529 B.R. 17
Bankr. E.D.N.Y.2015Background
- Debtor sought civil contempt against Wells Fargo for discharging the loan and continuing collection after discharge.
- Debtor's Chapter 7 case was a no-asset case; Wells Fargo was not listed and did not receive notice before case closure.
- Pre-petition loan originated in 2005 with World Savings Bank; separation agreement transferred property but Debtor believed discharge released him of liability.
- From 2011-2013 Wells Fargo pursued collection, including 137 calls and several letters after learning of the discharge.
- Court adopts a mechanical approach to unscheduled debts in no-asset cases, holding the debt discharged despite lack of creditor notice.
- Damages: attorney’s fees awarded; emotional distress denied; punitive damages awarded totaling $69,500; payment due within 60 days.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an unscheduled debt is discharged in a no-asset Chapter 7 case | Haemmerle contends the loan was discharged by operation of law. | Wells Fargo argues no discharge due to lack of notice. | Unscheduled debt discharged; mechanical approach applies. |
| Whether Wells Fargo violated the discharge injunction after learning of the discharge | Wells Fargo continued collection after discharge notice. | No willful violation given lack of notice and intent. | Wells Fargo knowingly violated §524(a)(2). |
| Whether attorney’s fees are warranted as contempt sanctions | Fees should be awarded for willful conduct and bad faith. | Limitations on award and amount argued. | Attorneys’ fees awarded; determine amounts on fee statement. |
| Whether emotional distress damages are warranted | Distress due to ongoing violations supports damages. | No causal link shown to worsen medical condition. | Emotional distress damages denied. |
| Whether punitive damages are warranted | Willful, malicious conduct merits punitive sanctions. | Punitive damages not justified without egregious conduct. | Punitive sanction of $69,500 awarded. |
Key Cases Cited
- Green v. Welsh, 956 F.2d 30 (2d Cir. 1992) (discharge injunction aims to protect fresh start)
- In re Nassako, 405 B.R. 515 (Bankr.S.D.N.Y. 2009) (contempt authority under §105 to enforce discharge injunction)
- In re DiGeronimo, 354 B.R. 625 (Bankr.E.D.N.Y. 2006) (willfulness requires knowing discharge and intent to violate)
- In re Szenes, 515 B.R. 1 (Bankr.E.D.N.Y. 2014) (punitive and compensatory sanctions for willful discharge injunction violation)
- In re Nicholas, 457 B.R. 202 (Bankr.E.D.N.Y. 2014) (contempt standards and attorney’s fees considerations)