The debtors' motion for sanctions duly came before the court for a hearing on January 21, 2000, in Fairbanks. Valerie Therrien appeared on behalf of the debtors. Pat Obrist appeared on her own behalf. After reviewing the pleadings and hearing the evidence, IT IS ORDERED:

        The debtors' motion is granted, and they shall recover the sum of $1,038.75 as attorney's fees and costs as well as the sum of $500.00 in punitive damages, for a total of $1,538.75, from Patricia Obrist. Judgment shall be entered accordingly.

Factual Background

        Gary Smith is an enlisted man serving in the Army. Mr. Smith and his wife have two young children. They owed nearly $60,000.00 in unsecured claims when they moved to Fairbanks in July of 1998. Given Gary's meager Army income of just over $1,000.00 a month in 1997 and $1,300.00 a month in 1998, they were hopelessly in debt.

        Patricia Obrist does business as AAAA Care Bed & Breakfast in Fairbanks. The Smiths, their children and Tammy's mother moved to Fairbanks and stayed at Ms. Obrist's facility for a month, beginning in July of 1998, prior to receiving base housing at Ft. Wainwright. While staying at Ms. Obrist's, Gary placed an alternator in her minivan and repaired some steps. Tammy's mother helped to cook some meals. Ms. Obrist rented a         6 ABR 322  minivan to the Smiths and allowed them to briefly use another car. The Smiths moved on base and received a housing allowance for their stay at Ms. Obrist's premises. They used the money for other purposes and did not pay Obrist, contending that any debt for their stay was offset by services they had performed. Obrist was outraged. The Smiths responded by contacting other servicemen who had stayed at her bed & breakfast and seeking to have the premises found "off limits" for service personnel.^1. Obrist sued the Smiths for rent in Fairbanks small claims court, receiving a judgment for $634.36 on February 3, 1999. After she obtained the judgment, Obrist filed an involuntary allotment against Smith's military pay on March 2, 1999.

        The Smiths filed for chapter 7 relief on April 23, 1999. Obrist was duly listed as a creditor and received a § 341 meeting notice, advising her of the automatic stay. A meeting of creditors was held on May 20, 1999, in Fairbanks. Obrist attended the meeting. She was advised both by Larry Compton, chapter 7 trustee, and Valerie Therrien, attorney for the Smiths, not to pursue her judgment in any manner. Still furious with the Smiths, Obrist wrote her Congressmen complaining of the Smiths' "fraud and abuse." That letter was sent in late May or early June of 1999. Her letters were forwarded through the Army chain of command. When they reached Gary Smith's commander, Mr. Smith was pulled from the field and questioned during field maneuvers held in Anchorage in June of 1999. Ms. Obrist later called the Better Business Bureau on July 7, 1999, to report the debtors for their alleged fraudulent business practices.

        The involuntary allotment initiated by Ms. Obrist finally began to bear fruit in early August of 1999. Gary Smith's August 2, 1999, check was garnished for the sum of $250.36. This reduced Smith's income to between $150.00 to $200.00. The Smiths desperately needed funds for groceries and living expenses. Valerie Therrien's paralegal         6 ABR 323  immediately contacted Ms. Obrist and requested return of the garnished check. Ms. Obrist refused and sent the check to John Ruebelmann, attorney-advisor for the United States Trustee's Office in Anchorage. After considerable effort by Ms. Therrien's staff, and the Smiths, the check was eventually returned to Ms. Therrien on August 7, 1999. The Smiths faxed a seventy-five page copy of their bankruptcy petition to the Army payroll office in Cleveland in an attempt to stop the continuing allotment. They repeatedly called the payroll office. Despite their efforts, Mr. Smith's August 30, 1999, paycheck was again garnished for $250.36. The Smiths again needed money for groceries and living expenses. Obrist refused to turn the check over to Valerie Therrien and instead mailed it to Larry Compton, the chapter 7 trustee in Anchorage. Compton returned the check to Therrien's office on September 16, 1999. Obrist refused to endorse the check or to take any action to stop the involuntary allotment she had initiated.

        11 U.S.C. § 362(a) provides, in part:

[A] petition filed under section 301, 302, or 303 of this title . . . operates as a stay, applicable to all entities, of –

        (1) the commencement or continuation, including the issuance or 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 this case under this title;

        (2) the enforcement, against the debtor or against property of the estate, of a judgment obtained before the commencement of the case under this title;

       . . . .

