In re: Thomas Wesley Wallace

• Court: United States Bankruptcy Appellate Panel for the Ninth Circuit
• Decided: March 26, 2014
• Docket: CC-13-1414-KuPaTa
• Status: Unpublished

Opinion

FILED MAR 26 2014 1 NO FO PUBL A IO T R IC T N SUSAN M. SPRAUL, CLERK U.S. BKCY. APP. PANEL 2 OF THE NINTH CIRCUIT UNITED STATES BANKRUPTCY APPELLATE PANEL 3 OF THE NINTH CIRCUIT 4 5 In re: ) BAP No. CC-13-1414-KuPaTa ) 6 THOMAS WESLEY WALLACE, ) Bk. No. 13-22160 ) 7 Debtor. ) ______________________________) 8 ) THOMAS WESLEY WALLACE, ) 9 ) Appellant, ) 10 ) v. ) MEMORANDUM* 11 ) CARCREDIT AUTO GROUP, INC., ) 12 ) Appellee. ) 13 ______________________________) 14 Argued and Submitted on February 20, 2014 at Pasadena, California 15 Filed – March 26, 2014 16 Appeal from the United States Bankruptcy Court 17 for the Central District of California 18 Honorable Richard M. Neiter, Bankruptcy Judge, Presiding 19 Appearances: Brian L. Dobrin argued for appellant Thomas Wesley 20 Wallace; Ryan N. English of the English Law Corporation argued for appellee Carcredit Auto 21 Group, Inc. 22 Before: KURTZ, PAPPAS and TAYLOR, Bankruptcy Judges. 23 24 25 26 * This disposition is not appropriate for publication. 27 Although it may be cited for whatever persuasive value it may have (see Fed. R. App. P. 32.1), it has no precedential value. 28 See 9th Cir. BAP Rule 8013-1. 1 INTRODUCTION 2 Debtor Thomas Wesley Wallace filed a motion seeking damages 3 against creditor Carcredit Auto Group, Inc. for violation of the 4 automatic stay. The bankruptcy court denied the motion and, in 5 the same order, sua sponte annulled the stay so as to 6 retroactively validate Carcredit’s postpetition repossession of 7 Wallace’s vehicle. According to the court, Wallace did not prove 8 that Carcredit’s stay violation was willful or that Wallace 9 suffered actual damages as a result of the stay violation. In 10 addition, the court determined that annulment was appropriate 11 because Wallace had not provided proof of insurance or any 12 assurance of his future performance of the obligations he owed to 13 Carcredit. 14 The bankruptcy court’s findings regarding Carcredit’s 15 willfulness and Wallace’s damages were clearly erroneous. 16 Moreover, the bankruptcy court improperly annulled the stay 17 without giving the parties an opportunity to develop the record 18 regarding the equities of their respective positions on stay 19 annulment. Accordingly, we REVERSE the bankruptcy court’s order, 20 and we REMAND for a new damages determination, including 21 Wallace’s reasonable attorney’s fees. 22 FACTS 23 Wallace commenced his bankruptcy case on May 8, 2013, by 24 filing a chapter 71 petition. Shortly before filing for 25 bankruptcy, on March 6, 2013, Wallace purchased an automobile 26 27 1 Unless specified otherwise, all chapter and section 28 references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532.

