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Clerk, US. Bankruptcy Court _

Western District of North Carolinal Saua /

Laura T. Beyer

United States Bankruptcy Judge

UNITED STATES BANKRUPTCY COURT

WESTERN DISTRICT OF NORTH CAROLINA

STATESVILLE DIVISION

In re: )

)

DIANA HOUCK, ) Chapter 13

) Case No. 11-51513

Debtor. )

)

DIANA HOUCK, )

)

Plaintiff, )

) Adversary Proceeding

Vv. ) No. 15-5028

)

SUBSTITUTE TRUSTEE )

SERVICES, INC., )

)

Defendant. )

FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER GRANTING

JUDGMENT TO THE PLAINTIFF

THIS MATTER is before the court after trial on the complaint

of the Plaintiff, Diana Houck. This lengthy litigation grew out

of a short-lived bankruptcy case—although the Plaintiff's case

only lasted five days, the Defendant, Substitute Trustee Services,

Inc., conducted a foreclosure sale during those five days and did

not subsequently undo the foreclosure or make any attempt to

validate it. After the court’s February 15, 2019 Order Granting

Plaintiff’s Motion for Summary Judgment, Denying Defendant’s

Motion for Summary Judgment, and Denying Plaintiff’s Motion for

Sanctions determined that the Defendant violated the automatic

stay of 11 U.S.C. § 362, the only issue left for the court to

determine at trial was the amount of damages to be awarded to the

Plaintiff. The trial presented a situation where a defendant

committed a willful stay violation that continued for several years

on the one hand, and a plaintiff who did not convincingly show a

significant portion of her alleged injuries at trial on the other.

Despite the Defendant’s egregious stay violation, the court can

only award damages proven by the Plaintiff. After considering the

evidence and argument presented by the parties and as explained

below, the court awards damages totaling $260,175.27 to the

Plaintiff. The total damages consist of $20,857.11 in actual

damages other than attorney’s fees, $109,318.16 in attorney’s

fees, and $130,000 in punitive damages.

PROCEDURAL HISTORY

1. This lawsuit began over seven years ago when the

Plaintiff filed her complaint in the United States District Court

for the Western District of North Carolina (“District Court”) on

April 26, 2013. The complaint, as subsequently amended, alleges

that Lifestore Bank, F.S.A (“Lifestore”), Grid Financial Services,

Inc. (“Grid”), and the Defendant engaged in a conspiracy in

violation of a number of state laws that caused the Plaintiff to

default on her mortgage and culminated in a foreclosure in

violation of the automatic stay imposed by 11 U.S.C. § 362 during

the Plaintiff’s (second) bankruptcy case. The District Court

referred the lawsuit to United States Magistrate Judge David S.

Cayer, and Judge Cayer entered three dismissal orders between

October 1, 2013 and February 20, 2014 that collectively dismissed

the entirety of the Plaintiff’s complaint. The Plaintiff only

appealed the first dismissal order (without leave), the United

States Court of Appeals for the Fourth Circuit (“Fourth Circuit”)

had not considered the appeal when Judge Cayer dismissed the

remainder of the complaint, and, on July 1, 2015, the Fourth

Circuit applied the doctrine of cumulative finality, vacated the

District Court’s judgment, reversed the October 1, 2013 dismissal

order, and remanded the case to the District Court. Judge Cayer

subsequently sent the lawsuit to this court with his September 22,

2015 Order of Referral to the Bankruptcy Court.

2. Upon receiving the lawsuit and hearing from the parties,

this court entered its Order Determining the Status of This

Adversary Proceeding, Examining This Court’s Subject Matter

Jurisdiction, Recommending Withdrawal of the Reference, and

Setting Status Hearing (“Status Order”) on February 5, 2018.1

1 The significant pre-Status Order procedural history of this lawsuit is

presented in greater detail in the Status Order. See Houck v. Lifestore Bank

(In re Houck), Nos. 11-51513, 15-5028, 2018 WL 722462, at *2–4 (Bankr. W.D.N.C.

Feb. 5, 2018).

After describing the lengthy procedural history of the lawsuit,

the Status Order determines the status of the lawsuit after the

Fourth Circuit’s July 1, 2015 opinion. Houck v. Lifestore Bank

(In re Houck), Nos. 11-51513, 15-5028, 2018 WL 722462, at *5–7

(Bankr. W.D.N.C. Feb. 5, 2018) [hereinafter Status Order]. The

Status Order concludes that the Fourth Circuit’s opinion did not

disturb the two dismissal orders that the Plaintiff did not appeal,

all of the claims against Lifestore and Grid had been dismissed,

and the lawsuit then consisted of only the Plaintiff’s stay

violation claim and state law claims (except for her emotional

distress claims) against the Defendant. Id. at *7. Next, the

court considered whether it had subject matter jurisdiction to

consider the remaining claims in the complaint. Id. at *7–12.

The Status Order concludes that the court did have “arising under”

jurisdiction to hear the stay violation claim, and, while it would

have had “related to” jurisdiction to hear the state law claims

during the pendency of the Plaintiff’s base bankruptcy case, the

court could not hear the state law claims after the Plaintiff’s

base case had been dismissed and closed. Id. Since this court

could not hear the entirety of the lawsuit, the Status Order

recommends that the District Court withdraw the reference so the

Plaintiff could pursue it there. Id. at *12.

3. The District Court confirmed the court’s analysis of the

subject matter jurisdiction question but decided to proceed in a

different manner and bifurcated the lawsuit. On February 7, 2018,

the Honorable Max O. Cogburn Jr. signed an order that withdraws

the reference of the state law claims, declines to exercise

supplemental jurisdiction over the state law claims, and dismisses

the state law claims without prejudice to the Plaintiff refiling

them in state court.2 Houck v. Lifestore Bank, 582 B.R. 138, 140–

142 (W.D.N.C. 2018). Judge Cogburn declined to withdraw the

reference of the stay violation claim. Id.

4. Accordingly, this court proceeded with the stay

violation claim against the Defendant.3 After completing

discovery, both parties moved for summary judgment. The court

held a hearing on November 7, 2018 and entered its Order Granting

Plaintiff’s Motion for Summary Judgment, Denying Defendant’s

Motion for Summary Judgment, and Denying Plaintiff’s Motion for

Sanctions (“Summary Judgment Order”) on February 15, 2019. First,

the Summary Judgment Order rejects the Defendant’s contention that

the Plaintiff was not eligible to be a debtor pursuant to 11 U.S.C.

§ 109(g) in her second bankruptcy case. Houck v. Substitute Tr.

Servs., Inc. (In re Houck), 597 B.R. 820, 828–31 (Bankr. W.D.N.C.

2019) [hereinafter Summary Judgment Order]. Next, the court

2 The parties reported to the court at trial that the Plaintiff did refile her

state law claims and that the state court lawsuit is pending.

3 “[A] stay violation claim is a core matter for which this court can enter a

final judgment.” Status Order at *8 n.12 (citing 28 U.S.C. § 157; Johnson v.

Smith (In re Johnson), 575 F.3d 1079, 1082–83 (10th Cir. 2009)); see also Houck

v. Lifestore Bank, 582 B.R. 138, 140 (W.D.N.C. 2018) (“As to the § 362 claim,

this Court determines that the United States Bankruptcy Court is uniquely

qualified to determine whether a willful violation of the automatic stay in

bankruptcy occurred.”).

concludes that the Defendant committed a willful violation of the

automatic stay when it foreclosed on the Plaintiff’s residence

during her second bankruptcy case and did nothing to remedy the

violation after receiving notice of the bankruptcy case later the

same day. Id. at 831–35.

5. The parties disagree about when the Defendant received

notice of the Plaintiff’s second bankruptcy case, but the court

did not have to resolve any factual disagreements about the timing

of the notice because the Defendant admitted to facts sufficient

to show a willful violation of the stay. After the Plaintiff

commenced her second bankruptcy case on December 16, 2011 and

before the court dismissed it on December 21, 2011, the Defendant

conducted a foreclosure sale on December 20 at 12:57 p.m. Id. at

832. While the Plaintiff contends that her husband, Ricky Penley

(“Penley”), contacted the Defendant’s law firm by telephone on

December 16 to bring the second bankruptcy case to its attention,

Second Amended Complaint with Demand for Trial by Jury at 9, Houck

v. Lifestore Bank, F.S.A., No. 5:13-CV-66 (W.D.N.C. Aug. 28, 2013),

and the Defendant claims that its law firm has no record of a call

from Penley between December 16 and 20, Memorandum in Support of

Substitute Trustee Services, Inc.’s Motion for Summary Judgment at

6, Houck v. Substitute Tr. Servs., Inc. (In re Houck), Nos. 11-

51513, 15-5028 (Bankr. W.D.N.C. Oct. 31, 2018), the Defendant

admits that its law firm received notice of the second bankruptcy

case from Nationstar Mortgage, LLC (“Nationstar”) at 3:52 p.m. on

December 20—about three hours after the foreclosure sale, Summary

Judgment Order at 832. Even if Penley did not call the law firm

on December 16, the Defendant conducted the foreclosure sale in

technical violation of the automatic stay, and the technical

violation became willful when Nationstar brought the bankruptcy

case to the Defendant’s attention. Id. The court expressed its

displeasure with the Defendant’s behavior in connection with the

foreclosure and its arguments in this litigation:

Importantly, [the Defendant] does not

deny that its “practice” after learning of a

foreclosure sale in technical violation of the

stay is to wait and see if the case is

dismissed before taking steps to undo the

sale. The court wholeheartedly agrees with

the Plaintiff’s contention that this practice

is abhorrent. The court is dumbfounded by the

cavalier position that [the Defendant] has

taken regarding its seemingly obvious stay

violation. The essence of [the Defendant’s]

“wait-and-see” approach is flawed and in

direct conflict with a litany of case law. If

[the Defendant] learns of a technical

violation, it is obligated to determine the

effect of the stay and remedy its violation—

not wait to see if the case will be dismissed

and the “barrier” of the automatic stay

removed.

Id. at 834 (citations omitted). While acknowledging that it would

subsequently have to determine the exact extent of the Plaintiff’s

damages, the court had no trouble concluding that she was injured

and awarding summary judgment to the Plaintiff. Id. at 835.

