Carter v. First National Bank (In re Carter), 502 B.R. 333

James A. Carter, Jr. Logging, LLC (LLC) owed First National Bank of Crossett (Bank) on two secured loans; Carter personally guaranteed them.
On October 24, 2012 Carter (as sole LLC member) executed an "Assignment" purporting to transfer all LLC assets to himself; the Bank was not informed.
Carter filed a personal Chapter 13 petition on October 25, 2012 (later dismissed) and again on November 2, 2012; the Bank sued the LLC in state court on November 2 seeking repossession of collateral.
The state court issued an Order of Delivery; the Sheriff seized the equipment. Carter moved in state court for a stay, produced the Assignment and bankruptcy notice, and the Sheriff retained the goods pending further order.
Carter then obtained return of the equipment via the Bankruptcy Court, filed a Motion for Sanctions alleging willful violation of the automatic stay, and sought damages; the Bankruptcy Court found no willful violation and denied sanctions.
The district court affirmed, reasoning the Bank lacked knowledge that the collateral had been transferred to Carter personally, so no willful stay violation occurred; a postpetition UCC notice was at most a technical (non-willful) violation.

Issue	Carter's Argument	Bank's Argument	Held
Whether repossession of equipment violated the automatic stay willfully	Bank knew of Carter's personal bankruptcy and therefore repossession was willful	Bank lacked knowledge that LLC assets had been assigned to Carter personally; action targeted LLC collateral	No willful violation — Bank reasonably believed collateral belonged to LLC
Whether Bank’s refusal to return equipment before court order constituted a continuing willful violation	Refusal to promptly return shows continuing deliberate violation	Bank disputed Assignment validity and reasonably awaited court direction	Not willful; refusal was not unreasonable under circumstances
Whether postpetition UCC/notice activity was a willful stay violation warranting damages	Any postpetition collection/notice violated stay and supports sanctions	Notice was a legal communication about rights under the UCC and, if violative, was only a technical (non-willful) breach	Technical/non-willful violation at most; insufficient for sanctions

First Nat’l Bank v. Pontow, 111 F.3d 604 (8th Cir. 1997) (standards for reviewing bankruptcy factual and legal findings)
Miller v. Farmers Home Admin., 16 F.3d 240 (8th Cir. 1994) (appellate review principles)
Garden v. Cent. Neb. Housing Corp., 719 F.3d 899 (8th Cir. 2013) (sanctions review is abuse of discretion)
Knaus v. Concordia Lumber Co., 889 F.2d 773 (8th Cir. 1989) (willfulness requires knowledge of the bankruptcy)
Jove Eng’g, Inc. v. IRS, 92 F.3d 1539 (11th Cir. 1996) (willful violation requires knowledge and intentional act regardless of intent to violate)
Apex Oil Co. v. Sparks, 406 F.3d 538 (8th Cir. 2005) (standard for overturning discretionary bankruptcy rulings)