Opinion
No. 1-88-00033
February 8, 1990
Property of the Estate — Debtor's Claim — Corresponding Adversary Proceeding. — An adversary proceeding in which a debtor asserts a prepetition claim against a party is itself property of the debtor's estate.
See Sec. 541(a)(1) at i 9502.
Automatic Stay — Exercising Control over Estate Property — Administrative Suit/Existing Adversary Proceeding by Debtor. — A shipping company, alleged by a Chapter 11 debtor-freight carrier to be liable for enhanced fees due to undercharges on prepetition shipping contracts, was held to have violated the automatic stay by its postpetition filing of an administrative proceeding with the Interstate Commerce Commission for the purpose of obtaining a decision that, essentially, the debtor's claims for the shipping undercharges were unreasonable. As a starting point, the debtor's adversary proceeding concerning the undercharges was clearly estate property. The shipper's ICC proceeding was an attempt to "control" property of the debtor within the proscription of Section 362(a)(3). "[The shipper's] administrative action filed postpetition against the bankruptcy estate in another forum concerning a prepetition claim of the estate is an act to exercise control over property of the estate."
See Sec. 362(a)(3) at ¶ 8602.
Automatic Stay — Police and Regulatory Exception — ICC Administrative Action by Debtor's Defendant. — Section 362(b)(4), excepting from the automatic stay legal actions brought by governmental units to enforce their police or regulatory powers, did not apply here because: 1) the stay paragraph allegedly violated was Section 362(a)(3), not Section 362(a)(1) as paragraph (b)(4) mentions; and 2) Section 362(b)(4) only applies to actions by governmental units, which is not the case here. "It does not pertain to administrative proceedings brought before a governmental unit by private parties seeking to adjudicate matters relating to the parties' pecuniary interests." A shipping company, alleged by a Chapter 11 debtor-freight carrier to be liable for enhanced fees due to undercharges on prepetition shipping contracts, was held to have violated the automatic stay by its postpetition filing of an administrative proceeding with the Interstate Commerce Commission for the purpose of obtaining a decision that, essentially, the debtor's claims for the shipping undercharges were unreasonable.
See Sec. 362(b)(4) at ¶ 8603.
Automatic Stay — Violation — Damages. — A shipper's filing of an administrative action with the Interstate Commerce Commission, pertaining to the same matter that the debtor previously-put into issue in bankruptcy court by filing an adversary proceeding, constituted a willful violation of the stay within the meaning of the remedial provision, Section 362(h). Willfulness requires only deliberate (violative) conduct done with knowledge of the bankruptcy filing; it does not require a specific intent to violate a court order. Due to the unsettled nature of this area of law, the debtor was not awarded compensatory damages, other than attorneys' fees for the stay litigation, nor punitive damages.
See Sec. 362(h) at ¶ 8608H.
This case is before the court upon (1) a motion by the plaintiff to hold the defendant in contempt for an alleged violation of the automatic stay and (2) a motion by the defendant to stay this adversary proceeding pending action by the Interstate Commerce Commission ("I.C.C.") on defendant's administrative petition filed with the I.C.C. Having conducted a hearing on the motions, and having considered the briefs submitted by the parties, the court now submits its findings of fact and conclusions of law pursuant to Bankr. R. 7052. This is a core proceeding. See In re Depew, 51 B.R. 1010, 1013-14 (Bankr. E.D. Tenn. 1985).
I.
The plaintiff ("trustee") is the chapter 7 trustee for Southwest Equipment Rental, Inc., d.b.a. Southwest Motor Freight ("Southwest"), a company which served as a common carrier for a number of shipping companies. During the time Southwest was in operation, its customer-shippers paid Southwest certain freight charges for the carrier services Southwest performed.
