Hobby Horizens, Inc. v. Sapere ( 1997 )

USCA1 Opinion

                                [Not for Publication]






                                For the First Circuit

                                ____________________



       Nos. 96-2114, 96-2115


                                HOBBY HORIZONS, INC.,


                                     Appellees,


                                         v.


                             JORGE O. AND JUDITH SAPERE,


                                     Appellants.


                                ____________________


                    APPEALS FROM THE UNITED STATES DISTRICT COURT


                          FOR THE DISTRICT OF MASSACHUSETTS


                   [Hon. Douglas P. Woodlock, U.S. District Judge]


                                ____________________


                                       Before


                               Torruella, Chief Judge,

                            Bownes, Senior Circuit Judge,

                              and Stahl, Circuit Judge.


                                ____________________


            Albert Auburn for appellant.

            John Yannis for appellees.


                                ____________________


                                   AUGUST 6, 1997

                                ____________________

                      Per Curiam.    Upon Appellees' Jorge O. and Judith






            Sapere ("Saperes") motion, the bankruptcy court held Appellant


            Hobby Horizons, Inc. ("Hobby") in contempt for willfully


            violating the automatic stay,  see 11 U.S.C. S 362(a), and


            awarded compensatory damages to the Saperes, but declined to


            award punitive damages. The district court affirmed the


            bankruptcy court. Hobby now appeals the finding of contempt


            and the grant of a bankruptcy discharge to the Saperes. The


            Saperes appeal the denial of punitive damages. We affirm for


            substantially the same reasons as the district court and add


            only a few additional comments.


                      We exercise independent review of the bankruptcy


            court's decision in an appeal from a district court's review,


            granting "no special deference to the district court's


            determinations."  Grella v. Salem
Five
Cent
Savings
Bank, 42


            F.3d 26, 30 (1st Cir. 1994). Typically we review the


            bankruptcy court's findings of fact for clear error, but


            subject its conclusions of law to
de
novo review.  See
id. In


            this case the bankruptcy court made no findings of fact,


            forcing the district court to make its own findings from the


            record. Accordingly, we independently reviewed the record in


            analyzing this appeal.


                      We are satisfied that the record amply supported the


            district court's findings of fact that Hobby willfully violated


            the stay. Hobby continued pursuing the Saperes despite notice


            of the bankruptcy filing. On that basis, neither the




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            bankruptcy court nor district court erred in holding Hobby in


            contempt. See
Vahlsing v.
Commercial Union Ins. Co.
, 928 F.2d


            486, 490 (1st Cir. 1991) (indicating that violation of stay


            requires either willfulness under 11 U.S.C. S 362(h) or other


            common law or statutory basis for liability).


                      We also find that both courts correctly determined


            that the Saperes' debt to Hobby was discharged, despite the


            fact that the Saperes did not list Hobby as a creditor, because


            Hobby had notice of the filing.   See 11 U.S.C. S 523(a)(3)


            (indicating that discharge is effective with respect to


            unlisted creditor who had notice or actual notice of the case


            in time to submit a timely proof of claim). Should Hobby


            continue to insist that this is not a no asset case, it may


            proceed in accordance with the bankruptcy rules and procedures


            in its efforts to establish that fact.


                      Finally, we affirm both courts' decisions not to


            award punitive damages to the Saperes. The bankruptcy court


            declined to impose punitive damages because it found that Hobby


            acted out of ignorance rather than malice. While we do not


            condone Hobby's actions, we note that Hobby has been required


            to compensate the Saperes for its conduct. We find no abuse of


            discretion in the denial of punitive damages.      See In
re


            Strumpf, 37 F.3d 155, 159 (4th Cir. 1994),    rev'd
on
other


            grounds, Citizens Bank of Maryland v. Strumpf, 116 S. Ct. 286


            (1995).




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                      For the reasons exhaustively explained in the


            district court's opinion, we affirm.


                      Affirmed.  Costs to Appellant.
















































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