Robert A. Heghmann, et ux. v. Djamel Hafiani, et al.

Does the Bankruptcy Court or the U.S. District Court, or both, have jurisdiction to entertain a com­ plaint filed by a debtor seeking compensatory and pu­ nitive damages for violation of their automatic stay? On this question there is currently a split in the circuits and among the district courts. The First and Second Circuits say no, the district court does not have jurisdiction over the debtors’ complaint. The Fifth, Sev­ enth and Eleventh Circuits say yes, the district courts have jurisdiction. The Eleventh Circuit Opinion below also held that both the district court and the Bank­ ruptcy Court had jurisdiction. District courts have come down on both sides of the issue. Thus, there is total chaos on this issue of critical importance to debt­ ors in bankruptcy.

Does the Bankruptcy Court judge-made law that a defendant who violates an automatic stay must restore the status quo or else pay a per diem fine based upon the value of the property converted control in a case filed in the U.S. District Court? The Petitioners did not initiate their federal court complaint immediately upon the bankruptcy court rul­ ing that the defendants had violated the automatic stay. They reminded the counsel for the Respondents of their responsibility to restore the status quo. It was only when the Respondents did nothing for four months that the Petitioners sought relief in the district court.