532 B.R. 655
Bankr. D.S.C.2015Background
- Debtor (Julie Warren) filed Chapter 13 on June 24, 2014 and listed Dill’s Used Cars (Arthur Dill) as a secured creditor; she proposed to retain her 2005 Pontiac Sunfire by payments to Dill.
- The Bankruptcy Noticing Center mailed the Chapter 13 Notice to Dill’s business street address (2442 South Lake Drive) on June 27, 2014; Dill testified his correct mailing address was a P.O. Box and that street-mail delivery was unreliable.
- Dill and Julius Anderson repossessed the vehicle on July 17, 2014. Debtor’s roommate and then her attorney notified Dill of the bankruptcy on July 18; Dill retained the vehicle until July 22 and demanded payment as condition of return.
- Debtor paid $235 to Dill and $200 to Anderson to regain the vehicle; she suffered missed medical appointments and alleged physical and emotional distress.
- Debtor sued for willful violation of the automatic stay under 11 U.S.C. § 362(k)(1); at trial the court found Dill had notice (presumption of receipt of mailed notice not rebutted) and retained the vehicle after actual notice.
- Court awarded Debtor actual damages ($546.96), emotional distress ($500), punitive damages ($2,000), attorney’s fees and costs ($8,200 + $350), for a total judgment of $11,596.96; claim against Anderson was denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether post-petition repossession was a willful violation of the automatic stay | Dill knew or should have known of the bankruptcy and retained the car after notice | Dill lacked notice because notice was mailed to street address, not his P.O. Box; he relied on counsel | Willful violation: court presumes mailed notice was received, and even if not, Dill had actual notice on July 18 and willfully retained the vehicle until July 22 |
| Proper legal standard for willfulness (burden of proof) | Preponderance of the evidence suffices | (Defendant urged prior clear-and-convincing standard or disputed weight) | Court adopts preponderance standard but finds liability proven under either standard |
| Entitlement and amount of damages and fees (including punitive) | Seeks actual damages, emotional distress, punitive damages, and attorneys’ fees/costs (total claimed ~$9,593 fees) | Fees claimed excessive; objections to some fee entries (block billing) | Awarded actual damages $546.96, emotional distress $500, punitive $2,000, attorney’s fees $8,200 and costs $350 (total judgment $11,596.96) |
| Liability of Julius Anderson for stay violation | Anderson participated in repossession and receipt of payment; liable under agency/partnership/joint venture | Anderson had no business relationship, was a friend, and had no notice prior to return on July 22 | Claim against Anderson denied: no evidence of agency/partnership and no proof he had notice before July 22 |
Key Cases Cited
- Budget Serv. Co. v. Better Homes of Va., Inc., 804 F.2d 289 (4th Cir.) (willfulness requires creditor know of petition and intentionally continue collection)
- Grogan v. Garner, 498 U.S. 279 (1991) (preponderance standard presumptively applies in civil matters)
- Citizens Bank of Md. v. Strumpf, 37 F.3d 155 (4th Cir.) (creditor commits willful violation by intentional act with knowledge of stay)
- In re Johnson, 501 F.3d 1163 (10th Cir.) (supports applying preponderance standard to stay-violation actions)
- Robinson v. Equifax Info. Servs., 560 F.3d 235 (4th Cir.) (lodestar method for determining reasonable attorney’s fees)
- Barber v. Kimbrell’s Inc., 577 F.2d 216 (4th Cir.) (factors to consider in awarding attorney’s fees)