Court Opinion

ID: 4696201
Source: CourtListenerOpinion
Date Created: 2021-06-16 20:00:55.410802+00
Date Added: 2024-06-11T08:05:39.171313
License: Public Domain

By order of the Bankruptcy Appellate Panel, the precedential effect
                       of this decision is limited to the case and parties pursuant to
                   6th Cir. BAP LBR 8024-1(b). See also 6th Cir. BAP LBR 8014-1(c).
                                        File Name: 21b0004n.06

                     BANKRUPTCY APPELLATE PANEL
                                    OF THE SIXTH CIRCUIT

 IN RE: BENNY DARNELL MCCARTHY,                              ┐
                                      Debtor.                │
 ___________________________________________                 │
                                                             │
 BENNY DARNELL MCCARTHY,                                      >        No. 20-8027
                                    Appellant,               │
                                                             │
                                                             │
        v.                                                   │
                                                             │
 ATLANTA POSTAL CREDIT UNION,                                │
                                               Appellee.     │
                                                             │
                                                             ┘

                     On Appeal from the United States Bankruptcy Court
                      for the Western District of Tennessee at Memphis.
                         No. 2:15-bk-29883—Jennie D. Latta, Judge.

                                Decided and Filed: June 16, 2021

       Before: DALES, GUSTAFSON, and WISE, Bankruptcy Appellate Panel Judges.

                                       _________________

                                             COUNSEL

ON BRIEF: Steven N. Douglass, HARRIS SHELTON HANOVER WALSH, PLLC, Memphis,
Tennessee, for Appellee. Benny D. McCarthy, Memphis, Tennessee, pro se.
                                       _________________

                                             OPINION
                                       _________________

       JOHN P. GUSTAFSON, Bankruptcy Appellate Panel Judge. Unrepresented Debtor-
Appellant Benny Darnell McCarthy (“the Debtor”) appeals the bankruptcy court’s order granting
his motion for sanctions against Creditor-Appellee Atlanta Postal Credit Union (“the Credit
 No. 20-8027                               In re McCarthy                                Page 2

Union”) for violation of the automatic stay. The Debtor asserts that the bankruptcy court erred
by awarding him inadequate damages. In response, the Credit Union moves to dismiss the
appeal based upon the “acceptance of benefits” doctrine and mootness. For the reasons set forth
below, we deny the Credit Union’s motion to dismiss and affirm the order of the bankruptcy
court.

                                      ISSUE ON APPEAL

         The issue properly presented in this appeal is whether the bankruptcy court erred by
failing to award “substantial punitive damages.”

                      JURISDICTION AND STANDARD OF REVIEW

         The Bankruptcy Appellate Panel of the Sixth Circuit has jurisdiction to decide this
appeal. The United States District Court for the Western District of Tennessee has authorized
appeals to the Panel and no party has timely elected to have this appeal heard by the district
court. 28 U.S.C. §158(b)(6), (c)(1)

         A party may bring an appeal as of right under 28 U.S.C. §158(a)(1) from final judgments,
orders, and decrees of the bankruptcy court. “Orders in bankruptcy cases qualify as ‘final’ when
they definitively dispose of discrete disputes within the overarching bankruptcy case.” Ritzen
Grp., Inc. v. Jackson Masonry, LLC, 589 U.S. ___, ____, 140 S. Ct. 582, 586 (2020). “An order
sanctioning a party and imposing a sum certain amount in damages is a final order.” In re
Jackson, 554 B.R. 156, 159 (B.A.P. 6th Cir. 2016).

         “A bankruptcy court’s decision to sanction is reviewed for an abuse of discretion.” Id.
“Sanctions premised upon an erroneous view of the law or an erroneous assessment of the
evidence are necessarily an abuse of discretion.” Id. (quotation and internal quotation marks
omitted).

