EL ECTRONI C CI TATI ON: 2007 FE D App. 0003P (6th Cir.) File Na me: 07b0003p.06

BA NK RU P TC Y A P P ELLA TE P AN EL OF THE SI XT H C IR CU IT

I n re: KENNET H DWAYNE PERRI N ) and TAMMY LYNN PERRI N, ) De bto rs
. )

_____________________________________ ) ) K E NN E T H D W A YN E P E R R IN ) and TAMMY LYNN PERRI N, ) Appellants. ) No. 06-8032

_____________________________________ )

Appea l from the United States B ankruptc y Court fo r t he Southe rn

Di str ic t of

Oh io, Ea ste rn

Di vis ion a t Co lum bu s. No. 05-51348.
Submit ted: November

8, 2006
Dec ided and F iled: J anuar y 23, 2007
B e fo re : G REG G, L AT TA , a nd WHI PPL E, B ank

ru ptc y Ap pe llate Pane l Judg e s.

____________________ CO UN SEL
O N B RI E F: Cry stal I . Z ellar, A dam T. B arc lay , Z EL L AR & Z EL L AR, Z anesville, Oh i o , for Ap pe lla nts

.

____________________ OP IN ION

____________________ J ENNI E D. LATTA, B ankruptc y Appellate Pane l J udg e. Ke nneth Dwa y ne Perr in and Tammy L y nn Perrin (“ Debtors” ) appe al an order of the ba nkruptcy court findinga willful violation of the a uto matic sta

y , b ut a wa rd ingno dama g e s to the De bto rs
.Pag e 2 of 6 I. ISSU ES ON AP P EAL The issues ra ised by

this appea l are : (1) whether a n awa rd of damag es is mandated by section 362(h) e ven whe n the debtor f ails t o prove a ctual dama g es; and (2) whether the bankr

uptcy court

e r r e d i np e r m i t t i n g a p r o s e c r e d i t o r

t o c a l l th e D e b t o r s ’ c o un s e l t o t e s t i f y.

II. JU RI SDI CT ION AND STANDARD OF RE VI EW The B ankruptc y

Appellate Pane l of the Six th Circ uit ( the “B AP”) ha s jurisdiction to decide this appeal. The United States District Court for the Southern D i s t ri ct o f Ohi o has authorized appea ls to the BAP, and a final orde r of the ba

nkruptcy court may

be appe aled a s of rig ht pursuant to 28 U.S.C. § 158(a) (1). For purposes of appea l, a final order “ends the litigation on the m erits and le av e s n o th in g f

o r th e c o u rt to d o b u t e xe c u te th e ju d g me nt.” Mi d l and Asphalt Corp. v. United States , 489 U.S. 794, 798, 109 S. C t. 1494, 1497 ( 1989) (citations omitted). The ba nkruptcy court’s order finding a v i o l at i o n o f the a utomatic stay

is a final orde r. He

gh ma nn v . I

nd or f ( In re Heghmann) , 316 B.R. 395, 400 (B .A.P. 1st Ci r. 2004). The que stion whether da mag es must be awa

rded wheneve r a w illful viol ation of the automatic stay

is found to have occur

red is a question of statutory interpre tation and is subject to de novo revie w. “De novo means that the a ppellate c ourt deter

mines the law indepe ndently of the trial court’s deter

mination.” O’Brien v. Rave nswood Apts., L td

. (In r e R a ve n s w o o d

A p t s
. , L td

. ) 33 8 B .R. 307, 310 (B .A. P. 6th Cir. 2006)

. The que stion of whether the bankr uptcy court prope rly

permitted Debtors’ counsel to be c alled as a witness is likewise a question of law subject to de novo re view.

