Wright v. Vanderbilt Mortgage and Finance, Inc. et al

UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW MEXICO
In re: 	MELISSA ANNE WRIGHT, 	No. 7-09-10892 JR
Debtor.
MELISSA ANNE WRIGHT,
Plaintiff,
v. 	Adversary No. 09-1048 J
VANDERBILT MORTGAGE AND FINANCE, INC.,
CRADDOCK, DAVIS, AND KRAUSE, LLP, SUSAN
CRAWFORD, MICHAEL J. CRADDOCK, RIO GRANDE
TITLE COMPANY f/k/a AMERICAN SURETY TITLE,
REMAX OF SANTA FE, and VISTA DEL MUNDO CORPORATION,
Defendants.
MEMORANDUM OPINION
This matter is before the Court on the Defendants Vanderbilt Mortgage and Finance, Inc.,
Craddock Davis & Krause LLP, Susan Crawford and Michael Craddock’s Amended Motion for
Summary Judgment and Memorandum in Support (“Amended Motion”) filed March 26, 2010.
(Docket No. 63). Melissa Wright filed Plaintiff’s Response and Answers to Defendants
Amended Motion for Summary Judgment (“Response”) on April 20, 2010. (Docket No. 67).
The Court denied Defendants’ initial request for summary judgment, finding that the evidence
Defendants presented in support of their request was insufficient. 	See Order Denying Motion
for Summary Judgment (Docket No. 59). Defendants’ Amended Motion is properly supported
by affidavits from which the Court can now conclude that there has been no willful violation of
the automatic stay by Vanderbilt Mortgage and Finance, Inc. (“Vanderbilt Mortgage”), Craddock
Davis & Krause LLP, Susan Crawford, or Michael Craddock. 	Plaintiff’s Response fails to raise
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any genuine issues of material fact that would preclude the entry of summary judgment. 	The
Court will, therefore, grant Defendants’ Amended Motion and enter summary judgment in their
favor.
BACKGROUND
The only remaining claim in this adversary proceeding is Ms. Wright’s claim for
compensatory and punitive damages, costs and interest under 11 U.S.C. §362(k) based on
Defendants’ alleged willful violation of the automatic stay.1 Ms. Wright’s Adversary Proceeding
Complaint for Damages for Willful Violation of the Automatic Stay (“Complaint”), as amended
by her Amended Adversary Proceeding Complaint for Damages for Willful Violation of the
Automatic Stay (“Amended Complaint”), alleges that Defendants willfully violated the stay by
taking the following actions after the commencement of her Chapter 7 bankruptcy case: (i)
conducting a foreclosure sale of her residence, (ii) filing an affidavit of publication of the sale,
(iii) filing a Special Masters Report of the sale, and (iv) obtaining a state court order confirming
the foreclosure sale. In particular, Ms. Wright complains that Defendants failed to take action to
prevent the entry of the order confirming the foreclosure sale after Defendants admit they had
actual notice of the filing of Ms. Wright’s bankruptcy case. Ms. Wright’s Response to the
Amended Motion continues to assert that Defendants were on constructive notice of her pending
bankruptcy when the order confirming the foreclosure sale was entered in the state court action,
and that Defendants either caused the entry of the order or otherwise did not prevent the entry of
or filing of the order in violation of the automatic stay.
1 By an order entered November 24, 2009 (Docket No.44), the Court dismissed all claims against the Defendants in
this adversary proceeding except for Ms. Wrights’ claim that Defendants willfully violated the automatic stay.
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SUMMARY JUDGMENT STANDARD
It is appropriate for the Court to grant summary judgment if the pleadings, discovery
materials, and any affidavits before the Court show that there is no genuine issue as to any
material fact and that the movant is entitled to judgment as a matter of law. See Fed.R.Civ.P.
56(c) made applicable to the adversary proceeding by Fed. R. Bankr.P. 7056. “[A] party seeking
summary judgment always bears the initial responsibility of informing the . . . court of the basis
for its motion, and . . . [must] demonstrate the absence of a genuine issue of material fact.”
Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Courts
must review the evidentiary materials submitted in support of a motion for summary judgment
to ensure that the motion is properly supported by evidence.