On January 8, 1988, Southwest filed a chapter 11 bankruptcy petition in this court. On March 8, 1988, the chapter 11 case was converted to a case under the provisions of chapter 7. The plaintiff, as chapter 7 trustee, obtained an audit of Southwest's freight bills for the purpose of determining whether or not the freight bills had been properly rated according to the tariffs filed by Southwest with the I.C.C. As a result of the audit, the trustee determined that a number of the freight charges were lower than the rates actually on file with the I.C.C. The trustee thereupon instituted suit against a number of Southwest's former customers alleging the customers were liable for the difference between the rate charged to the customer and the rate on file with the I.C.C. This difference, referred to as an under charge, is the subject of the instant lawsuit between the plaintiff and the defendant, Armstrong World Industries, Inc. ("Armstrong").
The instant lawsuit was commenced against Armstrong in this court on April 18, 1989, with the filing of plaintiff's complaint styled "Complaint to Recover Freight Charges." On June 5, 1989, the defendant filed a motion for stay of the adversary proceeding "pending determination by the Interstate Commerce Commission whether the motor common carrier rates and practices involved herein are unreasonable, in violation of the Interstate Commerce Act, and therefore unlawful and unenforceable." Likewise, on June 5, 1989, Armstrong filed with the I.C.C. a petition seeking an order declaring that the trustee's action in seeking to recover undercharges is an unreasonable practice and that the rates which the trustee seeks to collect are themselves unreasonable. More specifically, the petition requests that the I.C.C. open a declaratory order proceeding; that it set a procedural schedule which will allow the parties to utilize the I.C.C.'s discovery procedures; and that after submission of evidence the I.C.C. declare the trustee's attempts to collect undercharges from Armstrong an unreasonable practice, that the interpretation of the applicable tariffs upon which the trustee relies is unreasonable, and that the rates which the trustee seeks to collect are unreasonable. The petition also asks that the I.C.C. accord Armstrong any other relief to which it may be entitled.
The trustee contends the filing by Armstrong of the administrative petition with the I.C.C. constituted a willful violation of the provisions of the automatic stay set forth in § 362(a)(1) and § 362(a)(3) of the Bankruptcy Code. 11 U.S.C.A. §§ 362(a)(1) and (a)(3) (West Supp. 1989). Armstrong denies that the automatic stay was violated by the filing of the I.C.C. administrative petition.
II.
The principal issue to be determined is whether Armstrong violated the automatic stay by filing its administrative petition with the I.C.C. Although the trustee relief upon both § 362(a)(1) and § 362(a)(3) in asserting the stay was violated, the court believes the issue here can most easily be disposed of by reference to § 362(a)(3).
According to a decision rendered by the I.C.C. entitled Petition to Institute Rule Making on Negotiated Motor Common Carrier Rates, 5 I.C.C.2d 623 (1989), the essential elements of an unreasonable practice claim of the kind asserted by Armstrong in its I.C.C. petition are (1) negotiating a rate; (2) agreeing to a rate that the shipper reasonably relies upon as being lawfully filed; (3) failing, either willfully or otherwise, to publish the rate; (4) billing and accepting payment at the negotiated rate for (sometimes) numerous shipments; and (5) then demanding additional payment at higher rates. Id. at 628 n. 11. Section 362(a)(1) of the Bankruptcy Code essentially stays the commence ment or continuation of judicial, administrative, or other proceedings against the debtor, that were or could have been commenced before the filing of the bankruptcy case. Arm-strong maintains that it could not have commenced its I.C.C. action prior to the commencement of the bankruptcy case because the debtor had not attempted to recover an undercharge prior to that time. In light of the court's disposition of the plaintiff's motion under § 362(a)(3), the court need not decide whether § 362(a)(1) is also applicable to defendant's conduct.
Section 362(a)(3) provides in relevant part:
(a) Except as provided in subsection (b) of this section, a petition filed under section 301, 302, or 303 of this title . . . operates as a stay, applicable to all entities, of —
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(3) any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate.
11 U.S.C.A. § 362(a)(3) (West Supp. 1989).
The pertinent question is whether Armstrong's postpetition filing of its administrative petition with the I.C.C. falls within the category of "any act . . . to exercise control over property of the estate." To answer this question, the court must first decide whether the trustee's collection action, the subject of the I.C.C. petition, is property of the estate.
