David Brian Derringer

UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW MEXICO
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06/10/06
David Brian Derringer
04-17330
Order Granting in Part, Denying in Part [201-1] Motion For Order to Show Cause
and for extreme actual and punitive damages against Mick Chapel, Jennifer
Chapel, Joseph Manges and Stephen Long by David Brian Derringer .
Received on: 2005-08-11 15:44:08.000
2005-08-11 00:00:00.000
2005-08-12 00:00:00.000
Patti Hennessy
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UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW MEXICO
In re: DAVID BRIAN DERRINGER, No. 13-04-17330 MA
Debtor.
ORDER ON DEBTOR DAVID DERRINGER’S MOTION FOR SANCTIONS
FOR VIOLATION OF THE AUTOMATIC STAY
THIS MATTER is before the Court on Debtor David Derringer’s Motion for Order to Show
Cause and For Extreme Actual and Punitive Damages against Mick Chapel, Jennifer Chapel, Joseph
Manges, Stephen Long for Violations of Title 11 Section 362(h); and Request for Relief (“Motion”),
filed by the Debtor, pro se. The Motion seeks damages for violation of the automatic stay imposed
by 11 U.S.C. § 362 for actions taken by Mick Chapel and Jennifer Chapel, by and through their
attorney, Joseph Manges, following the entry of the Court’s Order Terminating Automatic Stay as to
Mick Chapel and Jennifer Chapel (“Order Granting Relief from Stay”) prior to the expiration of the ten
day period proscribed by Rule 62, Fed.R.Civ.P., made applicable to bankruptcy proceedings by Rule
7062, Fed.R.Bankr.P. The Court held a final hearing on the Motion on August 10, 2005. In
accordance with the Court’s ruling at the final hearing, the Court FINDS:
1. The Order Granting Relief from Stay was entered on June 28, 2005.
2. On July 5, 2005, as reflected on the certificate of mailing, Mick Chapel and Jennifer Chapel,
by and through their attorney, Joseph Manges, sent a Notice of Foreclosure Sale for filing in state court
case number CV-02-19 (“State Court Action”).
3. The Notice of Foreclosure Sale was filed in the State Court Action on July 8, 2005, and
scheduled a foreclosure sale for August 11, 2005.
4. Federal Rule of Bankruptcy Procedure 4001(a)(3) provides:
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1Section 362(h) provides:
An individual injured by any willful violation of a stay provided by this section shall
recover actual damages, including costs and attorneys’ fees, and, in appropriate
circumstances, may recover punitive damages.
11 U.S.C. § 362(h).
2
An order granting a motion for relief from an automatic stay made in accordance with
Rule 4001(a)(1) is stayed until the expiration of 10 days after the entry of the order,
unless the court orders otherwise.
Rule 4001(a)(3), Fed.R.Bankr.P.
5. Actions taken prior to the expiration of the ten-day period contained in Rule 4001(a)(3),
Fed.R.Bankr.P. can form the basis of a claim for damages for willful violation of the automatic stay
under 11 U.S.C. § 362(h).1 In re Banks, 253 B.R. 25 (Bankr.E.D.Mich. 2000).
6. An act taken in violation of the automatic stay is “willful” if the act was taken with
knowledge that the automatic stay was in place and the act was intentional; specific intent to violate the
automatic stay is not necessary for the act to be considered “willful” within the meaning of 11 U.S.C. §
362(h). Diviney v. NationsBank of Texas, N.A. (In re Diviney), 225, B.R. 762, 774 (10th Cir. BAP
1998) (citations omitted).
7. Attorneys can be held liable for violation of the automatic stay for actions taken on behalf of
their creditor-clients. See In re Johnson, 253 B.R. 857, 861 (Bankr. E.D.Ohio 2000) (“Courts have
imposed joint and several liability against creditors and their counsel for willful stay violations.”) (citing
In re Baker, 183 B.R. 30, 33 (Bankr.D.R.I. 1995); In re Stainton, 139 B.R. 232, 234 (9th Cir. BAP
1992); and In re Zick, 123 B.R. 825, 828 (Bankr. E.D.Wis. 1990)).
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8. Actions taken in violation of the automatic stay are void. In re Gagliardi, 290 B.R. 808,
814 (Bankr.D.Colo. 2003) (“Actions taken in violation of the automatic stay are void and of no force
or effect, even when there is no actual notice of the existence of the stay.”) (citing In re Calder, 907
F.2d 953, 956 (10th Cir. 1990)).
9. Having actively participated in the Debtor’s bankruptcy proceeding since the filing of
Debtor’s voluntary petition, Mick Chapel, Jennifer Chapel, and Joseph Manges were well aware of the
bankruptcy and the existence of the automatic stay.
10. An attorney practicing before the bankruptcy court is charged with knowing and abiding
by all applicable rules. Cf. NM LBR-2090-1b. (requiring non-resident attorneys who apply to appear
before the court pro hac vice to file a statement that the attorney has read and is familiar with these
rules); In re Kirkland, 181 B.R. 563, 568 (D.Utah 1995), aff’d, 86 F.3d 172 (10th Cir. 1996) (“Even
pro se parties are charged with knowledge of the rules”).
11. By sending the Notice of Foreclosure Sale during the ten-day period within which the
Order Granting Relief from Stay was stayed by operation of Rule 4001(a)(3), Mick Chapel, Jennifer
Chapel, and Joseph Manges wilfully violated the automatic stay.
12. Because the Notice of Foreclosure Sale is void and the foreclosure sale scheduled for
August 11, 2005 cannot now take place at that date and time, actual damages suffered by the Debtor
due to the violation of the automatic stay are minimal.
13. Punitive damages against attorney Joseph Manges are appropriate under the
circumstances. Clearly he knew of the pending bankruptcy, and is charged with knowledge of the
applicable rules, yet he proceeded to take action to initiate foreclosure proceedings during the period
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that the Order Granting Relief from Stay was stayed.
WHEREFORE, IT IS HEREBY ORDERED that the Motion is GRANTED, in part.
Actual damages in the amount of $250.00 are awarded in favor of Debtor and against Mick
Chapel and Jennifer Chapel, jointly and severally. Actual damages in the amount of $250.00 are
awarded in favor of Debtor and against Joseph Manges.
ORDERED FURTHER, that punitive damages in the amount of $750.00 are awarded in favor
of Debtor and against attorney Joesph Manges.
ORDERED FURTHER, that the damages awarded by this Order be paid to the Debtor within
ten days of the date of entry of this Order.
ORDERED FINALLY, that the Notice of Foreclosure Sale is void.
Any request for relief contained in the Motion inconsistent with this Order is hereby DENIED.
____________________________________
MARK B. McFEELEY
United States Bankruptcy Court
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I certify that on the date shown on the attached document verification, a true and correct copy of
the foregoing was either electronically transmitted, faxed, delivered or mailed to the listed counsel
and/or parties.
David Derringer, pro se
Box 157
Quemado, NM 87829
Joseph E. Manges
Attorney for Mick Chapel and Jennifer Chapel
PO Box 669
Santa Fe, NM 87504 -669
Stephen CM Long
2501 Yale SE Ste 204
Albuquerque, NM 87106 -4357
________________________________
Patti G. Hennessy
Law Clerk (505) 348-2545
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