                                                            FILED
                                                             MAR 26 2014
 1                          NO FO PUBL A IO
                              T R     IC T N
                                                         SUSAN M. SPRAUL, CLERK
                                                           U.S. BKCY. APP. PANEL
 2                                                         OF THE NINTH CIRCUIT
                    UNITED STATES BANKRUPTCY APPELLATE PANEL
 3
                              OF THE NINTH CIRCUIT
 4
 5   In re:                        )       BAP No.    CC-13-1414-KuPaTa
                                   )
 6   THOMAS WESLEY WALLACE,        )       Bk. No.    13-22160
                                   )
 7                  Debtor.        )
     ______________________________)
 8                                 )
     THOMAS WESLEY WALLACE,        )
 9                                 )
                    Appellant,     )
10                                 )
     v.                            )       MEMORANDUM*
11                                 )
     CARCREDIT AUTO GROUP, INC.,   )
12                                 )
                    Appellee.      )
13   ______________________________)
14                  Argued and Submitted on February 20, 2014
                             at Pasadena, California
15
                             Filed – March 26, 2014
16
              Appeal from the United States Bankruptcy Court
17                for the Central District of California
18       Honorable Richard M. Neiter, Bankruptcy Judge, Presiding
19
     Appearances:      Brian L. Dobrin argued for appellant Thomas Wesley
20                     Wallace; Ryan N. English of the English Law
                       Corporation argued for appellee Carcredit Auto
21                     Group, Inc.
22
     Before: KURTZ, PAPPAS and TAYLOR, Bankruptcy Judges.
23
24
25
26        *
           This disposition is not appropriate for publication.
27   Although it may be cited for whatever persuasive value it may
     have (see Fed. R. App. P. 32.1), it has no precedential value.
28   See 9th Cir. BAP Rule 8013-1.
 1                              INTRODUCTION
 2        Debtor Thomas Wesley Wallace filed a motion seeking damages
 3   against creditor Carcredit Auto Group, Inc. for violation of the
 4   automatic stay.   The bankruptcy court denied the motion and, in
 5   the same order, sua sponte annulled the stay so as to
 6   retroactively validate Carcredit’s postpetition repossession of
 7   Wallace’s vehicle.   According to the court, Wallace did not prove
 8   that Carcredit’s stay violation was willful or that Wallace
 9   suffered actual damages as a result of the stay violation.    In
10   addition, the court determined that annulment was appropriate
11   because Wallace had not provided proof of insurance or any
12   assurance of his future performance of the obligations he owed to
13   Carcredit.
14        The bankruptcy court’s findings regarding Carcredit’s
15   willfulness and Wallace’s damages were clearly erroneous.
16   Moreover, the bankruptcy court improperly annulled the stay
17   without giving the parties an opportunity to develop the record
18   regarding the equities of their respective positions on stay
19   annulment.   Accordingly, we REVERSE the bankruptcy court’s order,
20   and we REMAND for a new damages determination, including
21   Wallace’s reasonable attorney’s fees.
22                                   FACTS
23        Wallace commenced his bankruptcy case on May 8, 2013, by
24   filing a chapter 71 petition.   Shortly before filing for
25   bankruptcy, on March 6, 2013, Wallace purchased an automobile
26
27
          1
           Unless specified otherwise, all chapter and section
28   references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532.

                                       2
 1   from Carcredit.    In exchange for the automobile, Wallace agreed
 2   to make a downpayment of $1,000 and forty-eight monthly payments
 3   of $310.08.
 4          Carcredit apparently permitted Wallace to take possession of
 5   the vehicle without first requiring him to submit proof of
 6   insurance, or to pay the full $1,000 downpayment.    Instead, under
 7   the installment sales contract between Carcredit and Wallace,
 8   Carcredit agreed to let Wallace pay the downpayment in three
 9   installments.    At the time of the sale, Wallace paid $372.
10   Wallace was supposed to pay the remaining $628 balance in two
11   equal installments of $314, on March 20, 2013, and April 5, 2013,
12   respectively.    According to Carcredit, the credit card that
13   Wallace used to tender the March 20, 2013 payment was declined.
14   On March 29, 2013, Wallace paid $300 in cash towards the
15   downpayment, but he never paid the remaining balance of the
16   downpayment nor any of the regular monthly payments.
17          Meanwhile, Carcredit assigned its rights under the
18   installment sales contract to Gold Acceptance Automobile
19   Financial Services.    But the assignment agreement between Gold
20   and Carcredit required Carcredit to “repurchase” the installment
21   sales contract upon Wallace’s default, which Carcredit apparently
22   did.    Wallace’s bankruptcy schedules listed Gold as a creditor,
23   but not Carcredit.
24          After Wallace commenced his bankruptcy case, Gold sent
25   Wallace’s bankruptcy counsel a letter on May 30, 2013, offering
26   to enter into a reaffirmation agreement and assuring counsel that
27   Gold would not take any actions in violation of the automatic
28   stay.    This letter further stated that Gold had “advised

