Dwain W. Tate - Adversary Proceeding

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S. Martin Teel, Jr.

United States Bankruptcy Judge

UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF COLUMBIA

In re )

)

DWAIN W. TATE, ) Case No. 19-00237

)

Debtor. ) (Chapter 13)

)

)

DWAIN W. TATE, )

)

Plaintiff, )

)

Vv. ) Adversary Proceeding No.

) 19-10009

FATRFAX VILLAGE I )

CONDOMINIUM, et. al., )

)

Defendant. )

MEMORANDUM DECISION AND ORDER RE MOTIONS FOR SUMMARY JUDGMENT

The plaintiff in this adversary proceeding, Dwain W. Tate

(“Tate”), the debtor in the main bankruptcy case, has filed a

second amended complaint seeking (1) declaratory relief voiding a

foreclosure sale of property located at 3939 Pennsylvania Ave.,

SE, Unit 201, Washington, DC 20020 (the “Property”) (“Count I”)

and (2) damages pursuant to 11 U.S.C. §$ 362(k) (1) for the

defendants’ having willfully violated the automatic stay (“Count

II”). The defendants have now filed a Motion for Summary

Judgment (Dkt. No. 36), which Tate has opposed in an opposition

(Dkt. No. 37) which includes a motion for summary judgment (which

amounts to a motion for partial summary judgment) decreeing that

the defendants willfully violated the automatic stay, with

damages to be fixed later. I will grant the defendants’ motion

as to Count I, but will deny it as to Count II. As to Count II,

I will grant Tate partial summary judgment decreeing that, within

the meaning of 11 U.S.C. § 362(k)(1), the defendants “willfully”

violated the automatic stay.

I

FACTUAL BACKGROUND

Tate is the son of Annetta M. Tate (“Ms. Tate”), who owned

the Property until her death. After his mother passed away

intestate, Tate, the heir to the Property, continued to make the

monthly payments on the mortgage and condominium fees, but Ms.

Tate remained the “named owner” according to the deed on file

with the Recorder of Deeds and the Office of Tax and Revenue tax

records. Tate eventually fell delinquent on the payment of the

condominium fees, and the condominium association, Fairfax

Village Condominium I (“Fairfax Village”), a defendant herein,

filed and served a Notice of Foreclosure regarding the Property.

The foreclosure sale was set for April 11, 2019. After Tate

filed his bankruptcy petition on April 10, 2019, his counsel

informed Brian Fellner, who is counsel for Fairfax Village and

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individually a defendant herein, of the filing of the bankruptcy

and of Tate’s interest in the Property as Ms. Tate’s heir.

Despite this notice, the foreclosure sale proceeded on April 11,

2019. On April 14, 2019, Tate commenced this adversary

proceeding, and on April 19, 2019, Tate filed an amended

complaint (Dkt. No. 7) seeking declaratory relief voiding the

foreclosure sale and damages for violation of the automatic stay.

Upon consideration of the defendants’ Motion to

Dismiss (Dkt. No. 19) regarding Tate’s amended complaint, the

court issued its Memorandum Decision And Order Re Motion To

Dismiss And Directing Plaintiff To Provide A More Definite

Statement (Dkt. No. 28) (“Memorandum Decision And Order”). In

that Memorandum Decision And Order, the court ruled that if Tate

had a prepetition equitable interest in the Property arising from

his status as Ms. Tate’s heir, that such an interest would be a

valid basis for the relief sought in the amended complaint, and

directed Tate to provide a more definite statement of the basis

for such an equitable interest. Thereafter, Tate filed a second

amended complaint (Dkt. No. 32) complying with the court’s

Memorandum Decision And Order. In response, the defendants filed

an answer (Dkt. No. 34) to the second amended complaint in which

they conceded, based on the court’s Memorandum Decision And

Order, that the debtor had an equitable interest in the Property

and agreed to unwind the foreclosure sale. Subsequently, on

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August 6, 2019, the defendants filed the present Motion for

Summary Judgment, and on August 13, 2019, Tate filed his

opposition which included a motion that summary judgment be

entered in his favor as to the issue of whether there was a

willful violation of the automatic stay.

