$119,000 Sanctions for Discharge Injunction Violations
The panel next addressed the
bankruptcy court’s treatment of the
telephone call evidence. Although the
motion for contempt cited only the
letters, the bankruptcy court found,
and the BAP agreed, that the motion
put Ocwen on notice that any violation
of the discharge injunction was fair
game at trial. In fact, an Ocwen
representative testified at trial that he
reviewed telephone logs, though he did
not offer any specifics at that time as
to the number of calls. It was only in its
motion for reconsideration that Ocwen
produced telephone logs indicating
that there were only thirty five calls
as opposed to the approximately one
hundred Ms. Marino testified to. The
panel agreed with the court below that
the logs were available to Ocwen at
the original trial and did not provide a
basis for reconsideration. The fact that
Ocwen failed to produce on appeal
the transcript of the reconsideration
hearing further supported affirmance.
Concluding that “Ocwen’s repeated
dunning deprived the Marinos of a fresh
start ‘unhampered by the pressure
and discouragement of pre-existing
debt,’” the panel found that the amount
of the sanctions was appropriate.
The panel considered the significant
harm suffered by the Marinos and the
evidence that the harm was caused by
Ocwen’s conduct.
The panel found, however, that the
bankruptcy erred in concluding it
lacked the power to award punitive
damages. While Ninth Circuit law does
constrain a bankruptcy court’s power to
award substantial punitive damages, it
permits an award of “relatively minor
noncompensatory fines.” The panel
reasoned that punitive damages are
equivalent to “noncompensatory fines,”
and found that the bankruptcy court had
three choices: it could have 1) awarded
relatively minor punitive damages,
2) issued a recommendation to the
district court for an award of punitive
damages, or 3) referred the matter to
the district court for criminal contempt
proceedings.
The BAP, therefore, affirmed the
sanctions against Ocwen but reversed
and remanded on the Marinos’ cross-
appeal on the punitive damages issue.
Marino BAP 9th Cir. opinion Dec 2017
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National Association of Consumer Bankruptcy Attorneys
Winter 2018
CONSUMER BANKRUPTCY JOURNAL
19