6. Before the court could proceed to the issue of damages,

however, it had to rule on the Defendant’s objection to language

it considered too harsh in the Summary Judgment Order. See

Defendant’s Motion Pursuant to Fed. R. Civ. P. 52 and 59 at 1–2,

Houck v. Substitute Tr. Servs., Inc. (In re Houck), Nos. 11-51513,

15-5028 (Bankr. W.D.N.C. Mar. 1, 2019). After claiming for six

years in this lawsuit that it had not violated the automatic stay,

the Defendant admitted the stay violation but argued that it was

accidental, not abhorrent, Memorandum of Law Supporting

Defendant’s Motion Pursuant to Fed. R. Civ. P. 52 and 59 at 1,

Houck v. Substitute Tr. Servs., Inc. (In re Houck), Nos. 11-51513,

15-5028 (Bankr. W.D.N.C. Mar. 29, 2019) [hereinafter Defendant’s

Brief in Support of Motion to Reconsider]. The Defendant described

its procedures in relation to bankruptcy filings and claimed that

its review of 24 similar cases in its files showed that its law

firm filed a motion to set aside the foreclosure sale in each

instance (except this one). Id. at 2–3. The Defendant asked the

court to tone down the language of the Summary Judgment Order to

prevent the “manifest injustice” of harm to the professional

reputations of the Defendant and its attorneys. Id. at 8.

7. The court disagreed with the Defendant’s objection to

the language of the Summary Judgment Order. While admitting that

the “wait and see” language relied on by the Plaintiff was somewhat

vague and that the court’s comments were directed at the

Defendant’s and its law firm’s behavior and arguments in this case

and not more generally, Houck v. Substitute Tr. Servs., Inc. (In

re Houck), Nos. 11-51513, 15-5028, 2019 WL 2246542, at *2–3 (Bankr.

W.D.N.C. May 23, 2019) [hereinafter Order Denying Defendant’s

Motion to Reconsider], the court decided that the language of the

Summary Judgment Order was consistent with the information

presented to the court through the summary judgment hearing, id.

at *2. In particular, the Defendant misrepresented to the court

when it received notice of the Plaintiff’s second bankruptcy case

despite admitting contrary information in its filings4 and pursued

baseless arguments to justify its stay violation up to and

including the summary judgment hearing. Id. (“Both of these

arguments, (1) that there is nothing a creditor can do when it

discovers a technical violation of the stay, and (2) that the

dismissal of a case cures a prior stay violation, are contradicted

by abundant case law as noted in the Summary Judgment Order”

(citing Summary Judgment Order at 832–35)).

8. The court conducted a trial on the last remaining issue

in the adversary proceeding, the extent of the Plaintiff’s damages,

on December 3 and 4, 2019. The parties returned to the courtroom

on January 17, 2020 to argue about the Plaintiff’s attorney’s fees.

4 The Defendant also continued to argue for a date of notice contrary to the

findings of the Summary Judgment Order at trial.

FINDINGS OF FACT5

9. The Plaintiff presented evidence of several categories

of damages, and the court will address each separately.

Value of Real Estate

10. The Defendant’s foreclosure in violation of the stay

resulted in the Plaintiff’s loss of ownership and possession of

her residence at 318 Todd Railroad Grade Road, Todd, North

Carolina. The property consisted of a 2000-square-foot doublewide

mobile home with 4 bedrooms and 2 bathrooms on 1.8 acres. The

Plaintiff inherited the land, and she and Penley purchased the

mobile home for $106,000 in 2005. The Plaintiff also owned

adjoining 2-acre and 9-acre tracts of land.

11. Penley testified that he thought the real property was

worth $230,000 at the time of the foreclosure.6 The Plaintiff

testified that the value of the property was between $170,000 and

$180,000. The only documentary evidence of the value of the

property introduced at trial was Ashe County property tax

statements from 2011 and 2012 that show the tax value of the

property at the time was $144,000. The Plaintiff did not introduce

any appraisals or other valuations of the property.

5 In addition to the findings of fact specifically referenced in this order,

the court hereby incorporates the findings from the Summary Judgment Order by

reference.

6 The Defendant objected to Penley’s opinion of the value of the real property

and argued that the only layperson qualified to value real estate was the owner.

The court asked the Defendant to produce authority showing that a person in

Penley’s position could not offer such testimony, and the Defendant did not.

Penley’s valuation, however, was ultimately not a factor in the court’s

determination of the value of the property.

12. A letter from the Defendant’s law firm confirms that the

property sold for $135,311.44 at foreclosure and the foreclosure

satisfied the $130,142.89 balance of the mortgage on the property.7

Farm Income

13. Penley testified that he and the Plaintiff grew

“everything grown in Ashe County” on their three tracts of land:

daylilies, beans, corn, potatoes, peppers, and cabbage. They used

about half an acre of 318 Todd Railroad Grade Road, an acre and a

half of the 2-acre tract, and part of the 9-acre tract for farming.

According to Penley’s testimony, the profits from their farming

totaled $20,000–$30,000 annually. The Plaintiff said she did not

know how much money they made from farming, but she agreed with

Penley’s $30,000 estimate.

14. The Plaintiff introduced photographs of daylilies and

crops on the properties, but the only documentary evidence of

income from the farming operation that the Plaintiff presented was

Penley’s handwritten list of income and some expenses from 2010

7 The Defendant went to great lengths at trial to attempt to show that a second

mortgage that was also secured by the Plaintiff’s adjoining 2-acre tract of

land encumbered the foreclosed property. According to the Defendant, the

Plaintiff is not entitled to any damages for the loss of the real property

because she did not have any equity due to the two mortgages. There was evidence

admitted at trial that tended to show that 318 Todd Railroad Grade Road was

encumbered by the alleged second mortgage and evidence to the contrary. The

possible second mortgage, however, is ultimately irrelevant because it was not

satisfied (or paid on at all) at foreclosure according to the Defendant’s own

evidence, including the letter from its law firm and a proof of claim for the

mortgage from Penley’s subsequent bankruptcy case. Since the only secured

obligation paid at foreclosure was the $130,142.89 balance of the “first”

mortgage and the Plaintiff still owed the “second” mortgage balance after the

foreclosure, any value in excess of $130,142.89 was the Plaintiff’s equity in

the real property for the purposes of this matter.

that he prepared as a “rough estimate” of three months of net

income from the farming operation.8 Penley testified that he

compiled the rough estimate in the process of seeking a loan for

the construction of a new barn, but the document does not provide

an accurate and complete picture of the Plaintiff and Penley’s

farming operation. For example, the rough estimate includes

$16,000 of income from a landscaping job, which would include

payment for services and not from farming (although Penley said he

used the daylilies grown on the property as part of his

landscaping), and Penley admitted that the rough estimate did not

include some farming expenses such as fertilizer (although they in

part used a neighbor’s cow manure) and parts for their tractor.

8 The Defendant objected to the introduction of any calculation of damages other

than the rough estimate due to the Plaintiff’s failure to provide the

calculation and documents used to make the calculation prior to trial as

required by Federal Rule of Civil Procedure 26(a). (Federal Rule of Bankruptcy

Procedure 7026 makes Federal Rule of Civil Procedure 26 applicable in adversary

proceedings.) The March 9, 2018 Initial Pre-Trial Order in this adversary

proceeding requires “any party [that] believes their case would be benefited by

strict compliance with Fed. R. Civ. P. 26 and 16 . . . [to] request such relief

by proper motion and notice of hearing,” the Defendant did not file such a

motion, and the Defendant admitted that the court has broad discretion to

address this issue, see Silicon Knights, Inc. v. Epic Games, Inc., No. 5:07-

CV-275-D, 2012 WL 1596722, at *2 (E.D.N.C. May 7, 2012) (“[Federal] Rule [of

Civil Procedure] 37(c)(1) provides trial courts wide discretion to remedy

violations of Rule 26(a) or Rule 26(e).”). In addition, given the complete

dearth of discovery conducted by the Defendant and the Defendant’s failure to

raise this issue with the Plaintiff until less than a week prior to trial (and

more than six years after the litigation commenced), the court questions the

amount of prejudice caused by the Plaintiff’s failure to provide a calculation

and supporting documents. See Carotek, Inc. v. Textron Fastening Sys., Inc.,

No. 3:05-CV-395-MKR-DCK, 2008 WL 1777829, at *3 (W.D.N.C. Apr. 16, 2008) (“To

the extent Plaintiff was unaware or surprised, it could have availed itself of

discovery mechanisms to cure that surprise in a more timely fashion.”).

Regardless, the Plaintiff did not produce any other calculations of damages at

trial and relied instead on her opinion and the opinions of Penley. Accordingly,

to the extent that it is not moot, the Defendant’s objection is hereby overruled.

15. Penley testified that he kept the books and records for

the farming operation, but neither he nor the Plaintiff produced

any books and records at trial. The Plaintiff did not produce any

profit and loss statements, balance sheets, income tax returns,

receipts, or any other documents other than the rough estimate to

substantiate her alleged loss of farm income.9 The Plaintiff and

Penley continued to use their other two tracts of land for farming

but claimed that they lost all of their customers after the

foreclosure.

Rental Income

16. The Plaintiff and Penley testified that they used the

house on the adjoining 2-acre tract as a vacation rental called

“History’s Window” prior to the foreclosure, and the Plaintiff

lost the rental income when the foreclosure forced her and Penley

to use the property on the 2-acre tract as their residence. They

initially used agents to rent History’s Window and later rented it

themselves through the VRBO website.

17. Penley testified that they rented the property for

$150–200/night depending on the time of year. He kept the books

and records for the rental operation. The property rented for

200–250 nights a year according to Penley. After subtracting the

9 Penley testified that most of the Plaintiff’s records were lost when the

house on the adjoining 2-acre tract burned to the ground several years later.

The Plaintiff did not explain, however, why she had not provided any

documentation to her attorneys prior to the fire or why she did not seek records

from other sources.

cost of utilities and other normal expenses, Penley said that the

rental produced net income of $10,000–$15,000 annually from 2009–

2011. The Plaintiff said she thought the income from the rental

of History’s Window totaled $10,000 a year.

18. The Plaintiff did not produce any documentary evidence

to substantiate the alleged amount of lost rental income: no books,

records, tax returns, bank statements, receipts, VRBO documents,

etc.10

Personal Property

19. The Plaintiff and Penley claimed that the Plaintiff lost

a significant amount of personal property when they were evicted

from their home and moved into the property on the 2-acre tract in

March 2012, several months after the foreclosure. The lost

property included furniture, clothes, antiques, appliances,

dishes, pots and pans, farm equipment, and items with sentimental

value, and the Plaintiff and Penley said they lost the property

due to a lack of storage space in their new residence and the

rushed nature of their move.11 While they asked the court to

require the Defendant to compensate them for the lost property,

10 Penley blamed the subsequent fire that burned the property formerly known as

History’s Window for the Plaintiff’s failure to produce any documentary evidence

related to the rental income, but he did not explain why the Plaintiff failed

to gather documents from other sources and had not sent any records to her

attorneys during the years between the foreclosure and the fire.

