In re Burgess
In re Burgess
Opinion of the Court
MEMORANDUM OPINION AND ORDER ON DEBTOR’S EMERGENCY MOTION TO DETERMINE APPLICABILITY OF THE AUTOMATIC STAY
Before filing this case, the Debtor was incarcerated by a state court for submitting a fraudulent jurat attached to a fact information sheet he provided to a creditor attempting to collect a judgment against him. Under the state court order incarcerating him, the Debtor was to remain under arrest (first at home and later in jail) until he submitted a full and complete fact information sheet and paid $5,914.72 in sanctions. The Debtor has now asked this Court to rule that the automatic stay, which went into effect upon the filing of this case, bars the state court from continuing its contempt order incarcerating the Debtor.
Section 362(b) provides that the automatic stay does not bar the continuation of criminal proceedings against the debtor. For the reasons set forth below, the Court concludes that a contempt order is criminal in nature — even if it arises in a civil proceeding — if it is intended to vindicate the court’s dignity or authority. Here, the contempt order does exactly that. And because the state court’s contempt order seeks to vindicate that court’s authority, it is punitive and therefore criminal in nature. As a consequence, the automatic stay does not apply.
Background
At some point before this case was filed, a state court sanctioned the Debtor $2,256 because he failed to comply with its previous orders.
The state court later ordered that the Debtor be incarcerated in county jail until he purged his contempt.
Conclusions of Law
Under section 362(b), the automatic stay does not bar the commencement or continuation of a criminal action or proceeding.
Courts have taken two different approaches to that issue. On the one hand, some courts hold that a contempt proceeding must be unambiguously “criminal in nature” to be exempt.
First, that approach is consistent
Second, holding that a contempt order that was criminal in nature could never be excepted from the scope of the automatic stay would disserve the public interest. It is often said that bankruptcy was intended to provide relief to the unfortunate and honest debtor.
The Court now turns to the circumstances surrounding the issuance of the-contempt order in this case and whether the contempt order is, in fact, criminal in nature. In doing so, the Court is not bound by the fact that the contempt order itself says it is in the nature of an “indirect criminal contempt” sanction since the label affixed to the order by the court cannot change the nature and purpose of the contempt.
To begin with, the state court held the Debtor in contempt for filing a fraudulent jurat attached to his fact information sheet. Perjury, of course, is a criminal offense. Moreover, the state court order incarcerating the Debtor came on the heels of a previous sanctions order the state court entered against him for violating its previous sanctions orders. It is clear from this Court’s review of the record in the state court case that the Debtor has a history of disregarding or disobeying the state court’s orders.
In fact, the $5,914.72 fine in this case can be likened to restitution. Because the Debtor repeatedly failed to comply with the state court’s orders, AIM Recovery was forced to incur attorney’s fees. Had the Debtor complied with the state court’s orders, AIM Recovery never would have incurred those fees. The $5,914.72 was intended to make AIM Recovery whole— not to coerce the Debtor into complying with a previous order. In other words, it is clear that the $5,914.72 fine is a punishment for violating the state court’s previous orders.
That, along with the fact that the contempt order was issued because the Debt- or committed perjury and had violated numerous prior orders, is what distinguishes the contempt order in this case from the run-of-the-mill civil contempt order. Consider the following hypothetical: a state court orders a party to turn over a deposit it was holding in escrow. When the party fails to turn over the deposit, the state court enters a contempt order directing the party to turn over the deposit within a specified time period, failing which the party will be incarcerated or obligated to pay a fine. In that hypothetical, the contempt order is indisputably civil in nature because it is intended to coerce the party into complying with the turnover order. Here, the state court is not trying to coerce the Debtor into complying with its previous orders; it is punishing him for failing to do so.
Conclusion
In the end, if the purpose of the state court order is intended to uphold the court’s dignity, then the order is criminal in nature. While the contempt order at issue here does have some coercive components to it (i.e., the ability to purge the contempt, in part, by providing a truthful jurat), it appears to this Court that the principal purpose of the order, when taken as a whole, is to punish the Debtor for submitting a fraudulent fact information sheet and failing to comply with numerous orders issued by the state court. This makes it criminal in nature. And because the state court contempt order in this case is criminal in nature, its enforcement is not barred by the automatic stay.
Accordingly, it is
ORDERED that the automatic stay does not bar enforcement of the state court’s contempt order.
DONE and ORDERED in Chambers at Tampa, Florida, on January 7, 2014.