                                             FACTS

         On or about October 14, 2010, the Debtor obtained a loan from the Credit Union to
finance the purchase of the Debtor’s 2007 Chevrolet Corvette. The Debtor granted the Credit
Union a security interest in the vehicle. To evidence its security interest in the vehicle, the
 No. 20-8027                                In re McCarthy                                 Page 3

Credit Union was listed as the holder of the “1st Lien or Security Interest” on the Certificate of
Title issued by the Georgia Department of Revenue.

         The Debtor subsequently moved from Georgia to Tennessee. After moving to Tennessee,
the Debtor initiated the process of transferring the vehicle’s Certificate of Title from Georgia to
Tennessee. The Credit Union received a letter requesting the vehicle’s Certificate of Title from
the State of Tennessee Department of Revenue. This letter was dated November 2, 2012. The
Credit Union did not act upon the 2012 letter sent by the State of Tennessee Department of
Revenue.

         On or about October 16, 2015, the Debtor filed his voluntary petition for relief under
Chapter 13. The Credit Union participated in the bankruptcy case by filing a timely proof of
claim.

         In May 2016, the Debtor filed a formal complaint with the Georgia Department of
Banking & Finance based upon the Credit Union’s failure to transfer the vehicle’s Certificate of
Title. This complaint was filed in response to the Credit Union’s failure to act upon the letter
sent by the State of Tennessee Department of Revenue in 2012.

         In response, the Credit Union’s counsel sent email correspondence to Debtor’s counsel
falsely stating that the Credit Union had not received any letters from the State of Tennessee
requesting the vehicle’s Certificate of Title.

         Subsequently, the Credit Union received a second letter requesting the vehicle’s
Certificate of Title, this time from the Shelby County Clerk’s Office in Memphis, Tennessee.
This letter was dated January 21, 2017. The Credit Union did not act upon the 2017 letter sent
by the Shelby County Clerk’s Office.

         On April 27, 2020, the Debtor filed a pro se motion for sanctions against the Credit
Union for violation of the automatic stay. Three weeks later, the Credit Union filed a response
denying the sole allegation in the Debtor’s motion, that the Credit Union refused the Debtor’s
requests to transfer the Certificate of Title to his vehicle from Georgia to Tennessee.
 No. 20-8027                                In re McCarthy                                 Page 4

       On August 17, 2020, the Credit Union supplemented its response, providing material
facts the Credit Union learned after filing its initial response to the Debtor’s motion. The Credit
Union informed the bankruptcy court that due to the Credit Union’s transition to a paperless
record-keeping process, the Credit Union had not identified the 2012 letter from the Tennessee
Department of Revenue or the 2017 letter from the Shelby County Clerk’s Office. These letters
had provided the Credit Union with directions as to how the title could be transferred subject to
the Credit Union’s lien, and had directed the Credit Union to send the Georgia title to the
Tennessee clerk’s office in order for the clerk to send back a newly-issued Tennessee Certificate
of Title listing the Credit Union’s lien.

       Although the record is not clear on the date, at some point after the Debtor filed his pro se
motion for sanctions the Debtor’s counsel stepped in and ultimately participated in the litigation
of the Debtor’s motion.

       On August 18, 2020, a hearing was held on the motion for sanctions, the Credit Union’s
response, and its supplemental response. The bankruptcy court announced its oral ruling at the
end of the hearing, sanctioning the Credit Union. The bankruptcy court tasked the Debtor’s
counsel with drafting the order.

       On August 26, 2020, the bankruptcy court entered its written order. The order provided:

       IT IS THEREFORE ORDERED,

       1. That Atlanta Postal Credit Union shall forward the lien free title to the 2007
          Chevrolet Corvette such that it is received by Debtor’s counsel within seven
          days of the entry of this order;
       2. That Debtor is hereby granted damages for violation of the automatic stay by
          Atlanta Postal Credit Union in the amount of $25,000.00; and
       3. That Atlanta Postal Credit Union shall forward certified funds made payable
          to Debtor in payment of said damages in the amount of $25,000.00 such that
          said funds are received by Debtor’s counsel within seven days of the entry of
          this order.