11 While the Plaintiff moved months after the foreclosure, she testified that

she thought the situation would get rectified until she was given 10 days to

leave the mobile home.

they also said they sold some of it, gave some of it away, and

some of it “disappeared.”

20. The Plaintiff did not produce any documentary evidence

regarding the value of the lost personal property. In addition,

neither the Plaintiff nor Penley provided the value of any of the

personal property, other than the farm equipment, in their

testimony. According to Penley, the farm equipment consisted of

a tractor, a tiller, two “mammoth steelers,” a plow, a disc,

equipment used to “lay off roads,” and a planter; was purchased

for $10,000 in 2008 and sold for $1500 in 2011 (even though he

thought it was worth more than that); and was co-owned by him and

the Plaintiff. The Plaintiff believes that the contents of the

barn at 318 Todd Railroad Grade Road, including the farm equipment,

were worth almost $40,000.

Emotional Distress

21. The Plaintiff and Penley both testified about the

Plaintiff’s emotional distress as a result of the foreclosure and

subsequent events. The Plaintiff was in a somewhat unique position

among former owners of foreclosed property—since she and Penley

moved to their adjoining property, she was aware of activities at

her former residence and reminded about the loss of her property

during the years following the foreclosure. For example, Penley

described the Plaintiff’s pain as they watched the removal of the

topsoil from the land.12 Penley described the Plaintiff as two

different people before and after the loss of her home: she

formerly was an outgoing and active “social butterfly” and

subsequently became a recluse who does not enjoy socializing or

even talking and who requires medication for her anxiety and in

order to sleep. When she does talk, she cries and discusses this

situation.

22. Penley described the Plaintiff’s problems with asthma in

the years following the foreclosure. While she was diagnosed with

asthma prior to the loss of her home, the Plaintiff never had any

asthma attacks prior to the foreclosure and has suffered three

attacks since. One attack occurred in 2012 when bankers and

potential buyers frequently visited the property. The Plaintiff

was unable to stop the attack with her inhaler, emergency medical

technicians responded and administered oxygen, and the Plaintiff

had to go to the emergency room to get steroids and a breathing

treatment. Another attack happened in 2014 when the property was

sold to a couple, one of whom the Plaintiff knew from church, who

moved the mobile home. Penley testified that the Plaintiff passed

out and turned purple and subsequently spent five days on a

ventilator in the hospital.

23. The Plaintiff described her pre-foreclosure life as a

“mama” to most of the kids in the community, entertaining in her

12 Penley said the topsoil was removed and sold. The Defendant’s attorney

asserted that his client did not remove the topsoil.

home, and her familial experiences involving the property,

including the deaths of each of her parents. Recalling how her

life changed at the end of 2011 brought the Plaintiff to tears,

and the court recessed to allow her to compose herself. The

Plaintiff said she suffered from anxiety and depression every day

since the foreclosure, she did not want to go out or to church

because she knew the foreclosure would be the topic of

conversation, and the purchase of the property by someone she had

known since she was seven years old caused her great pain.

24. The Plaintiff did not produce any medical bills,

receipts, or any other documentary evidence of her emotional

distress.

Attorney’s Fees

25. The December 20, 2019 Declaration of M. Shane Perry in

Support of Plaintiff’s Motion for Attorney Fees and Costs

(“Declaration”) seeks reimbursement of attorney’s fees and costs

totaling $236,566.49, including $204,770 in attorney’s fees for

546.75 hours over seven years for the Plaintiff’s primary attorney

and $26,127.49 for 74.65 hours of work by her secondary attorney,

$18,246.66 of which was in relation to the two-day damages trial.

The Declaration says the 2012 “original fee agreement13

contemplated $300 an hour,” the primary attorney’s hourly rate

13 The Plaintiff’s primary attorney did not attach the original fee agreement

to the Declaration or otherwise make the original fee agreement available to

the court.

increased to $350 at the beginning of 2015, and his rate further

increased to $400 at the beginning of 2018. The Declaration

mentions the complexity of this litigation and says the primary

attorney did not include any time for his many discussions with

other attorneys or the time he spent contemplating the issues while

he drove his car or mowed his lawn. The requested fees do not

include “the time spent in any other part of this litigation in

other courts” and only includes part of the time that the primary

attorney spent on telephone calls related to this adversary

proceeding because “they were not documented.” Similarly, the

Declaration says that the primary attorney did not keep his time

spent sending emails, so he reconstructed the emails and billed .1

hours (six minutes) for each. There is no description of the topic

of the emails. The Declaration seeks $100/hour for 22.2 hours of

paralegal time that was not kept contemporaneously, and costs of

$3449, including $.10/page for 4,000 copies.14

26. The primary attorney attached a detailed, if sometimes

vague,15 accounting of his time spent on this adversary proceeding

since April 24, 2012. An accounting of the secondary attorney’s

time is also attached, along with a list of the time, date, and

sender/recipient for all of the primary attorney’s emails.

14 According to the Declaration, there is “no way to account for all of the

printed copies that have been produced in this case,” but the primary attorney

knows of more than 4,000.

15 The descriptions of how the attorney spent his time include “research,” “Phone

call,” “continuance,” “notes,” and “Discovery.” The attorney told the court

that the vague descriptions were a litigation tactic to avoid disclosing too

much information to the Defendant’s attorneys.

CONCLUSIONS OF LAW16

27. When a debtor commences a bankruptcy case by filing a

petition, the petition acts as a stay that generally prevents all

entities from pursuing pre-petition claims against the debtor. 11

U.S.C. § 362(a). Section 362(a) specifically prohibits “judicial,

administrative, or other action[s] or proceeding[s] against the

debtor,” “any act to obtain possession of property of the estate,”

and “any act to create, perfect, or enforce any lien against

property of the estate.” Id.

The automatic stay is one of the fundamental

debtor protections provided by the bankruptcy

laws. It gives the debtor a breathing spell

from his creditors. It stops all collection

efforts, all harassment, and all foreclosure

actions. It permits the debtor to attempt a

repayment or reorganization plan, or simply to

be relieved of the financial pressures that

drove him into bankruptcy.

Budget Serv. Co. v. Better Homes of Va., Inc., 804 F.2d 289, 292

(4th Cir. 1986) (quoting H.R. REP. NO. 95-595, at 340 (1977),

reprinted in 1978 U.S.C.C.A.N. 5963, 6296–97; S. REP. NO. 95-989,

at 54–55 (1978), reprinted in 1978 U.S.C.C.A.N. 5787, 5840–41).

“The automatic stay is a bedrock principle upon which the Code is

built; the importance of § 362 cannot be over-emphasized.” In re

Garner, No. 09-81998, 2010 WL 890406, at *2 (Bankr. M.D.N.C. Mar.

9, 2010) (citing Grady v. A.H. Robins Co., 839 F.2d 198, 200 (4th

16 In addition to the conclusions of law specifically referenced in this order,

the court hereby incorporates the conclusions from the Summary Judgment Order

by reference.

Cir. 1988)); see In re Franklin, 614 B.R. 534, 543 (Bankr. M.D.N.C.

2020) (“The automatic stay is one of the most fundamental and

important protections given to debtors under the Bankruptcy Code.”

(citations omitted)).

28. With one exception that is not applicable to this

adversary proceeding, section 362(k) provides that “an individual

injured by any willful violation of a stay provided by this section

shall recover actual damages, including costs and attorneys’ fees,

and, in appropriate circumstances, may recover punitive damages.”

§ 362(k). The injured individual must show “that she filed a

bankruptcy petition; that she was an individual protected by the

automatic stay provision; that the creditor received notice of the

petition; that the creditor’s actions were in willful violation of

the automatic stay; and that the debtor suffered damages” in order

to recover pursuant to § 362(k). Summary Judgment Order at 831

(citing Weatherford v. Timmark (In re Weatherford), 413 B.R. 273,

284 (Bankr. D.S.C. 2009)); see also Edwards v. B & E Transp., LLC

(In re Edwards), 607 B.R. 530, 536 (Bankr. W.D. Va. 2019) (“To

award damages under section 362(k), a court must find that (1) ‘a

violation occurred,’ (2) ‘the violation was committed willfully,’

and (3) ‘the violation caused actual damages.’ “ (quoting

Skillforce, Inc. v. Hafer, 509 B.R. 523, 529 (E.D. Va. 2014))).

The Summary Judgment Order concludes that the Plaintiff has shown

all of the required elements, including the existence of some

degree of damages, and reserves the issue of the extent of the

Plaintiff’s damages for trial. Summary Judgment Order at 831–35.

29. The Bankruptcy Code and the relevant legislative history

do not provide a definition of “actual damages,” In re Seaton, 462

B.R. 582, 594 (Bankr. E.D. Va. 2011), and courts have awarded

actual damages under many different theories, see Sundquist v.

Bank of Am., N.A. (In re Sundquist), 566 B.R. 563, 587 (Bankr.

E.D. Cal. 2017) (listing 17 categories of actual damages, including

value of personal property lost, lost business, and emotional

distress (citing Eric C. Surette, Annotation, Remedies and Damages

for Violations of the Automatic Stay Provisions of the Bankruptcy

Code (11 U.S.C.A. § 362(h)17), by Parties Other Than the Federal

Government, 153 A.L.R. Fed. 463 (1999 & 2016 Supp.))). While there

are many categories of actual damages, any damages must be the

result of the stay violation and satisfy the “but for” causation

standard frequently used in tort law: “[i]f a consequence would

not have occurred ‘but for’ the automatic stay violations, then

courts make awards based on that consequence.”18 Id. Even though

17 Section 362(k) was previously known as 11 U.S.C. § 362(h). Summary Judgment

Order at 831 n.4.

18 At trial, the Defendant advocated for a more stringent version of the “but

for” standard and attempted to convince the court that it could only award

damages if the stay violation was the sole cause of the injury. For example,

the Defendant argued that there was no harm caused by the foreclosure in

violation of the stay because the Plaintiff did not have the financial

capability to cure the default on her mortgage. “But for” causation, however,

just requires that the stay violation constitutes a cause of the injury, not

the only cause, as the Supreme Court recently reminded us in a different context.