Property of the estate is defined under § 541 of the Bankruptcy Code. In relevant part § 541 reads:
(a) The commencement of a case under section 301, 302, or 303 of this title creates an estate. Such estate is comprised of all the following property, wherever located and by whomever held:
(1) Except as provided in subsections (b) and (c)(2) of this section, all legal or equitable interests of the debtor in property as of the commencement of the case.
11 U.S.C.A. § 541(a)(1) (West 1979 Supp. 1989). The legislative history accompanying § 541 explains subparagraph (a)(1) as follows:
The scope of this paragraph is broad. It includes all kinds of property, including tangible or intangible property, causes of action (see Bankruptcy Act § 70a(6)), and all other forms of property currently specified in section 70a of the Bankruptcy Act. . . .
[T]his paragraph wil include choses in action and claims by the debtor against others. . . .
H.R. Rep. No. 595, 95th Cong., 1st Sess. 367 (1977), reprinted in 1978 U.S. Code Cong. Admin. News 5963, 6323; S. Rep. No. 989, 95th Cong., 2d Sess. 82 reprinted in 1978 U.S. Code Cong. Admin. News 5787, 5868.
The undercharge suit filed by the trustee against Armstrong is a cause of action which the debtor possessed at the time debtor's bankruptcy was filed since the alleged undercharges arose from facts which occurred prepetition. As previously noted, the trustee is claiming he is entitled to the difference between rates paid by Armstrong prepetition and the filed rate in existence at that time. Under § 541(a)(1), the trustee's claim for undercharges is clearly property of the estate. See Cottrell v. Schilling (In re Cottrell), 876 F.2d 540, 542 (6th Cir. 1989) (causes of action included in bankruptcy estate); Jones v. Harrell, 858 F.2d 667, 669 (11th Cir. 1988) (trustee succeeds to all debtor's causes of action upon filing of petition in bankruptcy); In re Uiterwyk Corp., 81 B.R. 658, 661 (Bankr. M.D. Fla. 1987) (debtor's cause of action becomes property of estate).
This court has recognized a carrier's right to collect under charges under the filed-rate doctrine even when the carrier misrepresented the filed rate to the shipper. See Brown v. Salem Carpet Mills (In re Express Transp. Co.), Adv. No. 1-89-0102 (Bankr. E.D. Tenn. July 31, 1989). The Brown opinion is in accord with those cases which have strictly construed the filed-rate doctrine. See, e.g., Supreme Beef Processors v. Yaquinto (In re Caravan Refrigerated Cargo), 864 F.2d 388 (5th Cir. 1989); Miller v. Armour Co. (In re Total Transp.), 84 B.R. 590 (D. Minn. 1988); Delta Traffic Serv. v. Georgia-Pacific Corp., 684 F. Supp. 769 (D. Conn. 1987).
Next, the court must decide whether Armstrong's action in filing the administrative petition with the I.C.C. was an act to exercise control over the trustee's cause of action. The word "control" means to exercise authority or dominating influence over; direct; regulate; to hold in restraint; check. American Heritage Dictionary 319 (2d college ed. 1985).
Armstrong's filing of the I.C.C. petition was a direct assault upon the trustee's attempt to collect undercharges. By its action, Armstrong seeks to "direct," "regulate," "restrain," or "check" the trustee's cause of action through utilization of the I.C.C. adjudicative process. Without requesting relief from the automatic stay, Armstrong has attempted to place the determination of the trustee's cause of action in a forum outside the bankruptcy court.
The court is aware that in Beker Indus. Corp. v. Florida Land and Water Adjudicatory Comm'n (In re Beker Indus. Corp.), 57 B.R. 611 (Bankr. S.D.N.Y. 1986), the court construed the "control" provision of § 362(a)(3) more narrowly than the common meaning of the word "control" would otherwise suggest. The court held that the control provision of § 362(a)(3) did not apply to good-faith governmental regulation of the use of property of the estate since it was highly unlikely that Congress, in adding the control provision phrase to § 362(a)(3) in 1984, intended to overrule those cases delineating the scope of the governmental regulation exemption from the automatic stay contained in § 362(b)(4). The court decided that "the scope of the control provision of § 362(a)(3), as applicable to governmental regulation, is governed by the contours of § 362(b)(4) as developed by case authority." Id. at 626. As will be discussed herein, the governmental regulation exception to the automatic stay is not applicable to this case; hence, the holding in Beker would not apply here.
