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  • Sarah Little

9th Circuit BAP says Relatively Mild Punitive Damages Okay

The 9th Circuit BAP, in In re Marino, upheld a bankruptcy court’s award of $119,000.00 in compensatory damages for discharge injunction violations by Ocwen. The BAP remanded the case for the bankruptcy court’s error in believing it did not have authority to award punitive damages. Previously, the 9th Circuit has said that bankruptcy courts are prohibited from assessing any “serious” punitive damages, but left open the possibility of “relatively mild” non-compensatory damages.

Ocwen wrote 22 letters to the debtors post discharge and after they obtained an order for relief from stay in the bankruptcy. Additionally, Ocwen called them 100 times. The bankruptcy court awarded compensatory emotional distress damages of $1,000.00 per event, but declined to award punitive damages because it believed it did not have authority to do so. The BAP upheld the compensatory damage award and remanded for the court to a) enter a final judgment for “relatively mild" non-compensatory fines, b) issue, for the district court’s consideration, proposed findings and a recommend judgment for punitive damages or c) refer the issue of contempt to the district court.

While a bankruptcy judge may not have the full complement of powers to provide justice, the BAP sees a few alternative options for addressing egregious behavior. See opinion.

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