                                                                           FILED
                                                                            NOV 27 2018
                           NOT FOR PUBLICATION
                                                                        SUSAN M. SPRAUL, CLERK
                                                                          U.S. BKCY. APP. PANEL
                                                                          OF THE NINTH CIRCUIT



             UNITED STATES BANKRUPTCY APPELLATE PANEL
                       OF THE NINTH CIRCUIT

In re:                                               BAP No. CC-18-1092-SFL

MORDECHAI ORIAN and YUN RU,                          Bk. No. 9:16-bk-10514-DS

                    Debtors.

MORDECHAI ORIAN; YUN RU,

                    Appellants,

v.                                                    MEMORANDUM*

MORDEHAI ASAF; LIORA ASAF,

                    Appellees.

                   Argued and Submitted on October 25, 2018
                           at Pasadena, California

                             Filed – November 27, 2018

               Appeal from the United States Bankruptcy Court
                    for the Central District of California



         *
        This disposition is not appropriate for publication. Although it may be cited for
whatever persuasive value it may have, see Fed. R. App. P. 32.1, it has no precedential
value, see 9th Cir. BAP Rule 8024-1.
          Honorable Deborah J. Saltzman, Bankruptcy Judge, Presiding



Appearances:        William Charles Beall of Beall & Burkhardt argued for
                    appellants; Michael N. Sofris of Action Legal Team
                    argued for appellees.



Before: SPRAKER, FARIS, and LAFFERTY, Bankruptcy Judges.



                                 INTRODUCTION

      This is an appeal from an order awarding damages under § 362(k).1

The damages award consists only of attorney’s fees the debtors incurred as

a result of the willful stay violation of appellees Mordehai and Liora Asaf.

The Asafs failed to promptly dismiss a lawsuit in Hawaii state court (the

“Hawaii Action”) once they discovered that they had filed the case in

violation of the stay. The bankruptcy court disallowed over half of the

$11,322.50 in fees debtors requested and their $77.60 in expenses, stating

only that the disallowed fees and costs were “unreasonable, excessive, or

did not result from the violation.” The bankruptcy court also denied the

debtors’ request for punitive damages.

      On appeal, the debtors challenge the disallowance of their fees and

      1
        Unless specified otherwise, all chapter and section references are to the
Bankruptcy Code, 11 U.S.C. §§ 101-1532, and all “Rule” references are to the Federal
Rules of Bankruptcy Procedure. All "Civil Rule" references are to the Federal Rules of
Civil Procedure.

                                           2
expenses. While the entirety of the record suggests why the bankruptcy

court disallowed some of these fees, it does not enable us to fully

understand or meaningfully review the balance of the disallowed fees.

Because we simply cannot tell why the bankruptcy court found certain fees

not allowable, we must VACATE and REMAND for further findings.

      The debtors also challenge the bankruptcy court’s denial of punitive

damages. They do not dispute the bankruptcy court’s statement of the legal

standard for awarding punitive damages under § 362(k). Rather, they only

challenge the bankruptcy court’s finding that the debtors did not prove a

reckless or callous disregard for the law or the debtors’ rights necessary for

punitive damages. Because this finding was not clearly erroneous, we

AFFIRM the denial of punitive damages.

                                   FACTS

A.    The Debtors’ Bankruptcy Filing And The Commencement Of The
      Hawaii Action.

      The debtors commenced their bankruptcy case by filing a voluntary

chapter 11 petition in March 2016. The case was converted to chapter 7 in

September 2016. Neither the mailing matrix nor the schedules of creditors

listed the Asafs.

      Without knowledge of the bankruptcy filing, the Asafs filed the

Hawaii Action against the debtors in the Third Circuit Court for the State of

Hawaii in April 2016. The complaint sought partition, an equitable lien and


                                      3
damages regarding a parcel of agricultural property located in Captain

Cook, Hawaii. The Asafs served the summons and complaint on the

debtors in June 2016. Shortly after being served, the debtors filed a notice of

bankruptcy filing and automatic stay in the Hawaii Action. In July 2016,

the state court entered an order holding the Hawaii Action in abeyance

“pending the outcome of the bankruptcy case.” The Asafs took no further

action in the Hawaii Action after entry of that order.

B.    The Relief From Stay Proceedings.

      Roughly fourteen months later, in September 2017, the Asafs filed a

motion for relief from stay in the bankruptcy court seeking to resume the

Hawaii Action. Among other relief requested, the Asafs asked the

bankruptcy court to annul the stay with respect to the commencement of

the Hawaii Action. The Asafs asserted that annulment was appropriate

because the debtors had commenced their bankruptcy case in bad faith and

without listing the Asafs as one of their creditors. The Asafs conceded that

they commenced the Hawaii Action postpetition, but they insisted that

they were unaware of the bankruptcy filing at that time.

      The debtors opposed the relief from stay motion. They pointed out

that there was no dispute that the Hawaii Action was commenced in

violation of the stay, that the action was void, and that the Asafs learned of

the bankruptcy case shortly after the Hawaii Action was commenced. They

further noted that, in spite of their obligation to promptly remedy their stay


                                       4
violation, the Asafs waited well over a year to seek annulment of the stay.

The debtors also disputed that their bankruptcy case was filed in bad faith.

As the debtors put it, they could not have filed bankruptcy to impede the

Hawaii Action because the bankruptcy was filed before the Hawaii Action

even existed.

      On November 7, 2017, the bankruptcy court held a hearing on the

Asafs’ relief from stay motion. The bankruptcy court stated several times

that the filing of the Hawaii Action violated the stay and was void. It

specifically considered and rejected the Asafs’ request for stay annulment,

holding that the Asafs had not factually established the requisite “balance

of equities” for such relief. The court also denied the Asafs’ request for

mandatory abstention. As the bankruptcy court explained, the state court

action that was the subject of the Asafs’ abstention request was filed in

violation of the stay and was void.

      During the hearing, the debtors announced their intent to seek

contempt sanctions for the continuing stay violation if the Hawaii Action

was not dismissed. In response, the Asafs claimed that they were powerless

to dismiss the Hawaii Action because it was stayed. The bankruptcy court

did not comment on this issue.

      On November 7, 2017, the bankruptcy court entered its order

denying the relief from stay motion. The Asafs did not appeal.




