Collier et al v. Washington

Filing 14

MEMORANDUM OPINION re 1 Bankruptcy Appeal filed by McBride & Collier, Glay H Collier, II. Signed by Judge Robert G James on 3/31/16. (crt,DickersonSld, D)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
MONROE DIVISION
GLAY H. COLLIER, II AND
MCBRIDE AND COLLIER, LLC,
Appellants

CIVIL ACTION NO. 15-01484 (lead)
--consolidated with–
CIVIL ACTION NO. 15-01853 (member)

VERSUS

JUDGE ROBERT G. JAMES

ANGELA DENISE WASHINGTON
Appellee

MAG. JUDGE KAREN L. HAYES

MEMORANDUM OPINION
Pending before the Court is the consolidated Appeal of Glay H. Collier, II and McBride
and Collier, LLC (collectively “the Collier Appellants”)1 from the April 7 and May 28, 2015
Memorandum Opinions of Bankruptcy Judge Jeffrey Norman (hereinafter “the Bankruptcy
Court”) in In re Washington, Bankruptcy Case No. 10-30666 and Adversary Proceeding No. 1403017. In the April 7, 2015 Memorandum Opinion, the Bankruptcy Court awarded damages to
Appellee Angela Washington (“Washington”) and attorneys’ fees to the Chapter 13 Trustee, as
well as imposing a sanction against the Collier Appellants. In the May 28, 2015 Memorandum
Opinion, the Bankruptcy Court also awarded Washington attorneys’ fees and costs.
For the following reasons, the Bankruptcy Court’s Opinions are AFFIRMED IN PART
AND REVERSED IN PART, and Collier’s Appeal is GRANTED IN PART AND DENIED IN
PART. This matter is REMANDED to the Bankruptcy Court to the extent that further
1

Although Collier and Thomas C. McBride were both members of McBride and Collier,
LLC, the facts are undisputed that Collier ran the Monroe and Shreveport offices, while McBride
ran the Alexandria office. As the facts giving rise to this appeal arose out of the operation of the
Shreveport office, the Court finds it appropriate to refer to the actions of Collier and the entity of
McBride and Collier, LLC, collectively as “the Collier Appellants.”

proceedings are necessary.
I.

FACTS
Washington filed a Chapter 13 case in the Bankruptcy Court for the Western District of

Louisiana in 2010. The plan was confirmed on July 28, 2010.
Because of increased post-confirmation expenses, on June 13, 2011, Washington
converted her Chapter 13 case to a Chapter 7 case. Washington’s attorneys’ fees to the Collier
Appellants were paid via debit charges on her account through August 2011.
However, the discharge of Washington’s Chapter 7 was cancelled for failure to file the
required financial management course certification pursuant to 11 U.S.C. §§ 727(a)(11) and
1328(g)(1). Her case was closed on February 28, 2012.
From the time of her initial filing until October 7, 2014, Washington was represented by
the Collier Appellants. On October 6, 2014, Washington moved through her new attorney, Sam
O. Henry, IV, to reopen her Chapter 7 case and to obtain a discharge.2
On October 22, 2014, Washington filed a Motion to Show Cause Why Attorneys’ Fees
Should Not Be Disallowed, to Compel Glay H. Collier, II, to Disgorge Attorneys’ Fees and for
Sanctions. In her motion, which was deemed an adversary complaint, Washington alleged that
(1) the Collier Appellants violated 11 U.S.C. §§ 527 and 528 by failing to provide certain
disclosures and a written contract detailing the services to be provided and thus are liable for
attorneys’ fees and costs pursuant to 11 U.S.C. § 526(c)(2); (2) the Collier Appellants collected
fees post-petition in violation of the automatic stay under 11 U.S.C. § 362 by debiting her bank

2

Until the motion was granted, the Collier Appellants apparently remained counsel of

record.
2

account; and (3) the Collier Appellants refused to file her required financial management course
certification because of her non-payment of legal fees, causing her case to be closed without a
discharge. As a result, Washington claimed that she lost her automobile and had her wages
garnished.
On February 20, 2015, the Collier Appellants filed a motion for summary judgment,
which the Bankruptcy Court granted in part and denied in part. The Bankruptcy Court granted
the motion to the extent that Washington claimed the Collier Appellants had refused to file her
financial management course certification, but denied the motion on her claims under 11 U.S.C.
§§ 362, 527, and 528.
On April 2, 2015, the Bankruptcy Court held a trial on the adversary proceeding.
In the April 7, 2015 Memorandum Opinion, the Bankruptcy Court ruled that the Collier
Appellants violated 11 U.S.C. §§ 526(a)(1) and (a)(3)(A) by misrepresenting to Washington, as
an “assisted person,” that they would take all actions to ensure she received a discharge in her
Chapter 7 case. The Bankruptcy Court also found that the Collier Appellants violated these
sections by failing to investigate and take remedial action to see that Washington was discharged.
The Bankruptcy Court also ruled that the Collier Appellants violated 11 U.S.C. §§ 527
and 528 by failing to make the required disclosures and failed to provide her with a contract. The
document that was given to Washington did not clearly and conspicuously detail the services that
the Collier Appellants would provide her and the fees for those services.
Finally, the Bankruptcy Court found that the Collier Appellants violated 11 U.S.C. § 362
by debiting post-petition payments from Washington’s bank account.
Based on these findings, the Bankruptcy Court ordered the following:
3