                                       3
 1   [Carcredit] on 5/29 and again on 5/30 to not make any direct
 2   communications with [Wallace]” on account of the bankruptcy
 3   filing.
 4          Nonetheless, on June 4, 2013, Carcredit repossessed the
 5   automobile from Wallace.    One day later, on June 5, 2013,
 6   Wallace’s counsel faxed Carcredit a letter advising Carcredit of
 7   the bankruptcy filing, asserting that the repossession violated
 8   the automatic stay, demanding that Carcredit immediately return
 9   possession of the automobile to Wallace and, if Carcredit did not
10   comply with counsel’s demand, threatening to file a motion in the
11   bankruptcy court seeking damages based on Carcredit’s stay
12   violation.
13          On June 6, 2013, Carcredit’s counsel sent a letter to
14   Wallace claiming that Carcredit was not aware of Wallace’s
15   bankruptcy filing until June 5, 2013, the day after repossession,
16   thereby denying that Gold had advised Carcredit of the bankruptcy
17   filing before the repossession occurred.    Carcredit further
18   stated that it intended to contact the bankruptcy trustee to seek
19   the trustee’s opinion regarding the proper disposition of the
20   car.
21          Wallace remained adamant in his demand for return of the
22   automobile.    That same day, June 6, 2013, Wallace sent Carcredit
23   a fax letter again informing Carcredit that it had violated the
24   stay by repossessing the automobile, that it was obligated to
25   remedy the stay violation by immediately returning possession of
26   the vehicle, and that Wallace would be filing a motion seeking
27   damages and other relief based on Carcredit’s continuing stay
28   violation.

                                       4
 1        On June 12, 2013, Wallace filed a motion for damages against
 2   Carcredit for violation of the automatic stay, seeking $45 per
 3   day in actual damages, plus an estimated $2,500 in attorney’s
 4   fees and $10,000 in punitive damages.   The damages motion also
 5   sought return of the automobile and Wallace’s personal
 6   possessions that were in the vehicle at the time of Carcredit’s
 7   repossession.   Wallace’s damages claim was based on the court’s
 8   contempt power under § 105(a) and, alternately, on § 362(k).    In
 9   support of his damages claim, Wallace relied on his own
10   declaration and the declaration of his counsel.   But the evidence
11   regarding damages was thin at best.    The following paragraph from
12   the declaration of Wallace’s counsel is the only evidence that
13   Wallace submitted directly addressing damages:
14        My regular billing rate is $300 an hour. I spent one
          hour speaking with CarCredit, Mr. English, Christine,
15        writing the attached letters and reading the letter
          from Mr. English. I spent three hours researching and
16        drafting this motion. I expect to spend another four
          hours writing a Reply, and to travel to and from Court
17        to appear at the hearing on this motion, for a total of
          8 hours of attorney time, or $2,400.00 plus the cost of
18        parking and the filing fee for this motion.
19   Dobrin Decl. (June 12, 2013) at ¶ 8.
20        Wallace sought and obtained an order from the bankruptcy
21   court setting a hearing on the damages motion on shortened
22   notice.    Wallace then served notice of the motion and the hearing
23   on Carcredit and its counsel, and Carcredit responded by filing
24   two declarations, one from its president and another from its
25   counsel.   In these declarations, Carcredit once again denied
26   having any notice or knowledge of Wallace’s bankruptcy filing
27   before it repossessed the automobile on June 4, 2013.    But
28   Carcredit once again admitted that Wallace’s counsel notified it

