Opinion ID: 705215
Heading Depth: 3
Heading Rank: 1

Heading: Willful Violation of Stay

Text: 16 The Appellants first contend that they should not be required to pay any, or at least, not all of the attorney's fees imposed by the bankruptcy court, because they did not willfully violate the automatic stay, and not to the extent found by the bankruptcy court. 7 The Appellants contend that the bankruptcy court based its imposition of costs and attorney's fees on three stay violations: the March 8, 1991 motion to release settlement proceeds, the December 6, 1991 motion to allocate recovery, and the Appellants' defense against the adversary complaint filed by Taxel. The Appellants argue, however, that they cannot fairly be charged with any wrongdoing as to the third matter because they were only defending themselves in a proceeding they did not initiate. 17 An individual injured by any willful violation of a stay provided by this section shall recover actual damages, including costs and attorney's fees, and, in appropriate circumstances, may recover punitive damages. 11 U.S.C. Sec. 362(h). 18 A willful violation does not require a specific intent to violate the automatic stay. Rather, the statute provides for damages upon a finding that the defendant knew of the automatic stay and that the defendant's actions which violated the stay were intentional. Whether the party believes in good faith that it had a right to the property is not relevant to whether the act was willful or whether compensation must be awarded. 19 Pinkstaff v. United States (In re Pinkstaff), 974 F.2d 113, 115 (9th Cir.1992) (quoting Goichman v. Bloom (In re Bloom), 875 F.2d 224, 227 (9th Cir.1989)). 20 The Appellants concede that they violated the automatic stay with respect to their March 8, 1991 motion to the Alaska state court, and they do not challenge the bankruptcy court's finding that their December 6, 1991 motion to the same court also constituted a violation of the automatic stay. With respect to their third contention, neither the bankruptcy court nor the BAP held that the Appellants violated the automatic stay by defending themselves in the adversary proceeding; rather, both courts declared that the Appellants should be held responsible for Taxel's costs and fees incurred in prosecuting the adversary proceeding, because it was the Appellants' conduct throughout this case, in both state and federal court, that necessitated Taxel's filing and prosecution of the adversary proceeding. In re Pace, 159 B.R. at 902. See also In re Bloom, 875 F.2d at 227 (approving an award of fees that included the cost of prosecuting the action for damages stemming from violation of the automatic stay). 21 The BAP held, and the materials provided show that 22 [the Appellants'] conduct involved: 23
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25 3. Preventing the substitution of the LeMai trustee into the state lawsuit when the trustee [was] a legitimate party in interest; 26 4. Misleading the state court as to bankruptcy law; 27 5. Refusing to relinquish proceeds to the LeMai trustee; 28 6. Attempting to take proceeds in contravention of the settlement agreement in violation of the automatic stay; 29 7. Attempting to circumvent the jurisdiction of the bankruptcy court by means of a motion to allocate recovery; 30 8. Harassing the trustee's counsel with threats of sanctions and disbarment. 31 Id. at 898. 32 In light of the above, the bankruptcy court did not err by finding that the Appellants had willfully violated the automatic stay. 33