Oftentimes, creditors will violate the automatic stay imposed by 11 U.S.C. § 362 out of inadvertence. In these instances, creditors typically correct the problem immediately. A recent case from the Bankruptcy Court for the Eastern District of California (Sundquist v. Bank of America, 566 B.R. 563 (Bankr. E.D. Cal. 2017)) explains why creditors act quickly. Bank of America had, prior to the bankruptcy, denied 20 home mortgage modification applications, which the court found to be in bad faith. This action occurred prior to the bankruptcy, but obviously had an impact upon the Bankruptcy Court’s decision for stay violations which included:
1. Foreclosing on the Sundquist’s home despite knowing of the bankruptcy;
2. Sending its agents to the Sundquist’s home to knock on the doors and windows;
3. Skirting security to obtain access to the Sundquist’s gated community;
4. Attempting to hide its actions by setting aside the foreclosure sale (without notice to the Sundquists); and
5. Removing the Sundquist’s appliances from the home.
The Sundquists suffered economic damages by having to move and pay rent. The Sundquists lost work (including a promotion) due to time loss and the stress induced by Bank of America’s actions. Similarly, the Sundquists suffered medical costs from the stress (one attempted suicide). In order to correct this problem and in order to punish Bank of America so that it may act more properly in the future and follow the law, the Court ordered the following relief:
1. $73,200.00 for rent paid;
2. $10,000.00 for moving expenses;
3. $87,882.00 in legal fees;
4. $41,511.00 for lost income due to loss of promotion;
5. $91,351.00 in additional loss income;
6. $24,000.00 for the appliances;
7. $26,637.00 for HOA fees;
8. $20,000.00 for its bad faith denial of loan modifications;
9. $40,000.00 in medical expense;
10. $300,000.00 for emotional distress;
11. $5,000,000.00 in punitive damages to the Sundquists;
12. $20,000,000.00 in punitive damages to be paid to California public law schools; and
13. $20,000,000.00 in punitive damages to be paid to non-profit consumer law groups.
Let’s hope all creditors (especially Bank of America) are more responsible in the future.