Richardson v. PRDO Retail Investors, LP; A&C Properties, Inc. (In re Richardson)

Case Type:
Case Status:
BAP No. SC-18-1273-LBKu (9th Circuit, Oct 04,2019) Not Published
1) In order to be awarded damages against a party for violating the automatic stay, the debtor bears the burden of showing by a preponderance of the evidence that the alleged offender willfully violated they automatic stay by committing the alleged violation. 2) The bankruptcy court did not abuse its discretion in disallowing a substantial portion of the attorney's fees originally requested by the debtors' attorneys.
Procedural context:
Following an evidentiary hearing before the bankruptcy court, debtors appealed an order awarding requiring the creditor to pay the debtors' reasonable attorney's fees for violating the automatic stay. The debtors appealed because the bankruptcy court did not award the debtors any damages for abusive language found on invoices sent from the appellees to the debtors.
The debtors (the Richardsons) guaranteed the commercial lease obligations of their business, RichardsonWilson Enterprises, LLC, dba Hut No. 8, to appellee PRDO Retail Investors, LP. After the business defaulted and filed a chapter 11 bankruptcy, PRDO sued the Richardsons and obtained a judgment of approximately $105,000. The Richardsons subsequently filed a chapter 13 case, and confirmed a plan. PRDO was listed on the schedules (care of the other appellee, A&C), received notice of the case, and actively participated in the Richardsons' chapter 13 case. A&C nonetheless sent monthly billing statements to the Richardsons' home address. The Richardsons' lawyer then sent a letter to the the appellees demanding that they cease collection activity, which they apparently did. Three months later, the Richardsons filed a sanctions motion against the appellees and A&C's property manager under 11 U.S.C. § 362(k). The bankruptcy court authorized the parties to conduct discovery. Following discovery, mediation, and evidentiary hearings, the bankruptcy court found that A&C had willfully violated the automatic stay by sending billing statements to the Richardsons that were addressed in a manner that made it appear the statements were directed to Mr. Richardson personally, and awarded the Richardsons reasonable attorney's fees incurred in enforcing the automatic stay. The bankruptcy court did not find evidence to support an award of either emotional distress or punitive damages.

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