                                       5
C.     The Show Cause Proceedings.

       1.     The Motion For An Order To Show Cause.

       On November 17, 2017, the debtors filed their ex parte motion

seeking an order to show cause why the Asafs should not be held in

contempt in light of their continuing violation of the stay. Even though the

motion was framed as one to show cause regarding contempt, it sought

relief under § 362(k). More specifically, the motion requested actual

damages under § 362(k) in the form of attorney’s fees and costs and also

requested punitive damages, citing the statutory language and case law

decided under that statute.2

       In his declaration in support of the motion, debtors’ counsel noted

the debtors’ demands for the dismissal of the void Hawaii Action made

during the relief from stay proceedings. Following the conclusion of the

relief from stay proceedings, counsel stated that he exchanged emails with

the Asafs’ California counsel and reiterated his demand for dismissal of the

Hawaii Action. According to the debtors’ counsel, the Asafs responded by

asserting that the debtors had no standing to enforce the automatic stay.

The debtors’ counsel replied by pointing out that Eskanos & Adler, P.C. v.



       2
        What now is designated as § 362(k) formerly was designated as § 362(h), until
Congress amended the statute in 2005 as part of its Bankruptcy Abuse Prevention and
Consumer Protection Act of 2005, Pub. L. No. 109–8, 119 Stat. 23 (“BAPCPA”). Thus,
case law decided before the enactment of BAPCPA identifies the relevant statutory
provision as § 362(h). See Hunsaker v. United States, 902 F.3d 963, 966 n.1 (9th Cir. 2018).

                                              6
Leetien, 309 F.3d 1210 (9th Cir. 2002), was inconsistent with the Asafs’

standing argument. But there was no further response to the debtors’

demand for dismissal.

      The Asafs opposed the debtors’ motion. As an initial matter, the

Asafs challenged the debtors’ right to seek ex parte relief. They also

maintained that the debtors could not recover any attorney’s fees as

§ 362(k) damages because the debtors incurred them in the process of

enforcing the automatic stay. In support of their argument, the Asafs cited

Sternberg v. Johnston, 595 F.3d 937 (9th Cir. 2010), which the Ninth Circuit

had overruled in America's Servicing Co. v. Schwartz-Tallard (In re

Schwartz-Tallard), 803 F.3d 1095, 1098-1101 (9th Cir. 2015) (en banc).

      On December 5, 2017, the bankruptcy court issued its order to show

cause why the Asafs should not be held in contempt (“OSC”). The OSC

further raised the issue of whether the Asafs should be held liable for

punitive damages and for the debtors’ attorney’s fees and costs incurred in

defending against the relief from stay motion and in bringing their motion.

      The Asafs dismissed the Hawaii Action on December 8, 2017, but

they only did so after the debtors filed their § 362(k) motion and after the

court issued its December 5, 2017 OSC.

      2.    The Show Cause Proceedings After Issuance Of The OSC.

      On December 26, 2017, the Asafs responded to the OSC. They noted

their dismissal of the Hawaii Action on December 8, 2017. They also argued


                                       7
that their actions were merely an attempt to perfect or maintain a

prepetition lien and were excepted from the automatic stay under

§ 362(b)(3). They denied that their actions willfully violated the stay and

also reiterated the attorney’s fees argument they made in their initial

response to the debtors’ motion, again relying upon the overruled Ninth

Circuit decision, Sternberg v. Johnston. The Asafs also argued that their

effort to annul the stay in the relief from stay motion was not itself a

violation of the stay, and any fees incurred by the debtors related to that

motion could not be recovered as damages under § 362(k).

      On January 2, 2018, the debtors replied to the Asafs’ OSC response.

The debtors first pointed out that the bankruptcy court previously

determined that the Hawaii Action was filed in violation of the stay. The

debtors further challenged the Asafs’ argument contending that the Hawaii

Action was well beyond the scope of the exception to the automatic stay

provided for in § 362(b)(3) to perfect, or maintain, a lien. Additionally, the

debtors reiterated that the Asafs’ stay violation had been willful because

the Asafs knew in June 2016 that the Hawaii Action had been filed

postpetition and they failed to remedy their stay violation for roughly the

next 18 months. This failure continued even after the bankruptcy court

ruled in November 2017 that the Hawaii Action was void and the debtors

had demanded dismissal of the Hawaii Action. Finally, the debtors argued

that the Asafs’ construction of Leetien and reliance on Sternberg v. Johnston


                                       8
bolstered the request for punitive damages. The debtors maintained that

the Asafs’ arguments were specious and were made to unduly increase the

costs of litigation.

      3.     The First Show Cause Hearing.

      In January 2018, the matter was reset for hearing several times in

large part because of mudslides that occurred in the Santa Barbara area. At

this same time, the matter was reassigned to a new bankruptcy judge. In

light of the reassignment, the debtors ordered and submitted the transcript

from the relief from stay hearing to facilitate the newly-assigned

bankruptcy judge’s understanding of the prior rulings with respect to the

Hawaii Action and the automatic stay.

      On February 1, 2018, the bankruptcy court held its initial hearing on

the OSC. At the outset of the hearing, the bankruptcy court granted the

debtors’ request that it take judicial notice of the relief from stay hearing

transcript. The court further stated that Judge Carroll’s findings made at

that hearing should be treated as the court’s findings “by everyone” at the

OSC hearing. The court additionally noted that Judge Carroll clearly found

that the Hawaii Action was filed in violation of the stay. The court

identified the following issues as questions that needed to be resolved: (1)

when (if ever) did the stay violation become willful; (2) when did the Asafs

comply with their duty to remedy the stay violation; and (3) assuming they




                                       9
did not timely comply, what are the damages.3

      The debtors acknowledged that their only actual damages consisted

of attorney’s fees to address the stay violation. As for punitive damages,

the debtors claimed that the specious arguments made by the Asafs, first to

support their refusal to dismiss the Hawaii Action and later to defend

against the OSC proceedings, evidenced the Asafs’ bad faith and justified a

punitive damages award.

      In response to the debtors’ comments, the Asafs in essence contended

that there was no proof that the debtors asked the Asafs’ Hawaii counsel to

dismiss the case or that it was legally possible under Hawaii law to

immediately dismiss the Hawaii Action upon demand. The Asafs next

reiterated their argument that, so long as the Hawaii Action was stayed,

they had no affirmative obligation to remedy the stay violation by

dismissing the void Hawaii Action.

