Court Opinion

ID: 4232147
Source: CourtListenerOpinion
Date Created: 2017-12-23 01:01:00.263054+00
Date Added: 2024-06-11T14:16:03.675689
License: Public Domain

FILED
 1                         ORDERED PUBLISHED              DEC 22 2017
                                                    SUSAN M. SPRAUL, CLERK
 2                                                      U.S. BKCY. APP. PANEL
                                                        OF THE NINTH CIRCUIT
 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
                              OF THE NINTH CIRCUIT
 4
 5   In re:                        )      BAP No.      NV-16-1229-FLTi
                                   )                   NV-16-1238-FLTi
 6   CHRISTOPHER MICHAEL MARINO    )                   (Cross-Appeals)
     and VALERIE MARGARET MARINO, )
 7                                 )      Bk. No.      3:13-bk-50461-BTB
        Debtors.                   )
 8   ______________________________)
                                   )
 9   OCWEN LOAN SERVICING, LLC,    )
                                   )
10      Appellant/Cross-Appellee, )
                                   )
11   v.                            )      OPINION
                                   )
12   CHRISTOPHER MICHAEL MARINO;   )
     VALERIE MARGARET MARINO,      )
13                                 )
        Appellees/Cross-Appellants.)
14   ______________________________)
15                  Argued and submitted on December 1, 2017
                                 at Reno, Nevada
16
                           Filed – December 22, 2017
17
               Appeal from the United States Bankruptcy Court
18                       for the District of Nevada
19        Honorable Bruce T. Beesley, Bankruptcy Judge, Presiding
20
     Appearances:     Christopher A.J. Smith of Wright, Finlay & Zak,
21                    LLP argued for appellant/cross-appellee Ocwen Loan
                      Servicing, LLC; Christopher P. Burke argued for
22                    appellees/cross-appellants Christopher Michael
                      Marino and Valerie Margaret Marino.
23
24   Before:   FARIS, LAFFERTY, and TIGHE,* Bankruptcy Judges.
25
26
27
          *
28          The Honorable Maureen A. Tighe, U.S. Bankruptcy Judge for
     the Central District of California, sitting by designation.
 1   FARIS, Bankruptcy Judge:
 2
 3                                INTRODUCTION
 4        Chapter 71 debtors Christopher Michael Marino and Valerie
 5   Margaret Marino sought sanctions against creditor Ocwen Loan
 6   Servicing, LLC (“Ocwen”) for its violation of the discharge
 7   injunction.   The bankruptcy court held a trial and awarded the
 8   Marinos $119,000 – one thousand dollars for each improper
 9   contact.
10        On appeal, Ocwen argues that the bankruptcy court erred
11   because its correspondence with the Marinos was in compliance
12   with state or federal law.    It also contends that the court
13   improperly considered telephone calls, which were not the subject
14   of the motion and not supported by evidence, and that there was
15   no evidence of injury to the Marinos.       We discern no error and
16   AFFIRM.
17        The Marinos cross-appeal, correctly arguing that the
18   bankruptcy court erred in holding that it lacked the authority to
19   award punitive damages.    On this point, we VACATE and REMAND so
20   the bankruptcy court can consider whether it would be appropriate
21   to (a) enter a final judgment for “relatively mild
22   noncompensatory fines,” (b) issue, for the district court’s
23   consideration, proposed findings and a recommended judgment for
24   punitive damages, or (c) refer the issue of contempt to the
25
          1
26          Unless specified otherwise, all chapter and section
     references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, all
27   “Rule” references are to the Federal Rules of Bankruptcy
     Procedure, and all “Civil Rule” references are to the Federal
28   Rules of Civil Procedure.

                                       2
 1   district court.
 2                           FACTUAL BACKGROUND
 3   A.   The Marinos’ chapter 7 petition
 4        The Marinos filed a chapter 7 bankruptcy petition in March
 5   2013 in the United States Bankruptcy Court for the District of
 6   Nevada.   They scheduled real property located in Verdi,
 7   California (the “Property”) and noted, “DEBTOR TO SURRENDER.”2
 8   GMAC Mortgage held a secured claim arising from a second mortgage
 9   on the Property.
10        The Marinos received their discharge on June 18, 2013.     The
11   bankruptcy court subsequently granted Deutsche Bank National
12   Trust Company, as Trustee for GMACM Mortgage Loan Trust 2005-AR6
13   (“Deutsche Bank”) relief from the automatic stay.   The court
14   closed the case on September 23, 2013.
15   B.   Written correspondence and telephone calls from Ocwen
16        Following the Marinos’ discharge, Ocwen, as the servicer for
17   Deutsche Bank, began sending the Marinos mailed correspondence in
18   June 2013 and continued to do so through April 2015.   The letters
19   included account statements, notices regarding force-placed
20   insurance, escrow statements, and other matters.
21        Some of the items of correspondence contained disclaimers
22   that were located at the bottom of a page or end of the letter in
23   small font.   A typical disclaimer read: “If you have filed for
24   bankruptcy and your case is still active and/or if you received a
25
26        2
            Mr. Marino later attested that they had moved out of the
27   Property in late 2011. When they filed their bankruptcy petition
     in 2013, the Marinos were living in Reno, Nevada. They have
28   since moved to Auburn, California.

                                      3
 1   discharge, please be advised that this notice is for information
 2   purposes only and is not an attempt to collect a pre-petition or
 3   discharged debt.”   Often, the disclaimers were preceded by
 4   demands for payment by a certain date or information about the
 5   amount that “you must pay” in a much more conspicuous font.
 6        Ocwen also called the Marinos numerous times post-discharge
 7   to request payment on their mortgage loan.
 8   C.   The motion for contempt
 9        In November 2015, the Marinos filed a motion to reopen their
10   case and to hold Ocwen in contempt for its alleged violation of
11   the discharge injunction (“Motion for Contempt”).   They argued
12   that Ocwen knowingly and willfully violated the discharge
13   injunction by sending the written correspondence after the
14   Marinos’ discharge.   They identified twenty-two instances of
15   allegedly improper correspondence3 whereby Ocwen sought to
16   collect from the Marinos personally.
17        In opposition to the Motion for Contempt, Ocwen argued that
18   sanctions were not warranted because the letters were not meant
19   to collect any debt against the Marinos personally and complied
20   with federal and state law.    It said that fourteen of the twenty-
21   two letters contained disclaimer language stating that the
22   letters were intended for informational purposes only, not to
23   collect any debt.   It argued that billing statements did not
24   violate the discharge injunction under California law because
25   they sought only voluntary payments.   It contended that the
26
27
          3
            In their moving papers, the Marinos only mentioned the
28   written correspondence, not telephone calls.

