In re: Snowden

Emotional distress damages are proper when a debtor suffers significant emotional harm, establishes the significant harm, and shows a causal connection between the harm and an automatic stay violation.

Rupanjali Snowden acquired a $575 payday loan from Check Into Cash of Washington (“CIC”). Snowden later advised CIC she was considering filing for bankruptcy, had placed a stop payment on the check securing the loan, and provided her attorney’s phone number. Snowden was advised that until she paid the loan, she must call CIC daily or CIC would begin calling Snowden’s references. Snowden made the daily call until she filed bankruptcy. Before Snowden filed for bankruptcy, CIC employees began calling Snowden at the hospital where she was employed as a nurse and cashed Snowden’s check, causing her to overdraw her bank account. As a result of the continued phone calls and the overdraft, Snowden suffered from anxiety and had difficulty concentrating. In April 2009, Snowden filed a motion for sanctions against CIC and sought a return of funds and overdraft fees as well as emotional distress and punitive damages and attorneys’ fees. Snowden requested that CIC settle the case for $25,000. CIC countered with an offer of $1,445 which Snowden refused. The bankruptcy court found that CIC had willfully violated the automatic stay and found Snowden’s emotional distress claim credible. Snowden was awarded emotional distress and punitive damages, attorneys’ fees, the loan amount and bank fees. On appeal, the Ninth Circuit held emotional distress damages are proper when a debtor suffers significant emotional harm, establishes the significant harm, and shows a causal connection between the harm and the automatic stay violation. Here, all the requisite factors were present. The panel also held that a stay violation ends when a court finds a violation of stay, not when a creditor offers a conditional partial reimbursement. AFFIRMED in part; REVERSED in part; REMANDED.