In re: Jose J. Hernandez

FILED APR 04 2014 1 NO FO PUBL A IO T R IC T N 2 SUSAN M. SPRAUL, CLERK U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT 3 UNITED STATES BANKRUPTCY APPELLATE PANEL 4 OF THE NINTH CIRCUIT 5 In re: ) BAP No. SC-13-1301-PaJuKu ) 6 JOSE J. HERNANDEZ, ) Bankr. No. 11-15921-MM7 ) 7 Debtor. ) ______________________________) 8 ) COLLECT ACCESS, LLC, ) 9 ) Appellant, ) 10 ) v. ) M E M O R A N D U M1 11 ) JOSE HERNANDEZ, ) 12 ) Appellee.2 ) 13 ______________________________) 14 Argued and Submitted on March 20, 2014 at Pasadena, California [15] Filed - April 4, 2014 [16] Appeal from the United States Bankruptcy Court 17 for the Southern District of California 18 Honorable Margaret M. Mann, Bankruptcy Judge, Presiding [19] Appearances: Tappan Zee argued for appellant Collect Access, 20 LLC. [21] 22 Before: PAPPAS, JURY, and KURTZ, Bankruptcy Judges. [23] 24 1 This disposition is not appropriate for publication. 25 Although it may be cited for whatever persuasive value it may have (see Fed. R. App. P. 32.1), it has no precedential value. 26 See 9th Cir. BAP Rule 8013-1. 27 2 Appellee Jose Hernandez did not file a brief or appear in 28 this appeal. 1 Appellant Collect Access, LLC (“Collect”) appeals the order 2 of the bankruptcy court finding it in contempt for failing to pay 3 monies due to chapter 73 debtor, Appellee Jose J. Hernandez 4 (“Hernandez”), under the terms of a previous order. We AFFIRM. 5 FACTS4 6 On August 30, 2002, a judgment was entered in San Diego 7 Superior Court in favor of First Select, Inc. against Hernandez 8 for $2,091.71; the judgment was renewed on January 22, 2008 for 9 $3,723.19. Collect, the successor to First Select, submitted a 10 writ of execution to the Los Angeles Sheriff’s Department on 11 July 12, 2011, to enforce the judgment. On August 26, 2011, the 12 sheriff served the writ on Wells Fargo Bank, N.A. and received 13 $712.39 from funds in Hernandez’s bank account. 14 On September 27, 2011, Hernandez filed a petition for relief 15 under chapter 7. He listed the levied funds as an asset in 16 Schedule B and claimed them exempt in Schedule C. 17 On November 3, 2011, Hernandez filed an ex parte motion in 18 the bankruptcy court seeking an order requiring the sheriff to 19 turn over the funds to him under § 542(a). The bankruptcy court 20 granted the turnover motion the next day. However, the sheriff [3] 22 Unless otherwise indicated, all chapter and section references are to the Bankruptcy Code, 11 U.S.C. §§ 101 – 1532, 23 all Rule references are to the Federal Rules of Bankruptcy 24 Procedure, Rules 1001–9037, and all Civil Rule references are to the Federal Rules of Civil Procedure 1–86. [4] As is discussed below, this is the second occasion these 26 parties have appeared before the Panel concerning their disputes. 27 Many of the facts recounted here are taken from the opinion of the Panel in the first appeal, Collect Access, LLC v. Hernandez, [28] 483 B.R. 713 (9th Cir. BAP 2012). -2- 1 was unable to comply with the order because, before receiving it, 2 the funds had been transferred to Zee Law Group (“Zee Group”), 3 the attorneys for Collect. 4 Hernandez filed a second ex parte motion for turnover on 5 November 21, 2011, this time directed at Zee Group. The 6 bankruptcy court granted that motion and entered the second 7 turnover order on November 30, 2011. 8 In response, on December 7, 2011, Collect filed an 9 application to vacate the second turnover order, arguing that 10 there was no legal basis to require it to turn over the funds to 11 Hernandez. Hernandez responded on December 19, 2011, alleging 12 that turnover was proper and, that by not paying over the funds 13 to him, Collect had violated the § 362(a) automatic stay; he 14 sought to recover $1,100 on account of Collect’s conduct as 15 damages under § 362(k). 