III . F AC TS Debtor K enneth Per

rin (“Per rin”) is e mploy ed as a

profe ssional c abinet maker

. He a lso owns and oper ates a

small cabinet shop on the side to e arn additional income. B eg inning in Apr il 2004, Pe rr in r e nte d w or

k s pa c e fr om c re dit or Ron a ld Whe e le r ( “ Whe e le r” ) f or his c a bin e t sh op bu sin e ss and outfitted the spac e with the nec essar y tools for ca

binet making . On Fe bruary 1 , 2 005, the Debtors filed their chapter 13 petition. Perrin then advised W heele r t hat he had filed the petition for bankruptc y
.N o ot her par t y appear ed i n t hi s appeal

. T her ef ore, no appel l ee i s not ed i n t he capt i on above. 1 Pag e 3 of 6 I n J une 2005, Perr in cea sed m aking rent pay ments for the space rente d from Wheeler . On Oc tob e r 1 , 200 5, Whe e le r ch ang e d the loc ks on the do or s and re fu se d to pe rm it Pe rr in t o r e tr ie ve his tools. I n late Oc tober 2005, Wheele r off ere d to allow Perrin to re trieve his tools in ex chang e for pay ment of the outstanding rent. When Per rin arr ived with less than the total amount owed, Wheele r offe red to a llow him to t ake only some of his tools. Perrin ref used, leaving with his money , but not with his tool s. I n November

2005, Perrin conta cted his couns el re gardingthe situation. Perrin’s counse l wrote to Wheele r dema

nding r eturn of the tools within seven da y s. Following rec eipt of this letter, Wheeler did not contac t Perrin or allow hi m to retrieve the tools, but W heele r did attempt to confe r with Perrin’s counse l who advised him to seek his own counsel. Wheele r then re tained counse l who exchang ed messag es with Perrin’s c ounsel. The two attorney s never spoke with ea ch other

. On Fe bruar

y 15, 2006, Perrin’s c ounsel filed a Motion R equestingOrde r to Show Cause and for Tur nover of Ba n k ruptcy

Estate Assets Pursuant to 11 U.S.C. § 542 (“Motion”). The Motion

s o u gh ttu rn o v er

o f P erri n ’s t o o l s , an d

an aw ar d o f d am age s an d

at t o rn ey fe es
. Fo l l o wi n g a h ea ri n g, the bankr uptcy court found that Wheeler willfully violated the automatic sta y and orde red him to turn over Per rin’s tools. The cour

t did not, however, a

war d damag es to Perrin be cause there was no evide n c e p r e s e n te d th a t a c tu a l d ama g e s r e s u lt e d f r o m th e v io lati o n o f th e a u to mati c stay . The bankruptc y

court’s written order

was e ntere d April 17, 2006, and this timely appea l followed. 1

IV . D ISC USS ION Tw o d i s t i n c t i s s u e s h av e b e e n r a i s e d i n th i s a p p e a l : ( 1 ) w h e th e r an aw ar d o f d am a g e s is mandated by

section 362(h) even where the debtor f ails to prove ac tual damag es, and ( 2) whe ther

a lit ig ant i s p re ve nte d f

ro m c a lli ngop po sin g c ouns e l a s a wi tne ss at tr ia l. Prior to amendment ef

fec tive October

17, 2005, section 362(h) stated: An individual injured by

any willfu l violation of the automatic stay pr ov ide d b y

thi s se c tio n s ha ll re c ov e r a c tua l da ma g e s, inc lud ingc os ts and attorne y s’ fe es. . . .B ec au s e t h e D ebt or s ’ ban k r u pt cy ca s e wa s f i l ed be f or e t h e e f f ec t i v e da t e of

t h e B an k r u pt cy Abu s e Pre v en t i on 2 and Co ns umer P r ot ect i on A ct o f 2 00 5 ( “ B A P C P A ”) , al l ref er enc es t o t he B ank r upt cy C od e i n t hi s opi ni on ar e t o t he preB A P C P A ve rs io n
. See B an k r u pt cy Abu s e Pre v en t i on a n d Cons u mer P r ot ec t i on Act of 2005, Pub. L. N o. 109- 8, § 15 01 ( b)(1 ) , 119 St at

