United States Court of Appeals
For the First Circuit
No. 09-9022
IN RE: LUIS G. VÁZQUEZ LABOY; CARMEN D. GARCÍA CALDERÓN,
Debtors.
LUIS G. VÁZQUEZ LABOY; CARMEN D. GARCÍA CALDERÓN,
Appellants,
v.
DORAL MORTGAGE CORPORATION; DORAL FINANCIAL CORPORATION;
EDGARDO CANALES IDRACH d/b/a CANALES LAW OFFICES;
ÁNGEL R. ROLÁN PRADO,
Appellees.
APPEAL FROM THE BANKRUPTCY APPELLATE PANEL
FOR THE FIRST CIRCUIT
Before
Torruella, Lipez, and Thompson, Circuit Judges.
Juan M. Suárez Cobo, with whom Legal Partners, P.S.C. was on
brief, for appellants.
Giselle López Soler, with whom Néstor M. Méndez Gómez and
Pietrantoni Méndez & Álvarez LLP were on brief, for appellees Doral
Mortgage Corporation and Doral Financial Corporation.
Giancarlo Font García, with whom Rivera-Carrasquillo, Martínez
& Font was on brief, for appellees Edgardo Canales Idrach d/b/a
Canales Law Offices and Ángel R. Rolán Prado.
May 27, 2011
THOMPSON, Circuit Judge. Debtors Luis Vázquez Laboy and
Carmen García Calderón claim they were unconstitutionally deprived
of a hearing on damages due to them as a result of the Appellees'
willful violation of the automatic stay in their bankruptcy case.
Appellees Doral Mortgage Corporation – who set in motion the stay
violation – and its former attorney-notaries at Canales Law
Offices, Edgardo Canales Idrach and Ángel Rolán Prado
(collectively, Canales) – who actually carried out the acts that
violated the stay – have mounted a broad counter-attack, fighting
everything from our jurisdiction to the willfulness of the
violation. All this avails them nothing, however. Avoiding the
constitutional issue, we nevertheless find that the Debtors are
entitled to present evidence, and we remand so they can do so.
Shenanigans at the Registry
This case's decade-plus of court proceedings all stem from the
Debtors' purchase of a property in Corozal, Puerto Rico on December
17, 1996.1 Not long after the purchase – on December 30, 1996 –
the Debtors presented their conveyance deed to the Registry of
Property. Under Puerto Rico law, the Registry has sixty days
either to record a deed that has been presented or to notify the
presenters of any defects. See 30 L.P.R.A. § 2255. If a deed's
presenters do not correct any defect within sixty days of
1
The Debtors purchased the property from Manuel Angel Vázquez
and Margarita Ortiz Bonilla; the notary who effected the
transaction was Luis F. Maldonado Rivera.
-2-
notification, then the presentation expires and the Registry will
reject the deed. See id.
On February 15, 1997 – before the initial sixty-day period was
up, and with the conveyance deed still unrecorded – the Debtors
borrowed $25,000 from Doral, secured by a mortgage on the property.
Canales, acting as a notary retained by Doral, promptly presented
the mortgage deed to the Registry.2
This is where things went awry. First, the Registry informed
the Debtors that their conveyance deed was defective. So on May 5,
1997, the Debtors withdrew the deed, as was their right under 30
L.P.R.A. § 2254. But the mortgage deed remained in limbo; its
presentation expired and it was never recorded. The Registry ought
to have informed Doral or Canales that the mortgage deed was
defective due to the withdrawal of the conveyance deed, see id. §§
2255, 2272; Doral disputes that the Registry did so. But there is
no question that by July 29, 1999, Doral had learned that the
conveyance and mortgage deeds remained unrecorded. Nevertheless,
it sat on its hands. And in the meantime, on January 31, 2000, the
Debtors filed for Chapter 13 bankruptcy. Doral learned of the
bankruptcy petition in February and entered the case in early
2
Under Puerto Rico law, a notary is an attorney specially
authorized to execute and give legal effect to certain documents –
including deeds – so the documents will reflect the agreement of
the parties. See 4 L.P.R.A. §§ 2002 (defining notary), 2031
(defining "public documents" as including deeds), 2032 (notaries
responsible for conforming public documents to parties' agreement).
