451 B.R. 664
Bankr. D.N.H.2011Background
- Debtor filed a voluntary Chapter 7 on Oct 14, 2003; USDA listed as unsecured creditor for $1,800 on Schedule F.
- USDA sent eight post-petition statements during the stay, with monthly payments due after discharge.
- Debtor received discharge on Jul 15, 2004; USDA later treated the loan as secured and surviving discharge.
- USDA’s continued statements and collection calls occurred from Jul 2004 to Apr 2006 despite notice of discharge.
- Debtor’s counsel demanded $1,365 in fees and $5,000 for emotional distress in Jun 2006; USDA directed her to file a FTCA claim.
- Bankruptcy court ultimately found stay and discharge violations, awarded $11,848.50 in attorney’s fees and $3,000 sanctions, and the Panel affirmed in part and reversed in part (Jul 21, 2010).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether emotional distress damages are available against the federal government for stay violations. | Duby argues Rivera Torres is distinguishable and emotional distress should be recoverable. | USDA relies on Rivera Torres to bar emotional distress damages against the government. | Emotional distress damages barred under Rivera Torres; remains binding precedent. |
| Whether attorney’s fees can be awarded where no other recoverable damages exist. | Duby seeks recovery of reasonable fees incurred to stop violations. | USDA argues fees should not be awarded absent other damages and that pre-litigation fees may be limited. | Bankruptcy court did not abuse discretion; fees awarded as actual damages under §362(k)(1) and §105(a). |
| Whether the $3,000 sanction for violation of the discharge injunction is permissible given sovereign immunity. | Sanction serves to vindicate court authority and deter future violations. | Sanction constitutes punitive damages barred by §106(a)(3). | Sanction awarded was punitive and barred by §106(a)(3); reversed in part. |
Key Cases Cited
- In re Rivera Torres, 432 F.3d 20 (1st Cir. 2005) (holds no waiver of emotional damages against the United States under §106[a])
- Fleet Mortgage Group, Inc. v. Kaneb, 196 F.3d 265 (1st Cir. 1999) (discusses emotional distress as actual damages under stay violations)
- Jove Eng’g, Inc. v. I.R.S., 92 F.3d 1539 (11th Cir. 1996) (recognizes sovereign immunity waiver limits for punitive damages under §106(a)(3))
- Pratt v. Gen. Motors Acceptance Corp., 462 F.3d 14 (1st Cir. 2006) (authorizes damages under §105(a) for discharge injunction violations)
- Bessette v. Avco Fin. Servs., Inc., 230 F.3d 439 (1st Cir. 2000) (recognizes bankruptcy courts’ contempt powers and monetary relief)
- Sternberg v. Johnston, 595 F.3d 937 (9th Cir. 2010) (treats actual damages as potentially excluding post-violation fees under stay; criticized by First Circuit commentators)