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ORDERED in the Southern District of Florida on January 12, 2024.

Scott M. Grossman, Judge

United States Bankruptcy Court

UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF FLORIDA

FORT LAUDERDALE DIVISION

www.flsb.uscourts.gov

In re:

MICHAEL MCINTOSH and Case No. 02-25039-SMG

AMANDA MCINTOSH,

Chapter 7

Debtors.

ee

MEMORANDUM OPINION AND ORDER

SANCTIONING FLORIDA CREDIT RESEARCH, INC.

FOR VIOLATING THE DISCHARGE INJUNCTION

When Amanda McIntosh — a single mother and registered nurse — checked her

bank balance while at work one day, she “freaked out.” The bank app on her phone

showed a negative balance, even though she had over $21,000 on deposit.

Ms. McIntosh was shocked and thought she had been the victim of identity theft. But

she was not the victim of identity theft. No, she was the victim of an overzealous

creditor – Florida Credit Research, Inc. – that unlawfully garnished her bank

accounts to collect a discharged debt.

Ms. McIntosh is now before this Court – the Court that issued her bankruptcy

discharge over twenty years ago – seeking to hold Florida Credit Research in

contempt of court and requesting actual and punitive sanctions for violating the

discharge injunction. Florida Credit Research has since released its writ of

garnishment, ceased its collection efforts, and acknowledged the debt it sought to

collect had in fact been discharged. But it argues it should not be held in contempt

because, under the Supreme Court’s 2019 decision in Taggart v. Lorenzen,1 there was

a “fair ground of doubt”2 as to whether collection of this debt violated the discharge

injunction. Under this standard, civil contempt may be appropriate only “when the

creditor violates a discharge order based on an objectively unreasonable

understanding of the discharge order or the statutes that govern its scope.”3

After separate trials first on entitlement to sanctions and then on the amount

of sanctions, the Court concludes that Florida Credit Research’s actions were based

on an objectively unreasonable understanding of Ms. McIntosh’s bankruptcy

discharge, and that there was no fair ground of doubt that collection of this twenty-

year-old, discharged debt violated the discharge injunction. Florida Credit Research

is therefore in contempt of court and will be sanctioned in the amount of $64,686.93,

1 587 U.S. ---, 139 S. Ct. 1795 (2019).

2 Id. at 1799.

3 Id. at 1802 (emphasis added).

consisting of $33,124.62 in actual compensatory sanctions for legal fees and costs

incurred, $10,000.00 for emotional distress, and $21,562.31 in punitive sanctions.

I. Jurisdiction, Authority, Venue, and Procedure.

Under Bankruptcy Code section 524(a)(2), a bankruptcy discharge “operates

as an injunction against the commencement or continuation of an action”4 to collect

a discharged debt.5 “Congress intended the discharge injunction ‘to eliminate any

doubt concerning the effect of the discharge as a total prohibition of debt collection

efforts’ and to ensure that ‘once a debt is discharged, the debtor will not be pressured

in any way to repay it.’”6 “The cessation of pressure to pay in and of itself is a prime

purpose of the discharge, a tradeoff for debtors having subjected themselves to the

rigors of the bankruptcy process.”7

Bankruptcy courts enforce this injunction through their statutory contempt

powers granted under Bankruptcy Code section 105(a), which provides that “the

bankruptcy court ‘may issue any order, process, or judgment that is necessary or

appropriate to carry out the provisions of [the Bankruptcy Code].’”8 “Together,

sections 524(a)(2) and 105(a) authorize a court to impose civil contempt sanctions for

attempting to collect a discharged debt when there is no objectively reasonable basis

for concluding that the creditor’s conduct might be lawful under the discharge order.”9

In this way, “a court may hold a creditor in civil contempt for violating a discharge

4 11 U.S.C. § 524(a)(2).

5 See In re Roth, 935 F.3d 1270, 1275 (11th Cir. 2019).

6 In re Anderson, 641 B.R. 1, 43 (Bankr. S.D.N.Y. 2022) (quoting S. Rep. No. 989, 95th Cong., 2d Sess.

80-81 (1978); H.R. Rep. No. 595, 95th Cong., 1st Sess. 365-66 (1977)).

7 Id. (citing In re Mooney, 340 B.R. 351, 362 n.29 (Bankr. E.D. Tex. 2006)).

8 Roth, 935 F.3d at 1275 (quoting 11 U.S.C. § 105(a)).

9 Id. (quoting Taggart, 139 S. Ct. at 1801) (cleaned up).

order if there is no fair ground of doubt as to whether the order barred the creditor’s

conduct.”10

The Court has subject matter jurisdiction under 28 U.S.C. § 1334(b),11 because

Ms. McIntosh’s claim for relief arises under Bankruptcy Code sections 727

(discharge), 524 (effect of discharge), and 105 (power of court).12 This matter is a core

proceeding,13 which the Court has authority to hear and determine under 28 U.S.C.

§ 157(b) and the general order of reference from the United States District Court for

the Southern District of Florida.14 “[I]t is ‘well established that the discharge is the

foundation upon which all other portions of the Bankruptcy Code are built.’”15 As the

Court that issued Ms. McIntosh’s discharge order, this Court “‘alone possesses the

power to enforce compliance with and punish contempt of that order,’ and this ‘power

to sanction contempt is jurisdictional.’”16

Venue is proper in this District under 28 U.S.C. § 1409(a). And under Federal

Rule of Bankruptcy Procedure 9020, a motion for contempt is a contested matter

governed by Federal Rule of Bankruptcy Procedure 9014.17

10 Id. (quoting Taggart, 139 S. Ct. at 1799) (emphasis in original).

11 See 28 U.S.C. § 1334(b) (conferring on the district court “original but not exclusive jurisdiction of all

civil proceedings arising under title 11 [the Bankruptcy Code], or arising in or related to cases under

title 11 [the Bankruptcy Code].”).

12 See In re McLean, 794 F.3d 1313, 1319-20 (11th Cir. 2015) (bankruptcy court had jurisdiction to

entertain contempt motion for violation of the discharge injunction).

13 In re Ajasa, 627 B.R. 6, 11 (Bankr. E.D.N.Y. 2021) (“Enforcement of the discharge injunction is a

core proceeding arising under the Bankruptcy Code.”); In re WVF Acquisition, LLC, 420 B.R. 902, 906

(Bankr. S.D. Fla. 2009) (enforcement of the discharge injunction is a core proceeding “because the relief

requested is ‘integrally involved in the bankruptcy court’s authority to enforce its own orders.’”)

(quoting In re Thigpen, 2004 WL 6070299, at *3 (Bankr. S.D. Ala. 2004)).

14 S.D. Fla. Local Rule 87.2(a).

15 Anderson, 641 B.R. at 15 (quoting In re Anderson, 884 F.3d 382, 389 (2d Cir. 2018)).

16 McLean, 794 F.3d at 1318-19 (quoting Alderwoods Grp., Inc. v. Garcia, 682 F.3d 958, 970 (11th Cir.

2012); citing Cox v. Zale Del., Inc., 239 F.3d 910, 917 (7th Cir. 2001)).