•

The Collier Appellants were ordered to pay damages and returned attorneys’ fees of
$2,377.04 for a violation of 11 U.S.C. § 526(c)(2)(A);

•

Collier was ordered to pay Washington insufficient fund fees in the amount of $102 and
to refund her attorneys’ fees of $600, for a total of $702.00, for a violation of 11 U.S.C.
§362(k) as an additional basis of recovery;3

•

Collier was ordered to pay Washington punitive damages of ten times actual damages,
which is equal to $7,020.00.

•

Collier was ordered to pay a civil penalty of $20,000.00, pursuant to 11 U.S.C. §
526(c)(5)(B).

•

A hearing was set on Washington’s request for attorneys’ fees and costs.

•

Finally, Collier was referred for disciplinary proceedings.
On May 21, 2015, a hearing was held on Washington’s request for attorneys’ fees and

costs. Washington’s contingency fee agreement with her attorneys was filed in the record and
showed that she would be entitled to 50% of all money or property collected as a result of
settlement or trial. The Collier Appellants challenged her right to recover more than 50% of
actual costs, including returned attorneys’ fees.
On May 28, 2015, Judge Norman issued a second Memorandum Opinion relying on In re
Repine, 536 F.3d 512 (5th Cir. 2008), to award attorneys’ fees that were incurred in prosecuting
the 11 U.S.C. § 362 claim. Judge Norman determined that Washington should be awarded
attorneys’ fees of $19,817.93 and costs of $199.41 for a total of $20,017.34.
This appeal followed. The Collier Appellants raised four issues on appeal: (1) whether
the Bankruptcy Court committed an error of law or an abuse of discretion in imposing a civil

3

These damages were duplicative; it was the intent of the Bankruptcy Court, however,
that Washington recover the total amount of $2,377.04 in actual damages, including returned
attorneys’ fees, plus punitive damages of $7,020.00.
4

penalty of $20,000; (2) whether the Bankruptcy Court committed an error of law in finding that
Washington’s claims under §§ 526(c)(2)(A), 527, and 528 of the Bankruptcy Code had not
prescribed; (3) whether the Bankruptcy Court committed an error of law in finding that
Washington’s claims under 11 U.S.C. § 362 were timely filed and not otherwise barred by the
doctrine of laches; and (4) whether the Bankruptcy Court committed an error of law by awarding
Washington attorneys’ fees in the amount of $19,817.93.
All briefing is complete, and the Court now issues this Opinion.
II.

APPEAL
A.

Standard of Review

This Court has jurisdiction over the Collier Appellants’ appeal from the Bankruptcy
Court’s Opinions pursuant to 28 U.S.C. § 158(a). In this regard, a district court functions as an
appellate court, reviewing the bankruptcy court’s findings of fact for clear error and the
bankruptcy court’s conclusions of law de novo. In re Eldercare Properties, Ltd., 568 F.3d 506,
515 (5th Cir. 2009). Mixed questions of fact and law are reviewed de novo. In re Canion, 196
F.3d 579, 584 (5th Cir.1999). A decision to impose sanctions is reviewed for “an abuse of
discretion.” In re Smyth, 242 B.R. 352, 357 (W.D.Tex.1999) (citing Goldin v. Bartholow, 166
F.3d 710, 722 (5th Cir.1999)). A court “by definition abuses its discretion when it makes an
error of law.” In re Superior Crewboats, Inc., 374 F.3d 330, 334 (5th Cir. 2004) (citations
omitted); In re Cahill, 428 F.3d 536, 539 (5th Cir. 2005) (“An abuse of discretion occurs where
the bankruptcy court ‘(1) applies an improper legal standard or follows improper procedures . . .,
or (2) rests its decision on findings of fact that are clearly erroneous.’”) (citation omitted).

5

B.

Did the Bankruptcy Court commit an error of law or abuse of discretion in
imposing a civil penalty of $20,000?

