UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF KENTUCKY
DONNA GAYE HALL
DEBTOR CASE NO. 89-00413
DONNA GAYE HALL PLAINTIFF
VS. ADV. NO. 91-0025
STUART W. COBB, a/k/a STEWART J. COBB
and COMMONWEALTH OF KENTUCKY,
NATURAL RESOURCES AND ENVIRONMENTAL
PROTECTION CABINET DEFENDANTS
MEMORANDUM OPINION AND ORDER
This matter is before the Court on the defendants' Motion for Summary Judgment. They contend that there is no genuine issue as to any material fact and that they are entitled to judgment as a matter of law on the issue of whether they violated the automatic stay imposed by 11 U.S.C.'362 by their actions in Franklin Circuit Court. The plaintiff has filed a Response to the Motion for Summary Judgment. This Court has jurisdiction of this matter pursuant to 28 U.S.C. '1334(b); it is a core proceeding pursuant to 28 U.S.C. '157(b)(2)(A).
The debtor/plaintiff herein, Donna Gaye Hall, filed a Chapter 13 petition in this Court on September 12, 1989. Her Chapter 13 Statement included as an unsecured debt $24,600.00 owed to the Natural Resources and Environmental Protection Cabinet ("the Cabinet") as "civil penalties". Her Amended Plan was confirmed on January 30, 1990. It listed a total of $24,600.00 in unsecured debt, and provided that creditors holding allowed unsecured claims would be paid to the extent of $.10 on the dollar.
This proceeding was commenced by the filing of the plaintiff's Complaint on January 28, 1991. Therein the plaintiff requested an order restraining the defendants from taking further action against her in Franklin Circuit Court or any other court and for her costs and attorney's fees. The defendants filed their Answer on February 27, 1991, stating that the Franklin Circuit Court action complained of falls within the police power exceptions to the automatic stay set out in 11 U.S.C.'362(b)(4) and (5). The Answer asks for the dismissal of the plaintiff's Complaint, for a determination that the automatic stay does not apply to the defendants' actions, and for their costs. The defendants filed their Motion for Summary Judgment on March 1, 1991; the plaintiff filed her Response on March 11, 1991.
The Franklin Circuit Court action complained of was an enforcement action (Civil Action No. 89-CI-0950) brought by the Cabinet pursuant to KRS 350.990(3) to enforce an Order of the Secretary of the Cabinet filed on November 21, 1986, and to obtain a permanent injunction requiring the plaintiff herein to reclaim a mine site on which she had obtained a Notice of Exploration from the Cabinet. The Complaint in that action was filed on June 30, 1989. The plaintiff, as noted above, filed her Chapter 13 petition on September 12, 1989, and her Amended Plan was confirmed on January 30, 1990.
On October 4, 1990, defendant Cobb was serving as one of the Cabinet's attorneys in the circuit court action, and in that capacity he filed a Motion for Default Judgment and Permanent Injunction, as the plaintiff had not made any response to the Cabinet's Complaint in that action. The Cabinet's Motion was heard on October 15, 1990, and the plaintiff failed to appear. A Default Judgment and Permanent Injunction was therefore entered against her. Under its terms the plaintiff was ordered to pay a penalty of $24,600.00 plus pre-judgment interest as well as a $5000.00 penalty. Post-judgment interest was assessed on the entire $29,600.00. She was also ordered to reclaim the entire disturbance associated with the permit that had been issued to her. The Default Judgment and Permanent Injunction was not appealed.
The plaintiff failed to comply with the Permanent Injunction, and the Cabinet's Motion for Show Cause was heard on January 7, 1991. The plaintiff appeared without counsel. She was subsequently ordered to appear and show cause why she should not be held in contempt for failure to comply with the Permanent Injunction. The contempt hearing was ultimately held on February 11, 1991, and the plaintiff failed to appear. In the meantime, the plaintiff had filed the within adversary Complaint on January 28, 1991. The Franklin Circuit Court entered an Order of Contempt on February 28, 1991, pursuant to which a bench warrant was issued for the plaintiff's arrest.
The thrust of the plaintiff's Complaint is that the actions of the defendants in the Franklin Circuit Court action violated the automatic stay. The defendants have responded, both in their Answer and in their Motion for Summary Judgment, that their actions are excepted from the automatic stay by 11 U.S.C.'362(b)(4) which excepts the commencement or continuation of an action by a governmental unit to enforce its police or regulatory powers, and '362(b)(5) which excepts enforcement of the judgment, other than a money judgment, obtained in an action by a governmental unit to enforce its police or regulatory powers.
The plaintiff, in her Response to Motion for Summary Judgment, bases her claim of violation of the automatic stay on the holding in U.S. v. Whizco, 841 F.2d 147 (6th Cir. 1988). However, the issue of willful violation of the automatic stay provisions of 11 U.S.C.'362 is not resolved under the Whizco case. The Whizco decision concerns dischargeability, holding that a debtor's affirmative reclamation obligation is dischargeable insofar as it requires the expenditure of money to accomplish. As to the reclamation obligation of the plaintiff herein, no evidence has been offered concerning what part of it may or may not be dischargeable pursuant to the holding in Whizco.
However, both the plaintiff and the defendants, in concentrating on whether a violation of the automatic stay occurred, have failed to deal with the significance of the fact that this is a Chapter 13 case. After a Chapter 13 debtor completes all payments under his plan, 11 U.S.C.'1328(a) provides that the court shall grant the debtor "a discharge of all debts provided for by the plan or disallowed under section 502 of this title, except for any debt--(1) provided for under section 1322(a)(5) of this title; or (2) of the kind specified in section 523(a)(5) of this title." Therefore, 11 U.S.C. '362 is not the only provision which effects a stay in the context of a Chapter 13 case. Once a Chapter 13 plan is confirmed, it is res judicata as to the debts provided for therein. In this case, the $24,600.00 debt to the Cabinet was included in the plaintiff's plan. Upon confirmation of the plaintiff's plan the Cabinet was bound by it. See 11 U.S.C. '1327. The Cabinet was therefore precluded from further pursuit of the plaintiff in Franklin Circuit Court.
In consideration of all of the foregoing, it is the opinion of this Court that the defendants have not borne their burden of establishing that there is no genuine issue as to any material fact and that they are entitled to judgment as a matter of law. Therefore, the defendants' Motion for Summary Judgment should be, and it hereby is, OVERRULED.
By the Court -
Charles K. Belhasen, Esq.
J. Alec Mackenzie, Esq.