-3-
March.
Now Doral was in a fix. The bankruptcy petition had triggered
an automatic stay, forbidding any action to perfect a lien against
estate property. See 11 U.S.C. § 362(a)(4). But this restriction
hurt Doral: Doral's interest in the Debtors' property remained un-
perfected, and its position in the bankruptcy proceedings suffered
as a result.3 If the mortgage had been recorded then Doral's claim
against the bankruptcy estate would have been secured by a lien on
the property; the unrecorded mortgage, though, left Doral's claim
effectively unsecured. So, heedless of the stay, on December 1,
2000, Canales – again acting as a notary retained by Doral –
presented the mortgage deed to the Registry anew, this time with a
corrected conveyance deed.4 See 30 L.P.R.A. § 2275 (allowing for
a new presentation after the correction of defects). The Debtors,
however, did not take this lying down.
Adversary Action
On August 22, 2001, the Debtors filed an adversary action
3
See, e.g., In re SPM Mfg. Corp., 984 F.2d 1305, 1312 (1st
Cir. 1993) ("If a lien is perfected and not otherwise invalidated
by law, it must be satisfied out of the assets it encumbers before
any proceeds of the assets are available to unsecured claimants,
including those having priority.").
4
Apparently the conveyance deed had already been corrected
and re-presented by notary Julio E. Córa Lopez; Canales obtained a
copy of the corrected deed from the Registry and filed this copy
with the mortgage deed. The correction and re-filing of the
conveyance deed rendered the mortgage deed valid, and the copy of
the corrected conveyance deed evidenced this remediation to the
Registry.
-4-
against Doral in bankruptcy court, claiming that Doral's
presentation of the mortgage deed willfully violated the automatic
stay and seeking various relief, including damages, costs, and
fees.5 Doral moved to dismiss the complaint. For their part, the
Debtors filed a motion for partial summary judgment on liability.
There followed a flurry of filings, including an amended complaint
that brought Canales into the case. Canales responded with its own
summary judgment motion. Finally, on August 29, 2003 the court
dismissed the action, holding that Doral's post-petition attempt to
perfect its mortgage fell under an exception to the automatic stay.
See 11 U.S.C. § 362(b)(3).6
5
The filing of the corrected conveyance deed did not
constitute an act against the bankruptcy estate and therefore has
never been directly at issue.
6
Specifically, § 362(b)(3) provides that a bankruptcy
petition does not act as a stay against:
any act to perfect, or to maintain or continue the
perfection of, an interest in property to the extent that
the trustee's rights and powers are subject to such
perfection under [11 U.S.C. § 546(b)] or to the extent
that such act is accomplished within the period provided
under [11 U.S.C. § 547(e)(2)(A)].
Section 546(b) provides that a trustee's rights and powers are
subject to generally applicable laws (A) allowing the perfection of
a property interest "to be effective against an entity that
acquires rights in such property before the date of perfection" or
(B) "provid[ing] for the maintenance or continuation of perfection
. . . to be effective against an entity that acquires rights in
such property before the date on which action is taken to effect
such maintenance or continuation." Section 547(e)(2)(A) defines a
time period: "at the time [a] transfer takes effect between the
transferor and the transferee, if such transfer is perfected at, or
within 30 days after, such time, except as provided in subsection
-5-
The Debtors moved for reconsideration, and after kicking the
issue about for three years the court obliged by reversing itself,
granting the Debtors' motion for partial summary judgment, and
effectively denying Doral and Canales's dispositive motions. The
court recognized that Doral had been aware well in advance of the
bankruptcy petition that its mortgage was unrecorded, and concluded
that the attempt to perfect the mortgage had constituted a
violation of the automatic stay. As a result, the court ordered
Doral to withdraw the mortgage deed and turn it over to the Debtors
for cancellation. An untimely appeal by Canales to the Bankruptcy
Appellate Panel (also "BAP" or "Panel") was swiftly dismissed for
want of jurisdiction. See Fed. R. Bankr. P. 8002(a) (establishing
time to file); In re Abdallah, 778 F.2d 75, 77 (1st Cir. 1985)
(Rule 8002 time limit is jurisdictional).