16 After conducting a hearing on Collect’s motion on 17 January 19, 2012, the bankruptcy court entered a Memorandum of 18 Decision on March 19, 2012. The court explained its reasons for 19 having granted both turnover motions and concluded that, by not 20 paying the seized funds to Hernandez, Collect had violated the 21 § 362(a) automatic stay: 22 Upon receiving notice of the Debtor's September 27, 2011 bankruptcy petition, Collect had an affirmative 23 obligation to cease its collection procedures and notify the Sheriff to return the property. It failed 24 to do so, resulting in the Sheriff's release of the Funds to Collect on November 7, 2011. This release 25 violated the automatic stay and was void (citations omitted). Collect and its attorney, Tappan Zee, were 26 given notice of Debtor's Chapter 7 petition on the date of filing, September 27, 2011. Bankruptcy Code section 27 362(k) permits a person injured by any willful violation to recover actual and punitive damages, as 28 sanctions for willful violations. . . . In the -3- 1 Debtor's response to Collect's opposition, the Debtor asserted $1,100 in damages from Collect's violation of 2 the automatic stay. Upon an application for fees and costs by the Debtor, subject to response from Collect, 3 the Court will consider an order assessing Debtor's actual damages for Collect's violation of the automatic 4 stay. 5 In re Hernandez, 468 B.R. 396, 405-06 (Bankr. S.D. Cal. 2012), 6 aff’d, 483 B.R. 713 (9th Cir. BAP 2012).5 7 The bankruptcy court entered an order denying Collect’s 8 motion on April 2, 2012 (“Order Denying Vacatur”), which again 9 directed Collect to turn over the $712.39 to Hernandez no later 10 than seven business days after entry of the order and provided 11 that the court would “consider an order assessing Debtor’s actual 12 damages for Collect’s violation of the automatic stay upon an 13 Application for Fees and Costs by [Hernandez].” 14 On April 4, 2012, Hernandez filed a Motion for Costs, 15 Damages and Fees Incurred for Willful Violation of the Automatic 16 Stay (the “Damages Motion”). The Damages Motion sought attorneys 17 fees and costs of $3,572.06, actual damages of $100.00, and 18 punitive damages of $7,225.00 relating to Collect’s stay 19 violation. 20 Collect appealed the Order Denying Vacatur on April 9, 2012. 21 However, Collect did not seek a stay pending appeal from either 22 the bankruptcy court or the Panel. In addition, in its Statement 23 of Issues on Appeal filed in the bankruptcy court, Collect did 24 not challenge the bankruptcy court’s ruling that it had violated 25 the automatic stay. [26] 27 5 For clarity, we will refer to the BAP decision as 28 Hernandez II. -4- 1 On April 27, 2012, Collect finally turned over the $712.39 2 to counsel for Hernandez. 3 While the appeal in Hernandez II was pending, Hernandez 4 filed two other motions in the bankruptcy court, one to avoid 5 Collect’s judgment lien under § 522(f) (the “Avoidance Motion”), 6 and a second asking the bankruptcy court to find that Collect was 7 in contempt for its failure to timely turn over the $712.39 8 within the seven-day time period specified in the Order Denying 9 Vacatur (the “First Contempt Motion”). 10 The bankruptcy court conducted a hearing on the three 11 Hernandez motions (i.e., Damages, Avoidance and First Contempt) 12 on June 14, 2012. At the hearing, the Avoidance Motion was 13 granted, the First Contempt Motion was denied because Collect had 14 by then complied with the Order Denying Vacatur, and the Damages 15 Motion was granted. The court awarded Hernandez his requested 16 attorney’s fees of $3,572.06, but denied his request for any 17 additional damages. 18 The bankruptcy court directed Hernandez to prepare and lodge 19 a proposed order concerning the Damages Motion. Hernandez lodged 20 a proposed order on June 25, 2012. On July 2, 2012, Collect 21 objected to the order proposed by Hernandez asserting that the 22 bankruptcy court, at the hearing on June 14, 2012, had directed 23 Hernandez to submit a form of "judgment," not an order. It also 24 lodged a proposed form of judgment for entry by the court. 