      The court then ruled that the Asafs willfully violated the automatic

stay. According to the court, the mere continued existence of the Hawaii

Action was not a willful stay violation because the Hawaii Action was




      3
         Later on at the same hearing, the bankruptcy court revisited the relief from stay
findings after the Asafs questioned whether Judge Carroll ever found that there was a
stay violation. In response, the bankruptcy court noted: “I think it’s clear Judge Carroll
at the time of the relief from stay motion hearing did find that action was filed in
violation of the stay.”

                                            10
being held in abeyance by order of the Hawaii circuit court.4 However, the

court explained that the Asafs’ filing of the relief from stay motion was

evidence that the Asafs were willfully violating the automatic stay by

pursuing the action. Still, the bankruptcy court ruled that punitive

damages were not justified. As the bankruptcy court explained, punitive

damages under § 362(k) required a showing of reckless or callous disregard

for the law or the rights of others. According to the court, in its view, the

record presented did not support a finding of reckless or callous disregard.

The court concluded that the debtors were entitled to recover their fees

incurred in defending against the relief from stay motion and set the

matter for the debtors to prove up their fees and costs on March 13, 2018.

       4.     The First Order On The Asafs’ Willful Stay Violation.

       Shortly after the first hearing on the OSC, the debtors lodged a

proposed form of order. The proposed form of order incorporated by

reference the reasoning of the court given at the February 1, 2018 hearing as

its findings of fact and conclusions of law. The Asafs then filed an objection


       4
       At the final hearing on the OSC, held on March 13, 2108, the bankruptcy court
modified its finding regarding how and when the willful stay violation occurred:

       The real issue is that there were a series of findings already made by the
       Court, by Judge Carroll, regarding the Hawaii action being a violation of
       the stay, and, as I found at the last hearing, the failure to dismiss that
       action was evidence that the violation of the stay had become willful.

Hrg. Tr. (March 13, 2018) at 4:11-13.

                                           11
to the proposed form of order. The Asafs complained that it was impossible

to tell if the court meant this order to be its final act for appeal purposes.

The Asafs further objected that the proposed order contained none of the

oral findings of fact, conclusions of law, and rulings the court made at the

February 1, 2018 hearing. The Asafs insisted that the bankruptcy court’s

oral finding that they willfully violated the stay by filing the relief from

stay motion was novel. They urged the court to memorialize this finding in

writing, for appeal purposes.

      The debtors filed a short reply in support of the proposed form of

order. The debtors maintained that, by way of its oral findings and

conclusions, the court really meant the following:

      As the undersigned heard the Court, the filing of a complaint in
      Hawaii after the filing of the petition was the stay violation. The
      Asafs action in attempting to prosecute that action through the
      filing of a Motion for Relief from the Automatic Stay was clear
      evidence that the stay violation had converted to a willful
      violation, and that therefore the Debtors were entitled to relief
      under § 362(k) for all damages suffered by the Debtors on and
      after the filing of the Motion for Relief from the Automatic Stay
      on September 13, 2017.

Response to Objection to Proposed Order (Feb. 12, 2018) at 1.

      On February 27, 2018, the bankruptcy court entered its first order on

the OSC. The order specified that the Asafs were in “willful violation of the

automatic stay,” and scheduled the matter for the prove up hearing. As to

the Asafs’ objection to the form of the order, the court stated in a footnote:

                                       12
      The court has reviewed the objection to the order lodged by the
      Asafs and the Debtors’ response, and agrees with the
      arguments made in the response. The court’s finding at the
      hearing on this matter, as well as the court’s prior finding, is
      that the filing of the Hawaii action was a violation of the
      automatic stay. Continuing to prosecute that action (including
      through the filing of the motion for relief from the automatic
      stay) was evidence that the stay violation was a willful one.
      Any comment made at the hearing inconsistent with this
      finding was a misstatement.

Order After Hearing On Order To Show Cause In Re Contempt (Feb. 27,

2018) at p. 2 n.1.

      On March 3, 2018, the Asafs filed an opposition to the entered order.

They titled the opposition an objection to the court’s proposed findings of

fact and conclusions of law and request for clarification. The objection in

large part questioned the footnote the court added to the entered order.

The Asafs maintained that it was impossible to tell from the order what

actions, other than the filing of the relief from stay motion, the court

viewed as a continuation of the Hawaii Action and hence a willful violation

of the automatic stay. The Asafs characterized the hearing as a proceeding

on contempt, and argued that an evidentiary hearing was required to

determine the willfulness of the Asafs’ stay violation. The Asafs argued

that the procedures the court followed and its findings were insufficient to

support the court’s contempt finding.




                                       13
      5.    The Debtors’ Damages Prove-Up.

      To establish their damages, the debtors submitted the declaration of

their counsel William Beall. Beall generally described his billing practices,

and he attached to his declaration his billing statements covering both the

relief from stay and show cause proceedings through February 6, 2018. The

billings included fees for the relief from stay proceedings totaling $2,565,

fees for the show cause proceedings totaling $5,415, and costs for the show

cause proceedings of $77.60 for the transcript from the relief from stay

proceedings. Beall stated that the size of the bills increased largely as a

result of the Asafs’ specious arguments. Beall further indicated that some

of this increase was attributable to the January 2018 mudslides, the

resulting continuances of the first show cause hearing, and the

reassignment of the bankruptcy case from Judge Carroll to Judge Saltzman.

      On February 23, 2018, the Asafs filed an opposition to the fee prove

up declaration. The opposition raised virtually no challenge to the

reasonableness of the fees or the necessity of the services performed.

Instead, the Asafs mainly argued that only $1,686.50 of the fees related to

the OSC proceedings were compensable because the remainder were

incurred after the stay violation had been remedied by the dismissal of the

Hawaii Action. The Asafs also argued that none of the debtors’ fees

incurred in defending against the relief from stay motion were

compensable. The latter argument mostly recapped the Asafs’ contentions


                                       14
that the relief from stay motion was not, itself, a violation of the stay –

willful or otherwise.