Buoyed by their string of successes, the Debtors petitioned
the court for damages, which then-section 362(h) authorized
following a willful violation of the automatic stay.7 The former
11 U.S.C. § 362(h) read: "An individual injured by any willful
violation of a stay provided by this section shall recover actual
damages, including costs and attorneys' fees, and, in appropriate
(c)(3)(B)." Subsection (c)(3)(B) refers to perfection "on or
before 30 days after the debtor receives possession of . . .
property." As the body of this opinion notes, the bankruptcy court
originally found that the exception applies here but then reversed
itself. Neither conclusion is now at issue.
7
Damages now fall under 11 U.S.C. § 362(k).
-6-
circumstances, may recover punitive damages." The Debtors
explicitly sought both a preliminary conference and a full hearing
on damages. The court acceded to the request for a conference,
which occurred on June 22, 2007,8 but the hearing on damages never
happened: on October 8, 2008, the court denied both the hearing and
damages, and attorneys' fees to boot, finding that the cancellation
of the mortgage was remedy enough. On December 17, 2008, the court
entered a final judgment denying damages. The Debtors appealed to
the Bankruptcy Appellate Panel, which summarily affirmed due to a
missing transcript; now they seek our review.
Jurisdiction
Before reaching the parties' substantive arguments, we must
determine whether we have jurisdiction to consider the matter at
all. Doral and Canales say we do not, for two reasons. First,
they say, the bankruptcy court's order on the motion for
reconsideration constituted a final judgment, so the Debtors'
request for damages and subsequent appeal months later were
untimely. And second, they say, even if there were some question
as to whether the court's order was a final judgment, the law of
the case requires us to hold that it was because the Bankruptcy
8
At the conference, the parties outlined their arguments on
the effect and validity of the court's self-reversal, and the court
set a briefing schedule so the parties could lay out their
arguments in more detail. The court did not indicate that it would
be ruling on the Debtors' damages request; instead, the discussion
suggested that the court would sort out the procedural morass that
followed its self-reversal.
-7-
Appellate Panel so held and no one challenged the Panel's
determination. Both of these arguments fail. We plainly "have
jurisdiction of [timely] appeals from all final decisions,
judgments, orders, and decrees" of intermediate bankruptcy
tribunals. 28 U.S.C. § 158(d)(1). Here, the BAP issued a final
decision and judgment in the form of a summary affirmance.
Therefore, we have jurisdiction.
We will, however, address Doral and Canales's jurisdictional
arguments as applied to the bankruptcy court, because if the
bankruptcy court had no authority to entertain the Debtors' request
for damages then no hearing on damages was necessary and our review
can end there.
The first jurisdictional argument, again, goes to timeliness.
Specifically, Doral and Canales say that the Debtors' request for
damages was functionally equivalent to a motion to alter or amend
a judgment under Fed. R. Civ. P. 59(e) because it sought additional
relief after the court had already granted summary judgment. As a
basis for this argument Doral and Canales say the order granting
summary judgment was a "final judgment"; if it was then the motion
may be properly characterized as one under Rule 59. And if this is
the case then the motion had to be filed within ten days of the
original judgment. See Fed. R. Civ. P. 59(e) (amended in 2009 to
extend filing period to twenty-eight days). Rule 59's time limit
is jurisdictional. Barrett v. United States, 965 F.2d 1184, 1187
-8-
(1st Cir. 1992). So, Doral and Canales conclude, because the
damages request was not filed within ten days of the summary
judgment grant, the bankruptcy court had no jurisdiction to
entertain it. But if, as the Debtors argue, the motion was
something other than one to set aside judgment, then the Rule 59
ten-day window would not apply.
