Thursday, April 13, 2017

bankruptcy - automatic stay - willful violation - emotional distress damages

In re Landsaw – 3d Cir. – April 10, 2017

The filing of a bankruptcy petition operates as an automatic stay of debt collection activities outside of bankruptcy proceedings. 11 U.S.C. § 362(a).  If “an individual [is] injured by any willful violation of [the] stay,” that individual “shall recover actual damages, including costs and attorneys’ fees, and, in appropriate circumstances, may recover punitive damages.” Id. § 362(k)(1).

In the present case, a creditor committed several willful violations of the automatic stay arising from the debtors’ bankruptcy petition. Because of these violations, the Bankruptcy Court awarded the debtors  emotional-distress damages as well as punitive damages under § 362(k)(1).  The District Court affirmed the awards.

We conclude that § 362(k)(1) authorizes the award of emotional-distress damages and that the debtors presented sufficient evidence to support such an award. We also conclude that the debtors were properly awarded punitive damages.

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