UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF ALASKA

A hearing on the debtor's motion for sanctions for violation of the automatic stay was held before the undersigned on December 16, 1998. Tom Yerbich appeared on behalf of the debtor, Gary Sleeper appeared on behalf of Kenneth and Roseleen Moore, and Gary Spraker appeared on behalf of Bill Barstow, the chapter 7 trustee. Having reviewed the motion, opposition, and reply, and considered the testimony and arguments of counsel presented at the hearing,

IT IS ORDERED:

1) The motion for sanctions for violation of the automatic stay is granted. The debtor is awarded the sum of $1,000.00 in actual damages, representing the scheduled value of the fishing reel, plus his costs and actual attorney's fees incurred in connection with the violation of stay. No punitive damages are awarded.

2) WITHIN 15 DAYS OF THE DATE OF THIS ORDER, Mr. Yerbich file and serve upon the Moore's attorney an itemized statement of the debtor's attorney fees and costs which have been incurred in connection with the Moore's violation of the stay. The Moores will have 10 DAYS within which to file any objections to the statement. The matter will thereafter be deemed submitted.

3) This is an interlocutory order. A final order and judgment will be issued after the amount of fees and costs is determined.

Background

Paul Fleenor filed his chapter 7 petition on April 24, 1998. On June 25, 1998, an order was entered abandoning the estate's interest in "the fishing vessel Aaron Rose, Official Number 618467" to creditors Kenneth and Roseleen Moore. The Moores and the debtor were co-owners of the vessel, which was encumbered by a preferred ship mortgage and several junior 6 ABR 100      liens. There was no equity in the vessel, and the Moores had located a buyer willing to purchase the vessel for $60,000. Because the buyer planned to use the vessel for the upcoming Bristol Bay salmon season, the Moores had moved for abandonment of this vessel on shortened time.

Attached to the Moore's application to abandon was a valuation report of the Aaron Rose, dated April 20, 1998, which gave the vessel a market value of $75,000.00. Included in the appraisal as fishing gear was a "power roller." The vessel was equipped with this item at the time of the appraisal. Another item of fishing gear, separately scheduled by the debtor as a "1996 salmon reel," was not on the vessel when the appraisal was done nor when the Moores moved for abandonment. The salmon reel had been removed from the vessel by the debtor in August, 1997, and placed in storage. After obtaining the order of abandonment, the Moores sold the Aaron Rose, and then removed the salmon reel from storage without the debtor's consent and placed it on the vessel.

Fleenor contends the Moores violated the automatic stay by taking the salmon reel. He says this was his separate property, and that the Moores were not entitled to take it by virtue of the order of abandonment. The Moores argue that the salmon reel was encompassed in the order for abandonment because it was an appurtenance of the vessel.

On his schedules, Fleenor scheduled the Aaron Rose as a 32' fiberglass Bristol Bay seiner with a market value of $75,000.00. He scheduled the 1996 fishing reel separately, under machinery and equipment used in business, with a market value of $1,000.00. The reel was also claimed exempt on his Schedule C. At the December 16, 1998, hearing, Fleenor testified that he built the salmon reel in the spring of 1997, with the assistance of Bay Welding. He paid for the reel himself, and it cost him about $4,500.00. He said it wasn't designed specifically for the Aaron Rose; he could put it on any vessel he wanted. He put the fishing reel on the Aaron Rose for the 1997 Bristol Bay salmon season, but removed it in August of 1997 before he "did halibut." He brought the reel back to Homer and placed it in storage. He didn't consider it to be part of the vessel. He stated that the Aaron Rose had been listed for sale before he had filed bankruptcy, without the reel being included as fishing gear.

