603 B.R. 325
Bankr. E.D. Ky.2019Background
- Linda Kay Jones filed chapter 7 on Oct. 14, 2005; schedule listed a judgment lien held by Capital One (Creditor) against Scott County real property (Vine Property). Debtors obtained discharge on March 9, 2006.
- On Feb. 22, 2006 Debtors moved to avoid Creditor's judgment lien under § 522(f); court granted avoidance on March 13, 2006. No record evidence the Avoidance Order was served on Creditor in 2006.
- In Jan.–Mar. 2019 Jones reopened the case and moved for contempt after Creditor failed to release the avoided judgment lien, which clouded title and delayed sale of inherited Pokeberry Property. Creditor was served by certified mail in Jan.–Feb. 2019 but did not appear.
- The lingering lien caused a $7,500 reduction to Debtor’s sale proceeds, $13 lien-release fee, $260 bankruptcy reopening fee, and emotional distress; Debtor’s counsel billed 21.8 hours.
- Court found Creditor had actual knowledge when served with the 2019 Contempt Motion/Release Order, willfully violated the § 524(a)(2) discharge injunction by not releasing the lien, and refused to participate.
- Relief: Contempt granted; awards for actual damages, attorneys’ fees, mild punitive damages, and daily coercive sanction if lien remains unreleased.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Creditor’s failure to release an avoided judgment lien violated the discharge injunction (§ 524(a)(2)) | Jones: lien was avoided in 2006 and its continued recordation impeded property rights and sale, so continuing lien collection acts violated the injunction | Creditor: (no contest / did not appear) | Court: Yes — the lingering lien violated § 524(a)(2) because it burdened Jones’s property rights post-discharge |
| Whether Creditor’s conduct was willful contempt requiring sanctions | Jones: Creditor received Contempt Motion and Release Order in 2019 and nonetheless failed to act, showing willful conduct | Creditor: (no contest) | Court: Yes — actual knowledge established by certified service in 2019; conduct was willful for contempt purposes |
| What remedial relief is appropriate for contempt of the discharge injunction | Jones: actual damages (sale reduction, fees, reopening fee), emotional distress, attorneys’ fees, and punitive/ coercive sanctions | Creditor: (no contest) | Court: Awarded actual damages $10,273, attorney’s fees $5,995, mild non‑compensatory damages $7,500; ordered payment within 14 days and $100/day coercive sanction if lien not released after notice |
| Whether debtor may rely on court order to cause official lien release or must obtain state-law release | Jones: seeks enforcement and coercive relief to secure release; court authorized debtor to present order to recording office | Creditor: (no contest) | Court: Declined to resolve state‑law recordation questions; instead imposed monetary coercive sanction to compel release and required debtor to file notice about release status |
Key Cases Cited
- Johnson v. Home State Bank, 501 U.S. 78 (discharge extinguishes in personam claims but leaves in rem remedies)
- Currier v. First Resolution Inv. Corp., 762 F.3d 529 (6th Cir.) (invalid judgment lien is a serious cloud on title and can coerce settlement)
- In re Isaacs, 895 F.3d 904 (6th Cir.) (purpose of discharge is automatic protection against attempts to collect discharged debts)
- Pertuso v. Ford Motor Credit Co., 233 F.3d 417 (6th Cir.) (contempt is the debtor’s remedy for discharge injunction violations)
- In re Joseph, 584 B.R. 696 (Bankr. E.D. Ky.) (courts may award actual damages and attorneys’ fees for discharge injunction violations)
- In re Biery, 543 B.R. 267 (Bankr. E.D. Ky.) (court may award non‑compensatory punitive damages under § 105(a) when needed to enforce the Code)