503 B.R. 666
Bankr. S.D. Miss.2013Background
- Debtor Dorisia Burns filed Chapter 13 on Aug. 31, 2012; she had a lease-purchase agreement with Home Zone for household items executed Dec. 3, 2011.
- On Sept. 1, 2012 the Debtor told a Home Zone employee (Wright) she had filed bankruptcy and gave him her attorney’s business card; Wright relayed that to manager Willis.
- On Sept. 4, 2012 Home Zone placed multiple collection calls, went to Debtor’s residence, and repossessed a bedroom furniture set (Debtor’s account) and a refrigerator (registered to Debtor’s sister but located in Debtor’s home and used/paid for in part by Debtor).
- During the repossession Debtor’s counsel informed Willis of the bankruptcy (gave case date/number); Home Zone nonetheless completed the repossession and later received a facsimile confirming the pending filing.
- Debtor sued under 11 U.S.C. § 362(k). At trial the court found Home Zone had knowledge, acted intentionally, and repossessed property covered by the stay; it awarded actual and punitive damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Home Zone willfully violated the § 362 automatic stay | Burns: oral notice (Sept. 1) + counsel contact (Sept. 4) put Home Zone on notice; continued collection and repossession were intentional violations | Home Zone: disputed knowledge as to bankruptcy for some acts; argued refrigerator wasn’t Debtor’s collateral so outside stay | Court: Willful violation proven — Home Zone knew of filing and intentionally repossessed and attempted collection, violating the stay |
| Whether the refrigerator was protected by the automatic stay | Burns: Debtor had possessory interest — fridge in her home, food purchased by her, she made some payments | Home Zone: Refrigerator belonged to sister Griffin and was not in Debtor’s lease-purchase agreement | Court: Debtor had a possessory interest; fridge fell within stay; repossession violated § 362 |
| Damages recoverable (emotional distress, lost property, attorneys’ fees/expenses, punitive) | Burns: seeks emotional distress, value/use loss of furniture and spoiled groceries, and attorneys’ fees/expenses and punitive damages | Home Zone: challenged amount/reasonableness of fees, argued lack of mitigation and excessive billing | Court: Awarded actual damages for emotional distress ($1,500), loss of use/value of bedroom set ($243.98) and groceries ($300), attorneys’ fees and expenses ($31,167.85), plus punitive $2,500; total $35,711.78 |
| Whether attorney fees should be reduced for poor billing judgment/block billing; whether plaintiff mitigated damages | Burns: fees reflected work performed; attempted settlements; mitigated property loss quickly | Home Zone: argued excessive hours, reuse of template pleadings, block billing, and failure to mitigate fees | Court: Applied lodestar, reduced pretrial entries for lack of billing judgment and block billing (total reductions applied), found lodestar $29,010 and expenses reasonable; found Debtor made reasonable mitigation efforts |
Key Cases Cited
- Campbell v. Countrywide Home Loans, 545 F.3d 348 (5th Cir. 2008) (automatic stay is a self-executing injunction; private right for willful violations)
- In re Chesnut (Templeton Mortg. Corp. v. Chesnut), 422 F.3d 298 (5th Cir. 2005) (purpose and broad scope of automatic stay)
- Young v. Repine (In re Repine), 536 F.3d 512 (5th Cir. 2008) (three-part test for willful stay violation: knowledge, intentional act, violation)
- Saizan v. Delta Concrete Prods. Co., 448 F.3d 795 (5th Cir. 2006) (billing judgment requirement; reduce fee awards for lack of documentation)
- In re 48th St. Steakhouse, Inc., 835 F.2d 427 (2d Cir. 1987) (possessory interests can be protected by the automatic stay)
- Knaus v. Concordia Lumber Co., Inc. (In re Knaus), 889 F.2d 773 (8th Cir. 1989) (egregious conduct standard for punitive damages under § 362)
- Collier v. Hill (In re Collier), 410 B.R. 464 (Bankr. S.D. Tex. 2009) (requirements and proof standard for emotional distress damages under § 362)
- Johnson v. Magee Rentals, Inc., 478 B.R. 235 (Bankr. S.D. Miss. 2012) (oral notice of bankruptcy sufficient to establish creditor knowledge)