445 B.R. 19
Bankr. D. Mass.2011Background
- Debtor Mouldi Sayeh filed a Chapter 11 petition and owned a Boston hotel at 254 Newbury Street with a restaurant in the basement.
- A Chapter 11 trustee, Anne White, was appointed and recommended selling the property as the viable course.
- Sayeh remained on the premises and removed assets and fixtures before the estate’s sale, without trustee authorization.
- Garnache, as trustee for 254 Newbury Street Realty Trust, bid $4,110,000 for the estate assets, which the court approved.
- Sayeh and Khusro removed personalty prior to the sale; Khusro bought back his own removed assets under an interim agreement.
- The trustee’s accounting showed actual damages totaling $51,683.30 attributable to Sayeh’s conduct; punitive damages were denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 362(k)(1) authorizes damages to a trustee | Sayeh is an individual or the estate’s representative. | Trustee not an individual; § 362(k)(1) unavailable to the trustee. | trustee cannot recover under § 362(k)(1); contemplates contempt remedies |
| Whether contempt under § 105(a) can provide compensatory damages | Contempt can compensate losses to the estate. | Contempt remedies are improper for damages in this context. | Contempt may provide compensatory damages to enforce stay; damages awarded |
| Whether punitive damages are appropriate | Punitive damages may be warranted under contempt for willful stay violations. | Punitive damages not appropriate given circumstances and lack of bad faith. | punitive damages denied |
| What is the amount of actual damages attributable to Sayeh | Full trustee-caused damages due to removals should be awarded. | Apportion damages between Sayeh and Khusro; some items not Sayeh’s fault. | Sayeh liable for $51,683.30 in actual damages |
| Whether the nine-day accounting delay justifies additional penalties | Sanctions for delay supported by order. | Delay not sufficiently culpable; accounting provided in good faith. | No additional punitive amount awarded for delay |
Key Cases Cited
- In re Pace, 67 F.3d 187 (9th Cir.1995) (trustee not an 'individual' for § 362(k)(1); contemplates contempt remedies)
- Bessette v. Avco Financial Services, Inc., 230 F.3d 439 (1st Cir.2000) (contempt power can enforce stay and award damages)
- In re Dunn, 324 B.R. 175 (D.Mass.2005) (clear standards for contempt in bankruptcy contexts)
- McDonald v. Norwest Financial, Inc. (In re McDonald), 265 B.R. 3 (Bankr.D.Mass.2001) (prima facie claim for contempt requires knowledge of stay order)
- Pratt v. Carter, 462 F.3d 20 (1st Cir.2006) (conduct can violate discharge notwithstanding lack of bad faith)