MEMORANDUM OPINION
Before this Court is chapter 13 debtor Mary Will’s complaint for compensatory and punitive damages and turnover of her 1998 Chevrolet Cavalier (the “Cavalier”) against Ford Motor Credit Company (“FMCC”). The complaint alleges a willful violation of the stay pursuant to 11 U.S.C.
Related matters also pending are FMCC’s motion to annul the automatic stay in this Chapter 13 case and its objection to the confirmation of Will’s chapter 13 plan.
Findings of Fact and Background
Will filed her current chapter 13 case on September 19, 2002 (the “Present Chapter 13”). Several disputes in the Present Chapter 13 can only be explained with reference to events in Will’s prior chapter 13 case (“Prior Converted Chapter 13”), which she filed on December 16, 1998, and converted to a chapter 7 case on March 25, 2002. The chapter 7 case culminated in a discharge of her unsecured debt on August 30, 2002, and an order closing that original case on September 3, 2002 — less than one month before Will filed the Present Chapter 13 case. The Prior Chapter 13, after being confirmed on March 9, 1999, dealt with secured claims in the following manner:
Property of the estate shall revert in the Debtor upon confirmation of the Plan. Upon completion of payment of the secured portion of any claim, the property securing said claim shall vest in the debtor free and clear of any lien, claim or interest of a secured creditor. If the security is property for which a release of title is necessary, upon satisfaction of said secured claim, the secured creditor shall furnish a release of said title to the debtor.
FMCC did not object to the confirmation of the plan in the Prior Converted Chapter 13 case, even though it contained the title-release language.
In the Prior Converted Chapter 13, Will listed FMCC as a creditor holding a secured claim in the amount of $14,166.78 for her Cavalier. Between March 31, 1999, and January 31, 2002, the chapter 13 standing trustee distributed the debtor’s funds to FMCC on behalf of the secured claim, paying the allowed secured claim in full. The “Trustee’s Final Report and Account” of the chapter 7 trustee in the converted case indicated the same in addition to making a finding of “no assets.” The same “Trustee’s Final Report and Account” also indicated that FMCC did not file an unsecured claim asserting that the value of the Cavalier was insufficient to support its total claim amount. In spite of the fact that FMCC had been paid its allowed secured claim in full by January 31, 2002, it failed to release the lien on the certificate of title at any time during or after the Prior Converted Chapter 13, instead claiming that a lien securing the full amount of the debt survived the former case due to the fact that Will had not completely paid off all of her obligations under her chapter 13 plan.
Believing that her debt to FMCC and the related lien were extinguished by the Prior Chapter 13, Will and her attorney did not schedule FMCC as a creditor in her Present Chapter 13. Consequently, FMCC had no formal or actual notice of the bankruptcy case currently before this Court when, on or around November 8, 2002, it repossessed Will’s Cavalier, claiming that Will still owed a fully secured balance of $4,034.23 plus interest. Will’s attorney soon informed FMCC of the pen-dency of the Present Chapter 13 and demanded that the vehicle be returned; however, FMCC refused to do so at that time.
Will’s attorney originally filed the instant adversary proceeding as a § 362(h)
Conclusions of Law and Analysis
A. Admissibility of FMCC’s Answer to First Set of Interrogatories
FMCC objected to the admissibility of Will’s trial exhibit number two, which consisted of FMCC’s “Answer to [the Debtor’s] First Set of Interrogatories,” on hearsay grounds, and the Court took the objection under advisement. The gist of the objection was that FMCC’s attorney’s out-of court written answers to interrogatories are not admissible as evidence against FMCC. The objection is overruled because Federal Rule of Evidence 801(d) provides that “[a] statement is not hearsay if — [t]he statement is offered against a party and is ... (C) a statement by a person authorized by the party to make a statement concerning the subject, or (D) a statement by the party’s agent or servant concerning a matter within the scope of the agency or employment, made during the existence of the relationship.”
B. Violation of the Discharge Injunction in Case 98BI0US
Will contends that FMCC has violated the discharge injunction she received in the chapter 7 portion of her Prior Converted Chapter 13. How the repossession of Will’s car violates the earlier case’s discharge injunction, without more, is unclear. That is, the discharge injunction, unlike the automatic stay, operates as an injunction against conduct to collect a debt as the
personal liability
of a debtor, not as an injunction prohibiting the enforcement of
in rem
claims that remain unavoided by the Bankruptcy Code.
