Source: http://www2.kyeb.uscourts.gov/opin/howopin/M362HDAM.OPI.html
Timestamp: 2019-04-21 16:07:58
Document Index: 32766098

Matched Legal Cases: ['§1334', '§157', '§362', '§362', '§362', '§362', '§362', '§362', '§362', '§362', '§101', '§109', '§362', '§362', '§362', '§362', '§362', '§362', '§105']

This matter is before the Court on Motions for Partial Summary Judgment filed herein by defendant Acceleration National Insurance Company ("Acceleration") and the Response filed by the plaintiff. Acceleration's Motions are in regard to Counts VI, VII, and XII of the plaintiff's Complaint. This Court has jurisdiction of this matter pursuant to 28 U.S.C. §1334(b); it is a core proceeding pursuant to 28 U.S.C. §157(b)(2)(E)(F) and (H).
Acceleration filed its Motions for Partial Summary Judgment on April 15, 1994. The plaintiff filed its Response on April 26, 1994. The Motions in regard to Counts VI and XII allege that Acceleration is entitled to judgment as a matter of law because the plaintiff asks for damages for willful violation of the automatic stay in those Counts, and 11 U.S.C. §362(h) does not provide for damages to a corporate debtor. The plaintiff contends that the term "individual" in §362(h) includes corporations.
The circuits appear to be evenly divided on the issue of whether a corporate debtor may seek and recover damages pursuant to 11 U.S.C. §362(h). That provision states:
...§362(h) must be read in conjunction with the rest of §362 and ... its sanctions are not limited to the relief of an 'individual' in the literal sense. The Bankruptcy Code does not define the word individual. We agree that it seems unlikely that Congress meant to give a remedy only to individual debtors against those who willfully violate the automatic stay provisions of the Code as opposed to debtors which are corporations or other like entities. Such a narrow construction of the term would defeat much of the purpose of the section, and we construe the word 'individual' to include a corporate debtor.
At page 292. In In re Atlantic Business and Community Corp., 901 F.2d 325, 329 (3rd Cir. 1990), the court cited Better Homes of Virginia in stating that §362(h) "has uniformly been held to be applicable to a corporate debtor." This is obviously something of an overstatement.
The Second and Ninth Circuits have come to a different conclusion concerning the application of §362(h) to a corporate debtor. Both of the cases originating in these Circuits refer to the Supreme Court's decision in United States v. Ron Pair Enterprises, Inc., 109 S.Ct. 1026, 1031 (1989), wherein the Court held that "[t]he plain meaning of legislation should be conclusive, except in the 'rare cases [in which] the literal application of a statute will produce a result demonstrably at odds with the intention of the drafters."
In re Chateaugay Corp., 920 F.2d 183 (2nd Cir. 1990) hold that corporate entities cannot recover compensatory damages for a creditor's willful violation of the automatic stay and that §362(h) applies only to natural persons. Both cases cite Ron Pair, as stated above, and then go on to analyze why Code language requires that conclusion.
Although the code does not define 'individual,' it does define 'person' in §101(35) to include 'individual, partnership, and corporation...' Throughout the code, rights and duties are allocated in some instances to 'individuals' and in others to 'persons.' Section 109, 'Who may be a debtor,' uses 'person' in certain situations and 'individual' in others. Chapter 13 of the code is available only to an 'individual with regular income...or an individual with regular income and such individual's spouse...' 11 U.S.C. §109(e) The text of other code provisions demonstrates that Congress used the word 'individual' rather than 'person' to mean a natural person.
...a reading of §362(h) in conformity with its plain meaning is not illogical, or inconsistent either with the automatic stay provisions of §362(a) or with the rest of the code. ... Congress may well have thought that individual debtors were particularly vulnerable to violations of the stay by debt-collection agencies and others who may be tempted to believe that individuals are less likely than corporations to be aware of their rights under the automatic stay. Congress may have concluded that this consideration, ..., warranted an explicit code provision to punish stay violations and compensate debtors, in addition to civil contempt, when the debtors are individuals.
We conclude that the Second Circuit's determination in Chateaugay is correct: 'individual' means individual, and not a corporation or other artificial entity. The Fourth and Third Circuit's analysis is inconsistent with the principles of statutory construction set forth by the Supreme Court in Ron Pair. ... As pointed out in Chateaugay, Congress enacted §362(h) as one of several 'Consumer Credit Amendments,' apparently meant to protect natural, or individual, debtors.
The Second and Ninth Circuits took into account the circumstances of the enactment of §362(h), as well as the Supreme Court's decision in Ron Pair. They also performed more searching analyses of Code language than the other courts in coming to their conclusions. This Court concludes that these decisions are the better reasoned of those under consideration. It is therefore the opinion of this Court that the plaintiff may not recover damages pursuant to §362(h), and that Acceleration is entitled to judgment as a matter of law on Counts VI and XII of the Complaint.
The plaintiff has alleged in its Response that even if the Court should rule that it may not recover damages pursuant to §362(h), it should be able to recover them under the theory of ordinary civil contempt under 11 U.S.C. §105. It is the opinion of this Court that such action would not be appropriate in this matter under the circumstances.