2 1 from Carcredit. In exchange for the automobile, Wallace agreed 2 to make a downpayment of $1,000 and forty-eight monthly payments 3 of $310.08. 4 Carcredit apparently permitted Wallace to take possession of 5 the vehicle without first requiring him to submit proof of 6 insurance, or to pay the full $1,000 downpayment. Instead, under 7 the installment sales contract between Carcredit and Wallace, 8 Carcredit agreed to let Wallace pay the downpayment in three 9 installments. At the time of the sale, Wallace paid $372. 10 Wallace was supposed to pay the remaining $628 balance in two 11 equal installments of $314, on March 20, 2013, and April 5, 2013, 12 respectively. According to Carcredit, the credit card that 13 Wallace used to tender the March 20, 2013 payment was declined. 14 On March 29, 2013, Wallace paid $300 in cash towards the 15 downpayment, but he never paid the remaining balance of the 16 downpayment nor any of the regular monthly payments. 17 Meanwhile, Carcredit assigned its rights under the 18 installment sales contract to Gold Acceptance Automobile 19 Financial Services. But the assignment agreement between Gold 20 and Carcredit required Carcredit to “repurchase” the installment 21 sales contract upon Wallace’s default, which Carcredit apparently 22 did. Wallace’s bankruptcy schedules listed Gold as a creditor, 23 but not Carcredit. 24 After Wallace commenced his bankruptcy case, Gold sent 25 Wallace’s bankruptcy counsel a letter on May 30, 2013, offering 26 to enter into a reaffirmation agreement and assuring counsel that 27 Gold would not take any actions in violation of the automatic 28 stay. This letter further stated that Gold had “advised

3 1 [Carcredit] on 5/29 and again on 5/30 to not make any direct 2 communications with [Wallace]” on account of the bankruptcy 3 filing. 4 Nonetheless, on June 4, 2013, Carcredit repossessed the 5 automobile from Wallace. One day later, on June 5, 2013, 6 Wallace’s counsel faxed Carcredit a letter advising Carcredit of 7 the bankruptcy filing, asserting that the repossession violated 8 the automatic stay, demanding that Carcredit immediately return 9 possession of the automobile to Wallace and, if Carcredit did not 10 comply with counsel’s demand, threatening to file a motion in the 11 bankruptcy court seeking damages based on Carcredit’s stay 12 violation. 13 On June 6, 2013, Carcredit’s counsel sent a letter to 14 Wallace claiming that Carcredit was not aware of Wallace’s 15 bankruptcy filing until June 5, 2013, the day after repossession, 16 thereby denying that Gold had advised Carcredit of the bankruptcy 17 filing before the repossession occurred. Carcredit further 18 stated that it intended to contact the bankruptcy trustee to seek 19 the trustee’s opinion regarding the proper disposition of the 20 car. 21 Wallace remained adamant in his demand for return of the 22 automobile. That same day, June 6, 2013, Wallace sent Carcredit 23 a fax letter again informing Carcredit that it had violated the 24 stay by repossessing the automobile, that it was obligated to 25 remedy the stay violation by immediately returning possession of 26 the vehicle, and that Wallace would be filing a motion seeking 27 damages and other relief based on Carcredit’s continuing stay 28 violation.

4 1 On June 12, 2013, Wallace filed a motion for damages against 2 Carcredit for violation of the automatic stay, seeking $45 per 3 day in actual damages, plus an estimated $2,500 in attorney’s 4 fees and $10,000 in punitive damages. The damages motion also 5 sought return of the automobile and Wallace’s personal 6 possessions that were in the vehicle at the time of Carcredit’s 7 repossession. Wallace’s damages claim was based on the court’s 8 contempt power under § 105(a) and, alternately, on § 362(k). In 9 support of his damages claim, Wallace relied on his own 10 declaration and the declaration of his counsel. But the evidence 11 regarding damages was thin at best. The following paragraph from 12 the declaration of Wallace’s counsel is the only evidence that 13 Wallace submitted directly addressing damages: 14 My regular billing rate is $300 an hour. I spent one hour speaking with CarCredit, Mr. English, Christine, 15 writing the attached letters and reading the letter from Mr. English. I spent three hours researching and 16 drafting this motion. I expect to spend another four hours writing a Reply, and to travel to and from Court 17 to appear at the hearing on this motion, for a total of 8 hours of attorney time, or $2,400.00 plus the cost of 18 parking and the filing fee for this motion. 19 Dobrin Decl. (June 12, 2013) at ¶ 8. 20 Wallace sought and obtained an order from the bankruptcy 21 court setting a hearing on the damages motion on shortened 22 notice. Wallace then served notice of the motion and the hearing 23 on Carcredit and its counsel, and Carcredit responded by filing 24 two declarations, one from its president and another from its 25 counsel. In these declarations, Carcredit once again denied 26 having any notice or knowledge of Wallace’s bankruptcy filing 27 before it repossessed the automobile on June 4, 2013. But 28 Carcredit once again admitted that Wallace’s counsel notified it

