Hunsaker v. United States, No. 16-35991 (9th Cir. 2018)
Annotate this CaseSovereign immunity does not preclude an award of emotional distress damages against the United States for willful violation of an automatic stay. The Ninth Circuit reversed the district court's judgment reversing the bankruptcy court's award of damages to debtors for the IRS's violation of the Bankruptcy Code's automatic stay. The panel held that Congress waived sovereign immunity for a "money recovery" under certain bankruptcy provisions, including 11 U.S.C. 362(k), which allows an individual to recover "actual damages" for a willful violation of the automatic stay. The panel remanded with instructions to consider the government's challenges on the merits.
Court Description: Bankruptcy The panel reversed the district court’s judgment reversing the bankruptcy court’s judgment awarding damages to debtors for the Internal Revenue Service’s violation of the Bankruptcy Code’s automatic stay. The panel held that sovereign immunity does not preclude an award of emotional distress damages against the United States for willful violation of the automatic stay. In 11 U.S.C. § 106(a), Congress waived sovereign immunity for a “money recovery” under certain bankruptcy provision, including 11 U.S.C. § 362(k), which allows an individual to recover “actual damages” for a willful violation of the automatic stay. Disagreeing with the First Circuit, the panel concluded that the bankruptcy court’s award of emotional distress damages under § 362(k) was a “money recovery” under § 106(a)’s waiver of sovereign immunity. The panel remanded to the district court with instructions to consider the government’s challenge to the merits of the debtors’ claims.
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