Unfortunately, there appears to be no legislative history explaining Congress's rationale for adding the control provision to § 362(a)(3) in 1984. The Beker court in a subsequent decision suggests that the parameters of the control provision of § 362(a)(3) should be defined by "the underlying Congressional purposes of preventing dismemberment of the estate and assuring orderly distribution." Official Comm. of Unsecured Creditors v. P.S.S Steamship Co. (In re Prudential Lines), Adv. No. 89-6430A (Bankr. S.D.N.Y. Dec. 4, 1989) (LEXIS, Bkrtcy library, Cases filed) (LEXIS cite: 1989 Bankr. LEXIS 2102). This suggestion no doubt stems from a consideration of the legislative history accompanying § 523(a)(3) before the 1984 amendment.
The legislative history specifically commenting on § 362(a)(3) before the addition of the control provision in 1984 reads as follows:
Paragraph (3) stays any act to obtain posession of property of the estate (that is, property of the debtor as of the date of the filing of the petition) or property from the estate (property over which the estate has control or possession). The purpose of this provision is to prevent dismemberment of the estate. Liquidation must proceed in an orderly fashion. Any distribution of property must be by the trustee after he has had an opportunity to familarize himself with the various rights and interests involved and with the property available for distribution.
H.R. Rep. No. 595, 95th Cong., 1st Sess. 341 (1977), reprinted in 1978 U.S. Code Cong. Admin. News 5963, 6298; S. Rep. No. 989, 95th Cong., 2d Sess. 50, reprinted in 1978 U.S. Code Cong. Admin. News 5787, 5836.
Another court, referring to another portion of the legislative history accompanying § 362(a) written before the 1984 amendment to § 362(a)(3), states the parameters of the control provision of § 362(a)(3) should be defined by considering the purpose behind the automatic stay, namely, "(1) to provide the debtor with a `breathing spell' from creditors; and (2) to protect individual creditors from the effects of a `race to the courthouse' and thereby promote equal treatment of creditors." Gline v. Horn Co. (In re Isley), 104 B.R. 673, 679 (Bankr. D.N.J. 1989).
To be sure, the phrase "an act to . . . exercise control over property of the estate" is a phrase susceptible to broad interpretation and application even when one interprets the phrase in light of the purposes of the automatic stay. A stay of any postpetition act by a creditor directed towards property of the estate allows a breathing spell for the debtor or bankruptcy trustee, ensures the bankruptcy court can keep control over the liquidation of property of the estate, and permits an orderly administration of the bankruptcy case. Although the court is not prepared to articulate the parameters of the control provision of § 362(a)(3) outside a factual context, the court is convinced that Armstrong's administrative action filed postpetition against the bankruptcy estate in another forum concerning a prepetition claim of the estate is an act to exercise control over property of the estate.
In In re Uiterwyk Corp., 81 B.R. 658 (Bankr. M.D. Fla. 1987), a chapter 11 debtor, an agent for various shipping lines, had filed a claim in the Iran-United States Claims Tribunal against Iran Express Lines, an Iranian shipping line, for recoveries of moneys arising from unpaid expenses and unreturned cargo. The cargo consisted of a number of containers and the owner/lessors of the containers, including a company called Itel Corp. ("Itel"), sought to charge the debtor either for continuing per diem costs related to the containers or for the value of the unreturned containers. Itel and several other container companies also asserted claims at the Iran-United States Claim Tribunal for recovery of moneys relating to the unreturned containers. Id. at 659.
After the debtor's claim had been arbitrated and submitted for decision, Itel sent a letter to the chairman of the tribunal requesting that its claim be consolidated and decided with the debtor's claim. Because Itel's claim had not yet been heard by the tribunal, a consolidation would have delayed final decision on debtor's claim. Id. at 660.