5 1 of the bankruptcy filing on June 5, 2013. According to 2 Carcredit, on June 26, 2013, after it received notice of 3 Wallace’s motion, it offered to permit Wallace to retrieve the 4 vehicle, provided that Wallace supplied Carcredit with proof of 5 insurance naming Carcredit as loss payee. 6 The initial hearing on Wallace’s damages motion occurred on 7 July 2, 2013. At the hearing, the bankruptcy court questioned 8 Wallace’s counsel regarding what Wallace really wanted to achieve 9 by way of the motion. Wallace’s counsel responded that Wallace 10 wanted to recover possession of the automobile. Wallace’s 11 counsel further pointed out that there was no dispute that, on 12 and after June 5, 2013, Carcredit knew of the bankruptcy filing 13 but failed to return the car. 14 The court did not find these facts compelling. Instead, the 15 court focused on Wallace’s financial ability to cure the default 16 on the installment sales contract and to make payments due under 17 the contract. As the court put it, getting the vehicle back 18 temporarily would not solve Wallace’s underlying transportation 19 problem. Only redeeming the contract or reaffirming it would 20 permit Wallace to keep the automobile. The court furthermore 21 indicated that it would not rule in Wallace’s favor on any 22 damages claim for violation of the automatic stay unless Wallace 23 proved his ability to pay for the vehicle: 24 THE COURT: Well, whether there's a violation of the stay or not, what are you -- supposing there is a 25 violation of the stay. But for your seeking sanctions, that wouldn't resolve the problem, would it? Your 26 client still wouldn't have the car. 27 MR. DOBRIN: Well, I did request that you order that the car be returned as well. 28

6 1 THE COURT: But, that's only half of the remedy. The other half is how does your client pay for the car. 2 MR. DOBRIN: The remedy to my client, or to the 3 creditor? 4 THE COURT: The remedy of the problem. I don't intend to solve this only half way today. Either your client is 5 going to pay for the car and convince me how he can pay for the car, and then I'll rule on the sanctions order, 6 or he won't. 7 Hr’g Tr. (July 2, 2013) at 4:19-5:9 (emphasis added). The court 8 continued the hearing on the motion to allow Wallace an 9 opportunity to present evidence on his ability to pay for the 10 automobile under the terms of the installment sale contract. 11 On July 15, 2013, the day before the continued hearing on 12 the damages motion, the bankruptcy court issued a tentative 13 ruling in favor of Carcredit and against Wallace. Among other 14 things, the court noted that Wallace had not provided evidence of 15 insurance or any assurance that he was financially capable of 16 performing in compliance with the terms of the installment sales 17 contract. Based on this lack of evidence, the court stated that 18 it was prepared to annul the automatic stay. The court further 19 noted that it was not clear whether Carcredit had notice of the 20 bankruptcy filing before it repossessed the vehicle on June 4, 21 2013. Based on these circumstances, the court concluded that 22 Carcredit did not willfully violate the stay and that Wallace had 23 not proven that he had incurred any actual damages.2 24 25 2 The full text of the tentative ruling is as follows: 26 While the repossession of the vehicle is a violation of 27 the automatic stay under 11 U.S.C. § 362(a), it is not clear that CarCredit had notice of Debtor’s bankruptcy 28 continue...