II

OVERVIEW

Fed. R. Civ. P. 56(a), made applicable in this court under

Fed. R. Bankr. P. 7056, provides that “[t]he court shall grant

summary judgment if the movant shows that there is no genuine

dispute as to any material fact and the movant is entitled to

judgment as a matter of law.” When evaluating a motion for

summary judgment, “[t]he court need consider only the cited

materials, but it may consider other materials in the record.”

Fed. R. Civ. P. 56(c)(3).

The defendants’ Motion for Summary Judgment argues (1) that

Tate’s request for declaratory judgment is moot in light of the

defendants’ having unwound the foreclosure sale, and (2) Tate is

not entitled to attorney’s fees arising from the defendants’

violation of the automatic stay, either because the violation of

the automatic stay was not willful, or because Tate failed to

mitigate his damages. As set forth below, because there is no

genuine dispute as to any material fact regarding Count I, the

defendants are entitled to summary judgement in their favor as a

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matter of law. As to the question of willfulness under Count II,

the material facts are not in genuine dispute, and on those facts

the law requires a finding that the defendants’ conduct

constituted, within the meaning of § 362(k)(1), a willful

violation of the automatic stay, such that they are not entitled

to summary judgment in that regard and that Tate is entitled to

partial summary judgment in that regard. Finally, as to the

question of mitigation of damages, there are material disputes of

fact as to whether any conduct of Tate or his counsel was

inconsistent with the duty to mitigate damages, and summary

judgment based on this is therefore inappropriate as to Count II.

I will now address each of these issues in detail.

II

TATE’S REQUEST FOR DECLARATORY RELIEF

The defendants request summary judgment in their favor as to

Tate’s request for a declaratory judgment because, in response to

the court’s Memorandum Decision and Order, “the foreclosure sale

has already been canceled, the deposit refunded to the highest

bidder, and a cancelation [sic] filed with the Recorder of

Deeds,” thus rendering such relief moot. Tate does not dispute

that the defendants have rescinded the foreclosure sale, or

present any argument as to why the defendants’ undoing the

foreclosure does not render Count I of the second amended

complaint moot. There is no reason not to treat the reversal of

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the foreclosure as mooting the request for declaratory relief.

See Galope v. Deutsche Bank Nat. Trust Co., 566 Fed. Appx. 552,

553 (9th Cir. 2014) (“rescission of the [foreclosure] sale ...

mooted [debtor’s] claims for injunctive and declaratory

relief”).1 Accordingly, the defendants are entitled to summary

judgment as to Count I.

III

TATE’S REQUEST FOR DAMAGES

The defendants seek summary judgment in their favor as to

Tate’s Count II requesting that the court find that the

defendants willfully violated the automatic stay and that Tate is

entitled to damages. The defendants contend that summary

judgment is appropriate for two reasons. First, they argue that

the applicable state law basis for Tate’s interest in the

Property was too ambiguous to render their violation of the

automatic stay “willful.” I conclude that the law was not

1 It is true that “so long as the plaintiff has a cause of

action for damages, a defendant’s change in conduct will not moot

the case,” Buckhannon Bd. & Care Home, Inc. v. West Va. Dep’t of

Health, 532 U.S. 598, 608-09 (2001), and that this principle

applies even where a plaintiff has sought declaratory or

injunctive relief. See Libbey v. Village of Atlantic Beach, 982

F. Supp. 2d 185, 200 fn.7 (citing cases). However, in this

adversary proceeding, Tate has separately stated a claim for

damages in Count II, so it is not necessary to retain Count I for

the purpose of awarding potential damages. See Galope, 566 Fed.