The Collier Appellants argue that the Bankruptcy Court improperly imposed a civil
penalty without a motion having been brought by the U.S. Trustee, the debtor, or the Bankruptcy
Court itself. Thus, they contend that they were denied due process because they had no notice
via the Complaint, via motion, or via the pretrial memorandum that civil penalties were at issue.
Washington states that she did not request imposition of a penalty and thus declines to
respond to this argument in her brief.
The Court must still consider, on the record, whether the Bankruptcy Court’s imposition
of a penalty was an error of law or abuse of discretion.4 The Bankruptcy Court relied on 11
U.S.C. § 526(c)(5) to impose a civil penalty of $20,000. That statute provides:
Notwithstanding any other provision of Federal law and in addition to any other
remedy provided under Federal or State law, if the court, on its own motion or on
the motion of the United States trustee or the debtor, finds that a person
intentionally violated this section, or engaged in a clear and consistent pattern or
practice of violating this section, the court may—
(A) enjoin the violation of such section; or
(B) impose an appropriate civil penalty against such person.
11 U.S.C. § 526(c)(5) (emphasis added).
In this case, it is undisputed that no motion was filed by the U.S. Trustee or Washington.
The Bankruptcy Court could, however, impose a sanction on its own motion if it found that the
4

Contrary to the Collier Appellants’ contention in their reply memorandum [Doc. No. 13,
p. ii], Washington’s failure to respond does not constitute a waiver. The Collier Appellants had
the duty to raise the issues it wished for the Court to review on appeal. While Washington had
an opportunity to respond to the Collier Appellants’ brief, the Court’s duty is to consider, de
novo, errors of law, if properly preserved, without regard to whether Washington chose to
respond to a particular issue.
6

Collier Appellants violated § 526(c)(6) or engaged in a clear and consistent pattern or practice of
violating this section.
In In re Sustaita, 438 B.R. 198 (B.A.P. 9th Cir. 2010), aff’d, 460 Fed. App’x 627 (9th Cir.
2011), the Bankruptcy Appellate Panel (“BAP”) for the Ninth Circuit Court of Appeals addressed
this issue. In that case, the bankruptcy court relied on § 526(c)(5)(B) to impose a $100,000 civil
penalty against the appellant, who was found to have operated as a bankruptcy petition preparer and
debt relief agency. The Chapter 13 Trustee had filed an application in the bankruptcy court seeking
various types of relief against the appellant, including punitive sanctions, but, on appeal, the BAP
found that “a plain reading of [the] application shows that it was insufficient to alert [the appellant]
that the court was acting on its own motion or that a civil penalty under [§ 526(c)(5)(B)] this section
was even under consideration.”5 Id. at 212. Moreover, the BAP found that the U.S. Trustee’s
joinder in the Chapter 13 Trustee’s application did not provide the necessary “explicit notice that the
U.S. Trustee was moving under § 526(c)(5)(B).” Id. Finally, the BAP found that the pre-trial
statement also failed to make any reference to § 526(c)(5)(B) in the contested issues. Id.
Based on these facts, the BAP reversed the imposition of a sanction against appellant,
explaining its decision as follows:
The Ninth Circuit has held that prior to sanctioning a party, the court must
provide the party to be sanctioned with particularized notice to comport with due
process. Miller v. Cardinale (In re DeVille), 361 F.3d 539, 548 (9th Cir. 2004). Such
notice necessarily includes a description of the alleged misconduct as well as the
source of the court’s sanctioning power so that the party would know which factors
to address to avoid sanctions.
This rule is equally applicable to the court’s statutory power to act on its own
motion when imposing a civil penalty under § 526(c)(5)(B) or to a motion initiated
5

The Chapter 13 Trustee did not have the right to move for sanctions under § 526(c)(5).
7

by the U.S. Trustee. Although we believe [the Chapter 13 Trustees’] applications
most likely informed [appellant] of the conduct alleged to be sanctionable under §
526(c)(5)(B), we conclude that [the appellant] did not receive explicit notice that the
court was acting on its own motion or considering a civil penalty under §
526(c)(5)(B) nor was there any indication that the U.S. Trustee was moving under
this section.6 Accordingly, we reverse the court’s decision to impose a civil penalty
against [the appellant] under this section. . . .
Id. at 212.
The Fifth Circuit Court of Appeals has not addressed this issue. However, at least with
charges of violations of disciplinary rules, district courts in the Western District of Texas have found
that “the Bankruptcy Court must give Appellant particularized notice of: (a) the improper conduct;
(b) the disciplinary rules he is charged with having violated; and (c) the potential sanctions he faces.”
In re Alvarado, No. CIV.SA-03-CA-0295-RF, 2003 WL 22097092, at *6 (W.D. Tex. July 29, 2003);
see

also

In

re

Luna,

Nos.

