Court Opinion

ID: 9686365
Source: CourtListenerOpinion
Date Created: 2023-08-24 15:44:57.194208+00
Date Added: 2024-06-11T18:18:18.461212
License: Public Domain

JONES, Bankruptcy Judge,
dissenting:
I agree with the majority’s conclusion that Gordon did not violate the automatic stay by participating in the motion for summary judgment. However, I disagree with the majority’s conclusion that the motion for costs which was included in the motion for summary judgment was also not a violation.
The majority concludes that the state court award of costs to all the defendants merely granted Gordon an “interest” in the total costs to be awarded. Therefore, Gordon did not violate the stay because he did not take any further, affirmative action to enforce that interest.
In my opinion, at the moment the bankruptcy petition was filed, any further action on a pending motion for pre-petition costs constituted a violation of the stay. The subsequent hearing on the motion and award of fees was a violation of the stay. See 11 U.S.C. § 362(a)(1).
*339In order for a bankruptcy judge to award costs and fees, however, the violation must be “willful.” 11 U.S.C. § 362(h). The Ninth Circuit has adopted a broad definition of willful, holding that a creditor acts willfully if it knows that a petition has been filed and the act which violates the stay is intentional. Johnston Environmental Corp. v. Knight (In re Goodman), 991 F.2d 613, 618 (9th Cir. 1993). “This standard encourages would-be violators to obtain declaratory judgments before seeking to vindicate their interests in violation of an automatic stay, and thereby protects debtors’ estates from incurring potentially unnecessary legal expenses in prosecuting stay violations.” Crysen/Montenay Energy Co. v. Esselen Assoc. (In re Crysen/Montenay Energy Co.), 902 F.2d 1098, 1105 (2d Cir.1990).
The safe course of action for Gordon and the other defendants would have been to obtain relief from the stay from the bankruptcy court before continuing with their motion for summary judgment. But they chose not to. Even though Gordon may have believed in good faith that seeking an award of costs was not a violation of the stay, a broad application of In re Goodman dictates that it is.
In addition, Gordon was given several opportunities by the bankruptcy court to enter into a stipulation which would vacate the state court judgment, then allow the stay to be lifted for the state court proceeding to continue. Gordon refused. The bankruptcy court held this to be a willful violation of the stay. See, e.g., In re Miller, 10 B.R. 778 (Bankr.D.Md.1981), aff'd, 22 B.R. 479 (D.C.Md.1982) (while repossession of debtor’s automobile in ignorance of the automatic stay is not willful violation of the stay, refusal to return the automobile upon notification of the bankruptcy is).
Although Gordon did voluntarily file a “Remission of Costs” with the state court which disclaimed any interest in the fees, the trustee had already expended estate funds in filing a complaint in the bankruptcy court against Gordon and the other defendants for willful violation of the stay. See, e.g., In re Crysen/Montenay Energy Co., 902 F.2d at 1105.
For the above reasons, I would affirm the bankruptcy court’s finding that Gordon willfully violated the stay. However, since Gordon individually was not responsible for all of the trustee’s costs, I would remand for a recalculation of the trustee’s costs directly attributable to Gordon’s willful violation of the stay.