25 On July 6, 2012, the bankruptcy court entered an Order Re 26 Further Briefing. It acknowledged Collect's objection to the 27 Hernandez proposed order and conceded that it may have "misspoke" 28 at some point in the hearing. However, the court indicated that -5- 1 its intent, as reflected in the Memorandum of Decision and its 2 tentative ruling, was that an order, not a judgment, be submitted 3 for entry. The court cited to case law in support of its 4 position that an order rather than a "mere judgment" was proper 5 in this context.6 However, the court invited Collect to submit 6 further arguments on this point: "If Collect has case law to 7 support its argument that the damages from the automatic stay 8 should merely be a judgment instead of an order, it may submit 9 further briefing by July 13, 2012. Otherwise, the Court will 10 enter an order for Collect to pay Debtor's attorney's fees within 11 15 days." 12 Collect did not respond to the bankruptcy court's invitation 13 to submit a brief, and the bankruptcy court entered the order on 14 the Damages Motion on July 19, 2012 (the “Attorney Fee Order”). 15 On December 14, 2012, the BAP affirmed the Order Denying 16 Vacatur. Hernandez II, 483 B.R. at 726 . Collect did not appeal 17 the BAP’s decision. 18 On April 22, 2013, Hernandez filed a second motion for 19 contempt against both Collect and Zee Group (the “Second Contempt 20 Motion”). It alleged that, while the Attorney Fee Order had been 21 entered on July 19, 2012, directing Collect to pay $3,572.06 to [22] 23 6 See In re Jones, 2007 Bankr. LEXIS 4649 , at *1 (noting that an order to show cause was entered against creditor for [24] failure to pay sanction as required by order); In re Seaspire, 25 Inc., 63 B.R. 44, 45 (Bankr. M.D. Fla. 1986) (ordering creditor to appear to explain why she should not be held in contempt for 26 failing to pay damages for violation of the automatic stay); see 27 also Shuffler v. Heritage Bank, 720 F.2d 1141, 1148 (9th Cir. 1983) (explaining that sanctions can be compensatory or 28 coercive). -6- 1 Hernandez’s attorney within fifteen days, and while Hernandez had 2 again demanded payment from Collect within five days on 3 January 2, 2013, no payment had been made. The Second Contempt 4 Motion asked the bankruptcy court to enter an Order to Show Cause 5 (“O.C.”) why Collect should not be held in civil contempt 6 pursuant to Rule 9020 and § 105(a). 7 Collect responded to the Second Contempt Motion on May 6, 8 2013. While not denying its failure to pay Hernandez, it argued 9 that because only Collect, and not its attorneys, was named in 10 the Attorney Fee Order, Zee Group could not be held in contempt; 11 that contempt was an improper procedure for enforcement of the 12 Attorney Fee Order; and that the Second Contempt Motion was moot 13 because it sought the same relief as the First Contempt Motion, 14 which had been denied. Collect did not comply with the Attorney 15 Fee Order. 16 Before the hearing on the Second Contempt Motion on May 23, 17 2013, the bankruptcy court issued a tentative ruling indicating 18 its intent to hold Collect in civil contempt if the Attorney Fee 19 Order had not been complied with, and the funds paid to 20 Hernandez, before the hearing. After the hearing, the court took 21 the issues under advisement. 22 The bankruptcy court entered an Order re Second Motion for 23 Contempt on June 12, 2013 (the “Contempt Order”). First, the 24 court agreed that contempt was not available as against Collect’s 25 attorneys. Second, the court ruled that the Second Contempt 26 Motion was not moot because it addressed Collect’s failure to 27 comply with the Attorney Fee Order, while the First Contempt 28 Motion focused on Collect’s failure to obey the turnover orders. -7- 1 The bankruptcy court then discussed Collect’s third 2 argument, that the Attorney Fee Order was merely a judgment for 3 damages, rather than an order to pay sanctions, such that it 4 could not be enforced via contempt. The court reasoned that, 5 even if it had been an error for the court to enter an order, 6 instead of a judgment, the Attorney Fee Order should have been 7 obeyed. The court noted that the context of the proceedings 8 clearly established that the Attorney Fee Order was based on an 9 implicit finding of contempt, rather than merely a damages award. 10 And finally, citing to the BAP’s decision in Rosales v. Wallace 11 (In re Wallace), 490 B.R. 898 (9th Cir. BAP 2013), the court 12 explained that an order to enforce compliance with a previous 13 sanctions order resulting from a party’s misconduct is not an 14 “ordinary money judgment” enforceable only through Civil Rule 69. 15 The bankruptcy court found that clear and convincing evidence 16 showed that Collect had knowingly violated a definite and 17 specific court order (the Attorney Fee Order), had ignored the 18 Court’s rejection of its judgment theory, and had refused to pay 19 the Attorney Fee Order. 