490 B.R. 662
Bankr. M.D. Penn.2013Background
- Debtor filed for bankruptcy and her vehicle, a 2006 Toyota Solara, was repossessed prepetition by Toyota Financial.
- Carr provided funds for Debtor to redeem the Solara, obtaining a security interest in the vehicle by possession.
- Debtor remained in possession of the Solara until after bankruptcy petition was filed; Carr refused to surrender the Solara post-petition.
- Debtor sought damages for Carr’s stay violation under 11 U.S.C. § 362(k); CGA agreed to represent pro bono under a fee arrangement later modified.
- Court previously held Carr violated the stay and had a duty to return the Solara; Carr eventually surrendered the vehicle in November 2012 after a court order.
- Debtor filed a Chapter 13 petition while the adversary proceeding was pending; bankruptcy case later dismissed for failure to pay filing fee.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Carr’s post-petition retention of the Solara violate the automatic stay? | Debtor argues Carr held the Solara in violation of § 362(a)(3) and must turnover immediately. | Carr contends he could maintain possession due to the dispute over insurance and there was no unconditional duty to surrender absent relief from stay. | Yes; turnover required and stay violation established. |
| What damages are recoverable as actual damages under § 362(k) for the stay violation? | Debtor seeks actual damages including attorney’s fees and potential lost wages and replacement costs. | Carr argues damages should be limited to concrete losses; some categories require proof and cannot be speculative. | Debtor entitled to $2,500 in attorney’s fees as actual damages; other categories denied for lack of proof or speculative basis. |
| Should punitive damages be awarded for the stay violation? | Debtor seeks punitive damages due to willful, arrogant disregard for the stay. | Carr contends modest damages are warranted, considering his ability to pay and lack of egregious conduct. | Yes; punitive damages awarded in the amount of $500. |
Key Cases Cited
- United States v. Whiting Pools, Inc., 462 U.S. 198 (Supreme Court 1983) (estate includes property debtor could have possessed at petition; turnover may be compelled)
- In re Knaus, 889 F.2d 773 (8th Cir. 1989) (creditor has duty to return prepetition repossessed property to the estate)
- In re Thompson, 426 B.R. 759 (Bankr.N.D. Ill. 2010) (pro bono counsel fees may be awarded as damages if properly incurred and contingent)
- In re Wagner, 74 B.R. 898 (Bankr.E.D.Pa. 1987) (punitive damages appropriate for egregious conduct)
- In re Gagliardi, 290 B.R. 808 (Bankr. D. Colo. 2003) (emotional distress damages considerations in stay violations)
- In re Beair, 168 B.R. 633 (Bankr.N.D. Ohio 1994) (damages for loss of use of collateral denied without proof)