Opinion ID: 781254
Heading Depth: 4
Heading Rank: 3

Heading: The Compensatory Sanctions

Text: 83 Having rejected the Trustee's contention that the entire award can be upheld as punitive sanctions under a criminal contempt authority, we go on to consider the extent to which the sanction award can be sustained as compensatory damages under the civil contempt authority. The bankruptcy court clearly erred in concluding that the Trustee could recover, as compensatory damages, all of the attorneys' fees from the underlying litigation. Some award of attorneys' fees to the Trustee may, however, be appropriate. We emphasize that attorneys' fees are an appropriate component of a civil contempt award. See, e.g., Walls, 276 F.3d at 507. 84 Mr. Lindblade initially took the position that his post-petition recordation was voidable, rather than void. The Trustee was therefore justified in seeking a declaration voiding the recordation. Reasonable attorneys' fees incurred in the process of voiding the violation of the automatic stay were properly awarded as compensatory damages for the violation. 85 A substantial portion of the underlying proceedings, however, was dedicated to determining whether Mr. Lindblade's deed, though unrecorded, was nonetheless enforceable against the Trustee. Mr. Lindblade was entitled to press those claims regardless of the validity of the post-petition recordation. Indeed, the bankruptcy court agreed with Mr. Lindblade that the unrecorded deed, if valid, was enforceable. 86 Another substantial part of the proceedings was devoted to the Trustee's contention that the deed of trust was not secured by a loan, but rather by a gift, in which case the unrecorded deed was a nullity. As that claim is not connected to the recordation issue (and as we have concluded that Mr. Lindblade was correct in that regard as well), sanctions for pressing that claim are not appropriate. 19 87 None of the attorneys' fees incurred by the Trustee in defending against Mr. Lindblade's claim that the unrecorded deed of trust was enforceable, nor any fees relating to the gift/ loan issue, can be sustained as damages flowing from the stay violation. We therefore remand for a determination of the Trustee's actual damages flowing from the automatic stay violation alone. 88