Appx. at 553 (distinguishing moot claims for declaratory and

injunctive relief from claims for damages pursuant to

§ 362(k)(1)); Shadduck v. Rodolakis, 221 B.R. 573, 580 (Bankr. D.

Mass. 1998) (holding similarly).

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ambiguous and that Tate is entitled to partial summary judgment

decreeing that there was a willful violation of the automatic

stay. Second, the defendants argue that Tate is not entitled to

attorney’s fees because he failed to mitigate damages. For the

reasons set forth below, I reject the defendants’ arguments.

A

DEFENDANTS’ ARGUMENT THAT THE LAW WAS AMBIGUOUS

The defendants argue, relying on this court’s rulings in In

re Flowers, 94 B.R. 3 (Bankr. D.D.C. 1988), and In re Stancil,

487 B.R. 331 (Bankr. D.D.C. 2013), that there was no willful

violation of the automatic stay because state law was uncertain

or unsettled regarding the ownership rights of Tate in the

Property.2 In support of this argument, the defendants merely

cite the court’s statement in Flowers, 94 B.R. at 8, that

2 An injunction ought to give explicit notice of what

conduct is outlawed before sanctions are imposed for engaging in

the outlawed conduct. Taggart v. Lorenzen, 139 S.Ct. 1795, 1802

(2019). It follows that in the case of civil contempt, an

objective test applies that civil contempt does not lie where

there is a fair ground of doubt as to the wrongfulness of the

defendant’s conduct. Taggart, 139 S.Ct. at 1801, 1804. The same

test applies to a proceeding under § 362(k): a violation of the

automatic stay is not “willful” when there is fair ground of

doubt as to whether the creditor’s conduct violated the automatic

stay. The creditor may have intended its act, but with there

being fair ground of doubt that the automatic stay applied, the

creditor cannot be said to have willfully violated the automatic

stay. A strict liability standard does not apply. See In re

Univ. Med. Ctr., 973 F.2d 1065, 1088-89 (3d Cir. 1992) (a

violation of an automatic stay is not “willful” if the law

regarding the alleged violation is sufficiently unsettled); In re

Seymoure, Nos. 07–4960, 07–4967, 2008 WL 1809309, at *3 (Bankr.

D.N.J. Mar. 12, 2008) (same).

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“[a]lthough a debtor’s property rights are generally controlled

by state law, the fact that such differing results have been

reached on the questions now before this Court, in jurisdictions

having seemingly similar state laws, would dictate that no

contempt be found here,” without actually providing any examples

of such disparate results.3 And in fact, the Bankruptcy Court

for the District of Maryland has held under Maryland law, which

influenced the District of Columbia’s Probate Reform Act of 1980,

D.C. Code §§ 20-101 et seq. (1981) (see Richardson v. Green, 528

A.2d 429, 436-37 (D.C. 1987)), that it was “clear” that the

debtor, as heir and beneficiary of his mother’s intestacy estate,

held an equitable interest in his deceased mother’s Property

notwithstanding his failure, as the personal representative of

her estate, to distribute the Property to himself in probate.

See In re Bunch, 249 B.R. 667, 670 (Bankr. D.Md. 2000). More

generally, courts applying state law have tended to conclude that

when a debtor’s interest in the decedent’s estate vests

prepetition, this interest becomes the property of the estate,

3 The defendants’ Motion to Dismiss (Dkt. No. 19) cited

case law in support of its argument that some interests (for

example, a contingent salary bonus) might be too remote to become

property of the bankruptcy estate, but that general principle is

insufficient to establish that the relevant District of Columbia

laws were ambiguous.

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even if probate has not yet occurred.4 See, e.g., Matter of

Chenoweth, 3 F.3d 1111 (7th Cir. 1993) (involving will); In re

Chappel, 189 B.R. 489 (9th Cir. BAP) (citing Chenoweth); Gan B,

LLC v. Sims, 575 B.R. 375 (N.D. Ill. 2017) (applying Chenoweth to

intestacy estates); In re Anderson, 128 B.R. 850, 851, 856-57

(D.R.I. 1991) (holding that debtor’s argument that debtor’s

interest under will did not belong to the bankruptcy estate was

so frivolous as to require the imposition of sanctions under Fed.