7 1 At the second hearing, Wallace’s counsel attempted to 2 persuade the bankruptcy court that the facts were sufficient to 3 demonstrate a willful stay violation and Wallace’s entitlement to 4 a damages award. But the bankruptcy court was unpersuaded. In 5 essence, the court held that the automatic stay did not require 6 Carcredit to return the repossessed vehicle unless Wallace 7 tendered proof that Carcredit’s interest in the vehicle was 8 adequately protected. According to the court, in order to 9 demonstrate adequate protection, Wallace should have provided 10 proof of insurance and demonstrated his willingness and ability 11 to cure the payment default under the installment sales contract, 12 but he failed to do either. 13 Wallace’s counsel also advised the court that his client, in 14 the interim, had obtained another automobile to use, so he no 15 2 16 ...continue filing and the stay on or before 6/4/2013, the day 17 CarCredit repossessed the vehicle. CarCredit declares that it did not have notice of Debtor’s bankruptcy 18 filing until 6/5/2013 and Debtor relies on a letter 19 from the attorney of Gold Acceptance that does not expressly state that notice was given to CarCredit 20 prior to the repossession. Furthermore, in In re Fitch, 217 B.R. 286, 291 (Bankr. S.D. Cal. 1998), the 21 bankruptcy court found that a demand for proof of insurance in exchange for return of the vehicle is a 22 valid request. At the prior hearing, the Court 23 inquired of Debtor’s counsel to provide proof of insurance and an indication that Debtor can cure the 24 delinquency and reaffirm the agreement (e.g., the agreement will not be an undue burden on Debtor). 25 Debtor has not provided such adequate assurances of 26 future performance. Absent such evidence, the Court will annul the automatic stay. Furthermore, based on 27 the foregoing, the Court finds no willful violation of the automatic stay by CarCredit nor evidence of actual 28 damages to Debtor.

8 1 longer wanted the automobile that Carcredit had repossessed. 2 Based on this information, the bankuptcy court ruled that all of 3 the attorney’s fees that Wallace incurred in attempting to 4 recover the automobile from Carcredit were unnecessary. The 5 bankruptcy court concluded the hearing by explicitly adopting its 6 tentative ruling as its final ruling on the damages motion. 7 On August 13, 2013, the bankruptcy court entered an order 8 denying Wallace’s damages motion and sua sponte granting 9 Carcredit relief from stay with respect to the automobile. 10 Wallace timely filed a notice of appeal on August 26, 2013. 11 JURISDICTION 12 The bankruptcy court had jurisdiction pursuant to 28 U.S.C. 13 §§ 1334 and 157(b)(2)(A) and (G). We have jurisdiction under 14 28 U.S.C. § 158. 15 ISSUES 16 1. Did the bankruptcy court commit reversible error when it 17 found that Carcredit did not willfully violate the automatic 18 stay? 19 2. Did the bankruptcy court properly assess Wallace’s 20 entitlement to damages under § 362(k)? 21 STANDARDS OF REVIEW 22 The bankruptcy court’s determination that a creditor did not 23 willfully violate the automatic stay is a finding of fact we 24 review under the clearly erroneous standard. See Sternberg v. 25 Johnston, 595 F.3d 937, 943 (9th Cir. 2010); Ozenne v. Bendon 26 (In re Ozenne), 337 B.R. 214, 218 (9th Cir. BAP 2006). An 27 erroneous view of the law may induce the bankruptcy court to make 28 a clearly erroneous finding of fact. Id. A court’s findings of

9 1 fact also are clearly erroneous if they are “illogical, 2 implausible, or without support in the record.” Retz v. Sampson 3 (In re Retz), 606 F.3d 1189, 1197 (9th Cir. 2010). 4 We review the bankruptcy court’s assessment of damages under 5 § 362(k) for an abuse of discretion. See Sternberg, 595 F.3d at 6 945; Eskanos & Adler, P.C. v. Leetien, 309 F.3d 1210, 1213 (9th 7 Cir. 2002).3 We apply a two-part test to determine whether the 8 bankruptcy court abused its discretion. First, we review de novo 9 whether the bankruptcy court selected the correct legal standard 10 to apply. Hinkson, 585 F.3d at 1261–63. And second, if the 11 bankruptcy court selected the correct legal standard, we consider 12 whether the court's findings and its application of those 13 findings to the correct legal standard were illogical, 14 implausible or without support in the record. Id. at 1262. 15 DISCUSSION 16 To award damages under § 362(k) for violation of the 17 automatic stay, the bankruptcy court must find that the creditor 18 willfully violated the stay. See Knupfer v. Lindblade 19 (In re Dyer), 322 F.3d 1178, 1191 (9th Cir. 2003) (citing 20 Pinkstaff v. United States (In re Pinkstaff), 974 F.2d 113, 115 21 (9th Cir. 1992)). And to find a willful stay violation, the 22 bankruptcy court must conclude that the creditor knew of the 23 bankruptcy filing and intended the actions that violated the 24 25 3 The Bankruptcy Abuse Prevention and Consumer Protection Act 26 of 2005, Pub.L. 109–8, 119 Stat. 23, revised and renumbered § 362 such that the provisions concerning damages for violation of the 27 automatic stay, formerly contained in § 362(h), were moved to § 362(k). See Mwangi v. Wells Fargo Bank, N.A. (In re Mwangi), 28 432 B.R. 812, 822 n.7 (9th Cir. BAP 2010).