A motion for summary judgment may be supported by affidavits, but affidavits are not
required. See Fed.R.Civ.P. 56(c)(2); Fed.R.Civ.P. 56(a)(A party claiming relieve may move
with or without supporting affidavits . . .”)(emphasis added). 	An affidavit offered in support of
or in opposition to a motion for summary judgment “must be made on personal knowledge, set
out facts that would be admissible in evidence, and show that the affiant is competent to testify
on the matters stated.” Fed.R.Civ.P. 56(e)(1). 	The party opposing a properly supported
motion for summary judgment, “may not rely merely on allegations or denials” contained in his
or her own pleading, but must “set out specific facts showing a genuine issue for trial.”
Fed.R.Civ.P. 56(e)(2). 	Defendants’ Amended Motion was properly supported by affidavits.
Plaintiff has not offered an affidavit in opposition to Defendants’ Amended Motion.
Nevertheless, in determining whether to grant a movant’s request for summary judgment, the
Court must view the facts in the light most favorable to the party opposing summary judgment. 2
2 Harris v. Beneficial Oklahoma, Inc., (In re Harris), 209 B.R. 990, 995 (10th Cir. BAP 1997)(“When applying this
standard, we are instructed to ‘examine the factual record and reasonable inferences therefrom in the light most
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The Court will review the Amended Motion and Plaintiff’s opposing response in light of these
standards.
UNDISPUTED FACTS
Based on the evidence now before the Court, the following facts are undisputed:
1. 	On October 2, 2008, the Court entered a Final Judgment against Kevin Uyehara
and Melissa Wright and in favor of Vanderbilt Mortgage in a case entitled Vanderbilt Mortgage
and Finance Inc. v. Kevin Uyehara and Melissa Wright, Fifth Judicial District, County of
Chaves, State of New Mexico, Case No. CV-2006-1193 (the “State Court Action” or
“Foreclosure Action”). (Amended Motion, Exhibit 1-A).
2. 	On December 5, 2008, the state court entered a Decree of Foreclosure and Order
of Sale and Appointment of Special Master in the State Court Action. (Amended Motion,
Exhibit 1-B). The property subject to the foreclosure is Ms. Wright’s residence.
3. 	Ms. Wright filed a voluntary petition under Chapter 7 of the Bankruptcy Code on
March 5, 2009 as Case No. 7-09-10892 (“Chapter 7 Case”).
4. 	Ms. Wright did not file a creditor list in the Chapter 7 Case until March 19, 2009,
at which time Vanderbilt Mortgage was added to the mailing list maintained by the Clerk of
Court for the Chapter 7 Case. (See Docket No. 12 and Docket No. 15 in the Chapter 7 Case).
5. 	On March 7, 2009, the Bankruptcy Noticing Center served a copy of the Notice of
Chapter 7 Case, Meeting of Creditors and & Deadlines (“Notice of Commencement of Case”)
only on the Chapter 7 Trustee appointed in the Chapter 7 Case, the United States Trustee, the
favorable to the party opposing summary judgment.’ ”)(quoting Wolf v. Prudential Ins. Co. of America, 50 F.3d 793,
796 (quoting Applied Genetics Int'l, Inc. v. First Affiliated Sec., Inc., 912 F.2d 1238, 1241 (10th Cir.1990)))(internal
quotation marks omitted); Henderson v. Inter-Chem Coal Co., Inc., 41 F.3d 567, 569 (10th Cir.1994)(stating that the
court must “view all facts and any reasonable inferences that might be drawn from them in the light most favorable
to the nonmoving party ...”).
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New Mexico Taxation & Revenue Department, and Ms. Wright. Chapter 7 Case, Docket No.
7).3
6. 	The Bankruptcy Noticing Center did not serve a copy of the Notice of
Commencement of Case on any of the Defendants. 	Id.
7. 	Ms. Crawford is an attorney employed by Craddock Davis and Krause LLP, and
while working for that firm represented Vanderbilt Mortgage in the Foreclosure Action.
(Amended Motion, Exhibit 1 – Affidavit of Susan P. Crawford, ¶ 4).
8. 	Ms. Crawford served as Special Master to conduct the foreclosure sale of Ms.
Wrights’ residence. 	Id. at ¶ 5.
9. 	Ms. Crawford conducted a foreclosure sale of Ms. Wright’s property on March
9, 2009 at 1:00 p.m. on the west side of the Chaves County Courthouse steps where the notice of
foreclosure sale stated that the foreclosure sale would be held. Id. at ¶¶ 7, 8, 9.
