Emotional Distress Damages Awarded for Creditor Violations of the Automatic Stay
August 18th, 2008, 10:22 am
Emotional damages qualify as “actual damages” under the Bankruptcy Code provision authorizing recovery of actual damages for the willful violation of automatic stay. Fleet Mortg. Group, Inc. v. Kaneb, 196 F.3d 265, 35 Bankr. Ct. Dec. (CRR) 45, Bankr. L. Rep. (CCH) ¶78044 (1st Cir. 1999).”Actual damages,” such as may be recovered by any individual injured by willful violation of automatic stay, include damages for emotional distress. In re Dawson, 390 F.3d 1139, Bankr. L. Rep. (CCH) P 80207 (9th Cir. 2004), petition for cert. filed (U.S. May 27, 2005).
To be entitled to award of emotional distress damages for willful violation of automatic stay, an individual must: (1) suffer significant harm; (2) clearly establish that significant harm; and (3) demonstrate a causal connection between that harm and violation of automatic stay. In re Dawson.
Though pecuniary loss is not prerequisite to recovery of emotional distress damages for willful violation of automatic stay, not every willful stay violation merits compensation for emotional distress, In re Dawson. For individual to recover emotional distress damages for willful violation of automatic stay, he must clearly establish that he has suffered significant emotional harm, such as by presenting corroborating medical evidence or by presenting non-experts, such as family members, friends or coworkers, to testify to manifestations of mental anguish and to clearly establish that significant emotional harm occurred. ID.
Damages for emotional distress are recoverable for willful automatic stay violations; while claims for fleeting or trivial emotional distress are not compensable, an individual who suffers significant harm and demonstrates a causal connection between the harm and the violation of the automatic stay is entitled to be compensated. 11 U.S.C.A. § 362(k). Green Tree Servicing, LLC v. Taylor, 369 B.R. 282, Bankr. L. Rep. (CCH) P 80901 (S.D. W. Va. 2007)
