527 B.R. 844
Bankr. D.P.R.2015Background
- Debtors Daniel Román Pérez and Cynthia González filed Chapter 13 on December 30, 2013; pre-petition judgment against them from 2012 was assigned through several entities to Operating Partners, a debt collector/agent.
- Operating Partners (through attorney Yarymar González Carrasquillo) filed a January 14, 2014 motion in the Puerto Rico Court of First Instance informing the court of the bankruptcy and requesting a stay; counsel also sought leave to withdraw.
- On February 11, 2014 Operating Partners filed (1) a motion to substitute plaintiff and (2) a motion seeking execution of the pre-petition judgment; Operating Partners acknowledges it had notice of the bankruptcy petition.
- Debtors commenced this adversary proceeding alleging willful violation of the automatic stay (11 U.S.C. § 362) and FDCPA violations; they moved for partial summary judgment asking the court to find Operating Partners liable for actual damages, attorneys’ fees, punitive damages, and FDCPA damages.
- Operating Partners admitted receipt of the bankruptcy notice and argued the execution-motion filing was an inadvertent clerical error by counsel (who had requested withdrawal) and not a willful stay violation.
- The bankruptcy court found Operating Partners violated the automatic stay willfully (entitling Debtors to actual damages and fees) but declined to award punitive damages and held that FDCPA damages are precluded where the Bankruptcy Code provides the remedy for the same conduct.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Operating Partners violate the automatic stay? | Operating Partners filed a motion seeking execution of a pre-petition judgment after having notice of the bankruptcy, thereby violating § 362. | The execution-motion filing was an inadvertent clerical error by counsel after counsel had sought withdrawal; Operating Partners did not intend to violate the stay. | Yes. Filing the execution motion after actual notice violated § 362(a). |
| Was any violation willful? | Willfulness is satisfied because Operating Partners had actual notice and nonetheless caused the stay-violating filing; courts may presume deliberation after notice. | The filing was unintentional/clerical; no intent to violate the stay. | Yes. Knowledge of the stay plus the act satisfies the willfulness standard; the violation was willful for § 362(k) purposes. |
| Are punitive damages appropriate under § 362(k)(1)? | Plaintiffs sought punitive damages for stay violation. | Defendant argued mistake and lack of malicious intent. | No. The record did not show egregious, malicious, or reckless conduct required for punitive damages. |
| Are FDCPA remedies available in addition to § 362 relief? | Plaintiffs asserted FDCPA claims (15 U.S.C. §§ 1692e, 1692f, 1692d) arising from the same stay-violation conduct. | Defendant disputed FDCPA applicability and emphasized absence of willful misconduct beyond the stay violation. | No. Court held FDCPA damages precluded here because the Bankruptcy Code (§ 362(k)) provides the exclusive remedy for the same violation benefitting the estate. |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment standard)
- In re Pacor, 743 F.2d 984 (3d Cir.) (test for “related to” bankruptcy jurisdiction)
- Fleet Mortgage Group v. Kaneb, 196 F.3d 265 (1st Cir. 1999) (willful stay-violation standard: knowledge + intentional act)
- Walls v. Wells Fargo Bank, N.A., 276 F.3d 502 (9th Cir. 2002) (FDCPA precluded by bankruptcy remedies in discharge context)
- Randolph v. IMBS, Inc., 368 F.3d 726 (7th Cir. 2004) (FDCPA may apply to collection attempts that contradict bankruptcy protections)
- Simon v. FIA Card Servs., N.A., 732 F.3d 259 (3d Cir. 2013) (no categorical preclusion of FDCPA in bankruptcy; analyze conflict/coexistence)