      On February 27, 2018, the debtors filed their reply to the Asafs’

damages prove-up opposition. In relevant part, the debtors supplemented

their billings to include fees for the show cause proceedings from and after

February 6, 2018, in the total amount of $3,342.50. The debtors also

included a request for projected fees of $475 for the estimated amount of

time for the final show cause hearing.

      6.    The Final Hearing And The Damages Order.

      On March 13, 2018, the bankruptcy court held its final show cause

hearing. At the outset of the hearing, the bankruptcy court reiterated its

statement from the February 27, 2018 order that the filing of the relief from

stay motion was not a stay violation. Rather, the court explained, the

continued existence of the Hawaii Action was evidence that the stay

violation had become willful. The bankruptcy court then repeatedly asked

the parties to address the issues of the amount and reasonableness of the

fees requested. The Asafs focused their argument on why the fees for the

relief from stay proceedings were not compensable at all. They also

restated their argument that the fees for the OSC proceedings incurred

after the Hawaii Action was dismissed were not compensable. The debtors

responded directly to the arguments the Asafs made. As for the

reasonableness and amount of the fees, the debtors pointed out that the


                                       15
Asafs never specifically disputed that issue. The court then took the matter

under submission.

      On March 27, 2018, the bankruptcy court entered its order awarding

the debtors $5,415.00 in fees. The court calculated the allowed fees as

follows:

      1.    Attorney’s fees of $1,805.00 related to the Debtors’ “Ex Parte
            Motion for Order to Show Cause” . . . Docket No. 216.

      2.    Attorney’s fees of $1,045.00 after the court’s issuance of its
            “Order to Show Cause in re Contempt of Violation of 11 U.S.C.
            § 362(a)(1), (5), and (6)” (the “OSC,” Docket No. 220), for
            appearance at the OSC hearing, preparation of order and notice
            of lodgment, and preparation of declaration regarding
            damages;

      3.    Attorney’s fees of $522.50 related to a dispute over the form of
            the Contempt Order;

      4.    Attorney’s fees of $1,567.50 related to responding to the
            Respondents’ brief opposing the Debtors’ claims for damages;
            and

      5.    Attorney’s fees of $475 to attend the March 13, 2018 hearing
            regarding damages.

Order Awarding Damages (Mar. 27, 2018) at p. 3.

      The court then disallowed the remaining balance of $5,985.10

“because the fees and costs submitted are unreasonable, excessive, or did

not result from the violation.” Order Awarding Damages (Mar. 27, 2018) at

                                      16
p. 3. The order did not otherwise explain the basis for the fees allowed or

disallowed. The debtors timely filed a notice of appeal of the award of

damages for the stay violation.

                               JURISDICTION

      The bankruptcy court had jurisdiction over this matter pursuant to 28

U.S.C. § 1334 because it concerned the scope and enforcement of the

automatic stay. See Yellow Express, Inc. v. Dingley (In re Dingley), 514 B.R.

591, 597 (9th Cir. BAP 2014), aff'd on other grounds, 852 F.3d 1143 (9th Cir.

2017). We have jurisdiction under 28 U.S.C. § 158.

                                    ISSUES

1.    Did the bankruptcy court abuse its discretion when it disallowed

      $5,985.10 of the fees and costs the debtors requested?

2.    Did the bankruptcy court commit clear error when it found that the

      Asafs had not acted with reckless or callous disregard for the law or

      the debtors’ rights?

                         STANDARDS OF REVIEW

      We review for an abuse of discretion the amount of fees and costs

awarded as damages under § 362(k). Eskanos & Adler, P.C. v. Roman (In re

Roman), 283 B.R. 1, 7 (9th Cir. BAP 2002); see also In re Schwartz-Tallard, 803

F.3d at 1101 (holding that § 362(k) makes fee awards mandatory to the

extent they arise from prosecuting an action for damages under the statute,

but also holding that the amount of fees awarded is a matter subject to the


                                       17
court’s discretion).

      The bankruptcy court abuses its discretion if it applies the wrong

legal standard or its findings of fact are clearly erroneous. Olomi v. Tukhi (In

re Tukhi), 568 B.R. 107, 112-13 (9th Cir. BAP 2017) (citing United States v.

Hinkson, 585 F.3d 1247, 1261–62 (9th Cir. 2009) (en banc)). The court’s

factual findings are not clearly erroneous unless they are “(1) illogical, (2)

implausible, or (3) without support in inferences that may be drawn from

the facts in the record.” Id.

                                DISCUSSION

      Importantly, the Asafs did not appeal the bankruptcy court’s

determination that they willfully violated the automatic stay. The only

order on appeal is the award of damages, the only appellants are the

debtors, and the only issues appealed are the partial denial of the debtors’

attorney’s fees and the decision not to award punitive damages. Moreover,

while the parties and the court have referenced contempt, the underlying

motion, order, and appeal involve damages under § 362(k) only. Section

362(k) provides in relevant part that, “an individual injured by any willful

violation of a stay provided by this section shall recover actual damages,

including costs and attorneys’ fees, and, in appropriate circumstances, may

recover punitive damages.” § 362(k)(1). An award of costs and attorney’s

fees is mandatory upon a finding that the stay was willfully violated.

Though courts are statutorily authorized to award punitive damages for


                                       18
willful stay violations, the decision to do so remains committed to the

bankruptcy court’s discretion.

A.    Denial Of Attorney’s Fees.

      In aggregate, the debtors requested allowance of $11,400.10 in fees

and costs as damages, and an award of punitive damages, under § 362(k).

Of that amount, the bankruptcy court disallowed $5,985.10, and denied

punitive damages. The bankruptcy court explained that it was disallowing

this amount “because the fees and costs submitted are unreasonable,

excessive, or did not result from the violation.” Order Awarding Damages

(Mar. 27, 2018) at p. 3. The debtors challenge the amount of fees and costs

disallowed. Their argument is twofold: (1) the bankruptcy court’s finding

was insufficient; and (2) the finding was clearly erroneous.

      1.    Governing Legal Standards.

            a.    Reasonable Attorney’s Fees As An Element Of
                  Damages.