10. 	Before conducting the foreclosure sale, Ms. Crawford looked about but did not
see Ms. Wright. Neither did she see Ms. Wright after the foreclosure sale when she walked back
around the courthouse. Id. at ¶¶ 8 and 10. 4
11. 	Ms. Crawford was not aware that the Chapter 7 Case had been filed at the time
she conducted the foreclosure sale. Id. at ¶ 15.
12. 	On March 10, 2009, Ms. Crawford prepared the Special Masters Report of Sale,
Special Masters Announcements at Foreclosure Sale, the Special Masters Deed and Proposed
3 A copy of the docket from the Chapter 7 Case is attached as Exhibit 1-I to the Amended Motion. The Court takes
judicial notice of the docket and the documents filed in the Chapter 7 Case. See In re Winslow, 186 B.R. 716, 721
(D. Colo. 1995)(taking judicial notice of the bankruptcy court’s records and files)(citing St. Louis Baptist Temple,
Inc. v. FDIC, 605 F.2d 1169, 1172 (10 th Cir. 1979)).
4 Ms. Wright continues to assert that on March 9, 2009 she went to the Chaves County Court house to attend the
foreclosure sale, armed with a copy of a notice of her bankruptcy petition, but was unable to locate the place of the
foreclosure auction. Response, page 2. (This is not an undisputed fact because it is not support by admissible
evidence.)
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Order of Confirmation (“Order Confirming Sale”) and mailed them to the Chaves County Clerk.
Id. at ¶¶ 13 and 14.
13. 	Ms. Crawford received a copy of Ms. Wright’s Chapter 7 Petition via first class
United States mail some time during the afternoon of March 12, 2009. Id. at ¶¶ 17 and 19. 	This
was the first notice, in any form, that Ms. Crawford received informing her of Ms. Wright’s
bankruptcy case and was the first time she had actual knowledge of the Chapter 7 Case. Id. at ¶
19.
14. 	After receiving the Notice of Filing of Bankruptcy in the mail, Ms. Crawford
immediately contacted Vanderbilt Mortgage and the Dallas office of Craddock Davis & Krause
and advised them of the Chapter 7 Case. Id. at ¶ 19. She further notified Vanderbilt Mortgage
that the foreclosure sale was void, and asked Vanderbilt Mortgage about filing a motion for relief
from the automatic stay to obtain an order to conduct a valid foreclosure sale. Id.
15. 	Between March 5, 2009, when Ms. Wright filed her voluntary petition under
Chapter 7 of the Bankruptcy Code and March 12, 2009, Ms. Wright never contacted Ms.
Crawford in any manner Crawford to inform her that the Chapter 7 Case had been filed. Id. at ¶
17.
16. 	Neither Ms. Crawford nor any of the other Defendants took any action with
respect to the Order Confirming Sale after the order was mailed to the State Court on March 10,
2009. Id. at ¶ 21.
17. 	The State Court signed the Order Confirming Sale on March 16, 2009. (Amended
Motion – Exhibit 1-E).
18. 	Michael J. Craddock is the managing partner of the law firm of Craddock Davis
& Krause LLP. 	(Amended Motion – Exhibit 2 - Affidavit of Michael Craddock, ¶ 3).
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19. 	Michael J. Craddock and Craddock Davis & Krause LLP first received notice of
the filing of Ms. Wright’s bankruptcy case on March 12, 2009 when Ms. Crawford informed Mr.
Craddock by e-mail that she had received a copy of Ms. Wright’s voluntary Chapter 7 Petition
by First Class U.S. Mail. 	Id. at ¶¶ 6, 7, and 8. 	No one at the Craddock Davis & Krause LLP
received any form of notice of Ms. Wright’s bankruptcy case prior to March 12, 2009. 	Id.5
20. 	Vanderbilt Mortgage first received notice that Ms. Wright filed a bankruptcy case
on March 12, 2009 when Ms. Crawford advised Vanderbilt Mortgage that she had received a
copy of Ms. Wright’s petition by first class United States mail that day. (Amended Motion –
Exhibit 3, Affidavit of David Banner, Portfolio Manager with Vanderbilt Mortgage assigned to
supervise Ms. Wright’s case since 2007, ¶¶ 3 and 4). 	No one at Vanderbilt Mortgage received
any mail or telephone calls prior to March 12, 2009 notifying it of the filing of Ms. Wright’s
bankruptcy case. Id. at ¶ 5 and 6.
