The Best Service Co. v. Emily Bayley , 678 F. App'x 593 ( 2017 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS FEB 27 2017
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: EMILY ANN BAYLEY, No. 15-55142
Debtor, D.C. No. 2:14-cv-07799-BRO
______________________________
THE BEST SERVICE CO. INC., MEMORANDUM *
Appellant,
v.
EMILY ANN BAYLEY,
Appellee.
Appeal from the United States District Court
for the Central District of California
Beverly Reid O’Connell, District Judge, Presiding
Argued and Submitted February 14, 2017
Pasadena, California
Before: D.W. NELSON, TALLMAN, and N.R. SMITH, Circuit Judges.
Appellant-Creditor The Best Service Company (“Best Service”) appeals the
district court’s order affirming the bankruptcy court, which granted Appellee-
Debtor Emily Ann Bayley’s (“Bayley”) motion for intentional violation of the
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
automatic stay. The district court concluded that Best Service violated two of the
automatic stay provisions in Bayley’s Chapter 13 bankruptcy proceeding—
specifically 11 U.S.C. § 362(a)(2) and (3)—when it failed to direct the Los
Angeles County Sheriff to release levied funds back to Bayley’s estate. The
district court also determined that the violations were willful and ordered Best
Service to pay Bayley’s attorneys’ fees and costs pursuant to 11 U.S.C.
§ 362(k)(1). We have jurisdiction under 28 U.S.C. § 1291, and we affirm.
1. Upon the filing of Bayley’s bankruptcy petition, Best Service had an
affirmative duty to turn over all property to the bankruptcy estate, even if it was in
the Sheriff’s possession. See Cal. Emp’t Dev. Dep’t v. Taxel (In re Del Mission
Ltd.), 98 F.3d 1147, 1151 (9th Cir. 1996); Knaus v. Concordia Lumber Co. (In re
Knaus), 889 F.2d 773, 775 (8th Cir. 1989). However, by directing the Sheriff to
hold the levied funds, Best Service both “enforce[d]” its pre-petition judgment, see
11 U.S.C. § 362(a)(2), and “exercise[d] control over property of the estate,” see id.§ 362(a)(3). Best Service should have “cease[d] its collection procedures and
notif[ied] the Sheriff to return [Bayley’s] property.” In re Hernandez, 468 B.R.
396, 405 (Bankr. S.D. Cal. 2012). But because it did not, the district court
properly concluded that Best Service was in violation of the automatic stay.
2. The district court also correctly determined that Bayley was entitled to
attorneys’ fees and costs as a result of Best Service’s violation. Under 11 U.S.C.
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§ 362(k)(1), a violation of the automatic stay is willful “if [the] party knew of the
automatic stay, and its actions in violation of the stay were intentional.” Eskanos
& Adler, P.C. v. Leetien, 309 F.3d 1210, 1215 (9th Cir. 2002) (citation omitted).
Here, it is undisputed that Bayley immediately notified Best Service about the
filing of her voluntary bankruptcy petition, and Best Service does not argue that it
was unaware of the automatic stay’s effects. Despite this knowledge, Best Service
decided to direct the Sheriff to hold the levied funds. As such, Bayley is entitled to
an award for the costs “incurred in ending [the willful] violation of the automatic
stay.” America’s Servicing Co. v. Schwartz-Tallard (In re Schwartz-Tallard), 803
F.3d 1095, 1099 (9th Cir. 2015) (en banc).
3. Finally, “[w]hen a party is entitled to an award of attorney’s fees in
the court of first instance, as [Bayley] was here, she is . . . entitled to recover fees
incurred in successfully defending the judgment on appeal.” Id. at 1101. Thus,
Bayley is entitled to recover the attorneys’ fees reasonably incurred in opposing
Best Service’s appeal in the district court. See id.Additionally, Bayley continues to oppose Best Service’s appeal in this court,
and she is therefore entitled to an award for the fees and costs she has expended
here. And while the district court properly held that the bankruptcy court was “the
proper forum to decide” the amount of that fee award, we make clear that a fee
award is mandatory at all levels of review to compensate Bayley for the damages
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she has suffered as a result of Best Service’s willful violation of the automatic stay.
See 11 U.S.C. § 362(k)(1).
Costs are also awarded to Appellee.
AFFIRMED.
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