See Bostock v. Clayton County, Ga., No. 17-1618, slip op. at 5–6 (U.S. June 15,

2020) (“This can be a sweeping standard. Often, events have multiple but-for

causes. So, for example, if a car accident occurred both because the defendant

ran a red light and because the plaintiff failed to signal his turn at the

a debtor loses the protection of the stay when a case is dismissed,

the “consequences directly attributable to the violation of the

stay before its expiration may continue to be visited upon a debtor

for an additional period of time,” so “liability for a stay

violation continues at least until full restitution is actually

made or, if after the expiration of the stay, the court orders

full restitution.” Id. at 586 (citing Snowden v. Check Into Cash

of Wash., Inc. (In re Snowden), 769 F.3d 651, 659 (9th Cir. 2014);

Snowden, 769 F.3d at 662 (Watford, J., concurring)). Since this

order will end the Defendant’s liability for the stay violation,

full restitution includes all of the Plaintiff’s damages over the

last eight years and several months.

30. “The award of actual damages is mandatory” in response

to stay violations, but “the burden is on the debtor to demonstrate

the extent of any damages.” Clayton v. King (In re Clayton), 235

B.R. 801, 810 (Bankr. M.D.N.C. 1998) (citations omitted); accord

In re Voll, 512 B.R. 132, 138 (Bankr. N.D.N.Y. 2014) (citations

omitted). The debtor must show his actual damages by a

intersection, we might call each a but-for cause of the collision. When it

comes to Title VII, the adoption of the traditional but-for causation standard

means a defendant cannot avoid liability just by citing some other factor that

contributed to its challenged employment decision. So long as the plaintiff’s

sex was one but-for cause of that decision, that is enough to trigger the law.”)

(citations omitted); see also Sundquist, 566 B.R. at 595, 599, 601, 602, 604,

608, 609 (observing that various types of damages would not have happened “but

for” the actions of the creditor). In addition to the technical problem with

the Defendant’s understanding of the “but for” standard, a requirement that

debtors, who are generally in bankruptcy due to financial problems, show that

they could repay a creditor prior to allowing recovery for stay violations would

gut the protections of § 362. While the court does not accept the Defendant’s

version of the standard for causation, there were causation problems with the

Plaintiff’s evidence under the correct standard as detailed below.

preponderance of the evidence, and the evidence should be

“concrete” and “non-speculative.” Seaton, 462 B.R. at 595. The

debtor can use “methodologies that need not be intellectually

sophisticated,” but the award for damages “cannot be based on mere

speculation, guess[,] or conjecture.” In re Sumpter, 171 B.R.

835, 844 (Bankr. N.D. Ill. 1994) (citations omitted).

31. Just as there are many types of actual damages that a

debtor could assert as a result of a stay violation, there are

many ways that a debtor could prove the damages to a court. Here,

the Plaintiff’s case runs into difficulty. With the exception of

photographs of the property and the rough estimate of farming

income, the Plaintiff relied almost entirely on her own testimony

and that of Penley to establish the amount of her damages. Cf. In

re Grason, No. 09-71353, slip op. at 3 (Bankr. C.D. Ill. Sept. 26,

2014) (disallowing actual damages other than attorney’s fees in

part because the debtor did not provide documentary evidence or

calculations and determining that his testimony alone was

insufficient). While the testimony was sufficient for the court

to conclude that the Plaintiff suffered some significant injury as

a result of the Defendant’s actions, as more fully explained below,

in many respects it was not sufficient to establish the exact

amount of damages suffered by the Plaintiff.19 See Sundquist, 566

19 At trial, the Defendant attempted to damage the Plaintiff’s and, to a lesser

extent, Penley’s, credibility by raising questions about an apparently

fraudulent deed that was faxed to the Plaintiff’s mortgage company and an

allegedly fraudulent credit counseling certificate that was attached to the

B.R. at 600 (awarding damages “in a conservative fashion that will

award less than what likely could have been proved with a more

focused evidentiary presentation”). For some of her alleged

damages, the Plaintiff did not even attempt to quantify the degree

of her alleged injuries and expected the court to determine the

value of various items of property and types of income allegedly

lost due to the Defendant’s actions. The Plaintiff told the court

that the damage was too significant to quantify—while the court

understands her sentiment, it was her burden to do so.

Value of Real Estate

32. The Plaintiff did not call an appraiser to testify about

the value of the real estate, but she did produce documentary

evidence of the $144,000 tax value at the time of the foreclosure.

Penley testified to a higher value, and the Plaintiff offered a

range of possible higher values, but neither opinion was

sufficiently supported by the witness for the court to rely on it.

Accordingly, the court concludes that the value of the property

was $144,000. Since the Defendant’s letter says the proceeds of

the foreclosure paid the $130,142.89 balance of the mortgage on

the property, the court will award the difference between the value

of the property and the balance of the mortgage, $13,857.11, to

Plaintiff’s complaint. Since the Defendant did not call any witnesses at trial,

its attempts to attack the Plaintiff and Penley were entirely limited to cross-

examination. The Defendant’s attacks were insufficient for the court to draw

any conclusions about the deed and the credit counseling certificate or the

Plaintiff’s overall reliability as a witness, but they did bolster the court’s

conclusion that it could not award all of the requested damages based almost

entirely on testimony.

the Plaintiff for the equity in the property at the time of the

foreclosure.

Farm Income

33. Due to the limitations of the rough estimate discussed

previously, the court cannot rely on that document to establish

the amount of farm income lost by the Plaintiff as a result of the

foreclosure. Without the rough estimate, the Plaintiff’s evidence

of her lost farm income consisted of photographs and testimony.

While the photographs were helpful in terms of providing some

context for the testimony, they did not establish the value of the

crops and flowers. Similarly, the Plaintiff and Penley failed to

establish their alleged lost income with any specificity and only

offered estimates of total lost annual income. The court cannot

rely on these general and vague estimates to establish the value

of the lost farm income. In addition, the witnesses did not

adequately explain or account for the degree of income lost due to

the foreclosure on 1.8 acres of their adjoining 12.8 acres when

they could have continued to use the remaining 11 acres for

farming. Instead, they claimed that they lost all of their farming

income due to the stigma associated with the foreclosure. The

court cannot conclude that a foreclosure on the smallest of three

adjoining parcels of land that were all used for farming caused

all of the farming to stop on the remaining two parcels.

34. The Defendant challenged the amount of farm income that

the Plaintiff lost but did not argue that there was none. The

court is confident based on the evidence presented that the

Plaintiff lost at least $1000 in farm income over the last eight

years due to the foreclosure; based on the severe limitations of

the evidence, however, the court is not comfortable awarding more

than that amount. See Franklin, 614 B.R. at 548 (observing that

it is likely that the debtor’s actual damages exceeded $150 but

determining that the evidence was insufficient to support a larger

award).

Rental Income

35. The Plaintiff and Penley testified about the loss of a

significant amount of rental income when the foreclosure forced

them to move into the property on the two-acre parcel that was

formerly used as a rental. They did not, however, produce any

documentary evidence of the rental income, and a rental business

is more likely to generate significant records and receipts than,

for example, a sole proprietorship farming operation. See Grason,

slip op. at 7 (awarding no damages for lost rental income due to

the lack of documentary evidence and calculation of expenses).

The Plaintiff should have been able to recreate some records, even

if the originals were lost, given the use of VRBO and the

likelihood of at least some of the income from the business being

reflected in bank statements. Also, as the Defendant argued, if

the Plaintiff was generating income consistent with the trial

testimony, it raises a question about why she defaulted on her

mortgage and did not cure the default prior to (or after) the

foreclosure. The Plaintiff did not adequately explain her pre-

foreclosure budget that allegedly included a great deal of income

and an inability to pay her regular expenses.

36. As with her farming income, the Defendant challenged the

amount of the Plaintiff’s income from her real property rental,

but it did not challenge the existence of some rental income. The

court is confident that the Plaintiff lost at least $1000 in rental

income as a result of the foreclosure but cannot award the amount

sought by the Plaintiff due to the limitations of her evidence.

Personal Property

37. Perhaps the most significant problems with the

Plaintiff’s evidence occurred with the alleged loss of personal

property. As in other categories of damages, the Plaintiff did

not produce any documentary evidence of the lost personal property,

but there were additional problems of proof in this category. The

Plaintiff alleged that she lost a significant amount of personal

property when she and Penley had to leave their residence several

months after the foreclosure and move to the smaller adjoining

property that had less storage space. The Plaintiff and Penley

described the move as throwing their stuff across the property

line. They did not adequately explain why they could not have

moved their property in a more organized fashion and found

somewhere to store it. Similarly, the Plaintiff and Penley did

not allege values for most of the personal property that they

claimed to lose as a result of the foreclosure, and the court

cannot determine values that are not in evidence. Compare Seaton,

462 B.R. at 595–98 (discussing difficulty of establishing the value

of used personal property and determining that fair market value

is the appropriate standard), with Edwards, 607 B.R. at 536–37

(awarding the original purchase price in addition to other out-

of-pocket expenses for the loss of use of a motorcycle). Some of

the property for which the witnesses provided valuation evidence,

like the farming equipment, was sold according to the testimony,

and the Plaintiff did not adequately explain why the sale price

would not represent the fair market value of the property sold.

38. Due to the lack of a direct link between the foreclosure

and the loss of the personal property and the failure of the

Plaintiff to provide evidence of the value of most of the property,

the court cannot award any damages for lost personal property.

See Grason, slip op. at 5 (awarding no damages for lost personal

property due to poor evidence); Seaton, 462 B.R. at 598–600 (same).

Emotional Distress

39. Where appropriate, courts allow emotional distress

damages for mental injuries suffered as a result of willful stay

violations. See, e.g., Voll, 512 B.R. at 138 (citing bankruptcy

cases from the Northern District of New York). While this circuit

has not traditionally approved emotional distress claims in

relation to civil contempt, see Malone v. Golden (In re Malone),

Nos. 10-31855, 10-3299, 2012 WL 162374, at *7 (Bankr. W.D.N.C.

Jan. 19, 2012) (citing In re Walters, 868 F.2d 665, 670 (4th Cir.

1989); Pague v. Harshman (In re Pague), Nos. 3:01-bk-32061, 3:09-

ap-00071, 2010 WL 1416120, at *7 (Bankr. N.D. W. Va. Apr. 5,

2010)), many courts within this circuit have awarded emotional

distress damages as compensation for stay violations, see Seaton,

462 B.R. at 601–02 (collecting Fourth Circuit cases that award

damages for emotional distress); see, e.g., Franklin, 614 B.R. at

548 n.21 (“Generally, Debtors may recover emotional distress

damages under § 362(k).” (citations omitted)); In re Carrigan, 109

B.R. 167, 171–72 (Bankr. W.D.N.C. 1989) (awarding damages for the

anxiety suffered by the debtor as a result of a stay violation).