17 See id. at 1326.

II. Background.

This matter is before the Court on Ms. McIntosh’s motion for sanctions against

Florida Credit Research for violating the discharge injunction,18 which she filed

together with a motion to reopen her closed twenty-year-old bankruptcy case on April

14, 2023.19 The Court held a preliminary hearing on these motions on May 10, 2023.20

In advance of that hearing, Florida Credit Research filed a response in opposition to

the motion for sanctions21 and Ms. McIntosh filed a reply.22

At the May 10 hearing, the Court granted the motion to reopen23 and scheduled

an evidentiary hearing for August 15, 2023, to consider entitlement to sanctions but

not the amount of any award.24 That was to be the subject of a separate evidentiary

hearing if the Court first found Ms. McIntosh entitled to sanctions against Florida

Credit Research.25 The order setting this first evidentiary hearing contained

deadlines for completion of discovery, for expert and pretrial disclosures, for exchange

of exhibits and objections thereto, and to file briefs in support of and in opposition to

the motion for sanctions.26

Ms. McIntosh and Florida Credit Research timely filed their briefs in advance

of the August 15 evidentiary hearing.27 Two witnesses testified at this evidentiary

18 ECF No. 11.

19 ECF No. 10.

20 ECF No. 14.

21 ECF No. 17.

22 ECF No. 18.

23 ECF No. 19.

24 ECF No. 21.

25 Id.

26 Id.

27 ECF No. 28, 34.

hearing: (1) James Jacobson, who owned both Florida Credit Research and the law

firm of Jacobson, Sobo & Moselle, and (2) Mark Rickard, Florida Credit Research’s

state court counsel, who for many years worked at Jacobson, Sobo, & Moselle, and

who now has his own law firm called Law Guard. At the conclusion of the evidentiary

hearing, after considering the testimony of Mr. Jacobson and Mr. Rickard, along with

the exhibits admitted into evidence28 and certain judicially noticed documents,29 the

Court announced orally its finding that Florida Credit Research had violated the

discharge injunction and that as a result, Ms. McIntosh was entitled to sanctions.

The Court then scheduled another evidentiary hearing for December 12, 2023, to

consider the amount of sanctions.30 The order setting this second evidentiary hearing

provided additional deadlines – for initial, expert, and pretrial disclosures, to

complete discovery, and to exchange and object to exhibits – all related to the amount

of sanctions.31

The Court conducted this second evidentiary hearing on December 12, 2023.

Although Florida Credit Research’s bankruptcy counsel attended, participated in,

and made argument at the hearing, neither Mr. Jacobson, Mr. Rickard, nor any other

client representative of Florida Credit Research was present. The Court heard

testimony from two witnesses – Ms. McIntosh and her daughter. Considering their

28 ECF Nos. 36, 37.

29 ECF No. 38.

30 ECF No. 39.

31 Id.

testimony, the exhibits admitted into evidence,** and the unobjected-to proffers of

counsel, the Court now makes the following findings of fact and conclusions of law.?3

III. Findings of Fact.

A. Ms. McIntosh’s 2002 “No-Asset” Chapter 7 Bankruptcy Case.

Ms. McIntosh filed a joint chapter 7 bankruptcy petition with her then-spouse

Michael McIntosh on July 8, 2002.34 She listed 35 unsecured creditors on her

bankruptcy schedules, including the following $7,400.00 credit card debt incurred in

October 1997 to Direct Merchants Bank, PO Box 21550, Tulsa OK 74121:

Credit Card Purchases

Direct Merchants Bank

PO Box 21550

OK 74121

There was no evidence — and Florida Research Credit has not contended — that this

debt was for anything other than unpaid credit card bills. In other words, Florida

Credit Research has not contended this was a non-dischargeable debt for money to

the extent obtained by false pretenses, a false representation, or actual fraud, or by

use of a materially false written statement;*> for fraud or defalcation while acting in

a fiduciary capacity, embezzlement, or larceny;*° or for willful and malicious injury

by the debtor to another entity or to the property of another entity.?”

82 ECF Nos. 50, 51.

33 See Fed. R. Bankr. P. 9014(c) (Federal Rule of Bankruptcy Procedure 7052, which incorporates

Federal Rule of Civil Procedure 52, applies to contested matters); Fed. R. Bankr. P. 7052; Fed. R. Civ.

P. 52(a).

34 ECF No. 1.

35 See 11 U.S.C. § 523(a)(2).

86 See 11 U.S.C. § 5238(a)(4).

87 See 11 U.S.C. § 523(a)(6).

Ms. McIntosh’s bankruptcy case was a “no-asset” chapter 7 case,38 meaning the

chapter 7 trustee determined there was no non-exempt property available for

distribution to creditors. Because her case was a “no-asset” case, under Federal Rule

of Bankruptcy Procedure 2002(e),39 no deadline to file proofs of claim was ever set.40

On October 22, 2002, Ms. McIntosh received a discharge under 11 U.S.C. § 727.41

B. Florida Credit Research’s 2003 Lawsuit and Judgment.

Florida Credit Research – which was owned by Mr. Jacobson, a now-retired

attorney – was in the business of purchasing bad debts from credit card companies.

It had, over the years, purchased – and then pursued collection of – well over ten

thousand debts. Much of that collection work was done by the law firm of Jacobson,

Sobo & Moselle, which Mr. Jacobson also owned, and where Mr. Rickard worked for

many years.

On March 20, 2003 – five months after Ms. McIntosh received her chapter 7

discharge – Florida Credit Research, as assignee of Metris Companies, Inc., sued her

in state court to collect on a $7,382.90 debt. There was no evidence as to how Florida

Credit Research acquired its claim from Metris Companies, or whether Metris

Companies was Ms. McIntosh’s original creditor, and if not, how (and from whom)

Metris Companies acquired its claim against Ms. McIntosh. Further, due to its age

38 ECF No. 4.

39 See Fed. R. Bankr. P. 2002(e):

(e) NOTICE OF NO DIVIDEND. In a chapter 7 liquidation case, if it appears from the

schedules that there are no assets from which a dividend can be paid, the notice of the

meeting of creditors may include a statement to that effect; that it is unnecessary to

file claims; and that if sufficient assets become available for the payment of a dividend,

further notice will be given for the filing of claims.

40 ECF No. 3.

41 ECF No. 7.

and that it predated the advent of electronic case filing, no copy of the original

complaint could be located.

A copy of Florida Credit Research’s final judgment, however, does exist. It

shows that on November 19, 2003, a Florida state court entered final judgment in

favor of Florida Credit Research, Inc., as assignee of Metris Companies, Inc.,

c/o Jacobson, Sobo & Moselle, and against Ms. McIntosh, for the following amounts:42

Principal $7,382.90

Costs $220.00

Prejudgment Interest43 $4,616.31

Attorneys Fees $800.00

Total $13,019.21, plus statutory interest.

There was no evidence that for the next nineteen-plus years any action was taken to

enforce this judgment.44

C. Florida Credit Research’s 2023 Collection Efforts.

Then on February 6, 2023, Florida Credit Research filed a motion for

proceedings supplementary to execution in state court, seeking to collect on this

nearly twenty-year-old judgment. In an affidavit accompanying that motion,

Mr. Rickard stated that Ms. McIntosh owed $24,839.19 as of that date. Although

nearly twenty years had gone by, Florida Credit Research did not conduct any search

(including a national PACER45 search) to see if its judgment debtor had filed for

42 ECF No. 11, at 10.

43 The amount of prejudgment interest as of November 19, 2003 ($4,616.31) relative to the amount of

principal debt ($7,382.90) is consistent with this debt having been incurred long before Ms. McIntosh

filed her bankruptcy case on July 8, 2002.

44 Under Fla. Stat. § 55.081, a Florida judgment lien expires after 20 years.

45 PACER is the Public Access to Court Electronic Records service, which provides electronic public

access to federal court records. On PACER, registered users can search for a case in the federal court

where the case was filed or search a nationwide index of federal court cases. See

bankruptcy. But Florida Credit Research clearly did some investigation, because it

was able to identify a bank where Ms. McIntosh had money on deposit. A few days

after filing its motion for proceedings supplementary, Florida Credit Research then

sought, obtained, and served on JPMorgan Chase Bank, N.A. a writ of garnishment.

JPMorgan Chase Bank responded that it was holding $21,117.46 in three accounts:

Ms. McIntosh’s savings account, her checking account, and a joint account shared

with her daughter (who was a high school senior at the time).