21. 	Vanderbilt Mortgage did not file the Special Masters Deed approved by the Order
Confirming Sale signed by the State Court Judge on March 16, 2009 and entered in the State
Court Action on the same date. (Amended Motion - Exhibit 1, Affidavit of Susan P. Crawford, ¶
21).
22. 	On March 16, 2009, Vanderbilt Mortgage filed a motion for relief from stay in
the Chapter 7 Case seeking modification of the stay to permit it to complete the foreclosure sale.
Id. at ¶ 20. See also, (Docket No. 8 in the Chapter 7 Case).
23. 	A copy of the motion for relief from stay was sent to Ms. Wright by prepaid
regular U.S. Mail on the same date the motion was filed. Id.
5 Ms. Wright appears to concede that she did not attempt to notify personnel at Vanderbilt or Craddock Davis &
Krause about the filing of her bankruptcy case. She asserts in her Response that the two additional statements (the
Affidavit of Mr. Crawford and the Affidavit of Mr. Banner) “are irrelevant” and that “no contact has ever been made
by Plaintiff to these individuals now or ever since 2006.” Response, p. 9.
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24. 	On March 27, 2009, Ms. Wright filed a response to the motion for relief from stay
objecting to stay relief. 	See (Docket No. 16 in the Chapter 7 Case).
25. 	After conducting a preliminary hearing on April 21, 2009 and an evidentiary
hearing on May 12, 2009 on Ms. Wright’s objection to the motion, this Court entered an order
granting stay relief on June 4, 2009. Amended Motion, Exhibit 1-L.
26. 	Ms. Wright filed the Complaint commencing this adversary proceeding on April
6, 2009 and filed an Amended Complaint on May 4, 2009. 	(See Docket No. 1 and Docket No.
5). On April 16, 2009, Ms. Wright served the Complaint on Defendants by regular U.S. Mail.
(See Docket No. 4). 	She served the Amended Complaint on Defendants by regular U.S. Mail on
May 19, 2009. (See Docket No. 14).
27. 	On or about June 15, 2009, Vanderbilt filed a motion in the State Court Action
seeking to vacate the Order Confirming Sale. Amended Motion, Exhibit 1-J. An order vacating
the Order Confirming Sale was entered in the Foreclosure Action on June 22, 2009. Amended
Motion, Exhibit 1-K.
28. 	There is no evidence that Ms. Wright ever made any request or demand for
Vanderbilt Mortgage to seek an order vacating the Order Confirming Sale.
DISCUSSION
Upon the filing of a voluntary petition under the Bankruptcy Code, 11 U.S.C. § 362
imposes an automatic stay applicable to all entities that, among other things, prohibits certain
actions against the debtor or against property of the bankruptcy estate unless the stay is modified
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to permit those actions. 11 U.S.C. §362(a). The scope of the automatic stay is broad 6 and,
among other things, specifically prohibits:
the commencement or continuation, including the issuance of employment of process, of
a judicial, administrative, or other action or proceeding against the debtor that was or
could have been commenced before the commencement of the case under this title, or to
recover a claim against the debtor that arose before the commencement of the case under
this title[.]
11 U.S.C. §362(a)(1).
By the express terms of Section 362(a), any action taken by a creditor to commence or
continue litigation against the debtor, unless excepted from the stay under 11 U.S.C. §362(b),
violates the automatic stay. Actions taken in violation of the automatic stay are void.7
A party injured by a creditor’s willful violation of the automatic stay is entitled to recover
damages in accordance with 11 U.S.C. § 362(k)(1). That section provides:
an individual injured by any willful violation of a stay . . . shall recover actual damages,
including costs and attorneys’ fees, and, in appropriate circumstances, may recover
punitive damages.
11 U.S.C. § 362(k)(1).
To be willful within the meaning of 11 U.S.C. § 362(k), a creditor must know of the automatic
stay and intentionally take the action that violates the stay.8 Specific intent to violate the
automatic stay is not required. Id.
Actions taken without notice or knowledge on the part of a creditor of the
commencement or pendency of the bankruptcy case nevertheless violate the stay, but the
6 In re Firstline Security, Inc., 415 B.R. 553, 557 (Bankr.D.Utah 2009); In re Hokanson, 383 B.R. 548, 557
(Bankr.D.Kan. 2008); In re Sullivan, 357 B.R. 847, 853 (Bankr.D.Colo. 2006). See also Acands, Inc. v. Travelers
Casualty and Surety. Co., 435 F.3d 252, 259 (3rd Cir. 2006).
