Homer Nat. Bank v. Namie
| Decision Date | 21 February 1989 |
| Docket Number | Civ. A. No. 88-1926. |
| Citation | 96 BR 652 |
| Parties | HOMER NATIONAL BANK v. Eddie NAMIE and Alice Nomey Namie. |
| Court | U.S. District Court — Western District of Louisiana |
Curtis R. Shelton, Cook, Yancey, King & Galloway, Shreveport, for Homer Nat. Bank, plaintiff/appellee/cross-appellant.
Darrell R. Avery, Culpepper, Teat & Avery, Jonesboro, for Namies, defendants/appellants.
The instant case is before the court on appeal from the judgment of the United States Bankruptcy Court (hereinafter, "Bankruptcy Court") for the Western District of Louisiana rendered on May 9, 1988. This court has jurisdiction pursuant to 28 U.S.C. § 158(a). Finding no error, the decision of the Bankruptcy Court is AFFIRMED.
STATEMENT OF THE CASE:
Mr. Eddie Namie and Mrs. Alice Nomey Namie are owners of a tract of land in Jonesboro, Louisiana. On March 17, 1986, Mr. and Mrs. Namie leased this property to John G. Mansoor and Mansoor's Mobile Home Sales, Inc. (hereinafter, "debtor"), the corporate lessee being the debtor in the bankruptcy proceeding from which this case arises. Mobile homes were placed on the leased premises for retail sales. After the lessees became delinquent on their rental payments, the Namies sued John G. Mansoor, individually, and the debtor in state court on November 6, 1986, and seized the mobile home at issue in this case.
Subsequently, on December 24, 1986, the debtor filed its petition under Chapter 7 of the Bankruptcy Code. The parties stipulated that sometime in January 1987, the Namies' attorney received the notice of the filing of the bankruptcy petition. That notice provided: "Upon filing of the petition, certain acts and proceedings against the debtor and the estate are stayed as provided in 11 U.S.C. § 362(a)." Exhibit J-8 to ¶ 8 of Pretrial Stipulation. Mr. Namie, an unsecured creditor, testified that he personally received a copy of the notice of the bankruptcy filing and reviewed it with his attorney. Trial Transcript at 20.
On January 22, 1987, a default judgment was rendered in the state court suit against Mr. Mansoor, individually. The judgment stated that it reserved all the Namies' rights against the debtor, as that defendant had filed a petition in bankruptcy. The judgment also purported to recognize a lessor's privilege on the mobile home in question. The mobile home was sold at a Sheriff's Sale on April 8, 1987 to Mr. Namie for $3,500. Mr. Namie shortly thereafter sold the trailer in question to a third-party for $9,500.
On March 10, 1987, prior to the sale, a Jackson Parish sheriff's deputy requested a mortgage certificate for the mobile home from the Louisiana Department of Public Safety. The administrator for the Office of Motor Vehicles responded by letter saying that no record of title existed for the mobile home. On April 3, 1987, Homer National Bank (hereinafter, "HNB") filed a proof of claim in the bankruptcy proceeding. Annexed as an exhibit to that proof of claim was an invoice and manufacturer's statement for certificate of origin identifying the mobile home as property of the debtor and, therefore, property of the estate.
On April 29, 1987, the bankruptcy trustee sent a notice of a proposed sale of the mobile home to HNB to all creditors in the bankruptcy case. The mobile home was sold to HNB on May 19, 1987 after the Bankruptcy Court approved the sale. However, HNB was unable to obtain possession of the Mobile Home, and this adversary proceeding was filed in the Bankruptcy Court.
The bankruptcy judge found that the Namies committed a willful violation of the automatic stay, and thus awarded HNB damages and attorney's fees. On appeal, the Namies present the following issues for review: (1) whether the automatic stay was violated; (2) if the stay was violated, was the violation willful; (3) whether the remedies in 11 U.S.C. § 362(h) are available to HNB; and (4) whether the damages awarded by the Bankruptcy Court were excessive. HNB has also appealed, urging contempt and state law conversion theories as alternate grounds to uphold the bankruptcy judge's rulings.
