ORDER
The opinion in this case is further amended by adding a new footnote 3 (and renumbering succeeding footnotes) on page 14188 of the amended slip opinion filed on October 22, 2009 (also found at
The relevant statute, 11 U.S.C. § 362(k)(1), states that “an individual injured by any willful violation of a stay ... shall recover actual damages, including costs and attorneys’ fees, and, in appropriate circumstances, may recover punitive damages.”
The new footnote 3 added at the end of that sentence is:
*940 The attorneys fee award against Stern-berg was based on the authority of this statute. The bankruptcy court did not find Sternberg or anyone else to be in civil contempt for violating the automatic stay, nor did it impose any sanctions under its inherent civil contempt authority. See In re Dyer,322 F.3d 1178 , 1189 (9th Cir.2003). As this opinion does not consider the civil contempt authority of the court, it does not limit the availability of contempt sanctions, including attorney fees, for violation of the automatic stay, where otherwise appropriate.
With this amendment, the panel has voted to deny the petition for panel rehearing. Judges Berzon and Clifton vote to deny the petition for rehearing en banc and Judge Hawkins so recommends. The full court has been advised of the petition for rehearing and rehearing en banc and no judge has requested a vote on whether to rehear the matter en banc. See Fed. R.App. P. 35. The petition for panel rehearing and the petition for rehearing en banc are denied. No subsequent petitions for rehearing, rehearing en banc, or rehearing before the full court may be filed.
OPINION
The filing of a bankruptcy petition immediately gives rise to an automatic stay. The stay applies to block or freeze most judicial actions against a debtor. It also permits a debtor to recoup any “actual damages,” including attorney fees, that result from a willful stay violation. See 11 U.S.C. § 362. This case presents questions both as to when a willful stay violation occurs and as to what attorney fees may be recovered as “actual damages.”
We affirm the holding of the district court that appellant Melvin Sternberg willfully violated the automatic stay that arose once appellee Logan Johnston filed for bankruptcy. Our cases establish that Sternberg had an affirmative duty to comply with the stay. This duty included ensuring that his actions did not prolong a violation of the stay that resulted from a state court motion seeking relief against Johnston that Sternberg filed prior to the bankruptcy. In this case, Sternberg willfully violated the automatic stay by defending an overbroad state court order in its entirety.
We also hold, however, that Johnston can recover as actual damages only those attorney fees related to enforcing the automatic stay and remedying the stay violation, not the fees incurred in prosecuting the bankruptcy adversary proceeding in which he pursued his claim for those damages. We thus vacate the amount of the award entered by the district court and remand for determination of the appropriate amount.
I. Background
Logan Johnston and Paula Parker were divorced in 1996. As part of the property settlement, Johnston was ordered to pay spousal maintenance.
In January 2001, Parker, through her attorney, Melvin Sternberg, asked the state court to hold Johnston in contempt for non-payment of spousal support. Among other things, the request asked the court to “award Judgment ... for all sums of spousal maintenance[;] ... enter an Order that [Johnston] be incarcerated; that his professional law license be suspended; and his drivers’ license be revoked ... until he ... immediately pay[s] ALL sums[;]” and place a lien “upon any vehicle or other property owned.”
On May 14 of that year, Johnston filed a Chapter 11 bankruptcy petition. His bankruptcy counsel did not file notice of *941 this petition in the state court proceeding until May 17, however.
On that same 'day, May 17, the state court conducted what appears to have been a previously scheduled evidentiary hearing on Parker’s contempt request. Johnston, who is an attorney, represented himself. Approximately 15 minutes into the hearing, he advised the court for the first time of his bankruptcy proceedings, explaining that the proceedings would result in a plan to pay his debts, including the spousal support, and that his bankruptcy counsel had informed him that the filing of the bankruptcy petition stayed anything regarding the property settlement, attorney fees, and sanctions. He apologized for “not knowing exactly what’s going on” and said, “I guess, I object in the abstract to anything that would contravene the bankruptcy laws,” while agreeing that the state court could establish the amount of his arrears.
Sternberg, for his part, explained that he did not know if the bankruptcy filing stayed the proceedings but stated that he did not think moving forward on the arrears, attorney fees, and contempt determination would violate the stay. The court decided to proceed on the issue of whether Johnston was in contempt. It would “take up the issue of sanctions at a later time when counsel ha[d] researched whether or not [the] court has jurisdiction to issue sanctions when a bankruptcy proceeding is pending.”
On July 13, the state court filed a minute order holding Johnston in violation of the divorce decree. The court found Johnston in contempt and granted judgment for Parker in the amount of $87,525.60, including interest. In addition, it ordered Johnston to “pay the judgment by August 1, 2001,” or be jailed “until the full amount ... is paid.”
