Campos v. Delli Gatti et al

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UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In re 	No. 02-45201 TK
Chapter 7
FERNANDO CAMPOS,
Debtor.
___________________________/
FERNANDO CAMPOS, 	A.P. No. 05-4412 AT
Plaintiff,
vs.
MICHAEL HEATH,
J. LOUIS DELLI GATTI,,
JUDITH DELLI GATTI, et al.,
Defendants.
___________________________/
MEMORANDUM OF DECISION RE MOTION FOR SUMMARY JUDGMENT
Plaintiff 	Fernando 	Campos 	(the 	“Debtor”), 	having 	previously
settled 	with 	defendant 	Michael 	Heath 	(“Heath”), 	seeks 	an 	award 	of
compensatory 	and 	punitive 	damages 	against 	defendants 	J. 	Louis 	and
Judith 	Delli 	Gatti 	(the 	“Delli 	Gattis”) 	for 	violation 	of 	the
discharge injunction. 	See 11 U.S.C. § 524. 	For the reasons stated
below, 	the 	Court 	will 	award 	the 	Debtor 	$10,465.75 	in 	compensatory
Signed: September 01, 2006
________________________________________
LESLIE TCHAIKOVSKY
U.S. Bankruptcy Judge
________________________________________
Entered on Docket
September 05, 2006
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 05-04412 Doc# 35 Filed: 09/01/06 Entered: 09/05/06 08:09:50 Page 1 of 7

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26 	1The claim, which asserted both priority and secured status,
was ultimately disallowed.
2
damages, less a credit of $1,500 for the settlement payments received
to date from Heath, and $5,000 in punitive damages. 	In addition, the
Court 	will 	direct 	the 	Debtor 	to 	file 	a 	partial 	satisfaction 	of
judgment in this adversary proceeding promptly after receipt of any
additional payments from Heath.
SUMMARY OF FACTS
This bankruptcy case was filed as a voluntary chapter 11 case on
September 27, 2002 and was converted to chapter 7 on April 17, 2003.
The 	Debtor 	received 	his 	discharge 	on 	December 	12, 	2003. 	The 	Delli
Gattis filed a proof of claim in the bankruptcy case. 1 	In 2004, as
the Court has previously found, Mr. Delli Gatti attempted to exercise
control over property of the estate. 	The Debtor filed a motion for
compensatory and punitive damages for violation of the automatic stay
pursuant 	to 	11 	U.S.C. 	§ 	362(h). 	The 	Court 	awarded 	the 	Debtor
compensatory damages of $1,622.50. 	However, due to the modest amount
of 	the 	award 	and 	the 	fact 	that 	the 	Debtor’s 	conduct 	had 	not 	been
blameless, the Court declined to award punitive damages.
After the Debtor received his discharge, the Delli Gattis filed
an action against the Debtor in state court based on their discharged
claim. 	Heath 	represented 	them 	in 	this 	action. 	Heath 	had 	not
represented 	the 	Delli 	Gattis 	in 	the 	bankruptcy 	case. 	On 	September
16, 2005, the Debtor filed this adversary proceeding, seeking damages
for violation of the discharge injunction. 	The Delli Gattis conceded
that their initial complaint had violated the discharge injunction.
Case: 05-04412 Doc# 35 Filed: 09/01/06 Entered: 09/05/06 08:09:50 Page 2 of 7