20 The bankruptcy court ordered Collect to show cause why it 21 should not pay $3,572.06, the amount due on the Attorney Fee 22 Order, to Hernandez within seven days. Collect was also ordered 23 to pay the attorney’s fees incurred by Hernandez in seeking 24 compliance with the Attorney Fee Order, in an amount to be 25 determined after Hernandez filed a fee application. 26 Collect filed a timely appeal of the Contempt Order on 27 June 21, 2013. Hernandez sought from the bankruptcy court, and 28 was granted, a stay pending appeal, on condition that it provide -8- 1 a bond, which it did. 2 JURISDICTION 3 The bankruptcy court had jurisdiction under 28 U.S.C. 4 §§ 1334 and 157(b)(2)(A) and (O). We have jurisdiction under [5] 28 U.S.C. § 158 . 6 ISSUE 7 Whether the bankruptcy court abused its discretion in 8 finding Collect in contempt for violating the Attorney Fee Order. 9 STANDARD OF REVIEW 10 The bankruptcy court’s civil contempt order and sanctions 11 are reviewed for abuse of discretion. Rediger Inves. Servs. v. 12 H Granados Commc’ns, Inc. (In re H Granados Commc’ns, 503 B.R. 13 726, 731-32 (9th Cir. BAP 2013). The abuse of discretion 14 standard has two parts. First, we consider whether the 15 bankruptcy court applied the correct legal standard; and second, 16 we must decide whether the court's factual findings supporting 17 the legal analysis were clearly erroneous. Alakozai v. Citizens 18 Equity First Credit Union (In re Alakozai), 499 B.R. 698 (9th 19 Cir. BAP 2013) (citing United States v. Hinkson, 585 F.3d 1247 , 20 1261-62 (9th Cir. 2009) (en banc)). 21 DISCUSSION 22 A. 23 To hold a party in civil contempt, the bankruptcy court must 24 find by clear and convincing evidence that the offending party 25 knowingly violated a definite and specific court order. Knupfer 26 v. Lindblad (In re Dyer), 322 F.3d 1178, 1190 (9th Cir. 2003). 27 The burden then shifts to the offending party to show why it was 28 unable to comply with the order. FTC v. Affordable Media, -9- [1] 179 F.3d 1228, 1239 (9th Cir. 1999). 2 In the Contempt Order, the bankruptcy court explained: 3 Even if the court was incorrect in entering an order rather than a judgment for damages, which it was not, 4 this is no defense to Collect’s noncompliance with the Attorney Fee Order. If Collect thought the Attorney 5 Fee Order was in error, it was incumbent upon it to submit briefing before the Court ruled, or appeal the 6 Attorney Fee Order and seek to stay the order pending appeal. (Citations omitted). . . . In short, the 7 evidence is clear and convincing that Collect knowingly violated a definite and specific court order by 8 ignoring the Court’s clear rejection of his judgment theory and refusing to pay the attorney’s fees ordered 9 by the Attorney Fee Order. 10 Contempt Order at 2. 11 In its analysis, the bankruptcy court correctly invokes a 12 long-standing rule of law: “If a person to whom a court directs 13 an order believes that order is incorrect the remedy is to 14 appeal, but, absent a stay, he must comply promptly with the 15 order pending appeal." This principle was articulated by the 16 U.S. Supreme Court in Maness v. Meyers, 419 U.S. 449, 458 (1975), 17 although its origin relates back in the Court’s case law to at 18 least 1922 with Howat v. Kansas, 258 U.S. 181 (1922). The Ninth 19 Circuit frequently applies the rule. See, e.g., Espinosa v. 20 United Student Aid Funds, 553 F.3d 1193, 1205 (9th Cir. 2008) 21 (holding that a creditor is not free to violate a bankruptcy 22 court order because it has doubts as to the validity of the 23 order) aff’d, 559 U.S. 260, 279 (2010); United States v. Galin, [24] 222 F.3d 1123, 1127 (9th Cir. 2000); Crystal Palace v. Mark Twain 25 Indus., Inc. (In re Crystal Palace Gambling Hall, Inc.), 817 F.2d 26 1361, 1365 (9th Cir. 1987) (cited as authority by the bankruptcy 27 court in this appeal). 