Fleenor also testified that the Aaron Rose had come with a fishing reel when he purchased it in 1990, but that it had been a "junk reel." Fleenor hadn't used it much. He said it was on and off the boat. For the 1995 and 1996 salmon seasons he had just used a net box that had come with the boat, rather than the old reel. He said the Aaron Rose had also come 6 ABR 101      equipped with a power roller, which was what he had used most of the time. Before the mid-1980's, he explained, most boats had used power rollers to draw in the nets, but the trend has been to switch to reels. However, he estimated that about 1/3 of those salmon fishing in Bristol Bay still used power rollers.

According to Fleenor, with the right tools he could fit the reel he built to another boat in less than two hours. The reel is mounted on a platform that has 4 legs with rollers. The rollers were adjusted to fit existing slides on the Aaron Rose. Fleenor said all he would need to do to fit the reel to another boat would be to cut off the legs and put new ones on. The integrity of the reel itself would not be affected.

The Moores also testified at the hearing. Their testimony was consistent with Fleenor's in certain respects. Mrs. Moore stated that fishing reels, rather than power rollers, are typically used now in the Bristol Bay salmon fishery. This change in gear preference has occurred over the past 10 years. She also stated that Fleenor hadn't used a fishing reel until the last couple of years. In her opinion, the use of the reel was essential to stay competitive because it reduced labor costs on the vessel. She said there had been another reel on the Aaron Rose when Fleenor purchased it, but he had sold it. The base on the reel Fleenor had built was specifically fitted to the Aaron Rose.

Mrs. Moore has been a commercial fisherman since 1970, and fishes in the same Bristol Bay salmon fishery as Fleenor. She and her husband have owned a boat yard since 1981. They sold the Aaron Rose after obtaining the order of abandonment. She said no one wanted the boat without a reel on it, and that she personally has not sold a boat for use in Bristol Bay without a reel on it. Mr. Moore said the Aaron Rose sold in early July, 1998, and that the reel was on it at the time it was sold. He had his son remove the reel from storage and he put it on the boat. He conceded that the reel could be put on boats similar to the Aaron Rose, but said it would take considerable modification.

The Moores filed their motion to abandon the Aaron Rose on May 29, 1998. On June 18, 1998, Fleenor's attorney sent a facsimile transmission to Fleenor's fiancé, Laura Sinn, advising that an order abandoning the vessel had not yet been entered, and further stating that the Moores had no legal interest in the reel. ⁽¹⁾ The order of abandonment was entered on June 6 ABR 102      25, 1998. On July 1, 1998, Fleenor's attorney sent a facsimile transmission to the Moore's attorney regarding the Moore's efforts to acquire the 1996 fishing reel. ⁽²⁾ This transmission advised the reel was not part of the Aaron Rose, that the order of abandonment didn't include it, and that the Moores were not entitled to take it. On July 2, 1998, the Moores took the reel without Fleenor's consent. ⁽³⁾ Fleenor's motion for sanctions for violation of the automatic stay was filed on August 11, 1998.

The intent of the owner is relevant to the determination of whether an item is an appurtenance. ⁽¹⁰⁾ Additionally, even if an item was once an appurtenance, it does not necessarily remain one for all purposes. ⁽¹¹⁾ Finally, an owner of a vessel "may not pass any better title than he has, and in the event of the sale of a vessel, irrespective of the most extended use of words of inclusion, the owner cannot pass any title to articles in the ship which do not belong to him." ⁽¹²⁾

In the present case, Fleenor's testimony that he built the 1996 fishing reel at his own expense is uncontroverted. Further, he did not intend the reel to become part of the Aaron Rose. He placed the reel on the Aaron Rose for one season, and then removed it and put it in storage. It was removed from the Aaron Rose without causing any damage to the vessel or the reel. The reel could be refitted to function on other vessels. The Aaron Rose had been listed for sale prepetition without the reel being included as gear. The vessel was equipped with other gear, a power roller, which served the same purpose as the reel, although not as efficiently. Finally, Fleenor scheduled the reel as an asset separate from the Aaron Rose and claimed it exempt. All these facts support Fleenor's claim that the reel was his separate property. The Moores 6 ABR 104      did not become co-owners of the reel simply because they were co-owners of the Aaron Rose.

