John E. Waites, US Bankruptcy Judge.
This matter is before the Court for a determination of damages regarding the Complaint filed by Cameron Julius Xavier Banks ("Plaintiff or Debtor") against Gralin Hampton Auto Sales ("Defendant"). In his Complaint, Plaintiff seeks damages for willful violation of the automatic stay under 11 U.S.C. § 362(k)(1) due to the post petition repossession of three vehicles by Defendant. The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334. This matter is a core proceeding pursuant to 28 U.S.C. § 157.
1. Plaintiff is the owner and operator of an executive shuttle service business, which provides transportation services using high-end luxury vehicles, including a 2015 Mercedes-Benz and 2018 Chevrolet Camaro ("Vehicles").
2. Plaintiff filed a voluntary petition for relief under chapter 13 of the Bankruptcy Code on February 15, 2019, Case Number 19-00916. Debtor listed the Vehicles as property of the estate in his Schedules. Debtor also listed a third vehicle in his Schedules, a 2017 Chrysler Pacifica, but this vehicle is titled solely in the name of CJ Banks Transportation LLC.
3. Plaintiff listed Defendant as a creditor on Schedule D and included Defendant on the mailing matrix in his bankruptcy case. On February 15, 2019, the Clerk of Court served the Notice of Chapter 13 Bankruptcy Filing on Defendant at the following address:
5. On February 25, 2019, Debtor sent a second letter to Defendant by facsimile and U.S. Mail, enclosing a copy of the Notice of Chapter 13 Bankruptcy Filing and Chapter 13 Plan. In his chapter 13 plan, filed on February 25, 2019, Debtor proposed to use income from his executive shuttle service business, as well as income from a separate trucking business, to fund his plan payments. The plan required payments of $4,220.00 per month to the Trustee beginning thirty days after the petition was filed pursuant to 11 U.S.C. § 1326(a)(1).
6. On March 1, 2019, Defendant filed proofs of claim in Debtor's bankruptcy case asserting claims secured by the Vehicles and the Pacifica, listing the 1737 N. Main Street, Summerville, SC 29483 address as its address for notices.
7. Debtor was incarcerated on May 23, 2019 on federal charges and has remained incarcerated from that date forward but attended the continued hearing on damages while in the custody of the U.S. Marshal.
8. On or about June 18, 2019, Defendant repossessed the Vehicles from Debtor's former residence.
9. On June 18, 2019, Debtor, through counsel, sent a demand letter to Defendant seeking immediate return of the Vehicles. Debtor's counsel also made demands for return of the Vehicles via telephone. The Vehicles were not returned despite multiple demands.
10. On June 20, 2019, Plaintiff commenced this adversary proceeding by filing a Complaint seeking turnover of the Vehicles pursuant to 11 U.S.C. § 542 and seeking damages for willful violation of the automatic stay pursuant to 11 U.S.C. § 362(k)(1).
11. On July 12, 2019, Debtor's bankruptcy case was dismissed because the plan did not comply with the requirements of chapter 13 of the Bankruptcy Code.
12. Defendant failed to timely respond to the Complaint and after a further hearing on August 22, 2019 to consider the default, at which Defendant did not appear, the Clerk of Court entered default against Defendant on September 13, 2019.
13. On September 17, 2019, based upon Defendant's default, the Court entered an Order ("Default Judgment Order") requiring Defendant to turn over the Vehicles and finding that there has been a violation of the automatic stay of 11 U.S.C. § 362 and that Debtor is entitled to damages, actual and punitive. A damages hearing was set for October 17, 2019 by separate notice.
14. Defendant filed a Motion to Reconsider on September 19, 2019.
15. On October 17, 2019, the Court held a hearing on damages and the Motion to Reconsider. Debtor did not attend that hearing but was represented by his wife and counsel. Prior to presenting argument regarding the Motion to Reconsider or evidence of damages, counsel for the parties negotiated a settlement whereby Defendant
16. On December 12, 2019, the Court conducted a hearing on the Motion to Reconsider and received evidence of damages from Debtor. At the hearing, Defendant withdrew its Motion to Reconsider, leaving only the issue of damages for consideration. Debtor presented testimony
17. On December 17, 2019, the Court entered an order vacating the portion of the Default Judgment Order requiring Defendant to turnover the Vehicles based on its determination that such relief should be vacated due to the dismissal of the bankruptcy case prior to the entry of the Order under 11 U.S.C. § 349(b)(2) (requiring that, upon dismissal of a bankruptcy case, all turnover orders entered pursuant to 11 U.S.C. § 542 be vacated).