28 The Maness rule applies even when the statute or case law -10- 1 underlying the trial court’s order is later ruled 2 unconstitutional. United States v. Pescatore, 637 F.3d 128 , 144 3 (2d Cir. 2011). And disregard of the requirements of the rule is 4 punishable by contempt proceedings. Id. However, to find 5 contempt for violation of a court’s order, the subject court 6 order must have been lawful. Shilitani v. United States, [7] 384 U.S. 364, 370 (1966). But, in this context, “lawfulness” is 8 not a high standard, depending only on whether the court entering 9 the order had subject matter jurisdiction over the action and 10 personal jurisdiction over the parties affected by the order. 11 Maness, 419 U.S. at 459 (“an order issued by a court with 12 jurisdiction over the subject matter and person must be obeyed by 13 the parties until it is reversed by orderly and proper 14 proceedings."). 15 B. 16 As the bankruptcy court found, Collect apparently decided 17 that because the Attorney Fee Order was a “judgment,” and not an 18 order, it need not voluntarily obey it but, instead, the onus was 19 on Hernandez to use execution or some other enforcement means to 20 collect the sums due under the Attorney Fee Order. Collect’s 21 decision was incorrect and had consequences. 22 First, we note that Collect has never asserted that the 23 bankruptcy court lacked subject matter jurisdiction over this 24 dispute, or personal jurisdiction over Collect to enter the 25 Attorney Fee Order. Indeed, the Attorney Fee Order was entered 26 by the bankruptcy court in connection with a pending bankruptcy 27 case, to enforce the § 362(a) automatic stay, and to compel a 28 creditor to recompense Hernandez for damages Collect caused him -11- 1 by its disregard of that stay. Clearly, the bankruptcy court had 2 subject matter jurisdiction over the contempt proceedings. 3 See 28 U.S.C. § 1334 (b)(establishing jurisdiction in the district 4 courts for “civil proceedings . . . arising in or related to a 5 case under title 11.”); 28 U.S.C. § 157 (a) (authorizing district 6 courts to refer all such proceedings to the bankruptcy court); [7] 28 U.S.C. § 157 (b)(1),(2)(A), (E), and (O) (authorizing 8 bankruptcy court to enter a final judgment in core proceedings, 9 including “matters concerning administration of the estate,” 10 “orders to turn over property of the estate,” or in “proceedings 11 affecting . . . the adjustment of the debtor-creditor . . . 12 relationship”). Collect was also subject to the personal 13 jurisdiction of the bankruptcy court, was afforded appropriate 14 due process, and appeared and was heard before the bankruptcy 15 court entered its orders. See Rules 9014 (contested matters); 16 9020 (contempt). 17 Moreover, as we explain below, Collect’s various arguments 18 challenging the contempt finding in the bankruptcy court, and now 19 on appeal, all lack merit. But, again, even if Collect were 20 correct, it can not dispute that the bankruptcy court issued a 21 lawful order, the Attorney Fee Order, which required it to act 22 and it defiantly chose not to. If Collect believed that order 23 was improper in some respect, its sole option was to appeal the 24 order, and to seek a stay of its duty to perform pending that 25 appeal. Instead, as the bankruptcy court correctly observed, 26 Collect consciously decided not to comply with the Attorney Fee 27 Order, it did not appeal, and it did not seek a stay. 28 Effectively, Collect did nothing, and doing nothing when the -12- 1 Attorney Fee Order clearly and definitely compelled it to pay 2 Hernandez for the attorneys fees and costs he incurred in 3 prosecuting the stay violation motions amply demonstrates 4 Collect’s contempt. 5 C. 6 Collect’s arguments in support of its legal position fall 7 into two categories. It first contends that the bankruptcy 8 court’s Attorney Fee Order is a “money judgment,” and therefore, 9 it must be enforced as a judgment, not via contempt proceedings. 10 Second, Collect insists that the bankruptcy court erred in 11 finding Collect in contempt for failing to pay a compensatory 12 order. 13 Collect’s first argument in unpersuasive. It relies on 14 Rules 9001(7) (“‘Judgment’ means any appealable order.”), 9002(5) 15 (“‘Judgment’ includes any order appealable to an appellate 16 court.”), and Civil Rule 69(a), which is applicable in contested 17 matters via Rules 7069 and 9014(c) (“A money judgment is enforced 18 by a writ of execution, unless the court orders otherwise.”). 