649 B.R. 831
Bankr. S.D. Miss.2023Background
- Debtor George Ryan Campbell filed Chapter 13 on October 10, 2022, and converted to Chapter 7 on December 21, 2022.
- On December 21, 2022, creditor Adam Pittman (through attorney Matthew Thompson of Thompson Addison PLLC) filed and served an $8.5 million alienation-of-affection lawsuit against Campbell.
- Thompson and the Law Firm had actual knowledge of Campbell’s bankruptcy (served with a suggestion of bankruptcy, opposing counsel’s entry of appearance, and discussed at a virtual hearing).
- Campbell moved for contempt alleging a willful violation of the automatic stay under 11 U.S.C. § 362.
- The Court found a willful stay violation, awarded Campbell reasonable and necessary attorney’s fees and costs under § 362(k), denied emotional-distress and punitive damages, and held Pittman, Thompson, and the Law Firm jointly and severally liable but required Thompson and the Law Firm to pay first.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did defendants willfully violate the automatic stay by filing and serving the prepetition-claim lawsuit? | Pittman (via Thompson) knowingly filed and served a suit asserting prepetition claims after bankruptcy; this was a stay violation. | No effective notice under § 342 because Pittman was not listed in Chapter 13 schedules; any violation was at most technical or without harm. | Yes. Knowledge was established and the filing/ service were intentional and violated § 362(a)(1). |
| What damages are recoverable under § 362(k)? (types and proof required) | Campbell seeks attorney’s fees/costs, $5,000 emotional distress, and punitive damages. | Fees not recoverable absent other actual damages; emotional and punitive unjustified. | Attorney’s fees and costs (reasonable and necessary) are recoverable; emotional-distress and punitive damages denied for lack of causal and egregious evidence. |
| Is an attorney’s knowledge imputed to the client for stay-notice purposes? | Yes — Thompson’s knowledge should be imputed to Pittman. | Argues client lacked effective notice and thus no obligation to know case still pending. | Yes. Actual knowledge of counsel is imputed to the client; § 342 safe-harbor is inapplicable once counsel had knowledge. |
| Who bears initial liability and how is recovery sequenced? | All defendants should be held liable. | Thompson sought to limit attribution to himself and his firm. | Joint and several liability; court ordered Thompson and the Law Firm to compensate first; only if they fail may Campbell pursue Pittman. |
Key Cases Cited
- Brown v. Chesnut, 422 F.3d 298 (5th Cir. 2005) (defines "willful" stay violation standard).
- Young v. Repine (In re Repine), 536 F.3d 512 (5th Cir. 2008) (adopts test and principles on damages and recoverable fees under § 362(k)).
- Monge v. Rojas (In re Monge), 826 F.3d 250 (5th Cir. 2016) (punitive damages for stay violations require egregious conduct).
- Holland v. Florida, 560 U.S. 631 (2010) (lawyer’s acts attributable to client).
- Hitt v. Connell, 301 F.3d 240 (5th Cir. 2002) (standards for proving emotional-distress damages).
- McWilliams v. Advanced Recovery Sys., Inc., 174 F. Supp. 3d 936 (S.D. Miss. 2016) (law-firm acts can create liability for the client).