Credit Nation Lending Services, LLC v. Nettles
489 B.R. 239
Bankr. N.D. Ala.2013Background
- Credit Nation filed a secured proof of claim for $6,127.54 on Nettles' 2005 Kia Spectra after Nettles petitioned for Chapter 13 bankruptcy.
- Nettles proposed a monthly plan payment of $250 to Credit Nation; bankruptcy court confirmed the plan in December 2011.
- Credit Nation repossessed the Nettles' Kia post-petition, despite Nettles' bankruptcy, prompting turnover and related proceedings.
- Nettles sought turnover of property, attorney’s fees, punitive damages, and related relief in the adversary and bankruptcy proceedings.
- Bankruptcy court found willful stay violation, retained the vehicle for ten days, and awarded Nettles attorney’s fees ($800) and sanctions ($200) while discharging Nettles’ debt to Credit Nation and cancelling the security interest.
- Credit Nation appealed, challenging the discharge as improper punitive damages under 11 U.S.C. § 362(k)(1) and urging reinstatement of its security interest.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was the Nettles' debt discharge proper under § 362(k)? | Credit Nation: discharge was punitive damages for stay violation; requires no injury. | Nettles: discharge is proper under § 362(k) for willful stay violation as damages. | Discharge affirmed under § 362(k). |
| Were punitive damages warranted under § 362(k)(1)? | Credit Nation: conduct not egregious/malicious enough for punitive damages. | Nettles: egregious, willful stay violation with deliberate retention supports punitive damages. | Yes; appropriate circumstances supported punitive damages. |
| Did Nettles have cognizable actual damages enabling punitive damages under § 362(k)? | Credit Nation: no injury shown beyond speculative harm; thus no punitive damages. | Nettles: attorney’s fees and costs incurred to compel turnover constitute actual damages. | Attorneys’ fees/costs were actual damages; injury proven. |
Key Cases Cited
- In re Cox, 214 B.R. 635 (Bankr.N.D. Ala. 1997) (willful stay violation; punitive damages not guaranteed)
- In re Grine, 439 B.R. 461 (Bankr.N.D. Ohio 2010) (attorney’s fees as actual damages under § 362(k))
- Vazquez Laboy v. Doral Mortgage Corp. (In re Vazquez Laboy), 647 F.3d 367 (1st Cir. 2011) (actual damages including attorney’s fees under § 362(k))
- Graham v. Graham (In re Graham), No. 07-4124, 2011 WL 7658757 (Bankr.S.D. Ga. 2011) (attorney’s fees awarded as actual damages despite lack of other injury)
- In re Johnson, No. 06-00164 (Bankr.N.D. Ala. 2007) (punitive damages where creditor displayed arrogant defiance; other cases cited)
- In re Spookyworld, Inc., 346 F.3d 1 (1st Cir. 2003) (contours of contempt remedies and punitive damages)