The debtor contended in bankruptcy court that Itel's action in requesting the tribunal to consolidate Itel's claim with the debtor's claim was an act to exercise control over property of the estate. Itel maintained it was merely attempting to further its own claim in the tribunal and that it did not intend to impede the debtor's claim. In considering whether the provisions of § 362(a)(3) were violated by Itel, Judge Paskay stated:
§ 362(a)(3) of the automatic stay provides that the automatic stay operates to prohibit any act to "exercise control over property of the estate." Itel maintains its conduct was only in furtherance of its own claim in the Tribunal. Concededly, as the Debtor maintains, a consolidation of Itel's claim with that of the Debtor's would delay a final decision being made on Debtor's claim in the Tribunal. However, this Court is satisfied that such conduct is not proscribed by the automatic stay provisions of the Bankruptcy Code. The automatic stay is not so broad as to prohibit one from zealously advocating its own claim or chose in action even if it might unintentionally interfere with a claim of a Debtor. Although Itel's conduct may result in an interference with the Debtor's claim in the Tribunal, this Court is satisfied that the interference was merely a technical violation of the automatic stay and was not done with the willful intent to control the Debtor's claim in the Tribunal.
The act by Itel which Judge Paskay concluded to be an unintentional, technical violation of the stay is much less an act to control property of the estate then the act of filing the administrative petition by Armstrong which was intended to be a direct attack on the trustee's claim in the I.C.C. proceeding.
The only case mentioned by the parties which squarely deals with the issue presented here is an unreported decision rendered by the bankruptcy court for the district of Minnesota. Faced with essentially the same facts as are presented in this case, the bankruptcy court in Minnesota concluded that a shipper violated the automatic stay by initiating proceedings before the I.C.C. which were designed to bar undercharge claims by the bankruptcy trustee representing the estate of a bankrupt carrier. Although the court's conclusions were stated somewhat summarily in a written order, the court nevertheless found that the filing of the I.C.C. petition following the carrier's bankruptcy filing constituted a violation of the automatic stay. Lovett v. Honeywell, Inc. (In re Transporation Sys. Int'l), Adv. No. 489-289 (Bankr. D. Minn. July 27, 1989) (appeal pending).
In seeking to avoid the provisions of § 362(a)(3), Armstrong cites several cases in which courts have held interpleader actions are outside the scope of § 362. See Holland America Ins. Co. v. Succession of Roy, 777 F.2d 992 (5th Cir. 1985); National Coop. Refinery Ass'n v. Rouse, 60 B.R. 857 (D. Colo. 1986); Price Pierce Int'l v. Spicers Int'l Paper Sales, 50 B.R. 25 (S.D.N.Y. 1985). Those cases are inapposite here. In interpleader actions, the claimants are more akin to plaintiffs asserting their claim to a specified res held by the court. Price Pierce Int'l v. Spicers Int'l Paper Sales, 50 B.R. at 26 (although debtor in interpleader action is a named defendant, it takes on the role of a plaintiff in proceeding against moneys deposited into the court). An interpleader action in which a debtor is but one of several claimants brought into a lawsuit for purposes of determining who should receive a designated fund deposited into the registry of the court is dissimilar to an administrative action filed directly against a debtor or bankruptcy estate to defeat the estate's cause of action. See In re Uiterwyk Corp., 81 B.R. at 661 (distinguishes interpleader action from creditor's action in that case). Moreover, authority exists in this circuit which appears to be at odds with those cases holding that interpleader actions are not automatically stayed under § 362. See NLT Computer Servs. Corp. v. Capital Computer Sys., 755 F.2d 1253 (6th Cir. 1985); Temlock v. Falls Building, Ltd. (In re Falls Building, Ltd.), 94 B.R. 471, 480-81 (Bankr. E.D. Tenn. 1988) (Stair, J.).
Armstrong also relies upon Continental Air Lines v. Hillblom (In re Continental Air Lines), 61 B.R. 758 (S.D. Tex. 1986). In that case, the court conluded the automatic stay was not applicable to the claims of minority shareholders of an independent corporation which arose from the debtor's postpetition takeover attempt of the corporation. Although the court in Continental discussed § 362(a)(3) in the course of its opinion, the court expressly pointed out that the phrase in § 362(a)(3) staying "any act to . . . exercise control over property of the estate" was not applicable to its case since the phrase was recently added to § 362 and was not applicable to bankruptcy cases filed prior to October 8, 1984. Id. at 777 n. 38. Hence, Continental Airlines did not address § 362(a)(3) as it is currently enacted.