The term "final judgment" is no misnomer – the Supreme Court
has held consistently for generations that it applies only to a
determination that leaves nothing more for the court to do than to
execute judgment. See Riley v. Kennedy, 128 S. Ct. 1970, 1981
(2008) ("A final judgment is 'one which ends the litigation on the
merits and leaves nothing for the court to do but execute the
judgment.'") (quoting Catlin v. United States, 324 U.S. 229, 233
(1945)). It follows that if the issue of damages was still open
when the court resolved the Debtors' motion for partial summary
judgment then the court's determination was not final. See Garzaro
v. Univ. of P.R., 575 F.2d 335, 337 (1st Cir. 1978) (holding that
an order that "leaves open the monetary liability of defendants, is
not a 'final' order" and collecting sources). Indeed, the Debtors
requested damages in their complaint and the court failed to act on
this request – the issue remained unresolved when the court granted
summary judgment. The bankruptcy court referred to its conclusion
only as an order. No judgment entered after the court's order.
And later on, the court itself explicitly held that it had not
-9-
issued a final judgment. The only thing that might lead us to
accept Doral and Canales's contention that the order was a final
judgment is a single line in the order: "judgment must enter in
favor of the debtors." But this line is not particularly
convincing – judgment did not actually enter at all. Given all
this, it is abundantly clear that the court did not issue a final
judgment before the Debtors filed their motion for damages. There
was no motion to alter or amend judgment because there was no final
judgment to alter or amend.
Doral and Canales next argue that the law of the case
effectively precluded the bankruptcy court's exercise of
jurisdiction over the motion for damages. This is so, Doral and
Canales say, because the BAP dismissed Canales's appeal of the
order granting summary judgment on the ground that it lacked
jurisdiction due to Canales's untimely filing. According to Doral
and Canales, the BAP's dismissal constituted an implicit holding
that the order was a final judgment. However, that is not the
case.
"The law of the case doctrine 'posits that when a court
decides upon a rule of law, that decision should continue to govern
the same issues in subsequent stages in the same case.'" Remexcel
Managerial Consultants, Inc. v. Arlequin, 583 F.3d 45, 53 (1st Cir.
2009) (quoting Arizona v. California, 460 U.S. 605, 618 (1983)).
We need not expound on this doctrine in great detail, as it plainly
-10-
does not apply here. Not only was the bankruptcy court's order
granting summary judgment not a final judgment, but the BAP did not
hold that it was one either. Intermediate bankruptcy tribunals
have jurisdiction over appeals not only from "final judgments,
orders, and decrees," but also from "interlocutory orders and
decrees." 28 U.S.C. § 158. Any appeal to an intermediate
bankruptcy tribunal – whether from a final judgment or an
interlocutory order – is subject to the time limit imposed by Rule
8002(a) of the Federal Rules of Bankruptcy Procedure.9 Thus, the
BAP's generic determination of untimeliness says nothing and
implies nothing about whether the unsuccessful appeal was from a
final or interlocutory order. For this reason, the law of the case
has no place here.
Doral and Canales propose the last-ditch policy argument that
it would be unfair to allow the Debtors an opportunity to appeal
when Canales was barred from the same opportunity; this argument is
perhaps their least compelling. Let us put it this way: If Doral
and Canales were correct that the order granting summary judgment
constituted a final judgment, then Canales dug its own appeal's
grave by filing fifty-eight days after the court's ruling – not
just untimely, but very untimely. But they are not correct on the
final judgment issue, which means that when final judgment actually
9
Rule 8002(a) imposed a ten-day time limit for appeals until
2009, when the limit was increased to fourteen days.
-11-
did enter, there was no reason they could not have cross-appealed,
fighting summary judgment before the BAP and then before us. See,
e.g., In re Bos. Reg'l Med. Ctr., Inc., 291 F.3d 111, 116 n.2 (1st
Cir. 2002) (noting that appellees aggrieved by a lower court
judgment may cross-appeal); Fed. R. Bankr. P. 8002(a) (establishing
time limit for cross-appeals). They have not done so. Doral and
Canales have failed to avail themselves of procedures that were
readily available to them; this failure decidedly does not imply
that they were unfairly deprived of an opportunity to appeal the
order granting summary judgment.
In the end, then, the bankruptcy court had jurisdiction over
the Debtors' damages motion, and we certainly have jurisdiction
over the Debtors' appeal of its denial. We turn now to the merits
of the case.