. 23, 216 ( s t at i ng t hat , un l es s ot her wi s e pr ovi ded, t he amendment s do not appl y t o cas es co m m enced unde r t i t l e 1 1 be f o re t he ef

f ect i ve d at e o f

B A P C P A ). Pag e 4 of 6 11 U.S. C

. § 3 6 2 (h). The ke y to an awa

rd of damag es under

section 362(h) is not the willful 2 vio latio n o f t

he a uto matic sta

y , b ut the re su lti ng inj ur

y . Any pe rs on wh o s uf fe rs inj ur y a s th e re su lt of a wi llf ul v iol a tio n o f t

he a uto matic sta

y is e nti tle d to re c ov e r a c tua l dama g e s. In th is c a se , Pe rr in failed to prove that he had suf fer ed any injury

. The decision of the c ourt of appe als in Archer v . Macom b County Bank, 85 3 F .2 d 49 7 ( 6th Cir. 1988), i s instructive. In Archer, the bankruptc y court found that a cr editor willfully violated the automatic stay

and aw arde d damages in excess of the amount of a ctual dama g es supported by the evidenc e b a s e d u

p o n th e d e b to r ’ s s tate me n t th a t h is b u s in e s s r e p u tati o n h a d b e e n d ama g e d

. The district court af

firmed the de cision of the bankr uptcy court, but the c ourt of appe als reve rsed. The court of a

ppeals noted that the bankruptc y court’s de cision reg ardin g t h e am ount of damag es constituted a fa ctual finding , which would not be overturne d unless it was clea rly err oneous. Arc he r, 85 3 F. 2 d at 499. Neve rtheless, the c ourt said, “a damag e aw ard must not be base d on ‘mere speculation, g uess, or conjecture .’” Id. (citations omitted). Proof of dama g es re quires that degree of ce rtainty

that the nature of the case admits. Id. The c ourt of appe als held the ba nkruptcy court’s finding s reg ardingdamag es to be c lear ly err oneous beca

use they wer e not suppor

ted by the re cord. The cou rt of app e a ls r e mand e d th e c a se , d ir e c tin g the ba nk ru ptc y c ourt to c on du c t a

he ari ngto deter mine the amount of a ctual dama g es “be aringin mind that ‘11 U.S .C. § 362(h) requires a finding of ac tual injury .’” Id. at 500 (c itations omi tted). I n the present case , Perrin failed to prove that he suff ere d an ac tual injury . Unlike Archer , no proof wa s offe red c oncer ning a ny actua l damag es suffe red a s the result of Wheele r’s e x erc ise of

c on tr ol o ve r P e rr in’ s too ls, a nd no awa

rd wa s ma de by the ba

nk ru ptc y c ourt . D e sp ite the De bto rs ’ strenuous ar g ument that the bankr uptcy court should have schedule d a second hea ring to consider dama g e s, no wh e re in the re c or d d oe s it a pp e ar t hat th e De bto rs a sk e d th e ba nk ru ptc y c ourt to d o th is. The Pane l will not address issues not r aised be fore the bankr uptcy court. See H

arshbarger v. Pe es ( In reHa rsh barge r) , 6 6 F. 3 d 7 7 5 , 7 7 7 n
. 3 (6 thC i r. 1 9 9 5 ) ( ci t i n g American I maging Serv., I

nc. v. Eagle-Pic her Indus., Inc. ( In re Eagle-Piche r Indus., Inc.) , 963 F. 2d 855, 862- 63 (6th Cir. 1992)).Th e Oh i o S u p r e m e C o u r t h a s a d o p t e d t h e Oh i o R u l e s o f P r o f e s s i o n a l C o n d u c t , w h i c h a r e b a s e d o n t h e A BA 3 M o d el R ul es of

P rof ess i o nal C o nd uct and whi ch wi l l repl ace t he C o d e o f P rof ess i o nal R espo nsi b i l i t y ef f ect i ve Fe b ruary 1, 200 7. T he P ane l d oes not b el i eve t hat i t s anal y s i s woul d be di f f er ent un der t he provi s i ons of t he M od el Rul es , wh i ch p ro v id e in p e rtine n t p a rt:

