501 F.3d 1163 (10th Cir. 2007), 05-8089, In re Johnson

Docket Nº:05-8089.
Citation:501 F.3d 1163
Party Name:In re Tommy Dean JOHNSON and Candice Ann Johnson, Debtors, Tommy Dean Johnson; Candice Ann Johnson, Plaintiffs-Appellees, v. Keith Smith, individually and as Vice President of M & M Auto Outlet--Wyoming, Inc.; M & M Auto Outlet--Wyoming, Inc., a Wyoming Corporation, Defendants-Appellants.
Case Date:August 28, 2007
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit
 
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501 F.3d 1163 (10th Cir. 2007)

In re Tommy Dean JOHNSON and Candice Ann Johnson, Debtors,

Tommy Dean Johnson; Candice Ann Johnson, Plaintiffs-Appellees,

v.

Keith Smith, individually and as Vice President of M & M Auto Outlet--Wyoming, Inc.; M & M Auto Outlet--Wyoming, Inc., a Wyoming Corporation, Defendants-Appellants.

No. 05-8089.

United States Court of Appeals, Tenth Circuit

Aug. 28, 2007

APPEAL FROM THE UNITED STATES BANKRUPTCY APPELLATE PANEL (BAP No. WY-04-87)

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Ken McCartney and Carrol Nelson, Law Offices of Ken McCartney, P.C., Cheyenne, Wyoming, for Plaintiffs-Appellees.

Stephen R. Winship, Winship & Winship, P.C., Casper, Wyoming, for Defendants-Appellants.

Before KELLY, McKAY, and BRISCOE, Circuit Judges.

McKAY, Circuit Judge.

M & M Auto Outlet--Wyoming, Inc. appeals the merits portion of a Bankruptcy Appellate Panel decision affirming the Wyoming bankruptcy court's determination that M & M willfully violated the automatic stay of 11 U.S.C.§ 362 by repossessing a pickup truck after a Chapter 13 bankruptcy petition had been filed. M & M's appeal presents a host of issues, including the finality of the BAP decision, the burden of proof required by § 362, the meaning of "willful" under § 362, and the application of that definition to M & M's actions.

BACKGROUND

This tortured tale about "a truck and those that would possess it" began when Debtors Tommy Dean and Candice Ann Johnson purchased a pickup truck from M & M. Johnson v. Smith (In re Johnson), 330 B.R. 880 (table), 2005 WL 2300370, at *1 (BAP 10th Cir. Sept. 7, 2005). Pursuant to a Retail Installment Contract and Security Agreement (the "Sales Contract") signed by the parties on March 30, 2004, Debtors agreed to purchase the vehicle for $13,138. The Sales Contract specified that Debtors would make a $2,300 down payment, consisting of $1,500 previously paid to M & M for the failed purchase of a different vehicle, $500 in cash, and a deferred $300 payment due April 13, 2004.1 On March 30, 2004, Debtors paid the additional $500, took possession of the vehicle, and received a Bill of Sale. The Bill of Sale listed "Wells Fargo Fin" as the lienholder.2 It contained no contingencies other than a statement that the sale would not "become binding until accepted by the DEALER or his authorized representative." (App. at 61 (Decision on Debtors' Am. Compl. for Turnover, Sanctions and Injunctive Relief at 4, Adv. No. 04-2036 (Bankr.D.Wyo. July 30, 2004) [hereinafter Bankr.Ct. Order]).) M & M's authorized representative executed the Bill of Sale on March 30, 2004.

Debtors financed the rest of the purchase price. The terms of the financing required repayment over thirty months at a sixteen percent interest rate, with the

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first installment due on April 30, 2004. The parties understood that financing would be arranged through Wells Fargo Financial, and the Sales Contract contained an assignment provision apparently for that purpose. Wells Fargo was not, however, a party to the Sales Contract. Rather, the Sales Contract listed M & M as the seller, required Debtors to make payments to the seller, and granted M & M a security interest in the vehicle.

M & M informed Debtors that Wells Fargo would contact them within ten days of the vehicle purchase, although the parties dispute the purpose of this call. According to M & M, the call was intended to allow Wells Fargo to conduct a loan interview, a fact which M & M alleges Debtors were aware of given their past attempts to finance a vehicle purchase with M & M. Debtors believed the call was meant merely to inform them how to make loan payments. Debtors assumed, based on a previous vehicle purchase through M & M and a document entitled "M & M Auto Outlet Casper*Gillette*RockSprings Your [sic] Approved! " that appeared to indicate loan approval, that Wells Fargo had already approved the financing arrangement. (App. at 61-62 (Bankr.Ct. Order at 4-5).)

