Schwartz-Tallard v. America's Servicing Co. (In re Schwartz-Tallard)

Summarized by Lovee Sarenas , Sklar Hirsh
13 years 8 months ago

Citation:

None as of yet.

Tag(s):

Ruling:

In REVERSING in part and AFFIRMING in part, a bankruptcy court's decision denying fees, the Bankruptcy Appellate Panel for the Ninth Circuit held that a debtor is entitled to attorney's fees as actual damages pursuant to 11 USC sec. 362(k)(1) in connection with defending an appeal of a bankruptcy court's decision that the automatic stay was violated. The Panel rejected the appellant's position that the Ninth Circuit's decision in Sternberg v. Johnston, 595 F.3d 937 (9th Cir. 2010), cert denied 131 S.Ct. 102 (2010) which denied attorney's fees in pursuit of an adversary proceeding to recover actual damages for violation of the automatic stay. The Panel found that unlike Sternberg, the debtor in the instant case was forced to defend the bankruptcy court's decision in his favor that the automatic stay was violated on appeal and was not using the statute as a "sword" to pursue damages against a creditor. As such, the Panel explained the debtor's action did not run afoul of the principle set forth in Sternberg that limits the application of 362(k) to actual damages resulting from violation of the automatic stay. The Panel also found that alternatively, the appellate panel cannot consider sanctions arising from Fed. R. Bankr. P. 9011 and under 11 USC sec., 105 when the bankruptcy court did not find sanctions under Rule 9011 and the debtor failed to allege facts that would warrant sanctions under Sec. 105.

Procedural context:

Appeal from decision of Hon. Linda Riegle, Bankruptcy Judge. Debtor moved for sanctions under sec. 362(k) after creditor foreclosed in violation of the automatic stay. Bankruptcy court granted motion under sec. 362(k) and Rule 9011. Creditor appealed to the District Court. District Court affirmed finding of automatic stay violation but reversed award of sanctions under Rule 9011 for lack of factual support for the decision. Debtor moved for attorneys' fees under sec. 362(k) incurred in defending the appeal to the district court. Bankruptcy court denied motion. Debtor appealed to the 9th Cir. BAP.

Facts:

Debtor Irene Michelle Schwartz-Tallard ("Debtor") filed a chapter 13 case. America's Servicing Company ("ASC") is the servicing company for the loan that secured Debtor's home in Henderson, Nevada. Although Debtor has made all postpetition mortgage payments, ASC sought relief from the automatic stay alleging under penalty of perjury that the Debtor failed to make the January and February 2009 mortgage payments. Debtor failed to oppose the relief from stay motion which was granted. Debtor found out that her home was in foreclosure status in April 2009 after ASC rejected acceptance of her April mortgage payment. Debtor challenged assertion that she defaulted on payments and sought to set aside the order lifting the stay. ASC failed to oppose the motion to set aside relief from stay ruling which the bankruptcy court granted. Notwithstanding, ASC foreclosed on Debtor's home. Debtor sought sanctions for violating the stay under sec. 362(k) and under Fed. R. Bankr. P. 9011 for mispresenting facts to the court regarding missed mortgage payments which the Court granted. Subsequent appeals happened leading up to the appeal to BAP for attorneys' fees.

Judge(s):

Bankruptcy Appellate Panel Judges PAPPAS, DUNN and KRISCHER.

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