Can Chapter 13 bankruptcy save you from contempt of court?

Wondering if Chapter 13 bankruptcy can help you if you've committed contempt of court?
Stephen Dunne, Esq.

Stephen Dunne, Esq.

Philadelphia bankruptcy, credit report, and debt collection abuse attorney

Wondering if Chapter 13 bankruptcy can help you if you've committed contempt of court?
Stephen Dunne, Esq.

Stephen Dunne, Esq.

Philadelphia bankruptcy, credit report, and debt collection abuse attorney

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Courtney Tucker and Michael Lincoln were engaged to be married in 1999 but the engagement suddenly ended in February, 2000 at which time a bitter dispute arose over Courtney’s personal property.  Courtney attempted to reclaim her belongings at their residence in Crum Lynne, Pennsylvania but Michael had already changed the locks and would not allow Courtney to enter the residence.

Left with no other option, Courtney filed an action in the Court of Common Pleas, Delaware County seeking a Protection From Abuse Order. Honorable Maureen F. Fitzpatrick granted the (PFA) and also granted Courtney’s request to go to the Crum Lynne residence with a police escort to obtain her personal belongings. Shortly after, Courtney searched the residence alongside her police escort and discovered that all her personal property was missing.

On May 19, 2000, Courtney filed a Petition for Civil Contempt in the State Court alleging that the Michael was still in possession of her personal property. A hearing was held on July 13, 2000 and Judge Osborne entered an Order containing the following language:

  1. Michael Lincoln, is found to be in Civil Contempt for preventing Courtney from obtaining her personal belongings from his residence.
  2. Michael Lincoln, must return to Courtney all of her personal possessions or pay to Courtney the sum of Nine Thousand Five Hundred Forty Three Dollars ($9,543.00) for those personal possessions within 15 days of the date of this Order.
  3. If Michael fails to comply with the above Order, the Court will establish a hearing date for the imposition of sanctions, which may include, but not be limited to a fine, incarceration, community service and any other sanction permitted by law which will bring the Contemnor into compliance with this Order.

On November 30, 2000, the debtor filed a voluntary petition under chapter 13 of the U.S. Bankruptcy Code.

On March 5, 2001, Courtney filed the Stay Motion, seeking relief from the stay to “hold debtor accountable for failing to comply with a previous Contempt Order in the months prior to the Bankruptcy filing.”

Judge Carey denied the Stay Motion. Judge Carey’s decision in In re Lincoln, 264 BR 370 – Bankr. Court, ED Pennsylvania 2001 followed a long line of decisions holding that “the automatic stay has generally been applied to civil contempt proceedings.”  In re Leonard, 231 B.R. 884, 889 (E.D.Pa.1999) citing In re Mickman, 1993 WL 128147 (Bankr. E.D.Pa.1993); In re Cherry, 78 B.R. 65, 69 (Bankr.E.D.Pa.1987). Courts are also in agreement that criminal contempt matters are not subject to the automatic stay pursuant to 11 U.S.C. § 362(b)(1). See, e.g., In re Allison, 182 B.R. 881, 884 (Bankr.N.D.Ala.1995).

The difference between criminal contempt and civil contempt has been described as follows:

The distinction between criminal and civil contempt is . . . a distinction between two permissible responses to contumacious behavior. These judicial responses are classified according to the dominant purpose of the court. If the dominant purpose is to prospectively coerce the contemnor to comply with an order of the court, the adjudication is civil. If, however, the dominant purpose is to punish the contemnor for disobedience of the court’s order or some other contemptuous act, the adjudication of contempt is criminal.

[The] dominant purpose of coercion or punishment is expressed in the sanction imposed. A civil adjudication of contempt coerces with a conditional or indeterminate sentence of which the contemnor may relieve himself by obeying the court’s order, while a criminal adjudication of contempt punishes with a certain term of imprisonment or a fine which the contemnor is powerless to escape by compliance. Garr v. Peters, 773 A.2d 183, 2001 WL 345840 (Pa.Super.2001) quoting Diamond v. Diamond, 715 A.2d 1190, 1194 (Pa.Super.1998).

The first prong in the analysis is to determine whether the contempt is “civil” or “criminal” contempt.  Several courts have distinguished between contempt proceedings intended to effectuate collection of a judgment and those intended to uphold the dignity of the court, finding that the automatic stay does not apply to contempt proceedings whose main purpose is to punish a contemnor and uphold the dignity of the court.  In re Smith-St. John Manufacturing Co., 1989 WL 7922, *2 (D.Kan. 1989) (“[S]ection 362(a)(1) does not apply to contempt proceedings aimed at punishing a bankrupt for flouting court orders.”

If the underlying purpose of continuing the contempt action in the State Court Proceeding is to “uphold the dignity of the court” and continue a contempt action that is similar to the description of criminal contempt quoted in Diamond v. Diamond, supra., then “cause” may exist for relief from the stay under § 362(d)(1). On the other hand, if the underlying purpose in continuing the contempt action is “calculated to enforce a money judgment, pursue a `collection motive,’ or to harass a defendant,” then relief from the stay is not appropriate.

In this case, the State Court wrote that Michael (debtor) was in civil contempt of the February 23, 2000 order and ordered the debtor to either return Courtney’s personal property; or pay $9,543.00.

Courtney is asking the Bankruptcy Court to permit her to return to state court to pursue a contempt action against the debtor for failure to comply with the previous Contempt Order. This request is akin to collecting a debt as opposed to upholding the dignity of the court. Granting stay relief would allow Courtney to prejudice other creditors of the bankruptcy estate. Motion denied.

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