R. Civ. P. 11 and 28 U.S.C. § 1927) (“Few cases exist where a

lawyer has even argued that a prepetition testamentary

entitlement should be excluded from the bankruptcy estate under

[11 U.S.C. §] 541.”).

Even without relying on analogous decisions construing other

states’ laws, I find no ambiguity as to legal basis for the

existence of the automatic stay in this case. D.C. Code § 20-105

4 A debtor’s entitlement to property of a decedent’s estate

may be insufficiently vested to become property of the estate.

See, e.g., In re Murray, 147 B.R. 688 (Bankr. E.D.Va. 1992)

(under Virginia’s law, widow’s elective one-third share in

husband’s decedent’s estate after payment of that estate’s debts

was not property of her bankruptcy estate because her entitlement

to an elective share would only vest after the satisfaction of

other obligations). A debtor may also have an interest in a

decedent’s estate under § 541(a)(1) that is too contingent to

qualify for some bankruptcy purpose. See In re Stoner, 487 B.R.

410 (Bankr. D.N.J. 2013) (debtor’s contingent interest in surplus

of father’s decedent’s estate was property of the bankruptcy

estate, but debtor’s interest was insufficient to claim a

homestead exemption on the proceeds from sale of the father’s

home). Such distinguishable cases do not show that the District

of Columbia law at issue is ambiguous.

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provides: “All property of a decedent shall be subject to this

title and, upon the decedent’s death, shall pass directly to the

personal representative, who shall hold the legal [i.e., not

equitable] title for administration and distribution of the

estate” (emphasis added). In an early case interpreting

§ 20-105, the Court of Appeals affirmed and adopted the Superior

Court’s opinion holding that § 20-105 abolished nonjudicial

dispositions of probate estates (i.e., dispositions without the

appointment of a personal representative). Richardson, 528 A.2d

at 432. The Superior Court’s opinion provides a detailed account

of the history leading to the adoption of § 20-105, beginning by

noting that “[a]t common law, title to personalty passed to the

executors or administrators and title to realty passed by

operation of law to the decedent’s heirs or devisees, subject to

the rights of creditors.” Id. (citations omitted). The opinion

further explains that the D.C. City Council rejected the Uniform

Probate Code’s concept of vesting title directly in (intestate)

heirs or (testamentary) legatees subject to a “power over title”

given to the personal representative, and instead opted, via

§ 20-105, to give the personal representative the same legal

title over real property as the personal representative

traditionally had over personal property at common law, in the

hope of expediting the administration of probate estates and

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creating safeguards for the rights of heirs and creditors. Id.

at 432-434.

At common law, however, “[t]he title in the executor ... is

a mere legal title for purposes of administration, and the

beneficiary has an inchoate or equitable interest.” 6 William J.

Bowe & Douglas H. Parker, Page on the Law of Wills § 59.2, at 427

(rev. ed. 2005), quoted in Reis v. Hazelett Strip-Casting Corp.,

28 A.3d 442, 478 (Del. Ch. 2011). Accordingly, § 20-105, in

equating realty and personalty, merely vested the legal title

with the personal representative for purposes of administration

of the estate (as § 20-105 states on its face), while the

equitable title, as at common law, remained with the heir or

legatee. As the court explained in Bunch, 249 B.R. at 670:

[W]hile it is true that the debtor held bare legal

title to the property in question as personal

representative, as the defendants acknowledge, it is

equally clear that he also held an equitable interest

in his mother’s property as the decedent’s sole heir

and sole beneficiary of her estate, which had vested in

him at the time of her death, well before the debtor

filed bankruptcy.