                                       5
 1   of the bankruptcy filing on June 5, 2013.    According to
 2   Carcredit, on June 26, 2013, after it received notice of
 3   Wallace’s motion, it offered to permit Wallace to retrieve the
 4   vehicle, provided that Wallace supplied Carcredit with proof of
 5   insurance naming Carcredit as loss payee.
 6        The initial hearing on Wallace’s damages motion occurred on
 7   July 2, 2013.   At the hearing, the bankruptcy court questioned
 8   Wallace’s counsel regarding what Wallace really wanted to achieve
 9   by way of the motion.   Wallace’s counsel responded that Wallace
10   wanted to recover possession of the automobile.    Wallace’s
11   counsel further pointed out that there was no dispute that, on
12   and after June 5, 2013, Carcredit knew of the bankruptcy filing
13   but failed to return the car.
14        The court did not find these facts compelling.    Instead, the
15   court focused on Wallace’s financial ability to cure the default
16   on the installment sales contract and to make payments due under
17   the contract.   As the court put it, getting the vehicle back
18   temporarily would not solve Wallace’s underlying transportation
19   problem.   Only redeeming the contract or reaffirming it would
20   permit Wallace to keep the automobile.   The court furthermore
21   indicated that it would not rule in Wallace’s favor on any
22   damages claim for violation of the automatic stay unless Wallace
23   proved his ability to pay for the vehicle:
24        THE COURT: Well, whether there's a violation of the
          stay or not, what are you -- supposing there is a
25        violation of the stay. But for your seeking sanctions,
          that wouldn't resolve the problem, would it? Your
26        client still wouldn't have the car.
27        MR. DOBRIN: Well, I did request that you order that the
          car be returned as well.
28

                                      6
 1        THE COURT: But, that's only half of the remedy.
          The other half is how does your client pay for the car.
 2
          MR. DOBRIN: The remedy to my client, or to the
 3        creditor?
 4        THE COURT: The remedy of the problem. I don't intend to
          solve this only half way today. Either your client is
 5        going to pay for the car and convince me how he can pay
          for the car, and then I'll rule on the sanctions order,
 6        or he won't.
 7
     Hr’g Tr. (July 2, 2013) at 4:19-5:9 (emphasis added).     The court
 8
     continued the hearing on the motion to allow Wallace an
 9
     opportunity to present evidence on his ability to pay for the
10
     automobile under the terms of the installment sale contract.
11
          On July 15, 2013, the day before the continued hearing on
12
     the damages motion, the bankruptcy court issued a tentative
13
     ruling in favor of Carcredit and against Wallace.     Among other
14
     things, the court noted that Wallace had not provided evidence of
15
     insurance or any assurance that he was financially capable of
16
     performing in compliance with the terms of the installment sales
17
     contract.     Based on this lack of evidence, the court stated that
18
     it was prepared to annul the automatic stay.     The court further
19
     noted that it was not clear whether Carcredit had notice of the
20
     bankruptcy filing before it repossessed the vehicle on June 4,
21
     2013.     Based on these circumstances, the court concluded that
22
     Carcredit did not willfully violate the stay and that Wallace had
23
     not proven that he had incurred any actual damages.2
24
25        2
              The full text of the tentative ruling is as follows:
26
          While the repossession of the vehicle is a violation of
27        the automatic stay under 11 U.S.C. § 362(a), it is not
          clear that CarCredit had notice of Debtor’s bankruptcy
28                                                         continue...