        (5) any act to create, perfect, or enforce against property of the debtor, any lien to the extent that such lien secures a claim that arose before the commencement of the case under this title;

        6 ABR 324         (6) any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case under this title; . . .

11 U.S.C. § 362(h) provides as follows:

        An individual injured by any willful violation of the stay provided by this section shall recover actual damages, including costs and attorneys' fees, and, in appropriate circumstances, may recover punitive damages.

        To find a "willful violation" of the automatic stay under 11 U.S.C. § 362(h), all that is required is that the creditor knew of the stay and that the actions which violated the stay were intentional. ^2. A creditor's good faith belief that his conduct was justified is irrelevant to the determination of a stay violation under § 362(h). ^3.

        Ms. Obrist had abundant notice of the Smiths' bankruptcy. She received notice of the § 341 meeting along with notice of the automatic stay. She attended the § 341 meeting. She was told by both the chapter 7 trustee and Ms. Therrien to stop all collection activity on her judgment. These warnings had no effect on her subsequent conduct, however.

        By writing Alaska Senators and Congressmen, Obrist commenced action against the debtors post-petition that could have been commenced pre-petition. Her letters were an attempt to recover a claim against the debtors that arose pre-petition. Obrist knew of the bankruptcy and violated 11 U.S.C. § 362(a)(1) and (a)(6). Additionally, Obrist, after being informed of the bankruptcy, failed to take any measure to stop her involuntary allotment against Gary Smith's Army pay. 11 U.S.C. § 362(a)(1) specifically prohibits the continuation of such proceedings as does § 362(a)(2) and (a)(5). Obrist says she "forgot" about the allotment. Given the scope of her vendetta against the debtors, her statement is         6 ABR 325  not credible. Moreover, when Ms. Therrien and her assistant repeatedly requested that Ms. Obrist stop the allotment, she refused, contending that it was Ms. Therrien's responsibility. Let there be no misunderstanding: creditors have an affirmative obligation to stop all pre- petition garnishment actions initiated on their behalf after the debtors have filed a bankruptcy petition. Obrist's failure to promptly terminate her garnishment of Gary Smith's wages violated the stay. ^4. She compounded that violation by twice failing to turn over wages to Smith or his attorney, even after repeated requests. She deliberately mailed the checks to Anchorage to frustrate the Smiths and keep them from their wages.

        If Ms. Obrist was truly a victim of fraud, she could have easily initiated an adversary action in bankruptcy court for the recovery of damages. She failed to do so. Instead, she adopted hardball tactics and knowingly violated the stay, causing considerable hardship to the Smiths and the needless expenditure of attorney's fees and costs.

        The Smiths are entitled to recovery of actual damages, including costs and attorney's fees, and, in appropriate circumstances, punitive damages. Prior to the hearing in this matter, the Smiths incurred $692.17 in attorney's fees and costs dealing with Ms. Obrist and her actions. Ms. Therrien spent at least an additional two hours for preparation and hearing of the motion for sanctions. Allowing her fees at $175.00 an hour leads to a total of attorney's fees and costs of $1,038.75. These attorney's fees and costs will be recovered from Ms. Obrist. The Smiths have been greatly inconvenienced by Ms. Obrist's actions, but have not proven any general damages other than attorney's fees and costs. After numerous delays, Gary Smith finally did recover his wages. Due to the extreme and outrageous conduct of Obrist, however, I will impose punitive damages of $500.00 against her.

        6 ABR 326          The Bankruptcy Code provides a number of means to fight fraud and willful and malicious conduct in the bankruptcy system. Exceptions to discharge are available for creditors who promptly file such claims. Objections to discharge can also be lodged by creditors, provided they are filed in a timely manner. There are an abundance of remedies available in the Code to injured parties. Parties such as Ms. Obrist, who operate outside the requirements of the law, must face the consequences.

        DATED:    January 26, 2000.

BY THE COURT


DONALD MacDONALD IV
United States Bankruptcy Judge

N O T E S:

1.        The Smiths were initially successful. Obrist's facility was found to be off-limits for Army personnel. Obrist appealed and has been re-instated by the Army.

2.         Pinkstaff v. United States (In re Pinkstaff), 974 F.2d 113, 115 (9th Cir. 1992).

3.         Id.

4.         In re Manuel, 212 B.R. 517 (Bankr. E.D. Va.1997).