03–50956,

02–54849,

Civ.A.SA–03–CA–0472X,

Civ.A.03–CA–0481–XR, 2004 WL 1618824 (W.D. Tex. July 19, 2004) (same).7
The Bankruptcy Court was faced with a number of greatly concerning allegations against the
Collier Appellants which he ultimately found to be true.8 Nonetheless, this Court agrees that Due
Process requires more than just notice of the conduct at issue, but also the particular standard by
which his conduct will be assessed and an opportunity to be heard as to that standard. See Alvarado,

6

Since this decision issued, § 526(c)(5)(B) has been amended to allow a debtor to also
bring a motion for penalties.
7

Although the Western District of Texas cases are not directly on point and involve, to
some extent, application of local rules, the Court finds that they are worthy of note given the
related disciplinary issues in this case.
8

Since the issuance of the Bankruptcy Court’s opinions, Collier admitted in the related
disciplinary matters that he took certain improper and unprofessional actions, including with
regard to the Washington matter. He then consented to disbarment. The Judges of the Western
District of Louisiana disbarred Collier on September 28, 2015.
8

2003 WL at *5 (citing Ted Lapidus, S.A. v. Vann, 112 F.3d 91, 97 (2d Cir. 1997), cert. denied, 522
U.S. 932 (1997); Satcorp Intern. Group v. China Nat. Silk Import & Export Corp., 101 F.3d 3, 6 (2d
Cir. 1996)).
The Court has carefully reviewed the record, but there is no evidence that the U.S. Trustee
or the debtor sought such a remedy under § 526(c)(5)(B). In her Complaint, Washington sought
damages and attorneys’ fees under § 526(c)(2), but not a civil sanction under § 526(c)(5)(B).
Likewise, Washington filed a pre-trial memorandum [Doc. No. 4-1, Appx. 000030-36], but this
section was never cited as a source of relief against the Collier Appellants. Finally, on the record
before it, the Court finds no evidence that the Bankruptcy Court gave notice of its intent to impose
a sanction under § 526(c)(5)(B) prior to the hearing on April 2, 2015.
Under these facts, the Court is compelled to reverse that portion of the Bankruptcy Court’s
April 7, 2015 Memorandum Opinion ordering Collier to pay a civil penalty of $20,000.00, pursuant
to 11 U.S.C. § 526(c)(5)(B). To this extent, the Bankruptcy Court’s April 7, 2015 Opinion is
REVERSED, and the Collier Appellants’ appeal is GRANTED.
C.

Did the Bankruptcy Court commit an error of law in finding that Washington’s
claims under § 526(a)(2)(A) for violations of §§ 527 and 528 of the Bankruptcy
Code had not prescribed?

The Collier Appellants next contend that the Bankruptcy Court erred in finding that
Washington’s claims under § 526(a)(2)(A) were not prescribed. Washington based these claims on
the Collier Appellants’ failure to provide certain disclosures and a written contract describing the
bankruptcy services to be performed in violation of 11 U.S.C. §§ 527 and 528. Citing the four-year
statute of limitations contained in 28 U.S.C. § 1658(a), the Collier Appellants argued that
Washington had not timely brought her claims within four years of the date the violations occurred.
9

Washington did not respond to this argument on the basis that such a claim would belong to
the bankruptcy estate because it “would have necessarily arisen prior to the plaintiff’s filing of a
bankruptcy petition.” [Doc. No. 12, p. 3].
In finding that there was a genuine issue of material fact whether Washington’s claims had
prescribed, the Bankruptcy Court relied on the private action articulated in 11 U.S.C. § 526(c)(2)(A)
and the applicable catchall limitations period found in 28 U.S.C. § 1658(a).
Section 526(c)(2)(A) provides:
Any debt relief agency shall be liable to an assisted person in the amount of any fees
or charges in connection with providing bankruptcy assistance to such person that
such debt relief agency has received, for actual damages, and for reasonable
attorneys’ fees and costs if such agency is found, after notice and a hearing, to have–
(A)

intentionally or negligently failed to comply with any provision of this
section, section 527, or section 528 with respect to a case or proceeding under
this title for such assisted person[.]

The applicable statute of limitations is found in 28 U.S.C. § 1658(a), which provides that “a civil
action arising under an Act of Congress enacted after the date of the enactment of this section may
not be commenced later than 4 years after the cause of action accrues.”9 (emphasis added).
The disclosures under Section 527 must be provided “not later than 3 business days after the
first date on which a debt relief agency first offers to provide any bankruptcy assistance services to
an assisted person.” 11 U.S.C. § 527(a)(2). The required disclosures under Section 528 must be
provided “not later than 5 business days after the first date on which such agency provides any
bankruptcy assistance services to an assisted person, but prior to such assisted person’s petition
9

