In In re Hernandez-Panameno, 2012 WL 4867580 (Bkrtcy.N.D.Cal. 2012), Judge Carlson awarded $18,032 in sanctions and damages against a car dealer who repossessed a vehicle in violation of the Bankruptcy Code’s automatic stay.  The case arose out of a spot-delivery situation where the dealer could not find financing for the sale of the vehicle.

Debtors purchased a car from Creditor on February 8, 2012. The contract permitted Creditor to rescind the contract if it was unable to find a lender willing to provide financing to Debtors. On March 15, 2012, Mayet, Creditor’s principal, called Olivia Hernandez–Panameno (Olivia) to tell her that Debtors had not qualified for financing. Olivia told Mayet that she and her husband had filed a chapter 13 bankruptcy petition on March 13, 2012. On March 15, 2012, Creditor sent a towing company to recover the car from Debtors at Olivia’s place of employment. Olivia mentioned her bankruptcy case to the towing company employee, who then called Creditor to advise him of that fact. The car was not repossessed at that time. On April 7, 2012, Creditor caused the car to be repossessed from Debtors’ residence. Three days later, Mayet received a call from Debtors’ attorney, again advising him of the bankruptcy filing. The following day, Creditor received a letter from Debtors’ attorney providing written notice of the bankruptcy and demanding return of the car.   The car was not returned to Debtors until April 30, 2012.

Judge Carlson found the violation of the automatic stay willful, and awarded actual and punitive damages.  Judge Carlson explained:

Debtors state that they suffered embarrassment, humiliation, and sleepless nights as a result of Creditor’s wrongful repossession of the car. This testimony is entirely persuasive. Despite their efforts and the efforts of their attorney to advise Creditor of the automatic stay, Debtors were reduced to powerlessness, frustration, and uncertainty by Creditor’s failure to honor the stay. It is, of course, difficult to put a dollar figure on that frustration. The court awards the sum of $3,000 for emotional distress. ¶ Punitive damages. The present case involves an egregious violation of the automatic stay in the following respects. First, Creditor violated the stay on several occasions: by sending a repo man to attempt to take the car on March 15, 2012, by repossessing the car on April 7, 2012, and by refusing to return the car from April 7 to April 30, 2012. Second, all of these acts were committed well after Olivia advised Creditor on March 15, 2012 that she and her husband had filed a chapter 13 petition. This is not a case in which the violation took place before the creditor had a chance to confirm the bankruptcy filing. Third, the explanation offered by Creditor (that he thought he was not a “creditor” because he could rescind the sale) does not suggest a good-faith mistake. There is no evidence that he consulted a lawyer to determine whether the stay applied, despite its having ample opportunity to do so. ¶  Upon consideration of all the facts and circumstances involved in Creditor’s violation of the stay, I find that violation to be flagrantly willful and award punitive damages in the amount of $10,000.  ¶ Debtors shall recover from Creditor the sum of $18,032, consisting of attorneys fees in the amount of $5,032, emotional distress damages in the amount of $3,000, and punitive damages in the amount of $10,000. The court determines that the most equitable means of enforcing this award is to credit the balance due on the car against the amount due from Creditor. Each party shall by October 22, 2012 file a calculation of the balance due on the purchase price (without any reduction for any attorney fees, for repossession costs, or for late charges imposed after March 30, 2012).