Opinion
Case No. 94-20823, Chapter 7
March 27, 1996
DECISION ON ORDER TO SHOW CAUSE AND ON DEBTOR'S MOTION FOR ATTORNEY FEES
THIS MATTER came before the court on the motion of the debtor, Beverly Irene Smith, for an order to show cause and for attorney fees. In the motion, the debtor pleaded that a creditor of her estate, General Motors Acceptance Corporation (GMAC), violated the automatic stay imposed by 11 U.S.C. § 362.
On motion of the debtor, this case was reopened on December 5, 1995. Mrs. Smith filed a motion for an order to show cause on January 4, 1996. The court issued its order to show cause on January 9, 1996, in which GMAC was ordered to appear at a hearing scheduled for February 13, 1996 and to show cause why it should not be found in willful violation of § 362. The order was served by a licensed process server upon the supervisor of the GMAC office at its street address in Billings, Montana. GMAC did not appear at the scheduled hearing and has not otherwise pleaded in response to the motion.
Mrs. Smith appeared at the hearing personally and through counsel. The court having considered her testimony and other evidence presented, and having heard the argument of counsel, hereby issues its decision.
Jurisdiction
The court has jurisdiction over this matter pursuant to 28 U.S.C. § 157 and 1334. This is a core proceeding pursuant to § 157(b)(2)(G) (0).
Findings of Fact
Mrs. Smith filed a voluntary chapter 7 petition for relief in this court on November 21, 1994. In her statement of financial affairs she listed a 1990 Chevrolet Suburban, V.I.N. 1GNEV16K3LF173-848, which had been repossessed by GMAC in November, 1994 prior to the filing of the bankruptcy.
GMAC was listed on the official list of creditors at its address, Box 1518, Billings, Montana. The Clerk of the Bankruptcy Court mailed a Notice of Commencement of Case Under Chapter 7 to all parties on the official list of creditors on November 22, 1994.
The chapter 7 trustee held an initial meeting of creditors pursuant to § 341 on December 20, 1994. No creditors attended. On December 30, 1994, the trustee filed a Trustee's Report of No Distribution and Abandonment. In that report, the trustee asserted that all scheduled assets were abandoned. As is the usual practice in this court, the report was not served on any parties in interest.
In her statement of intention, Mrs. Smith indicated that she planned to reaffirm the obligation on the Suburban. Her bankruptcy attorney, who was different than present counsel, did not assist her in contacting GMAC. Mrs. Smith testified that when she contacted the Billings GMAC office, she informed the representative that she had filed the chapter 7 case and indicated that she wished to reaffirm or redeem the vehicle.
On January 4, 1995, GMAC held a private sale of the Suburban for which it received $14,200. GMAC did not obtain an order modifying the automatic stay before or after the sale.
Subsequently, GMAC sent Mrs. Smith a Repossession Accounting Statement dated January 24, 1995. In this statement, GMAC provided a breakdown of the amount of its claim, the proceeds recovered from the sale, and the amount of the deficiency balance owed to GMAC.
Mrs. Smith testified that she had an offer in excess of the debt on the Suburban which she lost because of the creditor's sale. According to the debtor's evidence, the retail value of the Suburban on the date of the bankruptcy petition was filed was $18,500. This amount exceeds the amount of the debt on the Suburban by $2,290.
On March 1, 1995, Mrs. Smith received her chapter 7 discharge. On March 16, 1995, the bankruptcy case was closed.
Mrs. Smith has incurred reasonable legal fees to bring this matter before the court in the amount of $1,071, billed at the rate of $90.00 per hour, and expenses in the amount of $257.12. These fees are subject to the adjustments described herein.
Conclusions of Law
This matter is before the court on Mrs. Smith's motion for damages allowed under § 362(h). Section 362 imposes a stay of all actions taken by a creditor against property of the estate, which continues until the property is no longer property of the estate. 11 U.S.C. § 362(c)(1).
In this case, the chapter 7 trustee filed a no distribution report in which he abandoned all scheduled property, including the Chevrolet Suburban. However, proper notice and opportunity for a hearing of that report was not given as required by § 554(a). Therefore, the court concludes that the abandonment in the trustee's report was not effective at the time, and no property was abandoned by the trustee until the case was closed on March 16, 1995. At that time the property was abandoned, and the stay was no longer effective by operation of law. 11 U.S.C. § 362 (c)(2) 554(c).
Under § 362(h) of the Bankruptcy Code an "individual injured by any willful violation of a stay . . . shall recover actual damages, including costs and attorneys' fees." An action is willful if the creditor engaged in deliberate action with knowledge that the debtor has filed a petition in bankruptcy. In re Matthews , 184 B.R. 594 (Bankr.S.D.Ala. 1995).
GMAC is presumed to have received notice of the filing of the bankruptcy case. In re Rodolfy , 150 B.R. 347, 349 (Bankr.M.D.Pa. 1992). GMAC's act to sell the repossessed property was taken deliberately during the time the automatic stay was in effect. This conduct was willful and violated the automatic stay.
An award of damages is mandatory for a creditor's willful violation of the automatic stay. In re Pace , 67 F.3d 187, 193 (9th Cir. 1995). These awards include reasonable attorney's fees and costs. This court concludes that Mrs. Smith was damaged by her inability to redeem or reaffirm the obligation on the Chevrolet Suburban due to the actions of GMAC in violation of the automatic stay. Her actual damages are the amount of equity in the vehicle which was lost by the sale, i.e., $2,290.
Mrs. Smith's attorney submitted an affidavit to the court in which he detailed the services rendered and fees incurred in bringing this matter before the court. Including the time spent attending the hearing on this matter, counsel's fees total $1,161.
However, travel time in this court is allowed at half the reasonable hourly fee. Therefore, the court finds that reasonable fees in this matter total $981 and that an expense reimbursement in the established amount of $257.12 is proper. These fees are part of the actual damages incurred by Mrs. Smith. In re Herbst , 167 B.R. 983, 985 (Bankr.N.D.Fla. 1994); In re Skinner , 90 B.R. 470 (D.Utah 1988), aff'd, 917 F.2d 444 (10th Cir. 1990).
The court concludes that Beverly Irene Smith has been damaged by the conduct of General Motors Acceptance Corporation in the total amount of $3,528.12. The court will issue a judgment in accordance with this decision.