StayViolation.Com

Lead Them Not Into Temptation

The problem for many big corporations, insurance companies, financial institutions and even consumers to a lesser degree is that it is easy for a lawyer to lead them into temptation.  To the lawyer it is the means of getting paid more per case.  To the entity it is the feeling of feeling vindicated, even if the final result does not necessarily turn out that way (kind of like the last act of defiance).

We all know lawyers that do this.  Not only do we know who they are, they know who they are.  They probably live a little better than the rest of us, they are never in their offices because they are always in depositions somewhere, and they probably have the best hourly and collection rates around.  In East Texas we say that they are "Board Certified in Billing".

From my perspective typically representing the Plaintiffs, it comes at me this way.  "My client does not think it did anything wrong".  Or, their client wants to argue that a 1949 decision out of Puerto Rico represents a line of cases that represents good law, even if it goes against every decision in the circuit in which the suit resides.  Or, the one I love the best, is that the attorney is concerned not for his client, but what message this sends if he allows his client to settle this claim.  There is of course the so-called "Wal-Mart Defense" in which not only will there be no settlement, they will try to bury you regardless of the costs, for the principal of the thing.  It has to be the delight of those attorneys who think to highly of themselves to convince their clients that this is a viable option.

The problem for many big corporations, insurance companies, financial institutions and even consumers to a lesser degree is that it is easy for a lawyer to lead them into temptation.  To the lawyer it is the means of getting paid more per case.  To the entity it is the feeling of feeling vindicated, even if the final result does not necessarily turn out that way (kind of like the last act of defiance).

We all know lawyers that do this.  Not only do we know who they are, they know who they are.  They probably live a little better than the rest of us, they are never in their offices because they are always in depositions somewhere, and they probably have the best hourly and collection rates around.  In East Texas we say that they are "Board Certified in Billing".

From my perspective typically representing the Plaintiffs, it comes at me this way.  "My client does not think it did anything wrong".  Or, their client wants to argue that a 1949 decision out of Puerto Rico represents a line of cases that represents good law, even if it goes against every decision in the circuit in which the suit resides.  Or, the one I love the best, is that the attorney is concerned not for his client, but what message this sends if he allows his client to settle this claim.  There is of course the so-called "Wal-Mart Defense" in which not only will there be no settlement, they will try to bury you regardless of the costs, for the principal of the thing.  It has to be the delight of those attorneys who think to highly of themselves to convince their clients that this is a viable option.

Basketball Star Or No, You Cannot Throw Parents In Jail For Back Child Support When Seeking Reorganization Through Bankruptcy

There is a terrible tendency among family or domestic relation lawyers who have a child support collection matter pending before a Chapter 11, 12 or 13 bankruptcy is filed to allow the momentum of the state court collection process to continue, acting like it is out of their control.  Also, family law attorneys want to believe they are not labile in these situations, and that bankruptcy judges are loath to punish the ex-spouse just trying to collect the child support they are rightfully owed.

I am not completely sure why this dynamic continues to take place. But, too often family law attorneys who wear binders and some arrogant state law judges who think they can find creative ways to ignore the bankruptcy process.  All the while some debtor is being improperly punished, the bankruptcy estate is being harmed, and everyone involved is blaming the other and waving their hands up in the air say, "we didn't know".  It is right to say that most or many bankruptcy judges do not buy this argument.  They are not likely to punish the judges involved and they do not have to do so.  They can punish the ex-spouse and the ex-spouses lawyer, and they often do so.  Spouses owed child support and their collection attorneys should not rely on a bankruptcy judge to ignore the clear meaning of the law as a potential defense. 

Why Does Not Matter

We all remember those obnoxious Enron ads on TV in which behind the crooked "E" logo the announcer kept repeating "why?  why?  why?"  This was played by some with great satisfaction after Enron filed bankruptcy and its executives were indicted.

Where Is The Outrage!!!

Corporate irresponsibility in this country has simply gotten out of hand.  This is evident in viewing two areas of concern.  The first area is the average pay of a Fortune 500 CEO in America, and the second is the litigation choices exhibited by these companies when they violate a consumer's rights, especially in bankruptcy.  The contrast is none too stark because what it indicates is that the most financially viral among us tends to trample on and take advantage of the most financially vulnerable among us.  It is fine to say that these financially vulnerable who have had their rights knowingly violated are just after money, or that their lawyers just want to get paid.  But, is that not the pot calling the kettle black?  After all, was it not all about money that the company elected to violate the debtor's rights in the first place?  I would hope it was not about simply making the poor debtor suffer for no particular reason much like pulling the wings off a fly.  As former U. S. Senator Dale Bumpers said during President Clinton's impeachment hearing, "When they say it is not about money...its about money".

The great economist John Kenneth Galbraith just past away.  He understood the problem well.  In a 2002 interview with The Independent he argued that the modern corporations have become so complex it is impossible to hold them sufficiently accountable.  It is this complexity that prevent the corporations in the first place from complying with a consumer's or debtor's federally mandated rights.  They simply do not care or the cost of insuring compliance is simply not justified in their minds.  It really is the simple idea that their will is better than any right granted to the consumer or debtor.  Also, judges too often simply fail to hold corporations sufficiently responsible.  The corporations' attorneys argue about insignificant sums of money to the debtor as if it is life changing for the corporations before the Court.  It is life changing for the debtor.  It is amazing what $500.00 or $1,000.00 can do for a debtor when his or her rights have been willfully violated.  For the corporations' attorneys it is self serving because they get to charge many times any such request just to go forward.  Typically, in the end, the corporations get to pay more to the debtor's attorney, their own attorneys, and yet this increased amount is still so insignificant that it does nothing to correct the behavior that caused the violation in the first place.  With Citibank and its parent company at a trillion dollars in assets what is the level of damages it would have to pay to get its attentions to even review its systems for complaince more closely?  It's truly unimaginable.