7 See In re Calder, 907 F.2d 953, 956 (10th Cir. 1990)(“ . . . any action taken in violation of the stay is void and
without effect . . .”)(citing Ellis v. Consolidated Diesel Elec. Corp., 894 F.2d 371, 372 (10 th Cir. 1990)).
8 See In re Johnson, 501 F.3d 1163, 1172 (10th Cir. 2007)(holding that “in order to demonstrate a violation of §
362(k)(1), the debtor bears the burden of establishing, by a preponderance of the evidence, that the creditor knew of
the automatic stay and intended the actions that constituted the violation[.]”)(citation omitted).
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violation is merely “technical”9 and no damages are to be awarded.10 “Notice of the
commencement or pendency of a bankruptcy case need not be formal in nature ‘where the
creditor had sufficient facts which would cause a reasonably prudent person to make further
inquiry.’”11
The undisputed facts show that none of the Defendants had notice or knowledge of the
commencement of Ms. Wright’s bankruptcy until March 12, 2009. 	Ms. Wright did not contact
Ms. Crawford, Vanderbilt Mortgage, Craddock Davis & Krause, LLP or Michael Craddock by
telephone or otherwise between March 5, 2009, when Ms. Wright filed her voluntary petition,
and March 12, 2009, when Ms. Crawford received the notice of Ms. Wright’s bankruptcy case
by mail. Any actions taken by Ms. Crawford, Mr. Craddock, Vanderbilt Mortgage, or Craddock
Davis & Krause between March 5, 2009 and prior to March 12, 2009 were taken without actual
notice or knowledge of the pending bankruptcy. Ms. Crawford conducted the foreclosure sale on
March 9, 2009, prepared and executed the Special Masters Report of Sale, including the Special
Masters Announcements at Foreclosure Sale, a copy of the proposed Special Masters Deed and a
proposed form of Order Confirming Sale on March 10, 2009 and mailed them to the state court
on the same day. 	Such actions violated the automatic stay, but because they occurred before any
of the Defendants knew or had reason to know of Ms. Wright’s pending bankruptcy, they were
9 “Technical” violation of the stay” as used by this Court means a stay violation committed without notice or
knowledge of the bankruptcy case in which the stay was violated.
10 In re McMullen, 386 F.3d 320, 330 (1 st Cir. 2004)(“Absent such knowledge [of the bankruptcy case] on the part
of a creditor, however, the violation is merely ‘technical,’ and no damages are to be awarded”)(citations omitted); In
re Kolberg, 199 B.R. 929, 933 (W.D. Mich. 1996) (“To award damages under 11 U.S.C. § 362(h), the court must
find a willful violation of the automatic stay”); In re Galmore, 390 B.R. 901, 906 (Bankr. N.D. Ind. 2008)
(“Sanctions should not be imposed where there has been a technical violation of the stay”).
11 In re Reed, 102 B.R. 243, 245 (Bankr.E.D.Okl. 1989) (quoting In re Bragg, 56 B.R. 46,49 (Bankr.M.D.Ala.
1985). See also, In re WVF Acquisition, LLC, 420 B.R. 902, 910 (Bankr. S.D. Fla. 2009)(noting that it is sufficient
if the creditor violating the stay had notice of sufficient facts that would cause a reasonably prudent person to make
further inquiry in order to determine whether the debtor has filed a bankruptcy case)(citation omitted) ; In re
Reynolds, 2008 WL 373521 at *8 n.35 (Bankr.D.Kan. Feb. 8, 2008)(unreported)(same).
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not willful violations. Instead, they constitute technical violations for which no damages can be
awarded.
