Getting Compensatory Damages for the Willful Violation of the Automatic Stay Under 11 U.S.C. § 362(k)(1)
Do not violate the automatic stay. If you do, it may cost you thousands of dollars. This is the lesson that United States Bankruptcy Court Judge Julia Brand and I taught my client Alvaro Garcia’s largest Judgment Creditor and its counsel. On February 3, 2015, in a case entitled, In re Alvaro Garcia, Case No. 2:14-bk-29342-WB, Judge Julia Brand entered an Order Granting my Motion for Compensatory Damages for the Willful Violation of the Automatic Stay under 11 U.S.C. § 362(k)(1) and awarding $5,378.50 in compensatory damages including costs and reasonable attorney’s fee against my client’s judgment creditor, RAM Pizza, Inc., its attorneys of record David G. Moore, Esq., and the law firm Reid & Hellyer APC. After the filing of the bankruptcy petition, David Moore and Reid & Hellyer filed a Memorandum of Costs in the underlying state court case claiming $109,464.41 in post judgment costs. I told David Moore, an attorney with 50 years of experience, that filing a Memorandum of Costs after he knew that my client had filed bankruptcy was a violation of the automatic stay. I demanded that he withdraw his Memorandum of Costs. He refused. He told me that he was merely trying to “liquidate the debt,” not collect it. Later, after he read my motion, he offered to pay $600.00 in damages if I would withdraw it. I refused. Mr. Moore had an Associate Attorney, Scott Talkov, appear by phone for the first hearing on my motion. Mr. Talkov was not able to persuade the judge that there was any legal justification for what Mr. Moore had done. Mr. Talkov kept interrupting the judge and she became so upset that she refused to allow him to appear by phone in her court in any future proceedings in this case. At the second hearing, Mr. Moore appeared in person and tried to minimize the amount of money that the court would award against him for what it already had determined was his willful violation of the automatic stay. After Judge Brand ordered that the creditor, David G Moore and Reid & Hellyer pay $5,378.50 to my client trust account by February 18, 2015, they still tried to avoid payment in full by bluffs and threats. David G. Moore had Scott Talkov call and offer me $2,000.00 and tell me that if I did not accept the $2,000.00 payment, he would file an appeal. I refused his offer. I was not impressed by his bluff. 2 days later, I got the check from Reid & Hellyer for $5,378.50.
The automatic stay is one of the fundamental debtor protections provided under the Bankruptcy Code. Under 11 U.S.C. § 362(a)(6), the filing of a bankruptcy petition operates as a stay that protects the debtor and the property of the estate. The automatic stay stops all collection efforts, foreclosure actions, acts to obtain possession of property, harassment, prevents creditors from satisfying their claims to the detriment of other creditors, and any act to create, perfect, or enforce any liens against property of the estate. Pursuant to 11 U.S.C. § 362(a)(6), the stay is applicable to all entities, and forbids “any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case” under the bankruptcy code.
If you have any questions as to whether or not a particular action violates the automatic stay, call me. I will give you accurate free advice – advice that could save you thousands of dollars.
Special thanks to my Associate Attorney Ori Blumenfeld who wrote the papers that the court based its ruling on.