Section 526(c)(2)(A) was enacted after the December 1, 1990 effective date of 28 U.S.C.
§ 1658(a) and its general catchall limitations period.
10

under this title being filed.” 11 U.S.C. § 528(a)(1). Thus, it is undisputed that the disclosures should
have been made near the time of the Collier Appellants’ initial representation of Washington.
However, in the Bankruptcy Court’s order on Collier’s Motion for Summary Judgment on
this issue, the Bankruptcy Court accepted Washington’s argument that “the statute of limitations
period would not necessarily have begun at the outset of representation,” but may begin to run only
after “‘the plaintiff . . . discovers or a reasonably diligent plaintiff would have discovered the facts
constituting the violation. . . . ’” [Doc. No. 4-1, Appx. 000024 (quoting Merck & Co. v. Reynolds,
130 S. Ct. 1784 (2010))]. The Bankruptcy Court then found a genuine issue of material fact for trial
as to when the statute of limitations began to run. The Bankruptcy Court concluded that the Collier
Appellants were “free to argue at trial that the plaintiff’s claims are barred by the statute of
limitations, this is [a] fact determination that must be made by the trier of fact at trial.” [Doc. No.
4-1, Appx. 000025].
In the April 7, 2015 Memorandum Opinion, the Bankruptcy Court found that the statute of
limitations provides an affirmative defense, that the Collier Appellants made no argument and
presented no evidence on this affirmative defense at trial, and, “[t]herefore, any affirmative defense
that the . . . statute of limitations [under 28 U.S.C. § 1658(a)] has time-barred the claim under 11
U.S.C. § 526(c)(2)(A) is overrruled.”10 [Doc. No. 4-1, Appx. 000199].
On appeal, the Collier Appellants argue that the Bankruptcy Court committed an error of law
when it concluded that the four-year statute of limitations period under 28 U.S.C. § 1658(a) begins
to run from the date of discovery of the violation rather than from the date of the occurrence.

10

The Memorandum Opinion refers to the “Louisiana statute of limitations,” but the
statute of limitations at issue is that found in § 1658(a). [Doc. No. 4-1, Appx. 000199].
11

Before the Court can consider the Collier Appellants’ arguments, it must first determine
whether they properly preserved this point of error. As the Bankruptcy Court points out, a party
asserting an affirmative defense must properly raise that defense, preserve that defense, and provide
supporting evidence. The Collier Appellants did so initially in this case by asserting the defense in
their answer and then raising the legal argument in a motion for summary judgment prior to trial,
along with the facts supporting their legal argument. The Bankruptcy Court, however, ruled against
the Collier Appellants on their legal premise, finding a genuine issue of material fact as to when the
four-year statutory period began. At trial, the Collier Appellants could have made a motion for
judgment on partial findings pursuant to Rule 52(c) of the Federal Rules of Civil Procedure, which
was made applicable to adversary proceedings by Rule 7052 of the Federal Rules of Bankruptcy
Procedure. They did not do so and failed to preserve this issue for appeal. See MeadWestVaco
Corp. v. Rexam Beauty & Closures, Inc., 731 F.3d 1258, 1271 (Fed. Cir. 2013) (“Because it is
improper to appeal a denial of summary judgment, . . . we conclude that Rexam and Valois waived
the issue of indefiniteness by failing to raise it at the bench trial.”). Thus, the Court does not have
jurisdiction to entertain their arguments. To this extent, the Bankruptcy Court’s April 7, 2015
Opinion is AFFIRMED, and the Collier Appellants’ appeal is DENIED.
D.

Did the Bankruptcy Court commit an error of law in finding that Washington’s
claims under 11 U.S.C. § 362 were timely filed and not otherwise barred by the
doctrine of laches?

The Bankruptcy Court also ruled in favor of Washington on her claims that the Collier
Appellants violated the automatic stay provision of 11 U.S.C. § 362 by debiting her bank account
after the conversion of her Chapter 13 bankruptcy to a Chapter 7 bankruptcy. The Collier Appellants
urge the Court to find that the Bankruptcy Court committed an error of law by finding that these
12

claims were timely filed and not barred by the doctrine of laches.
Congress has yet to establish any limitation periods governing actions brought for violations
of the automatic stay. See In re Bernheim Litig., 290 B.R. 249, 258 (D.N.J. 2003). In most cases,
when Congress is silent, the catchall federal four-year statute of limitations codified at 28 U.S.C. §
1658(a), discussed supra, applies. However, § 1658(a) applies only to those acts enacted after 1990.
Title 11, United States Code, Section 362 was enacted in 1978, so § 1658(a) does not supply the
limitations period for this violation.
Federal courts have not consistently applied any limitations period to actions for violations
of the § 362 automatic stay. Some courts have borrowed analogous state limitations periods, some
have applied no limitation periods, some have applied the doctrine of laches, and some have applied
a hybrid of these. See generally, In re Bernheim Litig., 290 B.R. at 258 (citing Patrick McDowell,
Limitation Periods for Federal Causes of Action after the Judicial Improvement Act of 1990, 44
VAND. L. REV. 1355 (1991)).
Citing Holmberg v. Armbrecht, 327 U.S. 392 (1946), the Collier Appellants contend that the
Bankruptcy Court should have first considered the analogous state limitations period, which would
be Louisiana’s one-year prescriptive period for conversion,11 while performing an equitable
balancing test. See id. at 395 (“[W]hen Congress is silent . . . [it] has usually left the limitations of
time for commencing actions . . . to judicial implications. As to actions of law, the silence . . . has
been interpreted to mean . . . to adopt the local law of limitation.”
11