                                        7
 1        At the second hearing, Wallace’s counsel attempted to
 2   persuade the bankruptcy court that the facts were sufficient to
 3   demonstrate a willful stay violation and Wallace’s entitlement to
 4   a damages award.   But the bankruptcy court was unpersuaded.   In
 5   essence, the court held that the automatic stay did not require
 6   Carcredit to return the repossessed vehicle unless Wallace
 7   tendered proof that Carcredit’s interest in the vehicle was
 8   adequately protected.   According to the court, in order to
 9   demonstrate adequate protection, Wallace should have provided
10   proof of insurance and demonstrated his willingness and ability
11   to cure the payment default under the installment sales contract,
12   but he failed to do either.
13        Wallace’s counsel also advised the court that his client, in
14   the interim, had obtained another automobile to use, so he no
15
          2
16         ...continue
          filing and the stay on or before 6/4/2013, the day
17        CarCredit repossessed the vehicle. CarCredit declares
          that it did not have notice of Debtor’s bankruptcy
18        filing until 6/5/2013 and Debtor relies on a letter
19        from the attorney of Gold Acceptance that does not
          expressly state that notice was given to CarCredit
20        prior to the repossession. Furthermore, in In re
          Fitch, 217 B.R. 286, 291 (Bankr. S.D. Cal. 1998), the
21        bankruptcy court found that a demand for proof of
          insurance in exchange for return of the vehicle is a
22
          valid request. At the prior hearing, the Court
23        inquired of Debtor’s counsel to provide proof of
          insurance and an indication that Debtor can cure the
24        delinquency and reaffirm the agreement (e.g., the
          agreement will not be an undue burden on Debtor).
25        Debtor has not provided such adequate assurances of
26        future performance. Absent such evidence, the Court
          will annul the automatic stay. Furthermore, based on
27        the foregoing, the Court finds no willful violation of
          the automatic stay by CarCredit nor evidence of actual
28        damages to Debtor.

                                      8
 1   longer wanted the automobile that Carcredit had repossessed.
 2   Based on this information, the bankuptcy court ruled that all of
 3   the attorney’s fees that Wallace incurred in attempting to
 4   recover the automobile from Carcredit were unnecessary.    The
 5   bankruptcy court concluded the hearing by explicitly adopting its
 6   tentative ruling as its final ruling on the damages motion.
 7        On August 13, 2013, the bankruptcy court entered an order
 8   denying Wallace’s damages motion and sua sponte granting
 9   Carcredit relief from stay with respect to the automobile.
10   Wallace timely filed a notice of appeal on August 26, 2013.
11                             JURISDICTION
12        The bankruptcy court had jurisdiction pursuant to 28 U.S.C.
13   §§ 1334 and 157(b)(2)(A) and (G).   We have jurisdiction under
14   28 U.S.C. § 158.
15                                ISSUES
16   1.   Did the bankruptcy court commit reversible error when it
17        found that Carcredit did not willfully violate the automatic
18        stay?
19   2.   Did the bankruptcy court properly assess Wallace’s
20        entitlement to damages under § 362(k)?
21                          STANDARDS OF REVIEW
22        The bankruptcy court’s determination that a creditor did not
23   willfully violate the automatic stay is a finding of fact we
24   review under the clearly erroneous standard.   See Sternberg v.
25   Johnston, 595 F.3d 937, 943 (9th Cir. 2010); Ozenne v. Bendon
26   (In re Ozenne), 337 B.R. 214, 218 (9th Cir. BAP 2006).    An
27   erroneous view of the law may induce the bankruptcy court to make
28   a clearly erroneous finding of fact.   Id.   A court’s findings of

                                     9
 1   fact also are clearly erroneous if they are “illogical,
 2   implausible, or without support in the record.”    Retz v. Sampson
 3   (In re Retz), 606 F.3d 1189, 1197 (9th Cir. 2010).
 4        We review the bankruptcy court’s assessment of damages under
 5   § 362(k) for an abuse of discretion.     See Sternberg, 595 F.3d at
 6   945; Eskanos & Adler, P.C. v. Leetien, 309 F.3d 1210, 1213 (9th
 7   Cir. 2002).3   We apply a two-part test to determine whether the
 8   bankruptcy court abused its discretion.     First, we review de novo
 9   whether the bankruptcy court selected the correct legal standard
10   to apply.   Hinkson, 585 F.3d at 1261–63.   And second, if the
11   bankruptcy court selected the correct legal standard, we consider
12   whether the court's findings and its application of those
13   findings to the correct legal standard were illogical,
14   implausible or without support in the record.    Id. at 1262.
15                               DISCUSSION
16        To award damages under § 362(k) for violation of the
17   automatic stay, the bankruptcy court must find that the creditor
18   willfully violated the stay.   See Knupfer v. Lindblade
19   (In re Dyer), 322 F.3d 1178, 1191 (9th Cir. 2003) (citing
20   Pinkstaff v. United States (In re Pinkstaff), 974 F.2d 113, 115
21   (9th Cir. 1992)).   And to find a willful stay violation, the
22   bankruptcy court must conclude that the creditor knew of the
23   bankruptcy filing and intended the actions that violated the
24
25        3
           The Bankruptcy Abuse Prevention and Consumer Protection Act
26   of 2005, Pub.L. 109–8, 119 Stat. 23, revised and renumbered § 362
     such that the provisions concerning damages for violation of the
27   automatic stay, formerly contained in § 362(h), were moved to
     § 362(k). See Mwangi v. Wells Fargo Bank, N.A. (In re Mwangi),
28   432 B.R. 812, 822 n.7 (9th Cir. BAP 2010).