                                       4
 1   remaining correspondence concerned force-placed insurance, escrow
 2   information, or debt validation, not collection of a debt.
 3   D.   Evidentiary hearing
 4        The bankruptcy court reopened the case and held an
 5   evidentiary hearing on the Motion for Contempt.   At the outset,
 6   and by agreement of the parties, the court found “that Ocwen was
 7   aware of the bankruptcy, was aware of the discharge, got stay
 8   relief, and sent the various letters.”   The only remaining issues
 9   were Ocwen’s intent and damages.
10        Mr. Marino testified that the Property was their “dream
11   house,” but they faced financial difficulty starting in 2010.
12   They unsuccessfully tried to work with GMAC and Ocwen to modify
13   their mortgage payments, but eventually moved out in 2011.
14        After they filed for chapter 7 bankruptcy and received their
15   discharge in mid-2013, the Marinos began to receive letters from
16   Ocwen “stating that there was money due.”   The correspondence
17   included account statements with attached payment stubs and
18   demands for payment.   Mr. Marino testified that the payment stubs
19   indicated that he had to remit payment on the discharged debt,
20   that he was responsible for the interest payments, and that
21   payments were due by the stated dates.   Ocwen also sent notices
22   of force-placed insurance, which made Mr. Marino think that he
23   had to pay for the insurance on the Property, even though they
24   had surrendered and vacated it.
25        Mr. Marino said that the notices from Ocwen took a toll on
26   his marriage and caused him to fight with his wife.   He said that
27   he suffered from anxiety attacks and felt humiliated, tormented,
28   and harassed.   He testified that the stress eventually made them

                                        5
 1   contemplate divorce, although they managed to preserve their
 2   marriage.
 3        Mrs. Marino testified that the letters and calls from Ocwen
 4   caused distress to the point that she and her husband considered
 5   divorce.    She stated that she began having severe stomach pains
 6   when they tried to modify the mortgage loan; those pains
 7   disappeared when they filed for bankruptcy, but reemerged when
 8   they began receiving calls post-discharge.        In June 2014, she
 9   noted in writing that Ocwen was “calling me three to five times a
10   day” for approximately a year.    At trial, she did not provide an
11   exact number of calls that she received, but testified:
12        Q Okay. I don’t want to go -- it sounds like you got
          anywhere from 60 to 100 calls. Does that sound --
13
          A It was a lot of calls, yes.
14
15   She also stated, “I probably answered maybe a handful of phone
16   calls, probably maybe -- it’s hard to think of a number in that
17   time.   I mean, 20, I don’t know.       It seems to me that after a
18   while, I was just -- I couldn’t take it anymore.”
19        A friend of the Marinos, Bernadette O’Kane, testified about
20   her observations of the Marinos during their financial distress.
21   Ms. O’Kane stated that Mrs. Marino became sad and upset due to
22   dealing with creditors, started suffering stomach pains, and told
23   Ms. O’Kane that her marital relationship had become strained.
24   Ms. O’Kane said that Mr. Marino was previously fun-loving but
25   became agitated and angry.
26        Ms. O’Kane said that, following the discharge, the Marinos
27   were not able to move on with their lives, because “the calls
28   [from creditors] did not stop.”     She said that the calls made

                                         6
 1   Mrs. Marino cry; when Ms. O’Kane on occasion picked up such
 2   calls, the caller would assume that she was Mrs. Marino and
 3   repeatedly ask for payment.
 4        Sony Prudent, a senior loan analyst for Ocwen, testified as
 5   to Ocwen’s loan servicing procedure.    He stated that Ocwen keeps
 6   a comment log of all contacts with a borrower and that Owen might
 7   still send notices post-discharge pursuant to federal or state
 8   regulation, but that there would be a bankruptcy disclaimer
 9   stating that the letter was not an attempt to collect a debt “if
10   you’ve been discharged or in active bankruptcy.”
11        Mr. Prudent stated that he reviewed the Marinos’ file before
12   testifying, including the transaction history and comment logs.
13   He testified that the comment logs reflect that Ocwen called the
14   Marinos post-discharge but that it did not make any calls to the
15   Marinos after the Property was foreclosed (approximately two
16   years after the court granted Ocwen stay relief).
17        The court repeatedly questioned Mr. Prudent as to why post-
18   discharge letters might still say, “you must pay.”   Mr. Prudent
19   had no direct answer but stated, “[b]est answer, Your Honor, is
20   it would be a generic letter.”   He later said, “[i]t is an
21   internal policy, Your Honor.”    He also admitted that “[m]ost of
22   [the letters] are generated by our system” and were never
23   reviewed by a human being.
24        The bankruptcy court ordered additional briefing regarding
25   the correspondence, asking Ocwen to cite the specific statute or
26   regulation authorizing each document.   Ocwen cited the applicable
27   regulatory or statutory basis that allegedly applied to some of
28   its correspondence: 12 C.F.R. § 1024.37(c) (required notice of

                                       7
 1   force-placed insurance),4 12 U.S.C. §§ 2605 and 2609 (required
 2   notice of escrow account balance),5 15 U.S.C. § 1692g (required
 3   notice of debt validation information),6 and California Civil
 4
 5        4
              Before charging for force-placed insurance, a servicer
     must:
 6
 7        (i) Deliver to a borrower or place in the mail a
          written notice containing the information required by
 8        paragraph (c)(2) of this section at least 45 days
          before a servicer assesses on a borrower such charge or
 9        fee;
10
          (ii) Deliver to the borrower or place in the mail a
11        written notice in accordance with paragraph (d)(1) of
          this section . . . .
12
          5
              12 U.S.C. § 2609(b) states:
13
          Notification of shortage in escrow account. If the
14        terms of any federally related mortgage loan require
15        the borrower to make payments to the servicer . . . of
          the loan for deposit into an escrow account for the
16        purpose of assuring payment of taxes, insurance
          premiums, and other charges with respect to the
17        property, the servicer shall notify the borrower not
          less than annually of any shortage of funds in the
18
          escrow account.
19        6
            A debt collector shall send the consumer a written notice
20   stating:

21        (1) the amount of the debt;
22
          (2) the name of the creditor to whom the debt is owed;
23
          (3) a statement that unless the consumer, within thirty
24        days after receipt of the notice, disputes the validity
          of the debt, or any portion thereof, the debt will be
25        assumed to be valid by the debt collector;
26
          (4) a statement that if the consumer notifies the debt
27        collector in writing within the thirty-day period that
          the debt, or any portion thereof, is disputed, the debt
28                                                      (continued...)