Shortly thereafter, Ms. McIntosh checked her bank balance on her phone while

at work and “freaked out” because it showed a negative balance. She contacted her

bank, fearing she had been the victim of identity theft. Instead, she learned her

accounts had been garnished. The bank provided her contact information for an

attorney for Florida Credit Research. Ms. McIntosh then called that attorney46 and

asked if this had anything to do with a bankruptcy case she had filed many years ago.

The attorney told her if she had some paperwork regarding her bankruptcy case, she

should send it to him.

Notwithstanding Ms. McIntosh’s testimony – which the Court found to be

credible – Mr. Rickard claims the first time he learned Ms. McIntosh had filed for

bankruptcy was when she served an answer and motion to dissolve the writ of

garnishment on March 21, 2023, to which she attached a copy of the docket and the

https://pacer.uscourts.gov. According to the PACER website “The PACER system was established by

the Judicial Conference in 1988 as a way to improve public access to court information, which then

typically required a trip to the local courthouse. Today, PACER provides the public with instantaneous

access to more than 1 billion documents filed at more than 200 federal courts – nearly all the

documents filed by a judge or the parties in any case.” https://pacer.uscourts.gov/about-us.

46 It was not clear from her testimony if this attorney was Mr. Rickard. But Mr. Rickard was Florida

Credit Research’s only attorney of record on its state court filings in the garnishment proceedings.

creditor list from her 2002 bankruptcy case. That creditor list contained 45 names

and addresses, including “Direct Merchants Bank, PO Box 21550, Tulsa OK 74121.”

Because her bankruptcy case was so old, however, the underlying filings (including

her bankruptcy schedules) were not available electronically on the Court’s CM/ECF

system.

On March 27, 2023 – after clearly being put on notice that Ms. McIntosh had

previously filed for bankruptcy and was asserting this debt had been discharged –

Florida Credit Research nevertheless filed a motion for final judgment in

garnishment in the state court. In its motion, Florida Credit Research asserted that

because neither it nor Metris Companies (the entity from whom Florida Credit

Research claims to have acquired the debt on which it sued to obtain the judgment)

were listed on the creditor list in Ms. McIntosh’s bankruptcy case, this debt was an

“unscheduled” debt that was not discharged under Bankruptcy Code section

523(a)(3). According to Florida Credit Research, it was therefore entitled to a final

judgment in garnishment.

D. Contempt Proceedings Against Florida Credit Research.

On April 14, 2023, Ms. McIntosh moved to reopen her twenty-year-old chapter

7 bankruptcy case47 and filed a motion for sanctions against Florida Credit Research

for violating the discharge injunction.48 This Court then issued a notice of hearing on

April 25, 2023, setting a May 10, 2023 hearing on both the motion to reopen and the

47 ECF No. 10. After the motion to reopen was filed, the Court requested copies of the underlying filings

from archives, which upon retrieval were then placed on the electronic CM/ECF docket.

48 ECF No. 11.

motion for sanctions.49 That same day – April 25, 2023 – Florida Credit Research filed

a voluntary dissolution of the writ of garnishment in state court, which resulted in

Ms. McIntosh finally regaining access to her accounts after more than two months.

At the May 10 hearing, the Court set the August 15 evidentiary hearing to consider

the threshold issue of whether Ms. McIntosh was entitled to sanctions against Florida

Credit Research.

At the outset of the August 15 evidentiary hearing, Florida Credit Research

admitted the debt it was seeking to enforce was the $7,400.00 debt listed on

Ms. McIntosh’s bankruptcy schedules as owed to Direct Merchants Bank. The

evidence at trial showed that in 2003 “Direct Merchants Bank” issued credit card

statements with an address listed as PO Box 21550, Tulsa, OK 74121-1550, and with

directions to “make payments payable to Direct Merchants Bank.”50 That is the same

address Ms. McIntosh listed for this creditor on her bankruptcy schedules.

Mr. Rickard testified that “Direct Merchants Bank” was not an actual bank,

but instead was a registered trademark owned by Metris Companies, which Metris

Companies then licensed to its subsidiary, Direct Merchants Credit Card Bank, N.A.,

to use as a “d/b/a.” Mr. Rickard knew this because he had represented Florida Credit

Research in thousands of collection lawsuits as its attorney, including as an attorney

at Jacobson, Sobo & Moselle, where he had worked from late 1999 through 2014. He

49 ECF No. 14.

50 There was no evidence, however, of any credit card statements issued to Ms. McIntosh for this debt.

The evidence offered and admitted at trial were Direct Merchants Bank credit card statements for

other debtors from roughly the same time period, all from Florida state court lawsuits by Florida

Credit Research, Inc., as assignee of Metris Companies, Inc., filed by the Jacobson, Sobo & Moselle

law firm.

demonstrated an extensive knowledge and understanding of Florida Credit

Research’s practices and procedures in acquiring debts from other companies; the

relationship between Metris Companies and Direct Merchants Bank, from whom

Florida Credit Research had purchased thousands of debts for collection over the

years; and Florida Credit Research’s practices and procedures in seeking to collect

these debts. Consistent with Mr. Rickard’s testimony, Mr. Jacobson also testified that

Florida Credit Research had filed over 10,000 collection actions and did business with

Metris Companies and Direct Merchants Bank on multiple occasions.

At the December 12 evidentiary hearing to consider an appropriate award of

sanctions, the Court heard testimony from Ms. McIntosh and her daughter about the

emotional distress Florida Credit Research’s actions caused Ms. McIntosh. With her

savings and checking accounts frozen pending entry of a final judgment in

garnishment, Ms. McIntosh was unable to provide her daughter with many of the

accoutrements attendant to being a senior in high school – including a new prom

dress and a class ring. Her daughter also could not go on a senior class trip, and

Ms. McIntosh had to delay paying for her daughter’s driving lessons. Although

Ms. McIntosh had previously prepaid for a trip to Chicago with her daughter to

celebrate her senior year, because of the garnishment Ms. McIntosh now had very

little spending money – with the funds she had set aside for meals and entertainment

having been garnished – with which to enjoy this trip with her daughter.

During this time Ms. McIntosh had trouble paying some bills, she had to open

a new bank account to receive her paychecks, and, as a single mother on a nurse’s

salary, she suffered significant emotional distress over how she would be able to pay

for her daughter’s college education. She was also concerned with how she would even

be able to afford lawyers to fight this wrongful garnishment, with the source of

savings she might otherwise have used to pay legal fees having been garnished.

Ms. McIntosh testified that because of the garnishment, she was emotionally

unavailable to share in the joy of her daughter’s senior year due to her worries about

her savings having been garnished for a debt she understood to have been discharged

twenty years earlier.

The Court received evidence of the legal fees and costs Ms. McIntosh incurred

in connection with this matter. Her bankruptcy counsel, Robert Gusrae, Esq., billed

her $19,635.00 in legal fees through November 20, 2023, representing 56.1 hours of

work at $350 per hour. The Court also received (without objection) Mr. Gusrae’s

proffer that he did an additional 4.0 hours of work since that invoice and through the

December 12 hearing, also at $350 per hour, resulting in $1,400.00 in additional fees.

His bill also included $2,707.62 in costs for two depositions. These fees and costs due

to Mr. Gusrae – which the Court finds to be entirely reasonable – total $23,742.62.