Whether the Filing of a Notice of Bankruptcy put Defendants on Constructive Notice of
Ms. Wright’s Pending Bankruptcy Case
Ms. Wright argues that by filing a notice of the bankruptcy in the State Court Action on
March 9, 2009, Defendants were put on constructive notice of the filing of her bankruptcy. 	She
does not claim to have served a copy of such notice on Vanderbilt Mortgage or its counsel until
March 12, 2009. 	Recorded documents, such as mortgages or materialmens’ liens that are filed
in the real property records maintained by the country clerk, serve as constructive notice to the
world of the contents of the documents to the extent the documents affect title to real property
located in the county.12 The recording of a document in the real property records serves as
constructive notice because parties seeking to obtain title to real property have a duty to look in
the real property records to determine the status of record title.13 However, unlike documents
that are recorded in the real property records, documents filed in a pending court action do not
serve as constructive notice because parties are not duty bound to search the docket for
documents that might affect them. 	To the contrary, a party filing a document in a pending court
action is duty-bound to serve the opposing party with the document.14
12 See In re Beltramo, 367 B.R. 825, 829 (Bankr.D.N.M. 2007)(stating that “[r]ecorded documents serve as
constructive notice ‘to all the world of the existence and contents of the instruments so recorded from the time of
recording.’”)(quoting N.M.S.A. 1978 § 14-9-2 (Repl. Pamp. 2003)).
13 Cf. In re Colon, 563 F.3d 1171, 1182 (10 th Cir. 2009)(stating that, under Kansas law, the purchaser “must exercise
proper care” when examining a conveyance to determine whether it is in the chain of title). See also, In re
Waterford Energy, 294 Fed. Appx. 900, 905, 2008 WL 4411387 at **4 (5 th Cir. 2008)(unreported) (noting that “the
doctrine of constructive notice applies only to a person who is ‘dealing with the land itself.’)(quoting Foster v.
Augustanna Coll. & Theological Seminary, 92 Okla. 96, 218 P. 335, 338 (1923)) and rejecting debtor’s form of
“recordation notice” as sufficient constructive notice of the filing of the bankruptcy because the recorded notice did
not list any of the important deadlines and was undertaken without court approval).
14 See, e.g., Rule 1-005(A) NMRA (requiring that “every written motion . . . and every written notice . . . and similar
paper shall be served upon each of the parties.”). See also, Fed.R.Bankr.P. 9014 (“. . . relief shall be requested by
motion, and reasonable notice and opportunity for hearing shall be afforded the party against whom relief is
sought.”)
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Ms. Wright may have gone to the foreclosure sale at on March 9, 2009 at the appointed
time “armed with a copy of her bankruptcy” and, failing to make contact with Ms. Crawford,
filed a notice of bankruptcy in the State Court Action. But she did not notify Ms. Crawford,
Vanderbilt Mortgage, Craddock Davis & Krause, LLP, or Michael Craddock that day by
telephone or otherwise to put them on notice of her pending bankruptcy. 	Those parties were not
included on the service list for the Notice of Chapter 7 Bankruptcy Case, Meeting of Creditors &
Deadlines filed March 5, 2009. See Chapter 7 Case, Docket No. 7. Defendants were not put on
notice of Ms. Wright’s bankruptcy until March 12, 2009, a date after the dates Defendants took
any action in violation of the automatic stay. 	As explained above, those actions cannot serve as
the basis for finding a willful violation of the automatic stay because they do not constitute
intentional acts taken with knowledge of the automatic stay.
Whether Defendants Had a Duty to Take Curative Action Immediately upon Learning of
Ms. Wright’s Bankruptcy
Ms. Wright asserts that upon learning of her pending bankruptcy case, Defendants had an
obligation to contact the judge assigned to the State Court Action in order to prevent the entry of
the Order Confirming Sale. In other words, Ms. Wright asserts that their failure to act
constitutes a willful violation of the automatic stay. 	A technical stay violation taken by a
creditor without notice or knowledge of the automatic stay can become willful if the creditor
fails to take appropriate steps to “undo” the violation.15 In In re Eskanos & Adler P.C. v.
Leetien, 309 F.3d 1210 (9th Cir. 2002), the Ninth Circuit found that a creditor “willfully violated
the automatic stay by maintaining the active collection action and unjustifiably delaying its
dismissal after receiving notice of the bankruptcy petition.” Eskanos, 309 F.3d at 1216.
15 See, e.g., In re Taylor, 190 B.R. 459, 461 (Bankr.S.D.Fla. 1995)(imposing damages against creditor who failed to
take affirmative steps to remedy an innocent, technical violation of the automatic stay by refusing to vacate a default
judgment despite being given an opportunity to remedy the situation.)