                                     10
 1   stay.    See id.
 2        The bankruptcy court here acknowledged that Carcredit’s
 3   repossession of the automobile constituted a technical violation
 4   of the automatic stay.   However, the bankruptcy court found that
 5   Carcredit did not willfully violate the stay by repossessing the
 6   vehicle.    According to the court, Carcredit did not have notice
 7   of the bankruptcy filing until June 5, 2013, the day after it
 8   repossessed the vehicle.   Therefore, the court inferred, the
 9   repossession was not a willful stay violation.
10        As far as it goes, this finding is unobjectionable.
11   However, in making this finding, the bankruptcy court ignored
12   Carcredit’s conduct on and after June 5, 2013.   As of June 5,
13   2013, Carcredit knew of Wallace’s bankruptcy filing, and yet
14   Carcredit never volunteered to unconditionally return the vehicle
15   to Wallace.4
16        In order to comply with the automatic stay, once it learned
17   of Wallace’s bankruptcy filing, Carcredit had an “affirmative
18   duty” to remedy its prior, inadvertent stay violation by
19   returning the automobile to Wallace.   See In re Dyer, 322 F.3d at
20   1192 (citing Cal. Employment Dev. Dep't v. Taxel (In re Del
21
          4
           The bankruptcy court found that Carcredit offered to return
22
     the vehicle to Wallace if he provided proof of insurance. The
23   only evidence we found in the record supporting this finding was
     a statement in the declaration of Carcredit’s counsel, which
24   provided: “On June 26, 2013, I left a voicemail for [Wallace’s
     counsel] advising him that his client could retrieve the vehicle
25   but wanted proof of insurance naming Carcredit as loss-payee.”
26   English Decl. (June 27, 2013) at ¶ 4. There is no evidence in
     the record that Carcredit was prepared to return the vehicle to
27   Wallace before that date. Moreover, as we hold infra, Carcredit
     was not entitled to condition its return of the vehicle upon
28   presentation of proof of insurance or upon any other terms.

                                      11
 1   Mission Ltd.), 98 F.3d 1147, 1155 (9th Cir. 1996)); see also
 2   Sternberg, 595 F.3d at 945 (“To comply with his ‘affirmative
 3   duty’ under the automatic stay, Sternberg needed to do what he
 4   could to relieve the violation.”).   Accord, In re Mwangi,
 5   432 B.R. at 822 (citing Abrams v. Sw. Leasing & Rental, Inc.
 6   (In re Abrams), 127 B.R. 239, 242–43 (9th Cir. BAP 1991)).
 7        Thus, Carcredit’s knowing retention of the vehicle after
 8   learning of Wallace’s bankruptcy filing was a separate and
 9   independent violation of the automatic stay.   See In re Abrams,
10   127 B.R. at 243 (citing § 362(a)(3)).   And there can be no
11   legitimate doubt here that this stay violation was willful.
12   Carcredit knew about the bankruptcy filing on and after June 5,
13   2013, and yet it never returned the vehicle to Wallace despite
14   his repeated demands.   These facts patently satisfy the test for
15   willfulness set forth in In re Dyer, 322 F.3d at 1191.
16        It is not entirely clear why the bankruptcy court did not
17   find Carcredit’s failure to return the vehicle a violation of the
18   automatic stay, willful or otherwise.   Citing In re Fitch,
19   217 B.R. 286, 291 (Bankr. S.D. Cal. 1998), the bankruptcy court
20   indicated that Carcredit was entitled to require proof of
21   insurance before returning the vehicle.   But In re Fitch is
22   inapposite.   In Fitch, the creditor lawfully repossessed the
23   vehicle prepetition, so postpetition there was no prior stay
24   violation the creditor needed to remedy by returning the vehicle.
25   Id. at 290-91.5
26
          5
27         We need not decide here whether we would follow In re Fitch
     if we were confronted with a prepetition repossession instead of
28                                                         continue...

