220 B.R. 216 (Bkrtcy.D.N.J. 1998), 97-25411, In re Perez

Docket Nº:Bankruptcy No. 97-25411 (WFT).
Citation:220 B.R. 216
Party Name:In re Edwin PEREZ, Debtor.
Case Date:April 06, 1998
Court:United States Bankruptcy Courts, Third Circuit

Page 216

220 B.R. 216 (Bkrtcy.D.N.J. 1998)

In re Edwin PEREZ, Debtor.

Bankruptcy No. 97-25411 (WFT).

United States Bankruptcy Court, D. New Jersey.

April 6, 1998

Page 217

Christopher Mills, Jersey City, NJ, for Debtor.


WILLIAM F. TUOHEY, Bankruptcy Judge.


On January 28, 1997 and February 23, 1998 respectively the Court entertained two motions by the Chapter 13 debtor, Edwin Perez which raise significant issues concerning the jurisdiction of the Bankruptcy Court over municipal courts and judges vis-a vis the ability of this Court to order the rescission of municipal court orders of suspension of a debtor's driving privileges for non-moving parking violations in accord with repayment under a Chapter 13 plan. Of necessity, the Court's consideration of this issue raises questions concerning the applicability of the doctrine of sovereign immunity to municipalities and the New Jersey Division of Motor Vehicles ("DMV") as regards the treatment of States under the Eleventh Amendment, as well as the appropriate forum for a debtor seeking redress in the form of injunctive relief and sanctions against sitting municipal court judges for alleged non-compliance with Federal Court orders.

This particular matter comes before the Court first on Motion by the debtor filed December 15, 1997 to Enforce Litigant's Rights, seeking an Order of this Court compelling a sitting Municipal Court Judge to comply with a previous Order of this Court entered November 12, 1997, which Order directed a rescission of an Order of Suspension of the debtor's driving privileges issued by the Municipal Court of Union City, New Jersey. Debtor's December 15th Motion further seeks an Order imposing sanctions on the Union City Municipal Court Judge for an alleged continuing violation of this Court's Order and awarding legal fees to debtor's counsel.

In addition, this matter comes before the Court on debtor's Motion filed January 26, 1998 to hold a second municipal court judge in contempt of court and to hold such judge and the City of Hackensack, New Jersey jointly and severally liable for allegedly intentionally violating the automatic stay of § 362 of the Bankruptcy Code by forcing the debtor to pay parking tickets and for a refund of the fines paid and for damages both compensatory and punitive and legal fees associated with the debtor's Motion.

Hearings were conducted on January 29, 1998 and February 23, 1998 respectively, at which times, the Court took the matters under advisement.

The issues raised herein are core proceedings as defined by the United States Congress in 28 U.S.C. § 157. The within Opinion constitutes this Court's findings of fact and conclusions of law pursuant to Bankruptcy Rule 7052.

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The facts of these matters are not in dispute, and may be summarized as follows.

Debtor's Motion to Enforce Litigant's Rights

The debtor, Edwin Perez filed a petition for relief under Chapter 13 of the Bankruptcy Code on May 8, 1997. The debtor's petition indicates that he is a resident of Hoboken, New Jersey. His Summary of Schedules indicates that Mr. Perez has total assets of $105 and total liabilities of $11,422.00, consisting solely of creditors holding unsecured nonpriority claims. At the time of the filing of the petition, Mr. Perez was employed by a temporary agency in West New York, New Jersey and listed his total net monthly take home pay as $520.00. In particular, the Court notes that in addition to approximately $9,000.00 in child support arrears, Schedule F of the debtor's petition lists a minimum of $2,422.00 in debts for parking fines owed to the New Jersey municipalities of West New York, Hackensack, Hoboken, Jersey City, Little Ferry, Trenton and Union City from the years 1992 through 1997. 1 The Court notes that of the total of fourteen debts listed by the debtor on Schedule F, thirteen of those debts are for parking violations.

As a result of the aforesaid fines, the debtor's driving privileges had been suspended pre-petition. The debtor informs the Court that he tried personally to get his suspension lifted by going directly to the concerned municipal courts with proof of his bankruptcy filing as well as debtor's counsel informing the courts by mail of the filing. After receiving no relief, the debtor filed, with this Court, a Motion for Immediate Reinstatement of his driver's license on June 23, 1997.

