PETER BOWIE, Bankruptcy Judge
After several continuances, this matter came on regularly for hearing on debtor's motion to hold creditor Sonic Payday Ltd. in contempt and for sanctions for violation of the automatic stay of 11 U.S.C. § 362(a).
This Court has subject matter jurisdiction of the proceeding 20 pursuant to 28 U.S.C. § 1334 and General Order No. 312-D of the United States District Court for the southern District of California. This is a core proceeding under 28 U.S.C. § 157 (b) (2) (A), (0)
DISCUSSION
Sonic, through its counsel, has filed an opposition to 26 debtor's motion which addresses the merits of the motion. At the same time, Sonic purports to be reserving its "right" to contest this Court's in personam jurisdiction over it because it is an Irish company with no employees in the United States. Sonic has also noted that there is an arbitration clause in effect as between it and debtor, but has not asked the Court to examine, much less enforce such a clause. Because neither of these issues have been pressed by either side, the Court offers no opinion on them at the present time.
The underlying facts are as follows. On or about March 29, 2005 debtor applied to Sonic Payday, apparently over the internet, for a loan against a future paycheck, and assigned to Sonic the authority to draw on her account at the Bank of America for repayment of that loan on April 15, 2005. On April 14, 2005 debtor asserts by declarations that she called Sonic by phone, spoke with a representative about her account, and told the representative that she "had" filed bankruptcy so Sonic was prohibited from withdrawing money from her account to repay the loan. She declares the conversation took place at 1 p.m. on April 14.
Sonic disputes that such a call was placed to it, and argues it may have been to one of her other payday loan creditors. Debtor insists the call was with a representative of Sonic Payday who had access to her account information. After having had months to do so, debtor has not provided a copy of a relevant phone bill.
The Court need not resolve whether the debtor spoke with a representative of this creditor on April 14, 2005 at 1 p.m., as she asserts, because it is clear her bankruptcy petition had not been filed by that date and time. To the contrary, it is uncontroverted that debtor's petition was not filed until 1:46 p.m. on that day. Accordingly, there was no automatic stay in place at 1 p.m. and any inquiry by Sonic would not have disclosed the existence of any bankruptcy filing or automatic stay at that time, as her counsel acknowledged at the hearing. The courts which have considered similar instances have been consistent in recognizing that such a statement by a debtor is of no meaningful effect in terms of constituting notice of the existence of an automatic stay. See, e.g., In re Bush, 169 B.R. 34 (W.D. Va. 1994); In re Nelson, 335 B.R. 740 (Bankr. D. Kan. 2004); In re Shriver, 46 B.R. 626 (Bankr. N.D. 1985).
Counsel for Sonic seems to labor under some misunderstanding about the automatic stay and notice. First, the stay is effective upon the filing of the bankruptcy petition, without regard to whether anyone knows of its existence. Knowledge is relevant in terms of possible liability for a violation. And knowledge can arise or be attributed a number of ways, including putting a creditor on inquiry notice. Sonic seems to think it must be correctly listed in the schedules and must receive proper notice from the court about the filing. Not so. If Sonic learns of the pendency of a debtor's bankruptcy, Sonic has to freeze in owes it any money. That is not a necessary function of the debtor's schedules, or a list of the 20 largest unsecured creditors. Those may assist a creditor, but they do not absolve a creditor, once notified that a specific debtor has filed bankruptcy, from ascertaining whether they are a creditor of that debtor, knowing the debtor is protected by a stay.
Returning to the facts, at some point on April 15 Sonic Payday made demand on Bank of America to pay it $875 in two chunks of $437.50 each. In the meantime, debtor had contacted the bank, notified them of her filing, and instructed the bank not to honor the previously authorized draw by Sonic. Somehow, one chunk of $437.50 was transferred to Sonic and the other was refused. Based on the present record it is clear that at the time of the transfer from the bank to Sonic, Sonic did not have notice of the filing of debtor's bankruptcy and the concomitant automatic stay. Accordingly, there was no knowing and willful violation of the stay by the act of accomplishing the transfer of the $437.50 from debtor's account to Sonic. There was a violation of the stay, to be sure, but not one actionable at this chronological point under 11 U.S.C. § 362(h).
