515 B.R. 1
Bankr. E.D.N.Y.2014Background
- Debtors Szenes filed a Motion to Reopen under 11 U.S.C. § 350 to pursue claims that U.S. Bank violated the discharge injunction by attempting to collect a discharged debt from them personally.
- Hearing on the Motion to Reopen occurred on June 5, 2014; the motion was granted, reopening the closed case for the limited purpose described.
- Debtors then moved for contempt under 11 U.S.C. § 524 and for damages, including attorneys’ fees and costs and a civil sanction of $100,000.
- U.S. Bank received actual notice of the Discharge Order entered April 11, 2013; the discharge injunction prohibits collection efforts on discharged debts.
- U.S. Bank sent two collection letters (January 17, 2014 and March 20, 2014) after notice of discharge, which were directed to collect the discharged debt.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Discharge injunction violation | Szenes contends Bank violated the injunction by attempting to collect discharged debt. | Bank did not oppose and did not supply reasons; no contrary position filed. | Yes; Bank willfully violated the discharge injunction and is in contempt. |
| Attorneys’ fees and costs as damages | Fees incurred reopening the case and pursuing contempt are compensable damages. | N/A (Bank did not oppose). | Award of $3,050.00 in attorneys’ fees and costs to the debtors. |
| Punitive civil sanctions | Punitive sanctions appropriate to deter future violations. | N/A (Bank did not oppose). | A punitive sanction of $500.00 is appropriate. |
| Court’s authority to sanction | Discharge orders and 105(a) power authorize contempt and sanctions for violations. | N/A (Bank did not oppose). | Court has jurisdiction and authority to enforce discharge order via contempt. |
Key Cases Cited
- Green v. Welsh, 956 F.2d 30 (2d Cir. 1992) (discharge injunction protects against personal liability and furthers fresh start)
- In re Nicholas, 457 B.R. 202 (Bankr.E.D.N.Y.2011) (willful violation and bad faith support contempt; core enforcement authority)
- In re Nassoko, 405 B.R. 515 (Bankr.S.D.N.Y.2009) (clear and convincing evidence required for punitive damages; knowledge and violation)
- In re Dabrowski, 257 B.R. 394 (Bankr.S.D.N.Y.2001) (discharge injunction violations may warrant fees when willful and in bad faith)
- In re Watkins, 240 B.R. 668 (Bankr.E.D.N.Y.1999) (bad faith and willfulness support sanctions; not all violations justify fees)
- In re Anderson, 348 B.R. 652 (Bankr.D.Del.2006) (courts may use inherent contempt power to enforce discharge orders)
- In re Torres, 367 B.R. 478 (Bankr.S.D.N.Y.2007) (civil contempt sanctions may deter future violations and compensate losses)