See also U.S. v. Wade, 992 F. Supp. 6, 11 (D.D.C. 1997) (finding

that heirs had an equitable interest in property that entitled

them to assert standing to challenge an order of abatement

concerning that property notwithstanding that § 20-105 vested

legal title in the personal representative). Accordingly, as the

explanation in Richardson makes clear, the effect of § 20-105 was

not to divest heirs of their equitable interest, but to give

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personal representatives more control over the administration of

probate estates by vesting in them legal title over all property

of the estate.

In Douglas v. Lyles, 841 A.2d 1 (D.C. 2004), the Court of

Appeals further provided guidance as to the effect of § 20-105 on

an heir’s interests in the probate estate. In Douglas, the Court

of Appeals reversed the Superior Court’s ruling, which had

invalidated a sales contract between a purchaser and heirs of an

intestate decedent, which they entered into before the

appointment of a personal representative and the distribution of

the probate estate. In so doing the Court of Appeals, id. at 5,

reasoned that the contract was enforceable because

the [heirs] had more than a bare expectancy interest-the

owner of the property was already deceased when the

contract was entered into and, thus, there was no chance

that a change in the laws of intestate succession or

creation of a will could change the outcome. If a person

with a mere expectancy interest [such as a presumptive

heir during the ancestor’s lifetime] can validly assign

that interest and the assignee can obtain specific

performance, then it would follow that [the heirs’]

contract here to sell property in which they had a

specific and quantifiable future interest should be

enforced.

Thus, under District of Columbia law, as codified in § 20-105 and

interpreted in Richardson and Douglas, heirs retain the same

equitable or “quantifiable future interest” in a decedent’s

estate that they possessed at common law, and this interest is

not defeated by the personal representative’s assumption of legal

title for administrative purposes or by the failure of a

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personal representative to be appointed or to administer the

estate and distribute estate assets.

Subsequent rulings by the Court of Appeals are consistent

with this understanding of Richardson and Douglas. In In re

Estate of McKenney, 953 A.2d 336, 343 (D.C. 2008), the Court of

Appeals affirmed the trial court’s ruling voiding an heir’s

assignment of his interest in his mother’s undistributed probate

estate to a third party, because the assignee “made material

misrepresentations that induced [the assignor] to enter into the

agreement.” This ruling only makes sense if the heir had an

assignable interest in the estate notwithstanding that it had not

yet been administered. And in Ackerman v. Abbott, 978 A.2d 1250,

1256-57 (D.C. 2009), the Court of Appeals upheld a conveyance by

the beneficiary of a trust that had been named in a will as the

legatee of the testator’s interest in property, reasoning that

while legal title to [the decedent’s] undivided one-half

interest in the Property was in the personal

representative, D.C. Code § 20-105, [the legatee trust]

had an enforceable right to require the personal

representative to convey the property to it under the

terms of the will (subject, to be sure, to any

outstanding creditor claims and expenses of

administration, which do not appear to be an issue here),

and [the legatee trust beneficiary], in turn, had the

right to require [the legatee trust] to reconvey the

Property to her. Since real property was involved, both

rights were specifically enforceable. Douglas, supra,

841 A.2d at 4. Accordingly, at the time of [the legatee

trust beneficiary’s] deed to the trusts, both [the

legatee trust] and [the legatee trust beneficiary] as

beneficiary of the principal had an existing interest in

the Property, albeit a theoretically provisional one,

that was enforceable in equity. See id. at 4-5. In any

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realistic sense, a listing of the assets of [the legatee

trust] and of [the legatee trust beneficiary] at that

point would reflect in some manner the interests of each

in the Property, whether termed provisional, contingent,

inchoate or otherwise.

Thus, one further sees from Ackerman that an heir has an interest

in a decedent’s estate that vests upon the death of the decedent.