One additional contention mentioned by Armstrong in its brief but not mentioned during the hearing is that the filing of the administrative petition constituted an act excepted from the automatic stay provisions by § 362(b)(4) of the Bankruptcy Code. That section provides that the filing of a bankruptcy petition does not operate as a stay under § 362(a)(1) of the commencement or continuation of an action or proceeding by a governmental unit to enforce such governmental unit's police or regulatory power. Of course, in this case the court is reviewing Armstrong's actions to ascertain whether Armstrong violated § 362(a)(3), not § 362(a)(1). See supra note 1. Moreover, § 362(b)(4) pertains to actions to enforce governmental police and regulatory power only when such actions are brought by a governmental unit. See People of the State of Illinois v. Electrical Utilities, 41 B.R. 874 (N.D. Ill. 1984); Goldsten Real Estate v. Rent Administrator (In re 1736 18th Street, N.W., Ltd. Partnership), 97 B.R. 121 (Bankr. D.C. 1989); Revere Copper Products v. Hudson River Sloop Clearwater (In re Revere Copper Brass), 29 B.R. 584 (Bankr. S.D.N.Y.), aff'd, 32 B.R. 725 (S.D.N.Y. 1983). It does not pertain to administrative proceedings brought before a governmental unit by private parties sekking to adjudicate matters relating to the parties' pecuniary interests. Goldsten Real Estate v. Rent Administrator (In re 1736 18th Street, N.W., Ltd. Partnership), 97 B.R. at 123. See generally Word v. Commerce Oil Co. (In re Re Commerce Oil Co.), 847 F.2d 291 (6th Cir. 1988); N.L.R.B. v. Edward Cooper Painting, Inc., 804 F.2d 934 (6th Cir. 1986); United States v. Wellham (In re Wellham), 53 B.R. 195 (Bankr. M.D. Tenn. 1985). Clearly, § 362(b)(4) is inapplicable here.
In sum, the court concludes the filing by Armstrong of the I.C.C. petition constituted an act to exercise control over property of the estate and as such violated the automatic stay provisions of § 3562(a)(3).
The trustee seeks an award of attorney's fees and punitive damages arising from the violation of the stay by Armstrong. Although the trustee seeks relief alleging both that Armstrong's action constituted civil contempt of court and a willful violation of the stay under § 362(h), the court is of the opinion the relief afforded by § 362(h) is sufficient to redress Armstrong's action in this case. See In re Price, 103 B.R. 989 (Bankr. N.D. Ill. 1989) (court elected to proceed under § 362(h) rather than by way of civil contempt proceeding).
Section 362(h) of the Bankrutpcy Code provides for the imposititon of sanctions resulting from willful violations of the automatic stay. It reads:
(h) 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.A. § 362(h) (West Supp. 1989). "[T]he willfulness requirement refers to the deliberateness of the conduct and the knowledge of the bankruptcy filing, not to a specific intent to violate a court order." Wagner v. Ivory (In re Wagner), 74 B.R. 898, 903 (Bankr. E.D. Pa. 1987). Because Armstrong knew of the bankruptcy filing in this case before it filed its administrative petition with the I.C.C., Armstrong willfully violated the stay by its action. See Temlock v. Falls Building, Ltd. (In re Falls Building, Ltd.), 94 B.R. 471, 481-82 (filing interpleader action and obtaining a temporary restraining order against debtor with knowledge of bankruptcy filing constituted willful violation of the stay). Once a party becomes aware of a bankruptcy filing, such party is under a duty to seek further information which should reveal the applicability and scope of the automatic stay. If the party forges ahead and takes action against the debtor or estate without obtaining clarification or permission from the bankruptcy court, that party takes the risk of being assessed for damages if a stay violation is subsequently found. See In re Lile, 103 B.R. 830, 837 (Bankr. S.D. Tex. 1989); In re Peterkin, 102 B.R. 50, 53-54 (Bankr. E.D.N.C. 1989); In re Clark, 49 B.R. 704, 707 (Bankr. D. Guam 1985).
