Opinion ID: 201293
Heading Depth: 3
Heading Rank: 1

Heading: Willfulness of the Sevignys' Violation

Text: 35 McMullen next contends that the bankruptcy court erred in holding that the Sevignys' state superior court complaint against McMullen was merely a technical violation of the automatic stay, rather than a willful violation compensable under Bankruptcy Code § 362(h). Once again we must disagree. 36 Under Bankruptcy Code § 362(h), a violation of the automatic stay must be willful or the violator cannot be held liable for damages. Bankruptcy Code § 362(h); 11 U.S.C. § 362(h). Generally speaking, a violation will be found willful if the creditor's conduct was intentional (as distinguished from inadvertent), and committed with knowledge of the pendency of the bankruptcy case. See Fleet Mortgage Group, Inc. v. Kaneb, 196 F.3d 265, 268-69 (1st Cir.1999). Absent such knowledge on the part of a creditor, however, the violation is merely technical, and no damages are to be awarded. See In re Will, 303 B.R. 357, 364 (Bankr.N.D.Ill.2003) (noting that no damages could be awarded under subsection 362(h) where creditor had not been listed, and hence had received no notice of the bankruptcy case and resultant automatic stay); Shadduck v. Rodolakis, 221 B.R. 573, 585 (Bankr.D.Mass. 1998) (noting that no damages are allowable for technical violation, even where debtor nonetheless incurred attorney fees as result of violation). Normally, however, a creditor that commits a technical violation of the automatic stay, due to lack of notice, has an affirmative duty to remedy the violation as soon as practicable after acquiring actual notice of the stay. See Will, 303 B.R. at 364. 37 The determination as to whether a violation of the automatic stay was willful, as defined in subsection 362(h), poses a factual issue, which we review only for clear error. See In re Campion, 294 B.R. 313, 315 (BAP 9th Cir.2003). As previously stated, in relation to the McMullen allegation of bad faith under subsection 362(b)(4), see supra Section II.A, the bankruptcy court credited the Sevignys' testimony that they did not have notice that the McMullen bankruptcy proceeding remained pending at the time their superior court action to recover their deposit was filed. As soon as McMullen informed them of the automatic stay, the Sevignys promptly dismissed their superior court action. At most, McMullen catalogs tidbits of record evidence which might have persuaded the factfinder to reach a contrary conclusion, 6 but in no event could such evidence compel a finding in McMullen's favor. Thus, the bankruptcy court finding that the Sevignys' violation of the automatic stay was not willful is amply supported by the record, hence cannot constitute clear error. See Campion, 294 B.R. at 315.