In addition to Mr. Gusrae’s fees and costs, Ms. McIntosh presented the invoice

of attorneys Ofer Shmucher, Esq. and Shera Anderson, Esq., who represented

Ms. McIntosh in state court with respect to the writ of garnishment. Their invoice

sought a total of $18,722.00 for 44.09 hours of work. Florida Credit Research objected

to certain entries on that invoice, however, as being duplicative of Mr. Gusrae’s work

or as being unrelated to this bankruptcy case and instead for preparation of a

potential lawsuit under the Federal Fair Debt Collection Practices Act and the

Florida Consumer Collection Practices Act. The Court agrees with Florida Credit

Research that the time spent on these matters is not compensable here, nor is the

work that was duplicative of Mr. Gusrae’s work. The Court therefore finds a reduction

of $9,340.00 from Mr. Shmucher and Ms. Anderson’s bill is appropriate, resulting in

$9,382.00 as reasonable attorneys’ fees for the work they did to fight the writ of

garnishment.

III. Conclusions of Law.

Florida Credit Research argues that because it was enforcing a debt it did not

see listed on Ms. McIntosh’s bankruptcy schedules, it could safely assume the debt

was an unscheduled debt that was not discharged, and if Ms. McIntosh contended

otherwise, it was her burden to prove so. As discussed below, Florida Credit

Research’s position ignores the plain text of Bankruptcy Code section 523(a)(3), turns

the scope of a chapter 7 discharge on its head, and was objectively unreasonable in

every respect.

A. Bankruptcy Discharge Generally.

The goal of most individual chapter 7 debtors is to obtain a discharge of their

prepetition debts under Bankruptcy Code section 727(a).51 Except for certain types of

debts specifically excepted from discharge (more on this below), a chapter 7

bankruptcy discharge “discharges the debtor from all debts that arose before the date

51 11 U.S.C. § 727(a).

of the order for relief under” chapter 7.52 A bankruptcy discharge provides a debtor

with “a financial ‘fresh start’ by ‘releasing the debtor from personal liability with

respect to any discharged debt.’”53 Under Bankruptcy Code section 524,54 a discharge

voids “any past or future judgments on the debt” and operates “as an injunction to

prohibit creditors from attempting to collect or to recover the debt.”55 The discharge

injunction “is perhaps the most important feature of the discharge. That injunction

helps to ensure that the debtor’s ‘fresh start’ is realized by prohibiting creditors from

attempting to collect discharged debts.”56

Violation of the discharge injunction may be punished as contempt of court57

under a bankruptcy court’s “inherent power to punish contempt against it,”58 and

under Bankruptcy Code section 105(a),59 which empowers bankruptcy courts to “issue

any order, process, or judgment that is necessary or appropriate to carry out the

provisions of”60 the Bankruptcy Code. “A finding of civil contempt must be based on

‘clear and convincing evidence’ that a court order was violated.”61 This standard “is

52 11 U.S.C. § 727(b). The date of the order for relief in a voluntary chapter 7 case is the date the

petition is filed. 11 U.S.C. § 301(b).

53 In re Diaz, 647 F.3d 1073, 1087 (11th Cir. 2011) (quoting Tenn. Student Assistance Corp. v. Hood, 541

U.S. 440, 447 (2004)) (cleaned up).

54 11 U.S.C. § 524.

55 Hood, 541 U.S. at 447 (citing 11 U.S.C. §§ 524(a)(1), (2); 3 W. Norton, BANKRUPTCY LAW AND

PRACTICE 2D § 48:1, p. 48-3 (1998)).

56 Diaz, 647 F.3d at 1087 (citing In re Jet Fla. Sys., Inc., 883 F.2d 970, 972 (11th Cir. 1989)).

57 Taggart, 139 S. Ct. at 1801.

58 McLean, 794 F.3d at 1319 (citing Jove Eng’g, Inc. v. I.R.S., 92 F.3d 1539, 1553 (11th Cir. 1996)).

59 Id.

60 11 U.S.C. § 105(a).

61 Jove Eng’g, Inc., 92 F.3d at 1545 (citing Jordan v. Wilson, 851 F.2d 1290, 1292 n.2 (11th Cir. 1988);

Sizzler Family Steak Houses v. Western Sizzlin Steak House, Inc., 793 F.2d 1529, 1534 n.4 (11th Cir.

1986)).

more exacting than the ‘preponderance of the evidence’ standard but, unlike criminal

contempt, does not require proof beyond a reasonable doubt.”62

Although Taggart imposed restrictions on a court’s ability to impose civil

contempt sanctions for violation of the discharge order, nothing in Taggart suggests

any modification to a debtor’s prima facie burden to prove by clear and convincing

evidence that a creditor violated the discharge order.63 What Taggart does is

essentially provide an affirmative defense to the creditor, which only comes into play

after the debtor makes her prima facie case. Thus, even if a court finds by clear and

convincing evidence that a creditor violated the discharge order, the court may only

“impose civil contempt sanctions when there is no objectively reasonable basis for

concluding that the creditor’s conduct might be lawful under the discharge order.64 If

the creditor can establish a fair ground of doubt as to whether its actions violated the

discharge order, under Taggart the court cannot impose civil contempt sanctions.65

B. Exceptions to Discharge Generally.

Even when a debtor receives a discharge, certain types of debts may be

excepted from that discharge.66 For some of these potentially non-dischargeable debts

(debts arising from certain specifically enumerated bad acts),67 a creditor must file a

62 Id. (quoting Jordan, 851 F.2d at 1292).

63 See In re DiBattista, 615 B.R. 31, 39 n.9 (S.D.N.Y. 2020) (“The Taggart Court did not discuss whether

the clear-and-convincing standard is still appropriate on a civil contempt motion, but cases that have

dealt with such motions post-Taggart have continued to use the clear-and-convincing standard.”)

(citing Calvillo Manriquez v. Devos, 411 F. Supp. 3d 535, 540 (N.D. Cal. 2019)).

64 Taggart, 139 S. Ct. at 1801.

65 Id. at 1799.

66 See generally 11 U.S.C. § 523(a).

67 See 11 U.S.C. § 523(a)(2) (debts for money, property, services, or an extension, renewal, or

refinancing of credit, to the extent obtained by false pretenses, a false representation, or actual fraud,

or by use of a materially false written statement); 11 U.S.C. § 523(a)(4) (debts for fraud or defalcation

timely complaint to determine dischargeability, otherwise the debt will be

discharged.68 For any other type of potentially non-dischargeable debt, however, a

determination of dischargeability may be sought at any time69 by either the debtor or

a creditor, in either the bankruptcy court or in state court.70 And ordinarily, it is the

creditor’s burden to prove (by preponderance of the evidence) that its debt is excepted

from the debtor’s discharge.71

In “asset” cases (where a claims bar date is set because there are assets

available for distribution to creditors), Bankruptcy Code section 523(a)(3) excepts

from discharge debts not listed by the debtor or scheduled in time to permit the

creditor to timely file a proof of claim or seek a determination of dischargeability. In

those “asset” cases where a creditor argues it didn’t receive timely notice, it is the

debtor’s burden to prove the creditor had notice or actual knowledge of the case.72 In

a “no asset” case like Ms. McIntosh’s, however, a creditor’s notice or actual knowledge

of the case is not relevant, so the burden to prove its debt was not discharged still lies

with the creditor.73

while acting in a fiduciary capacity, embezzlement, or larceny); 11 U.S.C. § 523(a)(6) (debts for willful

and malicious injury by the debtor to another entity or to the property of another entity).

68 See 11 U.S.C. § 523(c); Fed. R. Bankr. P. 4007(c).

69 See 11 U.S.C. § 523(c); Fed. R. Bankr. P. 4007(b).

70 See Fed. R. Bankr. P. 4007(a); In re Levin, 284 B.R. 308, 312 (Bankr. S.D. Fla. 2002) (“state courts

have concurrent jurisdiction with the bankruptcy court to determine the dischargeability of most debts

under section 523 of the Code.”) (citing Cummings v. Cummings, 244 F.3d 1263, 1267 (11th Cir. 2001);

McQuade v. McQuade (In re McQuade), 232 B.R. 810, 813 n.1 (Bankr. M.D. Fla. 1999); In re Crowder,

37 B.R. 53, 55 (Bankr. S.D. Fla. 1984)).

71 Grogan v. Garner, 498 U.S. 279, 287-88 (1991); Griffith v. U.S. (In re Griffith), 206 F.3d 1389, 1396

(11th Cir. 2000); St. Laurent v. Ambrose (In re St. Laurent), 991 F.2d 672, 677 (11th Cir. 1993).

