Opinion
Case No. 3:18-bk-821-PMG
07-12-2018
In re: Stephen J. Acklin, a/k/a Stephen Joseph Acklin, a/k/a Stephen Acklin, Debtor.
Chapter 7 ORDER ON DEBTOR'S MOTION FOR SANCTIONS AGAINST SPECIALIZED TOWING AND TRANSPORTATION, INC.
THIS CASE came before the Court for trial on Debtor's Motion for Sanctions against Specialized Towing and Transportation, Inc. (the Sanctions Motion). (Doc. 6).
Specialized Towing and Transportation, Inc. (STT) repossessed the Debtor's truck two days before the filing of the bankruptcy petition, and certain personal items found in the truck were not returned to the Debtor immediately after the filing. In the Sanctions Motion, the Debtor asserts that STT's retention of the personal items constitutes a willful violation of the automatic stay.
Under §362(k) of the Bankruptcy Code, a debtor may recover damages for a violation of the stay if the violation was willful, and the debtor was injured by the violation.
In this case, the evidence does not establish (1) that STT knew before receiving the Sanctions Motion that the automatic stay had been invoked, or (2) that the Debtor was injured by a willful violation of the stay. Accordingly, the Sanctions Motion should be denied.
Background
Prior to the filing of the bankruptcy case, the Debtor purchased a 2014 Dodge Ram. The truck was encumbered by a lien held by M&T Bank.
On Saturday, March 17, 2018, STT repossessed the truck on behalf of the Bank, and took possession of the following items of personal property that were located in the truck: brush, 2 tags, black umbrella, 2 jackets, black strap, black leather bag, flashlight, misc papers, envelopes, cup, napkins, bible, shades, hair pick, blade, chargers, vapor pen, Zune, garage door opener, permanent markers, dodge truck manual, Nike hat. (STT's Exhibit 2).
The next day, March 18, 2018, the Debtor phoned STT's office, and was advised that he could retrieve the personal items by scheduling an appointment and paying a handling fee in the amount of $150.00.
One day later, on Monday, March 19, 2018, the Debtor filed a petition under Chapter 7 of the Bankruptcy Code.
On the same date that he filed the petition, the Debtor again phoned STT regarding the personal items. According to the Debtor, he was instructed to verify the bankruptcy filing and pay the handling fee in order to recover the items.
On either March 20 or March 28, 2018, the Debtor's bankruptcy attorney contacted STT by telephone, identified himself as the Debtor's bankruptcy attorney, and informed STT that the Debtor had filed a bankruptcy case.
On March 28, 2018, the Debtor filed the Sanctions Motion. (Doc. 6). In the Sanctions Motion, the Debtor contends that STT willfully violated the automatic stay by withholding the personal items, and seeks an award of compensatory and punitive damages based on the violation.
Discussion
The filing of a bankruptcy petition operates as an automatic stay that prohibits various attempts to enforce prepetition claims. 11 U.S.C. §362(a).
Section 362(k) of the Bankruptcy Code provides:
11 USC §362. Automatic stay11 U.S.C. §362(k)(1). "In order to recover damages under [§362(k)] a debtor must show that there was a willful violation of the automatic stay and that he or she was injured by the violation." In re Zajni, 403 B.R. 891, 895 (Bankr. M.D. Fla. 2008)(citing In re Hedetneimi, 297 B.R. 837, 841 (Bankr. M.D. Fla. 2003)).
. . .
(k)(1) Except as provided in paragraph (2), 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.
A creditor's violation of the stay is willful if the creditor (1) knew that the automatic stay was invoked, and (2) intended the actions that violated the stay. In re Ferrer, 2017 WL 401188, at 2 (Bankr. M.D. Fla.)(citing Jove Engineering, Inc. v. IRS, 92 F.3d 1539, 1555 (11th Cir. 1996)).