The parties were surprised by the order. Specifically, the bankruptcy court found that Sternberg and Parker “had expected further proceedings before the Judge would order [Johnston] to pay a sum certain or face any consequences.”
Johnston quickly sought to obtain relief from the order. He filed a motion for stay in the state court, but the hearing date on that motion was set for the day after the August 1 deadline by which he was to pay the arrears or go to jail. Additionally, he wrote a letter to Sternberg informing him that he was in violation of the automatic stay and asking Sternberg to “take appropriate remedial measures to cure [his] violation.” Sternberg did not take such action.
Johnston then filed a petition in the Arizona court of appeals, requesting the appellate court to stay and vacate the order. Representing Parker, Sternberg’s law firm filed a responsive brief, which was signed by another lawyer on Sternberg’s behalf. The brief took the position that the state court had proceeded within two exemptions to the automatic stay. Those exemptions allow for “the establishment or modification of an order for domestic support obligations” and “the collection of a domestic support obligation from property that is not property of the estate.” 11 U.S.C. § 362(b)(2)(A)-(B). The brief concluded by arguing that the judge “properly exercised her broad discretion and legal authority to continue with the evidentiary hearing!,] ... [to] hold Petitioner in contempt!,]” and to “deny [his] motion for relief.”
In the meantime, Johnston also sought relief from the bankruptcy court, where he filed another emergency motion to set aside the minute order, and also an adversary proceeding charging Parker and Sternberg with willfully violating the automatic stay. On July 31, the bankruptcy *942 court conducted a hearing on the emergency motion. It concluded that the automatic stay had been violated and vacated the state court’s minute order. In a later order, the bankruptcy court summarized its decision as follows:
If the State Court had qualified its Order to reflect only the amount of the arrearages, or if the State Court had been advised of what constituted non-estate property, so that the Minute Entry Order could be tailored only to the collection of the arrearages from such non-estate property, then the State Court arguably would have been acting within an exception to the automatic stay. However, the Minute Entry dictated that the Debtor immediately satisfy a large Judgment or face incarceration; all without the State Court focusing on the non-estate property ... or requesting the Bankruptcy Court’s prior determination of whether the automatic stay applied....
Johnston v. Parker (In re
Johnston),
Some time later, the adversary proceeding went to trial. After Johnston presented his case, Parker and Sternberg moved for a directed verdict.
Id.
at 471. The bankruptcy court granted the motion.
Id.
at 484-85. While the court reaffirmed its earlier conclusion that the state court order had violated the automatic stay, it wrote that it “[did] not see any separate violation of the stay by Defendants Parker and Sternberg.”
Id.
at 478. Furthermore, the court noted that while
Eskanos & Alder, P.C. v. Leetien (Eskanos),
On appeal, the district court reversed, holding
Eskanos
to be controlling.
Johnston v. Parker (In re
Johnston),
The remanded issues were then tried to the bankruptcy court. Before the court issued a ruling, Johnston settled with Parker, leaving only Sternberg as a defendant.
The bankruptcy court filed its decision in March 2006. The court explained that the district court’s opinion had narrowed the issues because it had concluded that “Sternberg willfully violated the automatic stay.” After hearing Johnston’s testimony and reviewing his monthly interim reports, the court concluded that Johnston had been injured in the amount of $2,883.20 because the stay violation had hindered his ability to work. The court also found Johnston’s testimony of emotional distress to be credible and awarded further damages in the amount of $20,000. Lastly, the court conducted a review of Johnston’s attorney fees and costs, and awarded $69,986, which included fees for prosecuting the adversary proceeding. The total judgment amounted to $92,869.20 plus post-judgment interest at a rate of 5.10% per annum.
An appeal followed, and the district court affirmed. Sternberg then appealed to our court.
*943 II. Discussion
This opinion addresses two issues: whether Sternberg violated the automatic stay and whether the bankruptcy court erred in its calculation of Johnston’s damages. 1 Each issue is addressed in turn. 2
A. The Automatic Stay
Whether the automatic stay has been violated is an issue we review
de novo. Eskanos,
When a debtor files for bankruptcy, he is immediately protected by an automatic stay under 11 U.S.C. § 362(a), which provides that a bankruptcy petition, among other things,
“operates as a stay, applicable to all entities, of the commencement or continuation ... of a judicial, administrative, or other action or proceeding against the debtor ...; the enforcement ... of a judgment ...; any act to obtain possession of property of the estate ...; [and] any act to create, perfect, or enforce any lien....”
It does not, however, prevent “the commencement or continuation of a civil action ... for the establishment or modification of an order for domestic support obligations” or “the collection of a domestic support obligation from property that is not property of the estate.” 11 U.S.C. § 362(b)(2)(A)-(B). Nevertheless, “[t]he scope of protections embodied in the automatic stay is quite broad, and serves as one of the most important protections in bankruptcy law.”