40. Emotional distress claims present peculiar problems of

proof, in this context and others. See generally Johnson v. Ruark

Obstetrics & Gynecology Assocs., P.A., 395 S.E.2d 85, 327 N.C. 283

(1990) (discussing the long history of and various standards for

the tort of negligent infliction of emotional distress in North

Carolina). In the context of stay violations, bankruptcy courts

typically require a debtor to show three elements: (1) significant

harm, (2) that is clearly established, and (3) a causal connection

with the stay violation. Sundquist, 566 B.R. at 587 (citing

Snowden, 769 F.3d at 656–57; Dawson v. Wash. Mut. Bank, F.A. (In

re Dawson), 390 F.3d 1139, 1149 (9th Cir. 2004)); Seaton, 462 B.R.

at 602 (quoting Page Venture, LLC v. Ventura-Linenko (In re

Ventura-Linenko), No. 3:10-cv-138-RCJ-RAM, 2011 WL 1304464, at *9

(D. Nev. Apr. 1, 2011)). Debtors are not, however, required to

show a related financial loss in order to be eligible for emotional

distress damages. Sundquist, 566 B.R. at 587 (citing Dawson, 390

F.3d at 1149); Seaton, 462 B.R. at 603 (citing Aiello v. Providian

Fin. Corp., 239 F.3d 876, 880–81 (7th Cir. 2001)).

41. There are many methods of providing evidence of mental

anguish, including the testimony of the debtor and corroborating

evidence from family members. Sundquist, 566 B.R. at 587–88; see

Voll, 512 B.R. at 138 n.3 (noting that the testimony of family is

one type of corroborating evidence for emotional distress claims

(citing Dawson, 390 F.3d at 1149–50)). Emotional distress damages

can be allowed based only on the victim’s testimony if the court

is persuaded by the testimony. Sundquist, 566 B.R. at 589–90.

Certain conduct is sufficiently egregious that an emotional

distress injury can be presumed, id. at 588; Voll, 512 B.R. at 138

(requiring corroborating evidence unless the circumstances are

sufficiently egregious); Seaton, 462 B.R. at 602 (quoting Ventura-

Linenko, 2011 WL 1304464, at *9), and courts can even presume some

injury to a reasonable person as a result of disturbing but not

egregious circumstances, Sundquist, 566 B.R. at 588; Seaton, 462

B.R. at 602–03 (quoting Ventura-Linenko, 2011 WL 1304464, at *9).

42. The paradigmatic example of a case where egregious

conduct justifies emotional distress damages without further

corroboration of the injury is a creditor holding or pretending to

hold a gun to a debtor’s head. See Sundquist, 566 B.R. at 588;

Seaton, 462 B.R. at 602 (quoting Ventura-Linenko, 2011 WL 1304464,

at *9). Another example occurred in this district 30 years ago.

Voll, 512 B.R. at 139 (citing Carrigan); Seaton, 462 B.R. at 602

(including Carrigan in a list of Fourth Circuit cases that awarded

emotional distress damages). In Carrigan, the debtor provided for

a second mortgage on his mobile home park through his Chapter 13

plan. 109 B.R. at 168. According to the testimony of the debtor

and his wife, the individual who held the second mortgage, Cleo

Screws, came to the Debtor’s residence after 9:00 p.m. on a Sunday

night, demanded payment on the mortgage, threatened the debtor,

initially refused to leave, and made an obscene gesture to the

debtor as he left.20 Id. at 168–69. Screws admitted to traveling

to the debtor’s residence on the night in question but claimed to

20 The Honorable George R. Hodges memorably described the obscene gesture as

“the same gesture used by Nelson Rockefeller in dealing with hecklers during

his presidential nomination campaign, by Roger Maris in dealing with opposing

fans, and by a captured crewman of the U.S.S. Pueblo in a North Korean propaganda

photo.” Carrigan, 109 B.R. at 169 n.*. To update Judge Hodges’s references,

it is also the same gesture that Mini-Me showed Austin Powers during their fight

in AUSTIN POWERS 2: THE SPY WHO SHAGGED ME, the singer M.I.A. delivered to an

international television audience during Madonna’s performance at halftime of

Super Bowl XLVI, and Anthony Weiner displayed to journalists after losing the

2013 New York City mayoral race.

have behaved like a gentleman throughout the encounter. Id. at

169. The court believed the debtor’s version of the evidence and

awarded damages for the “bodaciously flagrant” stay violation,

concluding that the “outrageous nature of Screws’ actions is

sufficiently strong to produce the anxiety expressed by the

debtor.” Id. at 170–72; see also In re Johnson, No. 15-50053,

2016 WL 659020, at *4 (Bankr. W.D.N.C. Feb. 17, 2016) (“Considering

Nationstar’s [540 phone calls] in this case, it is understandable

why the Debtors experienced psychological and other health

complications.”); cf. Voll, 512 B.R. at 140 (“Debtors did not

testify to any adverse collateral consequence that resulted from

the garnishment, such that the court might infer emotional harm.”).

43. Courts considering emotional distress claims as a result

of stay violations must keep a couple of additional considerations

in mind. The mental injury must be significant in order to deserve

compensation, so courts should not award emotional distress

damages in connection with each and every violation of the

automatic stay as a matter of course. See Voll, 512 B.R. at 139.

Similarly, it is important to connect the emotional distress

directly to the stay violation. Id. at 138 (quoting Dawson, F.3d

at 1149). Debtors in bankruptcy frequently suffer from multiple

stressors, financial and otherwise, and it can be difficult to

determine the degree to which mental anguish is the result of a

stay violation in comparison with other difficulties a debtor may

face. Id. at 136–37 (noting the debtor’s testimony about several

sources of stress); Seaton, 462 B.R. at 602 (“Segregating the

emotional distress experienced by a debtor from the automatic stay

violation from other stress sources may be problematic.” (citing

In re Robinson, No. 06–10618–SSM, 2008 WL 4526183, at *4 (Bankr.

E.D. Va. Sept. 29, 2008))).

44. Considering the Plaintiff’s evidence in light of the

foregoing principles, and despite the shortcomings of her

presentation, the court has no trouble concluding that the

Plaintiff suffered a compensable emotional distress injury. The

testimony of the Plaintiff and Penley clearly established

significant harm by describing the Plaintiff’s multiple asthma

attacks that resulted in hospitalizations and her long-term

depression. In addition, the testimony firmly established a causal

relationship with the stay violation, as the Plaintiff tied the

majority of her most severe emotional reactions to witnessing

activity on her former property. Sundquist, 566 B.R. at 581 &

nn.43–44 (detailing the “difficult experience” of a debtor

returning to the site of a stay violation and how personal property

at the site “triggered even more trauma”). Even when activity at

the property did not directly trigger the Plaintiff’s distress,

the testimony connected the events by noting that the Plaintiff

would cry and talk about the foreclosure. The Defendant did not

produce any evidence that suggested that the Plaintiff’s

difficulties were more general and related to her overall financial

situation, and the Defendant was the but for cause of all of the

Plaintiff’s emotional distress.

45. In addition, although Penley did corroborate the

Plaintiff’s testimony, the Defendant’s behavior was sufficiently

egregious, or at least disturbing, to establish damages without

corroboration. While a foreclosure in violation of the stay may

not seem as egregious as a gun to the head or even threatening a

debtor in the middle of the night, when one considers all of the

circumstances, this was a flagrant violation of the automatic stay.

This creditor is not an aggrieved individual who lacked

understanding of the requirements of the Bankruptcy Code; instead,

the Defendant is an experienced institutional actor represented by

one of the leading foreclosure law firms in this state. See

Sundquist, 566 B.R. at 610 (noting that Bank of America was a

sophisticated creditor that was aware of stay violation law). The

Defendant spent years claiming absolute innocence and ignoring the

off-ramps provided by the Plaintiff and suggested by this court

until the court ruled to the contrary, and stay violation liability

continues until the violation is rectified, id. at 586 (citing

Snowden, 769 F.3d at 659; Snowden, 769 F.3d at 662 (Watford, J.,

concurring)). The Defendant further showed the uniqueness of this

situation by asking the court to temper the language of the Summary

Judgment Order and claiming that its law firm had thoroughly

examined its files and did not find any other examples of similar

behavior. Defendant’s Brief in Support of Motion to Reconsider at

2–3, 8. While the court does not have to precisely determine the

level of the egregiousness, both because Penley corroborated the

Plaintiff’s testimony and the evidence clearly shows a situation

that would be disturbing to a reasonable person, the court does

believe emotional distress damages are entirely appropriate under

these circumstances.

46. Despite the court’s opinion of the Defendant’s conduct,

the Plaintiff’s case runs into a familiar problem here too—the

difficulty in precisely determining an appropriate amount of

damages. Here, as elsewhere, the Plaintiff failed to produce

documentary evidence that would have supported her case and would

presumably not be difficult to obtain, such as medical bills

related to her hospitalizations and treatment. Accordingly, the

court will award the Plaintiff $5,000 for her emotional distress

injury. See Sundquist, 566 B.R. at 608–09 (awarding $300,000 for

debtors’ emotional distress based solely on debtors’ statements

while noting that court would have awarded more with better

evidence).

