In his Law360 article “Stay Violators Now Face Strict Liability In 9th Circ.,” Attorney Steven Werth discusses the Schwartz-Tallard decision, which remedied a split in the circuits regarding the application of 11 U.S.C. §362(k). That section states that a debtor injured by a willful violation of the automatic stay “shall recover actual damages, including costs and attorneys’ fees, and, in appropriate circumstances, may recover punitive damages” in a lawsuit against a third party.”
Prior to Schwartz-Tallard, the 9th Circuit was the only Circuit in which debtor could recover attorneys’ fees incurred in remedying a stay violation up to the point where the violation ceased, but not after. Mr. Werth analyzes this decision and concludes that now that all Circuits are in alignment, 11 U.S.C. §362(k) will be interpreted in the most expansive way possible, permitting debtors to recover fees incurred throughout the litigation process and on appeal, even if the violation is remedied early in the process. Mr. Werth analyzes strategies that both parties can take to resolve their disputes favorably, given this recent change in 9th Circuit law.