Eskanos,
We have held on several occasions that the automatic stay imposes on non-debtor parties an affirmative duty of compliance. In
State of California Employment Development Department v. Taxel (In re Del Mission Ltd.),
for example, we held that a state’s knowing retention of disputed taxes violated the automatic stay.
The district court in this case found the rationale of our decision in
Eskanos
controlling. In that case, a law firm had been hired by one of a debtor’s unsecured creditors to pursue a collection action against the debtor. After filing the action, the firm learned of the debtor’s bankruptcy but waited 23 days to dismiss the action.
Eskanos,
The above authorities establish that Sternberg had an “affirmative duty” to conform his conduct to the automatic stay once Johnston filed for bankruptcy. The district court found that Sternberg violated this duty because he “w[as] required to take affirmative action to stay or vacate the state court’s ... Order” and failed to do so.
Johnston II,
We do not fault Sternberg for anything he did at the May 17 state court hearing, because the news of Johnston’s bankruptcy filing came as a surprise to him. The state court’s July 13 order also surprised him, and Sternberg cannot be held responsible for the order. Within a reasonable time after that, however, the law required Sternberg to take corrective action. He did not, and he affirmatively opposed Johnston’s effort to obtain relief from the state appellate court.
As described above, shortly after the overbroad state court order was filed, Johnston brought a petition for special action requesting the state appellate court to stay and vacate the order. In response, Sternberg offered a complete defense of the order. The conclusion of the brief filed by Sternberg’s law firm on behalf of Parker illustrates the breadth of this defense. The brief concludes by arguing that the state court judge “properly exercised her broad discretion and legal authority to continue with the evidentiary hearing[,] ... hold [Johnston] in contempt[,]” and “deny [his] motion for relief.” Sternberg’s defense of the order was absolute. He did not try to parse the valid from the invalid, but instead defended the order in its entirety, including the command that Johnston pay the arrears or go to jail, and without limiting the source of payment to non-estate property.
Sternberg argues that he was “compelled” to do this because the order was not completely invalid and Johnston had requested that it be vacated in its entirety. This misses the point. What Sternberg was compelled to do was comply with the automatic stay.
See, e.g., Eskanos,
To comply with his “affirmative duty” under the automatic stay, Sternberg needed to do what he could to relieve the violation. He could not simply rely on the normal adversarial process.
See Johnston Envtl. Corp. v. Knight (In re Goodman),
Sternberg also argues a variety of facts that implicitly challenge the willfulness of his violation. The thrust of his argument is that because Johnston never specifically requested that Sternberg seek to modify the order, and because Sternberg never sought to collect on the order, Sternberg did not willfully violate the stay. Stern-berg also appears to argue that because he believed that he was always proceeding within the domestic support exemptions, he could not have committed a willful violation.
Johnston was not required to ask Stern-berg to modify the order for Sternberg’s violation to be willful.
See In re Del Mission Ltd.,
At a minimum, Sternberg needed to alert the appellate court to the obvious conflicts between the order and the stay. By not doing so, he willfully violated the automatic stay.
B. Attorney Fees
Sternberg also argues that the bankruptcy court erred in calculating Johnston’s damages because it awarded attorney fees not only for the work associated with remedying the stay violation but also for the subsequent adversary proceeding in which Johnston sought to collect damages for the stay violation. We agree.
“A bankruptcy court’s award of attorney fees is reviewed for abuse of discretion or erroneous application of the law.”
Dawson v. Washington Mutual Bank, F.A. (In re Dawson),
Congress legislates against the backdrop of the “American Rule.”
Fogerty v. Fantasy, Inc.,
The relevant statute, 11 U.S.C. § 362(k)(1), states that “an individual injured by any willful violation of a stay ... shall recover actual damages, including costs and attorneys’ fees, and, in appropriate circumstances, may recover punitive damages.”
3
Without a doubt, Congress intended § 362(k)(1) to permit recovery as damages of fees incurred to prevent violation of the automatic stay. In permitting recovery of these fees as damages, § 362(k)(1) is consistent with the American Rule. There are several other situations in which fees can be part of damages; i.e., where the harm to be remedied includes expenditure of fees. Examples include legal malpractice suits,
see, e.g., John Kohl & Co. P.C. v. Dearborn & Ewing,
What is less clear is whether Congress intended to deviate from the American Rule by allowing recovery as damages of the fees incurred in the bankruptcy court action for damages resulting from violation of the automatic stay. 4
*947
We have previously stated that § 362(k)(1) “mandates the award of actual damages to an individual injured by any willful violation of a stay.”