18. After the hearing, with leave of the Court, Debtor's counsel filed a supplemental fee invoice on December 23, 2019 to include attorney's fees incurred between the October 17, 2019 hearing and the December 12, 2019 hearing in connection with this adversary proceeding. The invoice indicates that the total amount owed as of December 23, 2019 is $13,271.70.
By prior order entered on September 17, 2019 as a result of Defendant's default, the Court determined that there has been a violation of the automatic stay of 11 U.S.C. § 362 and that Debtor would be entitled to damages, actual and punitive, in an amount to be determined. In light of Defendant's withdrawal of its Motion to Reconsider, the issue of whether a
Debtor testified that he suffered actual damages through the loss of use of the Vehicles and the Pacifica in his executive shuttle service business. During the hearing, the Court determined that because the Pacifica was titled solely in the name of CJ Banks Transportation, LLC, it was not property of the estate and therefore not subject to the automatic stay. See Kreisler v. Goldberg, 478 F.3d 209, 213 (4th Cir. 2007) (finding that the automatic stay did not apply to an LLC wholly owned by the debtors, because an LLC is a separate legal entity for purposes of liability and property ownership and therefore the LLC must separately file bankruptcy in order to receive the protections afforded by § 362(a)(1)); In re Brittain, 435 B.R. 318 (Bankr. D.S.C. 2010) (stating that "members of an LLC have no property interest in property owned by the LLC" and therefore "a member's bankruptcy estate has no interest in property of an LLC."). Accordingly, Debtor presented testimony regarding the historical monthly income he received solely from the use of the Vehicles in his executive shuttle service business from January 2019, when the Vehicles were first put into use, through May 2019.
Debtor testified that the gross income from the Vehicles was $2550 in January 2019, $5075 in February 2019, $5900 in March 2019, $5885 in April 2019, and $5100 in May 2019. Although Debtor testified that there were no expenses for the Vehicles due to the bankruptcy reorganization, the income statement appears to reflect some expenses, including fuel costs ranging between $118 — $192 per month, but he failed to acknowledge the monthly debt service, repairs, or other monthly operating expenses. Debtor appears to argue that his actual damages should be the lost income for the period of time when the Vehicles were in the possession of Defendant from June 18, 2019 through the dismissal of his bankruptcy case on July 12, 2019 and other consequential damages.
Debtor's testimony regarding his actual damages from loss of use of the Vehicles was unclear and unconvincing. The income statement appeared incomplete regarding the operating expenses normally associated with running an executive shuttle service business, such as salaries, taxes, insurance, parking, and routine maintenance costs.
Debtor also asserted a claim for damages for emotional distress in the Complaint, alleging that Debtor experienced anxiety and fear as a result of losing the Vehicles and the loss of personal possessions in the Vehicles. Debtor offered no testimony regarding any emotional distress he experienced as a result of the repossession. Accordingly, the Court finds that Debtor failed to meet his burden of proving emotional distress damages.
In support of his claim for attorney's fees, Debtor presented into evidence a copy of an invoice from his counsel, which provides that Debtor incurred $7,548.80 in attorney's fees and $358.90 in expenses up through the October 17, 2019 hearing. This invoice was supplemented after the hearing to reflect an additional $5,364.00 in attorney's fees incurred after the October 17, 2019 hearing. In total, Debtor now seeks $13,271.70 in attorney's fees and costs in connection with this adversary proceeding. Considering all the factors to determine a reasonable attorney's fee award, the Court finds that an attorney's fee award of $12,000 is reasonable under the circumstances of this case.
Debtor further seeks an award of punitive damages. Section 362(k) allows the Court to award punitive damages in appropriate circumstances, such as where the creditor's conduct was intentional or egregious and where the creditor delayed returning the property to the debtor. Defendant repossessed Debtor's Vehicles after filing its proofs of claim in Debtor's bankruptcy case, therefore it is incontrovertible that Defendant had knowledge of Debtor's pending bankruptcy case and intentionally engaged in an act to obtain possession of property of the estate. Defendant also retained possession of the Vehicles for several weeks in violation of the automatic stay despite demands for return of the Vehicles from Debtor's counsel and the filing of this adversary proceeding. Defendant does not dispute that it had notice of the bankruptcy case and the automatic stay. Under the circumstances of this case, the Court finds that a punitive damages award of $1,500 is appropriate to deter similar future violations.
Based upon the foregoing, Defendant is hereby ORDERED to pay $12,000 by check made payable to and delivered directly to Steadman Law Firm, P.A. as attorney's fees and $1,500 to Debtor c/o Steadman Law Firm, P.A. as punitive damages within fourteen days of the entry of this Order. No other damages are appropriate or proven. Defendant shall file proof of this payment with the Court no later than fourteen days after the entry of this Order.