602 B.R. 770
Bankr. M.D. Ala.2019Background
- Debtor Lenora Deemer filed Chapter 13 in 2014, proposed surrender of a 2005 Nissan Altima, and converted to Chapter 7 in 2017 with the surrender noted; discharge entered November 28, 2017.
- Santander filed the original claim; the claim was transferred to NCEP, LLC, which never repossessed the inoperable vehicle nor released title for over a year.
- Debtor contacted NCEP multiple times; NCEP allegedly offered to release title only for $750. Debtor felt coerced but never paid.
- Debtor reopened the case and filed a Motion for Contempt and Sanctions in December 2018; hearing held January 17, 2019; briefs filed thereafter.
- After the contempt motion was filed, NCEP mailed the original certificate of title around December 14, 2018, thereby purging its contempt.
- Court found NCEP violated the discharge injunction (by coercive delay/refusal to repossess or release lien), awarded attorney fees ($1,917.50), denied compensatory and punitive damages, and declined broader sanctions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether NCEP violated the §524 discharge injunction by its post-discharge conduct | NCEP’s failure to repossess or release title and conditioning release on payment coerced Debtor into repaying discharged debt | NCEP pointed to creditor rights re: collateral and suggested collateral value could justify its conduct (did not present evidence) | Court: Violation. Failure to repossess or release lien was objectively coercive and thus contemned the discharge order until title was sent |
| Whether the creditor had an objectively reasonable basis to think its conduct lawful (Taggart standard) | Conduct was plainly barred by the discharge order; no reasonable ground of doubt | NCEP relied on principles that creditors may enforce rights in collateral when collateral has value (but presented no valuation or intent evidence) | Court: No objectively reasonable basis shown; Taggart test met in favor of Debtor |
| Compensatory damages (out-of-pocket and emotional distress) | Debtor sought $4,160 (storage-like calculation) and emotional distress damages | NCEP disputed causation and magnitude; no proof of actual out-of-pocket losses | Court: Denied. Debtor presented no evidence of actual out-of-pocket loss and failed to prove significant emotional distress |
| Attorney fees and punitive damages | Debtor sought $1,917.50 fees and $8,320 punitive damages | NCEP did not contest reasonableness of requested hourly rate; argued punitive relief inappropriate once contempt purged | Court: Awarded attorney fees $1,917.50 (fees remedial). Denied punitive damages because contempt was purged and punitive sanctions would be criminal in nature |
Key Cases Cited
- Taggart v. Lorenzen, 139 S. Ct. 1795 (2019) (civil contempt available when no objectively reasonable basis exists to believe creditor’s conduct is permitted by discharge)
- In re McLean, 794 F.3d 1313 (11th Cir. 2015) (tests for discharge-injunction violations and sanction purposes)
- In re Hardy, 97 F.3d 1384 (11th Cir. 1996) (discharge injunction and availability of contempt-based sanctions)
- In re Pratt, 462 F.3d 14 (1st Cir. 2006) (creditor’s failure to release lien or repossess an inoperable vehicle constituted coercion in violation of discharge)
- Bagwell v. Int’l Union, United Mine Workers of Am., 512 U.S. 821 (1994) (distinguishing coercive vs punitive contempt and due process concerns)
- Blum v. Stenson, 465 U.S. 886 (1984) (standard for reasonable hourly attorney rates)