      The debtors do not dispute that the bankruptcy court applied the

correct legal standards. In In re Schwartz-Tallard, 803 F.3d at 1101, the Ninth

Circuit, sitting en banc, held that a § 362(k) damages award must include

the debtor’s reasonable attorney’s fees incurred in prosecuting an action for

damages under the statute. But Schwartz-Tallard emphasized that

bankruptcy courts have discretion over the amount of fees awarded and

that the fees must be reasonable: “Only an award of fees reasonably


                                      19
incurred is mandated by the statute; courts awarding fees under § 362(k)

thus retain the discretion to eliminate unnecessary or plainly excessive fees.

Sound exercise of this discretion will provide a sufficient check on any

abuses that might otherwise arise.” Id.

      Consequently, even though fees and costs are an element of actual

damages under § 362(k), the same principles that govern the award of

professional compensation under § 330 also guide the allowance of fees

and costs under § 362(k). In re Roman, 283 B.R. at 9-11; Sundquist v. Bank of

Am., N.A. (In re Sundquist), 566 B.R. 563, 588 (Bankr. E.D. Cal. 2017),

partially vacated on other grounds, 580 B.R. 536 (Bankr. E.D. Cal. 2018).

Hence, the reasonable value of services typically is determined by using the

“lodestar” approach and by considering the particular circumstances of

each case.5 In re Roman, 283 B.R. at 11; In re Sundquist, 566 B.R. at 594-95.

Because there was no challenge to the reasonableness of the hourly rate

billed, we focus upon the reasonableness of the hours billed.

      In the context of § 362(k), the reasonableness inquiry also must

include an examination of whether the debtor had the ability to mitigate

the amount of damages incurred and whether the debtors exercised that

ability. In re Roman, 283 B.R. at 12; In re Sundquist, 566 B.R. at 594-95. One


      5
         Under the lodestar approach, the bankruptcy court determines the reasonable
amount of fees by multiplying the number of hours reasonably spent by the reasonable
hourly rate of the professional. Law Offices of David A. Boone v. Derham–Burk (In re
Eliapo), 468 F.3d 592, 598 (9th Cir. 2006).

                                         20
way to determine whether the debtors complied with their duty to mitigate

is to consider who caused the attorney’s fees to be incurred – the debtors or

their creditor. See In re Roman, 283 B.R. at 12.

             b.     Determining Reasonableness - Discretion And
                    Methodology.

      The bankruptcy court has broad discretion in determining what

amount of fees is reasonable under the circumstances. Koncicky v. Peterson

(In re Koncicky), Appeal No. W-07-1170-MkPaJ, 2007 WL 7540997, at *3 (9th

Cir. BAP Oct. 19, 2007); see also Gates v. Deukmejian, 987 F.2d 1392, 1398 (9th

Cir. 1992) (“The district court has a great deal of discretion in determining

the reasonableness of the fee and, as a general rule, we defer to its

determination . . . .”).6 We necessarily afford considerable deference to the

bankruptcy court’s reasonableness assessment because of its first-hand

experience with the attorney’s services and performance during the course

of the bankruptcy proceedings. Thomas v. Namba (In re Thomas), Appeal No.

CC-07-1053-PaBaK, 2007 WL 7541008, at *12 (9th Cir. BAP Nov. 5, 2007)

(citing Red Carpet Corp. of Panama City Beach v. Miller (In re Red Carpet Corp.

of Panama City), 902 F.2d 883, 891–92 (11th Cir. 1990)).

      The Ninth Circuit’s decision in Leichty v. Neary (In re Strand), 375 F.3d

      6
        Both the debtors and the Asafs have cited to Gates, a federal civil rights
decision, to support their respective arguments on appeal. While the prevailing
concerns and circumstances in civil rights cases and bankruptcy cases differ somewhat,
we find Gates helpful in articulating what courts generally must do when they
determine what constitutes a reasonable award of attorney’s fees.

                                          21
854 (9th Cir. 2004), exemplifies the extent of deference we must afford the

bankruptcy court’s reasonableness determination. There, the bankruptcy

trustee’s attorney sought, in total, $34,457 in fees. Of this amount sought,

$19,065 arose from the trustee’s litigation against the Internal Revenue

Service (“IRS”). Id. at 857. The bankruptcy court only allowed half of the

IRS litigation fees sought, finding that the minimal potential benefit to the

estate from the IRS litigation did not justify the attorney’s aggressive

pursuit of this litigation. Id. at 859-61. On appeal, the Ninth Circuit upheld

the bankruptcy court’s determination and disallowance of 50% of the

attorney’s IRS-related fees. The Ninth Circuit explained that the

bankruptcy court appropriately took into account the degree of potential

benefit from the IRS litigation and reasonably determined the allowable

amount of IRS-related fees. Id.

      It is instructive to compare the Ninth Circuit analysis in In re Strand

with its analysis in Gates, where the district court allowed a discounted fee

request of the plaintiffs’ attorneys arising in a civil rights action in the

amount of $5,627,399.66. Gates, 987 F.2d at 1396. In Gates, the attorneys

voluntarily had reduced their fee request by making $108,495.80 in specific

“billing judgment” deductions and by agreeing to a 10% across-the-board

deduction. Id. at 1398. The district court held that the “lodestar amount is

reasonable and justified by ample documentation.” Id. at 1397.

Additionally, the court reasoned that the voluntary reduction


                                        22
“compensated for any overbilling or duplication the court found suggested

in the record.” Id. On the other hand, the defendants claimed that the

plaintiffs’ voluntary reduction did not adequately account for overstaffing,

lumping, use of inexperienced attorneys, duplication, and excessive

conferences amongst the attorneys. Id. at 1398.

      The Ninth Circuit again began its analysis recognizing the general

rule of deference afforded district courts in exercising their discretion as to

the reasonableness of fees. Id. The Ninth Circuit acknowledged that,

particularly in the case of voluminous billings, district courts are not

expected to allow and disallow billing entries on an item-by-item basis. Id.

at 1399-1400. Nor was the district court, under the circumstances of that

case, required to expressly reject each and every one of the defendants’

objections. Id. at 1400. The Ninth Circuit reasoned that such attention to

detail would constitute an “unnecessary expenditure of precious, and

already strained, judicial resources.” Id. Indeed, the court recognized the

utility of percentage reductions of fees in certain instances. Id.