However, the statute of

As Collier has since admitted, the Collier Appellants wrongfully debited funds from
Washington’s bank account. They contend that this action is analogous to the delictual action of
conversion under Louisiana law, which is subject to the one-year prescriptive period under
Louisiana Civil code article 3492. See In re Succession of Landrum, 958 So.2d 778, 780 (La.
App. 1st Cir. 3/26/08).
13

limitations periods “are not controlling measures,” but are to be considered against equitable
measures.). As the analogous state limitations period had run when Washington filed her adversary
complaint, the Collier Appellants argue that there should be a presumption of laches, and
Washington had to show that her delay was excusable and the Collier Appellants were not prejudiced
thereby. [Doc. No. 11, p. 18 (citing Watz v. Zapata Off-Shore Oil Co., 431 F.2d 100 (5th Cir. 1970);
Muller v. Lykes Bros. Steamship Co., 337 F.Supp. 700, 702 (E.D. La. 1972); Nealy v. Fluor Drilling
Servs., Inc., 524 F. Supp. 789, 794 (W.D. La. 1981); Stretton v. Penrod Drilling Co., 701 F.2d 441
(5th Cir. 1983))].12
In ruling on the Collier Appellants’ motion for summary judgment, the Bankruptcy Court
considered the same arguments presented in this appeal. The Bankruptcy Court found (as the Collier
Appellants admit) that not all courts have looked to state limitations periods where Congress is
silent. Instead, the Bankruptcy Court agreed with the reasoning of the bankruptcy courts in
Newcomer v. Litton Loan Serving, L.P., 416 B.R. 166 (Bankr. D. Md. 2009), and Rushing v. Green
Tree Servicing, LLC (In re Rushing), 443 B.R. 85, 98 (Bankr. E.D. Tex. 2010). In Newcomer, the
bankruptcy court refused to apply a state limitations period to a § 362 violation, finding “that a claim
of a violation of the automatic stay does not depend on state statutory or case law.” [Doc. No. 4-1,
Appx. 000026]. In Rushing, the bankruptcy court noted that “courts have permitted debtors to bring
. . . actions [under § 362(k)] well after the underlying bankruptcy case has been closed or dismissed”
and that the approach of looking to state limitations periods is “not mandated.” 443 B.R. at 98 (citing
in [Doc. No. 4-1, Appx. 000027]. The Bankruptcy Court in this case found that, likewise, “[t]he
alleged violations of § 362 do not implicate Louisiana law in any way[,]” and found that it was “not
12

All of the Collier Appellants’ cited cases arise in admiralty, not in bankruptcy.
14

appropriate to graft Louisiana’s prescription period concerning the tort of conversion to the alleged
violations of the 11 U.S.C. § 362 automatic stay.” [Doc. 4-1, Appx. 000027].
In its Conclusions of Law following trial, the Bankruptcy Court found that the Collier
Appellants failed to raised the affirmative defense of laches as to their violation of the automatic
stay. The Bankruptcy Court considered the evidence and awarded damages.
As the defense of laches is part and parcel of the Collier Appellants’ arguments regarding the
timeliness of Washington’s claims, it would appear that the Collier Appellants have also failed to
preserve this issue for appeal. Nevertheless, even if this issue has been properly preserved for
appeal, the Court agrees with Washington that the Bankruptcy Court did not commit an error of law
in finding that her claim was timely filed. The Bankruptcy Court properly concluded that
Washington’s rights arose in bankruptcy law, and state law is not implicated.
Further, as Washington points out, even if Louisiana’s one-year limitations period were to
be considered as analogous to the facts in Washington’s federal claim, that limitations period would
not be applied automatically. Rather, it would be viewed in the context of the equities. In this case,
as the Bankruptcy Court recognized, the equities clearly favored Washington, who was deprived of
knowledge of her rights by the Collier Appellants’ failure to provide her the required disclosures,
and whose case was abandoned by the Collier Appellants after a debit failed to clear her bank
account. As soon as Washington retained new counsel, she proceeded with filing a motion in the
Bankruptcy Court. Under these circumstances, the Bankruptcy Court committed no error of law in
finding that it could proceed to review the substantive merits of Washington’s § 362 claim.
Therefore, to this extent, the Bankruptcy Court’s April 7, 2015 Opinion is AFFIRMED, and the
Collier Appellants’ Appeal is DENIED.
15

E.

Did the Bankruptcy Court commit an error of law by awarding Washington
attorneys’ fees in the amount of $19,817.93?