                                        8
 1   Code §§ 2924(a)(1)(A) (required notice of default),7 2923.5
 2   (required contact prior to notice of default),8 and 2924.9
 3   (required contact post-default).9
 4
 5        6
           (...continued)
          collector will obtain verification of the debt or a
 6
          copy of a judgment against the consumer and a copy of
 7        such verification or judgment will be mailed to the
          consumer by the debt collector; and
 8
          (5) a statement that, upon the consumer’s written
 9        request within the thirty-day period, the debt
10        collector will provide the consumer with the name and
          address of the original creditor, if different from the
11        current creditor.
          7
12          A mortgagee shall file a notice of default that includes
     the following information:
13
          (A) A statement identifying the mortgage or deed of
14
          trust by stating the name or names of the trustor or
15        trustors and giving the book and page, or instrument
          number, if applicable, where the mortgage or deed of
16        trust is recorded or a description of the mortgaged or
          trust property.
17
18        (B) A statement that a breach of the obligation for
          which the mortgage or transfer in trust is security has
19        occurred.

20        (C) A statement setting forth the nature of each breach
          actually known to the beneficiary and of his or her
21
          election to sell or cause to be sold the property to
22        satisfy that obligation and any other obligation
          secured by the deed of trust or mortgage that is in
23        default.
24        8
            “A mortgage servicer shall contact the borrower in person
     or by telephone” prior to recording a notice of default or, if
25   not possible, it must send written correspondence.
26        9
            A mortgage servicer that offers foreclosure prevention
27   alternatives shall send a written communication to the borrower
     that includes:
28                                                      (continued...)

                                     9
 1        On June 20, 2016, the bankruptcy court announced its ruling
 2   in favor of the Marinos.   The court rejected Ocwen’s defense that
 3   the correspondence was authorized by state or federal law,
 4   stating that, “I think if all they sent was what was required by
 5   the notice [sic], they would be fine.   But in each of those
 6   cases, they included additional language, which indicated that
 7   they were trying to collect money from the debtor.”
 8        The bankruptcy court held that the letters and phone calls
 9   indicated that Ocwen was trying to get the Marinos to make
10   payments on their mortgage loan: “Ocwen could not have been doing
11   anything but trying to get the debtor to give them some more
12   money, either for insurance or agree to be responsible for the
13   house that was vacant, even after they had . . . received stay
14   relief.”   The court said that Ocwen purposefully waited two years
15   to foreclose on the Property, “hoping that if they sent enough
16   letters and gave enough calls, that the debtor would ultimately
17   pay them some money for something.”
18        The court found the disclaimer language ineffective.    It
19   said that the disclaimers stated, “if you have filed for
20   bankruptcy” and “if you have received a discharge,” even though
21
          9
           (...continued)
22
          (1) That the borrower may be evaluated for a
23        foreclosure prevention alternative or, if applicable,
          foreclosure prevention alternatives.
24
          (2) Whether an application is required to be submitted
25        by the borrower in order to be considered for a
26        foreclosure prevention alternative.

27        (3) The means and process by which a borrower may
          obtain an application for a foreclosure prevention
28        alternative.

                                     10
 1   Ocwen knew that the Marinos had filed for bankruptcy and received
 2   a discharge.   It said that creditors that know that a debtor has
 3   filed for bankruptcy, received a discharge, and surrendered their
 4   home do not have “the right to have their computer gen out [sic]
 5   these various letters, which do comply, at least in some of the
 6   provisions, with the various notification statutes, but all of
 7   which include language which is not included in those statutes,
 8   which, to varying degrees of urgency, want the debtor to
 9   undertake a new obligation or pay them money.”
10        The court also found that Ocwen had called approximately a
11   hundred times following the discharge to ask the Marinos to pay
12   the discharged debt.   It noted that Ocwen failed to rebut the
13   Marinos’ testimony and failed to produce any records or evidence
14   to the contrary.
15        The bankruptcy court awarded the Marinos damages for
16   emotional distress, actual damages, and attorneys’ fees and
17   costs.   It stated that the Marinos had established that they had
18   suffered emotional distress as a result of Ocwen’s harassing
19   calls and letters.   The court found that Ocwen had sent nineteen
20   offending letters and made one hundred phone calls, and it
21   awarded $1,000 per letter and call as emotional distress damages.
22   The court entered an order (“Sanctions Order”) awarding the
23   Marinos $119,000 in emotional distress damages.
24        Regarding an award of punitive damages, the court stated:
25   “The issue of damages, I -- as I understand the law of the Ninth
26   Circuit, I do not have authority to impose punitive damages.     If
27   I did, I probably would, but I don’t.”
28        Ocwen timely appealed the Sanctions Order.

                                     11
 1   E.   The motion for reconsideration
 2        Ocwen filed a motion for reconsideration of the Sanctions
 3   Order (“Motion for Reconsideration”) under Civil Rule 59(e), made
 4   applicable in bankruptcy through Rule 9023.   It argued that it
 5   made far fewer calls to the Marinos than the one hundred calls
 6   that the court had found and that it did not provide any rebuttal
 7   evidence at trial because the Marinos did not raise the issue of
 8   telephone calls until late in the proceedings.
 9        Ocwen contended that it had “newly discovered” evidence in
10   the form of Ocwen’s call logs.   It provided the affidavit of a
11   loan analyst for Ocwen who testified that Ocwen made thirty-five
12   calls to the Marinos post-discharge.
13        The bankruptcy court denied the Motion for Reconsideration
14   by form order (“Reconsideration Order”) without any detailed
15   reasoning.   Although the court apparently held a hearing on the
16   Motion for Reconsideration, a transcript of the hearing is not in
17   the record on appeal.
18        Ocwen amended its notice of appeal to include the
19   Reconsideration Order.
20                              JURISDICTION
21        The bankruptcy court had jurisdiction pursuant to 28 U.S.C.
22   §§ 1334 and 157(b)(1).   We have jurisdiction under 28 U.S.C.
23   § 158.
24                                 ISSUES
25        (1) Whether the bankruptcy court erred in awarding the
26   Marinos $119,000 for violations of the discharge injunction.
27        (2) Whether the bankruptcy court erred in holding that it
28   lacked the authority to award punitive damages.

