PAX AMERICA DEVELOPMENT, LLC.

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NOT FOR PUBLICATION
UNITED STATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
LOS ANGELES DIVISION
In re: ) Case No. 2:10-bk-62980-PC
)
PAX AMERICA DEVELOPMENT, LLC, ) Chapter 7
)
) MEMORANDUM DECISION
)
) Date: November 14, 2013
) Time: 9:00 a.m.
) Place: United States Bankruptcy Court
) Courtroom # 1468
Debtor. ) 255 East Temple Street
____________________________________) Los Angeles, CA 90012
Before the court is the Motion for Order Canceling and/or Voiding Trustee’s Deed Upon
Sale Dated December 20, 2010 for Violation of the Automatic Stay (“Motion”) filed by WETAC
LLC (“WETAC”), together with the written opposition of New Vision Horizon, LLC (“New
Vision”). At the hearing, WETAC and New Vision conceded that the only issues remaining to
be decided by the court with respect to the Motion are (1) whether WETAC has standing to seek
damages for an admitted violation of the automatic stay by New Vision; and (2) if so, whether
WETAC has established a claim for damages recoverable from New Vision for violation of the
FILED & ENTERED
NOV 15 2013
CLERK U.S. BANKRUPTCY COURT
Central District of California
BY DEPUTY CLERK	egarcia
Case 2:10-bk-62980-PC Doc 194 Filed 11/15/13 Entered 11/15/13 11:26:58 Desc
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automatic stay.1 Having considered those issues, the court will deny the balance of the relief
requested in the Motion.
WETAC seeks damages for New Vision’s admitted violation of the automatic stay
pursuant to 11 U.S.C. § 362(k).2 Because the only legal beneficiaries of the automatic stay are
the debtor and trustee, a creditor does not have standing to seek damages for violation of the
automatic stay. Tilley v. Vucurevich (In re Pecan Groves of Arizona), 951 F.2d 242, 245 (9th
Cir. 1991). According to the Ninth Circuit:
A party seeking relief under the automatic stay provision must have standing in two
respects: constitutional standing and standing under the Bankruptcy Code. City of
Farmers Branch v. Pointer (In re Pointer), 952 F.2d 82, 85 (5th Cir.), cert. denied sub
nom. Pointer v. Carrollton-Farmers Branch Indep. School Dist., 505 U.S. 1222, 112 S.Ct.
3035 (1992). It is clear that a secured creditor has constitutional standing when another
creditor violates the automatic stay: it suffers a palpable injury, which can be traced to the
other creditor's allegedly unlawful conduct, and can be redressed by the bankruptcy court.
Id. (citing Allen v. Wright, 468 U.S. 737, 751, 104 S.Ct. 3315, 3324, 82 L.Ed.2d 556
(1984)).
Under the Bankruptcy Code, only a party that Congress has designated a beneficiary of
the stay has standing to bring an action to declare a violation of the stay void. James v.
Washington Mut. Sav. Bank ( In re Brooks), 871 F.2d 89, 90 (9th Cir.1989). This court,
1 Earlier today, the court granted New Vision’s motion [Dkt. # 181] filed on October 18, 2013,
seeking relief from the automatic stay to exercise its rights with respect to the real property and
improvements at 618 S. Spring Street, Los Angeles, California. The court granted New Vision’s
motion for “cause” pursuant to 11 U.S.C. § 362(d)(1), and annulled the stay to the petition date
so that the filing of the bankruptcy petition in this case did not affect any and all of the
enforcement actions that were taken by New Vision after the filing of the bankruptcy petition,
including the foreclosure and sale of the subject property on December 20, 2010. The court
adopts and incorporates herein by reference all of the findings of fact and conclusions of law
stated on the record after the close of evidence at the hearing on New Vision’s motion pursuant
to F.R.Civ.P. 52(a)((1), as incorporated into FRBP 7052.
2 Motion 2:22-24; 9:1-10. In its Motion, WETAC notes that “[a] party injured by a stay
violation ‘can recover damages in the form of costs and attorney’s fees under section 105(a) as a
sanction for ordinary civil contempt.” Id. at 6:16-17. However, a contempt proceeding must be
initiated by the filing of a motion seeking the issuance of an order to show cause as required by
LBR 9020-1. To the extent WETAC’s Motion seeks damages under § 105(a) in the form of
attorney’s fees and costs as a sanction for civil contempt, the motion is denied for WETAC’s
failure to comply with LBR 9020-1.
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in Pecan Groves, clearly held that the only legal beneficiaries of the stay are the debtor
and the trustee. 951 F.2d at 245. This proposition is clear from the language of § 362(a),
which by its terms only protects the debtor and the property of the estate from the
enumerated threats.
In a practical sense, of course, the automatic stay does operate to the benefit of the
creditors because it provides for the orderly distribution of the property of the debtor's
estate. However, the fact that individual creditors might incidentally benefit from the
automatic stay or be injured in some way by its violation does not give those creditors
standing under the Bankruptcy Code to bring an action claiming the stay was violated. If
creditors wish to complain of a violation of the stay they must speak to the bankruptcy
court through the trustee.
