The Best Service Co. v. Emily Bayley

NOT FOR PUBLICATION FILED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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