                                      12
 1                           STANDARDS OF REVIEW
 2        We review de novo questions of law, including whether the
 3   bankruptcy court applied the correct legal standard.    See
 4   Drummond v. Welsh (In re Welsh), 465 B.R. 843, 847 (9th Cir. BAP
 5   2012), aff’d, 711 F.3d 1120 (9th Cir. 2013).    De novo review
 6   requires that we consider a matter anew, as if no decision had
 7   been rendered previously.   United States v. Silverman, 861 F.2d
8   571, 576 (9th Cir. 1988).
 9        The bankruptcy court’s finding of a willful violation of
10   § 524 is a factual finding reviewed for clear error.    Emmert v.
11   Taggart (In re Taggart), 548 B.R. 275, 286 (9th Cir. BAP 2016).
12   A finding of fact is clearly erroneous if it is illogical,
13   implausible, or without support in the record.    Retz v. Samson
14   (In re Retz), 606 F.3d 1189, 1196 (9th Cir. 2010).    The
15   bankruptcy court’s choice among multiple plausible views of the
16   evidence cannot be clear error.    United States v. Elliott, 322
17 F.3d 710, 715 (9th Cir. 2003).
18        We review for abuse of discretion the bankruptcy court’s
19   decision to impose sanctions for contempt.    Knupfer v. Lindblade
20   (In re Dyer), 322 F.3d 1178, 1191 (9th Cir. 2003); Nash v. Clark
21   Cty. Dist. Atty’s Office (In re Nash), 464 B.R. 874, 878 (9th
22   Cir. BAP 2012).   Similarly, we review the bankruptcy court’s
23   denial of a motion for reconsideration for abuse of discretion.
24   Cruz v. Stein Strauss Tr. #1361, PDQ Invs., LLC (In re Cruz), 516
25 B.R. 594, 601 (9th Cir. BAP 2014) (citing Tracht Gut, LLC v. Cty.
26   of L.A. Treasurer & Tax Collector (In re Tracht Gut, LLC), 503
27 B.R. 804, 810 (9th Cir. BAP 2014)).    To determine whether the
28   bankruptcy court has abused its discretion, we conduct a two-step

                                       13
 1   inquiry: (1) we review de novo whether the bankruptcy court
 2   “identified the correct legal rule to apply to the relief
 3   requested” and (2) if it did, whether the bankruptcy court’s
 4   application of the legal standard was illogical, implausible, or
 5   without support in inferences that may be drawn from the facts in
 6   the record.    United States v. Hinkson, 585 F.3d 1247, 1262–63 &
 7   n.21 (9th Cir. 2009) (en banc).
 8                                DISCUSSION
 9   A.   Ocwen’s appeal
10        1.   The bankruptcy court may sanction a creditor that
               knowingly and willfully violates the discharge
11             injunction.
12        Section 727(a) provides that, absent certain exceptions,
13   “[t]he [bankruptcy] court shall grant the debtor a discharge.”
14   The discharge order “discharges the debtor from all debts that
15   arose before the date of the [bankruptcy filing].”   § 727(b).
16   More specifically, a discharge “operates as an injunction against
17   the commencement or continuation of an action, the employment of
18   process, or an act, to collect, recover or offset any such debt
19   as a personal liability of the debtor, whether or not discharge
20   of such debt is waived[.]”   § 524(a)(2).
21        “A party who knowingly violates the discharge injunction
22   under § 524(a)(2) can be held in contempt under § 105(a).”    In re
23   Taggart, 548 B.R. at 286.    The Ninth Circuit follows a two-part
24   test to determine whether the contemnor knowingly and willfully
25   committed a violation of the discharge injunction: “the movant
26   must prove that the creditor (1) knew the discharge injunction
27   was applicable and (2) intended the actions which violated the
28   injunction.”   Zilog, Inc. v. Corning (In re Zilog, Inc.), 450

                                       14
 1 F.3d 996, 1007 (9th Cir. 2006) (quoting Renwick v. Bennett (In re
 2   Bennett), 298 F.3d 1059, 1069 (9th Cir. 2002)).
 3        First, the movant must prove that the contemnor knew that
 4   the discharge injunction was applicable to his claim:
 5        [T]he Ninth Circuit has crafted a strict standard for
          the actual knowledge requirement in the context of
 6        contempt before a finding of willfulness can be made.
          This standard requires evidence showing the alleged
 7        contemnor was aware of the discharge injunction and
          aware that it applied to his or her claim. Whether a
 8        party is aware that the discharge injunction is
          applicable to his or her claim is a fact-based inquiry
 9        which implicates a party’s subjective belief, even an
          unreasonable one.
10
11   In re Taggart, 548 B.R. 288.
12        Second, the contemnor must have intended the action that
13   violated the injunction.    “The focus is on whether the creditor’s
14   conduct violated the injunction and whether that conduct was
15   intentional; it does not require a specific intent to violate the
16   injunction.”   Desert Pine Villas Homeowners Ass’n v. Kabiling (In
17   re Kabiling), 551 B.R. 440, 445 (9th Cir. BAP 2016).    We have
18   stated:
19        the analysis concerning a “willful” violation of the
          discharge injunction is the same as a finding of
20        willfulness in connection with violation of the
          automatic stay under § 365(k). In connection with the
21        second prong’s intent requirement, we have previously
          observed that “the bankruptcy court’s focus is not on
22        the offending party’s subjective beliefs or intent, but
          on whether the party’s conduct in fact complied with
23        the order at issue.”
24   In re Taggart, 548 B.R. at 288 (quoting Rosales v. Wallace (In re
25   Wallace), BAP No. NV–11–1681–KiPaD, 2012 WL 2401871, at *5 (9th
26   Cir. BAP June 26, 2012)).
27        “The standard for finding a party in civil contempt is well
28   settled: The moving party has the burden of showing by clear and