19 But Collect’s argument proves too much, because, at bottom, its 20 “judgment theory” would treat all orders issued by a bankruptcy 21 court as judgments. 22 Collect cites two cases for the proposition that all of the 23 bankruptcy court’s orders are, by virtue of these rules, 24 equivalent to money judgments. Collect’s Br. at 12 (citing 25 Newland v. Super. Ct., 40 Cal. App. 4th 608, 615 (1995); SEC v. 26 Naftalin, 460 F.2d 471, 775 (8th Cir. 1972)). Neither case 27 applies in this context. 28 The Newland case deals with discovery sanctions under -13- 1 California law. In it, the California court states that 2 “monetary sanction orders are enforceable through the execution 3 of judgment laws. These orders have the force and effect of a 4 money judgment and are immediately enforceable through execution, 5 except to the extent the trial court may order a stay of the 6 sanction.” Newland, 40 Cal. App. 4th at 615 . Of course, Newland 7 deals specifically with California’s procedural rules; it does 8 not speak to whether, or which, orders entered in federal civil 9 proceedings are money judgments that must be enforced via a writ 10 of execution, as opposed to contempt proceedings. 11 Collect’s second authority, Naftalin, is also of no 12 consequence here. Quoting the court in its brief, Collect points 13 out that, once the finding of contempt has been made and a 14 sanction imposed, the order acquires all the “elements of 15 cooperativeness and consequence necessary to be possessed by any 16 judicial order to enable it to have the status of a final 17 decision under [28 U.S.C.] § 1291.” Naftalin at 475. But 18 Collect does not correctly quote the text of the Eighth Circuit’s 19 decision, which instead actually reads, “Until a sentence or 20 sanction has been made to exist as to a contempt adjudication, 21 the situation is lacking in the elements of operativeness and 22 consequence necessary to be possessed by any judicial order to 23 enable it to have the status of a final decision under § 1291.” 24 Id. Naftalin also does not seem to have any bearing on what 25 constitutes a money judgment enforceable by execution. 26 Collect searches unsuccessfully for reliable authority that 27 a final order awarding monetary sanctions is a money judgment for 28 purposes of Civil Rule 69(a). Collect cites four cases that -14- 1 simply apply Civil Rule 69(a)’s requirement that the proper means 2 of securing compliance with a money judgment is to seek a writ of 3 execution. Collect’s Op. Br. at 20. The cases do not attempt to 4 distinguish between money judgments and a stay violation 5 sanctions order, nor more generally, are they insightful as to 6 whether final orders must be enforced solely through writs of 7 execution. 8 Of the four cases, the first is Hilao v. Est. of Marcos, [9] 95 F.3d 848 (9th Cir. 1996). This case involved an attempt to 10 enforce a $2 billion judgment from the District Court of Hawaii 11 in the Central District of California against the estate of 12 former President Ferdinand Marcos of the Philippines. The court 13 held that the size of the judgment and difficulty of enforcing 14 the judgment merited its treatment as a money judgment under 15 Civil Rule 69(a). Id. at 855 . 16 The second case is Shuffler v. Heritage Bank, 720 F.2d 1141 17 (9th Cir. 1983). The case dealt with enforcement of a money 18 judgment, plus $500 per day in fines. Although there is dicta in 19 the decision about Civil Rule 69(a), the court did not base its 20 decision on Civil Rule 69(a), but only ruled that the party was 21 in contempt for noncompliance with the earlier judgment, and 22 remanded to the district court for determination of the amount of 23 fine. Id. at 1148-49 . 24 The third case is Aetna Cas. & Sur. Co. v. Markarian, [25] 144 F.3d 346, 349 (1st Cir. 1997). The case holds that where a 26 “money judgment” is entered in federal court, the enforcement is 27 by writ of execution. Again, the size and complexity of the 28 judgment and difficulty of enforcement made the writ of execution -15- 1 under Civil Rule 69(a) the proper means of enforcement. Id. at 2 349. 3 The fourth case is Combs v. Ryan’s Coal Co., 785 F.2d 970 , 4 980 (11th Cir. 1986). Here the issue was enforcement of a money 5 judgment against nonparties. The amount was substantial 6 ($750,000), and again, the court determined it was a money 7 judgment enforceable under Civil Rule 69(a), in part because it 8 was a large judgment and involved nonparties. 