By its submission filed July 24, 1997, and without filing a general notice of appearance, the New Jersey Attorney General's office, on behalf of the Division of Motor Vehicles, objected to the jurisdiction of this Court to order immediate reinstatement of the debtor's driving privileges relying on the Eleventh Amendment and principles of sovereign immunity. By its Objection, the State specifically states that it "does not consent to be sued in federal court in this case." In addition, although the debtor lists "Motor Vehicle Services," Trenton, New Jersey, as an unsecured creditor for an "unknown" amount stemming from "possible fines or parking tickets," no proof of claim has been filed by the State. Moreover, the debtor does not list any motor vehicle insurance surcharges among his debts in his Schedules.

On November 12, 1997, the Court conducted a hearing concerning confirmation of the debtor's Chapter 13 Plan. No one appeared in opposition and/or submitted an objection to the Plan. Based upon the law as it existed at the time of confirmation, prior to the Third Circuit's pronouncement in In re Sacred Heart Hospital of Norristown, 133 F.3d 237 (3rd Cir.1998), the Court confirmed the Chapter 13 Plan on that date. 2 Under the Plan, in addition to $10,000 in child support arrears, which are non-dischargeable, the debtor was to pay through the life of the Plan $242.20 to the Standing Trustee, for parking tickets which represents a 10% payment on the total amount of the fines, $2,422.00. The Court notes that the debtor proposes a "two tier percentage plan," under which the debtor will pay the sum of $20.00 for six months and then the sum of $196.23 for 54 months or until such time as payment is made in full. The Court further notes that the reason stated for the "stepped plan" is that "the debtor's driver's license is now suspended." The debtor's Chapter 13 filing, it was asserted, "would reinstate his driver's license which would enable him to get another job and to make considerably more money." (Adjustment of Debts--Chapter 13 Plan, filed May 8, 1997). In light of the overwhelming majority of the debt listed as parking violations, it would appear to the Court that the precipitating factor for the Chapter 13 filing by Mr. Perez was the suspension of Mr. Perez's driver's license for his failure to pay the aforesaid fines.

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Also on November 12, 1997, in accordance with the above-referenced confirmation, this Court then entered an Order submitted by debtor's counsel compelling municipalities to rescind orders of suspension of the debtor's driving privileges and permitting reinstatement of debtor's driver's license concerning the Municipal Courts of Union City, Little Ferry, Jersey City, Hoboken, Hackensack and West New York (the "Rescinding Order"). The Rescinding Order further directed that the Clerk of the Bankruptcy Court mail copies of the Order to the DMV and instructed the Director of the DMV to restore the debtor's diving privileges effective November 12, 1997. In an effort to ensure debtor's full compliance under the Plan, the Court cites verbatim, the following language added to the Rescinding Order by the Court:

The debtor's Chapter 13 Plan by the terms of which the debtor will pay a 10% dividend to the unsecured creditors, including unpaid parking tickets was confirmed by the Bankruptcy Court on November 12, 1997. The within Order providing for the reinstatement of debtor's suspended license based on failure to pay parking tickets is conditioned upon the completion of the debtor's 10 lan. That is, the license is to be restored immediately, however, if the debtor breaches the plan and the case is dismissed prior to completion, the municipalities at that point will be free to rescind debtor's driver's license.

The Rescinding Order was served by counsel for the debtor along with a cover letter to all concerned Municipal Courts and prosecutors on November 20, 1997. (Exhibit B to debtor's Attorney's Certification in Support of Motion, filed December 15, 1997). In response to service of the Rescinding Order, debtor's attorney received a copy of the cover letter from the Chambers of the Union City Municipal Judge with the notation at the bottom dated November 25, 1997 "Bankruptcy does not apply." The notation was apparently directed by the Municipal Judge and initialed by the Clerk of the Court "LM." (Exhibit C to debtor's Attorney's Certification in Support of Motion).

Counsel for the debtor filed the within Motion to Enforce Litigant's Rights on December 15, 1997. At an initial hearing before this Court on January 6, 1998, at which the Municipality of Union City was not represented, the Court required counsel for the debtor...

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