U.S. Department of Education and its servicers do not have sovereign immunity to claim for violation of automatic stay:
The U.S. Department of Education and its servicers in this case were governmental units as defined in Code § 101(27), and Code § 106(a) unmistakably abrogated the Department’s sovereign immunity. Loan servicers FedLoan Servicing and Navient, both of which were owned by the Department, were instrumentalities of the Department under § 101(27).
Elements of violation of stay:
The Fifth Circuit has established a three-pronged test to determine a willful violation of the automatic stay: (1) the creditor must have known of the existence of the stay, (2) the creditor’s acts must have been intentional, and (3) the creditor’s acts must have violated the stay. In re Repine, 536 F.3d 512 (5th Cir. 2008). A showing of the creditor’s specific intent is not required.
Determination of reasonableness of attorney’s fees, generally:
In the Fifth Circuit, courts utilize both the “lodestar method” and the Johnson factors in determining whether attorneys’ fees are reasonable. A court computes the lodestar by multiplying the number of hours an attorney would reasonably spend for the same type of work by the prevailing hourly rate in the community. It may then adjust the rate up or down in light of the Johnson factors, which are (1) the time and labor required, (2) the novelty and difficulty of the questions, (3) the skill requisite to perform the legal service properly, (4) the preclusion of other employment by the attorney due to acceptance of the case, (5) the customary fee, (6) whether the fee is fixed or contingent, (7) time limitations imposed by the client or the circumstances, (8) the amount involved and the results obtained, (9) the experience, reputation, and ability of the attorneys, (10) the “undesirability” of the case, (11) the nature and length of the professional relationship with the client, and (12) awards in similar cases. Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir.1974).
Court awards damages for continuing violation of stay by U.S. Department of Education:
Where the U.S. Department of Education continued to attempt to collect the Chapter 13 debtor’s student loan debt after having been found in violation of the automatic stay, the court again found that the Department had willfully violated the stay and awarded the debtor a total of $4,231.67 in compensatory damages, consisting of $3,900 in attorney’s fees, $183.78 in lost wages and $149.27 in mileage, as the debtor traveled a total of 259.60 miles to attend the hearings on the matter.
In re Reed, 2020 WL 1456515 (Bankr. N.D. Miss., March 20, 2020)