Thursday, November 29, 2012

Nissan Motor Acceptance Corp. v. Baker case brief (violation of automatic stay)

Nissan Motor Acceptance Corp. v. Baker (ND Tex. 1999)    

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.

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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