Creditor sanctioned for violating automatic stay

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A creditor who received notice of a bankruptcy filing and then contacted the debtor threatening criminal action if she did not pay, willfully violated the automatic stay and was ordered to pay $170 in actual damages and $500 in punitive damages.

Background

This matter comes before the court on a motion for contempt for violation of automatic stay filed by the debtor, Lisalyn Merritt Wright, against Eddy Abdelmessih. An evidentiary hearing was conducted Nov. 7, 2019. At the conclusion of the hearing, the court took the matter under advisement.

Analysis

The court finds by clear and convincing evidence that the respondent willfully violated the automatic stay of 11 U.S.C. § 362(a). Abdelmessih had notice of the bankruptcy on Sept. 26, 2019, when he received the amendment adding him as a creditor. After receiving notice of the bankruptcy filing, Abdelmessih contacted Wright by email threatening to take criminal action if she did not pay Abdelmessih $2,000.

The Fourth Circuit has made it clear, albeit in a series of unpublished opinions, that the automatic stay does not apply to criminal prosecutions. However, threatening a debtor with criminal prosecution to collect a civil debt while the stay in effect is a different matter. Moreover, even if merely threatening the criminal prosecution were excepted from the stay, the respondent’s continued calls to Wright, which he did not dispute, with knowledge the stay was in effect are sufficient to establish a willful violation of the stay.

Under 11 U.S.C. § 362(k)(1), “an individual injured by any willful violation of a stay provided by this section shall recover actual damages, including costs and attorneys’ fees, and, in appropriate circumstances, may recover punitive damages.” Initially, Wright testified she suffered no financial harm as a result of the respondent’s actions. However, Wright did testify that she had to take a half day off work to testify in court, and that as a hairdresser she charges $85 per customer. The court will allow $170 in actual financial loss as actual damages. Wright testified that she did not incur any attorney’s fees in connection with this action. Thus, the court does not award any attorneys’ fees.

Wright testified at the hearing that the Facebook message from Abdelmessih terrified and embarrassed her. She also testified that she assumed she was going to be served with a warrant and arrested. Despite this testimony, Wright failed to provide any corroborating evidence that she experienced significant emotional harm. Thus, the court finds that there is insufficient evidence to award Wright emotional distress damages.

Under Section 362(k)(1), the court may grant punitive damages in “appropriate circumstances.” Abdelmessih’s aggressive stance in attempting to collect the $2,000 by threatening criminal action and repeatedly calling Wright with full knowledge of the stay being in effect satisfies this threshold. The court finds sufficient “egregious or vindictive conduct” in order to justify an award of punitive damages of $500.

Wright v. Abdelmessih, No. 19-71163, Dec. 3, 2019. WDVA Bankr. at Roanoke (Black). VLW No. 019-4-032, 9 pp.