Attorney’s Fees

47. As acknowledged by the Defendant’s attorney at the

January 17 hearing, a debtor’s attorney’s fees are part of the

actual damages as a result of a willful stay violation. § 362(k)

(“[A]n individual injured by any willful violation of a stay

provided by this section shall recover actual damages, including

costs and attorneys’ fees, and, in appropriate circumstances, may

recover punitive damages.”); Sundquist, 566 B.R. at 594; Voll, 512

B.R. at 140, 145 n.10. Like other actual damages, an award of

attorney’s fees is mandatory, Sundquist, 566 B.R. at 588; In re

Barnes, No. 00-50829, slip op. at 11 (Bankr. W.D.N.C. Jan. 29,

2001) (”Debtors are entitled to the attorney fees for prosecuting

this action.”), but the fees awarded must be necessary and

reasonable, § 329(b) (“If such compensation [to a debtor’s

attorney] exceeds the reasonable value of any such services, the

court may cancel any such agreement, or order the return of any

such payment, to the extent excessive . . . .”); § 330(a) (“After

notice to the parties in interest . . . and a hearing, . . . the

court may award to . . . a professional person . . . (A) reasonable

compensation for actual, necessary services rendered by the . . .

attorney and by any paraprofessional person employed by such

person; and (B) reimbursement for actual, necessary expenses.”);

Edwards, 607 B.R. at 537 (quoting In re Miller, 447 B.R. 425, 434

(Bankr. E.D. Pa. 2011)). The debtor’s attorney has the initial

burden of showing that his fees are reasonable, and the objecting

party has the burden to show that the debtor’s attorney billed for

too much time. Voll, 512 B.R. at 141 (quoting In re Abel, No. 95-

11044, 2001 WL 36160133, at *3 (Bankr. D. Vt. May 29, 2001)). The

reasonableness of the fees should be examined as of the time the

attorney rendered the services and not with 20/20 hindsight. Abel,

2001 WL 36160133, at *4.

48. Bankruptcy courts disagree about the relationship

between attorney’s fees and other actual damages. See Clayton,

235 B.R. at 811 n.3 (noting difference in opinion about whether

other actual damages are required in order to award attorney’s

fees). Some courts believe that proportionality between

attorney’s fees and other damages is a significant factor for

reasonableness, see, e.g., Seaton, 462 B.R. at 605–06, while

others, including this court, have awarded fees in far greater

amounts than the other actual damages, Johnson, 2016 WL 659020, at

*5 (awarding $3297.23 in attorney’s fees and $300 in other actual

damages); see also Better Homes, 804 F.2d at 290 (affirming $350

in compensatory damages and $1162.50 in attorney’s fees);

Franklin, 614 B.R. at 552 (awarding $3813.90 in attorney’s fees

and $150 in other actual damages); Voll, 512 B.R. at 143 (noting

cases where attorney’s fees were awarded with no other actual

damages (citing In re Burkart, No. 08-61077, 2010 WL 502945, at *6

(Bankr. N.D.N.Y. Feb. 9, 2010); In re Seniecle, No. 06-34763, 2009

WL 2902939, at *3 (Bankr. N.D.N.Y. Apr. 20, 2009))); Grason, slip

op. at 2–3 (actual damages of $4423 are all for attorney’s fees

and costs). The court believes the proper approach is to treat

the proportionality between attorney’s fees and other actual

damages as a non-dispositive factor to consider. See Voll, 512

B.R. at 143. Courts should attempt to discourage willful

violations of the stay while not “rewarding an excessively

litigious approach” simply because fees will be shifted to the

creditor. Id. at 141 (quoting Seniecle, 2009 WL 2902939, at *3);

see Seaton, 462 B.R. at 604–05 (quoting In re Prusan, No. 09-

49716-CEC, 2010 WL 813778, at *3 (Bankr. E.D.N.Y. Mar. 2, 2010)).

An award of attorney’s fees is appropriate when a debtor has to

come to court to address a willful violation of the stay. Johnson,

2016 WL 659020, at *3 (quoting In re Riddick, 231 B.R. 265, 268

(Bankr. N.D. Ohio 1999)). “[C]reditors 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 States (In re Duby), 451 B.R. 664, 677 (B.A.P. 1st

Cir. 2011); In re Robinson, 228 B.R. 75, 86–87 (Bankr. E.D.N.Y.

1998)).

49. Courts frequently use the “lodestar” approach to

determine the reasonableness of fees pursuant to § 330. See, e.g.,

Sundquist, 566 B.R. at 597 (“Lodestar fees consistent with § 330

are presumptively reasonable for purposes of § 329 so long as they

are proportional in terms of time, rate, and the nature and amount

of the controversy.”); Voll, 512 B.R. at 141–45. To determine a

lodestar amount, a court multiplies the attorney’s reasonable

hours by a reasonable hourly rate while considering twelve factors.

Grissom v. The Mills Corp., 549 F.3d 313, 320–21 (4th Cir. 2008)

(citations omitted). The twelve factors are:

(1) the time and labor expended; (2) the

novelty and difficulty of the questions

raised; (3) the skill required to properly

perform the legal services rendered; (4) the

attorney’s opportunity costs in pressing the

instant litigation; (5) the customary fee for

like work; (6) the attorney’s expectations at

the outset of the litigation; (7) the time

limitations imposed by the client or

circumstances; (8) the amount in controversy

and the results obtained; (9) the experience,

reputation and ability of the attorney; (10)

the undesirability of the case within the

legal community in which the suit arose; (11)

the nature and length of the professional

relationship between attorney and client; and

(12) attorneys’ fees awards in similar cases.

Id. at 321 (quoting Spell v. McDaniel, 824 F.2d 1380, 1402 n.18

(4th Cir. 1987)). The hourly rate is the “critical inquiry,” and

it is the attorney’s burden to show a reasonable rate. Id.

(quoting Plyler v. Evatt, 902 F.2d 273, 277 (4th Cir. 1990)).

After determining the lodestar amount, a court should subtract

from the total for time spent on unsuccessful claims and award a

percentage based on the degree of success. Id. (quoting Johnson

v. City of Aiken, 278 F.3d 333, 337 (4th Cir. 2002)); see Voll,

512 B.R. at 141 (noting that the lodestar amount can be increased

or decreased based on case-specific factors) (citing Arbor Hill

Concerned Citizens Neighborhood Ass’n v. County of Albany, 522

F.3d 182, 188–90 (2d Cir. 2008)). Appeals courts evaluate lodestar

determinations under an “extremely deferential standard of

review.” Grissom, 549 F.3d at 322.

50. Most of the lodestar factors in this adversary

proceeding either support the Plaintiff’s attorney’s fee

application or are more or less neutral. For example, over the

last seven-plus years, this adversary proceeding began in the

District Court; was sent to a magistrate; took a couple of trips

to the Fourth Circuit, including a successful appeal that depended

on the application of a somewhat novel theory (cumulative

finality); was sent to this court by the magistrate; was

recommended to go back to the District Court by this court; was

bifurcated between this court and the state court by the District

Court; resulted in summary judgment in favor of the Plaintiff; and

required three days of hearings on the Plaintiff’s damages in this

court. Even without getting into the specifics of the Plaintiff’s

attorney’s fee request, it is clear that this adversary proceeding

required a great deal of time and labor, demanded some skill to

deliver the necessary legal services, and involved opportunity

costs and time limitations for the attorney. Similarly, the

Plaintiff apparently consulted with many different attorneys

before finding one to take her case, which indicates that this

type of case is not very desirable in the legal community.

Attorney’s fees in stay violation cases vary widely, compare

Sundquist, 566 B.R. at 596, 598 (allowing $87,882 in attorney’s

fees for work in the state court and the bankruptcy court) with

Seaton, 462 B.R. at 606 (awarding 2.45% ($249.90) of requested

attorney’s fees to match the 2.45% of requested emotional distress

damages rewarded), and the court is not aware of any other

successful stay violation litigation that required more than seven

years of work.

51. The Defendant, to its credit, does not deny that the

Plaintiff’s attorney deserves to be awarded a reasonable fee for

his work. In order to defend its restricted version of

reasonableness, however, the Defendant resorts to faulty arguments

and ignores its responsibility for increasing the duration of the

controversy and, thus, the Plaintiff’s attorney’s fees. The

Defendant argues that the Plaintiff could have brought her stay

violation claim as a motion in this court instead of alleging it

along with many state law claims in the District Court. Cf.

Franklin, 614 B.R. at 540 n.7 (determining that debtor bringing

stay violation claim as an adversary proceeding instead of by

motion is of “little consequence”). While it may be true that the

Plaintiff could have brought a simple § 362(k) claim by itself in

this court, she cannot be faulted for her promotion of judicial

economy in trying to bring all of her related claims together, she

may have lost the claims currently pending in state court had she

not asserted them with the § 362 claim, and the District Court

confirmed this court’s conclusion that it could not hear the other

claims, Houck v. Lifestore Bank, 582 B.R. 138, 140 (W.D.N.C. 2018)

(“If the second bankruptcy case was still active, Judge Beyer would

continue to have ‘related to’ jurisdiction over those claims;

however, since the second bankruptcy petition has now been

terminated, there is no jurisdiction in the Bankruptcy Court to

consider those state-law claims. This Court’s supplemental

jurisdiction cannot now be shared under 11 U.S.C. § 157 with the

Bankruptcy Court.” (citing Enron Corp. v. Citigroup, Inc. (In re

Enron Corp.), 353 B.R. 51, 61 (Bankr. S.D.N.Y. 2006))); see also

Sundquist, 566 B.R. at 595–96 (noting that debtors initially

proceeded in state court on multiple theories and approving state

court attorney’s fees). Similarly, the Defendant argues that the

other claims dismissed by the District Court without prejudice and

now pending in state court were unsuccessful, but that argument

ignores that a dismissal on jurisdictional grounds is not a

determination on the merits, the other claims are still pending in

state court, and the Plaintiff’s attorney is only seeking fees

related to the stay violation claim.

52. Finally, the Defendant had numerous opportunities to

stop the Plaintiff’s attorney’s clock—some before the clock even

started running—but declined them all, resulting in a long case

fraught with difficulty and undue resistance. See Sundquist, 566

B.R. at 595 (noting that the creditor should not complain about

the extent of the debtors’ fees because the creditor’s conduct led

to the fees); Voll, 512 B.R. at 142 (rejecting creditor’s complaint

about debtor seeking sanctions in court when the creditor chose to

fight the allegations instead of acknowledging the violation).

The Defendant received notice of its technical stay violation a

few hours after the foreclosure and did nothing, allegedly because

none of its attorneys or employees put all of the information

together. The Defendant admits that it realized what happened a

few months later but incorrectly determined that it had done

nothing wrong and could not do anything to rectify the situation.

When the Plaintiff commenced this case, she asked for the

Defendant’s help in stopping the sale of her former residence to

a third party, but the Defendant declined. Early in the

litigation, the Plaintiff offered to settle for $5,000, but the

Defendant was not interested. See Voll, 512 B.R. at 142 (noting

settlement discussions in time records). Here, the court had to

inform the Defendant about important admissions in its own

discovery responses, and the Defendant ignored the court’s

suggestions about the problems in its case. In fact, at the

damages trial, the Defendant continued to argue that it really did

not do anything wrong after admitting the stay violation in its

Memorandum of Law Supporting Defendant’s Motion Pursuant to Fed.

