United States District Court, M.D. Pennsylvania
D. Mariani United States District Judge
case comes before the Court on appeal from an opinion and
judgment issued by Middle District of Pennsylvania Bankruptcy
Court Judge Robert Opel on January 14, 2016. (Doc. 1-1, 1-2).
Appellant, California Coast University, raises two issues on
appeal. First, Appellant argues that the Bankruptcy Court
erred when it ruled that the Appellant's violation of an
automatic stay was willful. (Doc. 14, at 1). Second,
Appellant argues that the Bankruptcy Court erred when it
awarded Appellee the time lost from work to attend the trial
in this mater as Appellee's only actual damages.
(Id.) For the reasons that follow, the Court will
affirm the Bankruptcy Court's order and remand the case
in accordance with the Bankruptcy Court's order for a
determination of attorneys' fees and costs.
Factual Background and Procedural History
Sue Aleckna, Appellee, was a student at California Coast
University, Appellant, and completed her coursework in
September 2009. (Doc. 5-5, at 147). During her time as a
student, she failed to make tuition payments due to the
Appellant in or about 2008. (Id. at 166). Pursuant
to its protocol, Appellant put a financial hold on
Appellee's account, however, Appellant did not pursue any
collection efforts. (Id. at 156-57; 188). On June 1,
2012, Appellee and her husband filed for bankruptcy.
(Id. at 151-52). Then, the Bankruptcy Court issued
the statutorily-mandated automatic stay. (Id.) In
her bankruptcy schedule, Appellee listed Appellant as an
unsecured creditor with a disputed claim in the amount of $6,
300. (Id. at 152; Doc. 5-1, at 182). The debt was
listed as disputed because Appellee was not sure if the debt
was a student loan or dischargeable by the Bankruptcy Code.
(Doc. 5-5, at 153).
6, 2012, Appellee contacted Appellant by phone to request a
copy of her transcript. (Id.). Appellee was told by
the Registrar, Angelina Cenina, that she could not obtain her
transcripts because she owed tuition to the Appellant, there
was no record of her bankruptcy, and that a request for an
official transcript must be submitted in writing.
(Id. at 188). Eventually, after involving her
attorneys, Appellee provided the bankruptcy petition and
schedules and requested the release of the transcript. (Doc.
7-4). Appellant mailed Appellee the transcripts, however, the
transcripts did not list any date for graduation. (Doc. 7-5).
Appellee, on August 7, 2012, called to inquire why the
graduation date was missing and was told that she "did
not technically graduate" because of the outstanding
debt. (Doc. 5-5, at 142).
then initiated the proceeding by filing an action to declare
Appellee's tuition obligation as non-dischargeable. (Doc.
5, at 2). On September 7, 2012, Appellee filed a
counterclaim, containing a count for violation of the
automatic stay, and two counts for attorneys' fees and
compensatory damages, punitive damages, costs and contempt of
court (/of.). On February 5, 2014, Appellee sought leave of
the court to amend her counterclaim, which the Bankruptcy
Court granted (Id. at 11). On April 10, 2014,
Appellee filed the amended counterclaim to allege that she
had graduated and that she had been awarded a degree.
(Id. at 12).
October 9, 2015, the Bankruptcy Court held a trial on the
amended complaint and held that Appellant willfully violated
the stay by failing to issue a transcript with a graduation
date. (Doc. 1-2, at 11-13). On January 14, 2016, the
Bankruptcy Court issued its decision, holding that Appellant
"willfully violated" the automatic stay by
withholding the transcript without a graduation date, and
thus, Appellee was entitled to "actual damages."
(Id. at 11). In his award, Judge Opel ordered
Appellant to provide Appellee with a transcript that included
a graduation date and issue a diploma. (Id.). In
addition, Appellant was ordered to pay $230.16 in actual
damages (based on eight hours leave time from her work in
order to attend trial), plus attorneys' fees and costs.
(Id. at 12). Based on Appellee's itemized
statement, the attorneys' fees amounted to $100, 000 and
$3, 927.12 in expenses, to which Appellants objected.
[Id. at 13; Doc. 14 at 42).
January 28, 2016, Appellant filed this appeal. (Doc. 1). On
January 29, 2016, Appellant complied with the Bankruptcy
Court's order by changing the transcript to include a
graduation date of January 29, 2016 and by issuing a diploma
to Aleckna. (Doc. 14, at 4). The Court held oral argument on
this appeal on August 20, 2019.
Jurisdiction and Standard of Review
District Court has jurisdiction to hear this appeal from a
Bankruptcy Court's final order pursuant to 28 U.S.C.
§ 158(a)(1). The Court reviews "the Bankruptcy
Court's findings of fact for clear error and exercise[s]
plenary review over questions of law." In re
Hechinger Inv. Co. of Delaware, Inc., 489 F.3d 568, 573
(3d Cir. 2007). "A finding of fact is clearly erroneous
only if it is 'completely devoid of minimum evidentiary
support displaying some hue of credibility or bears no
rational relationship to the supportive evidentiary
data.'" Havens v. Mobex Network Servs.,
LLC, 820 F.3d 80, 92 (3d Cir. 2016) (quoting Berg
Chilling Sys., Inc. v. Hull Corp., 369 F.3d 745, 754 (3d
Coast appeals the Bankruptcy Court's decision on two
grounds. First, it argues that its violation of the automatic
could not be "willful" because the law governing
whether withholding a complete transcript (with a graduation
date) is unsettled. (Doc. 14, at 20-22). Second, it appeals
on the grounds that actual damages awarded to Appellee for
taking time off from work to attend trial were improperly
awarded to her and "without any actual damages there can
be no 'willful' violation of the automatic
stay." (Doc. 14 at 45). The Court addresses each issue
Willful Violation of Automatic Stay
Section 362(k)(1) of the Bankruptcy Code provides for actual
damages upon injury from a "willful violation" of
an automatic stay. See 11 U.S.C. § 362(k)(1).
The Third Circuit has held that:
A 'willful violation' does not require a specific
intent to violate the automatic stay. Rather, the statute
provides for damages upon a finding that the defendant knew
of the automatic stay and that the defendant's actions
which violated the stay were intentional.
Whether the party believes in good faith that it had a right
to property is not relevant to whether the act was
'willful' or ...