Source: https://lundinonchapter13.com/Content/Section/62.4
Timestamp: 2019-08-26 04:36:19
Document Index: 540010969

Matched Legal Cases: ['§ 62', '§ 62', '§ 549', '§ 6511', '§ 362', '§ 362', '§ 52', '§ 50', '§ 50', '§ 78', '§ 62', '§ 52', '§ 50', '§ 53', '§ 50', '§ 549', '§ 78', '§ 62', '§ 362', '§ 158', '§ 362', '§ 1915', '§ 1930', '§ 1915', '§ 1930', '§ 1930', '§ 1930', '§ 1930', '§ 1915', '§ 362', '§ 362', '§ 362']

§ 62.4 Motion Practice or Adversary Proceeding?
Cite as: Keith M. Lundin, Lundin On Chapter 13, § 62.4, at ¶ ____, LundinOnChapter13.com (last visited __________).
An action for sanctions to remedy a violation of the automatic stay is commenced by filing a motion. This is consistent with other procedures that relate to the automatic stay, for example, requests for relief from the stay under Bankruptcy Rule 4001. Sanctions for violation of the stay are not listed in Bankruptcy Rule 7001 as an action that must be commenced by the filing of a complaint. If the debtor includes a request for an injunction of further creditor action, Bankruptcy Rule 7001 requires a complaint. If the debtor also wants to recover money or property from a creditor, an adversary proceeding may be necessary.1
There will not always be a bright line between motion practice seeking sanctions for violating the stay and affirmative use of an avoidance or recovery power that requires filing a complaint. For example, if the debtor wants sanctions for a creditor’s refusal to return repossessed property and also wants to recover the property that was repossessed, some courts will consider delivery of the property to be a remedy for the stay violation2 (motion practice) while others will insist on an adversary proceeding for turnover.3 Voiding a transfer of property that violated the stay is a common remedy for stay violation that is not easily distinguished from the avoidance of a postpetition transfer under § 549.4 In these gray areas, the debtor avoids procedural defenses by raising the stay violation by adversary proceeding.
Another problem with motion practice to remedy a violation of the stay is that a sanctions hearing often requires more time than is readily available on the typical Chapter 13 motion docket in a bankruptcy court. Stay violations often involve consideration of the creditor’s knowledge of the bankruptcy filing, the debtor’s efforts to give notice, the creditor’s actions and even the history of the creditor’s involvement in other bankruptcy cases. A hearing on sanctions will require witnesses and other evidence. In jurisdictions where motions are grouped together on motion dockets, debtor’s counsel may have to request a special setting to ensure adequate time. This will especially be true under the more stringent hearing requirements for contempt under Bankruptcy Rule 9020.
The stakes at a hearing on sanctions for violation of the stay can be high.5 Discovery in advance of the hearing often determines the outcome. If the sanctions hearing is motion practice, counsel may need to expedite discovery by agreement or by motion to reduce the time for responding to discovery requests.
It has been held that an action for sanctions for violation of the automatic stay survives dismissal of the underlying Chapter 13 case.6
1 See, e.g., Dougherty v. IRS (In re Dougherty), 187 B.R. 883, 885 (Bankr. E.D. Pa. 1995) (IRS did not violate the automatic stay by refusing to pay refund for 1991 in a Chapter 13 case filed in 1994 where the three-year limitations period under 26 U.S.C. § 6511(a) had expired. “[T]he Debtors’ invocation of 11 U.S.C. § 362(a) [is] misplaced. . . . ‘[W]e do not believe that it is a violation of the automatic stay for a party indebted to a debtor to refuse to make payments.’ A debtor can more properly simply file an adversary proceeding to recover the sums due without invoking § 362.”). See §§ 52.1 [ Turnover of Property ] § 50.1 Turnover of Property and 53.1 [ Strong-Arm Powers, Statutory Liens, Preferences and Fraudulent Conveyances ] § 50.3 Strong-Arm Powers, Statutory Liens, Preferences and Fraudulent Conveyances.
