Warren v. Dill (In re Warren)

• Court: U.S. Bankruptcy Court — District of South Carolina
• Writing for the Court: John E. Waites, US Bankruptcy Judge, District of South Carolina
• Citation: Warren v. Dill (In re Warren), 532 B.R. 655 (Bankr. S.C. 2015)
• Decision Date: 29 June 2015
• Docket Number: C/A No. 14–03600–jw,Adv. Pro. No. 14–80101–JW
• Parties: In re, Julie Gwen Warren, Debtor. Julie Gwen Warren, Plaintiff, v. Arthur Dill, individually and d/b/a Dill's Used Cars, and Julius Anderson, Defendants.

532 B.R. 655

In re, Julie Gwen Warren, Debtor.

Julie Gwen Warren, Plaintiff

v.Arthur Dill, individually and d/b/a Dill's Used Cars, and Julius Anderson, Defendants.

C/A No. 14–03600–jw

Adv. Pro. No. 14–80101–JW

United States Bankruptcy Court, D. South Carolina.

Filed June 29, 2015

Entered June 30, 2015

Julie Gwen Warren, pro se.

Lex Rogerson, Jr., Lexington, SC, for Plaintiff.

Richard R. Gleissner, Gleissner Law Firm, LLC, Columbia, SC, for Defendants.

ORDER

John E. Waites, US Bankruptcy Judge, District of South Carolina

This matter comes before the Court upon the Complaint filed by Julie Gwen Warren (“Debtor”) against Arthur Dill, individually and d/b/a Dill's Used Cars, and Julius Anderson (“Defendants”). In the Complaint, Debtor asserts a claim for willful violation of the automatic stay pursuant to 11 U.S.C. § 362(h)(1),¹ based upon the Defendants' alleged post-petition repossession of Debtor's 2005 Pontiac Sunfire (“Vehicle”). Defendants dispute Debtor's claim, asserting that they did not have notice of Debtor's bankruptcy filing, since the Notice of Chapter 13 Bankruptcy Case was sent to Defendant Dill's business address, not to his Post Office Box address, and that, after learning of the bankruptcy filing, they retained the Vehicle on advice of counsel. After considering the pleadings in the matter and testimony at the hearing, the Court makes the following findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52, which is made applicable to this adversary proceeding by Federal Rule of Bankruptcy Procedure 7052.²

FINDINGS OF FACT

1. Debtor filed a voluntary petition for relief under Chapter 13 of the Bankruptcy Code (“Petition”) on June 24, 2014.

2. At the time Debtor filed the Petition, she had possession and ownership of the Vehicle. Debtor had previously purchased the Vehicle from Defendant Dill, operating and transacting business under the name Dill's Used Cars, on March 7, 2014. The Vehicle's purchase was financed by Defendant Dill, who received a security interest in the Vehicle.

3. Debtor listed Defendant Dill as a creditor on her mailing matrix filed with the Petition at the following address: Dill's Used Cars, 2442 South Lake Drive, Lexington, South Carolina 29073.³

4. Simultaneous with the Petition, Debtor filed a Chapter 13 Plan. The plan proposed to retain the Vehicle by making payments to Dill's Used Cars in the amount of $38.00 per month, along with 5.25% interest until the allowed secured claim is paid in full. The plan was also served by U.S. Mail on June 24, 2015 on Defendant Dill at the 2442 South Lake Drive address.⁴

5. The Bankruptcy Noticing Center mailed the Notice of Chapter 13 Bankruptcy Case to Defendant Dill at the 2442 South Lake Drive address on June 27, 2014.⁵

6. During the trial, Defendant Dill testified that delivery of mail is undependable at 2442 South Lake Drive address and that his proper mailing address is: Post Office Box 84296, Lexington, South Carolina 29073. Defendant Dill further stated that he informs all of his clients of his proper mailing address.

7. Based upon an alleged default in payments, Defendants repossessed the Vehicle on the evening of July 17, 2014. Defendant Anderson rode with Defendant Dill to Debtor's residence to repossess the Vehicle, and Defendant Dill drove the Vehicle to Defendant Anderson's residence for storage.

8. On the morning of July 18, 2014, at Debtor's request, Debtor's roommate, Raymond Baxley, called Defendant Dill and advised him that Debtor had filed bankruptcy and demanded the return of the Vehicle. Defendant Dill refused to return the Vehicle. Later that same day, Debtor's attorney directly informed Defendant Dill of Debtor's bankruptcy filing by telephone and e-mail and demanded return of the Vehicle.

9. On July 19, 2014, Defendant Dill sent an e-mail to Debtor's attorney wherein he refused to return the Vehicle and stated that the Vehicle belonged to Defendant Anderson and that he “owe[d] it to Mr. Anderson to hold the [Vehicle] at this time for payment in full since [Debtor] violated its terms of sale.”⁶

10. On July 21, 2014, Debtor's attorney, through his paralegal, advised Defendant Dill that an adversary proceeding would be filed if the Vehicle was not returned by 5:00 p.m. that day.

11. On July 22, 2014, Defendants came to Debtor's residence to return the Vehicle. Prior to relinquishing control of the Vehicle, Defendant Dill demanded that Debtor pay him $235.00 and pay Defendant Anderson $200.00 as a condition of return. After receiving payment from Debtor, Defendants returned the Vehicle to Debtor.

12. Debtor suffers from numerous health-related issues, including seizures and esophageal problems. As a result of the repossession, Debtor missed appointments with a gastroenterologist and neurologist, because she lacked transportation to their offices, which are located approximately 60 miles away from her residence.