9 These cases can be contrasted with this appeal. Here, the 10 bankruptcy court found in the Attorney Fee Order that Collect had 11 willfully violated the automatic stay by declining to release the 12 seized funds to Hernandez, and awarded Hernandez compensatory 13 sanctions under § 362(k). Collect did not appeal that order. 14 And although Collect argues that the Attorney Fee Order was not a 15 sanction order for misconduct, this is quibbling. The Attorney 16 Fee Order directed Collect to pay the damages it had caused 17 Hernandez to incur, consisting of attorneys fees and costs, in 18 response to Collect's violation of the § 362(a) automatic stay. 19 Simply put, Collect's conduct was inappropriate when measured 20 against the Code, and the Attorney Fee Order cannot fairly be 21 characterized as anything other than a sanction. The cases cited 22 by Collect all deal with judgments entered in business disputes, 23 not sanctions for misconduct. 24 As compared to the dearth of support for Collect’s position, 25 BAP case law supports the bankruptcy court’s view that when a 26 party’s willful failure to comply with an order constitutes 27 misconduct it may be remedied via contempt sanctions. 28 In Rosales v. Wallace (In re Wallace), 490 B.R. 898 (9th -16- 1 Cir. BAP 2013), in a first contempt order, a creditor was found 2 by the bankruptcy court to have violated the § 524(a) discharge 3 injunction. The court ordered the creditor to pay sanctions to 4 the debtor, including attorney’s fees, within sixty days. The 5 creditor did not pay. The debtor filed a second contempt motion 6 to compel payment. The creditor argued that the first contempt 7 order was a money judgment that could only be enforced by a writ 8 of execution under Civil Rule 69(a). After a hearing, the 9 bankruptcy court found creditor in contempt and order them to pay 10 the original sanctions order. Creditor then appealed to the BAP. 11 Id. at 904. 12 The Panel first dismissed creditor’s argument that an order 13 to pay sanctions is a “judgment” for purposes of Civil 14 Rule 69(a), and Rules 9001(7) and 9002(5): “[T]hese Rules merely 15 provide definitions for the word ‘Judgment’ as ‘any appealable 16 order’ and ‘any order appealable to an appellate court.’ We fail 17 to see how these definitions would transform what is clearly an 18 order to pay monetary sanctions within a specified time period 19 into a money judgment.” Id. at 906. 20 The Panel ultimately ruled that Civil Rule 69(a) did not 21 apply to a bankruptcy court’s monetary sanction for violation of 22 a previous order: 23 Despite Civil Rule 69's mandate for the proper enforcement of money judgments, we are persuaded . . . 24 that a court's monetary sanction for a contemnor's misconduct is not an "ordinary" money judgment, and 25 therefore the use of the contempt power is a proper method to enforce a sanction for misconduct. 26 [Cleveland Hair Clinic, Inc. v. Puig], 106 F.3d 165, 166 (7th Cir. 1997)("Use of the contempt power is an 27 appropriate way to enforce a sanction for misconduct, which is not an ordinary money judgment.")(citing 28 Alpern v. Lieb, 11 F.3d 689, 690 (7th Cir. 1993)). See -17- 1 Loftus v. Se. Pa. Transp. Auth., 8 F.Supp.2d 464, 468 (E.D. Pa. 1998), aff'd, 187 F.3d 626 (3d Cir. 1999) 2 (table case)(citing Cleveland Hair Clinic and holding that the use of the contempt power to enforce a 3 sanction for misconduct is appropriate because a sanction for misconduct is not an ordinary money 4 judgment); Eng. v. Goodcents Holdings, Inc., 2009 U.S. Dist. LEXIS 77801 , 2009 WL 2835201 , at *2 (N.D. Ga. 5 Aug. 31, 2009)(rejecting plaintiff's argument that a writ of execution was exclusive remedy for violating 6 prior sanctions order and holding that contempt proceeding was proper remedy for plaintiff's failure to 7 comply with the order awarding defendant attorney's fees for plaintiff's unreasonable continuation of 8 litigation); SD Prot., Inc. v. Del Rio, 587 F.Supp.2d 429, 434-36 (E.D.N.Y. 2008)(holding party in contempt 9 for failing to comply with prior order to pay monetary sanction imposed for delaying litigation). [10] 11 Id. at 907. 