Demenno/Kerdoon, Inc., In re

• Decision Date: 20 June 1994
• Docket Number: No. 93-55177,93-55177
• Citation: 28 F.3d 105
• Parties: NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel. In re DEMENNO/KERDOON, INC., Debtor. COUNTY SANITATION DISTRICT NO. 1 OF LOS ANGELES COUNTY, Plaintiff-Appellant, v. DEMENNO/KERDOON, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 105

28 F.3d 105

NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel.

In re DEMENNO/KERDOON, INC., Debtor COUNTY SANITATION DISTRICT NO. 1 OF LOS ANGELES COUNTY Plaintiff-Appellant, v. DEMENNO/KERDOON, INC., Defendant-Appellee.

No. 93-55177.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 8, 1994.

Decided June 20, 1994.

Before: FARRIS, O'SCANNLAIN, and TROTT, Circuit Judges.

MEMORANDUM ^*

County Sanitation District No. 1 of Los Angeles County ("District") appeals the district court's order affirming the bankruptcy court's grant of summary judgment in favor of DeMenno/Kerdoon, Inc. ("DeMenno"). We affirm.

A discharge in bankruptcy "operates as an injunction against the commencement or continuation of an action ... to collect, recover or offset any [debt discharged under 11 U.S.C. Sec. 1141] as a personal liability of the debtor, whether or not discharge of such debt is waived." 11 U.S.C. Sec. 524(a)(2). This injunction assures the debtor of a "fresh start." The $856,300.50 connection fee claim was a charge for DeMenno's anticipated use of 1981.31 capacity units. That debt was discharged upon the confirmation of the plan, see id. Sec. 1141(d)(1)(A)(iii), and the District will be paid a pro rata share of $700,000 as part of the reorganization. By filing an action to collect a connection fee of $231,192.94 based on DeMenno's anticipated use of 1187.76 capacity units, the District is attempting to hold DeMenno personally liable for a portion of the $856,300.50 debt discharged in bankruptcy in violation of Sec. 524(a)(2).

The District clearly had a right of payment for a connection fee when DeMenno's anticipated usage of the sewerage system exceeded by more than 25% its historical baseline. The District's attempt to collect the connection fee, by characterizing the amount owed as a postpetition debt, is analogous to requiring a debtor to pay a discharged tort judgment as a condition of license renewal--a scheme invalidated in Perez v. Campbell, 402 U.S. 637 (1971).

We reject the District's argument that its $856,300.50 prepetition claim was unenforceable because it was unmatured and contingent. Creditors cannot decide, postpetition, which claims are or are not enforceable. The expansive definitions of "debt" and "claim" clearly encompass the District's connection fee claim. See 11 U.S.C. Sec. 101(5)(a) & (12); Pennsylvania Dep't of Public Welfare v. Davenport, 495 U.S. 552, 558 (1990).

The District also contends DeMenno is trying to use the bankruptcy laws to avoid post-confirmation statutory environmental obligations. See In re CMC Heartland Partners, 966 F.2d 1143, 1146 (7th Cir.1992) ("Having been a debtor in bankruptcy does not authorize a [reorganized debtor] to operate a nuisance today."); see also Ohio v....