Source: https://lundinonchapter13.com/Content/Section/62.3
Timestamp: 2019-12-10 01:55:03
Document Index: 639464135

Matched Legal Cases: ['§ 62', '§ 62', '§ 362', '§ 362', '§ 362', '§ 362', '§ 78', '§ 62', '§ 362', '§ 362', '§ 362', '§ 362', '§ 105', '§ 105', '§ 362', '§ 362', '§ 362', '§ 106', '§ 362']

§ 62.3 Sanctions or Contempt?
Cite as: Keith M. Lundin, Lundin On Chapter 13, § 62.3, at ¶ ____, LundinOnChapter13.com (last visited __________).
The Code, Rules and case law are not clear whether the proper remedy for violation of the stay is sanctions, contempt or both. If the debtor has been injured by a willful violation of the stay, 11 U.S.C. § 362(h) provides a statutory remedy that includes actual damages, costs, attorneys’ fees and punitive damages “in appropriate circumstances.”1 The cases finding a creditor in willful violation of the stay sometimes speak in terms of contempt.2 In other cases, the violator is sanctioned without mention of contempt and ordered to undo the action taken in violation of the stay or ordered to compensate the debtor.3
Debtor’s counsel can plead both contempt and sanctions when attacking a violation of the stay, but it is not obvious that adding contempt gets the debtor anything useful. The statutory remedies in § 362(h) are broad, and contempt carries some distracting baggage. The burden of proof with respect to contempt may be more onerous than in an action under § 362(h).4 The 1984 amendments to the Code may have impaired the contempt authority of the bankruptcy courts.5 When contempt is sought, Bankruptcy Rule 9020 will control. Notice that contempt is alleged and the effects of contempt orders are technical matters described with unusual precision in Bankruptcy Rule 9020. A motion for sanctions under § 362(h) is not so carefully circumscribed by the Rules. Adding contempt to a request for sanctions for violating the stay can be an invitation to technical defenses based on strict application of Bankruptcy Rule 9020.
1 See § 78.1 [ Remedies for Violation of Stay ] § 62.5 Remedies for Violation of Stay.
2 See, e.g., In re Seal, 192 B.R. 442 (Bankr. W.D. Mich. 1996) (Car lender intentionally violated the automatic stay, maliciously harassed the debtors and was in contempt of court orders to provide the debtors with a car title noting the creditor’s first lien. Stay violations included contacting the debtors after the petition, demanding payment, standing in front of the debtor’s car in the parking lot after a bankruptcy court hearing and intimidating the debtors over the phone.); In re Harrison, 185 B.R. 607 (Bankr. D. Kan. 1995) (Collection agency that violated the automatic stay by bringing suit in state court after notice of the Chapter 13 filing is subject to sanctions for civil contempt and should pay a $150 fine to the debtor, not to the court.); Hubbard v. Fleet Mortgage Co. (In re Hubbard), 70 B.R. 122 (Bankr. E.D. Ark. 1985), aff’d, 810 F.2d 778 (8th Cir. 1987); In re Shafer, 63 B.R. 194 (Bankr. D. Kan. 1986).
3 See, e.g., Flynn v. IRS (In re Flynn), 169 B.R. 1007 (Bankr. S.D. Ga. 1994) (Section 362(h) “creates independent federal bankruptcy cause of action which is based exclusively upon a violation of the automatic stay.”); Walker v. California Mortgage Servs. (In re Walker), 67 B.R. 811 (Bankr. C.D. Cal. 1986); In re Hebert, 61 B.R. 44 (Bankr. W.D. La. 1986); LaTempa v. Long, 58 B.R. 538 (Bankr. W.D. Va. 1986); Virginia Union Univ. v. Parham, 56 B.R. 531 (Bankr. E.D. Va. 1986); In re Sumrall, 56 B.R. 134 (Bankr. M.D. Fla. 1985); In re Rio, 55 B.R. 814 (Bankr. M.D. Ala. 1985).
4 See Ford Motor Credit Co. v. Florio (In re Florio), 229 B.R. 606, 607–08 (S.D.N.Y. 1999) (The burden of proof for contempt for violation of the stay may be different than the burden of proof under § 362(h) for sanctions for violation of the stay: “It is well established that the ‘clear and convincing’ standard applies only when there is an adjudication of contempt for the violation of an automatic stay; if that is not the case, the ‘clear and convincing’ standard of proof does not apply. . . . In this case, the Bankruptcy Court awarded only actual damages and attorneys’ fees; no finding of contempt was either sought or imposed. Accordingly, the ‘clear and convincing’ standard of proof does not apply and the Bankruptcy Court needed only to find a willful violation of the automatic stay in order to impose sanctions under 11 U.S.C. § 362(h). . . . ‘[I]f a party charged with violating the stay knows that the stay is in effect, any deliberate act taken in violation of the stay justifies an award of actual damages.’”).