12 Collect’s argument that the Attorney Fee Order is a money 13 judgment that must be enforced through a writ of execution under 14 Civil Rule 69(a) is inconsistent with In re Wallace. We hold 15 that the Attorney Fee Order was a definite and specific order 16 that Collect knowingly elected to disregard. Accordingly, the 17 bankruptcy court did not abuse its discretion in finding Collect 18 in contempt. Id. at 908. 19 D. 20 There is one potential element of confusion in the 21 bankruptcy court’s Contempt Order that Collect identifies: Were 22 the amounts that Collect was ordered to pay Hernandez in the 23 Attorney Fee Order compensatory damages under § 362(k), or 24 contempt damages under § 105(a)? Earlier in the case, the 25 bankruptcy court based the Attorney Fee Order on § 362(k). 26 Then, in the Contempt Order, the bankruptcy court stated that 27 “the record also supports the Court finding Collect in contempt 28 in the Attorney Fee Order under the standards of 11 U.S.C. -18- 1 § 105(a).” Contempt Order at 5. 2 There does not appear to be any prohibition in the case law 3 on awarding attorneys fees to an individual debtor to remedy a 4 stay violation under either § 105(a) or §362(k), provided the 5 different procedural requirements for such an award are met, and 6 the award does not include punitive damages. Schwartz-Tallard v. 7 Am. Servicing Co. (In re Schwartz-Tallard), 473 B.R. 340 , 351 8 (9th Cir. BAP 2012). And, recall, as the bankruptcy court 9 observed in its Contempt Order, “[t]he [Order re Further 10 Briefing] clearly invited the parties to address the contempt 11 issue to enable the Court to determine which of the two proposed 12 orders to enter, so Collect was aware that the Court was 13 reconsidering its tentative ruling and awarding the [Attorney Fee 14 Order] on the basis of the First Contempt Motion rather than the 15 Damages Motion when it entered the Attorney Fee Order as a 16 contempt order, rather than merely a damages award.” Contempt 17 Order at 6. 18 The Panel has addressed this issue, and in doing so, 19 rejected Collect’s argument that the Ninth Circuit’s opinion in 20 Sternberg v. Johnson, 595 F.3d 937 (9th Cir. 2008), limits 21 damages for violation of the automatic stay to those specified in 22 § 362(k): 23 Sternberg does not limit the recovery of fees and costs to § 362(k); instead, a debtor's recovery of damages is 24 also available under § 105(a). This is confirmed in the decision itself, which provides that the basis for 25 the decision was the statutory language of § 362(k), not the bankruptcy court's civil contempt authority 26 under § 105(a). See [Sternberg, 595 F.3d at] 946 n.3 ("As this opinion does not consider the civil contempt 27 authority of the court, it does not limit the availability of contempt sanctions, including attorney 28 fees, for violation of the automatic stay, where -19- 1 otherwise appropriate."). 2 Rediger Inves. Corp. v. H Granados Commc’ns, Inc. (In re 3 H Granados Commc'ns, Inc.), 503 B.R. 726, 734 (9th Cir. BAP 4 2013). 5 At bottom, it is of no consequence in this case whether the 6 Attorney Fee Order was based upon the bankruptcy court’s inherent 7 power to punish contempts under § 105(a), as opposed to its power 8 to compensate debtors for stay violations under § 362(k). The 9 Attorney Fee Order was a lawful order of the bankruptcy court 10 that Collect defied for almost two years. We find no abuse of 11 discretion in the bankruptcy court’s decision to find Collect in 12 contempt for its failure to obey the Attorney Fee Order. 13 CONCLUSION 14 Collect knowingly violated a lawful, specific order of the 15 bankruptcy court directing it to pay compensatory damages to 16 Hernandez incurred as a result of Collect’s violation of the 17 automatic stay. Instead of appealing the order and requesting a 18 stay pending appeal, Collect did nothing. Its arguments to 19 justify its conduct lack merit. Even were it correct, though, 20 Collect cannot avoid the consequences of its disregard of the 21 basic tenet that lawful orders of a court must be obeyed, and 22 absent compliance, as the disobedient party, it may be held in 23 contempt. 24 We AFFIRM the Contempt Order of the bankruptcy court. [28] -20-