2 See § 78.1 [ Remedies for Violation of Stay ] § 62.5 Remedies for Violation of Stay.
3 See § 52.1 [ Turnover of Property ] § 50.1 Turnover of Property. See, e.g., Spears v. Ford Motor Credit Co. (In re Spears), 223 B.R. 159 (Bankr. N.D. Ill. 1998) (Debtor must file an adversary proceeding for turnover and for sanctions where debtor alleges that creditor violated the automatic stay by refusing to turn over car it repossessed before the petition.).
4 See § 53.2 [ Postpetition Transfers ] § 50.7 Postpetition Transfers. See, e.g., Smith v. London (In re Smith), 224 B.R. 44 (Bankr. E.D. Mich. 1998) (Foreclosure sale in violation of stay is void and transfer is undone without resort to the avoidance of a postpetition transfer under § 549(c).).
5 See § 78.1 [ Remedies for Violation of Stay ] § 62.5 Remedies for Violation of Stay.
6 See TranSouth v. Sharon (In re Sharon), 234 B.R. 676 (B.A.P. 6th Cir. 1999) (Citing Javens v. City of Hazel Park (In re Javens), 107 F.3d 359 (6th Cir. 1997), dismissal of the Chapter 13 case does not abate a debtor’s action for sanctions for violation of the automatic stay under § 362(h).); Burgner v. Georgia Fed. Credit Union (In re Burgner), 218 B.R. 413 (Bankr. E.D. Tenn. 1998) (Dismissal of Chapter 13 case does not abate debtors’ action for sanctions for violation of stay against creditor that repossessed car after the petition but before dismissal.).
Ozenne v. Chase Manhattan Bank (In re Ozenne), 841 F.3d 810 (9th Cir. Nov. 9, 2016) (en banc) (Bankruptcy Appellate Panel lacked jurisdiction to consider writ of mandamus when debtor failed to timely appeal adverse decision with respect to sanctions for violation of automatic stay. This procedural default is sufficient ground to reverse BAP; not necessary to reach constitutional question addressed by BAP with respect to status of bankruptcy court and the use of All Writs Act. “[A] three-judge panel . . . held that the BAP lacked jurisdiction under the All Writs Act, because the BAP, established by the circuit judicial council pursuant to 28 U.S.C. § 158(b)(1), was not ‘established by Act of Congress.’ . . . To allow a party to seek a writ of mandamus in an appellate court in order to obtain relief from an appealable district court decision—after the time to appeal that decision has passed—would be a plain evasion of rules that are . . . mandatory and jurisdictional. . . . Ozenne will not be permitted to use mandamus to circumvent the jurisdictional requirement that he file a timely appeal. The BAP should have dismissed the petition for that reason.”).
Jahr v. Frank (In re Jahr), No. EW-11-1538-MkHJu, 2012 WL 3205417, at *4 (B.A.P. 9th Cir. Aug. 1, 2012) (unpublished) (Markell, Hollowell, Jury) (Question whether retention of repossessed property violated automatic stay turned on whether debtors had interest in car under state law; Bankruptcy Rule 7001 was implicated, and debtors' contempt motion should have been brought as an adversary proceeding. Car seller/lender disputed whether title transferred to debtors before the petition. Seller repossessed before the petition then refused to return car after petition. Debtors brought motion for contempt, and seller defended that debtors never had an interest in the car. BAP dismissed contempt motion without prejudice to the debtors' commencing an adversary proceeding seeking the same relief or alternatively seeking relief under § 362(k). "[I]t is error for a bankruptcy court to determine property interests outside of an adversary proceeding.").
In re Heghmann v. Indorf (In re Heghmann), 324 B.R. 415, 419-20 (B.A.P. 1st Cir. May 5, 2005) (In an adversary proceeding alleging violations of the automatic stay, authority to proceed in forma pauperis in 28 U.S.C. § 1915(a) allows the BAP to determine whether debtor can appeal to the United States Court of Appeals for the First Circuit without paying fees; although debtors meet the requisite showing of poverty, stay litigation is frivolous attempt to relitigate issues debtors repeatedly lost in state court proceedings with respect to an eviction. "28 U.S.C. § 1930(b), allowing the Judicial Conference of the United States to prescribe other fees in bankruptcy cases, does not contain any language removing these fees from the operation of § 1915. Most bankruptcy courts that have addressed the § 1930 issue in published opinions hold that § 1930(a) applies only to the filing of a bankruptcy petition and does not apply to fees, as set from time to time by the Judicial Conference pursuant to § 1930(b), for other proceedings in bankruptcy. . . . Because appeal fees are not explicitly excepted from waiver by § 1930, we conclude that we may consider the Debtor's § 1915 request to proceed in forma pauperis on appeal to the United States Court of Appeals for the First Circuit.").
