Understand the complexities and nuances of the Bankruptcy Code to better advise clients and prepare for court.
Emotional distress caused by landlord’s willful violation of the bankruptcy stay was entitled to compensation as actual damages ( Lansaw v. Zokaites (In re Lansaw) , 2017 BL 116554, 3d Cir., 16-1867, 4/10/17 ).
It was an issue of first impression in the U.S. Court of Appeals for the Third Circuit.
The debtors also presented sufficient evidence of their emotional distress to support the award. Doctors’ receipts and medical testimony were not necessary, Judge Michael H. Melloy wrote for the court.
An individual injured by any willful violation of the Bankruptcy Code’s stay against collection activities can recover “actual damages, including costs and attorneys’ fees,” and in appropriate circumstances, “punitive damages,” under Bankruptcy Code Section 362(k)(1). The damage award serves to enforce the bankruptcy’s stay.
The stay’s protections are not just financial in character, but serve also to provide the debtor with a breathing spell, the court noted. It stops all collection efforts and harassment, it said.
The court joined a growing number of circuits, including the First, Ninth, and Eleventh, in concluding that actual damages include damages for emotional distress resulting from a willful violation of the stay.
The court did not decide whether financial injury was a predicate to recovery for emotional distress. The debtors had incurred financial injury in the form of attorneys’ fees when they sought to enjoin further stay violations by the landlord. The court also left open whether emotional distress damages may be recovered against federal or state governments.
Also, the court upheld the debtors’ award of punitive damages. The 4-to-1 ratio between the punitive and actual damages awarded in this case comported with Constitutional considerations of due process, it said.
To contact the reporter on this story: Deborah Swann in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Jay Horowitz at JHorowitz@bna.com
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)