Standard of Review
Before a bankruptcy case reaches us, appellants have two
options for intermediate review: they may be heard by a district
court or a bankruptcy appellate panel. In re Hill, 562 F.3d 29, 32
(1st Cir. 2009); see also 28 U.S.C. § 158. Whichever option the
appellants choose, in conducting our own review we "cede no special
deference to the intermediate decision," focusing instead on the
bankruptcy court's decision. Hill, 562 F.3d at 32. Our review of
the bankruptcy court's decision is de novo, though we will only
upset the court's factual determinations in the case of clear
-12-
error. Id.
Willful Violation
An important premise of the Debtors' appeal is that the
bankruptcy court found Doral and Canales to have willfully violated
the automatic stay. Without a willful violation, the damages
provision of 11 U.S.C. § 362 by its terms would become irrelevant.
Doral and Canales claim that the bankruptcy court never found a
willful violation. They focus on the absence of the word "willful"
anywhere in the court's analyses. They further argue that there
was no willful violation as a matter of fact, precluding partial
summary judgment in the Debtors' favor and therefore precluding
damages. We disagree: as the bankruptcy court effectively held,
there was a willful violation as a matter of undisputed fact.10
A violation is "willful" if a "creditor's conduct was
intentional (as distinguished from inadvertent), and committed with
knowledge of the pendency of the bankruptcy case." In re McMullen,
386 F.3d 320, 330 (1st Cir. 2004). Doral and Canales cannot and do
not contest that Canales, at Doral's request, intentionally
presented the mortgage deed to the Registry after the Debtors had
10
We also pause to note that, because neither Doral nor
Canales cross-appealed, there is no direct challenge before us as
to the bankruptcy court's summary judgment grant, including its
determination that a willful violation occurred. The willful-
violation question remains alive only to the extent that it affects
the Debtors' right to damages. This limitation affects not only
our analysis but also the effect of our decision: specifically, the
mortgage remains cancelled because no one challenged that result.
-13-
filed their bankruptcy case. Nor is there any dispute that Doral
had knowledge of the case while it retained Canales, given that
Doral filed a notice of appearance in the underlying bankruptcy
case months before Canales filed the mortgage deed with the
Registry. Doral and Canales each attempt to cast themselves as the
guiltless party in the filing of the deed: Doral claims that
Canales filed the deed on the basis of Doral's pre-petition
urgings, and Canales claims that it did so without notice from
Doral as to the pending bankruptcy action. In other words, Doral
took no actions once it had knowledge, and Canales did take actions
but had no knowledge. Diffusion of responsibility, however, gets
them nowhere. See McMullen, 386 F.3d at 331 (cataloguing cases of
joint willful violations); see also In re Timbs, 178 B.R. 989, 995
(Bkrtcy. E.D. Tenn. 1994) (cataloguing cases of joint willful
violations by attorney and client). It seems to us that Doral
ought to have informed Canales when it learned of the bankruptcy
petition, and that Canales – given the notary's role of giving
legal effect to "the will of the parties," 4 L.P.R.A. § 2002
(emphasis added) – ought to have done more than follow Doral's word
alone.11 Despite their protestations, Doral and Canales's acts are
11
Indeed, Canales's argument that it acted not in concert with
Doral, but rather in its independent role as a notary – effectively
a public officer – is neither carefully advanced nor well-taken.
Doral told Canales it wished to foreclose against the Debtors and
needed the mortgage deed to be registered properly. By all
accounts, Canales asked no questions, did not contact the Debtors,
and simply did Doral's bidding. On the plain-as-day record and the
-14-
not wholly separable from one another, and in the end there is no
question that each is responsible for a willful violation as a
matter of law. See McMullen, 386 F.3d at 331.
