669 B.R. 415
Bankr. D. Or.2025Background
- Rebecca J. Almy filed for Chapter 7 bankruptcy on March 28, 2022; her discharge was entered June 24, 2022.
- Notices of the bankruptcy and discharge were sent to both Zip Co. US Inc. (Zip) and WebBank, making them aware of the proceedings.
- Despite notice, Zip continued to send Almy collection demands via email, text, and phone after the bankruptcy filing and discharge.
- Almy moved for contempt against Zip and WebBank alleging violations of the automatic stay and discharge injunction, seeking compensatory damages and sanctions.
- Neither Zip nor WebBank responded or participated in the evidentiary hearing. The court found evidence of 10 violative communications from Zip but insufficient evidence tying WebBank to post-petition conduct.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Violation of Automatic Stay | Zip continued collection after bankruptcy filing | No response by Zip | Zip violated the stay with post-petition demands |
| Violation of Discharge Injunction | Zip sought payment after discharge order entered | No response by Zip | Zip violated injunction with post-discharge demands |
| Emotional Distress Damages Available | Almy suffered significant emotional harm | N/A (no argument) | Emotional distress recoverable under contempt |
| Liability of WebBank | WebBank responsible via agency relationship | No response by WebBank | Evidence insufficient to hold WebBank liable |
Key Cases Cited
- Walls v. Wells Fargo Bank, N.A., 276 F.3d 502 (9th Cir. 2002) (automatic stay and discharge injunction are court orders enforceable by civil contempt)
- Renwick v. Bennett (In re Bennett), 298 F.3d 1059 (9th Cir. 2002) (standard for finding contempt in bankruptcy)
- Knupfer v. Lindblade (In re Dyer), 322 F.3d 1178 (9th Cir. 2003) (scope of civil contempt remedies in bankruptcy)
- Dawson v. Washington Mutual Bank, F.A., 390 F.3d 1139 (9th Cir. 2004) (emotional distress damages available for automatic stay violations)
- Green Point Credit, LLC v. McLean (In re McLean), 794 F.3d 1313 (11th Cir. 2015) (emotional distress damages for discharge injunction violations)