N.D. Ohio on Split of Authority Re Available Damages under § 362(a) of the Bankruptcy Code

Per U.S. v. Harchar, --- F.Supp.2d ----, 2005 WL 2653643 (N.D. Ohio Sep. 28, 2005):

Under § 362(a) of the Bankruptcy Code, the filing of a petition for bankruptcy creates an automatic stay which precludes all debt collection efforts outside the bankruptcy proceedings. 11 U.S.C. § 362(a). The § 362(a) automatic stay is enforced by a separate provision, at issue in this case, that requires courts to award "actual damages, including costs and attorneys' fees," as well as punitive damages under appropriate circumstances, to individuals injured by a creditor's "willful violation of a stay." 11 U.S.C. § 362(h). The issue in this appeal, one in which the United States is the creditor, is whether § 362(h) authorizes compensation for injuries such as emotional distress.

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The arguments made by the parties echo the analysis employed by different federal circuit courts of appeal resulting in a split of authority on the issue of what damages are authorized under § 362(h). Importantly, the circuit courts of appeals that have considered the issue agree that "actual damages" as used in § 362(h) is subject to different interpretations. See Dawson v. Washington Mutual Bank (In re Dawson), 390 F.3d 1139, 1146 (9th Cir.2004) (hereinafter Dawson II ) ("Even after examining the text and context of § 362(h), however, its meaning remains ambiguous."); e .g., Aiello v. Providian Fin'l. Corp., 239 F.3d 876, 879 (7th Cir.2001). Having agreed that § 362(h) is ambiguous, the split of authority concerns the differing interpretations of the ambiguous terms. While the Sixth Circuit has construed the term "willful" under § 362(h), it has not yet construed the terms at issue here.

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Because neither the Sixth Circuit Court of Appeals nor the district courts within the Sixth Circuit have construed § 362(h), it is a matter of first impression within this circuit. Based upon the Sixth Circuit's careful adherence to the rules of statutory construction set forth by the United States Supreme Court, this Court disagrees with Dawson II and joins the Seventh Circuit in construing § 362(h) as authorizing compensation for only tangible/economic injuries.