Reliance Steel & Aluminum Co. v. Locklin (In re Locklin)
- Summarized by Joel Newell , Ballard Spahr, LLP
- 9 years 1 month ago
- Citation:
- 9th Cir. BAP Case No. CC-15-1008-KuFKi and CC-14-1446-KuFKi (December 7, 2015)
- Tag(s):
-
- Ruling:
- in the unpublished decision, the 9th Circuit Bankruptcy Appellate Panel ("BAP") affirmed the bankruptcy court's award of damages for Reliance Steel & Aluminum, Co. ("Reliance") and Reliance's counsel's willful violation of the automatic stay. A stay violation is willful if the alleged violator knew of the automatic stay and if his or her actions were intentional. Reliance's proof of claim constituted prima facie evidence of the validity of the claim.
- Procedural context:
- Reliance and its counsel appealed the bankruptcy court's order determining that they willfully violated the automatic stay. The bankruptcy court awarded actual damages of $7,033 and punitive damages of $2,500. Reliance also appeals the bankruptcy court's denied of Reliance's proof of claim.
- Facts:
- LaVesta Locklin ("Debtor") attempted to maintain landscaping business that manufactured and sold lighting products. The Debtor took over business operation in approximately December 2007 after her husband passed away. Reliance's relationship with the Debtor was one wherein Reliance agreed to sell the Debtor's businesses materials it used on a credit basis. During the time period of 2006 through 2012, the Debtor's business timely paid 94 of Reliance's 95 invoices submitted. One week after the Debtor filed her individual Chapter 11 bankruptcy, Reliance commenced a lawsuit against the Debtor's business for the roughly $8,000 in unpaid invoice. The Debtor did not schedule Reliance as a creditor based on Reliance being a trade creditor of the Debtor's businesses, not the Debtor individually. However, Reliance asserted that the Debtor was an alter ego of the businesses. Reliance had actual knowledge of the bankruptcy no later than February 2014 when it filed its proof of claim. Reliance dismissed the Debtor from the state court litigation without prejudice. The bankruptcy court denied Reliance's claim against the Debtor individually, finding that Reliance could not substantiate the alter ego theory of liability. On the same date in which the bankruptcy court denied Reliance's claim, it approved the Debtor's motion to sell real property. Reliance's counsel served the Debtor's broker a copy of the judgment lien which included the Debtor's name. The Debtor filed a motion for violation of the automatic stay against Reliance. The approved sale was still pending during the time Reliance was sending correspondence to the Debtor's broker.
- Judge(s):
- Honorable KURTZ, FARIS and KIRSCHER.
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