513 B.R. 605
Bankr. D.N.M.2014Background
- Debtor entered into a Sale Contract to buy a property from Davis; property includes a house on a foundation and a mobile home not permanently affixed.
- Davis sued Debtor in state court (CV-2013-01256) and, after trial, Judge Arrieta terminated Debtor’s rights and awarded no damages beyond possession.; Debtor transferred title of the Mobile Home to himself two days after the judgment.
- Debtor filed Chapter 7 bankruptcy on April 26, 2014; Davis was listed as a creditor and notice was mailed on April 28, 2014.
- On May 7, 2014, Davis attempted to evict the Debtor and family despite the bankruptcy filing; she did not seek stay relief before the eviction.
- Debtor alleged actual damages from the eviction and related conduct, including lost wages, travel costs, property losses, housing costs, and attorney fees; Davis seeks stay relief to continue the state court action.
- The court must decide whether Davis violated the automatic stay, whether sanctions are warranted, and whether the stay should be lifted to allow the state action to proceed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the automatic stay prevented eviction in this case | Escobedo | Davis argued 362(b)(22) excused eviction | Stay applicable; 362(b)(22) does not apply; eviction violated stay. |
| Whether Davis willfully violated the automatic stay | Escobedo asserts willful violation evidenced by notice and knowledge | Davis believed she had right to possession | Willful violation proven; notice and knowledge shown. |
| Whether the Debtor is entitled to damages and whether punitive damages are appropriate | Escobedo entitled to actual damages and possible punitive damages | Davis disputes extent and measurability of damages; punitive damages contested | Actual damages awarded; punitive damages awarded as appropriate. |
| Whether attorney Perales-Pina violated the automatic stay | Davis’s attorney violated stay via actions on client’s behalf | Attorney did not act to violate stay; he advised client | No evidence of attorney stay violation. |
| Whether stay relief should be granted to proceed in state court | State court action should be stayed; relief to be denied | Curtis factors support lifting stay to adjudicate issues | Stay relief granted; state court may adjudicate transfer of Mobile Home. |
Key Cases Cited
- In re Deerman, 482 B.R. 344 (Bankr.D.N.M. 2012) (scope of automatic stay is broad, includes property and actions against debtor)
- In re Gindi, 642 F.3d 865 (10th Cir. 2011) (broad stay protection; includes estate and debtor interests)
- In re 48th St. Steakhouse, Inc., 835 F.2d 427 (2d Cir. 1987) (mere possessory interest can trigger stay protection)
- Johnson v. Smith (In re Johnson), 575 F.3d 1079 (10th Cir. 2009) (stay protections; notice need not be formal)
- Diviney v. NationsBank of Tex., N.A. (In re Diviney), 225 B.R. 762 (10th Cir. BAP 1998) (four-factor test for punitive damages under 362(k))
- Exxon Shipping Co. v. Baker, 554 U.S. 471 (2018) (due process considerations in punitive damages)
- State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003) (guidance on appropriate punitive multipliers)
- In re Curtis, 322 B.R. 470 (Bankr.D. Mass. 2005) (four-factor framework for punitive damages)
- In re Draper, 2010 WL 963987 (Bankr.D.N.M. 2010) (forfeiture considerations in real estate contracts; equity abhors forfeiture)