Hunsaker v. U.S.A.
Ninth Circuit splits with the First on the interpretation of Section 106(a).
- Rochelle Quick Take
View Rochelle Summary- Case Type:
- Consumer
- Case Status:
- Reversed and Remanded
- Citation:
- 16-35991 (9th Circuit, Aug 30,2018) Published
- Tag(s):
- Ruling:
- Ninth Circuit reversing district court, which had reserved the bankruptcy court award of damages to the Debtors for violation of the automatic stay by the IRS. Sovereign immunity does not bar an emotional distress award that resulted from a willful violation of the automatic stay. 11 U.S.C. § 106(a) waives sovereign immunity for a “money recovery,” which includes emotional distress damages under § 362(k).
- Procedural context:
- Appeal to the Ninth Circuit from order of district court reversing bankruptcy court’s award of damages.
- Facts:
- Debtors filed a Chapter 13 bankruptcy. IRS was on notice of the filing but continued to send collection notices and threatened a levy on Social Security benefits. Debtors commenced an adversary proceeding and the IRS conceded it had violated the stay. Nevertheless, it argued sovereign immunity prevented the Debtors from collecting emotional distress damages. Bankruptcy court awarded damages of $4,000 dollars but the district court reversed, concluding sovereign immunity was not waivable under § 362(k). Debtors appealed.
- Judge(s):
- McKeown, Paez, and Bashant
