Wallace v. Two Bobcats, Inc.

Summary

The United States Bankruptcy Court for the Southern District of Texas awarded the Wallaces damages for Two Bobcats, Inc.’s willful violations of the bankruptcy discharge injunction. The court awarded $1,885 in economic damages, $3,000 in emotional distress damages, $1,000 in punitive damages, and $36,458.08 in attorney’s fees and expenses.

Holdings

1. A debtor may recover compensation for personal time and effort spent prosecuting a discharge-injunction claim when supported by credible evidence of the time expended and applicable earnings; the court awarded the Wallaces $1,885.00.
2. A plaintiff seeking emotional-distress damages must present specific, sufficiently particularized and extensive evidence of emotional harm; Ms. Wallace's testimony concerning panic attacks satisfied that threshold, while Mr. Wallace's testimony concerning lost sleep and chest pressure did not.
3. Punitive damages may be awarded for a creditor's willful discharge-injunction violation when the conduct constitutes egregious, intentional misconduct; Two Bobcats' two violations warranted $1,000.00 in punitive damages.
4. The Wallaces were entitled to recover the full $36,458.08 in reasonable attorney's fees and expenses, including fees incurred responding to the motion to extend the deadline to object to discharge because that motion was used as leverage in post-discharge collection efforts.
5. Blind-copying a represented debtor on a demand email sent to the debtor's attorney may constitute an intentional circumvention of the lawyer-client relationship and a direct communication prohibited by Texas Disciplinary Rule of Professional Conduct 4.02(a); in this case, the conduct supported the finding of an intentional discharge-injunction violation.

Questions Presented

1. What economic damages, if any, could the Wallaces recover for time and effort spent prosecuting their discharge-injunction claim?
2. Whether the evidence established sufficiently particularized emotional distress to support an award of damages.
3. Whether Two Bobcats' conduct constituted sufficiently egregious, intentional misconduct to support punitive damages for willful violations of the discharge injunction.
4. Whether the Wallaces were entitled to recover the claimed attorney's fees and expenses, including fees incurred in responding to a motion concerning an exception to discharge.
5. Whether blind-copying the debtors on a demand email sent to their bankruptcy attorney constituted an intentional circumvention of the attorney-client relationship and a violation of the discharge injunction.

Disposition

other