                                      15
 1   convincing evidence that the contemnors violated a specific and
 2   definite order of the court.    The burden then shifts to the
 3   contemnors to demonstrate why they were unable to comply.”        Id.
 4   at 286 (quoting In re Bennett, 298 F.3d at 1069).       “[E]ach prong
 5   of the Ninth Circuit’s two-part test for a finding of contempt in
 6   the context of a discharge violation requires a different
 7   analysis, and distinct, clear, and convincing evidence supporting
 8   that analysis, before a finding of willfulness can be made.       This
 9   is consistent with the Ninth Circuit’s reluctance to hold an
10   unwitting creditor in contempt.”       Id. at 288 (citation and
11   internal quotation marks omitted).
12        2.     The bankruptcy court did not err in finding that
                 Ocwen’s communication with the Marinos knowingly and
13               willfully violated the discharge injunction.
14        In the present case, there is no dispute that Ocwen knew
15   that the discharge injunction was applicable to its claim and
16   that it intentionally sent the letters and placed the phone
17   calls.    Rather, Ocwen argues that its contacts with the Marinos
18   did not violate the discharge injunction.       We hold that both the
19   written correspondence and the telephone calls were knowing and
20   willful violations.
21               a.    The bankruptcy court properly found that the
                       written correspondence violated the discharge
22                     injunction.
23        The discharge has long been an important feature of American
24   bankruptcy law.    Over eighty years ago, the Supreme Court
25   described its purpose and importance:
26        One of the primary purposes of the Bankruptcy Act is to
          relieve the honest debtor from the weight of oppressive
27        indebtedness, and permit him to start afresh free from
          the obligations and responsibilities consequent upon
28        business misfortunes. This purpose of the act has been

                                       16
 1        again and again emphasized by the courts as being of
          public as well as private interest, in that it gives to
 2        the honest but unfortunate debtor who surrenders for
          distribution the property which he owns at the time of
 3        bankruptcy, a new opportunity in life and a clear field
          for future effort, unhampered by the pressure and
 4        discouragement of pre-existing debt. The various
          provisions of the Bankruptcy Act were adopted in the
 5        light of that view and are to be construed when
          reasonably possible in harmony with it so as to
 6        effectuate the general purpose and policy of the act.
 7   Local Loan Co. v. Hunt, 292 U.S. 234, 244–45 (1934) (citations
 8   and internal quotation marks omitted).
 9        The discharge is automatic and self-effectuating.    Creditors
10   must obey it, even if debtors do not assert it.    Pavelich v.
11   McCormick, Barstow, Sheppard, Wayte & Carruth LLP (In re
12   Pavelich), 229 B.R. 777, 781-82 (9th Cir. BAP 1999).
13        The discharge prohibits not just litigation, but also
14   informal collection activities, such as dunning notices and
15   telephone calls.   See In re Feldmeier, 335 B.R. 807, 813 (Bankr.
16   D. Or. 2005) (“Among the collection activity prohibited by the
17   discharge injunction are ‘telephone calls, letters, and personal
18   contacts.’” (citation omitted)).
19        The discharge has one important limit: it bars only efforts
20   to collect debts “as a personal liability of the debtor.”
21   § 524(a)(2).   This means that secured creditors can foreclose
22   their liens after the discharge is entered.    Johnson v. Home
23   State Bank, 501 U.S. 78, 83 (1991) (explaining that a discharge
24   extinguishes only the personal liability of the debtor, and that
25   a creditor’s right to foreclose on a mortgage securing the debt
26   survives or passes through the bankruptcy).
27        This creates some tension.    While the discharge generally
28   prohibits creditors from communicating with discharged debtors in

                                       17
 1   an effort to extract payment, lienholders usually must
 2   communicate with debtors in order to enforce their liens.    For
 3   example, a foreclosure of a mortgage without notice to the
 4   mortgagor would likely be invalid even if the mortgagor were not
 5   personally liable for the mortgage debt.
 6        The way to reconcile this tension is to hold that a
 7   lienholder may communicate with a discharged debtor only to the
 8   extent necessary to preserve or enforce its lien rights, and may
 9   not attempt to induce the debtor to pay the debt.   As we have
10   held, “the creditor may not use a contact to ‘coerce’ or ‘harass’
11   the debtor.”   In re Nash, 464 B.R. at 881; see United States v.
12   Holmes (In re Holmes), BAP No. CC-94-2001-HMV, 76 A.F.T.R.2d (RIA)
13   95-7925 (9th Cir. BAP 1995) (“A secured creditor cannot, under
14   the guise of enforcing an unavoided lien, attempt to coerce the
15   debtor into paying a discharged debt. . . .   Even if a creditor
16   threatens only to enforce its surviving lien, that threat will
17   violate the discharge injunction if the evidence shows that the
18   threat is really an effort to coerce payment of the underlying
19   discharged debt.” (citations omitted)).
20        We agree with the bankruptcy court that Ocwen’s
21   communications went far beyond what was necessary to protect or
22   enforce Ocwen’s lien rights and that they also were meant to
23   induce the Marinos to make payments post-discharge.    The notices
24   and statements gave the impression that the Marinos were still
25   liable for the mortgage payments, taxes, and force-placed
26   insurance premiums.   Even if some of the notices may not have
27   violated the discharge injunction, the bankruptcy court correctly
28   noted that the cumulative effect of all of the letters demanding