13. According to Debtor, she was able to see her neurologist the following Friday, July 25, 2014, but was unable to schedule a make-up appointment with her gastroenterologist for approximately three months. Debtor testified that this lapse in medical treatment caused her severe mental and emotional distress along with discomfort and physical ailments, including difficulty swallowing and digesting food, nausea, and difficulty breathing. However, Debtor did not seek emergency medical treatment for any of her health issues during the three-month period following the repossession.

14. On September 4, 2014, Debtor filed the Complaint, asserting claims against the Defendants for willful violation of the automatic stay under § 362(k)(l).

15. At the hearing, Debtor presented into evidence “Plaintiff's Fee Affidavit,” which asserts that Debtor incurred attorney's fees in the total amount of $6,843.00 and costs in the amount of $350.00 in connection with this matter up through trial.

16. Following the trial, the Court provided Defendants an opportunity to respond to the fee affidavit presented into evidence, and Defendants filed an Objection to Attorney's Fees on March 18, 2015.

17. Debtor filed a Response to the Objection to Attorney's Fees on March 27, 2015. Debtor also filed a Supplemental Fee Affidavit, asserting a claim for additional attorney's fees in the amount of $2,750.00 for fees incurred in responding to the Objection to Attorney's Fees. Debtor attached a copy of Debtor's Fee Agreement with Debtor's Counsel as an exhibit to the Supplemental Fee Affidavit.

CONCLUSIONS OF LAW

I. Was the post-petition repossession of Plaintiff's automobile a willful violation of the automatic stay pursuant to § 362(k) ?

Section 362(k)(l) of the Bankruptcy Code provides that “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.” § 362(k)(1). A willful violation of the automatic stay occurs when a “creditor knows of the pending bankruptcy petition and intentionally attempts to continue collection procedures in spite of it.” Weatherford v. Timmark (In re Weatherford), 413 B.R. 273, 285 (Bankr.D.S.C.2009) (citing Budget Serv. Co. v. Better Homes of Va., Inc., 804 F.2d 289, 292–93 (4th Cir.1986) ). For a debtor to recover damages for an alleged willful violation of the automatic stay, the debtor must establish five elements: “ ‘(1) that a bankruptcy petition was filed, (2) that the debtors are ‘individuals' under the automatic stay provision, (3) that the creditors received notice of the petition, (4) that the creditor's actions were in willful violation of the stay, and (5) that the debtor[s] suffered damages.’ ” Weatherford. 413 B.R. at 284 (quoting In re Sammon, 253 B.R. 672, 679–80 (Bankr.D.S.C.2000) ). Debtor bears the burden of proving these elements. Bolen v. Mercedes Benz. Inc. (In re Bolen), 295 B.R. 803, 807 (Bankr.D.S.C.2002).

There is a split of opinion among the courts regarding the proper burden of proof to apply in an action for willful violation of the automatic stay. See In re Westman, 300 B.R. 338, 342 n.4 (Bankr.D.Minn.2003) (applying the preponderance of the evidence standard but noting the minority approach of applying a clear and convincing evidence standard); In re Clayton, 235 B.R. 801, 806–07 (Bankr.M.D.N.C.1998) (noting the difference of opinion among the courts regarding the proper standard of evidence to apply in an action for willful violation of the automatic stay); Hanna Coal Co. v. I.R.S., 218 B.R. 825, 829 (W.D.Va.1997) (recognizing that “there is a split among the bankruptcy courts as to the weight of the burden a plaintiff [alleging a violation of the automatic stay] must carry”). This Court has historically applied a clear and convincing evidence standard. See In re Romero, C/A No. 10–00837–HB, 2010 WL 4863781 (Bankr.D.S.C. Nov. 23, 2010) (Burris, J.); Taylor v. Credit Cars of Lexington, C/A No. 10–01560–DD, Adv. Pro No. 10–80058, 2010 WL 5437244 (Bankr.D.S.C. Aug. 5, 2010) (Duncan, J.); In re Weatherford, 413 B.R. 273, 284 (Bankr.D.S.C.2009) (Waites, J.); In re Bolen, 295 B.R. at 807 (Waites, J.) (citing Diviney v. NationsBank of Texas (In re Diviney), 211 B.R. 951, 961 (Bankr.N.D.Okla.1997) ); Deleon v. United States (In re Deleon), C/A No. 93–72315–D, Adv. Pro. No 95–8130, slip op. (Bankr.D.S.C. Apr. 12, 1996) (Davis, J.), aff'd C/A No. 3:96–1662, slip op. (D.S.C. Oct. 6, 1997) (Perry, J); Lynn v. Automotive Acceptance (In re Lynn), C/A No. 95–70839, Adv. Pro. No. 95–8051, slip op. (Bankr.D.S.C. Mar. 5, 1996) (Davis, J.); Brockington v. Citizens & S. Nat'l Bank of S.C. ( In re Brockington), 129 B.R. 68, 70 (Bankr.D.S.C.1991) (Bishop, J.) (citing In re Zunich, 88 B.R. 721 (Bankr.W.D.Pa.1988) ; In re Wagner, 74 B.R. 898 (Bankr.E.D.Pa.1987) ; In re Mack, 46 B.R. 652 (Bankr.E.D.Pa.1985) ). In closing arguments, Debtor's Counsel requested that the Court reconsider such standard, arguing that the preponderance of the evidence standard...