Here, Blackstone Financial Services “Blackstone” held a loan with the debtor secured by debtor’s automobile. The loan was in default and Blackstone had a repossession order out on the collateral.

Although Fisher filed a Chapter 7 bankruptcy, an individual allegedly from Blackstone, referred to here as Mr. Clemente, contacted Fisher by telephone and stated that if she failed to surrender the vehicle, she would be committing a “criminal felony.”

Following that conversation, Fisher contacted her attorney. Fisher’s attorney contacted Mr. Clemente and emphatically admonished him, stating that:

(1) Ms. Fisher had recently filed bankruptcy;

(2) her vehicle was protected from repossession by the provisions of the automatic stay; and

(3) in order to repossess the car, the creditor must first seek and obtain relief from the automatic stay.

Mr. Clemente’s response was that: He didn’t care if the debtor filed bankruptcy (over the years he had become skeptical of such statements); and that he intended to carry out the repossession order.

Mr. Clemente and Raymond Jefferson, manager of Blackstone, attended the bankruptcy court’s first meeting of creditors. Following the first meeting of creditors, both Mr. Clemente and Blackstone’s manager went down to the parking lot where debtor’s vehicle was located. They blocked the vehicle in the lot and began to repossess the same.

At this time, debtor’s attorney arrived, showed Mr. Clemente and Blackstone’s manager a copy of the bankruptcy petition, and advised them that it was illegal to repossess the vehicle in this manner. The bankruptcy Trustee also arrived and confirmed debtor’s attorney’s representations.

Despite all of the above admonitions, Blackstone continued the repossession and removed the vehicle over the course of about two hours.

Fisher brought an adversary complaint against Blackstone seeking possession of her vehicle plus damages and attorney fees for Blackstone’s violation of the automatic stay.

The bankruptcy court first found that Mr. Clemente’s initial telephone call to the debtor demanding return of the collateral and accusing her of engaging in criminal conduct was in and of itself a violation of the automatic stay.

Moreover, the court further found that Blackstone’s repossession of the vehicle, after being warned by the bankruptcy Trustee and debtor’s counsel, constituted a willful and malicious violation of the automatic stay.

The court noted that Blackstone’s conduct was greatly disturbing and constituted one of the most flagrant violations of the automatic stay known to the court.

The court found that:

Blackstone’s actions in (1) contacting the debtor post-bankruptcy for the express purpose of harassing and threatening her; and (2) in forcefully repossessing her vehicle despite clear and repeated warnings against such action, warrant the imposition of punitive damages and assessment of attorney fees against Blackstone.

Accordingly, Blackstone, its manager, and Mr. Clemente were all held liable to the debtor for (1) debtor’s attorney fees; (2) compensatory damages of $1,000 for the embarrassment and emotional distress intentionally inflicted upon her; and (3) punitive damages of $4,000 for the willful and malicious violation of the bankruptcy stay. Rebecca Fisher v. Blackstone Financial Services, 144 B.R. 237 .

Author: Charles R. Harroun, Attorney at Law