Finally, the Collier Appellants argue that the Bankruptcy Court committed an error of law
in awarding Washington attorneys’ fees pursuant to 11 U.S.C. § 362(k), in the amount of $19,817.93
as damages for their violation of the automatic stay.
Title 11, United States Code, Section 362(k)(1) provides in part “. . . an individual injured
by 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.”
The Collier Appellants argue that the statutory language requires an award of attorneys’ fees
to be considered an item of damage for the injured individual, so if she has no liability for attorneys’
fees, then attorneys’ fees are not recoverable. Because Washington had a contingency fee contract
with her attorney for 50% of all amounts collected in the action for violation of the automatic stay
and for all costs incurred, the Collier Appellants argue that she could recover only 50% of the
amounts properly awarded as actual damages.
In its April 7, 2015 Memorandum Opinion, the Bankruptcy Court found that Washington
suffered actual damages of $60013, plus $102 for three insufficient funds fees of $34 each. The
Bankruptcy Court also ordered the return of the $1,675.04 attorneys’ fees paid by the Chapter 13
Trustee to the Collier Appellants prior to the conversion. Thus, the Bankruptcy Court awarded
damages and returned attorneys’ fees to Washington in the total amount of $2,377.04. The
Bankruptcy Court also awarded Washington punitive damages for violations of the automatic stay
at a rate of ten times her actual damages, or $7,020. Finally, the Bankruptcy Court found that an

13

The Collier Appellants admitted to this amount.
16

award of attorneys’ fees and costs was mandated and set a separate hearing to determine the
appropriate amount to be awarded.
A hearing was held on May 21, 2015, during which Washington requested an award of
attorneys’ fees and costs in the total amount of $24,207.34. The Collier Appellants did not object
to the requested rates or the time expended, but objected to an award of attorneys’ fees greater than
50% of her actual damages.14
In its May 28, 2015 Memorandum Opinion, the Bankruptcy Court rejected the arguments of
the Collier Appellants. The Bankruptcy Court relied on the Fifth Circuit’s decision in In re Repine,
536 F.3d 512 (5th Cir. 2008). In Repine, the Bankruptcy Court found that the Fifth Circuit “clearly
held it is proper to award attorney’s fees that were incurred in prosecuting an 11 U.S.C. § 362 claim
as long as there are also actual damages.” Civil Action No. 15-01853 [Doc. No. 1, p. 3].15 The
Bankruptcy Court found further that Washington’s “fee agreement with her attorney does not limit
the recovery as it clearly states the attorney will be entitled to ‘50% of all money or property
collected as a result of settlement or trial.’” Id. (quoting Exh. D-1). The Bankruptcy Court then
conducted a review of the billing statement and time records submitted by Washington’s counsel.
After deducting time improperly charged for clerical and duplicative tasks, the Bankruptcy Court
awarded attorneys’ fees of $19,817.93 and costs of $199.41, for a total of $20,017.34.
As they did at the May 21, 2015 hearing, the Collier Appellants rely on In re Thompson, 426
B.R. 759 (Bkrtcy. N.D. Ill. 2010), to support their argument that the Bankruptcy Court erred by

14

The Collier Appellants did not object to the inclusion of the returned attorneys’ fees as
part of Washington’s actual damages.
15

The Collier Appellants’ two appeals were consolidated for the Court’s consideration,
but the Bankruptcy Court’s May 28, 2015 Opinion was filed in the member case.
17

awarding damages greater than what Washington was actually responsible or liable for under her feeshifting agreement. In Thompson, the bankruptcy court for the Northern District of Illinois
considered a request for attorneys’ fees against a secured creditor which had willfully violated the
automatic stay by repossessing the debtor’s vehicle pre-petition and refusing to return the vehicle
to the bankruptcy estate. The bankruptcy court denied attorneys’ fees because it found the feeshifting provision of § 362(K)(a) was meant only “to restore this Debtor to the actual financial
position that he would have occupied had the Defendant not violated the automatic stay.” Id. at 766.
Under the facts of that particular case, the debtor’s attorneys had waived his responsibility for any
attorneys’ fees, so he could not recover those fees under § 362(k)(1).16 The Thompson Court then
noted that the debtor’s attorneys could have prevented the result by “stating that the recovery of
attorneys[’] fees would be contingent on recovery from [the violator], but that it was necessary for
the attorneys to maintain some actual individual liability on the part of [the debtor] to allow the fees
to be recoverable as damages for purposes of . . . §362(k)(1).” [Doc. No. 11, p. 22].17
In addition to their reliance on Thompson, the Collier Appellants argue that the Bankruptcy
Court misinterpreted the Fifth Circuit’s decision in Repine. They contend that Repine stands only
for the propositions that it is “‘proper to award attorney’s fees that were incurred prosecuting a