Fleenor committed the use of the reel to the Aaron Rose for the 1997 Bristol Bay salmon season. While the reel was on the boat, it could be considered an appurtenance for purposes of a maritime lien or forfeiture. This does not alter the fact that the reel was Fleenor's personal property, however. The Moores did not become entitled to the reel simply because Fleenor placed it on the boat for one season.

I conclude that the reel belonged to Fleenor and was not an appurtenance of theAaron Rose at the time the Moores moved for abandonment of the vessel. The Moore's motion for abandonment simply referred to the Aaron Rose. The appraisal attached to their motion listed several items of equipment and gear, but did not list the reel. ⁽¹³⁾ There was nothing in the motion to place the court or parties in interest on notice that the reel was to be abandoned with the vessel. The order abandoning the vessel did not include the fishing reel.

Section 362(h) of the Bankruptcy Code provides that " [ a]n individual injured by any willful violation of a stay provided by this section shall recover actual damages, including costs and attorney's fees, and, in appropriate circumstances, may recover punitive damages." As noted above, the fishing reel was not included in the order abandoning the Aaron Rose to the Moores. Further, the Moores were on notice before they took the reel that Fleenor disputed their right to it. They have, therefore, willfully violated the automatic stay. ⁽¹⁴⁾ Their honest belief that the reel was an appurtenance of the vessel will not preclude their liability under § 362(h).

A "willful violation" does not require a specific intent to violate the automatic stay. Rather, the statute provides for damages upon a finding that the defendant knew of the automatic stay and that the defendant's actions which violated the stay were intentional. Whether the party believes in good faith that it had a right to the property is not relevant to whether the act was "willful" or 6 ABR 105      whether compensation must be awarded. ⁽¹⁵⁾

Fleenor has asked for actual damages of $1,000.00 for intentional infliction of emotional distress. The record does not support his claim of emotional distress. However, Fleenor scheduled the reel as having a value of $1,000.00. The reel cannot be recovered; the Moores have sold it, with the Aaron Rose, to a third party. Accordingly, Fleenor's request for actual damages will be granted in the sum of $1,000.00 based on the scheduled value of the reel. Fleenor has also requested an award of $10,000.00 in punitive damages and his actual attorney's fees. Punitive damages for willful violation of the stay should only be awarded "in appropriate circumstances" upon a showing of "reckless or callous disregard for the law or rights of others." ⁽¹⁶⁾The circumstances of this case do not justify an award of punitive damages. The Moores obtained an order of abandonment from this court and legitimately believed they were entitled to take the reel under authority of that order. There is no evidence that they forced entry or made threats to obtain the reel. The reel was acquired by Mr. Moore without damage to person or property when both Fleenor and Mrs. Moore were fishing in Bristol Bay. No punitive damages will be awarded. Fleenor will be awarded his costs and actual attorney's fees, however.

For the foregoing reasons, Fleenor's motion for sanctions for violation of the automatic stay will be granted. Fleenor is awarded actual damages of $1,000.00 plus his costs and actual attorney's fees. Mr. Yerbich will be given 15 days within which to file an itemized statement of the fees and costs which have been incurred by the debtor in connection with the Moore's violation of the stay. The Moores will have 10 days within which to file any objections to the statement. The matter will thereafter be deemed submitted and an order determining the amount of fees and costs to be awarded will be issued.

DATED: March 10, 1999.

BY THE COURT
DONALD MacDONALD IV
United States Bankruptcy Judge

1. 6 ABR 101      See Attachments to Motion for Sanctions for Violation of Automatic Stay, filed August 11, 1998 [Docket No. 25].

2. 6 ABR 102      Id.

3. 6 ABR 102      Id.

4. 6 ABR 102      70 Am. Jur. 2d, Shipping § 154 at 558-59 (1987).