(Order Granting Mot. Sanctions Against Credit Union (“Order”) at 1-2, Aug. 26, 2020, 2:15-bk-
29883, ECF No. 61.)
 No. 20-8027                                    In re McCarthy                                        Page 5

          The Credit Union complied with the directives set forth in the Order. On August 20,
2020, after the oral ruling but before the entry of the Order, the Credit Union issued Check No.
78174 in the amount of $25,000.00 (“Check”) made payable to the Debtor.

          On September 3, 2020, the Debtor timely filed his pro se notice of appeal and statement
of election.

          On that same day, the Credit Union hand delivered the Check to Debtor’s counsel along
with the lien-free Certificate of Title to the vehicle. The phrase “Please Negotiate Promptly” was
noted on the Check. (Kelly Aff., Ex. 1, Dec. 7, 2020, Case No. 20-8027, ECF No. 13-2.) On
September 9, 2020, the Debtor endorsed and negotiated the Check.

          The Debtor and the Credit Union have filed their respective briefs, including a reply brief
filed by the Debtor. Along with the Credit Union’s brief, the Credit Union also filed a motion to
dismiss. The Debtor did not file a response to the Credit Union’s motion to dismiss.

                                               DISCUSSION

          The Credit Union moves to dismiss the Debtor’s appeal on the grounds that by accepting
the benefits of the judgment (by endorsing and negotiating the Check six days after the notice of
appeal), the Debtor waived his right to appeal and should be estopped from proceeding with his
appeal.       However, in this appeal the Debtor disputes the sufficiency of the damages the
bankruptcy court awarded the Debtor, asserting that the damages were inadequate. Accordingly,
the Debtor’s entitlement to the amount awarded by the bankruptcy court is uncontested, and he is
seeking additional recovery under a single legal theory. Under these facts, the motion to dismiss
will be denied. See, United States v. Hougham, 364 U.S. 310, 81 S. Ct. 13 (1960).1

          Turning to the issue presented, the Debtor’s pro se brief offers only minimal insight
regarding the basis for this appeal.           He asserts that the bankruptcy court erred when it
“overlooked the duration of the creditor’s violations, [and] accepted Atlanta Postal Credit
Union[’s] excuses as justification to overlook their willful violation of automatic stay.” (B.A.P.

          1
        To the extent this issue is governed by Tennessee law, Tennessee follows the rule in Hougham. See, e.g.,
McClendon v. House, 637 S.W.2d 883, 884 (Tenn. Ct. App. 1982).
 No. 20-8027                                      In re McCarthy                                           Page 6

Pro Se Br. Form at 1-2, Case No. 20-8027, ECF No. 5.)2 The Debtor indicates that he wants the
Panel to “[c]onsider the egregious violations of Atlanta Postal Credit Union and their disregard
and disrespect for the rule of law.” (Id. at 2.) The Debtor also asserts that “Atlanta Postal Credit
Union continued to withhold vehicle title even after they were paid in full in August 2019. After
they were paid the vehicle belonged to me and they had no legal claim to my property.” (Id.)
The Debtor provided a single paragraph summary of his appeal in his merits brief, in which he
asserted that due to the Credit Union’s actions he could not “register/operate” his car for five
years. (Id., Suppl. Statement at 1-2.) In conclusion, he argued that “these violations warrants
[sic] imposing substantial punitiive [sic] damages for deterrence and punishment.” (Id., Suppl.
Statement at 2.)

         The Order grants the motion for sanctions, finds that the Debtor is entitled to damages,
and orders specific relief. The Order granted the Debtor damages in the amount of $25,000.00.
The Order does not identify whether the amount awarded reflects actual or punitive damages, or
both, and the Debtor did not designate a transcript of the bankruptcy court’s August 18, 2020
oral ruling in the record on appeal. Nor does the bankruptcy court docket reflect that a transcript
was ever ordered.