5 See, e.g., In re Sequoia Auto Brokers, Ltd., Inc., 827 F.2d 1281 (9th Cir. 1987).
Williams v. Levi (In re Williams), 323 B.R. 691, 702 (B.A.P. 9th Cir. Mar. 25, 2005) (Brandt, Klein, Pappas) (A request for monetary sanctions under § 362(h) is initiated by motion not by adversary proceeding; in contrast, "Rule 7001 requires an adversary proceeding when a debtor is seeking a finding of contempt.").
In re Jester, No. 06-02126, 2007 WL 781900 (E.D. Pa. Mar. 8, 2007) (unpublished) (Golden) (On motion for contempt of automatic stay, Philadelphia Parking Authority's postpetition impounding and sale of debtor's car was willful stay violation.).
Leverette v. Community Bank (In re Leverette), No. 12-05005-KMS, 2013 WL 5350902 (Bankr. S.D. Miss. Sept. 25, 2013) (Samson) (Punitive damages not available in civil contempt action for stay violation; punitive damages are available in action under § 362(k).).
In re Ochoa, No. 10-55950 CN, 2010 WL 3909496, at *3 (Bankr. N.D. Cal. Oct. 1, 2010) (Novack) (Civil contempt under § 105 was appropriate sanction for creditor that refused to turn over car repossessed before the petition. Repossessing creditor willfully violated automatic stay. Remedy "must be designed to compensate for damages flowing from the contempt or to coerce compliance with the order that was violated." Because creditor had already sold vehicle, it could not be returned, but award of attorney fees and costs was appropriate.).
Jones v. Wells Fargo Home Mortgage (In re Jones), No. 06-01093, 2007 WL 2480494, at *3 (Bankr. E.D. La. Aug. 29, 2007) (unpublished) (Magner) (For violations of automatic stay by Wells Fargo Home Mortgage—see 366 B.R. 584 (Bankr. E.D. La. 2007)—court may order sanctions for civil contempt under § 105(a) and for damages under § 362(k). "The purpose of civil sanctions, whether monetary or nonmonetary, is to prevent an abuse of the bankruptcy process. Sanctions may include the imposition of a monetary fine, reimbursement of fees and costs to debtors' counsel, punitive damages, and other relief as the court may direct in order to enforce its orders. Nevertheless, sanctions are not designed to compensate aggrieved parties for damages sustained as a result of wrongful conduct.").
Dean v. Global Fin. Credit, LLC (In re Dean), 359 B.R. 218 (Bankr. C.D. Ill. Dec. 28, 2006) (Altenberger) (Debtors' complaint for civil contempt damages arose under § 362(h); debtors were included under § 362(h)'s private right of action for damages when they were seeking recovery on estate's behalf.).
In re Omine, 329 B.R. 343, 348 (Bankr. M.D. Fla. Aug. 26, 2005) (Limitations on a monetary recovery under § 106(a)(3) found in the Equal Access to Justice Act are not applicable to limit attorney's fees awarded as sanctions against the Florida Department of Revenue for its violation of the automatic stay because the DOR consented to the court's jurisdiction by filing its proof of claim. The EAJA addresses limitations on judgments for costs and attorney's fees awarded to a prevailing party in any civil action brought by or against the United States. Section 106(a)(3) of the Bankruptcy Code extends this limitation to "any governmental unit." Such limit, however, is found only in a section of the statute which the Eleventh Circuit has declared to be unconstitutional. The Florida DOR, by filing a claim, consented to the jurisdiction of the court and, consequently, "the award of any fees, costs, or damages against them similarly are determined by the same rules that apply to other litigants. The limitations imposed by the EAJA simply do not apply. The provisions of the EAJA . . . apply only in circumstances of forced abrogation of sovereign immunity protection. They do not apply when the state agency consents to this Court's jurisdiction.").
Hampton v. Yam's Choice Plus Autos, Inc. (In re Hampton), 319 B.R. 163, 165 n.1 (Bankr. E.D. Ark. Jan. 10, 2005) (Evans) (Although styled as a motion for contempt, debtor's adversary proceeding seeking compensatory and punitive damages for violation of the automatic stay "is actually for damages rather than contempt because a statute has been violated rather than a court order.").
In re Bivens, 324 B.R. 39, 42 (Bankr. N.D. Ohio Aug. 18, 2004) (Speer) (Section 362(h) "was added to the Bankruptcy Code in 1984, and was intended to supplement the only previously available remedy for a stay violation: Contempt. Based, therefore, upon § 362(h)'s supplementation for the remedy of contempt, this provision will be applied, unless the context clearly requires otherwise, to actions in which damages are sought for a stay violation.").