R. Civ. P. 52 and 59. The party to this adversary proceeding that

has displayed an excessively litigious approach is the Defendant,

not the Plaintiff.

53. Nevertheless, at the risk of repeating itself like a

broken record, the court must admit that the Plaintiff’s

presentation is not without shortcomings. For example, the

Plaintiff’s attorney provided examples of fees recently approved

in bankruptcy cases ranging from $380 to $550 per hour, but all of

the cases cited are distinguishable.21 In addition, the Plaintiff’s

attorney’s lack of experience in this type of litigation shows in

his failure to keep detailed and contemporaneous time entries as

suggested by the court’s Guidelines for Compensation and Expense

Reimbursement of Professionals. The attorney also spent excessive

time on particular tasks, such as 7.8 hours on a motion to compel,

3.8 hours on a notice of deposition, and 16.1 hours to prepare for

two depositions.22 See Voll, 512 B.R. at 144 (observing that a

court should “exclude hours that are excessive, redundant, or

otherwise unnecessary” (quoting Watkins v. Guardian Loan Co. (In

re Watkins), 240 B.R. 668, 679 (Bankr. E.D.N.Y. 1999))). While it

was reasonable for the Plaintiff to be represented by (and

compensated for) two attorneys at the damages trial, especially

since multiple attorneys appeared on behalf of the Defendant at

most of the hearings and three appeared at trial, it was not

reasonable for the Plaintiff’s primary attorney to have his partner

21 In defense of the Plaintiff’s attorney’s examples and as previously noted,

there may not be any situations in this district or others that are not

distinguishable from this adversary proceeding in some way.

22 The court notes that the Plaintiff’s attorney waived some of the time that

he spent on this case, including time spent consulting with outside attorneys.

review every document that he filed. See id. Also, while the

Plaintiff’s attorney was successful in establishing the stay

violation despite the necessity of traveling back and forth between

four courts and more judges, the court believes that a more

skillful litigant would have shown the Plaintiff’s entitlement to

a larger amount of actual damages. See Sundquist, 566 B.R. at

590, 600, 604, 605, 608, 609 (repeatedly noting the likelihood of

larger damage awards with better evidentiary presentations).

54. In consideration of the foregoing, it is appropriate to

allow the Plaintiff’s attorney an hourly rate of $300. See id. at

597 (approving a $300 lodestar rate in a sanctions adversary

proceeding for a foreclosure in violation of the stay). Three

hundred dollars per hour is the rate initially agreed to by the

Plaintiff and her attorney (before the attorney’s rate increased

to $350 and then $400) and is less than the examples cited by the

Plaintiff’s attorney. In light of the Plaintiff’s primary

attorney’s timekeeping deficiencies, the excessive time billed for

some tasks, and his failure to establish the full amount of damages

to which the Plaintiff appears to have been entitled, it is

appropriate to reduce his hours by half to 273.375, and 273.375

hours at $300/hour equals $82,012.50. The Plaintiff only requested

fees for her second attorney’s participation in trial preparation

and at trial, which is $18,246.66 of the $26,127.49 in his time

sheets, and the second attorney is entitled to the full amount of

the time he spent in connection with the trial. The requested

time for emails and for the paralegals’ time suffers from the same

defects as the primary attorney’s time entries in that the time

was not kept contemporaneously and the descriptions of the work

are vague or nonexistent, so it is appropriate to discount those

fees by 50% also, to $4500 and $1110 respectively. The court does

not see any problems with the costs requested and will award the

full amount of $3449.23 In total, the court awards $109,318.16 in

fees and costs. The court is aware that this amount is significant

and significantly more than the amount of the Debtor’s other actual

damages, but it is less than half of the fees requested by the

Plaintiff, and the court feels it is appropriate in light of all

of the facts and circumstances of this case, including the duration

of the dispute and the Defendant’s central role in extending that

duration.

Punitive Damages

55. Unlike actual damages (including attorney’s fees), an

award of punitive damages is not mandatory for willful violations

of the automatic stay; instead, the Bankruptcy Code reserves

punitive damages for “appropriate circumstances.” § 362(k) (“[A]n

individual injured by any willful violation of a stay provided by

this section shall recover actual damages, including costs and

23 While the Plaintiff’s attorney did not keep track of the 4000 copies

contemporaneously, he only billed $.10/page, and the Guidelines for Compensation

and Expense Reimbursement of Professionals suggest $.25/page, so the court does

not believe that the copying cost needs to be discounted.

attorneys’ fees, and, in appropriate circumstances, may recover

punitive damages.”). Congress did not provide any further guidance

on the circumstances where punitive damages are appropriate,

Sundquist, 566 B.R. at 609–10 (“[T]here is still much about the

law of § 362(k)(1) punitive damages that amounts to writing on a

clean slate.”), and left the determination to the court’s

discretion, Franklin, 614 B.R. at 549 (citing Clayton, 235 B.R. at

811); Carrigan, 109 B.R. at 172.

56. Courts have developed various ways of describing conduct

that is especially troublesome and therefore deserving of

additional sanction. Punitive damages are appropriate where there

is a “reckless or callous disregard for the law or the rights of

others,” Sundquist, 566 B.R. at 588 (quoting Goichman v. Bloom (In

re Bloom), 875 F.2d 224, 228 (9th Cir. 1989)), a standard that is

satisfied by actual bad faith, id. Appropriate circumstances for

punitive damages can also involve misconduct described as

“egregious or vindictive,” Carrigan, 109 B.R. at 172 (citation

omitted), “malicious, wanton, or oppressive,” Sundquist, 566 B.R.

at 588 (citing Snowden, 769 F.3d at 657), or “contumacious,”

Franklin, 614 B.R. at 540. Regardless of the terminology,

situations where punitive damages are appropriate generally

involve an intentional or reckless stay violation. Id. at 549

(quoting Wells Fargo Bank, N.A. v. Jones, 391 B.R. 577, 608 (Bankr.

E.D. La. 2008)); see also Seaton, 462 B.R. at 604 (noting that

courts assess punitive damages for acts involving “creditor

conduct beyond willfulness or deliberation and more closely

resembling . . . specific intent” (quoting Rountree v. Nunnery (In

re Rountree), 448 B.R. 389, 419 (Bankr. E.D. Va. 2011))).24

57. The court previously used “abhorrent,” a synonym of

egregious, to describe the Defendant’s behavior, Summary Judgment

Order at 834, and declined the Defendant’s invitation to soften

that language, Order Denying Defendant’s Motion to Reconsider at

*2, so it should come as no surprise that the court believes

punitive damages are appropriate for these circumstances. Even if

it did not know of the Plaintiff’s bankruptcy case when it

conducted the foreclosure, as the Defendant argues and the

Plaintiff disputes, the Defendant admits that it received notice

of the Plaintiff’s case a few hours later. Even if the Defendant

did not initially put all the pieces together, as it argues, the

Defendant admits that it realized a few months later that it

conducted the foreclosure in violation of the stay; at that point,

the Defendant claims that it thoroughly reviewed the situation and

24 A willful stay violation only requires knowledge of a bankruptcy case and an

intentional act in violation of the stay, not the specific intent to violate

the stay. Better Homes, 804 F.2d at 292–93 (“There is ample evidence in the

record to support the conclusion that Budget Services knew of the pending

petition and intentionally attempted to repossess the vehicles in spite of

it.”); Wagner v. Ivory (In re Wagner), 74 B.R. 898, 903 (Bankr. E.D. Pa. 1987)

(“[T]he willfulness requirement refers to the deliberateness of the conduct and

the knowledge of the bankruptcy filing, not to a specific intent to violate a

court order.”). As discussed at length in the Summary Judgment Order, a

technical stay violation becomes willful when a creditor learns of a pending

bankruptcy case and does nothing to remedy its conduct. Summary Judgment Order

at 832–35.

decided that it did not do anything wrong and that there was

nothing it could do, two conclusions that are obviously incorrect

in light of the relevant law, see Summary Judgment Order at 832–

35. Nevertheless, in terms of trying to fix the problem, nothing

is exactly what the Defendant has done for almost a decade. See

Edwards, 607 B.R. at 538 (observing that the creditor had “ample

opportunity to correct its violation” but did not and awarding

punitive damages). The Defendant took the Plaintiff’s residence,

property that had been in her family for generations, in violation

of federal law. For more than a year after the foreclosure, the

Defendant could have admitted its violation and returned the

property to the Plaintiff. For years after it conveyed the

property to a third party, the Defendant could have apologized and

sought to make the Plaintiff whole. See Johnson, 2016 WL 659020,

at *5 (faulting creditor for taking six months to correct its

actions and awarding punitive damages). Instead, the Defendant

proclaimed its innocence and refused to admit any culpability until

this court ruled to the contrary. After the entry of the Summary

Judgment Order, the Defendant admitted its stay violation but

continues to argue that the Plaintiff does not deserve much, if

any, compensation for the injury.

58. In concluding that the Defendant’s actions were

egregious and in reckless and callous disregard for the law and

the Plaintiff’s rights, it is important to note again that the

Defendant is a very experienced institutional creditor represented

by and operating through some of the most experienced attorneys

that appear in this court. See Order Denying Defendant’s Motion

to Reconsider at *3 (observing that the court is familiar with the

Defendant’s attorneys and holds them in high regard). The

Defendant is not a pro se creditor who is unfamiliar with basic

concepts of bankruptcy law like many of the bad actors in stay

violation cases. See In re Kimbler, No. 04165-5-DMW, 2020 WL

4005781, at *2, *6 (Bankr. E.D.N.C. July 15, 2020) (assessing

punitive damages against individual creditor who instigated

criminal charges against debtor in violation of the stay);

Franklin, 614 B.R. at 540–41, 552 (assessing punitive damages

against car dealership that disabled and repossessed debtor’s car

in violation of the stay); Carrigan, 109 B.R. at 168–69, 172

(assessing punitive damages against individual mortgagee who

demanded payment from debtor in violation of the stay). A law

firm that appears in various bankruptcy courts on a daily basis

committed the acts that led to the Defendant’s liability. The

Defendant’s contentions that this stay violation was an accident

and that it simply misunderstood the relevant law are not credible.

At some point, the Defendant likely realized its error,25 which

25 The Defendant introduced an email from one of its law firm’s employees

acknowledging its awareness of the stay violation in early April 2012. E-mail

from Jamie Maisonet, Foreclosure Status, Status Dep’t, Hutchens, Senter, Kellam

& Pettit P.A. to Teresa Strickland, Tiffany Thaler, & Sheva T. James (Apr. 2,

2012, 3:31 P.M.) (“I think we have an issue on this [foreclosure]. The borrower

filed bankruptcy and we took it to sale.”). A different employee of the firm

responded by saying attorneys at the firm were looking into the issue and they

would make the ongoing stay violation intentional. At a minimum,

the Defendant should have known better, and its acts were reckless,

callous, and egregious.

