543 B.R. 717
Bankr. M.D. Penn.2016Background
- Debtor Jaime Sue Aleckna filed a Chapter 13 petition (joint case) on June 1, 2012; California Coast University (Coast) was a scheduled creditor claiming about $6,300.00.
- Coast originally sued in an adversary proceeding to have its claim declared nondischargeable; that complaint was ultimately dismissed with prejudice, while Aleckna’s counterclaim for automatic-stay violations remained.
- Aleckna requested transcripts before and after filing; Coast refused to release transcripts citing a financial hold and later sent transcripts that omitted a graduation date despite Aleckna having completed course requirements.
- The Court took judicial notice of the bankruptcy mailing; the 341 notice was mailed to Coast on June 6, 2012, creating a presumption of receipt that Coast failed to rebut.
- The court found Coast staff lacked training/procedures to identify bankruptcy notices and concluded Coast’s withholding or limited release of transcripts aimed to collect a prepetition debt, violating the automatic stay.
- Remedy: judgment for Aleckna awarding actual damages of $230.16, an order requiring Coast to deliver certified transcripts with a graduation date and a diploma within 21 days, denial of emotional-distress and punitive damages, and allowance to seek attorneys’ fees and costs within 14 days.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether refusal to release transcripts due to a financial hold violates the automatic stay (§ 362(a)) | Withholding transcripts to compel payment is an act to collect a prepetition debt and thus violates § 362(a)(6) | Coast treated transcripts as withheld for nonpayment and asserted no timely notice or that withholding was permissible | Court held refusal to release transcripts because of a financial hold violated the automatic stay |
| Whether Coast had knowledge of the bankruptcy when it acted | Aleckna notified Coast by phone and via letter with case number; notice of filing was mailed to Coast (341 notice) | Coast contended it did not receive the 341 notice and had no actual knowledge | Court applied mailbox rule, found notice mailed June 6, allowed 3 days for delivery, and held Coast had knowledge as of June 9, 2012 |
| Whether issuing a transcript that omits a graduation date (despite completed requirements) violates the stay | A transcript lacking a graduation date (or refusing to process graduation) is a de facto withholding that impairs debtor’s postpetition rights and collects debt | Coast said transcripts were provided (albeit without graduation date) and graduation processing required payment | Court held release of transcript without graduation date (and refusal to process graduation) violated the automatic stay and ordered certified transcript with graduation date and diploma |
| Damages available for willful stay violation: actual, emotional, punitive, attorneys’ fees | Seeks actual damages (lost wages), emotional distress, punitive damages, and attorneys’ fees/costs | Coast opposed or disputed scope of damages and evidence for emotional/punitive awards | Court awarded $230.16 for lost wages, denied emotional‑distress and punitive damages, and allowed fee petition for reasonable attorneys’ fees and costs |
Key Cases Cited
- In re Mu’min, 374 B.R. 149 (Bankr. E.D. Pa. 2007) (majority view that withholding transcript for unpaid debt violates § 362(a)(6))
- In re Merchant, 958 F.2d 738 (6th Cir. 1992) (withholding transcripts constitutes collection activity causing stay violation)
- In re Parker, 334 B.R. 529 (Bankr. D. Mass. 2005) (refusal to allow registration or graduation for nonpayment violates automatic stay)
- Johnson v. Edinboro State College, 728 F.2d 163 (3d Cir. 1984) (decision under § 525, distinguished from § 362 automatic-stay analysis)
- In re Linsenbach, 482 B.R. 522 (Bankr. M.D. Pa. 2012) (elements and proof standard for willful stay violations)