632 B.R. 680
9th Cir. BAP2021Background
- Debtors Bradley and Nancy Koeberer transferred $125,000 and their Sonoma residence prepetition to an irrevocable trust; the Bank sued in state court including a fraudulent-transfer (UVTA) claim against the trustee and the Koeberers.
- The Koeberers filed chapter 7; the Bank received notice, entered an appearance in the bankruptcy case, but later filed a state-court Notice of Trial postpetition and served it on defense counsel.
- The Bank also filed a state-court Notice of Stay (rejected by the state court) and informed the state court it would not pursue the Koeberers but intended to continue claims against the trustee/transferee.
- The Koeberers moved for contempt under § 362(k), seeking $5,000 plus attorneys’ fees and costs; the bankruptcy court found a stay violation but called it "technical," denied damages and fees, and held the debtors lacked standing to complain about interference with the UVTA claim.
- The BAP affirmed that the Bank violated § 362(a)(1) and § 362(a)(3), held the debtors had standing to vindicate the stay as to actions directed at them under § 362(a)(1) (but not for estate-owned UVTA claims under § 362(a)(3)), vacated the denial of attorneys’ fees and costs, and remanded for a reasonableness determination.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Bank violated the automatic stay by filing/serving a postpetition Notice of Trial and intending to pursue the UVTA claim | Bank knowingly continued the state action and sought to prosecute the UVTA claim against parties tied to debtors | Bank only pursued claims against the trustee/transferee and did not actively prosecute claims against the Koeberers | Yes. Filing the Notice of Trial and pursuing the UVTA claim violated § 362(a)(1) and § 362(a)(3) |
| Whether the Koeberers had standing to seek contempt for the stay violation | Debtors may raise stay violations that target them under § 362(a)(1) | Only the trustee may assert violations affecting estate property (UVTA claim) | Debtors have standing under § 362(a)(1) but not to assert violations solely affecting estate property under § 362(a)(3) |
| Whether a "technical" stay violation precludes sanctions under § 362(k) | § 362(k) mandates awards for any willful stay violation producing injury; a "technical" label does not automatically bar fees | The Bank’s conduct was merely technical and not sanctionable | Court erred to deny sanctions solely because the violation was described as "technical"; § 362(k) has mandatory language, though injury and reasonableness still matter |
| Whether actual/punitive damages and attorneys’ fees should be awarded | Debtors sought actual damages ($5,000), punitive damages, and attorneys’ fees/costs | Bank argued no actual harm and conduct didn’t warrant damages or fees | No actual or punitive damages awarded (no evidence of injury); denial of attorneys’ fees vacated — remand to determine reasonable fees (which could be zero) |
Key Cases Cited
- FDIC v. Hirsch (In re Colonial Realty Co.), 980 F.2d 125 (2d Cir. 1992) (fraudulent-transfer actions against transferees are "actions . . . to recover a claim against the debtor" under § 362(a)(1))
- Mwangi v. Wells Fargo Bank, N.A., 764 F.3d 1168 (9th Cir. 2014) (petition creates automatic stay and freezes the status quo)
- Hillis Motors, Inc. v. Hawaii Auto. Dealers’ Ass’n, 997 F.2d 581 (9th Cir. 1993) (automatic stay precludes postpetition actions affecting debtor or estate property)
- Eskanos & Adler, P.C. v. Leetien, 309 F.3d 1210 (9th Cir. 2002) (definition of willful stay violation and review of sanctions amount)
- Am.'s Servicing Co. v. Schwartz-Tallard (In re Schwartz-Tallard), 803 F.3d 1095 (9th Cir. 2015) (§ 362(k) authorizes fee awards; only reasonably incurred fees are mandated)
- In re Mark One Corp., 619 B.R. 423 (Bankr. E.D. Cal. 2020) (fraudulent-conveyance and avoidance claims become property of the bankruptcy estate)