Williams v. Levi (In re Williams), 323 B.R. 691 (B.A.P. 9th Cir. Mar. 25, 2005) (Brandt, Klein, Pappas) (Request for sanctions under § 362(h) is initiated by motion; Bankruptcy Rule 7001 requires an adversary proceeding when debtor seeks contempt.).
Portfolio Recovery Assocs., LLC v. Lopez (In re Lopez), No. 7:15-CV-526, 2016 WL 4546884 (S.D. Tex. Sept. 1, 2016) (Alvarez) (Sanctions order against Portfolio Recovery Associates for discovery problems in an adversary proceeding alleging violation of the automatic stay is not appealable and is not appropriate for interlocutory appeal.).
Diwa v. California Franchise Tax Bd. (In re Diwa), No. C 07-00569 CRB, 2007 WL 1462398, at *1 (N.D. Cal. May 18, 2007) (unpublished) (Breyer) (Request for damages in adversary proceeding against California Franchise Tax Board (FTB) is denied; FTB did not violate stay.).
Talley v. Alabama Dep't of Pub. Safety, 472 F.Supp.2d 1323 (N.D. Ala. Jan. 30, 2007) (Acker) (Adversary proceeding alleging stay violation for suspension of driver's license based upon failure to pay fines was properly dismissed.).
Alley v. Saxon Mortg. Servs., Inc. (In re Alley), No. 13-2070, 2014 WL 2987656, at *3 (Bankr. D. Me. July 1, 2014) (Cary) (Citing Bessette v. Avco Financial Services, Inc., 230 F.3d 439 (1st Cir. Dec. 15, 2000) (Torruella, Campbell, Schwarzer), action for violations of automatic stay and discharge injunction was properly brought as an adversary proceeding. "'To dismiss on procedural grounds alone would be to elevate form over substance.' . . . This is not to say that proceeding by way of Rule 9020 would be inappropriate but it is not required.").
In re Cini, No. 10-62715-11, 2012 WL 2374224, at *10 (Bankr. D. Mont. June 22, 2012) (Kirscher) (To remedy willful stay violation under § 362(k), debtor should proceed by motion rather than complaint. Parties should consider "whether the limitations imposed on attorney's fees by [Sternberg v. Johnston, 595 F.3d 937 (9th Cir. Feb. 8, 2010) (Hawkins, Berzon, Clifton),] apply.").
Bouyea v. Social Sec. Admin. (In re Bouyea), 429 B.R. 846 (Bankr. D. Md. May 18, 2010) (Mannes) (Complaint alleging stay violations by Social Security Administration (SSA) is not dismissed notwithstanding failure to properly serve SSA, Attorney General and U.S. Attorney for District—as required by Bankruptcy Rules 7004(b)(5) and 2002(j)(4)—when SSA had not filed statement designating its mailing address for notices pursuant to Bankruptcy Rule 5003(e).).
In re Lukach, No. 805-89014-478, 2007 WL 1365436 (Bankr. E.D.N.Y. May 8, 2007) (unpublished) (Eisenberg) (Motion for sanctions is granted, with compensatory and punitive damages awarded for bank's stay violation.).
Hodge v. Money Shop, LLC (In re Hodge), 367 B.R. 843 (Bankr. M.D. Ala. May 7, 2007) (Williams) (Adversary proceeding for willful stay violation and damages is granted.).