72 Matter of Faden, 96 F.3d 792, 795 (5th Cir. 1996) (citing U.S., Small Bus. Admin. v. Bridges, 894

F.2d 108, 111 (5th Cir. 1990)); In re Massa, 187 F.3d 292, 296 (2d Cir. 1999) (citing Dependable Ins.

Co. v. Horton (In re Horton), 149 B.R. 49, 57 (Bankr. S.D.N.Y. 1992)).

73 See note 71, supra.

C. The Unscheduled Debts Exception to Discharge under Section 523(a)(3).

Bankruptcy Code section 523(a)(3) excepts from discharge a debt:

(3) neither listed nor scheduled under section 521(a)(1) of this title, with

the name, if known to the debtor, of the creditor to whom such debt is

owed, in time to permit—

(A) if such debt is not of a kind specified in paragraph (2), (4), or

(6) of this subsection, timely filing of a proof of claim, unless such

creditor had notice or actual knowledge of the case in time for

such timely filing; or

(B) if such debt is of a kind specified in paragraph (2), (4), or (6)

of this subsection, timely filing of a proof of claim and timely

request for a determination of dischargeability of such debt under

one of such paragraphs, unless such creditor had notice or actual

knowledge of the case in time for such timely filing and request.74

In other words, for a debt that does not arise from certain enumerated bad acts set

forth in section 523(a)(2), (a)(4), or (a)(6), if the debt is not listed or scheduled by the

debtor in time to allow the creditor to file a timely proof of claim, that debt is

not discharged, unless the creditor had notice or actual knowledge of the case (in

which case it is discharged). And for a debt that did arise from those enumerated bad

acts, that debt also will not be discharged if it is not listed or scheduled in time for

the creditor to both file a timely proof of claim and a timely request for

determination of dischargeability of the debt, unless the creditor had notice or

actual knowledge of the case (again, in which case it will still be discharged).75

The Supreme Court has recently confirmed the longstanding principle of

bankruptcy jurisprudence that exceptions to discharge “should not extend beyond

74 11 U.S.C. § 523(a)(3).

75 See 4 COLLIER ON BANKRUPTCY ¶ 523.09 (16th ed. 2023) (“A debt is excepted from discharge if it was

not scheduled in time to permit timely action by the creditor to protect its rights, unless the creditor

had notice or actual knowledge of the case.”).

their stated terms.”76 The stated terms of section 523(a)(3)(A) only except from

discharge debts that are not scheduled in time to permit timely filing of a proof of

claim. In a case where there are insufficient assets available for distribution to

creditors, however, and the notice of meeting of creditors directs creditors not to file

proofs of claim (like the notice did here),77 there is no deadline to file a proof of claim.

Because the exception to discharge under section 523(a)(3)(A) for unscheduled debts

applies only to cases where there is a deadline to file proofs of claim – and there was

no such deadline in this case – the exception does not apply here. In other words,

whether or not Ms. McIntosh listed this debt on her bankruptcy schedules, it was still

discharged as a matter of law. As explained by a leading bankruptcy law treatise:

It is not uncommon for a debtor to discover, after the entry of the

discharge order and the closing of a no-asset chapter 7 bankruptcy case,

that a creditor was omitted from the schedules. Some debtors,

apparently believing that debts must be scheduled to be discharged,

have moved to reopen the case to amend the schedules to add the

creditor. Some courts have permitted this unless there is evidence of

fraud or intentional design in omitting the creditor from the schedules.

Other courts have refused to permit the reopening of a bankruptcy case

to permit a debtor to schedule an omitted debt.

Under the language of section 523(a)(3)(A) it is unnecessary to

reopen a case to obtain a discharge of an unscheduled debt in a

no-asset case. In a no-asset chapter 7 case, no deadline is set for the

filing of claims. Therefore, the lack of notice to the creditor does not

deprive the creditor of the opportunity to file a timely proof of claim. In

such circumstances, unless the debt falls within subsection

523(a)(2), (a)(4) or (a)(6), it is discharged. If the debt does fall

within those subsections, since the deadline for filing a dischargeability

complaint will have passed before the case is closed, reopening the case

will not alter the fact that the debt is nondischargeable. Nevertheless, a

bankruptcy court has the discretion to reopen a case to permit a debtor

76 Bartenwerfer v. Buckley, 598 U.S. 69, 77 (2023).

77 The notice here said, “Please Do Not File A Proof of Claim Unless You Receive a Notice To Do So.”

(ECF No. 3).

to amend the schedules to add a creditor so that the debtor may have an

accurate list of the discharged debts, thereby assisting, in a practical

manner, in the implementation of the debtor’s fresh start.78

Notwithstanding this widely-accepted explanation of section 523(a)(3)’s

applicability in no-asset chapter 7 cases, Florida Credit Research argues there is a

“fair ground of doubt” as to whether its claim was discharged under the Eleventh

Circuit’s 1986 decision in Matter of Baitcher.79 Further, because Florida Credit

Research (allegedly) could not determine whether its claim was scheduled, it argues

Ms. McIntosh had the burden – twenty years after she filed for bankruptcy – to prove

she did not fraudulently or intentionally fail to schedule this debt. Florida Credit

Research is wrong, and Baitcher does not create any fair ground of doubt about this.

D. Matter of Baitcher.

In Baitcher, debtor Barbara Baitcher filed a no-asset chapter 7 case in which

she failed to list a creditor, John Samuel.80 After she received a discharge and her

case was closed, Samuel obtained a judgment against her in state court for a

prepetition debt.81 The debtor then moved to reopen her bankruptcy case to add

Samuel’s name to her list of creditors.82 The bankruptcy court granted that motion,

and then permitted the debtor to file an adversary proceeding to determine the

dischargeability of the debt under Bankruptcy Code section 523(a)(3).83 On cross-

motions for summary judgment, the bankruptcy court ruled for the debtor,

78 4 COLLIER ON BANKRUPTCY ¶ 523.09 (16th ed. 2023) (emphasis added).

79 781 F.2d 1529 (11th Cir. 1986).

80 Id. at 1530.

81 Id.

82 Id.

83 Id. at 1531.

determining Samuel’s debt was discharged.84 Samuel appealed and the district court

affirmed.85 Samuel appealed again to the Eleventh Circuit, seeking “reversal on the

ground that his motion for summary judgment should have been granted.”86

The Eleventh Circuit agreed with Samuel and reversed the district court and

the bankruptcy court, determining that there were disputed issues of fact as to the

dischargeability of Samuel’s debt, and holding that the bankruptcy court erred in

granting summary judgment.87 In deciding that summary judgment should not have

been granted, the Eleventh Circuit suggested that if the debtor could show an honest

mistake – and not “fraud or intentional design” – then she should have her

discharge.88 But, the Eleventh Circuit held, this issue could not be resolved on

summary judgment.89

84 Id.

85 Id.

86 Id. at 1532.

87 Id. at 1534. The Eleventh Circuit characterized the bankruptcy court’s grant of summary judgment

to the debtor as having resulted in a new discharge being “granted to Baitcher, including Samuel’s

claim,” stating that Baitcher “obtained a new discharge applicable to” Samuel. Id. at 1531. That was,

unfortunately, an incorrect statement of both fact and law. The text and structure of the Bankruptcy

Code make clear that a debtor only gets one discharge, which, except for debts excepted from that

discharge under section 523, “discharges the debtor from all debts that arose before the [petition date],

. . . whether or not a proof of claim . . . is filed . . . or allowed . . . .” 11 U.S.C. § 727(b). The debtor in

Baitcher had already received a discharge. Baitcher, 781 F.2d at 1530. Thus, the bankruptcy court in

Baitcher did not grant – and could not have granted – the debtor a second discharge (this time of

Samuel’s debt). What the bankruptcy court actually did was determine whether the debt to Samuel

was dischargeable. See Fed. R. Bankr. P. 4007(a) (“A debtor or any creditor may file a complaint to

obtain a determination of the dischargeability of any debt.”). In other words, the bankruptcy court

determined whether this debt was included within the scope of the discharge the debtor had already

received, or whether it was excepted from that discharge.