59. The appropriate amount of punitive damages should be

based on the goals of deterrence and retribution. See Franklin,

614 B.R. at 549 (quoting Charity v. NC Fin. Solutions of Utah, LLC

(In re Charity), Nos. 16-31974-KLP, 16-03121-KLP, 2017 WL 3580173,

at *18 (Bankr. E.D. Va. Aug. 15, 2017)); Sundquist, 566 B.R. at

613–14 (“[P]unitive damages serve legitimate governmental and

societal interests in punishing unlawful conduct and deterring its

repetition.” (citations omitted)). Of the two goals, the court

believes that deterrence of future bad behavior, by the Defendant

and other creditors, is the most important. Johnson, 2016 WL

659020, at *4 (“In determining the amount of a punitive damages

award, the court is primarily concerned with changing the behavior

that resulted in the stay violation, so the amount awarded should

motivate the creditor to correct its conduct. Deterrence to others

may be a relevant factor as well.” (citing Riddick, 231 B.R. at

269)). Unfortunately, a lack of contrition is a sign that

violations will continue, Franklin, 614 B.R. at 550 (quoting

Charity, 2017 WL 3580173, at *19 n.66), and the Defendant has not

should hope the foreclosure would not be a problem. E-mail of Teresa L.

Strickland, Team Leader/Client Servs./Status A, Foreclosure Dep’t, Hutchens,

Senter, Kellam & Pettit P.A. to Jamie Maisonet, Tiffany Thaler, & Sheva T. James

(Apr. 2, 2012 4:23 P.M.) (“[C]ross your fingers y’all.”). According to the

Defendant’s version of the facts, a non-attorney employee of its law firm

correctly analyzed the situation and saw a stay violation, and its attorneys

reached the opposite, incorrect conclusion.

shown much remorse or that it understands the gravity of its

actions. Similarly, like Bank of America in Sundquist, the

Defendant’s “strategy regarding the [Plaintiff] has been infused

with a sense of impunity,” 566 B.R. at 616; see Plaintiff’s

Pretrial Memorandum of Law at 11, Houck v. Substitute Tr. Servs.,

Inc. (In re Houck), Nos. 11-51513, 15-5028 (Bankr. W.D.N.C. Nov.

29, 2019) (noting that the Defendant claims that any judgment will

be uncollectable due to its lack of capitalization and insurance),

another sign that a substantial award of punitive damages is

necessary to get its attention.

60. The leading Supreme Court cases on punitive damages do

not address punitive damages pursuant to § 362, but they are

helpful. Sundquist, 566 B.R. at 610 (citing Philip Morris USA v.

Williams, 549 U.S. 346 (2007); State Farm Mut. Auto. Ins. Co. v.

Campbell, 538 U.S. 408 (2003); BMW of N. Am., Inc. v. Gore, 517

U.S. 559 (1996)). The Supreme Court’s jurisprudence provides three

guideposts for punitive damages: “(1) the degree of

reprehensibility of the defendant’s misconduct; (2) the disparity

between the actual or potential harm suffered by the plaintiff and

the punitive damages award; and (3) the difference between the

punitive damages awarded and the civil penalties authorized or

imposed in comparable cases.” Id. (citing State Farm, 538 U.S. at

418); see also Franklin, 614 B.R. at 549–50 (discussing the three

guideposts (quoting Charity, 2017 WL 3580173, at *18)).

61. The first factor, the degree of reprehensibility,

examines the creditor’s “indifference to or reckless disregard for

the rights of others, whether the target of the conduct was

financially vulnerable, and whether the conduct involved repeated

actions.” Franklin, 614 B.R. at 550 (quoting Charity, 2017 WL

3580173, at *19) (internal quotations omitted). Here, the

Defendant was indifferent to or at least reckless about the

Plaintiff’s rights, and the Plaintiff was very vulnerable

financially. While the Defendant’s conduct did not involve

repeated actions, the Defendant had repeated opportunities, over

several years, to correct its error but did not. “Reprehensible”

is another synonym for abhorrent, and, as explained in the Summary

Judgment Order and earlier in this order, the court believes the

Defendant’s behavior displayed a high degree of reprehensibility.

See Sundquist, 566 B.R. at 610–12 (concluding that institutional

creditor that foreclosed in violation of the stay and did not

subsequently rectify the situation acted with a high degree of

reprehensibility).

62. The second guidepost involves the relationship between

the amount of actual damages and the size of the punitive damage

award. While the relationship between the two is important, courts

cannot always use a simple multiple, especially in situations with

a low amount of proven actual damages and/or a high degree of

reprehensibility, because the punitive damage award needs to be

significant enough to motivate the Defendant and others to change

their behavior. See Franklin, 614 B.R. at 550 (“[T]he use of any

multiple of actual damages would be meaningless and would utterly

fail to serve the purposes for imposing actual damages.”);

Sundquist, 566 B.R. at 612 (“[T]his is a case of substantial actual

harm where simplistic rations are of limited utility.”).

63. In the § 362(k) context, the third guidepost examines

other punitive damage awards for stay violations. The amounts

vary widely, see Franklin, 614 B.R. at 550–51 (cataloging range of

amounts awarded in multiple cases involving car repossessions);

see, e.g., Sundquist, 566 B.R. at 618 (awarding $45 million in

punitive damages for foreclosure in violation of the stay and

related actions (with $40 million earmarked for contributions to

consumer rights organizations and law schools and the entire award

subject to remittitur to $5 million if the creditor contributes

$30 million to the same organizations directly)); Charity, 2017 WL

3580173, at *23 (awarding $100,000 per case in three cases with

contribution and remittitur provisions similar to Sundquist), and

depend on the facts surrounding the various stay violations, see,

e.g., Sundquist, 566 B.R. at 612 (noting the need for a large award

to get the attention of Bank of America); Johnson, 2016 WL 659020,

at *5 (awarding $100 per call in punitive damages for 540

collection phone calls).

64. Finally, part of the court’s consideration in regard to

punitive damages is a debtor’s responsibility to mitigate her

injury from the stay violation.26 Clayton, 235 B.R. at 811–12.

Mitigation by the debtor requires reasonable behavior under the

particular circumstances, Sundquist, 566 B.R. at 594 (citing

Eskanos & Adler v. Roman (In re Roman), 283 B.R. 1, 12 (B.A.P. 9th

Cir. 2002)), and the court concludes that the Plaintiff generally

acted reasonably. She did not, however, mitigate all of her

damages. For example, she did not remove her personal property

from her former residence more promptly to avoid its loss or

continue her farming operation on her remaining property. The

court takes this behavior into consideration in fashioning its

punitive damages award, as it did in declining to award actual

damages for the lost personal property or more damages for the

lost income from farming.

65. While all of this guidance regarding punitive damages

does not come close to a formula that produces the exact proper

amount for the court to award, after consideration of the purposes

of punitive damages, the Supreme Court’s guideposts, and the facts

and circumstances present here, the court will award $130,000 in

26 Similarly, another punitive damages test looks at “provocation by the debtor”

as a factor. See Seaton, 462 B.R. at 595 (“Relevant factors courts consider

when determining whether punitive damages should be awarded include: (1) the

nature of the creditor’s conduct; (2) the creditor’s ability to pay damages;

(3) the motive of the creditor; (4) and any provocation by the debtor.” (quoting

Rawles v. Wych (In re Rawles), No. 08-00555, 2009 WL 2924005, at *2 (Bankr. D.

Md. June 18, 2009))). There is no evidence of provocation by the Plaintiff,

and this four-factor test also supports an award of punitive damages.

punitive damages to the Plaintiff. The court feels that this is

an appropriate amount to get the Defendant’s attention without

providing a windfall to the Plaintiff. See id. at 614 (noting the

difficulty of balancing the goal of deterring future behavior

without awarding a windfall to the plaintiffs). The amount of the

award is roughly equivalent to the Plaintiff’s actual damages,

including her attorney’s fees, and is roughly 6½ times her actual

damages without the attorney’s fees. It is appropriate for

punitive damages to exceed actual damages as long as they are not

“so outrageous as to be impossible for the creditor to satisfy,”

Edwards, 607 B.R. at 538, and this court and others have awarded

punitive damages in far greater ratios to actual damages, see

Franklin, 614 B.R. at 552 (awarding $150 in actual damages other

than attorney’s fees, $3813.90 in attorney’s fees, and $15,000 in

punitive damages); Edwards, 607 B.R. at 538 (observing that the

Fourth Circuit affirmed punitive damages that were 2,000% of the

compensatory damages (citing Better Homes, 804 F.2d at 290));

Johnson, 2016 WL 659020, at *5 (awarding $300 in actual damages

other than attorney’s fees, $3297.23 in attorney’s fees, and

$54,000 in punitive damages). Other methods that courts have used

to calculate punitive damages would result in a similar or larger

amount. See Franklin, 614 B.R. at 552 n.24 (agreeing that an award

of double the scheduled debt is appropriate where actual damages

are minimal (citing In re Stephens, 495 B.R. 608, 617 (Bankr. N.D.

Ga. 2013))); Barnes, slip op. at 10–11 (striking a secured claim

and canceling the lien as punitive damages for a stay violation).

CONCLUSION

While the court realizes that this is most likely not the end

of the disputes over this situation, it is pleased to reach an end

after several years and to conclude this adversary proceeding.

The Plaintiff was severely injured by the Defendant’s unreasonable

and abhorrent behavior in claiming that it was not required to and

could not do anything to rectify its technical stay violation once

it became aware of it. The Plaintiff most likely failed to prove

the true extent of her damages, but she did show her entitlement

to a significant award. Accordingly, for the reasons explained in

this order, the court hereby awards $260,175.27, made up of

$20,857.11 in actual damages other than attorney’s fees,

$109,318.16 in attorney’s fees, and $130,000 in punitive damages,

to the Plaintiff. The court will enter a separate judgment

consistent with this order. The Clerk is directed to send a copy

of this order to the District Court in reference to its

consolidated cases 5:13-cv-00066-DSC and 5:18-cv-00022-MOC.

SO ORDERED.

This Order has been signed United States Bankruptcy Court

electronically. The Judge’s

signature and Court’s seal

appear at the top of the Order.