Regardless, Wells Fargo either did not call Debtors or was unable to reach them. Testimony illustrated that on or around April 25, 2004, Debtors called Wells Fargo in order to ascertain how to make the upcoming initial loan payment. Wells Fargo informed them that it had no account in their name. Debtors then called M & M. M & M required that Debtors supply additional paperwork, which they apparently delivered on April 30, 2004, the due date for the first payment. According to Debtors, M & M represented that it would contact Wells Fargo to obtain the payment information for Debtors, but did not do so. Debtors, therefore, did not make their initial loan payment.

Just days later, on May 6, 2004, Debtors filed a Chapter 13 bankruptcy petition. That petition listed Wells Fargo as a secured creditor and M & M as an unsecured creditor. The court sent out notice of Debtor's bankruptcy to all listed creditors. Debtors erroneously listed M & M's physical address on the petition, rather than M & M's postal mailing address. Accordingly, M & M never received official notice of the bankruptcy proceeding.

On either May 10 or May 13, 2004, M & M repossessed the pickup truck. On May 13, 2004, Debtor's attorney contacted M & M and spoke to its vice-president, informing him of the bankruptcy and demanding the vehicle's immediate return. M & M refused because the vice-president believed that the call was merely a ruse put on by Debtors in an attempt to illegally recover the pickup truck.

A flurry of litigation followed. On May 20, 2004, Debtors filed a complaint against M & M alleging violation of the automatic stay under 11 U.S.C. § 362 and seeking declaratory and compensatory relief. Debtors also filed a motion for a temporary restraining order ("TRO") seeking to enjoin any potential sale of the vehicle and to obtain possession of the vehicle. The bankruptcy court granted Debtor's TRO motion and ordered M & M to deliver the vehicle to Debtors. Debtors moved to amend their complaint in order to request turnover of the vehicle title in addition to the previously requested relief. Debtors also filed a separate motion requesting turnover of the vehicle title.

M & M complied with the TRO order. Due to confusion over the vehicle's location at the delivery site not attributable to M & M, however, Debtors were unable to retrieve the vehicle. As a result, Debtors filed a "Motion for Expedited Impositions of Sanctions and Order Directing Marshall to Collect Property." The motion was rendered

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moot when, at an expedited hearing on the motion, M & M explained that it had delivered the vehicle and its location at the delivery location became apparent. Debtors nevertheless modified their motion to request turnover of the vehicle title.

The bankruptcy court then granted Debtors' motion to amend their complaint. Following Debtors' filing of the amended complaint, M & M moved to dismiss the action. Thereafter, M & M filed a motion to modify the automatic stay in order to repossess and sell the pickup truck or, in the alternative, to require Debtors to assume or reject the Sales Contract. The bankruptcy court denied M & M's motion to dismiss and held an evidentiary hearing in order to address the outstanding motions.

The bankruptcy court subsequently granted Debtors' various motions requesting the vehicle title and denied M & M's request for relief from the automatic stay. In addition, the bankruptcy court ruled in favor of Debtors on their amended complaint, finding that M & M willfully violated § 362. The bankruptcy court deferred assessing damages until it held an additional evidentiary hearing on that issue.

M & M issued a new title reassignment pursuant to the bankruptcy court's order. That title, however, listed M & M as the lienholder rather than Wells Fargo.3 As a result, Debtors were unable to register and license the vehicle without providing the Wyoming motor vehicle department with a lien release or a copy of the security agreement. Although M & M faxed the necessary materials to the proper state official, Debtors refused to proceed with the registration and licensing. Thus, the pickup truck sat unused.

The bankruptcy court then held the evidentiary hearing to determine the amount of damages stemming from M & M's willful violation of the stay. In its order on damages, the bankruptcy court required M & M to provide Debtors with a title clear of M & M's lien and awarded $6,198.23 in damages. Specifically, the bankruptcy court awarded Debtors $937.50 for loss of use of the pickup truck, $5,028.50 in attorney's fees, and $232.23 in costs.

M & M appealed the grant of the TRO, the denial of the motion to dismiss, the order requiring turnover of the vehicle title, and the merits decision to the BAP. The BAP affirmed the bankruptcy court's decision on the merits, but reversed the bankruptcy court's damages award on loss of use due to insufficient evidence, vacated the attorney's fees, and remanded that issue for further proceedings. Those proceedings regarding attorney's fees remain outstanding.

M & M now appeals the merits portion of the BAP's decision.

ANALYSIS

I. Jurisdiction

On March 23, 2006, this court issued an order to show cause why this appeal should not be dismissed for lack of jurisdiction. Specifically, we questioned whether the BAP's decision was a final, appealable order when further proceedings were required to resolve damages. Recognizing that the BAP remanded only for a redetermination of attorney's fees, we now hold that our jurisdiction is appropriate under 28 U.S.C. § 158(d). See Budinich v. Becton Dickinson & Co., 486 U.S. 196, 201-02, 108 S.Ct. 1717, 100 L.Ed.2d 178 (1988) (promulgating "uniform...

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