The record in this case does not demonstrate actual damages suffered by the trustee as a result of the filing of the I.C.C. petition nor does the trustee seek actual damages other than attorney's fees. Compensatory damages will therefore not be awarded. Nor will the court award punitive damages in this case. In order to justify an award for punitive damages, "the defendant must have acted with actual knowledge that he was violating the federally protected right [the automatic stay] or with reckless disregard of whether he was doing so." Wagner v. Ivory (In re Wagner), 74 B.R. at 904 (citing Cochetti v. Desmond, 572 F.2d 102 (3d Cir. 1978)); Temlock v. Falls Building, Ltd. (In re Falls Building, Ltd.), 94 B.R. at 482. The "appropriate circumstances" necessary for awarding punitive damages has been described by one court as requiring "egregious, intentional misconduct on the violator's part." United States v. Ketelsen (In re Ketelsen), 880 F.2d 990, 993 (8th Cir. 1989). Certainly, it would have been more prudent for Armstrong to have initially sought clarification of the scope of the stay from this court before filing its I.C.C. action. Nevertheless, having considered the evidence and authorities presented in Armstrong's briefs in defense of its action, and further considering that at the time Armstrong filed its administrative petition there were apparently no authorities addressing the precise issue raised in this case concerning the applicability of § 362(a)(3) to the type of administrative proceeding filed by Armstrong, the court does not believe Armstrong's conduct rises to the degree of culpability or egregiousness necessary for the imposition of punitive damages.
Notably, when Armstrong became aware of this court's opinion in Brown v. Salem Carpet Mills (In re Express Transp. Co.), Adv. No. 1-89-0102 (Bankr. E.D. Tenn. July 31, 1989), wherein the court denied a motion to refer that case to the I.C.C. for consideration of equitable defenses in an undercharge action, Armstrong immediately took steps to suspend its administrative proceeding pending a ruling on the trustee's motion in this case.
Although actual and punitive damages will not be awarded in this case, the trustee is entitled to reasonable attorney's fees incurred in connection with the stay litigation. A review of the statement submitted by the trustee's attorney indicates an award of $2,782 would be reasonable compensation for the services rendered.
Finally, the court must address Armstrong's motion to stay this adversary proceeding pending action by the I.C.C. on the defendant's administrative petition. It is Armstrong's contention to the I.C.C. has primary jurisdiction over the issues raised in the plaintiff's complaint. Although in Brown v. Salem Carpet Mills (In re Express Transportation Co.), Adv. No. 1-89-0102 (Bankr. E.D. Tenn. July 31, 1989), this court denied a motion to refer an undercharge suit to the I.C.C. for consideration of equitable defenses, Armstrong argues the facts in this case are distinguishable in that the filed rates here are being challenged as ambiguous.
If Armstrong wishes the court to consider the merits of its primary jurisdiction argument, it may file a motion to refer this proceeding to the I.C.C., a procedure Armstrong should have initially followed in this case. Since Armstrong never filed a motion for relief from the stay, the court declines to deal with the primary jurisdiction issue on the basis of the motions and record now before it.
Moreover, Armstrong's motion to stay does not present adequate evidentiary materials upon which the court can decide the underlying merits of the primary jurisdiction issue. The motion refers to factual materials clearly outside the pleadings. At the hearing, plaintiff's counsel objected to the sufficiency of the evidentiary materials attached to Armstrong's motion in support of its factual contentions. Although a number of copied documents were attached to the motion, there were no affidavits submitted nor was there any evidentiary foundation laid for the documents. Hence, the motion was inadequately supported. See Fed.R.Civ.P. 43(c); F.D.I.C. v. Lauterbach, 626 F.2d 1327 (7th Cir. 1980); United States v. Dibble, 429 F.2d 598 (9th Cir. 1970); Douglas v. Beneficial Fin. Co., 334 F. Supp. 1166 (D. Alaska 1971).
An order will enter in accordance with this memorandum.