The Best Service Co. v. Emily Bayley
678 F. App'x 593
| 9th Cir. | 2017Background
- Debtor Emily Ann Bayley filed a voluntary Chapter 13 bankruptcy petition, triggering the automatic stay under 11 U.S.C. § 362.
- Creditor Best Service had previously levied funds through the Los Angeles County Sheriff (pre-petition) and was notified of Bayley’s bankruptcy filing.
- After notice, Best Service directed the Sheriff to hold the levied funds rather than turning them over to the bankruptcy estate or releasing them to the debtor.
- Bayley moved in bankruptcy court for a finding of willful violation of the automatic stay; the bankruptcy court granted relief and awarded attorneys’ fees and costs.
- The district court affirmed, holding Best Service violated § 362(a)(2) and (a)(3) and that the violation was willful under § 362(k)(1); the Ninth Circuit affirmed on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether directing the Sheriff to hold levied funds after petition filed violated the automatic stay | Bayley: Best Service had a duty to turn over estate property and must cease collection and direct Sheriff to return funds | Best Service: (implicitly) retention of funds or instructing Sheriff to hold was permissible despite notice | Yes. Directing Sheriff to hold levied funds violated § 362(a)(2) (enforcement) and § 362(a)(3) (control over estate property) |
| Whether the violation was willful such that fees are recoverable under § 362(k)(1) | Bayley: She notified Best Service of the filing; Best Service acted knowingly and intentionally | Best Service: does not dispute knowledge of the stay’s effects | Yes. Knowledge of the stay plus intentional action satisfies willfulness for fee award |
| Scope of recoverable fees — appellate/post-judgment fees | Bayley: Entitled to fees incurred in ending the violation and defending the judgment on appeal | Best Service: appealed the sanctions | Yes. Fees for contesting violation at all levels of review are recoverable; bankruptcy court to determine amount |
| Proper forum to determine fee amount | Bayley: Bankruptcy court should calculate and award reasonable fees | Best Service: appealed to district and circuit courts | Yes. The bankruptcy court is the proper forum to decide the amount; fee award is mandatory if violation is willful |
Key Cases Cited
- Cal. Emp’t Dev. Dep’t v. Taxel (In re Del Mission Ltd.), 98 F.3d 1147 (9th Cir. 1996) (creditors must turnover estate property upon petition)
- Knaus v. Concordia Lumber Co. (In re Knaus), 889 F.2d 773 (8th Cir. 1989) (creditor duty to deliver property to bankruptcy estate upon filing)
- Eskanos & Adler, P.C. v. Leetien, 309 F.3d 1210 (9th Cir. 2002) (willfulness requires knowledge of stay and intentional action)
- America’s Servicing Co. v. Schwartz-Tallard (In re Schwartz-Tallard), 803 F.3d 1095 (9th Cir. 2015) (en banc) (fees for defending stay-violation rulings on appeal are recoverable)