88 Baitcher, 781 F.2d at 1534. This “fraud or intentional design” language comes from a 1983 Seventh

Circuit decision, Matter of Stark – which in turn cited two cases predating the modern Bankruptcy

Code of 1978 – in support of the proposition that “a debtor may reopen the estate to add an omitted

creditor where there is no evidence of fraud or intentional design.” 717 F.2d 322, 324 (7th Cir. 1983)

(citing In re Cafferky, [1977–78] Bankr. L. Rep. (CCH) ¶ 66,518 (Bankr. E.D. Tenn. July 29, 1977); In

re Callahma, [1977–78] Bankr. L. Rep. (CCH) ¶ 66,465 (E.D. Ore. May 5, 1977)). This “fraud or

intentional design” language, however, is found nowhere in the text of the modern Bankruptcy Code,

which became effective on October 1, 1979. See Pub. L. No. 95–598, § 402(a), 92 Stat. 2549, 2682 (1978).

89 Baitcher, 781 F.2d at 1534.

To the extent Baitcher applies at all here, it does not create any fair ground of

doubt as to whether Florida Credit Research’s debt was discharged. Florida Credit

Research has never alleged Ms. McIntosh fraudulently or with “intentional design”

failed to schedule Florida Credit Research or any of its predecessors in interest as a

creditor. Fraudulent omission or intentional design in failing to list a creditor,

however, is the only circumstance in which Baitcher might arguably apply.90 Because

that is not the case here, Florida Credit Research’s purported reliance on Baitcher

and cases applying it cannot create any fair ground of doubt as to whether the debt it

now seeks to collect was discharged.

But even if one construes Baitcher as holding that a debtor’s intent is relevant

to determine whether under Bankruptcy Code section 350(b)91 she can reopen a

no-asset chapter 7 case to seek a determination of dischargeability of a debt, that

90 Baitcher might only arguably apply because its judicially created “equitable rule” – which is found

nowhere in the text of the Bankruptcy Code – was actually dicta. See In re Horlacher, 2009 WL 903620,

at *3 (N.D. Fla. 2009) (noting that in Baitcher, “the Eleventh Circuit suggested in dicta that in the

absence of fraud or intentional design a Chapter 7 debtor with no assets should be allowed to amend

her schedules to include a debt not previously disclosed in the bankruptcy,” and stating that Baitcher’s

“absence of fraud or intentional design” language “was only dicta as to the issue in this case”); see also

In re Garrett, 266 B.R. 910, 913-15 (Bankr. S.D. Ga. 2001) (analyzing Baitcher and construing its

“equitable rule” as applying only to whether a case should be reopened under Bankruptcy Code section

350, and not as adding any new judicially created exception to discharge); cf. In re Hunter, 116 B.R. 3,

5 (Bankr. D.D.C. 1990) (questioning “[h]ow Baitcher, in the face of the statute’s plain language,

logically could reach the conclusion that intentional omission can make the debt non-dischargeable,

even when there is still time to file a claim”). This “equitable rule” was dicta because the actual issue

the Eleventh Circuit decided was whether the bankruptcy court appropriately granted summary

judgment on the issue of dischargeability of the debt. See U.S. v. Caraballo-Martinez, 866 F.3d 1233,

1244 (11th Cir. 2017) (“dicta is defined as those portions of an opinion that are not necessary to

deciding the case then before us.”); see U.S. v. Gillis, 938 F.3d 1181, 1198 (11th Cir. 2019) (same) (citing

Obiter Dictum, BLACK’S LAW DICTIONARY (10th ed. 2014) (explaining that a statement is dictum if it

is “unnecessary to the decision in the case”); Bryan A. Garner, et al., THE LAW OF JUDICIAL PRECEDENT

46 (2016) (“Generally, a dictum is a statement in a judicial opinion that is unnecessary to the case’s

resolution.”)). The Eleventh Circuit’s actual holding was simply that the bankruptcy court erred in

granting summary judgment because “[t]here were triable issues of fact.” Baitcher, 781 F.2d at 1535.

91 Under section 350(b), “[a] case may be reopened in the court in which such case was closed to

administer assets, to accord relief to the debtor, or for other cause.” 11 U.S.C. § 350(b).

holding still does not establish a fair ground of doubt as to whether the debt here was

discharged. Baitcher does not stand for the proposition that an unscheduled debt in

a no-asset case is not discharged, or that if a creditor can create any colorable doubt

as to whether the debt was discharged, then the debtor has the burden to reopen her

bankruptcy case and seek a determination of its dischargeability. As explained by the

bankruptcy court in In re Garrett,92 Baitcher’s judicially created “equitable rule”

merely limits the forum in which a debtor can seek a determination of

dischargeability:

If the good faith test applies only to Section 523, then Baitcher has added

a nondischargeable category (bad faith omission from the schedules of a

non-fraud claim) that Congress never adopted. If it applies to Section

350 [closing and reopening cases], the case cannot be reopened and

dischargeability remains unadjudicated. However, debtors have the

right to plead a bankruptcy discharge as an affirmative defense to an

action on the debt in state court. The state courts have concurrent

jurisdiction to determine dischargeability, at least after the

[bankruptcy] case is closed.

* * *

Thus, if in a closed “no-asset” case, a non-fraud claim is unscheduled and

later sued upon, the debtor may plead Section 523(a)(3) as a defense in

the court where the suit is brought. What Baitcher does is deny the

debtor’s right to reopen and obtain a federal forum, if the

omission was made through design or fraudulent intent. This

right may or may not be valuable. It may deprive [the] debtor of what is

viewed as a more specialized, and perhaps more sympathetic, forum to

litigate this question, or it may not. Whatever the practical effect, the

federal forum is lost to the debtor who failed to establish good faith in

omitting the debt from debtor’s schedules. The sine qua non of

bankruptcy is full disclosure and the granting of relief to honest but

unfortunate debtors. Under Baitcher, those who fail the test are not

92 266 B.R. 910.

entitled to reopen their case and obtain a determination, in the

bankruptcy forum, of entitlement to a discharge under Section 523.93

Thus, Baitcher does not stand for the proposition – as Florida Credit Research posits

– that a debtor has the burden to reopen her case to seek a determination of

dischargeability of an allegedly unscheduled debt for that debt to be discharged. That

debt has been discharged as a matter of law under Bankruptcy Code section 523(a)(3).

