Opinion
CASE NO. 07-00699-5-ATS.
February 14, 2008
ORDER AWARDING SANCTIONS
The matter before the court is the motion filed by the chapter 13 debtor, Leslie Marchant Evans, seeking sanctions against Digital Federal Credit Union ("Digital") for violations of the automatic stay. A hearing took place in Raleigh, North Carolina on February 12, 2008.
The debtor filed a petition for relief under chapter 13 of the Bankruptcy Code on April 5, 2007. All creditors, including Digital, were served with notice of the commencement of the debtor's bankruptcy case by regular first-class mail on April 8, 2007. The debtor's schedule of creditors, filed on April 19, 2007, listed Digital as the holder of a secured claim arising from the financing of a 2002 Nissan Altima.
On December 31, 2007, having received notice of the debtor's bankruptcy case seven months earlier, Digital repossessed the debtor's vehicle at her home. The debtor contacted her attorney on January 2, 2008, whose assistant, Gayla Jacobs, attempted to contact Digital by phone. On January 3, 2008, after Ms. Jacobs had left two additional phone messages, a representative of Digital contacted Ms. Jacobs and apologized for the mistake, stating that the vehicle would be returned to the debtor promptly if not that day. The car was not returned that day, however, and Ms. Jacobs left two more phone messages for Digital to no avail on January 4, 2008. As a result, the debtor filed a motion for sanctions against Digital on January 9, 2008. Notwithstanding the motion, Digital failed to return the vehicle until approximately January 28, 2008, nearly a month after the wrongful repossession.
Digital did not respond to the debtor's motion and did not appear at the hearing. Counsel for the debtor notified Digital of its violations of the automatic stay and gave it an opportunity to cure the violation before seeking monetary sanctions against it under 11 U.S.C. § 362(h) (now § 362(k)). E.D.N.C. LBR 9011-3(b). Digital disregarded the phone calls from counsel for the debtor, ignored the automatic stay, and neither responded to the debtor's motion nor attended the hearing to offer an explanation of its behavior.
Clearly, the repossession violates the automatic stay. "The automatic stay serves a crucial function in any bankruptcy case and willful violations under § 362(h) are serious matters warranting the mandatory imposition of sanctions that Congress has proscribed." In re Brock Utilities Grading, Inc., 185 B.R. 719, 720 (Bankr. E.D.N.C. 1995).
Digital's actions have caused the debtor considerable distress, and the debtor has incurred attorney's fees of $500.00 to bring this motion before the court. As alternative transportation, Ms. Evans used her estranged husband's vehicle for a long commute to work for nearly a month. Additionally, because the husband's vehicle is much smaller than Ms. Evans' vehicle, it caused her difficulty in transporting her son's vital medical equipment. The court will award Ms. Evans $500.00 in compensatory damages.
Digital's cavalier attitude toward the automatic stay is unacceptable, and monetary sanctions are clearly needed to get this creditor's attention. See In re Chavis, 213 B.R. 462 (Bankr. E.D.N.C. 1997) (imposing sanctions of $10,000 against Wake Medical Center for violations of the automatic stay). The court will award sanctions of $500.00 as compensatory damages to the debtor plus a punitive sanction of $3,000.00 plus reimbursement of attorney's fees and expenses of $500.00.
NO LATER THAN 10 DAYS FROM THE DATE OF THIS ORDER, DIGITAL FEDERAL CREDIT UNION SHALL PAY $500.00 IN ATTORNEY'S FEES AND EXPENSES TO TRAVIS SASSER, COUNSEL FOR THE DEBTOR, AT 875 WALNUT STREET, SUITE 342, CARY, NORTH CAROLINA 27511. NO LATER THAN 10 DAYS FROM THE DATE OF THIS ORDER, DIGITAL FEDERAL CREDIT UNION SHALL PAY $500.00 IN DAMAGES TO THE DEBTOR, LESLIE MARCHANT EVANS, AT 7100 PEKIN DRIVE, WILLOW SPRING, NORTH CAROLINA 27592. ALSO, NO LATER THAN 10 DAYS FROM THE DATE OF THIS ORDER, DIGITAL FEDERAL CREDIT UNION SHALL PAY $3,000.00 AS A SANCTION TO PEGGY B. DEANS, CLERK, U.S. BANKRUPTCY COURT, EASTERN DISTRICT OF NORTH CAROLINA, 1760-A PARKWOOD BOULEVARD, WILSON, NC 27894. The proceeds paid to the Clerk shall be distributed by the Clerk in accordance with a future order of this court.