Stephen H Chew

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UNITED STATES BANKRUPTCY COURT
DISTRICT OF MASSACHUSETTS

In re

STEPHEN H. CHEW, Chapter 7
Case No. 05-21076-RS

Debtor

MEMORANDUM OF DECISION REGARDING
DAMAGES FOR WILLFUL VIOLATION OF THE AUTOMATIC STAY

On June 12, 2006, after an evidentiary hearing, the Court made Findings of Fact and
Rulings of Law (“Findings and Rulings”) on which it based its determination that the within
Debtor, Stephen H. Chew, is entitled to actual and punitive damages from Marcia McGarry,
Carol Colburn, Edward Chew, and Cynthia Wyrocki (‘‘Creditors”) for injury, including
emotional distress, resulting from a willful violation of the automatic stay pursuant to § 362(h) of
the Bankruptcy Code.' To assist the Court in fixing the amount of damages to be recovered by
the Debtor, the Court also ordered (a) that the Debtor submit a statement of actual damages,
including attorneys’ fees, and any proposed punitive damages award by June 26, 2006 and (b)
that the Creditors file their response thereto by July 5, 2006.

On June 26, 2006, the Debtor filed his statement, setting forth $8,398.50 in actual
damages for costs and attorneys’ fees (consisting of $224 in bank overdraft charges, $207 for a
deposition transcript, and $7,967.50 in attorneys fees) and leaving to the Court’s discretion the
quantification of both actual damages for emotional distress and punitive damages (“Statement”).
On June 29, 2006, the Creditors filed a memorandum of law opposing the damages amount set

forth in the Statement (“Opposition”). Neither the Debtor nor the Creditors requested a further

'The stay violation comprised the Creditors’ attachment of a joint account in the name of
the Debtor and his non-debtor spouse. The account had a credit balance in the amount of
$5,997.19.

UTHENTICATED Z > oe

U.S. GOVERNMENT
INFORMATION
GPO

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evidentiary hearing regarding the fixing of damages, and the Court has determined that the fixing
of damages can be decided on the evidence adduced at the evidentiary hearing and without
further hearing.” In deciding this matter, the Court has considered, in addition to such evidence,
the Findings and Rulings (which the Court incorporates herein by reference), the Statement, the

Opposition, the record of the proceedings and case to date, and applicable law.

Discussion

The Creditors advance three arguments in the Opposition, in part revisiting factual
matters previously heard and determined. These arguments are discussed below.

First, the Creditors characterize the Debtor’s emotional distress injury as “garden-variety
anxiety,” portraying it as largely if not solely occasioned by factors other than the stay violation,
attributable more to the Debtor’s non-debtor wife than to the Debtor, and, in any event, waived
because not quantified in the Statement but left to the Court’s discretion. Except for the newly
raised waiver element, this argument blatantly ignores the Findings and Rulings, especially the
Court’s determination that the Debtor suffered actual emotional distress. The issue is not
whether the Debtor suffered emotional distress but the monetary recovery appropriate in these
circumstances. In effect, the Creditors’ position is that the Debtor should recover nothing for
emotional distress. The Court rejects that argument.

Second, the Creditors seek to limit the Debtor’s recovery of attorneys’ fees in this matter
to the original flat fee agreement between the Debtor and his attorneys rather than the subsequent

hourly rate agreement necessitated by case developments occurring after the original agreement,

The evidentiary hearing was not limited to liability but included all issues, including
damages.

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which fully warrant a supplemental arrangement. In addition, they attack various time entries
contained in the Statement. The Court finds that the Debtor is obligated to his attorneys in
accordance with the supplemental hourly rate agreement. Moreover, the Court finds that the
Services and expenses sought to be recovered are fair and reasonable and that the recitation
thereof in the Statement is properly reflective of the time expended and costs incurred and
consistent with applicable national and local rules. Lastly, the Court notes that an award of
attorneys’ fees in a stay violation proceeding is virtually mandated by the statute: “An individual
injured by any willful violation of [the automatic] stay... shall recover actual damages, including
costs and attomeys’ fees[.]” 11 U.S.C. § 362(h) (emphasis added).

Third, the Creditors contend that punitive damages are inappropriate in the circumstances

of this matter, although they acknowledge that any such award, if made, should be limited to an
amount sufficient to serve the purpose of deterrence. As noted in the Findings and Rulings, the
Creditors not only acted in violation of the stay but refused to stand down for the two weeks
between that violation and the Court’s order directing the dissolution of the objectionable
attachment. Their stance was intransi gent and their violation protracted, precisely the
circumstances requiring deterrence. Moreover, although they did not know for certain that their
action would be deemed a violation of the automatic stay, they did know (as evidenced by their
need to consult three attorneys on the subject) that it occupied a gray area in which an adverse

ruling could not be ruled out. They did not act with a good faith belief in the lawfulness of their

*This case, having been commenced before the 10/17/05 effective date of the Bankruptcy
Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”), is governed by the
Bankruptcy Code as it existed prior to its amendment by that act. Prior to the BAPCPA
amendments, the operative provision was codified at 1] U.S.C. § 362(h), and references in this
memorandum are to the pre-BAPCPA codification. The new law relocated the language of
subsection (h) to subsection (k)(1) and made it subject to a limitation set forth in subsection
(k)(2). See 11 U.S.C. § 362(k).

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conduct but in defiance of known infirmities in their position.

Conclusion

The Debtor suffered emotional distress attributable to the stay violation. The
supplemental fee agreement between the Debtor and his attorneys is valid and binding, and
encompasses the attorneys’ fees awarded hereunder. The Creditors forced the Debtor to obtain
from the Court a protection Congress intended as automatic, at a monetary and emotional cost to
the Debtor and in a manner requiring deterrence.

Accordingly, the Court orders that the Debtor shall recover from the Creditors the sum of
$15,395.69 consisting of the following: $8,398.50 in actual costs and attorneys’ fees; $1,000 in
damages for emotional distress; and $5,997.19 in punitive damages. The Creditors shall be
jointly and severally liable for this amount; and they shall pay the entire award by August 31,
2006, failing which they shall be jointly and severally liable for a sanction of $100 per day for
each day such award (or any portion thereof) remains unpaid. A separate order shall issue

reflecting the foregoing.

Dated: July /3, 2006 Myatt euatr

Robert Somma
United States Bankruptcy Judge

ce: Jon H. Kurland, Esq., Counsel for Debtor
Michael B. Feinman, Counsel for Creditors