5. 6 ABR 102      Id.; United States v. F/V Golden Dawn, 222 F.Supp. 186, 188 (E.D.N.Y. 1963); The Frolic, 148 F. 921, 922 (D.R.I. 1906).

6. 6 ABR 102      Oceanic Fisheries, Inc. v. The John Michael, 97 F.Supp. 305, 307 (W.D. Wash. 1951)[tank cleaners which were on a tug but were used primarily for cleaning fish oil out of the tanks at the end of the voyage, and were not necessary to the purpose of the voyage itself, were not appurtenances].

7. 6 ABR 102      Kesselring v. F/T Arctic Hero, 30 F.3d 1123, 1125-26 (9th Cir. 1994); Golden Dawn, 222 F.Supp. at 188-189.

8. 6 ABR 102      Arctic Hero, 30 F.3d at 1125-26; Payne v. S S Tropic Breeze, 274 F.Supp 324, 329-30 (D.P.R. 1967); rev'd on other grounds, 412 F.2d 707 (1st Cir. 1969)[cement loading bagging and discharging equipment owned by vessel charterer but installed on vessel and necessary for the purpose of the voyage at time maritime lien arose was subject to that lien] Turner v. United States, 27 F.2d 134, 136 (2nd Cir. 1928)[refrigerating plant installed on a vessel and necessary to its operation as a refrigerating vessel was subject to maritime lien notwithstanding the fact that it belonged to the charterer rather than the vessel owner] The Frolic, 148 F. at 923-24 [chronometer leased for specific purpose of voyage to Labrador was appurtenant to vessel and subject to forfeiture even though owned by a third party].

9. 6 ABR 103      Arctic Hero, 30 F.3d at 1126; Golden Dawn, 222 F.Supp. 188-89 [leased fishfinder not appurtenance of vessel subject to mortgage lien, even though the equipment was commonly used on such vessels and used to further the particular objective of the vessel].

10. 6 ABR 103      Stewart & Stevenson Serv. Inc. v. M/V Chris Way MacMillan, 890 F.Supp. 552, 562 (N.D.Miss. 1995); 2 Benedict on Admiralty § 32.b (1998).

11. 6 ABR 103      Chris Way, 890 F.Supp. at 563-64 [old engines which had been removed from vessel after salvage and not intended to be placed back on vessel once decision had been made to restore it were no longer appurtenances] Fox v. Taylor Diving & Salvage Co., 694 F.2d 1349, 1357 (5th Cir. 1983)[equipment which was in dry dock at time of accident of vessel was not an appurtenance for purposes of warranty of seaworthiness; equipment had to have been in use in the functioning of the vessel at the time of the accident to be considered appurtenant].

12. 6 ABR 103      1 Benedict on Admiralty § 167 at 10-15 (1998); see also S S Tropic Breeze, 274 F.Supp. at 329 [if the controversy had been exclusively between the owner and the charterer, rather than the scope of a maritime lien, the charterer would have an absolute right to the leased equipment] The Frolic, 148 F. at 922 [personal property provided by an employee might be considered appurtenant to the individual rather than the vessel].

13. 6 ABR 104      The reel is a large piece of equipment which sits on the vessel deck. See Moore's Ex. 1. If it were missing from a vessel, it would be obvious.

14. 6 ABR 104      The Moores have suggested that the reel is not property of the estate and that Fleenor should be required to file an adversary proceeding under Fed. R. Bankr. P. 7001 in order to assert his interest in it. This argument is unpersuasive, and contradicts the Moore's primary position, which is that the reel was appurtenant to the Aaron Rose, unquestionably an asset of the estate, and thus encompassed in the order abandoning property of the estate.

15. 6 ABR 105      In re Pinkstaff, 974 F.2d 113, 115 (9th Cir. 1992), citing Goichman v. Bloom (In re Bloom), 875 F.2d 224, 227 (9th Cir. 1989).

16. 6 ABR 105      Goichman v. Bloom (In re Bloom), 875 F.2d 224, 228 (9th Cir. 1989).