10 1 stay. See id. 2 The bankruptcy court here acknowledged that Carcredit’s 3 repossession of the automobile constituted a technical violation 4 of the automatic stay. However, the bankruptcy court found that 5 Carcredit did not willfully violate the stay by repossessing the 6 vehicle. According to the court, Carcredit did not have notice 7 of the bankruptcy filing until June 5, 2013, the day after it 8 repossessed the vehicle. Therefore, the court inferred, the 9 repossession was not a willful stay violation. 10 As far as it goes, this finding is unobjectionable. 11 However, in making this finding, the bankruptcy court ignored 12 Carcredit’s conduct on and after June 5, 2013. As of June 5, 13 2013, Carcredit knew of Wallace’s bankruptcy filing, and yet 14 Carcredit never volunteered to unconditionally return the vehicle 15 to Wallace.4 16 In order to comply with the automatic stay, once it learned 17 of Wallace’s bankruptcy filing, Carcredit had an “affirmative 18 duty” to remedy its prior, inadvertent stay violation by 19 returning the automobile to Wallace. See In re Dyer, 322 F.3d at 20 1192 (citing Cal. Employment Dev. Dep't v. Taxel (In re Del 21 4 The bankruptcy court found that Carcredit offered to return 22 the vehicle to Wallace if he provided proof of insurance. The 23 only evidence we found in the record supporting this finding was a statement in the declaration of Carcredit’s counsel, which 24 provided: “On June 26, 2013, I left a voicemail for [Wallace’s counsel] advising him that his client could retrieve the vehicle 25 but wanted proof of insurance naming Carcredit as loss-payee.” 26 English Decl. (June 27, 2013) at ¶ 4. There is no evidence in the record that Carcredit was prepared to return the vehicle to 27 Wallace before that date. Moreover, as we hold infra, Carcredit was not entitled to condition its return of the vehicle upon 28 presentation of proof of insurance or upon any other terms.

11 1 Mission Ltd.), 98 F.3d 1147, 1155 (9th Cir. 1996)); see also 2 Sternberg, 595 F.3d at 945 (“To comply with his ‘affirmative 3 duty’ under the automatic stay, Sternberg needed to do what he 4 could to relieve the violation.”). Accord, In re Mwangi, 5 432 B.R. at 822 (citing Abrams v. Sw. Leasing & Rental, Inc. 6 (In re Abrams), 127 B.R. 239, 242–43 (9th Cir. BAP 1991)). 7 Thus, Carcredit’s knowing retention of the vehicle after 8 learning of Wallace’s bankruptcy filing was a separate and 9 independent violation of the automatic stay. See In re Abrams, 10 127 B.R. at 243 (citing § 362(a)(3)). And there can be no 11 legitimate doubt here that this stay violation was willful. 12 Carcredit knew about the bankruptcy filing on and after June 5, 13 2013, and yet it never returned the vehicle to Wallace despite 14 his repeated demands. These facts patently satisfy the test for 15 willfulness set forth in In re Dyer, 322 F.3d at 1191. 16 It is not entirely clear why the bankruptcy court did not 17 find Carcredit’s failure to return the vehicle a violation of the 18 automatic stay, willful or otherwise. Citing In re Fitch, 19 217 B.R. 286, 291 (Bankr. S.D. Cal. 1998), the bankruptcy court 20 indicated that Carcredit was entitled to require proof of 21 insurance before returning the vehicle. But In re Fitch is 22 inapposite. In Fitch, the creditor lawfully repossessed the 23 vehicle prepetition, so postpetition there was no prior stay 24 violation the creditor needed to remedy by returning the vehicle. 25 Id. at 290-91.5 26 5 27 We need not decide here whether we would follow In re Fitch if we were confronted with a prepetition repossession instead of 28 continue...

