Butz v. People First Federal Credit Union (In Re Butz)
444 B.R. 301
Bankr. M.D. Penn.2011Background
- Debtors filed a Chapter 13 bankruptcy on April 26, 2010 in the U.S. Bankruptcy Court for the M.D. Pennsylvania.
- Plaintiff Freda M. Butz received a computer-generated past-due statement from Defendant on June 14, 2010.
- Plaintiff alleged the statement was an invoice demanding pre-petition debt payment, constituting a willful stay violation under § 362(k).
- Defendant admits sending the statement but argues it informed the debtor of account status, not a collection effort.
- Defendant asserts it took steps consistent with the stay (marking account as no collection activity, reporting to credit bureaus, charging off), and that the computer-driven nature excuses the action.
- The court granted summary judgment for Plaintiff on the issue of stay violation, with damages to be determined at a later hearing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did sending the statement violate the automatic stay | Butz should recover for willful stay violation since notice existed and statement demanded payment. | Statement merely informed status; no collection action occurred and system automation excuses violation. | Yes; sending the statement was a willful stay violation. |
| Are there genuine issues of material fact | undisputed that defendant had notice and sent the statement; no factual dispute. | claims acts and defenses show compliance with the stay. | No genuine issues of material fact; undisputed notice and action. |
| Entitlement to damages under § 362(k) | Plaintiff entitled to actual damages and fees; damages to be determined at hearing. | Any damages remaining issues; argues actions taken do not support damages beyond notice. | Judgment as a matter of law that stay was violated; damages to be determined at a damages hearing. |
Key Cases Cited
- In re Lansdale Family Restaurants, Inc., 977 F.2d 826 (3d Cir.1992) (willfulness requires knowledge of the bankruptcy petition)
- In re University Medical Center, 973 F.2d 1065 (3d Cir.1992) (willful violation does not require specific intent)
- In re Krystal Cadillac-Oldsmobile GMC Truck, Inc., 337 F.3d 320 (3d Cir.2003) (knowledge of bankruptcy supports willfulness)
- In re Nixon, 419 B.R. 281 (Bankr.E.D.Pa.2009) (defines willfulness under § 362(k))
- In re Wingard, 382 B.R. 892 (Bankr.W.D.Pa.2008) (computer-did-it defense rejected; creditor must prevent violations)
- In re Rijos, 263 B.R. 382 (1st Cir.BAP 2001) (burden on creditor to prove steps to prevent stay violations when there is notice)
- In re McCormack, 203 B.R. 521 (Bankr.D.N.H.1996) (sophisticated enterprises must adjust procedures to comply with the stay)
- In re Krystal Cadillac-Oldsmobile GMC Truck, Inc., 337 F.3d 631 (3d Cir.2002) (see narrative in opinion; included for context in analysis)