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Violation of Bankruptcy Order: Can You Get Punitives?

Posted: Mon Oct 24, 2005 8:17 pm
by David A. Szwak
In re Poole,
242 B.R. 104, Bankr.N.D.Ga., Oct 06, 1999

Conduct of creditor and its law firm in continuing to pursue state court collection remedies against Chapter 13 debtor was willful, thereby subjecting creditor and law firm to sanctions for violating discharge injunction, since their conduct was intentional and with knowledge of bankruptcy filing and discharge injunction, even though law firm did not have notice of debtor's bankruptcy when state court lawsuit against debtor was initially reactivated, where creditor continued to serve debtor at invalid corporate address after law firm had requested and obtained debtor's credit report containing debtor's correct, current home address.

Compensatory damages and attorney fees may be awarded as sanctions for violations of discharge injunction, pursuant to bankruptcy statute authorizing court to enter any necessary or appropriate orders

Punitive damages are not available under bankruptcy statute authorizing court to enter any necessary or appropriate orders, but punitive damages may be imposed for violations of discharge injunction, however, pursuant to court's inherent contempt powers if actions were taken in bad faith.[/u]

Posted: Mon Oct 24, 2005 8:18 pm
by David A. Szwak
Compensatory damages and attorneys fees may be awarded as sanctions pursuant to 11 U.S.C. § 105. Hardy, 97 F.3d 1384, 1390, citing Jove Engineering, 92 F.3d 1539, 1557-58. Punitive damages are not available under § 105. Id. Punitive damages may be imposed, however, pursuant to the court's inherent contempt powers if the actions were taken in bad faith. Hardy, 97 F.3d 1384; Jove Engineering, 92 F.3d 1539; Glatter v. Mroz, 65 F.3d 1567 (11th Cir.1995). See also, Chambers v. NASCO, Inc., 501 U.S. 32, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991). Debtors contend BSBP and UBV willfully violated the discharge injunction by filing the garnishment, by failing to record the release of the writ of fieri facias, and by opposing the Motion to Set Aside the judgment in the Cobb Lawsuit.