(a) A lawy er s h al l n ot a ct a s a n a dv oca t e at a t r i al i n w h i ch t h e l aw y er i s l i k el y t o be a n ec es s ar y w i t ne ss unless o ne o r m o re o f t he f o l l o w i ng ap p l i es: ( 1) t he t es t i mo ny r el at es t o an u ncont es t ed i s s ue; (2) t he t est i m o ny rel at es t o t he nat ure and value of l e g a l se rv ic e s rende red i n t he cas e; (3) t he d i squali f

i cat i o n of t he l awyer wo ul d wo rk su b sta n tia l ha rd sh ip o n the clie n t. O h io R u le s o f P ro f’ l C o n d u c t 3 .7 (a ) (e ff e c tive F e b . 1 , 2 0 0 7 ). Pag e 5 of 6 Wher e th e r e w a s n o p r o o f in th e r e c o r d c o n c e r n in g a c tu a l d ama g e s s u f

f e r e d b y th e D e b tor s, the bankruptc y

court prope rly

declined to a

war d damag es, which c ould o nly have r esulted fr om sp e c ulatio n. As a

matte r o f l aw, Pe rr in w a s n ot e nti tle d to re c ov e r d ama g e s b e c a us e he fa ile d to prove that he was injure d by Wheeler’ s violation of the automatic stay

. The sec ond issue raised by the Debtor s is whether the bankruptc y court e rre d in permitting Wheeler to c all Debtors’ co unsel as a f act witness at trial. The short answ er is no. The re is no absolute privileg e that preve nts an attorney from beingcompelled to provide testimony in liti g ation involving a c lient. S

e e F e d

. R

. Ev id

. 6 01 (“Eve ry

person is compe tent to be a witness e x cept a s otherwise pr ovided in these rule s.”). Rathe r ce rtain information made available to the attorney by his client is privilege d and ce rtain other inf ormation g ener ated by

an attor n ey

is protected f

rom disclosure under certain circumstance s as work pr oduct. See ge nerally Fe d .R. Ev id

. 501. Fur ther, when “ a lawyer le arns or

it is obvi ous that he or a lawy er in his firm may be called as a w itness other tha n o n b e ha lf

of his c lie nt, he may

c on tin ue the re pres ent a tio n unti l it be c ome s a

pp are nt t hat hi s tes ti mo ny is or m ay be p rej ud ici al t o h is cli ent .” O hi o C od e of P rof ’l Re sp on si bi li ty

DR 5-1 02 (B)

.

3 The Pane l has revie wed the tr anscr ipt of the hear ing befor e the ba nkruptcy court. Wheele r asked the court whe ther he would be permitted to c all Adam Ba rcla y , counsel for Per

rin, to the stand. The c ourt g rante d his request. B arc lay objected that he mi g ht be asked questions about matters that

we re pr ivi le g e d. Th e ba

nk ru ptc y c ourt ins tr

uc te d B arc lay to ra ise ob

je c tio ns to s pe c if

ic qu e sti on s. Ba rcla y then aske d if he would be permitted to have co-c ounsel sit at counsel table to objec t as

nece ssary . He was told that this wa s permissible. At no point did B arc lay indicate that he felt that he would be c ompelled to withdraw from repr esentation of Perr in beca use his testimony

might bePag e 6 of 6

pr e jud ic ia l to his c lie nt. At no tim e did B arc lay or his c o- c ouns e l ob je c t on the ba sis of

pr ivi le g e to

an y o f t h e q uestions posed by Wheeler. U nder the se circ umstances, ther e wa s no err or by the ba nk ru ptc y c ourt in p e rm itt ingB arc lay

to b e c a lle d a s a

wi tne ss at tr ia l.

V. CO NC LU SION The ba nkruptcy court wa s corr ect in r efusing to a war d damag es to Per

rin when no injury

was shown or dama g es prove d. There was no e rror by the bankruptc y court in pe rmitting counse l for the De bto rs to b e c a lle d a s a

wi tne ss. Th e de c isi on

of the ba nk ru ptc y c ourt is AF F IRMED.