12 1 In this case, the notion that Carcredit, which indisputably 2 violated the automatic stay by repossessing the vehicle 3 postpetition, could condition its efforts to rectify its stay 4 violation upon the debtor taking certain actions, like providing 5 proof of insurance and providing assurance of future performance, 6 is inconsistent with the holding in In re Del Mission Ltd., 7 In re Mwangi and In re Abrams. These cases stand for the 8 proposition that creditors have a mandatory and unconditional 9 duty under §§ 362(a)(3) and 542(a) to relinquish control of 10 estate property acquired or controlled postpetition. See 11 In re Del Mission Ltd., 98 F.3d at 1151; In re Mwangi, 432 B.R. 12 at 823-24; In re Abrams, 127 B.R. at 242–43. 13 Alternately, the bankruptcy court held that, in light of 14 Wallace’s failure to submit proof of insurance and to demonstrate 15 his financial ability to perform under the installment sales 16 contract, cause existed for annulment of the automatic stay, 17 which retroactively validated Carcredit’s repossession and 18 retention of the vehicle. Therefore, the court reasoned, there 19 was no stay violation in light of the retroactive effect of the 20 court’s annulment ruling. 21 As a threshold matter, this Panel has expressed doubt that 22 annulment of the stay nullifies the statutory consequences of a 23 willful stay violation for purposes of a § 362(k) claim. See 24 25 5 ...continue 26 a postpetition repossession. However, we note that In re Fitch is directly at odds with Knaus v. Concordia Lumber Co. 27 (In re Knaus), 889 F.2d 773, 775 (8th Cir. 1989), cited with approval in, In re Del Mission Ltd., 98 F.3d at 1151, and 28 In re Abrams, 127 B.R. at 242 & n.6.

13 1 Williams v. Levi (In re Williams), 323 B.R. 691, 702 (9th Cir. 2 BAP 2005). Even if a technical stay violation may be “cured” by 3 stay annulment, the continuing stay violation evident herein was 4 decidedly not a mere technical stay violation. Rather, it was an 5 overtly willful stay violation, which presumably cannot be cured 6 by stay annulment. See id. 7 Even if we were to assume that the statutory consequences of 8 a willful stay violation could be nullified by annulment of the 9 stay, the bankruptcy court erred when it annulled the stay sua 10 sponte, deprived the parties of an opportunity to develop the 11 record regarding the equities of their respective positions on 12 stay annulment and failed to weigh those equities. See Gasprom, 13 Inc. v. Fateh (In re Gasprom, Inc.), 500 B.R. 598, 607-08 (9th 14 Cir. BAP 2013). As in In re Gasprom, the bankruptcy court here 15 made no attempt to weigh anything. It simply held, without any 16 advance warning, that Carcredit was entitled to annulment of the 17 stay because Wallace did not provide either proof of insurance or 18 any assurance of his future performance. 19 In so ruling, the bankruptcy court ignored the fact that one 20 of the key purposes of the automatic stay is to give debtors a 21 “breathing spell” from their creditors. See Sternberg, 595 F.3d 22 at 945 (citing Goichman v. Bloom (In re Bloom), 875 F.2d 224, 226 23 (9th Cir. 1989)). By refusing to return the vehicle to Wallace, 24 Carcredit denied Wallace even the temporary breathing space that 25 might have provided an opportunity for an orderly search for an 26 alternate means of transportation. 27 Carcredit was entitled to seek relief from stay based on 28 Wallace’s failure to provide proof of insurance and some