Jones v. Wells Fargo Home Mortgage (In re Jones), 366 B.R. 584 (Bankr. E.D. La. Apr. 13, 2007) (Magner) (On debtor's complaint, Wells Fargo violated § 362(a)(3) and (6).), aff'd in part and remanded on other grounds, 391 B.R. 577 (E.D. La. July 1, 2008) (Berrigan), on remand, 418 B.R. 687 (Bankr. E.D. La. Oct. 1, 2009) (Magner), aff'd, No. CIV. 07-3599, 2010 WL 3398849 (E.D. La. Aug. 24, 2010) (Lemelle), remanded, 439 Fed. Appx. 330 (5th Cir. Aug. 24, 2011) (unpublished) (Higginbotham, Smith, Haynes), on remand, No. 06-1093, 2012 WL 1155715 (Bankr. E.D. La. Apr. 5, 2012) (Magner).).
In re Hildreth, 362 B.R. 523 (Bankr. M.D. Ala. Feb. 9, 2007) (Sawyer) (Agreeing with In re Timbs, 178 B.R. 989, 994 (Bankr. E.D. Tenn. 1994), debtors properly proceeded by motion rather than adversary proceeding for "sanctions" and "damages" based on 60 phone calls and three letters threatening foreclosure.).
In re Reed, Nos. 04-13062, 06-01161, 2007 WL 274322 (Bankr. S.D. Ala. Jan. 26, 2007) (unpublished) (Complaint for willful stay violation.).
In re Davidson, No. 4:06-ap-00072-JMM, 2007 WL 215664 (Bankr. D. Ariz. Jan. 25, 2007) (unpublished) (Marlar) (Complaint for willful violations of stay dismissed.).
In re Hamby, 360 B.R. 657 (Bankr. E.D. Tenn. Jan. 17, 2007) (Stair) (Motion for damages and contempt for alleged stay violation.).
Dean v. Global Fin. Credit, LLC (In re Dean), 359 B.R. 218 (Bankr. C.D. Ill. Dec. 28, 2006) (Altenberger) (Debtors' complaint alleged damages for stay violation and defendant's motion to dismiss alleged such relief was not covered by Rule 7001. An adversary proceeding provided more procedural protection than a motion. It was harmless error if the pleading should have been by motion. Moreover, since complaint sought monetary damages, there is authority that adversary proceeding is appropriate, if not essential, procedure, citing In re Rimsat, Ltd., 208 B.R. 910, 913 (Bankr. N.D. Ind. 1997).).
In re Hildreth, 357 B.R. 650 (Bankr. M.D. Ala. Dec. 14, 2006) (Sawyer) (Motion for enforcement of automatic stay and damages for breach of stay was appropriate procedure.).
In re Butts, No. 05-10104ELF, 2006 WL 2597838, at *7 (Bankr. E.D. Pa. Sept. 12, 2006) (unpublished) (Motion for turnover that included request for sanctions and resulted in a finding of contempt for violation of the automatic stay was properly served on NTL, a corporation, by first-class mail delivery to the manager of the Delaware office of that corporation. Under Bankruptcy Rule 7004(b)(3) a "managing or general agent" includes an individual "responsible . . . in charge of any substantial phase of the corporation's operations."). See also In re Butts, 350 B.R. 12 (Bankr. E.D. Pa. 2006).).
Torres Lopez v. Consejo De Titulares Del Condominio Carolina Court Apts. (In re Torres Lopez), No. 03-00093, 2006 WL 3898307 (Bankr. D.P.R. May 15, 2006) (unpublished) (Carlo-Altieri) (Court implicitly agreed that adversary proceeding was appropriate method for seeking damages when debtor alleged willful stay violations.).
Prado v. Cash Am. Advance, Inc. (In re Prado), 340 B.R. 574 (Bankr. S.D. Tex. Mar. 31, 2006) (Isgur) (Complaint alleged stay violation by pawnbroker.), aff'd No. 05-7028-M, 2008 WL 4449947 (S.D. Tex. Sept. 29, 2008) (Crane).).
Han v. GE Capital Small Bus. Fin. Corp. (In re Han), 333 B.R. 881 (Bankr. N.D. Fla. Sept. 26, 2005) (Mahoney) (Pro se adversary proceeding was willful violation of automatic stay.).