Threatening criminal prosecution for nonpayment of rent properly cost a landlord $7,500 in punitive damages plus the debtor’s attorneys’ fees, the Sixth Circuit held in an unreported opinion on Sept. 30.
The case involved a woman whose rent check bounced. After she filed for bankruptcy, the landlord wrote letters to her, her lawyer and her mother, claiming he was not attempting to collect back rent; rather, the landlord said he would initiate criminal proceedings for passing a bad check.
Saying the case was the worst stay violation he had ever seen, the bankruptcy judge granted the bankrupt $7,500 in punitive damages plus attorneys’ fees. The district court upheld the award, as did the Sixth Circuit in an opinion on Sept. 30 by Circuit Judge David W. McKeague.
Affirming the lower courts’ opinions, Judge McKeague rejected the landlord’s contention that the communications fell within the criminal prosecution exception to the automatic stay in Section 362(b)(1).
Judge McKeague said the letters were not in furtherance of the “commencement or continuation of a criminal action or proceeding.” Instead, the bankruptcy judge correctly found they were a “threat whose purpose was to induce payment” and thus “ran afoul of the plain language of the automatic stay.”
At most, an individual can only report an alleged crime to governmental authorities. Writing a threatening letter was a stay violation, the district judge said.