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However, 	they 	contended 	that 	they 	had 	subsequently 	amended 	their
complaint and that the amended complaint did not do so. 	At a hearing
on 	September 	21, 	2005, 	the 	Court 	ruled 	to 	the 	contrary 	and 	ordered
the Delli Gattis to dismiss the state court action and to expunge the
lis pendens that had been recorded based on that action.
The Debtor’s request for damages was set for trial. 	The trial
was 	initially 	scheduled 	to 	take 	place 	on 	March 	24, 	2006. 	At 	the
Delli Gattis’ request, the trial was delayed and was rescheduled for
July 21, 2006. 	The Debtor filed a trial brief on July 24, 2006. 	On
the same day, the Delli Gattis filed a motion to postpone the trial
a 	second 	time. 	The 	motion 	was 	denied. 	However, 	at 	the 	time 	of
trial, 	it 	appeared 	that 	neither 	party 	had 	exchanged 	documents 	one
week 	before 	the 	trial 	date 	as 	directed 	by 	the 	Court’s 	scheduling
order. 	Both 	parties 	asked 	that 	the 	other 	party’s 	documents 	be
excluded but asked that their own documents be admitted.
The Court concluded that, under the circumstances, neither side
should 	be 	able 	to 	introduce 	any 	documents 	and 	the 	trial 	should 	be
continued. 	However, 	the 	Court 	inquired 	why 	a 	trial 	was 	necessary.
Since 	the 	only 	issue 	was 	the 	amount 	of 	the 	damages 	and 	the 	damages
consisted of attorneys’ fees, the Court speculated that a motion for
summary judgment would be the proper way to proceed. 	As a result, no
new trial date was scheduled. 	On August 1, the Debtor filed a motion
for 	summary 	judgment. 	The 	Delli 	Gattis 	filed 	an 	opposition. 	The
Debtor 	filed 	a 	reply. 	The 	parties 	appeared 	at 	a 	hearing 	on 	the
motion, 	and 	at 	the 	conclusion 	of 	the 	hearing 	the 	Court 	took 	the
motion under submission.
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DISCUSSION
In 	the 	motion 	for 	summary 	judgment, 	the 	Debtor 	sought
compensatory 	damages 	totaling 	$15,089.72 	and 	punitive 	damages
totaling $30,179.44. 	The $15,089.72 represented $13,514.75 in fees
and $597.47 in costs actually incurred plus an additional $997.50 in
estimated fees and costs to be incurred. 	The motion was supported by
a 	declaration 	describing 	in 	detail 	the 	work 	performed, 	time 	spent,
and rates charged.
The motion disclosed that the Debtor had settled with Heath and
indeed contained a time entry relating to that settlement. 	However,
it did not disclose the amount of the settlement or whether payment
had 	been 	received. 	The 	Debtor 	urged 	the 	Court 	to 	award 	punitive
damages 	as 	well 	as 	compensatory 	damages. 	He 	suggested 	that 	the
Court’s failure to do so when Mr. Delli Gatti violated the automatic
stay may have contributed to this further violation of the Bankruptcy
Code.
The 	Delli 	Gattis 	objected 	to 	the 	request 	for 	damages, 	both
compensatory and punitive. 	They contended that the amount requested
for 	attorneys’ 	fees 	was 	excessive. 	They 	argued 	that, 	because 	the
Debtor 	had 	failed 	to 	comply 	with 	the 	Court’s 	scheduling 	order, 	no
fees after that date should be awarded. 	They also contended that, at
a minimum, the Court was required to reduce the amount of the award
by the amount of the Debtor’s settlement with Heath. 	Moreover, they
contended that, since Heath was an attorney and the Delli Gattis were
not, Heath should be held solely liable for the violation.
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At 	the 	hearing, 	the 	Debtor 	disclosed 	that 	the 	amount 	of 	the
settlement 	with 	Heath 	was 	$6,500, 	of 	which 	he 	had 	received 	to 	date
only 	$1,500. 	The 	Debtor 	conceded 	that 	he 	was 	only 	entitled 	to 	a
single 	recovery 	and 	suggested 	that 	the 	Court’s 	order 	indicate 	a
credit 	against 	the 	judgment 	amount 	for 	the 	$1,500 	in 	settlement
payments 	received 	to 	date 	and 	direct 	the 	Debtor 	to 	file 	a 	partial
satisfaction of judgment with respect to future payments.
The Court has considered the evidence and argument submitted by
the parties and concludes as follows:
Compensatory Damages:
The 	Court 	will 	award 	the 	Debtor 	compensatory 	damages 	totaling
$10,465.75 in fees and $597.47 in costs for a total of $11,063.22.
Although the Court believes that the Debtor could have proceeded by
summary judgment in the first instance, if he had complied with the
scheduling order, he could also have proceeded by trial. 	To do so,
the Court estimates would have taken no more than one hour.
The Court finds the work performed through the day of the trial
and 	the 	fees 	charged 	for 	that 	work 	reasonable. 	However, 	the 	work
performed thereafter was unnecessary. 	Thus, the Court has deducted
the 	fees 	requested 	for 	work 	performed 	thereafter, 	added 	one 	hour’s
worth 	of 	time 	for 	the 	trial 	that 	could 	have 	taken 	place 	had 	the
Debtor complied with the Court’s scheduling order, and then added two
more hours for finalizing matters in the adversary proceeding.
With 	respect 	to 	the 	settlement, 	the 	Court 	will 	adopt 	the
Debtor’s 	suggestion. 	The 	award 	will 	be 	for 	the 	full 	amount 	of
$10,465.75 	less 	a 	credit 	of 	$1,500 	for 	a 	net 	amount 	of 	$8,965.75.
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The 	Debtor 	will 	be 	directed 	to 	file 	in 	this 	proceeding 	a 	partial
satisfaction 	of 	judgment 	promptly 	each 	time 	a 	payment 	is 	received
from 	Heath, 	indicating 	the 	amount 	of 	the 	payment 	received. 	The
judgment 	against 	the 	Delli 	Gattis 	will 	be 	deemed 	reduced 	by 	the
amount of the payment.
Punitive Damages:
The Court will award the Debtor punitive damages of $5,000. 	The
Court 	does 	so 	despite 	its 	belief 	that 	the 	Delli 	Gattis’ 	financial
circumstances are modest. 	The Court is persuaded that, absent such
an 	award, 	the 	deterrence 	purpose 	will 	not 	be 	served 	and 	further
violations of the Bankruptcy Code may occur. 	Normally, the fact that
the 	Delli 	Gattis 	were 	represented 	by 	counsel 	would 	have 	caused 	the
Court 	to 	place 	a 	greater 	share 	of 	the 	blame 	on 	the 	attorney
representing 	them. 	However, 	the 	Court 	has 	had 	considerable
opportunity to observe the Delli Gattis’ conduct in this case. 	The
Court is persuaded that they knew or should have known that they were
acting improperly in continuing to prosecute a claim either against
the Debtor or with respect to the real property in question.
Counsel for the Debtor is directed to submit a proposed form of
order and judgment in accordance with this decision.
END OF DOCUMENT
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COURT SERVICE LIST
Richard Seim
133 Race St.
San Jose, CA 	95126
Rocky Ortega
Law Offices of Rocky Ortega
405 El Camino Real, Ste. 302
Menlo Park, CA 94025-5240
Case: 05-04412 Doc# 35 Filed: 09/01/06 Entered: 09/05/06 08:09:50 Page 7 of 7