In re Del Mission Ltd.,
An award of attorneys’ fees is appropriate where a debtor must resort to the Court to enforce his or her rights in consequence of a violation of the automatic stay. Accordingly, it is well established that the attorneys’ fees and costs incurred in prosecuting an adversary proceeding seeking damages arising from a violation of the automatic stay is recoverable....
Havelock v. Taxel (In re
Pace),
In contrast, we conclude that the plain meaning of “actual damages” points to a different result. The dictionary defines “actual damages” as “[a]n amount awarded ... to compensate for a proven injury or loss; damages that repay actual losses.” Black’s Law Dictionary 416 (8th ed.2004). Following this definition, the proven injury is the injury resulting from the stay violation itself. Once the violation has ended, any fees the debtor incurs after that point in pursuit of a damage award would not be to compensate for “actual damages” under § 362(k)(1). Under the American Rule, a plaintiff cannot ordinarily recover attorney fees spent to correct a legal injury as part of his damages, even though it could be said he is not made whole as a result. See, e.g., Restatement (Second) of Torts § 914(1) (1979) (“The damages in a tort action do not ordinarily include compensation for attorney fees or other expenses of the litigation.”). The same is true here. The context and goals of the automatic stay support this narrower understanding, and it is the one we adopt.
We have explained the purposes of the automatic stay as twofold. These two purposes are enabling the debtor to try to reorganize during a break from collection efforts and protecting creditors by preventing one creditor from pursuing its own remedies to the detriment of its co-creditors.
See In re Dawson,
Permitting a debtor to collect attorney fees incurred in prosecuting a damages action would further neither the financial nor the non-financial goals of the automatic stay. With regard to the financial goals, we have explained that “the stay gives the debtor time to put finances back in order, offers the debtor an opportunity to reorganize so that creditors can be satisfied to the greatest extent possible, and prevents creditors from racing to devour the debt- or’s estate.... ”
Id.
The stay, then, is meant to help the debtor deal with his bankruptcy for the benefit of himself and his creditors alike. We have never said the stay should aid the debtor in pursuing his creditors, even those creditors who violate the stay. The stay is a shield, not a sword.
See, e.g., Hillis Motors, Inc. v. Hawaii Auto. Dealers’ Ass’n,
Allowing attorney fees for a damages action also would not promote the non-financial goals of the automatic stay. More litigation is hardly consistent with the concept of a “breathing spell” for the debtor. In fact, part of the rationale of the “affirmative duty” we have imposed on non-debtors to dismiss collection actions against debtors is that “[e]ounsel must be engaged to defend against a default judgment[and] ... state collection actions are not to be used as leverage in negotiating ... in bankruptcy.”
Eskanos,
We recognize that the Fifth Circuit appears to have held to the contrary: “The lower courts in our Circuit have concluded that it is proper to award attorney’s fees that were incurred prosecuting a section 362(k) claimf,]” and “[w]e adopt the same reading of section 362(k) and therefore agree.”
Young v. Repine (In re Repine),
We remand to the district court with instructions to remand to the bankruptcy court to determine which fees are properly allocable to efforts to enforce the automatic stay and prevent enforcement of the state court order that violated the stay. All fees related to proving Johnston’s damages are disallowed per the American Rule.
*949 III. Conclusion
We affirm that portion of the district court’s judgment that holds that Sternberg violated the automatic stay and is liable for Johnston’s actual damages. We also affirm the determinations that Johnston suffered actual damages of $2,883.20 for the interference with his work and an additional $20,000.00 for emotional distress. His actual damages also include the attorney fees incurred in seeking to enforce the automatic stay and to fix the problem caused by the overbroad state court order. Because Johnston’s actual damages under § 362(k)(l) do not include fees incurred in prosecuting the adversary proceeding to obtain damages, we vacate the amount of the judgment and remand for further proceedings to determine the appropriate amount.
Each side to bear its own costs.
AFFIRMED IN PART; VACATED AND REMANDED IN PART.
Notes
. While Sternberg also argues that the bankruptcy court's emotional distress award was an abuse of discretion, this issue does not merit a lengthy discussion. Each of Stern-berg’s arguments is foreclosed by
Dawson v. Washington Mutual Bank, F.A. (In re Dawson),
. Johnston argues that Sternberg has waived all of his arguments but one by providing an inadequate "appellate record.” Sternberg supplemented his excerpts of record, however, making it sufficient to resolve this dispute.
See Everett v. Perez (In re Perez),
. The attorneys fee award against Sternberg was based on the authority of this statute. The bankruptcy court did not find Sternberg or anyone else to be in civil contempt for violating the automatic stay, nor did it impose any sanctions under its inherent civil contempt authority.
See In re Dyer,
. We have affirmed awards under § 362(k)(1) that appear to have contained attorney fees incurred in prosecuting a § 362(k)(1) dam
*947
ages action.
See In re Dawson,