                                     18
 1   money created the perception that the Marinos needed to pay
 2   Ocwen.   See In re Nordlund, 494 B.R. 507, 519 (Bankr. E.D. Cal.
 3   2011) (“Even though some of [the bank’s] written communications
 4   to the debtors seem innocuous, when [the bank’s] 24 written
 5   communications over a 10–month period are considered in context
 6   and as a whole, a more disturbing picture is painted.    Even if
 7   each letter from [the bank] had acknowledged the debtors’
 8   discharge and stated that [the bank] would take no action against
 9   the debtors personally to collect its three home loans, the sheer
10   volume and repetitiveness of [the bank’s] letters communicated
11   just the opposite.”).   Therefore, the letters violated the
12   discharge injunction.
13        Ocwen argues that the disclaimer language contained in some
14   of the notices protects it from liability.    We disagree.
15        First, Ocwen does not attempt to explain the fact that, of
16   the twenty-two letters it sent to the Marinos, seven had no
17   disclaimer language whatsoever.
18        Second, although Ocwen knew that the Marinos had filed for
19   bankruptcy protection and received a discharge, thirteen of the
20   fifteen letters with disclaimers spoke of bankruptcy as a
21   hypothetical possibility (e.g., “if you filed for bankruptcy and
22   your case is still active, or if you have received an order of
23   discharge, please be advised that this is not an attempt to
24   collect a prepetition or discharged debt”).    Ocwen makes no
25   attempt to explain why it was proper for Ocwen to obscure the
26   fact (known to Ocwen) that the Marinos had already received a
27   discharge.
28        Third, even the small number of letters that acknowledged

                                       19
 1   (as Ocwen admittedly knew) that the Marinos had obtained a
 2   discharge were internally contradictory.    The body of these
 3   letters asserts that the Marinos must pay the debt, but the
 4   disclaimer placed at the end of the same documents told them that
 5   they need not pay the debt.   This contradiction confused the
 6   Marinos and would likely confuse many similarly situated debtors.
 7   Cf. In re Anderson, 348 B.R. 652, 661 (Bankr. D. Del. 2006)
 8   (finding a violation of the discharge injunction where the letter
 9   with disclaimer language also stated confusingly that the debtors
10   would be liable for any deficiency).
11        Fourth, Ocwen makes no effort to explain why it sent
12   admittedly “generic” notices to the Marinos.    In this modern age
13   of information technology, Ocwen could and should prepare notices
14   that are consistent with the known legal status of its borrowers.
15   Ocwen’s failure to do so must reflect either incompetence (which
16   we doubt) or a deliberate effort to induce confused borrowers to
17   pay discharged debts.   Similarly, it was probably no accident
18   that the improper demands for payment appear near the beginning
19   of each letter and the disclaimers appear near the end.
20        Ocwen also argues that state or federal law required it to
21   send some of the correspondence.     If it were true that state or
22   federal law required Ocwen to send all of the various letters as
23   a condition to the preservation or enforcement of its lien
24   rights, we might agree.   But the premise is not valid.
25        First, Ocwen could not cite any law that authorized some of
26   its correspondence.
27        Second, some of the statutes and regulations cited by Ocwen
28   simply do not apply to its correspondence.    For example, Ocwen

                                     20
 1   cites 15 U.S.C. § 1692g(a) to excuse the debt validation notices
 2   sent by Western Progressive (on Ocwen’s behalf), but the Fair
 3   Debt Collection Practices Act generally does not apply to
 4   mortgage foreclosures.   See Ho v. ReconTrust Co., NA, 858 F.3d
5   568, 572 (9th Cir. 2017) (“actions taken to facilitate a
 6   non-judicial foreclosure, such as sending the notice of default
 7   and notice of sale, are not attempts to collect ‘debt’ as that
 8   term is defined by the FDCPA”).
 9        Third, even when Ocwen sent legally required notices, it
10   routinely embellished those notices with demands for payment that
11   the applicable statutes and regulations do not require.    For
12   example, 12 C.F.R. § 1024.37(c) requires that a mortgage lender
13   give notice of force-placed insurance; Ocwen added a demand for
14   payment of the insurance premiums.     Similarly, the escrow account
15   notices not only provided information as to account balances in
16   accordance with 12 U.S.C. §§ 2605 and 2609, but also informed the
17   Marinos that, if the they did not pay the shortage, their escrow
18   shortfall would increase.   Additionally, the debt validation
19   notices allegedly sent pursuant to 15 U.S.C. § 1692g provided
20   information of the “total delinquency owed” and stated in large
21   type that “WE ARE ATTEMPTING TO COLLECT A DEBT[.]”    As the
22   bankruptcy court aptly stated, Ocwen’s notices may have been
23   proper had they been limited to the required information mandated
24   by the statutes and regulations; however, Ocwen invariably
25   included a demand for payment that the Marinos were not legally
26   obligated to make.   Ocwen’s inclusion of additional language not
27   prescribed by the relevant statutes or regulations violated the
28   discharge injunction.

                                       21
 1        Ocwen cites California Civil Code §§ 2924(a)(1)(A),
 2   2923.5(a)(2), and 2924.9, which require it to contact borrowers
 3   before and after filing a notice of default.    These notices were
 4   sent amidst the improper collection notices that demanded
 5   payment, so it was not unreasonable for the Marinos to believe
 6   that the letters were further attempts to collect on the debt.
 7   Cf. In re Nordlund, 494 B.R. at 519 (“Taken together, and in
 8   context, the court construes the 24 letters as a deliberate
 9   attempt by [the bank] to sow confusion and doubt as to whether it
10   would recognize the debtors’ discharge.   Its goal seems to have
11   been to convince the debtors to pay the bank despite their
12   discharge.”).
13        In sum, the bankruptcy court did not clearly err in finding
14   that “Ocwen could not have been doing anything but trying to get
15   the debtor to give them some more money . . . .”   Ocwen’s
16   repeated dunning deprived the Marinos of a fresh start
17   “unhampered by the pressure and discouragement of pre-existing
18   debt.”   See Local Loan Co., 292 U.S. at 244.
19              b.   The bankruptcy court properly considered the
                     telephone calls in its award of damages.
20
21        Ocwen also argues that the bankruptcy court should not have
22   considered the telephone calls that it made to the Marinos,
23   because (1) the issue of calls was not raised in the Motion for
24   Contempt, and (2) the evidence provided on reconsideration shows
25   that Ocwen made only thirty-five post-discharge calls, rather
26   than the one hundred calls found by the court.   We reject both
27
28

