In re Goodfellow,
298 B.R. 358, Bankr.N.D.Iowa, Sep 03, 2003
Chapter 7 debtor filed motion for sanctions, alleging that creditor's conduct in continuing to send invoices and other types of collection letters to debtor, making telephone calls in an attempt to get her to pay off her debt, and placing information concerning her in various credit report agency files violated the automatic stay and the discharge injunction. The Bankruptcy Court, Paul J. Kilburg, Chief Judge, held that: (1) creditor willfully violated the automatic stay and the discharge injunction; (2) debtor sustained actual damages in the amount of $5,000.00; (3) debtor was entitled to punitive damages in the amount of $5,000.00; and (4) debtor was entitled to attorney fees in the amount of $1,200.00.
A bankruptcy petition filed under § 301 of the Code imposes the automatic stay pursuant to § 362. All voluntary cases are included in § 301. The automatic stay under § 362 prohibits any entity from taking action "to collect, assess, or recover a claim against the debtor that arose before the commencement of a case." 11 U.S.C. § 362(a)(6). The scope of the automatic stay is extremely broad. In re Knaus, 889 F.2d 773, 774 (8th Cir.1989). By the passage of § 362, Congress intended the automatic stay to stop "all collection efforts, all harassment, and all foreclosure actions" and "prevent creditors from attempting in any way to collect a prepetition debt." H.R. 595, 95th Cong., 1st Sess. pp. 340-42 (1977), U.S.Code Cong. & Admin.News 1978, pp. 5963, 6296-6299; In re Grau, 172 B.R. 686, 690 (Bankr.S.D.Fla.1994).
Section 362(h) addresses sanctions for the violation of the automatic stay. It provides that:
An individual injured by any willful violation of a stay provided by this section shall recover actual damages, including costs and attorneys' fees, and, in appropriate circumstances, may recover punitive damages.
11 U.S.C. § 362(h). A violation of the stay is "willful" where the violator's conduct is deliberate and with knowledge of the bankruptcy filing. In re Dencklau, 158 B.R. 796, 800 (Bankr.N.D.Iowa 1993). In imposing actual damages, the trial court has discretion to fashion the punishment to fit the circumstances. Hubbard v. Fleet Mortg. Co., 810 F.2d 778, 782 (8th Cir.1987) (citing United States v. United Mine Workers, 330 U.S. 258, 303, 67 S.Ct. 677, 91 L.Ed. 884 (1947)).
11 U.S.C. § 524(a)
Section 524(a) states, in pertinent part:
(a) A discharge in a case under this title--
(2) operates as an injunction against the commencement or continuation of an action, the employment of process, or an act, to collect, recover or offset any such debt as a personal liability of the debtor, whether or not discharge of such debt is waived.
11 U.S.C. § 524(a).
Section 524(a)(2) replaces the automatic stay of § 362 with a permanent injunction against enforcement of all discharged debts after entry of the discharge. In re Waswick, 212 B.R. 350, 352 (Bankr.D.N.D.1997). Unlike § 362(h), which authorizes an individual injured by a willful violation of the automatic stay to recover actual damages, attorney fees, and where appropriate, punitive damages, § 524(a) does not expressly mention such awards. In re Walker, 180 B.R. 834, 847 (Bankr.W.D.La.1995). Willful violation of the § 524(a)(2) injunction, however, will warrant a finding of civil contempt. Id.; Waswick, 212 B.R. at 352. The burden rests with the movant to show by clear and convincing evidence that the offending creditor had knowledge of the discharge and willfully violated it by pursuing collection activities. Waswick, 212 B.R. at 352.
Discover Financial Services, Inc. has been properly served with Debtor's Motion for Sanctions. It has not filed an appearance or made contact with Debtor's counsel concerning this action. There have been numerous contacts made between Discover Financial Services, Inc. and Debtor by letters and telephone calls. While the letters have been standard correspondence, the telephone contacts took on a threatening tone and were unreasonable both in their approach as well as their timing. All contacts have been numerous and have sought payment of Debtor's debt in violation of the automatic stay as well as the post-discharge injunction.
Discover Financial Services, Inc. was properly served with notice of the pendency of the bankruptcy case. It was likewise properly served with the Motion for Sanctions sought under § 362 and § 524. The Court determines that there have been a substantial number of contacts by Discover Financial Services, Inc. with Debtor through telephone calls and mailings. The Court finds that Debtor has been damaged in several respects. Because of the nature of the telephone contacts, she was required to undergo medical treatment at the Veteran's Hospital in Iowa City, Iowa. In addition, she suffered damages because of the placement of her account in a reporting agency after Debtor took bankruptcy and after the entry of discharge. Because of these violations, Debtor was required to incur attorney's fees and appear in court to defend her rights. As such, the Court finds that Debtor is entitled to actual damages, punitive damages, attorney's fees and costs.
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