                                     12
 1        In this case, the notion that Carcredit, which indisputably
 2   violated the automatic stay by repossessing the vehicle
 3   postpetition, could condition its efforts to rectify its stay
 4   violation upon the debtor taking certain actions, like providing
 5   proof of insurance and providing assurance of future performance,
 6   is inconsistent with the holding in In re Del Mission Ltd.,
 7   In re Mwangi and In re Abrams.   These cases stand for the
 8   proposition that creditors have a mandatory and unconditional
 9   duty under §§ 362(a)(3) and 542(a) to relinquish control of
10   estate property acquired or controlled postpetition.   See
11   In re Del Mission Ltd., 98 F.3d at 1151; In re Mwangi, 432 B.R.
12   at 823-24; In re Abrams, 127 B.R. at 242–43.
13        Alternately, the bankruptcy court held that, in light of
14   Wallace’s failure to submit proof of insurance and to demonstrate
15   his financial ability to perform under the installment sales
16   contract, cause existed for annulment of the automatic stay,
17   which retroactively validated Carcredit’s repossession and
18   retention of the vehicle.   Therefore, the court reasoned, there
19   was no stay violation in light of the retroactive effect of the
20   court’s annulment ruling.
21        As a threshold matter, this Panel has expressed doubt that
22   annulment of the stay nullifies the statutory consequences of a
23   willful stay violation for purposes of a § 362(k) claim.     See
24
25        5
           ...continue
26   a postpetition repossession. However, we note that In re Fitch
     is directly at odds with Knaus v. Concordia Lumber Co.
27   (In re Knaus), 889 F.2d 773, 775 (8th Cir. 1989), cited with
     approval in, In re Del Mission Ltd., 98 F.3d at 1151, and
28   In re Abrams, 127 B.R. at 242 & n.6.

                                      13
 1   Williams v. Levi (In re Williams), 323 B.R. 691, 702 (9th Cir.
 2   BAP 2005).   Even if a technical stay violation may be “cured” by
 3   stay annulment, the continuing stay violation evident herein was
 4   decidedly not a mere technical stay violation.   Rather, it was an
 5   overtly willful stay violation, which presumably cannot be cured
 6   by stay annulment.   See id.
 7        Even if we were to assume that the statutory consequences of
 8   a willful stay violation could be nullified by annulment of the
 9   stay, the bankruptcy court erred when it annulled the stay sua
10   sponte, deprived the parties of an opportunity to develop the
11   record regarding the equities of their respective positions on
12   stay annulment and failed to weigh those equities.   See Gasprom,
13   Inc. v. Fateh (In re Gasprom, Inc.), 500 B.R. 598, 607-08 (9th
14   Cir. BAP 2013).   As in In re Gasprom, the bankruptcy court here
15   made no attempt to weigh anything.    It simply held, without any
16   advance warning, that Carcredit was entitled to annulment of the
17   stay because Wallace did not provide either proof of insurance or
18   any assurance of his future performance.
19        In so ruling, the bankruptcy court ignored the fact that one
20   of the key purposes of the automatic stay is to give debtors a
21   “breathing spell” from their creditors.    See Sternberg, 595 F.3d
22   at 945 (citing Goichman v. Bloom (In re Bloom), 875 F.2d 224, 226
23   (9th Cir. 1989)).    By refusing to return the vehicle to Wallace,
24   Carcredit denied Wallace even the temporary breathing space that
25   might have provided an opportunity for an orderly search for an
26   alternate means of transportation.
27        Carcredit was entitled to seek relief from stay based on
28   Wallace’s failure to provide proof of insurance and some