      Nonetheless, the Ninth Circuit vacated the district court’s allowance

of the fees. Id. at 1402. The Ninth Circuit held that, in order to permit the

appellate court to conduct its review of the district court’s allowance and

disallowance of fees, the district court must provide a “concise but clear”

explanation for its fee award. Id. at 1398 (citing Hensley v. Eckerhart, 461

U.S. 424, 485 (1983)). This requires “some indication of how it arrived at


                                       23
the amount of compensable hours for which fees were awarded to allow

for meaningful appellate review.” Id. (citing Cunningham v. County of Los

Angeles, 879 F.2d 481, 485 (9th Cir. 1988)). Further explaining this

requirement, the Ninth Circuit wrote, “[a]lthough we do not require ‘an

elaborately reasoned, calculated, or worded order . . . [and] a brief

explanation of how the court arrived at its figures will do, . . . something

more than a bald, unsupported amount is necessary.’” Id. (quoting

Chalmers v. City of Los Angeles, 796 F.2d 1205, 1211 n.3 (9th Cir. 1987))

(internal citation omitted).

      According to the Ninth Circuit, the district court’s cursory statement

approving the discounted fee request, “affords us no explanation as to how

the court arrived at ten percent as the correct reduction and thus, it does

not allow for us meaningfully to assess its determination.” Id. at 1400.

      We acknowledge that Gates is a federal civil rights case involving a $5

million fee request that warranted heightened scrutiny of the fees

requested. Even so, this Panel has applied almost identical reasoning in its

bankruptcy decisions, when the bankruptcy court’s ruling did not

adequately explain the allowance and disallowance of much smaller fee

requests. See, e.g., Lobel & Opera v. United States Tr. (In re Auto Parts Club,

Inc.), 211 B.R. 29 (9th Cir. BAP 1997) ($137,033.50 in fees); In re Dutta, 175

B.R. 41 (9th Cir. BAP 1994) ($25,046.00 in fees).

      For instance, in In re Dutta, we vacated and remanded for further


                                        24
findings, where the bankruptcy court disallowed $6,502.50 of $25,046 in

requested attorney’s fees. Id. at 47-48. In disallowing these fees, the

bankruptcy court relied on a preprinted checklist form of order. Id. at 45. In

the form order, the bankruptcy court ticked off roughly half the fifteen

stated grounds for disallowing fee requests, including but not limited to

the following: “lumping of services,” “excessive phone calls with

client/others,” “excessive time spent on task,” “duplication of services,”

“necessity for service,” and “rate is in excess of prevailing local rates.” Id.

On appeal, we noted that the record did not appear to support several of

the grounds the bankruptcy court ticked off as justifying the disallowance

of fees. Id. at 46-47. We held that the bankruptcy court’s reasonableness

determination must include a “clear and concise explanation” of the fees

allowed and disallowed, citing the same Supreme Court authority the

Ninth Circuit relied on in Gates. See id. at 46 (citing Hensley, 461 U.S. at 437).

We concluded:

      While a trial court need not necessarily explain its analysis in
      terms of elaborate mathematical calculations, for example, it
      must provide sufficient insight into its exercise of discretion to
      allow an appellate court to exercise its reviewing function. In
      the absence of such a sufficient explanation, the fee award must
      be remanded to provide such an explanation.

Id.

      Meanwhile, in In re Auto Parts Club, the bankruptcy court disallowed

two thirds of the roughly $150,000 in fees and costs requested by counsel

                                        25
for the official committee of unsecured creditors. In re Auto Parts Club, Inc.,

211 B.R. at 30-31. The sole reason the bankruptcy court offered for the

disallowance concerned the lack of benefit to the estate from counsel’s

services. Id. at 34-36. The bankruptcy court explained that, once the

interested parties agreed to sell the debtor’s business, counsel should have

drastically scaled back its services in light of the fact that additional

services after that point were of little or no prospective benefit to the estate.

Id.

      As in In re Dutta, the In re Auto Parts Club panel vacated and

remanded for further findings. Id. at 36. We explained that the bankruptcy

court made no findings explaining why counsel should receive significant

reductions for services performed before agreement was reached for the

sale of the debtor’s business or why absolutely no compensation should be

allowed for services provided after the sale was agreed to. Id. Nor was it

evident from the record why the court disallowed the fees in this manner.

Id.

      In sum, Gates, In re Auto Parts Club, and In re Dutta collectively stand

for the proposition that, when the bankruptcy court determines the amount

of fees to allow and disallow, it must give a clear and concise explanation

of how it arrived at its figures. As explained below, the bankruptcy court

did not sufficiently explain why it disallowed over half of the fees

requested by the debtors’ counsel.


                                        26
       2.       Analysis Of The Amounts Allowed And Disallowed.

       Although the bankruptcy court attributed the fees it allowed to

various tasks, it did not similarly attribute the fees and costs it disallowed.

Instead, it merely stated that $5,985.10 in fees and costs were disallowed as

excessive, unreasonable or unrelated to the stay violation. Unfortunately,

neither the fees allowed or disallowed wholly match the billings submitted

by the debtors’ counsel. Therefore, we cannot tell from the face of the

court’s order which fees troubled the court or which specific grounds for

disallowance the court relied upon. That said, the bankruptcy court did

break down the allowed fees into components and provide some

identification that tracks the billing statements. Together with the

declarations of the debtors’ counsel and the parties’ statements on appeal,

we are largely able to identify which fees were allowed, and then deduce

what fees and costs were disallowed.

                a.    Fees Arising From Relief From Stay Motion.

           The debtors requested a total of $2,565.00 (incurred in September,

October and November7) for defending against the Asafs’ relief from stay

motion. Because the bankruptcy court did not attribute any of the fees it

allowed to the discrete matter involving the defense of the relief from stay


       7
         The debtors’ fees in November included more than just work on the relief from
stay motion. However, the billing statement segregated the time related to the relief
from stay motion, thereby facilitating the evaluation of the debtors’ fees with respect to
this task.

                                            27
motion, we can deduce that it disallowed these fees in their entirety.8

       Nor is the reason for that disallowance subject to legitimate dispute.

Of the three reasons the bankruptcy court gave for disallowing fees, only

the causation ground – not related to the stay violation – explains the total

disallowance of these fees. Moreover, these fees were the focus of much of

the Asafs’ arguments. The entirety of the record has given us a clear and

concise understanding of the basis for the bankruptcy court’s disallowance

of this subset of fees.