                                     22
 1   arguments.10
 2        Ocwen is correct that the Motion for Contempt focused
 3   exclusively on the written correspondence.   However, Ocwen was on
 4   notice that the Marinos sought sanctions for violation of the
 5   discharge injunction; it should reasonably have known that the
 6   trial could span all instances of improper contact with the
 7   Marinos.   Indeed, Ocwen’s representative, Sony Prudent, testified
 8   that he had reviewed the contact logs, including telephone calls,
 9   in preparation for trial.
10        Moreover, Ocwen never objected during trial to any testimony
11   regarding telephone calls.   Thus, it waived any such objection.
12   Hansen v. Moore (In re Hansen), 368 B.R. 868, 875 (9th Cir. BAP
13   2007) (“A party who fails to object to evidence at trial waives
14   the right to raise admissibility issues on appeal.” (citing Price
15   v. Kramer, 200 F.3d 1237, 1251–52 (9th Cir. 2000))).
16        The Marinos introduced evidence at trial that Ocwen
17   repeatedly called them to request payment, even though they
18   understandably could not offer a definite number of calls.
19
          10
20          Ocwen does not argue on appeal that the court erred in
     finding that the calls violated the discharge injunction. While
21   we note that California state law requires the creditor to
     attempt to contact the debtor concerning the default, see Cal.
22
     Civ. Code § 2923.5, the only evidence in the record about the
23   content of the phone calls is the Marinos’ and Ms. O’Kane’s
     testimony about repeated demands for payment. There is no
24   evidence that the content of the calls complied with the state
     statutes. Ocwen did not offer a script that it requires its
25   staff to use or any other evidence of what its staff said during
26   the calls. Rather, it appears that the calls simply and
     repeatedly demanded payment post-discharge. Nor does it appear
27   that a so-called “mini-Miranda warning,” if given, would bring
     Ocwen’s telephone calls into compliance, inasmuch as the FDCPA
28   generally does not apply to foreclosure proceedings.

                                     23
 1   Mrs. Marino testified that Ocwen called three to five times a day
 2   for a year; that she did not pick up all of Ocwen’s calls because
 3   she did not want to be harassed; that she may have answered
 4   twenty of the calls; and that she may have received between sixty
 5   to one hundred calls.   Mr. Marino’s and Ms. O’Kane’s testimony
 6   also mentioned numerous calls.   At trial, Ocwen did not produce
 7   any evidence regarding the number of telephone calls, other than
 8   to acknowledge that it made calls to the Marinos.   The court’s
 9   finding that Ocwen called the Marinos one hundred times was not
10   clearly erroneous.
11        In its Motion for Reconsideration, Ocwen provided the call
12   log from the Marinos’ file that purported to show that Ocwen only
13   called the Marinos thirty-five times during the applicable
14   period.   But “‘a motion for reconsideration should not be
15   granted, absent highly unusual circumstances, unless the district
16   court is presented with newly discovered evidence, committed
17   clear error, or if there is an intervening change in the
18   controlling law.’    A [Civil] Rule 59(e) motion may not be used to
19   raise arguments or present evidence for the first time when they
20   could reasonably have been raised earlier in the litigation.”
21   Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 890 (9th
22   Cir. 2000) (quoting 389 Orange St. Partners v. Arnold, 179 F.3d
23   656, 665 (9th Cir. 1999)).   The call logs were available to Ocwen
24   prior to trial and were referenced by Ocwen’s witness; the
25   bankruptcy court even expressed its displeasure that Ocwen did
26   not introduce the call logs into evidence but only relied on
27   Mr. Prudent’s testimony about their contents.   The logs were not
28   “newly discovered evidence” within the meaning of Civil Rule

                                      24
 1   59(e).    See Feature Realty, Inc. v. City of Spokane, 331 F.3d
2   1082, 1093 (9th Cir. 2003) (“Evidence ‘in the possession of the
 3   party before the judgment was rendered is not newly discovered.’”
 4   (citation omitted)).
 5        There is another independently sufficient reason to affirm.
 6   Ocwen failed to provide us with a transcript of the hearing on
 7   the Motion for Reconsideration.    See Clinton v. Deutsche Bank
 8   Nat’l Tr. Co. (In re Clinton), 449 B.R. 79, 83 (9th Cir. BAP
 9   2011) (“Without a transcript, it is impossible to determine why
10   the bankruptcy court ruled as it did.    Therefore, we have little
11   choice but to exercise our discretion and summarily affirm the
12   bankruptcy court’s decision[.]”).
13        3.     The damages were reasonable and supported by the
                 evidence.
14
15        Ocwen argues that the $119,000 award is not reasonable,
16   because the award was arbitrary and the court ignored other
17   causes of the Marinos’ emotional distress.    We disagree.
18        The Ninth Circuit has allowed emotional distress damages for
19   automatic stay violations when the debtor “(1) suffer[s]
20   significant harm, (2) clearly establish[es] the significant harm,
21   and (3) demonstrate[s] a causal connection between that
22   significant harm and the violation of the automatic stay (as
23   distinct, for instance, from the anxiety and pressures inherent
24   in the bankruptcy process).”    Snowden v. Check Into Cash of Wash.
25   Inc. (In re Snowden), 769 F.3d 651, 657 (9th Cir. 2014) (quoting
26   Dawson v. Wash. Mutual Bank, F.A. (In re Dawson), 390 F.3d 1139,
27   1149 (9th Cir. 2004)) (discussing violation of the automatic
28   stay).    The same rule should apply to violations of the discharge

