In Re Novak

223 B.R. 363, 40 Collier Bankr. Cas. 2d 838, 1997 Bankr. LEXIS 2279, 1997 WL 995872
CourtUnited States Bankruptcy Court, M.D. Florida
DecidedNovember 7, 1997
DocketBankruptcy 95-04413-6B7
StatusPublished
Cited by16 cases

This text of 223 B.R. 363 (In Re Novak) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, M.D. Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Novak, 223 B.R. 363, 40 Collier Bankr. Cas. 2d 838, 1997 Bankr. LEXIS 2279, 1997 WL 995872 (Fla. 1997).

Opinion

MEMORANDUM OPINION

ARTHUR B. BRISKMAN, Bankruptcy Judge.

This matter came before the Court on the Debtor’s, Scott Joseph Novak, Motion for Damages and Attorney’s Fees for Violation of the Automatic Stay by Barnett Bank Pursuant to 11 U.S.C. § 362(h) (Doc. 37). Appearing before the Court were Craig Wake-field, counsel for the Debtor, Scott Joseph Novak; and John Lovett, counsel for Barnett Bank. After reviewing the pleadings, evidence, exhibits, live testimony of Scott Joseph Novak, Wanda Lee Queen, Claudia Ann Liotta, and Diane Hudson, and arguments of counsel, the Court makes the following Findings of Fact and Conclusions of Law.

FINDINGS OF FACT

The Debtor, Scott Joseph Novak (“Mr.Novak”), filed his voluntary petition for relief under Chapter 7 of the Bankruptcy Code on August 8,1995. 11 U.S.C. § 101 et seq. Mr. Novak listed Barnett Bank, N.A. of Central Florida (“Barnett”) as a general unsecured creditor in the amount of $3,396.00. Mr. Novak’s debt to Barnett was based upon a checking account with insufficient funds in an alleged “kiting scheme”. Barnett received notice of Mr. Novak’s bankruptcy when the Notice of Commencement of Case Under Chapter 7 (“Notice”) was sent to them by U.S. mail on August 31, 1995. The deadline for creditors to file a Complaint Objecting to Discharge pursuant to § 727 of the Bankruptcy Code or to Determine Dischargeability of Certain Debts pursuant to § 523 of the Bankruptcy Code was November 20, 1995. 1 The Notice defines a discharge and explains its effect. 2

Barnett’s policy was debts incurred similar to Mr. Novak’s were not dischargeable in bankruptcy, and therefore, did not reflect the notice of a bankruptcy on his account. Barnett did not file a complaint under either § 523 or § 727 of the Bankruptcy Code. A discharge was entered on December 8, 1995. The debt owed by Mr. Novak to Barnett was discharged.

Mr. Novak went to Barnett on May 15, 1996 to cash a check for $500.00 made payable to him on a Barnett account. It was after 5:00 p.m. and near closing time. The Barnett drive-through teller, Claudia A. Liot-ta, delayed cashing the check to verify the maker’s signature. The teller determined that Mr. Novak was indebted to Barnett. The teller brought this to the attention of Wanda Queen (“Ms.Queen”), vice president and branch officer.

Ms. Queen advised Mr. Novak that he was indebted to Barnett based upon unpaid checks and intended to set-off the $500.00 against his indebtedness. Mr. Novak notified her of his bankruptcy. Ms. Queen advised Mr. Novak to leave and call Barnett the next day, regarding the $500.00 check.

Mr. Novak then became irate and rude because of the actions of the Bank. Ms. *366 Queen called the police because it was close to Barnett’s closing time and she was concerned about the safety of departing employees. The police arrived and Mr. Novak left.

Ms. Queen consulted with appropriate Barnett officers. Barnett records on Mr. No-vak’s account did not reflect the notice of bankruptcy. The Barnett officers determined that the debt Mr. Novak owed was non-dischargeable, irregardless of the discharge in bankruptcy and offset the funds to Mr. Novak debt to Barnett. Mr. Novak was informed of Barnett’s actions when he called Ms. Queen on May 16th.

Mr. Novak filed his Motion for Damages and Attorney’s Fees for Violation of the Automatic Stay by Barnett Bank Pursuant to 11 U.S.C. § 362(h) (Doc. 37) on October 30, 1996. A hearing was held on December 5, 1996 and Barnett failed to appear. The Court granted Mr. Novak’s motion, awarding Mr. Novak a Judgment for the $500.00 at issue, plus $700.00 for expenses, $500.00 for attorney’s fees, and $12,500.00 for punitive damages.

Barnett filed its Motion for Reconsideration to Vacate or Amend Order and for Relief from Sanctions (Doc. 40) on December 16, 1996. The Court granted the motion and set a Final Evidentiary hearing February 26, 1997 on the Debtor’s Motion for Sanctions.

Mr. Novak is a conscientious debtor who sought counsel, informed his creditors of his bankruptcy, and relied on the protection provided by the Code. Barnett is a sophisticated creditor, familiar with the ramifications of a bankruptcy filing. Barnett failed to obtain clarification or permission from the court with respect to the automatic stay. Barnett admitted that it had actual knowledge of Mr. Novak’s bankruptcy and its effect on the debt to the bank on two separate occasions and disregarded the notice. The Notice of Case under Chapter 7 of the Bankruptcy Code was sent to Barnett and Mr. Novak informed Ms. Queen.

Barnett concedes its actions constituted a violation of 11 U.S.C. 362 and that an award of reasonable damages is appropriate, but objects to an award of punitive damages. With respect to actual damages, Mr. Novak missed work and traveled a considerable distance to attend the hearings on December 5, 1996 and February 26, 1997, incurring costs and a reasonable attorney’s fee. Mr. Novak is entitled to actual damages as a direct result of Barnett’s actions, consisting of $500.00 from conversion of the check, $1,008.00 for lost wages, $191.31 for rental car, $585.81 for airplane fare, and $2,000.00 for a reasonable attorney’s fee. An award of $20,000.00 in punitive damages is appropriate based on the circumstances and facts.

CONCLUSIONS OF LAW

Barnett concedes that its actions violated the automatic stay and reasonable damages are appropriate. The issue remaining before the Court is whether Barnett Bank’s actions constitutes willful violation of the automatic stay pursuant to 11 U.S.C. § 362(a), subjecting SunTrust to punitive sanctions under 11 U.S.C. § 362(h).

Section 362 of the Bankruptcy Code provides for an automatic stay upon the filing of a bankruptcy petition under any chapter of the Bankruptcy Code.

Section 362 of the bankruptcy Code provides in pertinent part:

(а) Except as provided in subsection (b) of this action, a petition filed under section 301, 302, or 303 of this title ... operates as a stay, applicable to all entities, of — (1) the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title;
(б) any act to collect, assess, or recover a claim against the debtor that arose before commencement of the case under this title[.]

11 U.S.C.

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Bluebook (online)
223 B.R. 363, 40 Collier Bankr. Cas. 2d 838, 1997 Bankr. LEXIS 2279, 1997 WL 995872, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-novak-flmb-1997.