       Although the bankruptcy court originally considered the Asafs’

motion for relief from stay as evidence of their willful violation of the stay,

it ultimately disallowed all fees the debtors requested as arising from their

defense of the relief from stay motion. We agree with the bankruptcy court

that the debtors’ fees related to the relief from stay motion did not arise

from the stay violation for purposes of awarding damages under § 362(k).

It is well settled that ”[t]he automatic stay does not apply to proceedings

initiated against the debtor if the proceedings are initiated in the same


       8
         Generally speaking, Rules 7052 and 9014(c) make Civil Rule 52(a) applicable in
most adversary proceedings and contested matters. Civil Rule 52(a)(1) requires the
bankruptcy court to render factual findings. However, the Ninth Circuit has held that
Civil Rule 52(a) does not apply to motions for attorney’s fees. D'Emanuele v. Montgomery
Ward & Co., Inc., 904 F.2d 1379, 1388 (9th Cir.1990), overruled on other grounds by City of
Burlington v. Dague, 505 U.S. 557 (1992); see also In re Dutta, 175 B.R. at 47 (applying
D'Emanuele’s holding to bankruptcy court fee application proceedings). Even so, this
does not obviate the need for a “clear and concise explanation” for the bankruptcy
court’s reasonableness determination. In re Dutta, 175 B.R. at 47.

                                            28
bankruptcy court where the debtor’s bankruptcy proceedings are

pending.” Snavely v. Miller (In re Miller), 397 F.3d 726, 730 (9th Cir. 2005). In

fact, the Ninth Circuit has indicated that a timely relief from stay motion

seeking annulment is a potential remedy for a stay violation rather than a

continuation of it. See Schwartz v. United States (In re Schwartz), 954 F.2d 569,

573 (9th Cir. 1992) (“If a creditor obtains retroactive relief under section

362(d), there is no violation of the automatic stay, and whether violations of

the stay are void or voidable is not at issue.”); see also In re Biehl, Case No. 6:

13-bk-26277-MH, 2017 WL 1040941, at *3 (Bankr. C.D. Cal. Mar. 13, 2017)

(holding that a stay annulment motion is not, itself, a violation of the

automatic stay).

      The debtors’ argument on this point is short but somewhat difficult

to follow. They rely on the standard of review for factual findings – the

clearly erroneous standard – and contend that the bankruptcy court’s

determination that the relief from stay-related fees did not arise from the

stay violation was not supported by the record. The debtors’ argument

misses the point. Based on the authorities set forth above, as a matter of

law, the $2,565.00 the debtors incurred in defending against a bona fide

stay annulment motion did not arise from the stay violation.9 Accordingly,

out of the disallowed fees and costs totaling $5,985.10, we agree with the


      9
        The result might be different if the stay annulment motion lacked any factual or
legal basis.

                                           29
bankruptcy court that $2,565.00 for work related to the relief from stay

motion was not compensable under § 362(k). This leaves $3,342.50 in

disallowed fees and $77.60 in costs to examine.

               b.   Fees And Costs Incurred Regarding The Order To Show
                    Cause.

      Based upon the billing statements, the debtors’ counsel sought

additional fees for November (exclusive of the fees for relief from stay) and

December, 2017 through February 2018. The parties agree that the

remainder of the fees billed in November relate to the OSC, and were

allowed by the bankruptcy court. The billing entry descriptions match the

subject matter descriptions in the court’s order for the debtors’ motion for

the OSC. Moreover, the fees for the additional November billings tie to the

specific amount the court allowed as related to the debtors’ motion for OSC

- $1,805.00.

      The bankruptcy court also allowed $1,045.00 for “issuance of its

‘Order to Show Cause in re Contempt for Violation of 11 U.S.C. 362(a)(1),

(5), and (6)’ ... for appearance at the OSC hearing, preparation of order and

notice of lodgment, and preparation of declaration regarding damages.”

The award in the order appears to match both the substance and amount

for three of the five billing entries for the debtors’ counsel’s original

February statement (February 1-6, 2018). The two remaining entries for

this statement are both for one-tenth of an hour, totaling $95.00. The first of


                                       30
these entries is for calendaring dates, while the second entry is for an email

to the client regarding mediation. It appears that the bankruptcy court

disallowed these entries as excessive or unreasonable. The entry for

calendaring dates reasonably could be construed as non-legal work that

constitutes overhead and is not compensable as attorney fees. See In re

Nucorp Energy, Inc., 764 F.2d 655, 659 n.5 (9th Cir. 1985). As for the entry for

the email, the bankruptcy court presumably concluded that this time entry

related to mediation activities and not to the stay violation.

      The bankruptcy court next allowed $522.50 “related to a dispute over

the form of the Contempt Order.” The first three billing entries for the

second February statement, covering February 8-12, 2018, specifically relate

to this dispute and match the amount allowed. Additionally, the court

allowed attorney fees in the amount of $475.00 to attend the March 13, 2018

damages hearing. This matches the billing entry for March 13, 2018, for

$475.00 to attend the damages hearing.

      Finally, the court allowed $1,567.50 “related to responding to the

Respondents’ brief opposing the Debtors’ claims for damages.” Given the

structure of the order and the chronological progression of the other

amounts allowed, these fees appear to relate to seven billing entries

between February 23-27, 2018. However, these entries total $2,345.00.

Through a process of elimination, one can combine several of the entries to

arrive at the $1,567.50 allowed by the court. Unfortunately, there are two


                                       31
combinations of entries possible to reach this result. Unlike the other

categories, the court’s description for this component of the fees allowed

does not provide any additional insight as to which fees were disallowed.

We are unable, therefore, to conclude which fees were awarded and which

were disallowed in the second February billing statement.

      Based upon the fees specifically allowed by the bankruptcy court we

can also surmise that certain other fees were disallowed. Specifically, the

description of the allowed fees suggests that all of the billing entries for

December 2018 and January 2018 were disallowed. Unlike the fees

allowed, there is no discussion as which of the disallowed fees were

“unreasonable, excessive, or did not result from the violation.” Ultimately,

we are left to speculate as to which fees were allowed and which were

disallowed. And as to the disallowed fees, we must further speculate as to

why they were disallowed. Although the reasons that some of the fees

were disallowed appear more apparent than others, we must still

speculate. The court’s order did not provide a clear and concise statement

as to which fees were disallowed or why such fees were disallowed.

            c.    Disallowance Of Costs.