E. Florida Credit Research Violated the Discharge Injunction.

Florida Credit Research acknowledges it is not asserting Ms. McIntosh

intentionally omitted this debt from her schedules or that any omission, if intentional,

was the result of fraud or intentional design.94 With that acknowledgment, Baitcher

simply does not apply at all here. Accordingly, there was no objectively reasonable

basis for Florida Credit Research to believe Ms. McIntosh’s failure to move to reopen

her bankruptcy case to seek a determination of dischargeability somehow renders

Florida Credit Research’s claim enforceable because the current holder of the debt

didn’t see its name listed on her bankruptcy schedules. Indeed, such a construction

of the discharge injunction would turn it on its head and render any debt that has

been transferred from the original creditor to another entity presumptively

nondischargeable, and improperly put the burden on the debtor to prove the new

holder of the claim is the successor to the original creditor. To impose this type of

burden – in time, money, and aggravation – on a debtor who has already discharged

93 Id. at 915-16 (emphasis added; internal citations omitted).

94 ECF No. 17, at 6.

her debts is absurd and cruel, would eviscerate the protections of the discharge

injunction, and certainly is not what Taggart requires.

Florida Credit Research’s admission that there is no argument Ms. McIntosh

intentionally or fraudulently failed to schedule this debt, combined with the plain

text of section 523(a)(3), creates no fair ground of doubt that Florida Credit Research

was seeking to enforce a discharged debt. Her case was a no-asset chapter 7 case.

This was not disputed. She received a chapter 7 discharge. This was not disputed. So

even if Florida Credit Research believed the claim it now holds was not listed on her

schedules, under Bankruptcy Code section 523(a)(3) it nevertheless was still

discharged. And even if Baitcher applies, there is no evidence Florida Credit Research

had any reason to believe Ms. McIntosh intentionally or fraudulently omitted this

debt from her schedules. In sum, there is simply no fair ground of doubt that this debt

was discharged, and it was objectively unreasonable for Florida Credit Research to

assume otherwise. Ms. McIntosh is therefore entitled to an award of sanctions.

F. Contempt Sanctions.

As the Eleventh Circuit explained in In re McLean,95 “[b]ankruptcy courts may

impose compensatory sanctions for actual damages that a debtor incurs as a result of

a creditor’s violation of the discharge injunction” under Bankruptcy Code section

105(a).96 Actual damages can also include emotional distress caused by a violation of

the discharge injunction.97 To recover damages for emotional distress, the debtor

95 794 F.3d 1313.

96 Id. at 1325.

97 Id.

“must (1) suffer significant emotional distress, (2) clearly establish the significant

emotional distress, and (3) demonstrate a causal connection between that significant

emotional distress and the violation of the discharge injunction.”98

Courts can also impose coercive sanctions for violation of the discharge

injunction, “the sole purpose of which is typically to bring an end to an ongoing

contempt.”99 And courts can impose punitive sanctions, which are “for offenses

already completed.”100 Punitive sanctions “take the form of a fixed fine and have no

practical purpose other than punishment.”101 “[I]n bankruptcy as well as other

contexts, courts have ‘traditionally been reluctant to grant punitive damages absent

some showing of reckless or callous disregard for the law or rights of others.’”102 Thus,

“punitive sanctions are appropriate only where a party acted with sufficient notice

concerning the legal import of its offending actions.”103

“Because punitive sanctions are for offenses already completed, they take on

the character of criminal punishment and render the contempt criminal in nature.”104

Thus, “due process requires more stringent protections in criminal contempt

98 Id. at 1325-26 (quoting Lodge v. Kondaur Capital Corp., 750 F.3d 1263, 1271 (11th Cir. 2014))

(cleaned up).

99 Id. at 1323.

100 Id.

101 Id.

102 Id. at 1325 (quoting Goichman v. Bloom (In re Bloom), 875 F.2d 224, 228 (9th Cir. 1989); citing

Kolstad v. Am. Dental Ass’n, 527 U.S. 526, 548-49 (1999)).

103 Id. (citing BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 574-75 (1996)).

104 Id. at 1323 (citing Int’l Union, United Mine Workers of Am. v. Bagwell, 512 U.S. 821, 828-29 (1994)).

For civil contempt the due process requirements “are flexible, varying with the circumstances of each

case.” Id. at 1324 (quoting Mercer v. Mitchell, 908 F.2d 763, 769 n.11 (11th Cir. 1990)). “At most, due

process requires only ‘skeletal’ protections in civil contempt proceedings: a show-cause order providing

notice and a hearing in which the alleged contemnor, who may be represented by counsel, can

introduce evidence rebutting the allegation of contempt and testify on its own behalf.” Id. (citing

Mercer, 908 F.2d at 767).

proceedings.”105 This includes the presumption of innocence and proof of guilt beyond

a reasonable doubt.106 Although McLean appropriately characterized punitive

sanctions for contempt as “criminal in nature” – which they are107 – nothing in

McLean precludes a bankruptcy court from imposing punitive sanctions for violating

its own order.108 McLean simply articulates the more stringent due process

protections a bankruptcy court must afford when considering punitive sanctions.109

IV. Imposition of Sanctions.

A. Actual Compensatory Sanctions.

1. Attorneys’ Fees and Costs.

Having considered the appropriate standards for imposition of sanctions

against Florida Credit Research, the Court concludes an award of $33,124.62 in

actual compensatory sanctions for legal fees and costs is appropriate. This amount

consists of $23,742.62 for Mr. Gusrae’s legal fees and costs, plus $9,382.00 for

Mr. Shmucher’s and Ms. Anderson’s work in state court fighting the writ of

garnishment (but not for the work duplicative of Mr. Gusrae’s, nor for the work they

105 Id. at 1324.

106 Id. (citing Young v. U.S. ex rel. Vuitton et Fils S.A., 481 U.S. 787, 798-99 (1987)). For “serious

criminal contempts” – which the Supreme Court has defined as those involving imprisonment of more

than six months, Bagwell, 512 U.S. at 827 – this also includes the right to a jury trial. McLean, 794

F.3d at 1324 (citing Young, 481 U.S. at 798-99). The punitive sanctions being sought here against

Florida Credit Research are monetary only, so the matter before the Court is not a “serious contempt.”

See Bloom v. State of Ill., 391 U.S. 194, 198 (1968) (“criminal contempt is a petty offense unless the

punishment makes it a serious one”).

107 Bloom, 391 U.S. at 201 (“Criminal contempt is a crime in the ordinary sense; it is a violation of the

law, a public wrong which is punishable by fine or imprisonment or both.”).

108 McLean, 794 F.3d at 1318-19 (the bankruptcy court “‘alone possesse[d] the power to enforce

compliance with’ the discharge injunction.”) (quoting Alderwoods Grp., 682 F.3d at 970).

109 See id. at 1325 (remanding the case to the bankruptcy court “so that it may decide how properly to

dispose of the [debtors’] request for non-compensatory sanctions” and “remind[ing] the bankruptcy

court of the proper standard should it endeavor to impose punitive sanctions on remand.”).

did preparing a Federal Fair Debt Collection Practices Act or Florida Consumer

Collection Practices Act complaint).

2. Emotional Distress.

In addition, the Court will award $10,000.00 as actual compensatory sanctions

for the emotional distress Florida Credit Research caused to Ms. McIntosh. As she

testified, Ms. McIntosh is a registered nurse and single mother, whose daughter was

a high school senior when Florida Credit Research wrongly seized her (and her

daughter’s) bank accounts to collect a 20-year-old discharged debt. She clearly

suffered emotional distress because of Florida Credit Research’s conduct.

One thing in life we can never get back is time. Ms. McIntosh and her daughter

can never get back the time near the end of her daughter’s senior year when they

were looking forward to graduation, prom, a class ring, driving lessons, a celebratory

trip, and preparing to go to college. Rather than enjoy the savings Ms. McIntosh had

squirreled away to spend on her daughter for these things, those funds were frozen,

and she instead had to hire lawyers to get them back. Now she has her savings back,

and the Court will award her most of the attorneys’ fees she seeks. But she can never

get back that time with her daughter, or the experiences they were going to share

together with that money.