ANALYSIS OF LAW AND FACTS:
The standard of review of decisions of the Bankruptcy Court is well settled. The bankruptcy judge's findings of fact cannot be set aside unless clearly erroneous. Bankruptcy Rule 8013. A finding is clearly erroneous when although there is evidence to support it, the reviewing court is left with the definite and firm conviction that a mistake has been committed. Anderson v. City of Bessemer City, 470 U.S. 564, 573, 105 S.Ct. 1504, 1511, 84 L.Ed.2d 518 (1985). However, the Bankruptcy Court's conclusions of law are subject to de novo review. Matter of Consolidated Bancshares, Inc., 785 F.2d 1249, 1252 (5th Cir.1986).
The Namies argue that the bankruptcy judge erred in finding that they violated the automatic stay. In the alternative, they argue that if the automatic stay was violated, the bankruptcy judge erred in finding the violation "willful." The automatic stay is contained in 11 U.S.C. § 362(a) and provides, in part:
The scope of the stay in § 362(a) is extremely broad. All actions taken in violation of its terms are void, even where there was no actual notice of the existence of the stay. 2 Collier on Bankruptcy ¶ 362.03 at 362-31 (15th ed. 1988). This stay is effective upon the filing of a petition, whether voluntary, joint or involuntary. Id.
The debtor's bankruptcy petition was filed on December 24, 1986. The stay was, therefore, in effect from that date forward. Nevertheless, the Namies continued their seizure of the mobile home and had it sold at a sheriff's sale. The bankruptcy judge correctly found these actions to be violative of the automatic stay.
The automatic stay imposes a moratorium on all actions against the debtor or his property and assets. Matter of S.I. Acquisition, Inc., 817 F.2d 1142, 1146 (5th Cir. 1987). When the Namies continued their seizure of the mobile home, they violated § 362(a)(3), which prohibits any act to exercise control over property of the estate. The subsequent sheriff's sale violated § 362(a)(5), which prohibits the enforcement of any lien against property of the debtor. Additionally, when the Namies' state court judgment purported to recognize a lessor's lien on the mobile home, they violated § 362(a)(4), which prohibits any act to create, perfect or enforce any lien against the property of the estate. That these acts were committed is undisputed. See Pretrial Stipulation ¶¶ 3, 9, 11, 13 and 17.
The bankruptcy judge also found the violations willful. For purposes of § 362(h), "willful" has been interpreted to mean "deliberate or intentional." In re Rinehart, 76 B.R. 746, 756 (Bkrtcy.S.D.1987), affirmed, 88 B.R. 1014 (D.S.D.1988) This interpretation is consistent with the interpretation given to the term as used in § 523(a)(6), which relates to the nondischargeability of debts caused by willful and malicious injury. See, e.g., In re Glazer, 25 B.R. 329, 330 (9th Cir.B.A.P.1982). Where there is actual notice of the bankruptcy petition, it must be presumed that the violation was deliberate or intentional. Rinehart, supra. Mr. Namie testified that he received notice of the filings from the bankruptcy court, took the notice to his attorney and they "looked it over." Trial Transcript at 20. He further testified that the attorney told him that he did not think Mr. Namie should be concerned with the notice. Id. In response to a question by the court, Mr. Namie admitted being aware that a bankruptcy petition had been filed. Id. The court recognizes that Mr. Namie may have relied on the advise of his counsel in ignoring the bankruptcy filing. Nevertheless, a violation of the automatic stay can be willful even if it occurred on the advise of an attorney. In re Meinke, Peterson & Damer, P.C., 44 B.R. 105, 108 (Bkrtcy.N.D.Tex.1984); see also, 2 Collier, supra ¶ 362.11 at 362-73. It is clear that the Namies had actual knowledge of the bankruptcy filing, yet committed numerous acts prohibited in § 362 of the Bankruptcy Code. Accordingly, the bankruptcy judge did not err in finding the violations "willful."
The Namies contend that even if they committed a willful violation of the automatic stay, the remedies provided in 11 U.S.C. § 362(h) are not available to creditors. 11 U.S.C. § 362(h) provides: "An individual injured by any willful violation of a stay provided by this section shall recover actual damages, including costs and attorney's fees, and, in appropriate circumstances, may recover punitive damages." The Namies contend that this section applies only to debtors injured as a result of a stay violation.
The Bankruptcy Code does not define the word "individ...
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