failed 

to establish that they experienced significant harm traceable specifically to the 

Notices.3

Additionally, the Bankruptcy Court erred in awarding damages because Mr. 

and Mrs. Hunsaker did not establish that any emotional distress they suffered was 

medically significant. In most cases, a debtor must establish that his or her 

emotional distress is medically significant in order to recover damages. See 

Dawson, 390 F.3d at 1149 (citing Skeen, 248 B.R. at 319). See also In re Burkart 

d/b/a Burkart Auto., 2010 WL 502945, at *5 (Bankr. N.D.N.Y. Feb. 9, 2010) 

(citing Grand, 2009 WL 790205 at *5) (“In the absence of egregious conduct, 

 

3 Recall that at the same time as they received the Notices, Debtors had other longterm concerns and worries: the land dispute with the county that caused the 

Hunsakers to file for bankruptcy lasted for approximately four years and was not 

resolved until around November 2014. App. 190-91. Mr. Hunsaker described the 

land dispute as a “pain in the neck,” “stressful,” and “the main focus in [his] life.” 

App. 66-67. Mrs. Hunsaker also found the land dispute and Plaintiffs’ finances to 

be stressful. App. 208. 

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however, the Court must guard against frivolous claims by awarding emotional 

distress damages only where the emotional or psychological toll on the debtor is 

clearly proven to have been medically significant.”); In re Hutchings, 348 B.R. 

847, 912 (Bankr. N.D. Ala. 2006) (“fleeting, inconsequential, and medically 

insignificant annoyance, aggravation, or indignation ...does not, as a matter of law, 

justify an award of ‘actual damages’”). 

The evidence at trial established that despite having regular doctor’s visits, 

neither Mr. nor Mrs. Hunsaker sought medical care for their emotional distress. 

See, e.g., Lodge, 750 F.3d at 1272 (debtors could not establish a causal connection 

between their injuries and the stay violation where they failed to provide evidence 

of doctor’s visits); Van Durden, 2015 WL 3507074 at *5 (holding that debtor did 

not seek any medical help as a result of the stay violations and therefore could not 

meet the Dawson standard); Bourke, 543 B.R. at 665 (the fact that debtor did not 

seek medical attention for the additional stress of stay violation was a factor in 

denying damages). Indeed, Mrs. Hunsaker’s prescription records establish either 

that she had fewer migraines during the period at issue, or that she was able to stop 

the on-set of the migraine by taking over-the-counter medication. Either way, Mrs. 

Hunsaker was able to carry on with her normal life. 

The only evidence of Mr. Hunsaker’s harm was his and his wife’s testimony 

that after reading the notices he ground his teeth, his temples would go in and out, 

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and he became upset. But being temporarily upset is not sufficient to establish 

significant harm. See, e.g., Bourke, 543 B.R. at 665; Dayley, 349 B.R. at 830. 

Moreover, nothing in Dawson supports awarding damages for emotional distress 

not directly caused by the stay violation but instead indirectly caused by watching 

a relative suffer emotional distress. That appears to be a leap in the law that is not 

supported inside or outside bankruptcy cases. Indeed, for common law torts, 

damages for emotional distress caused by harm to a relative are usually limited to 

where the direct harm witnessed by the plaintiff is serious physical injury. See, 

e.g., Consol. Rail Corp. v. Gottshall, 512 U.S. 532, 549 (1994) (describing the 

circumstances under which bystanders may recover for emotional distress brought 

on by watching the injury or death of a third party). The Court should not allow 

this unprecedented extension of liability for emotional distress to distress caused 

by witnessing a third party’s emotional distress. 

 Mr. and Mrs. Hunsaker failed to establish that any emotional distress they 

suffered was neither fleeting nor medically insignificant, and therefore, they failed 

to meet their burden to prove significant harm under the Dawson standard. 

// 

// 

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CONCLUSION 

This Court should reverse the judgment of the Bankruptcy Court and remand 

with instructions to enter judgment in favor of the United States on the merits. 

Dated: March 15, 2019. 

RICHARD E. ZUCKERMAN 

Deputy Assistant Attorney General 

/s/ Boris Kukso 

BORIS KUKSO 

Trial Attorney, Tax Division 

U.S. Department of Justice 

P.O. Box 683 

Washington, D.C. 20044 

202-353-1857 (v) 

202-307-0054 (f) 

Boris.Kukso@usdoj.gov 

 

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CERTIFICATE OF SERVICE 

I hereby certify that on March 15, 2019, I electronically filed the foregoing 

document with the Clerk of Court using the CM/ECF system, which will send 

notification of such filing to the following: 

Keith D. Karnes; kkarnes@keithkarnes.com 

/s/ Boris Kukso 

BORIS KUKSO 

Trial Attorney 

United States Department of Justice, Tax 

Division 

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