From these rulings of the Court of Appeals, it is clear that

there is no ambiguity as to the effect of § 20-105 on Tate’s

interests in the Property: upon Ms. Tate’s death, Tate received a

“specific and quantifiable” inchoate or equitable interest in the

Property. Because it is well-settled that “[t]he bankruptcy

estate is comprised of ‘all legal or equitable interests of the

debtor in property as of the commencement of the case,’” and that

§ 541(a)(1) “is deliberately broad in scope,” In re Graves, 609

F.3d 1153, 1156 (10th Cir. 2010) (citing United States v. Whiting

Pools, Inc., 462 U.S. 198, 204-05 (1983)), it follows that Tate

had an unambiguous prepetition equitable interest that became

property of the bankruptcy estate.

In light of the defendants’ failure to provide statutory or

precedential support for their claim that D.C. law was

“ambiguous” as to Tate’s interest, it is possible that the

defendants meant to argue that their counsel had a good faith but

mistaken belief about District of Columbia law, and that this

mistaken belief reflected that the law was ambiguous. This

argument fails. Just as good faith is not a defense to civil

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contempt (see McComb v. Jacksonville Paper Co., 336 U.S. 187,

191, 69 S.Ct. 497, 93 L.Ed. 599 (1949)), good faith is not a

defense to a § 362(k) claim. Stancil, 487 B.R. at 343.

“Moreover, the reliance on the erroneous advice of counsel does

not establish that the law was unsettled as to whether an

automatic stay had arisen.” Id. at 344.

The defendants’ Motion to Dismiss cited Richardson and

Douglas, which, as I have concluded above, plainly hold that an

heir is vested with the same equitable interest in property as

the heir received at common law. Accordingly, even if a good-

faith exception were applicable to the defendants’ proceeding

with the foreclosure sale, that exception could not extend to any

actions taken after the defendants became aware, or should have

become aware, of Richardson and Douglas while conducting research

for the Motion to Dismiss.5 See In re Grinspan, 597 B.R. 725,

5 The defendants’ Motion to Dismiss relied on Richardson

and Douglas for propositions that are squarely contradicted by

those cases, namely: (1) that the debtor had only an expectancy

interest in the Property (contradicted by Douglas) and (2) that

the personal representative’s legal title foreclosed any interest

of the debtor as an heir (contradicted by Douglas and by

Richardson clearly characterizing § 20-105 as giving the personal

representative legal title for administrative ease). Moreover,

the defendants, in their response to Tate’s opposition to their

Motion to Dismiss, attempted to distinguish Bunch, upon which

Tate relied in his opposition to the Motion to Dismiss, on the

basis that it was applying Maryland law, even though Richardson

explicitly notes that § 20-105 was based on the Maryland law at

issue in Bunch, and even cites the legislative history of the

Maryland law.

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744-45 (Bankr. E.D.N.Y. 2019) (creditor who initially violated

automatic stay without actual notice willfully violated stay upon

taking further actions after receiving actual notice of the

stay); In re Warren, 532 B.R. 655, 662 (Bankr. D.S.C. 2015)

(holding similarly).

In summary: District of Columbia law is not ambiguous as to

the existence of Tate’s interest in the Property at the

commencement of the case, and therefore the law is not ambiguous

as to the existence of the automatic stay when the defendants

proceeded with the foreclosure sale. There is no genuine dispute

as to the material facts, and as a matter of law they establish

that under unambiguous District of Columbia law Tate plainly had

an interest in the Property, that such interest was plainly

protected by the automatic stay, that the defendants were

informed of Tate’s interest in the Property and of the

commencement of the bankruptcy case, and that the defendants

nevertheless proceeded to sell the Property at a foreclosure

sale, thus violating the automatic stay. Therefore, I reject the

defendants’ argument that their violation of the stay was not

willful.

