by The creditor violated the automatic stay by refusing to take the steps necessary to transfer title of the vehicle he had sold to the debtor prior to bankruptcy. Parker v. Smith (In re Parker), No. 12-1324, AP 13-32 (Bankr. S.D. Miss. Jan. 6, 2014). The debtor bought a jeep from Smith with a down payment and an installment contract giving Smith a security interest in the vehicle. At the time of sale, Smith did not turn over the title or application for change of title. Shortly after purchasing the jeep, the debtor filed for chapter 13 bankruptcy listing Smith as a creditor and providing for payments on the jeep with interest. The debtor’s lawyer informed Smith of the bankruptcy. One year later, when the tag on the vehicle expired, the debtor did not have proof of ownership to obtain a new one. Additionally, due to lack of proof of ownership, the debtor was unable to get liability insurance on the vehicle.
In the motion for summary judgment, the court took as true admissions made by Smith by reason of his failure to respond to the debtor’s request for admissions, including that “[Smith’s] refusal to submit the Application for Title transferring title to the 1999 Jeep Cherokee, . . . to [the Debtor], was with the specific intent to collect upon a debt which [Smith] claim[s] was due [him] from [the Debtor].”
The court found that, under section 362(k), a debtor may recover damages where the creditor knew of the existence of the stay, acted intentionally, and violated the stay. Young v. Repine (In re Repine), 536 F.3d 512, 519 (5th Cir. 2008). The case turned on whether the creditor’s action in refusing to turn over the title, or application for change of title, to the debtor constituted an exercise of control over the vehicle in violation of section 362(a)(3). The court found that it did stating: “Smith’s passive act of holding on to the existing certificate of title falls within the ambit of the Code’s definition of ‘exercising control’ over the Debtor’s possession and use of the Jeep. See TranSouth Fin. Corp. v. Sharon (In re Sharon), 234 B.R. 676, 682 (B.A.P. 6th Cir. 1999); In re Banks, 253 B.R. 25, 31 (Bankr. E.D. Mich. 2000).” By preventing the debtor from driving the jeep legally, the creditor committed the equivalent of repossession and the refusal to “return” the vehicle post-petition constituted a violation of the stay. The fact that the debtor was physically able to (and, in fact, did) drive the vehicle in violation of the law, did not change the court’s ruling. By driving illegally, the debtor exposed himself to legal consequences which he actually suffered when he had a car accident and was ticketed for driving with expired tags and failing to have liability insurance. The financial pressure applied by refusing to transfer title to the vehicle was the type of collection activity the stay was designed to prevent. The court granted summary judgment in favor of the debtor ordering the creditor to take the necessary action to transfer title.