         In the Statement of Issues, (Case No. 20-8027, ECF No. 9), the Debtor asserts the
following errors by the bankruptcy court: (1) the bankruptcy court ignored the Credit Union’s
admission that it was mistaken regarding receipt of requests from the State of Tennessee; (2) the
court ignored that the Credit Union no longer had any financial or legal right to the property; and
(3) the court should not have instructed Debtor’s counsel to prepare the order granting the
motion for sanctions because the Debtor filed his motion for sanctions pro se. Although the
Debtor’s brief is vague, it appears his position is that the bankruptcy court did not award
“substantial punitive damages.”

         Under 11 U.S.C. §362(k), an “individual injured by any willful violation of a stay
provided by this section shall recover actual damages, including costs and attorneys’ fees, and, in

         2
          The Clerk’s office offers a pro se brief form to Pro Se Appellants which allows them to answer a series of
questions in lieu of drafting a merits brief. The Debtor utilized this form and included a supplemental one paragraph
response. He also filed a four-page reply brief restating his position.
 No. 20-8027                                       In re McCarthy                                           Page 7

appropriate circumstances, may recover punitive damages.” See, Archer v. Macomb Cnty. Bank,
853 F.2d 497, 499 (6th Cir. 1988).                “Damages under §362(k) must also be proven with
reasonable certainty and must not be speculative or based on conjecture.” Grine v. Chambers (In
re Grine), 439 B.R. 461, 469 (Bankr. N.D. Ohio 2010). The party seeking recovery has “the
burden of proving entitlement to damages.” Id. See also, TranSouth Fin. Corp. v. Sharon (In re
Sharon), 234 B.R. 676, 687 (B.A.P. 6th Cir. 1999)(“The bankruptcy court appropriately assigned
to the Debtor the burden to prove entitlement to damages.”); IRS v. Mathews (In re Mathews),
209 B.R. 218, 220 (B.A.P. 6th Cir. 1997); In re Perrin, 361 B.R. 853, 856-58 (B.A.P. 6th Cir.
2007). In addition to actual damages, if a “bankruptcy court believes that the amount of such
actual damages is insufficient to deter the kind of deliberate and repeated violations of the
automatic stay . . . the bankruptcy court is free to impose an appropriate amount of punitive
damages.” Archer, 853 F.2d at 500.

         The Credit Union did not appeal either the finding that it had violated the automatic stay
or the amount of sanctions awarded.3 Instead, it immediately complied with the bankruptcy
court’s ruling by transferring the title and paying the sanctions in full. The Debtor is unable to
carry his burden on appeal because he did not include a transcript of the bankruptcy court’s oral
ruling as part of the appellate record. Where “an appellant fails to provide an adequate appellate
record on an issue finally decided by a prior court, that failure makes his road to victory difficult
at best.” Hawley v. City of Cleveland, 24 F.3d 814, 821-22 (6th Cir. 2001). Additionally, “an
appellant’s failure to provide a transcript is more critical when the ruling being appealed is oral.”
Knowles Bldg. Co. v. Zinni (In re Zinni), 261 B.R. 196, 202 (B.A.P. 6th Cir. 2001).

         Federal Rule of Bankruptcy Procedure 8009(b)(1)(A) requires the appellant to file
“a transcript of such parts of the proceedings not already on file as the appellant considers
necessary for the appeal[.]” Additionally the rule requires appellants to “include in the record a
transcript of all relevant testimony and copies of all relevant exhibits” when “the appellant
intends to argue on appeal that a finding or conclusion is unsupported by the evidence or is

         3
          On January 14, 2021, the Supreme Court of the United States issued an opinion holding that the mere
retention of estate property after the filing of a bankruptcy petition does not violate §362(a)(3). City of Chicago v.
Fulton, 592 U.S. ___, 141 S. Ct. 585 (2021). Since the Credit Union did not appeal the determination that it violated
the automatic stay, there is no need to evaluate the impact of the Fulton decision in the present appeal.
 No. 20-8027                                In re McCarthy                                  Page 8

contrary to the evidence.” Fed. R. Bankr. P. 8009(b)(5). Moreover, the rule requires that the
record on appeal must include “transcripts of all oral rulings.” Fed. R. Bankr. P. 8009(a)(4).