. This Memorandum Opinion and Order is intended to supplement the Court’s oral ruling from the bench at the hearing on October 22, 2013.
. Doc. No. 10-2 at 1.
. Id. at 2-3.
. Doc. No. 10-3.
. Id. at ¶¶ 2-5.
. Doc. No. 10-4.
. Doc. No. 10 at ¶¶ 3-8.
. Id. at 8.
. Id. at ¶¶ 10-16.
. 11 U.S.C. § 362(b)(1).
. In re Dervaes, 81 B.R. 127, 129 (Bankr.S.D.Fla. 1987).
. See, e.g., In re Dervaes, 81 B.R. at 129 (Bankr.S.D.Fla. 1987); Rook v. Rook (In re Rook), 102 B.R. 490, 493 (Bankr.E.D.Va. 1989) (citing In re Cherry, 78 B.R. 65, 70 (Bankr.E.D.Pa. 1987)).
. In re Rook, 102 B.R. at 493.
. Id.; see also Int'l Distrib. Ctrs. v. Walsh Trucking Co., 62 B.R. 723, 729 30 (S.D.N.Y. 1986).
. Forsberg v. Pefanis, 2010 WL 2331465, at *1 (N.D.Ga. 2010) (analyzing Kukui Gardens Corp. v. Holco Capital Grp., Inc., 675 F.Supp.2d 1016 (D.Haw. 2009); Lowery v. McIlroy & Million (In re Lowery), 292 B.R. 645 (Bankr.E.D.Mo. 2003); Stovall v. Stovall, 126 B.R. 814 (N.D.Ga. 1990); US Sprint Comm’cns Co. v. Buscher, 89 B.R. 154 (D.Kan. 1988)).
. Young v. United States ex rel. Vuitton, 481 U.S. 787, 793, 107 S.Ct. 2124, 95 L.Ed.2d 740 (1987); Shillitani v. United States, 384 U.S. 364, 370, 86 S.Ct. 1531, 16 L.Ed.2d 622 (1966); Gompers v. Bucks Stove & Range Co., 221 U.S. 418, 31 S.Ct. 492, 55 L.Ed. 797 (1911) (citing Bessette v. Conkey, 194 U.S. 324, 333, 24 S.Ct. 665, 48 L.Ed. 997 (1904)).
. BFP v. Resolution Trust Corp., 511 U.S. 531, 542-43, 114 S.Ct. 1757, 128 L.Ed.2d 556 (1994).
. See Dominic's Restaurant of Dayton, Inc. v. Mantia, 683 F.3d 757, 760-61 (6th Cir. 2012) (quoting In re Rook, 102 B.R. 490, 493 (Bankr.E.D.Va. 1989)).
. Manama v. Citizens Bank, 549 U.S. 365, 374-75, 127 S.Ct. 1105, 166 L.Ed.2d 956 (2007).
. E.g., Dominic’s Restaurant, 683 F.3d at 760; Jou v. Adalian, 2011 WL 4435916, at *4 (D.Haw. Aug. 30, 2011) (citing Stovall v. Stovall, 126 B.R. 814, 815-16 (N.D.Ga. 1990); Gedeon v. Gedeon (In re Gedeon), 31 B.R. 942, 946 (Bankr.D.Colo. 1983); In re Kearns, 168 B.R. 423 (D.Kan. 1994)); Kukui Gardens Corp. v. Holco Capital Grp., 675 F.Supp.2d 1016, 1026-27 (D.Hawaii 2009); Marine Midland Bank, N.A. v. Huber (In re Huber), 171 B.R. 740, 754 & n.17 (Bankr.W.D.N.Y. 1994) (citing and endorsing US Sprint Comm’cns Co. v. Buscher, 89 B.R. 154 (D.Kan. 1988)).
. United States v. Haggerty, 528 F.Supp. 1286, 1296 (D.Colo. 1981) (citing Leitstein v. Capital Co. (In re Fox), 96 F.2d 23, 25 (3d Cir. 1938)); see also United States v. Henry, 2008 WL 2625359, at *3 (W.D.Va. 2008) (quoting Int’l Union v. Bagwell, 512 U.S. 821, 827, 114 S.Ct. 2552, 2557, 129 L.Ed.2d 642 (1994)).
. In re Wiley, 315 B.R. 682, 687 (Bankr.E.D.La. 2004).
Reference
- Full Case Name
- IN RE: John BURGESS, Debtor
- Cited By
- 6 cases
- Status
- Published