The debtor has the burden of proving his entitlement to damages, and any such damages "must be proven with reasonable certainty." In re Sciortino, 561 B.R. 569 (Bankr. N.D. Ga. 2016).
A. No willful violation of the stay
In this case, the evidence does not establish that STT knew before receiving the Sanctions Motion that the stay had been invoked.
The truck was repossessed before the bankruptcy petition was filed.
Generally, a creditor's post-petition refusal to return repossessed property of the debtor is a violation of the automatic stay, even if the repossession occurred before the bankruptcy petition was filed. In re Zajni, 403 B.R. at 894. The refusal may be sanctionable if the violation was willful. In re Castillo, 456 B.R. 719, 724 (Bankr. N.D. Ga. 2011).
The Debtor in this case filed the Sanctions Motion nine days after the petition date. In the nine-day period between the filing of the petition and the Sanctions Motion, the only effort to inform STT of the bankruptcy case consisted of two telephone calls. The first call was placed by the Debtor on the petition date, either before or after the petition was actually filed at 3:57 p.m. The second call was placed by the Debtor's attorney on either March 20 or March 28, 2018.
The evidence does not show with reasonable certainty that either the Debtor or the attorney provided STT with the Debtor's bankruptcy case number or other basic filing information in the telephone calls.
Additionally, the evidence does not show that any written notice of the Debtor's case was provided to STT in the nine-day period before the Sanctions Motion was filed, despite the two telephone calls. STT was not served with a copy of the original Notice of Chapter 7 Bankruptcy Case, for example, and no written notice was sent to STT as a follow-up to the telephone calls, even though such a notice had been prepared in the Debtor's attorney's office.
Under these particular circumstances, the evidence does not show that STT knew before receiving the Sanctions Motion that the automatic stay had been invoked. See In re Ferrer, 2017 WL 401188, at 2(The debtor's verbal communication that he had retained a bankruptcy attorney was not sufficient knowledge of the stay for purposes of §362(k)). Accordingly, the Court finds that STT's retention of the personal items was not a willful violation of the stay.
B. No evidence of damages
Second, the evidence does not show that the Debtor was injured by STT's violation of the stay or by STT's retention of the personal items after the bankruptcy case was filed.
The property at issue in the Sanctions Motion is not the truck, so the Debtor does not assert that he was injured by any lack of transportation after the repossession.
Instead, the property at issue in the Sanctions Motion consists of personal items, including several articles of clothing and accessories, a flashlight and umbrella, a Bible, and a vapor pen. (STT's Exhibit 2). The Debtor does not assert that the items are associated with his employment or livelihood, or that he had any specific need for the items within the nine-day period between the filing of the bankruptcy petition and the Sanctions Motion.
STT acknowledges that the Debtor was advised in the telephone call on the petition date that he would be required to pay a standard handling fee of $150.00 to retrieve the personal items. But the Debtor has never paid the handling fee or any other amount to STT, and STT did not pursue collection of the handling fee after the initial contact.
Finally, the Sanctions Motion was filed nine days after the petition, after minimal verbal contact and no written communication with STT to resolve the issue surrounding the return of the personal items. See In re Banks, 521 B.R. 417, 426 (Bankr. M.D. Ga. 2014)("Attorneys' fees must be proven with reasonable certainty and be shown to be reasonable and necessary.").
Under these particular circumstances, the evidence does not show that the Debtor was injured by STT's violation of the automatic stay. See In re Ferrer, 2017 WL 401188, at 2("There was absolutely no evidence presented on the issue of damages."). Consequently, the Court finds that the Debtor is not entitled to an award of actual or punitive damages under §362(k) of the Bankruptcy Code.
Accordingly:
IT IS ORDERED that the Debtor's Motion for Sanctions against Specialized Towing and Transportation, Inc. is denied.
DATED this 12 day of June, 2018.
BY THE COURT
Paul M. Glenn
PAUL M. GLENN
United States Bankruptcy Judge