Ms. Ward countered that her action did not violate the discharge injunction because she was protecting her equitable claim against the property. There was no question that Ward knew of the bankruptcy discharge, and that the debtor was harmed by the reopening of the Federal lawsuit because he incurred attorney’s fees. At issue was whether Ward’s action violated the discharge injunction, if so, whether that violation was willful. “Ms. Ward’s action sought not just to enforce her right in the property through specific performance or other equitable means, but also to seek affirmative monetary relief from the debtor - in other words, a legal remedy,” the court said. “The claims she brought against the debtor exceed the limited relief in equity that she could have sought without violating the discharge injunction. The fact that Ms. Ward could have brought a proceeding strictly IN REM without violating the injunction does not mean that she can also seek legal remedies against the debtor without violating the injunction. Because Ms. Ward brought the action directly against the debtor and sought affirmative monetary relief in addition to specific performance, she violated the discharge.” Because she knew of the discharge, and intended the action that violated the discharge, the court found that she willfully violated the discharge injunction. The only evidence of the debtor’s damages was his attorney’s fee of $4,469. The court found insufficient evidence of egregious behavior to warrant punitive damages and ruled that Ward was in contempt of the discharge injunction, and ordered her to pay $4,469 as a sanction.

What the ruling means is that if the reinstituted lawsuit against debtor sought only the equitable remedy of specific performance and did not ask for monetary damages, she would not have violated the discharge.

Lawrence Bautista Yang is a graduate of Georgetown University Law Center and has been in law practice for thirty + years. He specializes in bankruptcy, business and civil litigation and has handled more than four thousand successful bankruptcy cases in California. He speaks Mandarin & Fujien and looks forward to discussing your case with you personally. Please call Angie, Barbara or Jess at (626) 284-1142 for an appointment at 1000 S Fremont Ave Bldg A-1 Suite 1125 Unit 58 Alhambra, CA 91803.