       Without a transcript of the hearing and the bankruptcy court’s oral ruling, the Panel has
nothing before it to support the Debtor’s assertion that the bankruptcy court erred and that the
sanctions awarded were not adequate. The Debtor’s brief asserts that the bankruptcy court did
not appropriately consider the length of the Credit Union’s violation. However, without the
transcript, the Panel cannot determine if there is any basis for that assertion.

       The only exhibit that the Debtor designated as part of the record on appeal is the Credit
Union’s supplemental response to the motion for sanctions. In its supplemental response, the
Credit Union admitted that it had previously falsely informed the bankruptcy court and the
Debtor’s counsel that it had not received any requests to transfer the title. Without a transcript of
the oral ruling, the Panel is unable to determine how this admission impacted the court’s
determination regarding sanctions. However, the bankruptcy court did find that a violation
existed, and did award sanctions.

       The supplemental response and the Debtor’s brief do not provide any insight or evidence
regarding the amount of damages the Debtor suffered. The Debtor does not articulate what
specific damages he incurred, nor does he suggest an amount that he would find satisfactory as
punitive damages. In his reply brief, the Debtor asserts that the Credit Union’s action in refusing
to transfer title, even after the loan had been paid in full through the Chapter 13 plan, caused him
frustration, anxiety, and anger. He asserts that his inability to use the vehicle impacted his
mobility and quality of life. (Reply Br. at 2, Case No. 20-8027, ECF No. 15.) However, he does
not explain why the bankruptcy court’s award of $25,000.00 as a sanction was insufficient to
compensate him for his loss. And, without the transcript, the Panel is unable to evaluate what
arguments the Debtor made to the bankruptcy court and what metrics the bankruptcy court used
to reach its decision. Further, the Debtor’s brief does not explain how the requirement that his
attorney draft the order was unfair, or harmed him in any way.

       On the record before this Panel, the Debtor has not met his burden of persuasion that the
bankruptcy court erred. See, Pinnacle Tech. Res., Inc. v. Spencer (In re Spencer), 359 B.R. 357
 No. 20-8027                                In re McCarthy                                 Page 9

(unpublished table decision), available at 2006 WL 3539295, at *1, 2006 Bankr. LEXIS 3297, at
*3 (B.A.P. 6th Cir. Dec. 8, 2006)(“Failure to provide the Panel with relevant portions of the trial
transcript makes evaluation of the validity of the Debtor’s arguments difficult.”). “Appellant is
the party responsible for presenting a complete record on appeal and will not prevail on any
assignment of error which depends on information omitted from the designation.” Slizyk v.
Smilack (In re Slizyk), Case No. 6:06-cv-1896-Orl-19, 2007 WL 2154231, at *5, 2007 U.S. Dist.
LEXIS 53266, at *15 (M.D. Fla. July 24, 2007), reconsideration granted in part 2007 WL
2406997, 2007 U.S. Dist. LEXIS 60856 (M.D. Fla. Aug. 20, 2007), on reconsideration 2007 WL
2554637, 2007 U.S. Dist. LEXIS 63291 (M.D. Fla. Aug. 28, 2007). These principles, which are
crucial to a meaningful appellate process, apply regardless of whether an appellant proceeds with
counsel or without. Eglinton v. Loyer (In re G.A.D., Inc.), 340 F.3d 331, 335 (6th Cir. 2003)
(“The Supreme Court has instructed courts to hold pleadings filed by pro se litigants to a less
stringent standard than those filed by lawyers, but has ‘never suggested procedural rules in
ordinary civil litigation should be interpreted so as to excuse mistakes by those who proceed
without counsel.’” (citations omitted)).

                                           CONCLUSION

       For the foregoing reasons, the Panel AFFIRMS the bankruptcy court’s order and
DENIES the Credit Union’s motion to dismiss.