RSSViolation of the automatic stay
Jan 24
I think the key to a stay violation is notice. If you had no
knowledge of the bankruptcy, there can be no willful violation of the stay.
A violation might become willful if you fail to dismiss the case after
learning of the bankruptcy, but you did dismiss the case. Here is a quote
from a Ninth Circuit case:
In Dyer, we ultimately upheld the contempt sanctions on the ground that,
though the creditor may not have known about the automatic stay initially,
he became aware of it when he was notified by the trustee, and this created
“an affirmative duty to remedy [the] automatic stay violation” by “undo[ing]
the recordation process.” Dyer, 322 F.3d at 1192. Because the failure to
cure the violation after notice was undisputed in Dyer, we agreed that the
violation was willful and upheld the contempt sanctions.
The district court relied on this aspect of Dyer in upholding the
bankruptcy court:
Defendants were charged with knowledge of the stay no later than August 21,
2002, when ZiLOG served a complaint on Defendants seeking injunctive relief
to stop the Idaho state actions. See In re Dyer, 322 F.3d at 1191.
Defendants’ failure to take affirmative action to undo an arguably innocent
violation of the automatic stay constituted a willful violation. Absent any
affirmative act by Defendants to stay or dismiss the Idaho litigation, the
bankruptcy court’s finding that the continuing Idaho state proceedings were
a willful violation of the discharge order was reasonable. . . .
*In re Zilog, Inc.,* 450 F.3d 996, 1008-09 (9th Cir. 2006).
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