      Finally, the debtors requested reimbursement of only one expense:

the $77.60 cost of the transcript from the relief from stay hearing. Given the

specific amounts the bankruptcy court allowed and the balance disallowed,

the bankruptcy court must have disallowed this cost. It is unclear why the


                                       32
bankruptcy court did so. On this record, this cost seems neither excessive

nor unreasonable. Clearly, the ordering and submission of the transcript

was related to the OSC proceedings and played an integral role at the

February 1, 2018 show cause hearing. During that hearing, the bankruptcy

court twice referred to the findings made at the relief from stay hearing

that the Hawaii Action was filed in violation of the stay and was void. In

addition, the transcript evidenced the debtors’ demand, made in open

court, for the dismissal of the Hawaii Action. If the Asafs harbored any

doubt about the status of the Hawaii Action as a continuing stay violation

and the need to fully dispose of it, that doubt must have ended at the time

of the relief from stay hearing. The hearing transcript made this clear. The

utility of this transcript was bolstered by the fact that different judges

presided over the relief from stay proceedings and the show cause

proceedings.

      That being said, we ultimately are left to speculate why the

bankruptcy court disallowed the transcript cost. Because we must remand

for further findings on the remaining unallocated portions of the

disallowed fees, the bankruptcy court may amend its findings in relation to

denial of this cost (in case we have misconstrued the basis for the

bankruptcy court’s disallowance), or the court may reconsider the

disallowance of this cost if it chooses to do so.




                                       33
            d.     Closing Remarks On Analysis Of Fees Disallowed.

      While the record suggests much of the court’s reasoning, it does not

enable us to understand all of it. Accordingly, we conclude that the court’s

findings were not sufficiently clear and concise to permit meaningful

appellate review. Although the fees relating to the motion for relief from

stay present a discrete subset, and the record supports denial of those fees,

because we must remand this matter for further explanation we are not

inclined to sever one component. Rather, we will remand the totality of the

matter in the hope of avoiding any further confusion. On remand, the

bankruptcy court on further consideration may do any of the following:

(1) provide further explanation why the subject fees were excessive,

unreasonable, or unrelated to the stay violation; (2) provide an alternate or

different basis for their disallowance (e.g., failure to mitigate); or

(3) reconsider the allowance or disallowance of those fees.

      3.    Denial Of Punitive Damages.

      Section 362(k) specifically provides for the award of punitive

damages in “appropriate circumstances.” The bankruptcy court relied

upon established Ninth Circuit law holding that punitive damages cannot

be awarded under § 362(k) unless the stay violator acted with “‘reckless or

callous disregard for the law or rights of others.’” Snowden v. Check Into

Cash of Wash., Inc. (In re Snowden), 769 F.3d 651, 657–58 (9th Cir. 2014)

(quoting Goichman v. Bloom (In re Bloom), 875 F.2d 224, 228 (9th Cir. 1989)).


                                        34
      Generally speaking, there are two underlying purposes for punitive

damage awards: to punish outrageous conduct and to deter future similar

conduct. Smith v. Wade, 461 U.S. 30, 54 (1983) (citing Restatement (Second)

of Torts § 908(1) (1977)). As stated in Smith:

      The focus is on the character of the tortfeasor's conduct –
      whether it is of the sort that calls for deterrence and
      punishment over and above that provided by compensatory
      awards. If it is of such a character, then it is appropriate to . . .
      assess punitive damages . . . . To put it differently, society has
      an interest in deterring and punishing all intentional or reckless
      invasions of the rights of others . . . .

Id.

      The debtors do not challenge the bankruptcy court’s application of

punitive damages law. Rather, they dispute the bankruptcy court’s finding

on the Asafs’ reckless and callous disregard for their rights. According to

the bankruptcy court, the debtors did not show that the Asafs acted with

reckless or callous disregard. The debtors effectively contend that the

bankruptcy court should have inferred the requisite state of mind from the

Asafs’ specious litigation positions in the relief from stay proceedings and

the show cause proceedings. This quintessentially is an issue of fact. Id. at

52.

      For purposes of this discussion we will assume without deciding that

most of the Asafs’ litigation positions were specious. We further will

assume that the bankruptcy court could have inferred the requisite state of


                                       35
mind from the way the Asafs conducted themselves in the relief from stay

proceedings and the show cause proceedings. Nonetheless, we are not

persuaded that the bankruptcy court’s key punitive damages finding was

clearly erroneous. While many of the litigation positions the Asafs took

were at best misguided, the positions were not necessarily indicative of a

reckless or callous disregard. Furthermore, there was other evidence in the

record that militated against a finding of reckless or callous disregard. The

record reflects that, for over a year, the continued existence of the stayed

Hawaii Action was a complete non-issue for both parties. And when the

parties’ focus did return to the Hawaii Action, the first (and only) thing the

Asafs voluntarily did was seek an annulment of the stay – which would

have remedied the stay violation.

      It is also worth noting that the extent and degree of the misconduct

involved in this matter, the degree and nature of harm caused to the

debtors, and the level of reprehensibility of the misconduct are relatively

minimal. This is especially so when compared to the misconduct of the

stay violators in the above-referenced punitive damages cases. See, e.g., In

re Snowden, 769 F.3d at 654-55; In re Sundquist, 566 B.R. at 591-92, 611–12. It

is appropriate to consider factors like these in the process of assessing the

propriety of awarding punitive damages. In re Sundquist, 566 B.R. at 610. In

concluding that the record presented did not support a finding of reckless

or callous disregard, this is exactly what the bankruptcy court did.


                                       36
     We are not saying that we condone the Asafs’ delay in dismissing the

Hawaii Action or that this delay was legally permissible. Rather, we

conclude that under the particular circumstances of this matter the

bankruptcy court’s controlling punitive damages finding was logical,

plausible and supported by the record.

                              CONCLUSION

     For the reasons set forth above, we AFFIRM the bankruptcy court’s

denial of punitive damages. As to the award of attorney fees, we VACATE

AND REMAND for further proceedings as specified in the body of this

decision.




                                     37