Doral and Canales argue that the bankruptcy court's
determination that "[t]he present case is more like an avoidance
action . . . than a common violation of the automatic stay"
forecloses a finding of willfulness as a matter of law. They do
not, however, explain how this avoidance analogy (which the court
used only to support its decision not to award damages) might
affect our willfulness analysis. Instead, the analogy seems
designed to fit the proverbial round peg (here, a willful violation
of the stay) into a square hole (here, an avoidance action),
casting this case as something it is not. We have already spelled
out what constitutes a willful violation, applied that standard
here, and concluded that there was such a violation. In contrast,
an avoidance action allows a bankruptcy trustee to cancel an
improper conveyance or recover for the estate the value of the
improperly conveyed property. See 11 U.S.C. §§ 544, 545, 547(b),
548(a), 549(a). Here, the adversary action may indeed have been
like an avoidance action in that cancelling an improper conveyance
sparse law cited by Canales, the firm acted not independently but
rather on Doral's behalf. Our own research bears out this
conclusion. See, e.g., Chévere v. Cátala, 115 D.P.R. 432, 438, 15
P.R. Offic. Trans. 572 (P.R. 1984) (discussing the notary's
inherent duty to "investigate the facts and data on which the
efficacy or validity of [a] transaction rests") (emphasis and
internal quotation marks omitted).
-15-
was a portion of the remedy, but it simply was not one.12 Doral and
Canales's analogy to avoidance actions cannot trump the language of
the statute that actually applies here and the well-established
case law construing that language; as a matter of plainly
applicable law, Doral and Canales willfully violated the stay.
Hearing on Damages
Now we reach the meat of the appeal: the Debtors' contention
that the court erred by denying them a hearing on damages. The
parties frame this as an issue implicating the Fifth Amendment's
Due Process Clause. But "courts should not decide constitutional
issues when this can be avoided," see United States v. Vilches-
Navarrete, 523 F.3d 1, 9 n.6 (1st Cir. 2008), and we can address
the Debtors' concerns without recourse to the Fifth Amendment.
The opportunity for a plaintiff to present evidence on damages
after winning partial summary judgment on liability is a right so
fundamental in civil proceedings that it normally goes without
saying. See, e.g., Donahue v. United States, 634 F.3d 615, 622
(1st Cir. 2011) (district court "granted partial summary judgment
. . . with respect to liability" and then "held a bench trial on
the issue of damages"); In re Rivera Torres, 432 F.3d 20, 22 (1st
12
The fact of the separate statutory bases for willful
violation actions (11 U.S.C. § 362) and avoidance actions (11
U.S.C. § 544) also renders inapposite the bankruptcy court's, and
Doral and Canales's, reliance on In re Burns, 322 F.3d 421 (6th
Cir. 2003). Burns dealt only with avoidance actions and had
nothing whatsoever to say about willful violations.
-16-
Cir. 2005) ("The bankruptcy court entered partial summary judgment
in favor of the Debtors, subject to a later hearing on damages.");
Vélez v. Awning Windows, Inc., 375 F.3d 35, 39 (1st Cir. 2004)
(district court "granted the plaintiff's motion for partial summary
judgment . . . resolv[ing] the issue of liability" and then
"convened a damages hearing before a jury"); accord 10B Wright,
Miller & Kane, Federal Practice & Procedure § 2736 (3d ed. 1998)
(noting that "if the court establishes the existence of liability"
via partial summary judgment, "the case then will proceed for a
determination of the damage issue"). Such an opportunity is
necessary here given the bankruptcy code's unequivocal mandate of
actual damages following a willful violation of an automatic stay.
As a reminder, the statute at issue provides: "An individual
injured by any willful violation of a stay provided by this section
shall recover actual damages, including costs and attorneys' fees."
11 U.S.C. § 362(h) (prior to amendment). There can be no question
that, as a general matter, the statute mandates actual damages.
And it would be impossible for a court to set the amount of actual
damages, costs, and attorneys' fees without taking evidence. Thus,
the bankruptcy court frustrated both the statute's language and its
mandated result by denying the Debtors a chance to prove damages.
In order "to enforce [the statute] according to its terms," as both
we and the bankruptcy court must do, remand is necessary.
Caminetti v. United States, 242 U.S. 470, 485 (1917); see also
-17-
Mass. Museum of Contemporary Art Found., Inc. v. Buchel, 593 F.3d
38, 50 (1st Cir. 2010) (same).