Tate’s opposition to the defendants’ Motion for Summary

Judgment itself sought partial summary judgment as to the issue

of willfulness. The defendants’ reply seems to have overlooked

that Tate moved for summary judgment. However, in replying to

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that opposition the defendants stated: “The remaining question

is: was the law sufficiently clear to tell them that in advance,

thus making their action a willful violation of the Automatic

Stay?” They have briefed that question and I have concluded that

the law was sufficiently clear to tell the defendants that a

foreclosure sale would violate the automatic stay. Accordingly,

it is appropriate to grant partial summary judgment ruling that

there was a willful violation of the automatic stay, such that

Tate is entitled under § 362(k)(1) to recover actual damages,

including costs and attorney’s fees, and, if appropriate,

punitive damages.

B

DEFENDANTS’ ARGUMENT THAT DEBTOR DID NOT MITIGATE DAMAGES

The defendants’ Motion for Summary Judgment further requests

that the court deny Tate’s request for fees because Tate

“breached his duty to mitigate damages” and “has raced to the

courthouse steps and has churned this case repeatedly – an

approach that makes no economic or practical sense whatsoever.”

Strictly speaking, “[n]othing in the Bankruptcy Code or

Federal Rules of Bankruptcy Procedure suggests that such a duty

[to mitigate] exists.” In re Rijos, 263 B.R. 382, 390 (1st Cir.

B.A.P. 2001). Neverthless, the defendants’ objection to the

potential use of § 362(k) to generate improper fees is well-

taken, and accordingly, courts have developed a “sound judicial

17

policy that profit-making from violations of the automatic stay

is inherently improper.” In re Silk, 549 B.R. 297, 303 (Bankr.

D. Mass. 2016)(quoting In re Docherty, No. 15-14124, 2016 WL

675835, at *9 (Bankr. N.D. Ohio Feb. 18, 2016)). See also In re

Genesys, Inc., 273 B.R. 290, 296 (Bankr. D.D.C. 2001) (finding

that a debtor has a duty to mitigate damages and fees should not

be “completely overblown”). Nevertheless, for three reasons,

summary judgment is inappropriate regarding the defendants’

argument that Tate has failed to mitigate damages (and has thus

forfeited any entitlement to attorney’s fees).

First, “failure to mitigate is an affirmative defense and

the party asserting it bears the burden of demonstrating the

opposing party’s failure to act reasonably under the

circumstances.” Tri County Industries, Inc. v. District of

Columbia, 200 F.3d 836, 840 (D.C. Cir. 2000). On the evidence

before the court, it is not clear that Tate’s actions in filing

the adversary complaint should be viewed as unnecessarily

“rac[ing] to the courthouse steps” in an attempt to profit from

the stay violation rather than as reasonable under the

circumstances: not only do debtors not have an obligation to

notify creditors before seeking relief under § 362(k), see Silk,

549 B.R. at 303, but the defendants admit that they proceeded

with the foreclosure sale despite notice of the pendency of the

case and of Tate’s alleged interest in the Property. Nor is it

18

clear why Tate’s opposition to the Motion to Dismiss, his second

amended complaint (filed in response to this court’s Memorandum

Decision And Order), or his opposition to the Motion for Summary

Judgment should be interpreted as “churn[ing] this case

repeatedly.” With regard to the defendants’ Motion to Dismiss in

particular, I find the words of the court in In re Voll, 512 B.R.

132, 142 (Bankr. N.D.N.Y. 2014) to be applicable:

the [creditor] elected to oppose Debtors’ motion on the

basis that no violation of the automatic stay occurred,

thereby requiring Debtors’ counsel to prove the

violation. It did not, in contrast, acknowledge the

violation and limit its arguments to issues of mitigation

of damages. Had it done so, the court would take more

seriously the contention that a mere phone call was all

that was reasonably necessary to resolve the matter.

Accordingly, the defendants have not shown that Tate’s actions

were unreasonable under the circumstances, and have not satisfied

their burden as to mitigation of damages such as to be entitled

to summary judgment on that issue.