The Court therefore finds, by clear and convincing evidence, that Ms. McIntosh

suffered significant emotional distress caused by Florida Credit Research’s violation

of the discharge injunction.110 As compensation for this emotional distress, the Court

110 See id. at 1325-26.

determines that – while there is no price one can put on time that can never be

recaptured – $10,000.00 is an appropriate measure of damages for the significant

emotional distress Ms. McIntosh suffered during this time that should have been

filled with joy, celebration, and optimism for her daughter’s future. Accordingly, the

Court will award her a total of $43,124.62 in actual compensatory sanctions,

consisting of $33,124.62 in legal fees and costs, plus $10,000.00 for emotional distress.

B. Punitive Sanctions.

Finally, as to punitive sanctions, the Court finds Florida Credit Research’s

conduct to have been egregious and reprehensible, and showed “a reckless or callous

disregard for the law or rights of others.”111 Ms. McIntosh has proven beyond a

reasonable doubt that Florida Credit Research violated the discharge injunction

when it sought, obtained, and served a writ of garnishment seeking to collect a

discharged debt, and then refused to release the writ until after she moved to reopen

her bankruptcy case and sought sanctions, and this Court set those matters for

hearing. Heeding McLean’s dictates, the Court has afforded Florida Credit Research

all due process required before imposing punitive sanctions, including the following:

• Florida Credit Research was served with the motion for sanctions and the

notice of hearing on that motion,112 in which Ms. McIntosh clearly sought

punitive damages;113

• the Court held a preliminary hearing on the motion for sanctions,114 at which

Florida Credit Research’s counsel appeared and made argument, and in

advance of which Florida Credit Research filed an objection;115

111 Id.

112 ECF No. 15.

113 ECF No. 11.

114 ECF No. 14.

115 ECF No. 17.

• the Court then issued a scheduling order setting an evidentiary hearing to

determine whether Ms. McIntosh was entitled to any sanctions against Florida

Credit Research, and setting deadlines for discovery, pretrial disclosures,

exchange of exhibits, and legal briefs;116

• the Court then held an evidentiary hearing to determine whether

Ms. McIntosh was entitled to sanctions against Florida Credit Research, at

which Florida Credit Research called two witnesses to testify in its defense –

its principal James Jacobson and its state court counsel Mark Rickard;

• after that evidentiary hearing, the Court issued a second scheduling order,

setting another evidentiary hearing to consider the appropriate amount of

sanctions and setting additional deadlines for further discovery, initial and

pretrial disclosures, and exchange of exhibits, with respect to this issue;117

• in advance of that hearing, Florida Credit Research took additional discovery,

including the depositions of Ms. McIntosh and her daughter;118

• the Court then held the evidentiary hearing on the amount of sanctions, at

which Florida Credit Research again appeared through counsel and had an

opportunity to cross-examine Ms. McIntosh’s witnesses; and

• at the conclusion of that hearing, the Court entertained argument from both

Ms. McIntosh and Florida Credit Research.

Having concluded that Florida Credit Research has been afforded all required

due process before considering the imposition of punitive sanctions, the Court next

concludes – for the reasons discussed above – that Florida Credit Research showed a

reckless or callous disregard for both the law (this Court’s discharge order) and the

rights of Ms. McIntosh (the protections to which she is entitled as a result of the

discharge injunction).119 Indeed, Florida Credit Research’s conduct is indicative of an

overly aggressive business model that encourages extortive settlements of debts that

by law have been discharged. By proceeding as it had, Florida Credit Research was

116 ECF No. 21.

117 ECF No. 39.

118 ECF No. 42, 43.

119 McLean, 794 F.3d at 1325.

betting that rather than bring this case to the bankruptcy court and have a trial,

Ms. McIntosh would settle for some lesser amount to make the problem go away.

Ms. McIntosh didn’t take the bait, but she never should have been in that position to

begin with.

The Court finds Florida Credit Research’s conduct to have been reckless,

reprehensible, and egregious, warranting punitive sanctions.120 Considering punitive

sanctions awards in other cases,121 the Court determines that punitive sanctions in

the amount of $21,562.31, representing 50% of the amount of actual compensatory

sanctions awarded, is appropriate here. The Court therefore awards Ms. McIntosh a

total of $64,686.93 in sanctions – representing $33,124.62 in attorneys’ fees and costs,

$10,000.00 for emotional distress, and $21,562.31 in punitive sanctions – against

Florida Credit Research.

V. Conclusion.

The Court recognizes there is a robust market for the purchase and sale of

unpaid debts in this country. Bad debts get traded all the time. To suggest that

120 See id.

121 See, e.g., In re Withington, 654 B.R. 173, 188 (Bankr. S.D. Fla. 2023) (awarding $175,607.02 in

punitive damages, representing a multiplier of 3.375 times actual damages); In re Lyubarsky, 615 B.R.

924, 939 (Bankr. S.D. Fla. 2020) (awarding punitive damages for violation of the automatic stay in the

amount of $236,518.50, which was twice the amount of $118,259.25 awarded in actual damages); In re

Ferris, 611 B.R. 701, 709 (Bankr. M.D. Fla. 2019) (awarding punitive damages of $25,000 for violation

of the discharge injunction, in addition to actual damages of over $30,000 in legal fees, costs, and for

emotional distress); In re Harrison, 599 B.R. 173, 192 (Bankr. N.D. Fla. 2019) (awarding punitive

damages of 3.375 times the amount of actual damages); WVF Acquisition, 420 B.R. at 915 (awarding

punitive damages for violation of the automatic stay in the amount of $50,000, representing an

approximately one-to-one ratio to actual damages of $51,995); Mooney, 340 B.R. at 361 (awarding

$40,000 in punitive damages, representing nearly twice the amount of actual damages, for violation of

the discharge injunction); In re Moon, 2023 WL 1779643, at *13 (D. Nev. 2023), appeal dismissed, 2023

WL 6613781 (9th Cir. 2023) (district court on appeal awarded $128,002.41 in punitive damages,

representing a 1.5 multiplier times actual damages).

merely selling a debt to another holder could somehow immunize a creditor and

create a fair ground of doubt as to whether that debt was discharged because the new

holder of the claim didn’t see its name on the debtor’s creditor list, however, turns the

protections of the bankruptcy discharge on its head. But that’s what Florida Credit

Research did here. It put its head in the sand and assumed it could enforce this 20-

year-old debt simply because insufficient records were available to show it could not.

While Taggart122 certainly tightened the standard for imposing sanctions for

discharge injunction violations, it did not choke off this avenue for relief entirely.

A debtor who files a chapter 7 case and obtains a discharge necessarily emerges

from her bankruptcy case with nothing but exempt assets (if she has any assets at

all). She should be able to rely on that discharge and not have to continually hire

lawyers to defend against claims of debt purchasers each time a debt is sold. It was

reckless, egregious, and reprehensible for Florida Credit Research to have put that

onus on her. After considering the evidence, and for the reasons discussed above, the

Court concludes that Florida Credit Research violated the discharge injunction in

Ms. McIntosh’s bankruptcy case and is liable to Ms. McIntosh for sanctions in the

total amount of $64,686.93.

Accordingly, it is ORDERED that:

1. Ms. McIntosh’s Expedited Motion for Sanctions Against Florida Credit

Research Inc. for Violation of the Discharge Injunction123 is GRANTED.

122 139 S. Ct. 1795.

123 ECF No. 11.

2. Ms. McIntosh is awarded actual compensatory sanctions in the amount

of $43,124.62 against Florida Credit Research, Inc.

3. Ms. McIntosh is awarded punitive sanctions in the amount of $21,562.31

against Florida Credit Research, Inc.

4. The Court will enter a separate judgment in favor of Ms. McIntosh and

against Florida Credit Research, Inc., in the total amount of $64,686.93.

# # #

Copies furnished to all counsel of record via CM/ECF.