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Factors relevant to the determination of whether a creditor’s technical violation in continuing a
state court action becomes willful for purposes of 11 U.S.C. § 362(k)(1) include:
1) whether the debtor asked the creditor to dismiss the litigation; 2) the length of time
between commencement of the bankruptcy case and when the creditor was notified of the
case; 3) the length of time between the creditor learning of the bankruptcy case and
dismissal of the litigation; 4) whether the creditor upon learning of the bankruptcy case
sought an emergency hearing on relief from the stay; 5) whether the debtor suffered any
prejudice as a result of the delay; and 6) any other circumstances relevant to whether the
delay in dismissing the litigation was justified.16
Here, it is undisputed that Defendants submitted the documents relating to the foreclosure
sale to the state court before they had knowledge or notice of Ms. Wright’s bankruptcy.
However, they did have actual knowledge of the bankruptcy before the entry of the Order
Confirming Sale in the State Court Action. 	The uncontroverted evidence offered in support of
Defendants’ Amended Motion is sufficient for the Court to conclude that Defendants did not act
unreasonably in failing to contact the state court in an attempt to prevent the entry of the Order
Confirming Sale.
First, Defendants knew, and in fact treated the foreclosure sale and the Order Confirming
Sale as “void” upon learning of Ms. Wright’s pending bankruptcy. 	Ms. Crawford’s affidavit
acknowledges that upon receiving notice of Ms. Wright’s bankruptcy, she knew that the
foreclosure sale was void. None of the Defendants took further action in reliance on the
foreclosure sale. They did not record the Special Master’s Deed in reliance on the foreclosure
sale. 	Second, Defendants undertook to obtain relief from the automatic stay from the
bankruptcy court within four days of learning of the filing of Ms. Wright’s bankruptcy case. 	By
filing the motion seeking relief from the stay and serving it upon Ms. Wright, Defendants
16 In re Kline, 424 B.R. 516, 526 (Bankr.D.N.M. 2010)(citing Will v. Ford Motor Credit Co. (In re Will), 303 B.R.
357, 364 (Bankr.N.D.Ill. 2003), In re Gossett, 369 B.R. 361, 375 (Bankr.N.D.Ill. 2007) and Williams v. General
Motors Acceptance Corp., 316 B.R. 534, 543-44 (Bankr.E.D.Ark. 2004)).
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acknowledged that they were bound by the automatic stay and would need an order from the
Bankruptcy Court before they could proceed against Ms. Wright or her property. Third, Ms.
Wright was put on notice that Defendants were not pursuing the State Court Action without
permission from the Bankruptcy Court. She actively opposed relief from the stay. Ms. Wright
was, therefore, not prejudiced by the entry of the Order Confirming Sale. 	Fourth, there is no
evidence that Ms. Wright demanded that Defendants vacate the Order Confirming Sale. To the
contrary, the only evidence before the Court is that Defendants voluntarily undertook to undo the
Order Confirming Sale. Fifth, Defendants obtained an order from the state court vacating the
Order Confirming Sale promptly after obtaining stay relief in the bankruptcy case, which was
about three months after Defendants first learned Ms. Wright’s bankruptcy case. 	The delay
between the date Defendants received actual notice of Ms. Wright’s bankruptcy and the date
Defendants obtained an order vacating the Order Confirming Sale was not unreasonable under
the circumstances.
It would have been prudent for the Defendants to contact the state court upon learning of
Ms. Wright’s pending bankruptcy case. But under the circumstances of this case, where
Defendants treated the Order Confirming Sale as void and promptly took appropriate steps to
obtain relief from the automatic stay before proceeding further, and where there is no evidence
that Defendants refused a request by Ms. Wright to vacate the Order Confirming Sale or that Ms.
Wright was prejudiced by any delay, the Court finds that Defendants’ technical violation of the
automatic stay is not willful as a matter of law.
The Court will enter and judgment consistent with this Memorandum Opinion.
__________________________________________
ROBERT H. JACOBVITZ
United States Bankruptcy Judge
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Date entered on docket: 	May 27, 2010
COPY TO:
Melissa Anne Wright
1305 South Brown
Roswell, NM 88203
Susan P Crawford
Attorney for Vanderbilt Mortgage and Finance, Inc., Michael Craddock, Susan Crawford, and
Craddock, Davis and Krause LLP
3100 Monticello Ave Ste 550
Dallas, TX 75205-3466
Case 09-01048-j Doc 70 Filed 05/27/10 Entered 05/27/10 14:57:00 Page 15 of 15