Second, even if some of Tate’s actions were not consistent

with his duty to mitigate damages, it is unclear that this serves

as a basis for precluding an award of attorney’s fees outright.

Moreover, even if in some cases an outright disallowance of all

fees would be appropriate, such should not be the case here:

“creditors may not deny that a violation of the stay was willful

then, after forcing the debtor to litigate the matter, baldly

claim that debtor-counsel’s fees were unreasonable or

unnecessary.” Voll, 512 B.R. at 142 (citing Duby v. United

19

States (In re Duby), 451 B.R. 664, 677 (1st Cir. B.A.P. 2011); In

re Robinson, 228 B.R. 75, 86-87 (Bankr. E.D.N.Y. 1998)).

Third, while the defendants’ concern about abuse of § 362(k)

is valid, any such abuse does not warrant an outright denial of

fees: § 362(k) itself constrains counsel’s ability to collect an

inflated fee, making outright disallowance unnecessary. Under

§ 362(k), a plaintiff “can recover as actual damages only those

attorney fees related to enforcing the automatic stay and

remedying the stay violation . . . .” Sternberg v. Johnston,

595 F.3d 937, 940 (9th Cir. 2010). The term “actual damages” is

generally understood to limit fee awards under § 362(k) to those

fees generated by those activities of the debtor’s counsel that

are “reasonable and necessary.” In re Prusan, 495 B.R. 203, 208

(Bankr. E.D.N.Y. 2010) (citing In re Robinson, 228 B.R. 75, 85

(Bankr. E.D.N.Y. 1998)). Consequently, when a court rules that

the debtor is entitled to recover attorney’s fees under § 362(k),

the court retains the authority to review the reasonableness of

the fees requested, including their necessity. See In re Collum,

604 B.R. 61, 70 (Bankr. M.D. Ala. 2019) (“courts have broad

discretion to determine the appropriate amount” of attorney’s

fees awarded pursuant to § 362(k).”) (citing In re Smith, 296

B.R. 46, 62 (Bankr. M.D. Ala. 2002)). The same principles hold

true in this adversary proceeding. Because the defendants have

not established that Tate has failed to mitigate damages to such

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an extent as to foreclose an award of attorney’s fees, Tate has a

right to present evidence to the court as to the appropriate

amount of attorney’s fees, notwithstanding that the fee award may

ultimately be minimal and may be reduced to the extent of fees

incurred by reason of a failure to mitigate such damage.

Accordingly, the court will deny the Motion for Summary

Judgment as to Count II, and the court will hold a scheduling

conference for a trial on the amount of damages to which Tate is

entitled pursuant to § 362(k).

IV

For the foregoing reasons, it is

ORDERED that the defendants’ Motion for Summary Judgment

(Dkt. No. 36) is granted in part, and Count I, seeking

declaratory relief is dismissed on the grounds of mootness. It

is further

ORDERED that the part of Tate’s motion for summary judgment

(Dkt. No. 37) seeking a declaratory judgment under Count I is

DENIED. It is further

ORDERED that the defendants’ Motion for Summary Judgment

(Dkt. No. 36) is otherwise DENIED. It is further

ORDERED that Tate’s motion for summary judgment (Dkt. No.37)

is granted in part, as follows: the court decrees that within the

meaning of 11 U.S.C. § 362(k) the defendants willfully violated

the automatic stay of 11 U.S.C. § 362(a) such that Tate is

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entitled to recover actual damages, including costs and

attorney’s fees, and, if appropriate, punitive damages. It is

further

ORDERED that on March 3, 2020, at 10:30 a.m., the court will

hold a status conference.

[Signed and dated above.]

Copies to: Recipients of e-notifications of filings;

EJF Real Estate Services

David Hanh

Clarence Hutton

1428 U Street, NW

2nd Floor

Washington, DC 20009

Alex Cooper Auctioneers Inc.

4910 Massachusetts Ave., NW

#100

Washington, DC 20016

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