                                       25
 1   injunction.    See In re Nordlund, 494 B.R. at 523 (applying
 2   Dawson’s three-part test to violations of the discharge
 3   injunction); C & W Asset Acquisition, LLC v. Feagins (In re
 4   Feagins), 439 B.R. 165, 178 (Bankr. D. Haw. 2010) (“Although
 5   Dawson considered the remedy for violations of the automatic stay
 6   under section 362(k)(1), the same reasoning applies to willful
 7   violations of the discharge injunction.”).
 8        Ocwen contends that the bankruptcy court’s award of $1,000
 9   per contact was arbitrary and that the total award should not
10   have exceeded “several thousand dollars” in accordance with Dyer.
11   But Ocwen ignores the fact that the bankruptcy court awarded
12   compensatory damages for emotional distress, not punitive
13   sanctions.    The limit on punitive sanctions discussed in Dyer11
14   does not apply to a compensatory award.
15        Ocwen also argues that the Marinos’ emotional distress
16   predated the post-discharge communications and was not caused by
17   its violation of the discharge injunction.    But the Marinos and
18   Ms. O’Kane testified that the Marinos’ health and relationship
19
20
          11
            Ocwen cites In re Martinez, 561 B.R. 132, 173 (Bankr. D.
21 Nev. 2016), for the proposition that a “$1,000 per violation
     figure can be arbitrary as it does not take into account the
22
     circumstances of the individual victim, and therefore, would not
23   compensate for the actual damages suffered.” But the Martinez
     court also stated that “[a] $1,000 per violation figure can be
24   too high in some cases, but too low in others. Repeated attempts
     by a creditor to collect a discharged debt may cause little
25   concern to an individual who is represented by effective
26   bankruptcy counsel, but may be gut wrenching to a pro se debtor
     who thought he had received a fresh start.” Id. at 173 n.47. In
27   this case, the bankruptcy court heard testimony from the Marinos
     about how Ocwen’s violations affected them. The court’s award
28   did “take into account the circumstances of” the Marinos.

                                      26
 1   improved after they filed for bankruptcy but deteriorated again
 2   when Ocwen began contacting them post-discharge.   The bankruptcy
 3   court weighed the evidence and determined that Ocwen’s violation
 4   of the discharge injunction caused the Marinos’ injury.   The
 5   court did not clearly err in assigning blame to Ocwen.
 6   B.   The Marinos’ cross-appeal
 7        The Marinos argue that the court erred by failing to award
 8   punitive damages, because it erroneously believed that it lacked
 9   authority to do so.   The bankruptcy court misstated the law.
10        While the Ninth Circuit has stated that the bankruptcy
11   courts are prohibited from assessing any “serious” punitive
12   damages, it has left open the possibility of “relatively mild
13   noncompensatory fines.”   In re Dyer, 322 F.3d at 1193.   We have
14   previously stated that, “[i]f a bankruptcy court finds that a
15   party has willfully violated the discharge injunction, the court
16   may award actual damages, punitive damages and attorney’s fees to
17   the debtor.”   In re Nash, 464 B.R. at 880 (citing Espinosa v.
18   United Student Aid Funds, Inc., 553 F.3d 1193, 1205 n.7 (9th Cir.
19   2008), aff’d, 559 U.S. 260 (2010)).
20        Ocwen concedes that the bankruptcy court may award sanctions
21   and that relatively mild noncompensatory fines may be permissible
22   under some circumstances, but it argues that the bankruptcy court
23   may not award punitive damages.
24        Some bankruptcy courts understand Dyer to mean that a
25   bankruptcy court may not allow “punitive damages” for a violation
26   of the discharge injunction but may award “relatively mild
27   noncompensatory fines.”   See, e.g., In re Martinez, 561 B.R. at
28   175 (“this court has no authority to award punitive damages for a

                                       27
 1   violation of the Discharge Injunction, but it does have authority
 2   to award mildly [sic], non-compensatory fines in appropriate
 3   circumstances”); In re Dickerson, 510 B.R. 289, 298 (Bankr. D.
 4 Idaho 2014) (“in general, punitive damages are not an appropriate
 5   remedy for § 105(a) contempt proceedings, [but] relatively mild
 6   noncompensatory fines may be acceptable in some circumstances”).
 7   Other courts have held that a bankruptcy court may award
 8   “punitive damages,” so long as the amount is “relatively mild.”
 9   See, e.g., Rosales v. Wallace (In re Wallace), BAP No.
10   NV-11-1681-KiPaD, 2012 WL 2401871, at *8 (9th Cir. BAP June 26,
11   2012) (recognizing that, under Dyer, “such punitive sanctions
12   cannot be ‘serious’”).   We do not see any meaningful difference
13   between “punitive damages” and “noncompensatory fines.”    The
14   Ninth Circuit has authorized “noncompensatory fines,” which are
15   simply punitive damages by another name.   However labeled, any
16   such award must be “relatively mild.”12
17        It was thus an error for the bankruptcy court to preclude
18   itself from considering an award of punitive damages.    We do not
19   hold that the bankruptcy court must award a fine or punitive
20   damages, but we remand so that the bankruptcy court can consider
21   whether to do so.
22        Alternatively, the bankruptcy court might choose to issue
23   proposed findings and a recommended judgment on punitive damages
24
25        12
            The Ninth Circuit left open the question of what is a
26   “serious” punitive sanction but implied that any fine above
     $5,000 (presumably in 1989 dollars) would be considered
27   “serious.” In re Dyer, 322 F.3d at 1193 (citing F.J. Hanshaw
     Enters., Inc. v. Emerald River Dev., Inc., 244 F.3d 1128, 1139
28   n.10 (9th Cir. 2001)).

                                     28
 1   to the district court or refer the matter to the district court
 2   for criminal contempt proceedings.   See, e.g., Exec. Benefits
 3   Ins. Agency v. Arkison, 134 S. Ct. 2165, 2173 (2014) (When faced
 4   with “core” claims that cannot be adjudicated by the bankruptcy
 5   court under Stern v. Marshall, 564 U.S. 462 (2011), “[t]he
 6   bankruptcy court should hear the proceeding and submit proposed
 7   findings of fact and conclusions of law to the district court for
 8   de novo review and entry of judgment.”); In re Dyer, 322 F.3d at
 9   1194 n.17 (“We do not preclude the possibility that a bankruptcy
10   court could initiate criminal contempt proceedings by referring
11   alleged contempt to the district court.   Nor do we address
12   whether the district court could refer those proceedings back to
13   the bankruptcy court if the parties so consented.”).   The
14   restriction on the bankruptcy court’s power to grant punitive
15   damages and punish contempt stems from the fact that bankruptcy
16   judges lack life tenure.   District judges do not face that
17   restriction.   See In re Dyer, 322 F.3d at 1194.
18                               CONCLUSION
19        For the foregoing reasons, the bankruptcy court did not err
20   in awarding the Marinos damages for Ocwen’s willful violations of
21   the discharge injunction but erred when it held that it lacked
22   the authority to award any punitive damages.   We therefore AFFIRM
23   IN PART and VACATE and REMAND IN PART the Sanctions Order and
24   AFFIRM the Reconsideration Order.
25
26
27
28

                                     29