16

The debtor had paid attorneys’ fees of $3,500 and originally was responsible for fees on
appeal, but his attorneys waived his responsibility for fees on appeal for this dispute. 426 B.R. at
766. Thus, the debtor had no responsibility for any fees, regardless of what happened on appeal.
17

The Thompson Court stated that the attorneys should have entered “into a clear written
agreement providing that the fees were to be due from [the debtor] but contingent upon success
of the appeal and collection from [the violator]. By doing so, they could have eliminated [the
debtor’s] risk of payment while also ensuring that [the debtor] actually incurred damages in the
form of attorneys’ fees that were due from the client, albeit to be collected from the creditor.”
Id. at 767.
18

section 362(k) claim,’” and that “there is no precedent ‘that requires a prevailing party to prove that
fees actually have been paid [by the debtor] before they can be awarded [to him].’” [Doc. No. 11,
p. 23 (quoting Repine, 536 F.3d at 522)]. However, they argue that Repine did not address the
argument herein that a prevailing party is limited to recovering attorneys’ fees for which she is
actually responsible. Finally, the Collier Appellants argue that the Bankruptcy Court’s reading and
application of Repine ignores the statutory language of § 362(k) which only allows a party to recover
attorneys’ fees as part of her “actual damages.” [Doc. No. 11, p. 23].
Washington responds that Repine is substantially identical to this case. The bankruptcy court
in Repine awarded $27,280.00 in actual damages, $5,000.00 in punitive damages, and $33,720.00
in attorneys’ fees for a violation of the automatic stay. Washington notes further that the Repine
Court cited In re Still, 117 B.R. 251 (Bankr. E.D. Tex. 1990), for the proposition that a “debtor could
collect attorney’s fees incurred in prosecuting a stay violation as long as there were actual damages.”
Repine, 536 F.3d at 522 (citing Still, 117 B.R. at 254). Washington then cited to decisions in other
jurisdictions which suggest that there is a circuit split on this issue, but that district courts in the Fifth
Circuit, as well as the First Circuit Court of Appeals and district courts in other circuits, continue to
follow Repine and award reasonable attorneys’ fees. Washington urges the Court to uphold the
Bankruptcy Court’s decision as a proper application of the “plain and dispositive language of . .
.Repine.” [Doc. No. 12, p. 12]. Finally, Washington dismisses the Thompson case as having
“peculiar facts . . . [which] account for its peculiar result.”18 Id. at p. 12 n.2.
In their reply memorandum, the Collier Appellants deny a circuit split and characterize

18

Washington also makes additional arguments to distinguish Thompson, but the Court
finds it unnecessary to recount them here in light of its conclusion.
19

Washington’s interpretation of Repine as “strained.” [Doc. No. 13, p. ii].
Having fully reviewed the arguments and the case law, the Court finds that the Bankruptcy
Court did not commit legal error in awarding reasonable attorneys’ fees and costs to Washington,
rather than limiting her to a recovery of 50% her actual damages. Although the Court considers
Repine to be persuasive, rather than precedential, since it did not address the exact issue here,19 the
Court also agrees with the Bankruptcy Court that Repine can be read to support the fees and costs
awarded. Washington was responsible for attorneys’ fees if there was a recovery,20 and there was
a recovery of actual damages (as well as punitive damages) in this case. Thus, the Court finds that
the Bankruptcy Court properly awarded attorneys’ fees at a reasonable rate and for the reasonable
time expended. To this extent, the Bankruptcy Court’s April 7 and May 28, 2015 Opinions are
AFFIRMED, and the Collier Appellants’ Appeal is DENIED.
III.

CONCLUSION
For the foregoing reasons, the Bankruptcy Court’s Opinions are AFFIRMED IN PART AND

REVERSED IN PART, and the Collier Appellants’ Appeal is GRANTED IN PART AND DENIED
IN PART. To the extent that the Collier Appellants appealed the Bankruptcy Court’s imposition of
a civil sanction, the Bankruptcy Court’s April 7, 2015 Opinion is REVERSED, and the Collier
Appellants’ Appeal is GRANTED. The Bankruptcy Court April 7 and May 28, 2015 Opinions are
otherwise AFFIRMED, and the Collier Appellants’ Appeal is DENIED.

This matter is

19

It is unclear what type of agreement Repine had with his attorney for payment of fees.
Given the fact that Repine had not actually paid any fees, he may well have had a contingency fee
agreement, or, he may have had some type of agreement to pay attorneys’ fees at the standard
hourly rate if there was a recovery. Those facts are just not part of the decision.
20

Washington is, thus, distinguishable from the debtor in Thompson who had no
responsibility for any attorneys’ fees.
20

REMANDED to the Bankruptcy Court to the extent any further proceedings are necessary.
MONROE, LOUISIANA, this 31st day of March, 2016.

21