Automatic Stay

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Ninth Circuit BAP Permits Appellate Attorney Fee Award for Stay Violation

When a debtor is forced to defend both the ruling that the creditor violated the automatic stay and the award of sanctions for that violation, the debtor may recover her appellate attorney fees under section 362(k). Schwartz-Tallard v. America’s Servicing Co., No. 11-1429 (B.A.P. 9th Cir. June 28, 2012). [Read more…] about Ninth Circuit BAP Permits Appellate Attorney Fee Award for Stay Violation

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$3,000,000.00 Award Against Wells Fargo

In Charles Dickens’ “A Tale of Two Cities,” there is a scene in which the wealthy Monsieur the Marquis, riding in his carriage through a crowd, runs over and kills a small, poor child. When the crowd cries out in outrage, he carelessly throws a few coins out of the window of the carriage with the words, “It is extraordinary to me that you people cannot take care of yourselves and your children.” With that, he rides on. Thus begins the French Revolution.

For many years, Wells Fargo has been carelessly throwing coins out of its carriage window at the debtors overrun by its policies that unfairly compound their already onerous financial burdens. But, debtors, with the help of the courts, are fighting back.

The recent battlefield was the Bankruptcy Court for the Eastern District of Louisiana in the case of Jones v. Wells Fargo Home Mortgage, No. 03-16518 (Bankr. E.D. La, April 5, 2012). In that case Judge Elizabeth Magner reviewed an order for sanctions after remand by the Fifth Circuit, in light of the Fifth Circuit’s decision in Wells Fargo Bank, N.A. v. Stewart (In re Stewart), 647 F.3d 553 (5th Cir. 2011) (finding that Bankruptcy overstepped its mandate in ordering Wells Fargo to audit every case it was involved in in the district). [Read more…] about $3,000,000.00 Award Against Wells Fargo

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BAP’s Consider Appeals of Sanctions Orders

Creditor’s counsel is appealing an order by the Bankruptcy Court of the Western District of Missouri awarding Chapter 7 debtor sanctions for $1,500.00 as a result of the creditor’s violation of the discharge injunction under Section 524(a)(2) and (3). In re King, No. 12-6014 (B.A.P. 8th Cir.). The appeal, filed on February 21, 2012, is before the 8th Circuit BAP. The debtor had filed a motion to reopen his bankruptcy case to add the creditor, and the underlying debt was thereafter discharged with no objection. The creditor then filed suit in State Court seeking recovery on that debt. After notifying creditor’s counsel of the bankruptcy discharge to no avail, debtor sought sanctions and attorney fees against creditor’s counsel. The creditor’s counsel appeals the bankruptcy court’s denial of the creditor’s motion for reconsideration of the court’s order granting sanctions.

The BAP for the 9th Circuit is also considering an appeal of an order granting sanctions against creditors and their counsel in the amount of $11,217 for violation of the automatic stay under Section 362(a). In re Knapp, No. 12-1092 (B.A.P. 9th Cir.). Like King, that case involves the pursuit of a state court lawsuit against a Chapter 7 bankruptcy debtor even after the debtor’s counsel sought to educate the creditor’s counsel about the automatic stay.