Duby v. United States (In Re Duby)
451 B.R. 664
1st Cir. BAP2011Background
- Debtor Dorothy R. Duby filed a voluntary Chapter 7 petition on Oct. 14, 2003.
- USDA was listed as an unsecured nonpriority creditor on Schedule F in the amount of $1,800.
- USDA sent eight post-petition statements and calls despite notice of the stay.
- Debtor received a discharge on July 15, 2004; USDA’s post-discharge collection continued.
- USDA’s error treated the debt as secured and surviving discharge, prompting further statements and default notices through 2006.
- Bankruptcy court ultimately awarded $11,848.50 in attorney’s fees and a $3,000 sanctions award, and the First Circuit panel reviewed these rulings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether emotional distress damages are available against the United States under §106. | Duby argues Rivera Torres misread; emotional damages may be recoverable. | USDA relies on Rivera Torres and limits emotional damages against the government. | Emotional distress damages are unavailable against the United States. |
| Whether attorney's fees were recoverable under §362(k) given lack of other damages. | Fees awarded as actual damages; pre-litigation settlement refused. | Fees must be tied to actual damages incurred; excessive pre-litigation fees may be unrecoverable. | Attorney's fees awarded under §362(k) upheld as actual damages. |
| Whether the $3,000 sanction for discharge-injunction violation was punitive and improper. | Sanction served to deter future violations, may be compensatory. | Sanction is permissible to deter future violations; may be coercive. | Sanction awarded under §105(a) improperly punitive; vacated. |
| Whether sovereign immunity bars any monetary relief against USDA without express waiver. | Waiver allows monetary relief under §106(a) for certain remedies. | §106(a) does not authorize punitive damages and emotional distress; waiver is limited. | Sovereign immunity barred punitive damages; emotional distress damages barred; fees affirmed. |
Key Cases Cited
- In re Rivera Torres, 432 F.3d 20 (1st Cir. 2005) (emotional distress damages not available against government under §106(a))
- Pratt v. Gen. Motors Acceptance Corp., 462 F.3d 14 (1st Cir. 2006) (§105(a) sanctions and damages for discharge injunction violations)
- Sternberg v. Johnston, 595 F.3d 937 (9th Cir. 2010) (debtor fees for damages action not recoverable under §362(k) (circuit split))
- Fleet Mortgage Group, Inc. v. Kaneb, 196 F.3d 265 (1st Cir. 1999) (discussion of emotional distress as ‘actual damages’ under stay violations)
- In re Heghmann, 316 B.R. 395 (1st Cir. BAP 2004) (standard for reviewing damages in stay violations)
- Soares v. Brockton Credit Union, 107 F.3d 969 (1st Cir. 1997) (automatic stay protections and debtor rights)