2
11 U.S.C. §§ 362(a), 524(a);
Cox v. Zale Delaware,
C. Violation of the Automatic Stay in Case 02B86I26
Assuming
arguendo
that FMCC is correct in asserting that it still had a security interest that survived the Prior Converted Chapter 13, Will’s interest in the Cavalier was still an asset of the bankruptcy estate in the Present Chapter 13 according to § 541(a)(1), regardless of whether FMCC had a remaining security interest in it.
See In re Robinson,
To determine whether this violation was willful under § 362(h), the legal basis for Will’s complaint, the Court must inquire whether FMCC (1) had actual knowledge of Will’s Present Chapter 13 case and (2) committed a deliberate act when its agents repossessed the Cavalier.
See In re Sharon,
In this case, the evidence unambiguously shows that FMCC committed a deliberate act while repossessing; however, Will’s own evidence seems to indicate that FMCC had no actual knowledge of the existence of her Present Chapter 13. Believing that her earlier bankruptcy case as a whole had extinguished her secured and unsecured debt on the Cavalier, Will did not list FMCC as either a secured or unsecured creditor in her Present Chapter 13 pursuant to Bankruptcy Rule 1007(a). This omission would have prevented the clerk from sending notice to Ford under Bankruptcy Rules 2002(a), (b), (f), and (o), which require 20 or 25 day notices to parties in interest of the order for relief, the meeting of creditors, and the time fixed for a chapter 13 plan confirmation hearing and for filing claims. This omission did initially prevent FMCC’s act of repossession from being a “willful” violation of the automatic stay, instead producing a technical or inadvertent violation.
See Clayton v. King (In re Clayton),
What began as a technical violation of the automatic stay, though, turned into a willful one because a creditor has an affirmative duty to remedy an automatic stay violation without court order when it learns of the existence of a debtor’s bankruptcy case and receives a request to return estate property repossessed post-petition.
See Matter of Brown,
The Court may additionally award the debtor attorneys’ fees under § 362(h) where the creditor fails to remedy a violation of the automatic stay, thereby forcing the debtor to bring a motion and incur legal costs in order to enforce his rights under the Bankruptcy Code, and some disputed authority exists for awarding attorneys’ fees alone even if no other actual damages are proven.
See In re Forty-Five Fifty-Five,
D. Money Damages for Willful Stay Violations
The debtor’s complaint requests an award of compensatory damages for the loss of use of her vehicle and for unreturned personal property stored in her car, an award of punitive damages, and an award of costs and attorneys’ fees.
At trial, Will had visible trouble walking to take the stand and testified to the necessity of regular visits to her various physicians, which totaled approximately ten trips for the five months during which she did not have use of her Cavalier. The medical trips included visits to a psychotherapist she started seeing after she lost her primary mode of transportation. She also took bi-weekly trips to serve as an AA volunteer, which required round-trip CTA fare of $3.60, and needed to travel to stores for regular household shopping and to church. Assuming she went to shopping centers and to church once a week, her total number of trips during the five-month time frame was approximately 90 trips (10 + 40 + 20 + 20).
After initially using cabs as a substitute for her vehicle, Will switched to using CTA buses and occasionally road along on trips in her daughter’s vehicle. For an older woman of poor health and walking ability traveling regularly during a northern Illinois winter, CTA transportation is not equivalent to having the use of one’s own car. Will testified to only being able to walk half a block at a time and to being unable to stand for long periods of time. The use of CTA transportation will normally require additional walking at both ends of a trip as well as greater outdoor waiting periods for buses to arrive. Convenience equivalent to that offered by one’s own vehicle is more comparable to the services of a taxicab than to a CTA bus, so the inconvenience and aggravation of being forced to use less favorable CTA transportation (or of attempting to coordinate and accommodate a family member’s schedule) require the award of compensatory damages. Will’s damages for obtaining less convenient alternative transportation for the five months during which FMCC wrongfully withheld her vehicle are $324 (90 multiplied by $3.60). The $3.60 figure for a single trip is less than what a typical round-trip cab-fare price would be, although the convenience of a taxicab would be more similar to the convenience of having the use of one’s own car. Without more specific evidence, though, the Court cannot award a higher rate of compensatory damages for each trip.