                                      14
 1   assurance of his future performance, but Carcredit never filed a
 2   relief from stay motion, nor did it take any other legally
 3   permissible action to assert its rights in the vehicle once it
 4   learned of Wallace’s bankruptcy filing.    Under In re Del Mission
 5   Ltd., In re Mwangi and In re Abrams, Carcredit's retention of the
 6   vehicle repossessed in violation of the stay was not a lawful
 7   option.   Under these circumstances, we must reverse the
 8   bankruptcy court’s stay annulment ruling.    See In re Gasprom,
 9   Inc., 500 B.R. at 607-08.
10        The bankruptcy court also found that Wallace failed to prove
11   that he incurred any actual damages as a result of Carcredit’s
12   stay violations.    According to the bankruptcy court, the
13   attorney’s fees Wallace incurred in bringing the damages motion
14   were unnecessary because Wallace ultimately agreed, by the time
15   of the second hearing, to surrender his right to possession of
16   the vehicle because he had, by that time, arranged for an
17   alternate means of transportation.
18        We are perplexed by the bankruptcy court’s damages finding.
19   The record establishes that, at the time of the first hearing,
20   Wallace did not yet have an alternate means of transportation
21   and, at that time, still sought return of the vehicle from
22   Carcredit.   It was only sometime after the first hearing, at
23   which the court announced that Wallace was not entitled to return
24   of the vehicle without proof of insurance and an assurance of
25   future performance, that Wallace obtained a different vehicle
26   from another source.    Furthermore, Wallace’s efforts to obtain
27   alternate transportation were consistent with his duty to
28   mitigate damages.    See Eskanos & Adler v. Roman (In re Roman),

                                      15
 1   283 B.R. 1, 12 (9th Cir. BAP 2002).    It does not make any sense
 2   to disallow all of Wallace’s fees on account of his successful
 3   efforts to mitigate damages.
 4          Put another way, an award of actual damages, including
 5   reasonable attorney’s fees, is mandatory under § 362(k) once the
 6   debtor establishes that the creditor willfully violated the
 7   automatic stay.    See Sternberg, 595 F.3d at 947.   The amount of
 8   attorney’s fees awarded should be limited to those that are
 9   reasonable and necessary to remediate the stay violation.      Id. at
10   949.    Here, the bankruptcy court in essence found that all of
11   Wallace’s attorney’s fees were unreasonable and unnecessary
12   because Wallace later found another means of transportation.
13   This finding was clearly erroneous.    The record establishes that,
14   before Wallace found an alternate means of transportation, his
15   counsel contacted Carcredit both by phone and in writing
16   demanding return of the vehicle and, when Carcredit did not
17   comply with these demands, counsel filed the damages motion and
18   attended the first hearing on the damages motion.    Under
19   § 362(k), the reasonable fees incurred in rendering these
20   services are recoverable as actual damages.    See id.
21          On remand, the bankruptcy court, at a minimum, must
22   determine the amount of attorney’s fees Wallace reasonably
23   incurred, before finding another means of transportation, in
24   attempting to recover the vehicle from Carcredit.    See generally
25   In re Roman, 283 B.R. at 11 (utilizing § 330(a) standards for
26   determining reasonable professional compensation as a guide for
27   awarding attorney’s fees under § 362(h)).    Wallace also is
28   entitled to consideration of his punitive damages claim on

                                      16
 1   remand, although we express no opinion as to what amount of
 2   punitive damages, if any, should be awarded.   See generally
 3   In re Bloom, 875 F.2d at 227-28 (reviewing punitive damages
 4   award); In re Daniels, 316 B.R. 342, 355-57 (Bankr. D. Idaho
 5   2004) (discussing punitive damages standards).6
 6                              CONCLUSION
 7        For the reasons set forth above, we REVERSE the bankruptcy
 8   court’s order denying Wallace’s damages motion and granting
 9   Carcredit retroactive relief from the automatic stay, and we
10   REMAND for further proceedings consistent with this decision.
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
          6
26         In the alternative, Wallace sought civil contempt sanctions
     against Carcredit under § 105(a) based on Carcredit’s willful
27   violation of the automatic stay. In light of our analysis and
     disposition of this appeal, we decline to address Wallace’s
28   alternate ground for relief.

                                    17