Later the same day, April 15, after learning of the withdrawal from the bank, debtor's counsel wrote a letter advising Sonic of the bankruptcy filing on April 14 and demanding return of the withdrawn funds by April 19. Although the mailing address on the letter was to a company in Idaho, not Ireland, the letter was faxed to Sonic Payday at a fax number that was correct for this creditor. At the hearing, Sonic acknowledged that it had finally located the fax misplaced within its system after debtor's counsel had provided a copy.
So what this motion is really about is whether Sonic violated the stay by not restoring the $437.50 to debtor's account before April 28, 2005 and, if so, what damages are appropriate. Sonic has contended that it did not learn of the bankruptcy until April 27, at which time it wrote off debtor's account. One day later, April 28, the funds were restored to debtor's account, although the Court has not been told how Sonic learned or decided it needed to do that, or when.
The case of Eskanos Adler, P.C. v. Leetien, 309 F.3d 1210 (9th Cir. 2002) is somewhat similar. There, post-petition, the creditor's collection agent filed suit against the debtor in state court, apparently not knowing of the bankruptcy. The bankruptcy court found the creditor unreasonably delayed in dismissing the complaint, having learned of the bankruptcy filing on September 6 and not dismissing until September 29. The creditor claimed the delay resulted "from problems with its process server and misplacing the case number to the state collection action." Damages of $1,000 were awarded.
On appeal, the Ninth Circuit held "that 362(a)(1) imposes an affirmative duty to discontinue post-petition collection actions." Id. at 1215. The court reviewed the lower court's findings, and appellant's contentions. In rejecting those contentious, the court noted:
Nor does it [appellant] offer any evidence that once it received notice of the bankruptcy filing, that it moved expeditiously to cure the automatic stay violation or attempt to contact Leetien informing her that it halted and discontinued its collection activity.
309 F.3d at 1215. Most appropriately, the court observed:
Eskanos continues to assert that sanctions are inappropriate because any delay in dismissal was due to problems with its process server. We disagree. Eskano's internal disorder does not excuse it from complying with the automatic stay.
Id.
The Bankruptcy Appellate Panel for the First Circuit Court of Appeals, in In re Rijos Nieves, 263 B.R. 382, 392 (2001) stated that once a creditor had notice of the pending bankruptcy, the creditor "had the burden of proving that it took steps to either prevent or reverse violations of the stay. This required the introduction of admissible evidence."
In In re Sharon, 234 B.R. 676 (6th Cir. BAP 1999), the creditor repossessed a vehicle prepetition. On the date the petition was filed, demand was made for return of the vehicle, accompanied by an offer of adequate protection. Several days later a motion was filed and the court ordered the vehicle returned. Debtor was out of possession for 11 days post-petition. The lower court found a willful violation of the stay for delaying, and awarded sanctions. The BAP affirmed.
In the instant case, Sonic has not offered any explanation of what happened to the misplaced fax of April 15; nor of how Sonic did learn of the bankruptcy on or before April 26, when it wrote off the account; nor of what caused Sonic to restore the funds to debtor's account one day later, on April 28. Without such information, the Court is unable to conclude whether Sonic acted promptly to reverse its unknowing violation of the stay on April 15.
Debtor has sought multiple forms of compensation for Sonic's violation. The Court needs additional information from the debtor and her bank about the impact of Sonic's withdrawal of the funds. The court has additional concerns raised by the bank statement provided concerning what appears to be debit card charges within a few days of the bankruptcy filing, and about the other payday loans listed on debtor's schedules.
Accordingly, before the Court can make a complete ruling on the present motion, further competent evidence is required. It would seem an evidentiary hearing on the unresolved issues would be an appropriate way to proceed. Since it is debtor's motion, if debtor elects to continue to pursue the motion, debtor's counsel should contact the Court's calendar deputy clerk to ascertain a date for such a hearing. Debtor's counsel shall be responsible for coordinating with counsel for Sonic to obtain a time estimate and to find a mutually convenient date and time for further proceedings.
IT IS SO ORDERED.