Assocs. Fin. Servs. Co. v. First Fed. Sav. & Loan Ass’n (In re Franck), 19 F.3d 1440, 1994 WL
93169, *2 -*3 (9th Cir. 1994) (citations original) (emphasis added). Because WETAC does not
have standing under the Bankruptcy Code to pursue a claim for damages against another creditor
for an alleged violation of the automatic stay, WETAC’s Motion must be denied on the basis of
lack of standing alone.
Even if the court could find that WETAC had both constitutional standing and standing
under the Bankruptcy Code to pursue a claim against New Vision for damages for a violation of
the automatic stay and that WETAC had established that the stay violation by New Vision was
willful, the court cannot award the damages sought by WETAC pursuant to 11 U.S.C. § 362(k)
for two reasons. First, § 362(k) applies only to individuals. WETAC is a limited liability
corporation, not an individual. See Johnson Envt’l Corp. v. Knight (In re Goodman), 991 F.2d
613, 619 (9th Cir. 1993). Second, the only evidence of damages proffered by WETAC is the
declaration of WETAC’s counsel which states, in pertinent part, that the sum of $15,486 in
attorney’s fees and costs were incurred, or will be incurred, in connection with the Motion.3
There is no evidence of damages other than the attorney’s fees and costs incurred in bringing the
motion. Damages that may be awarded under § 362(k) attributable to a willful violation of the
automatic stay do not include attorney’s fees and costs incurred in a bankruptcy case to prosecute
3 Motion (Kwon Dec.) ¶15.
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a claim under § 362(k). Sternberg v. Johnston, 595 F.3d 937, 948 (9th Cir. 2010). Accordingly,
WETAC’s Motion must be denied in its entirety.
New Vision shall lodge a proposed order denying the relief requested in the Motion
consistent with this Memorandum Decision.
###
Date: November 15, 2013
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NOTICE OF ENTERED ORDER AND SERVICE LIST
Notice is given by the court that a judgment or order entitled (specify): Memorandum Decision was
entered on the date indicated as Entered on the first page of this judgment or order and will be served in
the manner stated below:
1. SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING (NEF) B Pursuant to controlling
General Orders and LBRs, the foregoing document was served on the following persons by the court via
NEF and hyperlink to the judgment or order. As of (date) 11-15-2013 , the following persons are currently
on the Electronic Mail Notice List for this bankruptcy case or adversary proceeding to receive NEF
transmission at the email addresses stated below.
Sean D Allen sda@sghoalaw.com
Julian K Bach Julian@Jbachlaw.com
Jennifer A Bender bankruptcy@zievelaw.com
Michael C Bergkvist rotorbear@earthlink.net, mbergkvist@aol.com
Lawrence R Boivin lboivin@mileslegal.com
David W Brody dbrody@brody-law.com, bknotice@brody-law.com
Michael W Burnett mwb@burnettpc.com, mhernandez@burnettpc.com
Evan M Daily ecfcacb@piteduncan.com, edaily@piteduncan.com
Michael T Delaney mdelaney@lbbslaw.com, monique.talamante@lewisbrisbois.com
Daniel K Fujimoto wdk@wolffirm.com
Nichole Glowin nglowin@wrightlegal.net, bkgroup@wrightlegal.net
Amy L Goldman goldman@lbbslaw.com
Arnold L Graff ecfcacb@piteduncan.com
Lemuel B Jaquez bjaquez@mileslegal.com
Alyssa B Klausner abk@sghoalaw.com
Brad Krasnoff krasnoff@lbbslaw.com
Phillip H Kwon phillip@kwonlaw.com
Scott Lee slee@lbbslaw.com
Miyun Lim teribklaw@gmail.com
Terry Loftus bknotice@mccarthyholthus.com, tloftus@mccarthyholthus.com
Christopher M McDermott ecfcacb@piteduncan.com
John J Menchaca (TR) jmenchaca@menchacacpa.com, ca87@ecfcbis.com;igaeta@menchacacpa.com
Marisol A Nagata cdcaecf@bdfgroup.com
Christina J O christinao@mclaw.org, erica@mclaw.org
John Park jparkatty@sbcglobal.net
John Park jparkatty@sbcglobal.net
Ronald D. Roup ecf@rouplaw.com
Michael R Totaro tsecfpacer@aol.com
Brian H Tran btran@mileslegal.com
United States Trustee (LA) ustpregion16.la.ecf@usdoj.gov
Darlene C Vigil cdcaecf@bdfgroup.com
Catherine T Vinh ecfcacb@piteduncan.com
Edward T Weber bknotice@rcolegal.com
Gilbert B Weisman notices@becket-lee.com
Kristi M Wells bknotice@rcolegal.com
Kristin A Zilberstein bknotice@mccarthyholthus.com, kzilberstein@mccarthyholthus.com
Case 2:10-bk-62980-PC Doc 194 Filed 11/15/13 Entered 11/15/13 11:26:58 Desc
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