In In re Wallace, 2014 WL 1244792 (9th Cir.BAP 2014), the 9th Circuit BAP reversed and remanded for further proceedings a bankruptcy court’s finding that an automobile finance company’s post-petition retention of a repossessed vehicle was not a willful violation of the bankruptcy laws.

The bankruptcy court here acknowledged that Carcredit’s repossession of the automobile constituted a technical violation of the automatic stay. However, the bankruptcy court found that Carcredit did not willfully violate the stay by repossessing the vehicle. According to the court, Carcredit did not have notice of the bankruptcy filing until June 5, 2013, the day after it repossessed the vehicle. Therefore, the court inferred, the repossession was not a willful stay violation.  ¶  As far as it goes, this finding is unobjectionable. However, in making this finding, the bankruptcy court ignored Carcredit’s conduct on and after June 5, 2013. As of June 5, 2013, Carcredit knew of Wallace’s bankruptcy filing, and yet Carcredit never volunteered to unconditionally return the vehicle to Wallace. ¶ . . . In order to comply with the automatic stay, once it learned of Wallace’s bankruptcy filing, Carcredit had an “affirmative duty” to remedy its prior, inadvertent stay violation by returning the automobile to Wallace. See In re Dyer, 322 F.3d at 1192 (citing Cal. Employment Dev. Dep’t v. Taxel ( In re Del Mission Ltd.), 98 F.3d 1147, 1155 (9th Cir.1996)); see also Sternberg, 595 F.3d at 945 (“To comply with his ‘affirmative duty’ under the automatic stay, Sternberg needed to do what he could to relieve the violation.”). Accord, In re Mwangi, 432 B.R. at 822 (citing Abrams v. Sw. Leasing & Rental, Inc. ( In re Abrams), 127 B.R. 239, 242–43 (9th Cir. BAP1991)).  ¶  Thus, Carcredit’s knowing retention of the vehicle after learning of Wallace’s bankruptcy filing was a separate and independent violation of the automatic stay. See In re Abrams, 127 B.R. at 243 (citing § 362(a)(3)). And there can be no legitimate doubt here that this stay violation was willful. Carcredit knew about the bankruptcy filing on and after June 5, 2013, and yet it never returned the vehicle to Wallace despite his repeated demands. These facts patently satisfy the test for willfulness set forth in In re Dyer, 322 F.3d at 1191.  ¶  It is not entirely clear why the bankruptcy court did not find Carcredit’s failure to return the vehicle a violation of the automatic stay, willful or otherwise. Citing In re Fitch, 217 B .R. 286, 291 (Bankr.S.D.Cal.1998), the bankruptcy court indicated that Carcredit was entitled to require proof of insur-ance before returning the vehicle. But In re Fitch is inapposite. In Fitch, the creditor lawfully repossessed the vehicle prepetition, so postpetition there was no prior stay violation the creditor needed to remedy by returning the vehicle. Id. at 290–91. ¶  In this case, the notion that Carcredit, which in-disputably violated the automatic stay by reposssessing the vehicle postpetition, could condition its efforts to rectify its stay violation upon the debtor taking certain actions, like providing proof of insurance and providing assurance of future performance, is inconsistent with the holding in In re Del Mission Ltd., In re Mwangi and In re Abrams. These cases stand for the proposition that creditors have a mandatory and unconditional duty under §§ 362(a)(3) and 542(a) to relinquish control of estate property acquired or controlled postpetition. See In re Del Mission Ltd., 98 F.3d at 1151; In re Mwangi, 432 B.R. at 823–24; In re Abrams, 127 B.R. at 242–43.