Here, however, are the figures that tell it all.  The average Fortune 500 CEO makes $11.3 million dollars a year in compensation.  In perspective how much money does that represent?  For one, it takes a Fortune 500 CEO, whose company has trampled on a debtor's federally protected rights, just 21.71 hours to earn what the average debtor or family grosses in income for entire year.  A family in bankruptcy that might earn up to $25 an hour when working is out earned by a CEO who earns this amount every 1.16 minutes.

When the corporation's attorney seeks to delay any settlement on seemingly bogus grounds, those attorneys as well as the debtor's attorneys are typically running up joint fees of $500.00 a hour.  Before one believes this is outrageous it is important to know it takes the average CEO only 23.26 minutes to earn this amount.

How many times have we seen corporate attorneys argue that a debtor does not deserve three or four thousand dollars to cover their attorneys' fees and compensate the debtor for his or her rights, which were willfully violated, when the average CEO of the company that violated the rights is earning this amount every 3.1 hours or less.

Money is so plentiful or so worthless that a corporation can afford to pay just one of its thousands and thousands of employees $11.3 million a year, but they cannot apologize for violating federally mandated legal rights by paying an insignificant sum.  When will the judges decide to put it in perspective?

What Does "Injury" Mean In A Stay Violation Context? Hint: Not What Defense Lawyers Claim.

The defense(s) raised by opposing counsel in an automatic stay litigation case tend to be tactical, and not based upon the plain meaning of the law.  It is generally the attempt of counsel to add values or meanings to the Bankruptcy Code that simply do not exist.  One of these areas is the interplay between the term "injury" and "damages" under 11 U.S.C. § 362(h) of the pre-October 17, 2005 Code or under § 362(k) of the new Code.  Defense counsel would like to believe is that these two terms are synonymous, indentical, and interchangable.  These terms are not and cannot be the same given judical requirements of statutory construction.

You get a phone call from defense counsel in which he or she informs you, usually rather boorishly, that his or her client's defense is that the debtor was not "damaged" by any automatic stay and, as such, defendant reads this as an absolute bar to recovery.  Of course by "damaged" counsel is stating that the debtor suffered no out-of-pocket expenses.  It is the old "no harm, no foul" rule that is so popular on the streets.  The only problem is that no such defense exists under 11 U.S.C. § 362(h) or (k).  It is made up, it is pie in the sky and, if followed, it would constitute legislating from the bench (a big no no with Congress and legal scholars these days).

The problem with the synonymous argument between injury and damages is it attempts to apply whiteout to a relevant term of the Bankruptcy Code.

It is not a credible argument under statutory construction rules that the concept of "injury" and "damages" should have the identical meaning.  Statutes should be construed, if possible, to give effect to every clause and word. See e.g., Duncan v. Walker, 533 U.S. 167, 174 (2001); Babbitt v. Sweet Home Chapter of Communities for a Great Or., 515 U.S. 687, 698 (1995). The only real exception to this rule is where it is obvious that a word was inadvertently asserted or would be repugnant to the statute, neither of which would appear to be the case as it concerns the two different terms, “injury” and “damages”, in § 362(h) or (k). Therefore, clearly, “injury” does not necessarily constitute “damages”, but “damages” could be a form of “injury”.

Throughout the body of case law on automatic stay violations injury is not much discussed. This is because injury must be presumed if the automatic stay has been violated. The Fifth Circuit, at least in the context of motions to dismiss and summary judgment, has recognized this point in Meadowbriar Home for Children, Inc., v. Gunn, 81 F.3d 521 (5th Cir. 1996), in stating:

“[W]hen the plaintiff is himself an object of the action (or foregone action) at issue there is ordinarily little question that the action or inaction has caused him injury, and that a judgment preventing or requiring the action will redress it.” (Internal citations omitted).  Id. at 529.

We must look to federal common law to determine Congress’ design. The United States Supreme Court has so stated in Morissette, supra.

Injury, then, should be viewed in the context of federal injunction law. According to the United States Supreme Court a stay should only issue upon an absolute finding that the debtor or party would be irreparably injured if not granted. Hilton v. Draunskill, 481 U.S. 770, 776 (1987), Dan Morales v. Trans World Airlines, Inc., 504 U.S. 374, 381 (1992), A.O. Smith v. FTC, 530 F.2d 520 (3rd Cir. 1975). “[W]e have emphasized ‘the elementary principle that a preliminary injunction shall not issue except upon a showing of irreparable injury….[T]he requisite is that the feared injury or harm be irreparable – not merely serious or substantial….The word means that which cannot be repaired, retrieved, put down again, atoned for….Irreparable injury is suffered where monetary damages are difficult to ascertain or are inadequate.” A.O. Smith at 530. The result is that Congress concluded, as a matter of law that a stay would automatically issue in bankruptcy cases because the injury that would result would be irreparable if the stay did not issue. Therefore, any bankruptcy court in which a stay violation has been proven should presume irreparable injury.

Damages is a different concept completely.  It is not an element for recovery under § 362(h) or (k).  Rather, damages are the mandatory consequence of the elements of § 362(h) or (k) have been established or proven.