## Facts

- Toni B. Hampton bought a 1988 Chrysler from Yam’s Choice Plus Autos, Inc. on credit; Yam’s held a perfected lien.
- The vehicle included a PayTeck starter-interrupt device that required entry of a periodic code to start the car; the debtor had to obtain codes from Yam’s.
- Hampton filed Chapter 13 bankruptcy on October 8, 2002; her plan was confirmed December 16, 2002, and she made plan payments.
- After the bankruptcy filing, Hampton experienced recurring inability to start the car, asserted that Yam’s provided incorrect or ineffective codes, and claimed she could not reliably use the vehicle.
- Yam’s contended the problems were due to debtor misunderstanding or inadvertent employee error, not an attempt to coerce payment.
- Hampton brought an adversary proceeding seeking damages for violation of the automatic stay under 11 U.S.C. § 362(h) (now § 362(k)).

## Issues

1. Whether Yam’s postpetition administration of the PayTeck device—requiring monthly codes and allegedly providing codes that disabled the vehicle—constituted an act to exercise control over estate property in violation of 11 U.S.C. § 362(a).
2. If so, whether the conduct was a willful stay violation under § 362(h), entitling Hampton to actual damages (including attorney’s fees), and whether punitive damages were warranted.

## Decision

- The court held that the vehicle was property of the estate and Yam’s continued PayTeck-based control over its operability violated the automatic stay, including § 362(a)(3).
- The court found the violation willful because Yam’s had notice of the bankruptcy and intentionally continued the code-controlled system that interfered with the debtor’s use of the vehicle.
- The court awarded actual damages, including out-of-pocket losses and reasonable attorney’s fees.
- The court denied punitive damages, finding the conduct insufficiently egregious or malicious.

## Legal Principles

- An act that conditions a debtor’s postpetition use of estate property on recurring creditor permission can constitute an impermissible exercise of control over estate property under § 362(a)(3).
- A stay violation is willful under § 362(h) when the creditor knows of the bankruptcy and intentionally commits the acts that violate the stay; specific intent to violate the stay is not required.
- An individual injured by a willful stay violation is entitled to actual damages, including costs and attorney’s fees, under § 362(h) (now § 362(k)).
- Punitive damages under § 362(h) require aggravated circumstances (e.g., malicious, bad-faith, or highly reprehensible conduct) beyond a willful violation.

## Conclusion

The bankruptcy court concluded that Yam’s postpetition use of a starter-interrupt device to control the debtor’s vehicle interfered with estate property in violation of the automatic stay, that the violation was willful, and that Hampton was entitled to actual damages and attorney’s fees, but not punitive damages.


In re Hampton, 319 B.R. 163 (Bankr. E.D. Ark. 2005)