## Facts

- Hubert Baker and a co-debtor financed a 1991 Nissan pickup truck through Nissan Motor Acceptance Corporation (Nissan) and fell more than two monthly payments behind.
- The debtors filed a Chapter 7 bankruptcy petition on December 30, 1993, listing the truck as property of the estate and Nissan as a secured creditor; they stated an intent to reaffirm the vehicle debt.
- On January 4, 1994, Nissan repossessed the truck without knowledge of the bankruptcy filing.
- After the repossession, debtors’ counsel notified Nissan of the bankruptcy; the bankruptcy court found Nissan had notice of the case as of January 4, 1994.
- Nissan did not return the truck after receiving notice and continued to keep possession.
- On February 23, 1994, Nissan filed a motion for relief from the automatic stay or, alternatively, for adequate protection.
- While that motion was still pending, Nissan sold the truck on March 16, 1994, asserting the stay had already been lifted.
- On June 1, 1994, without knowledge that the truck had been sold, the bankruptcy court granted Nissan’s motion for relief from stay.
- The debtors later filed an adversary proceeding alleging Nissan’s post-notice retention and sale violated the automatic stay.
- The bankruptcy court entered judgment for the debtors, awarding $23,000 in actual and punitive damages and $4,981.75 in attorneys’ fees and expenses, and gave Nissan the option to satisfy the $23,000 portion by delivering a new 1996 Nissan pickup truck (title free and clear of liens).
- Nissan appealed the bankruptcy court’s judgment to the U.S. District Court for the Northern District of Texas.

## Issues

1. Whether Nissan’s continued retention of the repossessed truck after receiving notice of the Chapter 7 filing was an “exercise of control” over property of the estate barred by 11 U.S.C. § 362(a)(3).
2. Whether Nissan’s sale of the truck while its stay-relief/adequate-protection motion was pending violated the automatic stay.
3. Whether Nissan could justify keeping the truck as a form of adequate protection, rather than turning it over under 11 U.S.C. § 542(a) and seeking protection through the bankruptcy court.
4. Whether Nissan’s conduct was “willful” under 11 U.S.C. § 362(h) (now § 362(k)), supporting an award of actual damages, punitive damages, and attorneys’ fees.

## Decision

- The district court affirmed the bankruptcy court’s judgment.
- The court agreed that Nissan violated the automatic stay by retaining the truck after notice of the bankruptcy and by selling it before obtaining stay relief.
- The court rejected Nissan’s argument that it could hold the vehicle as de facto adequate protection while pursuing stay relief.
- The court affirmed the finding of a willful stay violation and upheld the damages and fee awards, including the alternative option allowing Nissan to satisfy the $23,000 damages component by delivering a new 1996 Nissan pickup truck free and clear of liens.

## Legal Principles

- The automatic stay under 11 U.S.C. § 362 operates immediately upon filing and bars acts to obtain possession of, or exercise control over, property of the estate.
- A creditor’s continued retention of estate property after receiving notice of the bankruptcy filing constitutes an “exercise of control” prohibited by § 362(a)(3), even if the creditor initially took the property without knowledge of the filing.
- Selling estate property before obtaining court permission or effective stay relief violates the automatic stay.
- Under 11 U.S.C. § 542(a), an entity in possession of estate property generally must deliver the property (or its value) to the trustee; turnover is not conditioned on the debtor first providing adequate protection.
- 11 U.S.C. § 363(e) provides a court-supervised mechanism to request adequate protection; it does not authorize a creditor to keep estate property through self-help while awaiting a ruling.
- A stay violation is “willful” under § 362(h) when the creditor has knowledge of the bankruptcy and intentionally performs the act that violates the stay; a specific intent to violate the law is not required.
- For a willful stay violation, the bankruptcy court may award actual damages (including attorneys’ fees) and, when supported by the record, punitive damages.

## Conclusion

The district court held that once Nissan had notice of the Chapter 7 filing, it was not free to keep and dispose of the debtors’ truck while pursuing stay relief; Nissan’s post-notice retention and pre-relief sale were willful violations of the automatic stay, and the bankruptcy court’s award of damages, fees, and the alternative “new truck” satisfaction option was affirmed.


Nissan Motor Acceptance Corporation v. Baker, 239 B.R. 484 (1999)