Anticipating our decision's grounding in statutory language,
Doral and Canales claim that the court's determination of a willful
violation is not enough to trigger a damages inquiry: they say that
in order to be statutorily entitled to damages a party must first
prove injury, too. See 11 U.S.C. § 362(h) (prior to amendment,
establishing right to recovery for "[a]n individual injured by any
willful violation," emphasis added). The Debtors claim injury:
they have expended court costs and attorneys' fees in order to
vindicate the automatic stay, and the statute mandates that they
may recover both as actual damages.13 Moreover, in the context of
a procedural argument founded on the absence of any opportunity to
offer proof of damages, Doral and Canales's contention puts the
trailer before the tractor. The Debtors would no doubt welcome an
opportunity to prove injury, which is closely intertwined with
damages; as it is, they have not had the opportunity to prove
anything beyond the willful violation. The Debtors also point out
that in each of a plethora of non-binding lower-court cases Doral
and Canales cite on this point, the court made its final
determination on damages only after reviewing evidence specific to
13
The Debtors have made it plain enough that these are exactly
the damages they seek: on appeal, they have waived their right to
pursue actual damages other than costs and attorneys' fees except
to the extent such damages might be necessary for an award of
costs.
-18-
injury and damages.14 Thus, contrary to Doral and Canales's
contentions, these cases support the Debtors' argument that the
statute affords them an opportunity to present evidence. The
Debtors have a statutory right to prove damages after a willful
violation of the automatic stay, and such a violation is precisely
what occurred here.
The parties spend more energy on the question of whether the
bankruptcy court already provided adequate opportunity for the
Debtors to prove damages. As a starting point, Doral says we
cannot review the question at all and must summarily affirm because
the Debtors have not produced a transcript of the bankruptcy
court's conference that was nominally on damages. This might be an
issue, except for the undisputed fact that the court never held an
evidentiary hearing but, instead, explicitly denied the Debtors'
request for one. Cf. Rodríguez v. Señor Frog's de la Isla, Inc.,
No. 09-2548, 2011 WL 1364934, at *7 (1st Cir. Apr. 12, 2011)
(argument could not succeed absent transcript because there was not
"enough raw material so that we [could] do our job"). Moreover,
the transcript is readily available through the bankruptcy court
14
In re Heghmann, 316 B.R. 395, 399 (1st Cir. B.A.P. 2004)
(hearing involving testimony of two witnesses); In re Dayley, 349
B.R. 825, 829 (Bkrtcy. D. Idaho 2006) (outlining testimony on
damages); In re Skeen, 248 B.R. 312, 319 (Bkrtcy. E.D. Tenn. 2000)
(hearing involving testimony on, e.g., lost wages); In re Clayton,
235 B.R. 801, 805 (Bkrtcy. M.D.N.C. 1998) (full trial on all
issues); In re Sucre, 226 B.R. 340, 344 (Bkrtcy. S.D.N.Y. 1998)
(damages award based in part on review of pay stubs).
-19-
docket: it shows that the court discussed damages barely if at all
and took no evidence. Instead, at the June 22, 2007 status
conference, the parties laid out a skeletal version of their legal
arguments, and the court ordered further briefing. Between the
bankruptcy court's rejection of a damages hearing and the easily
obtained transcript's showing that the status conference did not
allow for the presentation of evidence, there is more than enough
for us to conclude, as we do, that the court improperly denied the
Debtors an opportunity to prove damages.
Wrapping up, we note that the bankruptcy court's decision
itself shows why such an opportunity is necessary. The record
reveals no clear foundation for the bankruptcy court's conclusion
that damages were unwarranted. The court only suggested that the
adversary proceeding was "like an avoidance action," but did not
otherwise support its conclusion that cancellation of the mortgage
was a sufficient remedy for the willful violation. And the court
gave no explanation for disregarding the statute's language
mandating the recovery of costs and attorneys' fees. The court's
conclusion is rooted in neither record nor statute, and an analogy
unsupported by any evidence is not enough to justify its decision
to disregard the statute's mandatory language and deny damages.
Conclusion
For the reasons set forth above, we reverse the bankruptcy
court's denial of a hearing on damages, vacate its rejection of
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damages, and remand for the parties to present evidence on damages.
Costs are taxed in favor of the appellants.
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