In re Derringer, BAP No. NM-07-002,

• Decision Date: 24 September 2007
• Docket Number: BAP No. NM-07-002,,Bankruptcy No. 04-17330-m13.
• Citation: 375 B.R. 903
• Parties: In re David Brian DERRINGER, Debtor. Mick Chapel, Jennifer Chapel and Joseph E. Manges, Appellants, v. David Brian Derringer, Appellee.
• Court: U.S. Bankruptcy Appellate Panel, Tenth Circuit

375 B.R. 903

In re David Brian DERRINGER, Debtor Mick Chapel, Jennifer Chapel and Joseph E. Manges, Appellants, v. David Brian Derringer, Appellee.

BAP No. NM-07-002,

Bankruptcy No. 04-17330-m13.

United States Bankruptcy Appellate Panel of the Tenth Circuit.

Filed September 24, 2007.

Submitted on the briefs:^*

Joseph E. Manges of Comeau, Maldegen, Templeton & Indall, Santa Fe, New Mexico, pro se and for Appellants.

David Brian Derringer, pro se.

Before CLARK, MICHAEL, and NUGENT, Bankruptcy Judges.

MICHAEL, Bankruptcy Judge.

Mick Chapel and Jennifer Chapel (the "Chapels") and their attorney, Joseph Manges ("Manges"), cross appeal¹ an order of the bankruptcy court finding that they violated the automatic stay and awarding compensatory and punitive damages to debtor David Brian Derringer ("Derringer") in the total amount of $903. The sole issue presented to this Court is whether the bankruptcy court abused its discretion when it found that a violation of the automatic stay had taken place in this case. Finding no reversible error, we affirm.²

I. BACKGROUND

In a 2005 Order and Judgment of this Court,³ we remarked that "[t]he battle between the parties to' these appeals has continued unabated for over ten years," and that "these cases mark the fifth and sixth appeals that [the parties] have presented to this Court." The saga continues. Much of what follows may sound familiar.⁴ We limit our description of the facts to those relevant to disposition on appeal.

The Chapels hold a judgment lien upon certain real property owned by Derringer.⁵ A foreclosure sale of the real property was scheduled for October 8, 2004.⁶ On October 6, 2004, Derringer filed a petition for relief under Chapter 13 of the Bankruptcy Code. On October 29, 2004, the Chapels (through Manges, their attorney) filed a motion for relief from the automatic stay that arises pursuant to 11 U.S.C. § 362 in order to enforce their judgment lien.⁷ After a hearing, the motion for relief from stay was granted in part and denied in part by an order entered on December 27, 2004 (the "December 27 Order"). The December 27 Order imposed certain duties and conditions upon Derringer, and stated that if such conditions were not complied with, the automatic stay would be summarily vacated. The December 27 Order was appealed to this Court by Derringer, but that appeal was dismissed as interlocutory.

On June 28, 2005, the bankruptcy court entered an order terminating the automatic stay as it applied to the Chapels (the "Order Granting Relief'). The Order Granting Relief made no mention of Federal Rule of Bankruptcy Procedure 4001(a)(3),⁸ which provides that such orders are automatically stayed for a period of ten days, "unless the court orders otherwise."⁹ Seven days later, on July 5, 2005, Manges (again in his capacity as attorney for the Chapels) mailed a document entitled "Notice of Foreclosure Sale" (the "Foreclosure Notice") to Derringer. The Foreclosure Notice was filed with the New Mexico state court on July 8, 2005. Pursuant to the terms of the Foreclosure Notice, a sale of the Derringer property was scheduled for August 11, 2005.

On July 13, 2005, Derringer filed with the bankruptcy court a pleading entitled "Debtor David Derringer's Motion For Order to Show Cause and For Extreme Actual and Punitive Damages Against Mick Chapel, Jennifer Chapel, Joseph Manges, [and] Stephen Long for Violations of Title 11 Section 362(a) Under Provisions of Title 11 Section 362(h); and Request for Relief' (the "Sanctions Motion"). In addition to reasserting virtually every argument previously made regarding the dispute between the parties, Derringer claimed that the service of the Foreclosure Notice less than ten days after the entry of the Order Granting Relief constituted a violation of the automatic stay provisions found in § 362. Derringer sought an award of actual and punitive damages against all parties listed in the caption of the Sanctions Motion.

The bankruptcy court held a hearing on the Sanctions Motion on August 10, 2005, one day prior to the scheduled sale of the Derringer property. While the parties were provided with an opportunity to present argument, no evidence was offered or received at the hearing. The parties agreed and the bankruptcy court found that the Foreclosure Notice was sent to Derringer less than ten days after the entry of the Order Granting Relief. The bankruptcy court found that the Chapels and Manges (collectively "Appellants") had acted in violation of § 362. The bankruptcy court then entered an order (the "Sanctions Order") requiring the Chapels to pay Derringer actual damages of $250 and further directing Manges to pay Derringer actual damages of $250 and punitive damages of $750.

