Opinion
Case No. 01-20557
June 14, 2001.
DECISION ON MOTION FOR ORDER TO SHOW CAUSE FOR VIOLATION OF AUTOMATIC STAY
On June 5, 2001, this case came before the court for hearing on the pro se debtor's allegation that two creditors violated the automatic stay in her case. The court has considered the testimony and other evidence and the applicable law in making this ruling.
FACTS
Aileen Ann Cain filed her pro se chapter 7 petition on April 18, 2001. The Notice of Chapter 7 Bankruptcy Case (Notice) was served by the Clerk of the Bankruptcy Court on April 20, 2001. The Notice was mailed to
the Collection Center, Inc. (Collection Center) in Rawlins, Wyoming and to the Collection Bureau of Torrington, Wyoming. The Torrington agency is actually the Credit Bureau of Torrington (Credit Bureau), but it received the Notice despite the incorrect name on the service list and matrix.
On April 30, 2001, a representative of the Collection Center telephoned Ms. Cain and spoke with her mother. Ms. Cain's mother informed the caller that Ms. Cain intended to file a bankruptcy case. Later the same day, Ms. Cain's mother called the Collection Center and informed it that the bankruptcy case had been filed.
On May 2, 2001, the Collection Center received the Notice and entered the bankruptcy case information into its electronic data base. No further collection activity was taken.
On April 24, 2001, the Credit Bureau served a Motion for Summary Judgment in a civil collection action pending against Ms. Cain and sent it to the Justice of the Peace Court. The motion appears to have been filed on April 27, 2001. Ms. Cain received the motion for summary judgment at some date after she filed her petition. In response, she sent a note to the Credit Bureau indicating that she had filed the chapter 7 petition.
On April 30, 2001, the Justice of the Peace Court entered and mailed an Order Setting Hearing on the motion. On May 3, 2001, Ms. Cain received an unidentified document from the Justice of the Peace Court, possibly the order setting the hearing.
The Credit Bureau received the Notice on April 25, 2001. On May 7, 2001, the Credit Bureau's counsel called the Justice of the Peace Court, informed it of the bankruptcy case and canceled the hearing. The Credit Bureau also called the Justice of the Peace Court on May 21, 2001, after receiving this court's order setting a hearing on sanctions.
JURISDICTION
The court has jurisdiction over this core proceeding pursuant to 28 U.S.C. § 157(b)(2)(O) 1334. These issues may be heard as a contested matter. In re Timbs, 178 B.R. 989, 994 (Bankr.E.D.Tenn. 1994).
CONCLUSIONS OF LAW
Ms. Cain contends both creditors made collection contacts after she filed her bankruptcy petition, in violation of the automatic stay. Among other things, the automatic stay of 11 U.S.C. § 362 precludes collection activity and the continuation of any proceeding to recover a claim against the debtor and actions taken to recover a claim. The court is mandated to award actual damages to an individual injured by a willful violation of the stay. 11 U.S.C. § 362(h).
A violation of the automatic stay is willful if the action is deliberately taken with knowledge that the debtor has filed a petition in bankruptcy. In re Matthews, 184 B.R. 594, 599 (Bankr.S.D.Ala. 1995).
Conduct is deliberate if it is intentional, but the conduct need not be taken with the intent to violate the stay for a violation to be willful. In re Roberts, 175 B.R. 339, 344 (9th Cir. BAP 1994).
The case law is consistent in holding that once a creditor is notified of a bankruptcy filing, the stay imposes an affirmative duty on that creditor to stop postpetition collection activities. Id.; In re Clemmons, 107 B.R. 488, 490 (Bankr.D.Del. 1989). For example, a garnishing creditor has an affirmative duty to dismiss a garnishment. In re Dennis, 17 B.R. 558 (Bankr.M.D.Ga. 1982).
With regard to the Collection Center, the court concludes there was no willful violation of the automatic stay. Although it made a collection call on April 30, 2001, the Notice was not received until May 2, 2001. Further, no collection efforts were made after Ms. Cain's mother informed the Collection Center of the bankruptcy petition. Even though the call was postpetition, it was made without knowledge of the bankruptcy case and was not willful as a matter of law.
On the other hand, the Credit Bureau had knowledge of the automatic stay on April 25, 2001. Not until May 7, 2001 did it or its attorney notify the Justice of the Peace Court of the bankruptcy filing. During that two week period, the Justice of the Peace Court set a hearing on the motion and sent notice of the hearing to the debtor. The Credit Bureau had an affirmative obligation and was in the best position to notify the Justice of the Peace court, rather than relying on chance or notice by the debtor.
The Order setting the hearing on summary judgment violated the automatic stay and was made at the behest of the Credit Bureau which had knowledge of the bankruptcy case. Therefore, the violation was willful.
Under § 362(h), the court is mandated to award actual damages for a willful violation. Ms. Cain was not represented by counsel in bringing this motion, but could have been. A damage award of $200 is compensatory under the facts of this case. The court will issue a judgment to that effect.