Lodge v. Kondaur Credit Corp: In Issue of First Impression, Panel Holds That Emotional Damages Are Recoverable for Willful Violation of Automatic Bankruptcy Stay

Lodge v. Kondaur Capital Corp., No. 13-10919, from NDGa

Circuit Judge Hull joined by Senior Circuit Judge Black and Senior District Judge Walter (WDLa)

Summary:  The Lodges sued claiming that the defendants violated the automatic stay entered in their bankruptcy proceeding and that the defendants violated the Fair Debt Collection Practices Act ("FDCPA").  Kenneth Lodge filed a Chapter 13 Bankruptcy petition in 2005.  While the bankruptcy stay was in effect, the defendants published a notice of sale for the Lodge's  house which was withdrawn one day later.  After the Chapter 13 discharge, the Lodges filed a lawsuit against the defendants claiming that the publication of the notice of sale violated the automatic bankruptcy stay and violated the FDCPA.

 

The district court granted summary judgment on the automatic stay claim, finding that the plaintiffs failed to show sufficient injury.  The district court also granted summary judgment on the FDCPA claim, finding that the plaintiffs had not submitted any competent evidence of the fact that the defendants were debt collectors for purposes of that Act.

The panel agreed with the district court’s ruling on the automatic stay issue.  As a matter of first impression, the panel decided that emotional distress damages were recoverable as actual damages, but found that to recover such damages a plaintiff must (1) suffer significant emotional distress; (2) clearly establish the significant emotional distress; and (3) demonstrate a causal connection between that significant emotional distress and the automatic stay.  The plaintiffs did not meet this test.

The panel also agreed that there was no admissible evidence that the defendants were debt collectors.  The district court did not abuse its discretion in declining to take judicial notice of the defendants’ websites.

The district court’s grant of summary judgment was affirmed.

 

Note: The panel reserved the question of whether a plaintiff must show financial or physical injury before emotional distress damages may be awarded.