14 1 assurance of his future performance, but Carcredit never filed a 2 relief from stay motion, nor did it take any other legally 3 permissible action to assert its rights in the vehicle once it 4 learned of Wallace’s bankruptcy filing. Under In re Del Mission 5 Ltd., In re Mwangi and In re Abrams, Carcredit's retention of the 6 vehicle repossessed in violation of the stay was not a lawful 7 option. Under these circumstances, we must reverse the 8 bankruptcy court’s stay annulment ruling. See In re Gasprom, 9 Inc., 500 B.R. at 607-08. 10 The bankruptcy court also found that Wallace failed to prove 11 that he incurred any actual damages as a result of Carcredit’s 12 stay violations. According to the bankruptcy court, the 13 attorney’s fees Wallace incurred in bringing the damages motion 14 were unnecessary because Wallace ultimately agreed, by the time 15 of the second hearing, to surrender his right to possession of 16 the vehicle because he had, by that time, arranged for an 17 alternate means of transportation. 18 We are perplexed by the bankruptcy court’s damages finding. 19 The record establishes that, at the time of the first hearing, 20 Wallace did not yet have an alternate means of transportation 21 and, at that time, still sought return of the vehicle from 22 Carcredit. It was only sometime after the first hearing, at 23 which the court announced that Wallace was not entitled to return 24 of the vehicle without proof of insurance and an assurance of 25 future performance, that Wallace obtained a different vehicle 26 from another source. Furthermore, Wallace’s efforts to obtain 27 alternate transportation were consistent with his duty to 28 mitigate damages. See Eskanos & Adler v. Roman (In re Roman),

15 1 283 B.R. 1, 12 (9th Cir. BAP 2002). It does not make any sense 2 to disallow all of Wallace’s fees on account of his successful 3 efforts to mitigate damages. 4 Put another way, an award of actual damages, including 5 reasonable attorney’s fees, is mandatory under § 362(k) once the 6 debtor establishes that the creditor willfully violated the 7 automatic stay. See Sternberg, 595 F.3d at 947. The amount of 8 attorney’s fees awarded should be limited to those that are 9 reasonable and necessary to remediate the stay violation. Id. at 10 949. Here, the bankruptcy court in essence found that all of 11 Wallace’s attorney’s fees were unreasonable and unnecessary 12 because Wallace later found another means of transportation. 13 This finding was clearly erroneous. The record establishes that, 14 before Wallace found an alternate means of transportation, his 15 counsel contacted Carcredit both by phone and in writing 16 demanding return of the vehicle and, when Carcredit did not 17 comply with these demands, counsel filed the damages motion and 18 attended the first hearing on the damages motion. Under 19 § 362(k), the reasonable fees incurred in rendering these 20 services are recoverable as actual damages. See id. 21 On remand, the bankruptcy court, at a minimum, must 22 determine the amount of attorney’s fees Wallace reasonably 23 incurred, before finding another means of transportation, in 24 attempting to recover the vehicle from Carcredit. See generally 25 In re Roman, 283 B.R. at 11 (utilizing § 330(a) standards for 26 determining reasonable professional compensation as a guide for 27 awarding attorney’s fees under § 362(h)). Wallace also is 28 entitled to consideration of his punitive damages claim on

16 1 remand, although we express no opinion as to what amount of 2 punitive damages, if any, should be awarded. See generally 3 In re Bloom, 875 F.2d at 227-28 (reviewing punitive damages 4 award); In re Daniels, 316 B.R. 342, 355-57 (Bankr. D. Idaho 5 2004) (discussing punitive damages standards).6 6 CONCLUSION 7 For the reasons set forth above, we REVERSE the bankruptcy 8 court’s order denying Wallace’s damages motion and granting 9 Carcredit retroactive relief from the automatic stay, and we 10 REMAND for further proceedings consistent with this decision. 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 6 26 In the alternative, Wallace sought civil contempt sanctions against Carcredit under § 105(a) based on Carcredit’s willful 27 violation of the automatic stay. In light of our analysis and disposition of this appeal, we decline to address Wallace’s 28 alternate ground for relief.