When FMCC finally returned the Cavalier to Will in April of this year, food wrappings indicated that the vehicle had been used. Additionally, her former license plates, registration sticker, and tire jack were missing; the vehicle required service due to its inability to turn over; and the battery needed to be replaced. The Court finds that $200 is reasonable compensation for the replacement of the battery and the missing items.
As the authority cited above recognizes, an award of attorneys’ fees is appropriate in this matter because Will had to resort to court action to force FMCC to remedy its stay violation by initially filing a “Motion for Damages Pursuant to 362(H)” on January 17, 2003. Instead of remedying the stay violation
at that
time, FMCC exploited every single technical flaw in this motion to require a formal trial on an adversary proceeding that did not occur for another eight months, after which time formal discovery recovered virtually no new factual information beyond those facts alleged in the original motion under
Finally, in considering whether punitive damages are appropriate, the Court will consider “(1) the nature of the creditor’s conduct; (2) the creditor’s ability to pay damages; (3) the motive of the creditor; and (4) any provocation by the debtor.”
In re Sumpter,
E. FMCC’s Motion to Annul the Automatic Stay in the Present Chapter IS Case
FMCC’s motion to annul the stay is based on Will’s failure to include it as a secured creditor in her current chapter 13 schedules and plan as well as on the obvious adequate-protection problems such a failure would trigger. It also alleges that she filed the Present Chapter 13 in bad faith. FMCC requests an annulment in the Present Chapter 13 so that its repossession of Will’s vehicle might be retroactively validated and so that it may continue to immediately pursue enforcement of its asserted lien for $4,034.23. This validating effect that granting the motion would have inextricably ties it to the awarded money judgment in the current adversary proceeding brought under § 362(h).
“Courts are in agreement that allowing retroactive relief from the stay is the exception rather than the rule.”
In re Scott,
• The controversy over the survival of FMCC’s lien after Will’s Prior Converted Chapter 13 is a bona fide legal dispute the particulars of which had not been fully fleshed out during the initial stages of the Present Chapter 13. Notice to FMCC of
If FMCC eventually prevails on the lien-survival issue, it is entitled to bring a motion to modify the automatic stay prospectively and to re-allege adequate-protection grounds similar to those in the current motion to annul, if appropriate.
F. FMCC’s Objection to Confirmation
FMCC’s confirmation objection alleges that Wills chapter 13 plan should include its remaining disputed secured claim for $4,034.23 plus interest, but the plan does not include it. This objection goes to the heart of the lien-survival issue. The status of a security interest once a chapter 13 case is converted to a chapter 7 case and the debtor has already paid the § 506(a) secured claim in full is a separate legal matter which has been discussed in published opinions by various courts.
Compare In re Castro,
The foregoing opinion constitutes findings of fact and conclusions of law pursuant to Bankruptcy Rules 9014 and 7052. A separate order under Bankruptcy Rule 9021 will follow.
Order and Judgment
1. Chapter 13 debtor Mary Will is awarded a money judgment of $524 in compensatory damages and $2000 in punitive damages against Ford Motor Credit Company. She is additionally awarded her costs and attorneys’ fees concerning her § 362(h) action upon submission of an itemization of the legal work performed and expenses incurred on her behalf in this matter.
2. Ford Motor Credit Company’s motion to annul the automatic stay in Case 02 B 36426 is denied.
3. Ford Motor Credit Company’s objection to confirmation of the debtor’s most recent chapter 13 plan is set for a status hearing on December 4, 2003, at 10:30 a.m.
Notes
. While a proceeding to obtain relief under § 362(h) has been held not to require an adversary proceeding,
In re Forty-Five Fifty-Five,
. Whether any portion of FMCC's lien did survive or should have survived Will’s prior converted case is a separate legal issue not
.
Compare In re Sharon,
with Coleman v. Grand Nat’l Bank (In re Coleman),
and with Bell-Tel Fed. Credit Union v. Kalter (In re Kalter),
. This approach is consistent with that of courts that have endorsed remedies, including for "technical” or "inadvertent” violations of the stay on various theories.
See, e.g., Chase Lumber & Fuel Co. v. Koch (In re Koch),