Subject: Violation of the automatic stay
Facts:
Bankr. Court held that the actions of Nissan, appellant, violated
automatic stay of 362. BC entered actual and punitive damages for Appellees
Debtors in amount of $23k and reasonable attorney fees and expenses
totaling $5k.
BC gave Appellant option of satisfying actual/puni’s by deliviering a new truck, free and clear of any liens. Court affirms. Debtor filed Chapter 7 on Dec. 30, 1993. They listed their 1991 truck and stated their intent to reaffirm the debt.
On Jan. 4, 1994, Nissan, without knowledge repo’d the truck. Debtor’s counsel contacted Nissan following the repo to inform them of the debtor’s bankruptcy. On Feb. 23, 1994, Nissan filed for relief from stay, or in the alternative, adequate protection. Nissan sold the truck on March 16, 1994. BC did not know of the sale, granted the motion on June 1, 1994. On Nov. 1994, debtor filed this to seek damages for violating the automatic stay.
BC gave Appellant option of satisfying actual/puni’s by deliviering a new truck, free and clear of any liens. Court affirms. Debtor filed Chapter 7 on Dec. 30, 1993. They listed their 1991 truck and stated their intent to reaffirm the debt.
On Jan. 4, 1994, Nissan, without knowledge repo’d the truck. Debtor’s counsel contacted Nissan following the repo to inform them of the debtor’s bankruptcy. On Feb. 23, 1994, Nissan filed for relief from stay, or in the alternative, adequate protection. Nissan sold the truck on March 16, 1994. BC did not know of the sale, granted the motion on June 1, 1994. On Nov. 1994, debtor filed this to seek damages for violating the automatic stay.
Issue:
Is the repossession and retention of debtor’s property a violation
of the automatic stay? Were there actions willful to merit
sanctions? Were actual Damages merited by sufficient evidence?
Holding:
Yes and Yes and Yes.
Analysis:
§362(a)(3) prohibits “any act to obtain possession of property of
the estate or of property from the estate or to exercise control over
the property of the estate.” Case law holds that continued
retention of property of the estate after notice of the bankruptcy
filing is an “exercise of control” over property of the estate in
violation of the automatic stay. Nowhere in §363 grants a creditor
the authority to self-help to retain property as adequate protection,
which is exactly what the creditor did. §542(a) provides that a
creditor “shall deliver to the trustee, and account for, estate
property or the value of such property.” Appellee testified that
their daughter-in-law drove them when necessary, the vehicle was
their only transportation, debtor had to drive 90 miles to work,
couldn’t secure reliable transportation, and they had to purchase
and finance a used car in May to replace their vehicle.
*
The court was willing to lift the stay and Nissan could have had the
car. BUT when it acted on its own without approval, it had to pay
nearly $30k in damages. Lesson learned.
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