McLean v. Greenpoint Credit LLC
515 B.R. 841
M.D. Ala.2014Background
- McLeans filed a 2006 Chapter 13, later converted to Chapter 7, with a discharge in 2009; Green Tree held a deficiency claim from the 2006 case and later filed a 2012 claim for the same debt in the McLeans’ new bankruptcy.
- McLeans objected to Green Tree’s 2012 claim due to the prior discharge; adversary proceeding followed; Green Tree withdrew the claim on January 11, 2013; the Bankruptcy Court sustained the objection on January 16, 2013.
- The Bankruptcy Court held a trial on October 15, 2013; it found Green Tree willfully violated the discharge injunction, awarding $25,000 actual damages, $18,355.16 in attorney’s fees, and a $50,000 sanction.
- The district court affirmed the Bankruptcy Court’s decision; Green Tree appeals challenging liability for violation and the damages/sanctions awards.
- The court holds that filing a proof of claim on a discharged debt violates the discharge injunction, that damages under §105 are authorized, and that emotional damages and the $50,000 sanction are warranted.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether filing a proof of claim violates the discharge injunction | McLeans | Green Tree | Yes, willful violation established |
| Whether monetary relief is authorized for discharge-injunction violations | McLeans | Green Tree | Yes, §105 authorizes monetary relief |
| Whether emotional distress damages are proper | McLeans | Green Tree | Yes, emotional damages allowed with causal link and significant harm |
| Whether the $50,000 sanction is warranted (coercive/punitive) | McLeans | Green Tree | Yes, sanction warranted to deter and coerce future compliance |
Key Cases Cited
- United States v. White, 466 F.3d 1241 (11th Cir. 2006) (discharge injunction is a permanent injunction against enforcing discharged debts)
- Hardy v. IRS (In re Hardy), 97 F.3d 1384 (11th Cir. 1996) (willfulness in discharge-injunction violations; factors for contempt liability)
- In re Jove Eng’g, Inc., 92 F.3d 1539 (11th Cir. 1996) (§ 105 power to remedy violations; civil/contempt framework for sanctions)
- In re Dawson, 390 F.3d 1139 (9th Cir. 2004) (standard for awards of emotional distress in discharge/injunction context (Dawson))