Derringer filed his notice of appeal from the Sanctions Order on August 17, 2005. On August 18, 2005, Appellants filed a motion seeking reconsideration of the Sanctions Motion. On September 20, 2005, the bankruptcy court denied the motion to reconsider. On September 23, 2005, the Appellants filed their cross-appeal with respect to the Sanctions Order.

Derringer's primary argument on appeal was that the damages awarded by the bankruptcy court were inappropriately low. In response, Appellants argued that, an award of damages was not supported by either the law or the record. Upon review, this Court found that the evidentiary record did not support an award of damages and remanded the matter for further proceedings.¹⁰ Further, this Court, exercising its discretion, declined to address Appellants' argument that an alleged "postponement" of a foreclosure sale is not an act that violates the automatic stay. We noted that the argument was not presented to the bankruptcy court and, given that the case was to be remanded, found it unnecessary to address the issue. The Court left it to the "discretion of the bankruptcy court" as to whether to consider the argument on remand.¹¹ Accordingly, this Court vacated the award of damages. Upon remand, the bankruptcy court refused to consider the argument that the alleged postponement of the foreclosure sale did not constitute a stay violation. However, the court did take evidence on the issue of damages. Based on that evidence, the bankruptcy court awarded Derringer actual damages of $153 against Appellants jointly and severally, and assessed punitive damages against Manges in the amount of $750.¹²

Derringer was the first to appeal the bankruptcy court's order after remand. Once again, Derringer took issue with the amount of damages awarded by the bankruptcy court. Additionally, he filed a valid election for the appeal to be heard by the United States District Court for the District of New Mexico (the "District Court"). The Appellants then cross-appealed the same bankruptcy court order to this Court. Both appeals were sent to the District Court, which withdrew the Notice of Cross Appeal and returned it to this Court. Since similar issues were pending before both the District Court and this Court, this Court stayed this cross-appeal pending resolution of the District Court appeal. The District Court has affirmed the bankruptcy court's calculation of damages, and expressly left it to this Court to review the bankruptcy court's ruling that a violation of § 362 took place.¹³ The ruling of the District Court is final, and we can dispose of this cross-appeal.

II. APPELLATE JURISDICTION

This Court has jurisdiction to hear timely-filed appeals from "final judgments, orders, and decrees" of bankruptcy courts within the Tenth Circuit, unless one of the parties elects to have the district court hear the appeal.¹⁴ Neither party elected to have this cross-appeal heard by the United States District Court for the District of New Mexico. The parties have therefore consented to appellate review by this Court.

A decision is considered final "if `it ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.'"¹⁵ In this case, the bankruptcy court found a stay violation and entered sanctions against the Appellants. Nothing remains for the trial court's consideration. Thus, the decision of the bankruptcy court is final for purposes of review.

III. ISSUE ON APPEAL

The only issue on appeal is whether the Appellants' mailing and court filing of the Foreclosure Notice less than ten days after the entry of the Order Granting Relief constitutes a willful violation of the automatic stay.

IV. STANDARD OF REVIEW

In In re Diviney, this Court previously held that "Whether a party's actions have violated the automatic stay is a question of law which is reviewed de novo." Barnett v. Edwards (In re Edwards), 214 B.R. 613, 618 (9th Cir. BAP 1997) (citations omitted). We review the bankruptcy court's finding that a creditor's action constituted a willful violation of the stay for clear error. McHenry v. Key Bank (In re McHenry), 179 B.R. 165, 167 (9th Cir. BAP 1995); Franchise Tax Bd. v. Roberts (In re Roberts), 175 B.R. 339, 343 (9th Cir. BAP 1994).¹⁶

There is no reason to depart from the standard of review outlined in Diviney.

V. ANALYSIS

A. The argument that the alleged postponement of the foreclosure sale does not constitute a violation of the stay is reviewable on appeal.

Derringer contends that Appellants are prevented from asserting that the mailing and filing of the Foreclosure Notice ,did not violate the automatic stay because Appellants did not present this argument to the bankruptcy court before it was argued to this Court in the previous appeal. It is true that, prior to our remand of this case, counsel for the Chapels never expressed to the bankruptcy court (either at the hearing or in the pleadings) that "the actions taken in furtherance of the foreclosure sale do not violate the automatic stay." However, this entire proceeding is about whether or not Appellants violated the stay, and the bankruptcy court ruled that there had been a willful violation. Additionally, Appellants did not...