354 B.R. 301 (Bkrtcy.N.D.Ala. 2006), 03-82842-JAC-7, In re Potter

Docket NºBankruptcy No. 03-82842-JAC-7.
Citation354 B.R. 301
Party NameIn re Edward Lee POTTER, Debtor. Edward Lee Potter, Plaintiff, v. City of Hanceville, et al., Defendants.
Case DateNovember 06, 2006
CourtUnited States Bankruptcy Courts, Eleventh Circuit

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354 B.R. 301 (Bkrtcy.N.D.Ala. 2006)

In re Edward Lee POTTER, Debtor.

Edward Lee Potter, Plaintiff,


City of Hanceville, et al., Defendants.

Bankruptcy No. 03-82842-JAC-7.

Adversary No. 05-70053-CMS.

United States Bankruptcy Court, N.D. Alabama, Western Division.

Nov. 6, 2006

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Stuart L. Moore, Cullman, AL, for Debtor.

Kenneth Haynes, Haynes & Haynes, P.C., Birmingham, AL, for Plaintiff.

G. Meador Akins, Thomas S. Hale, Victoria Jeanne Franklin-Sisson, Burgess & Hale LLC, Birmingham, AL, for Defendants.

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C. MICHAEL STILSON, Bankruptcy Judge.

This matter came before the court on the defendants' motions for summary judgment in their favor on former Hanceville Police Chief Edward Lee Potter's complaint accusing them of illegally discriminating against him because of his bankruptcy. The court has reviewed the record of the hearing and the submissions of the parties in the context of applicable law. It finds the defendants motions, filed under Fed.R.Civ.P. 56, are due to be DENIED; and the plaintiff's objections to summary judgments, SUSTAINED.


The plaintiff Edward Lee Potter was the police chief of Hanceville, Alabama, from September 12, 2002 until October 4, 2004, when a newly elected City Council appointed another candidate as chief of police. The City of Hanceville and five of the members of its council are defendants in this action. Defendants include the City of Hanceville, Alabama; Mayor Katie Whitley; and Council Members Wayne Armstrong, Hubert Jones, Selma Barnett, and Larry Cornett.

The complaint was filed February 4, 2005 in the United States District Court for the Northern District of Alabama. District Judge Lynwood Smith referred the action to the Bankruptcy Court for the Northern District pursuant to 28 U.S.C. § 157(a) on October 26, 2005. The action then became Adversary Proceeding No. 05-70053.

The individual defendants and the defendant City of Hanceville, each filed a motion for summary judgment and briefs in support their motions. Included within each brief is a statement of facts. The plaintiff Potter also filed a brief in response and in opposition to these motions for summary judgment, which agreed with many of the facts stated in defendants' briefs. For convenience, the court will refer to plaintiff's response (AP Doc. 136) to identify those agreed-upon facts.

Potter was appointed chief of police on September 12, 2002 by a prior council. Pursuant to Ala.Code § 11-43-4, his service was to continue until a successor was appointed by the City Council and qualified. In July of 2003, while serving as chief, Potter filed a Chapter 7 bankruptcy petition. (AP Docs. 94-99, Potter deposition at p. 138). The plaintiff's bankruptcy filing became the subject of conversation in the rumor mill in the City of Hanceville. (Doc. 136 at p. 6) Potter's Chapter 7 discharge was entered on October 23, 2003.

Hanceville had a population of approximately 2,951 residents as of the 2000 census. All seats on its City Council and the mayor's office were up for election in the 2004 campaign. The parties have described a form of municipal government in which the mayor sits on the council and has an equal vote with other council members. Those elected in the city election took office October 4, 2004. (Doc. 136 at page 3-4).

Ala.Code § 11-43-4 (1975), as amended, provides as follows:

§ 11-43-4. Election of clerk, etc., in towns and in cities having less than 6,000 inhabitants; filling of vacancies in council generally.

In cities having a population of less than 6,000 and in towns, the council shall elect a clerk and fix the salary and term of office, and may determine by ordinance the other officers of the city or town, their salary, the manner of their election and the terms of office, and shall fill all vacancies in the council by a majority vote of the council; and all members of the council may vote to fill

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vacancies any provision of law to the contrary notwithstanding. The clerk and such other officers elected by the council shall serve until their successor or successors are elected and qualified. (emphasis added)

The parties have not provided the court with a copy of an ordinance establishing the office of chief of police, but have stipulated that "in the City of Hanceville (as well as most, if not all, cities of similar population in Alabama) the position of Chief of Police, as well as City Attorney, City Clerk and Municipal Judge, serves at the pleasure of, is appointed by, and whose term of appointment coincides with the elected term of the Mayor and City Council" (Doc. 136 at p. 3).

Mayor-elect Katie Whitley heard the rumor about Potter's bankruptcy and went to the United States Bankruptcy Court in Decatur to obtain copies of part of the plaintiff's bankruptcy petition (AP Doc. 89-92, Whitley deposition p. 29-32). This was approximately September 1, 2004. (Plaintiff's Exhibit 10 to AP Doc. 137) Whitley showed these copies to Barnett (Whitley deposition at p. 37), and Cornett (Whitley deposition at p. 46), giving copies to Cornett.

To one extent or another, the fact that the plaintiff had filed bankruptcy was a subject of conversation among all those who were elected to the City Council. Prior to being sworn in as mayor and city council members, the soon-to-be city officials began looking for someone other than Potter to appoint as chief of police. The City of Hanceville and the newly elected mayor and council did not advertise the chief of police position as an opening. Instead, they conducted the search for potential candidates as described below:

Whitley, Jones, and Barnett met with Craig Richie at the Dairy Queen in Hartselle, Alabama around September 10, 2004. (Richie deposition at p. 11). At a second meeting at the Dairy Queen, Richie also met with Whitley and Cornett. (Richie deposition at p. 13)

Wayne Armstrong and Jones also talked with Jimmy Rogers about the possibility of Rogers becoming police chief. Rogers declined. (Armstrong deposition at pp. 25-26) Armstrong talked with Steve Conner about the job and Conner stated that he was not interested in the police chief position. (Armstrong deposition pp. 27-28)

On October 4, 2004, the individual defendants and Councilwoman Betty Walls (who is not named as a defendant in Potter's suit) were sworn in as the new mayor and City Council of Hanceville. AP Doc. 130 is the minutes of the City of Hanceville organizational meeting of October 4, 2004. These minutes reflect the following:

The mayor recommended Craig Richie as Chief of Police. Alderman Jones moved to elect Craig Richie as Chief of Police. Seconded by Alderman Armstrong. Ayes: Alderman Cornett, Jones, Armstrong, Alderwoman Barnett and Mayor Whitley. Nays: Alderwoman Walls: Motion carried.

Craig Richie thereby became chief of police, and his appointment ended Potter's term as chief. Although Councilman Armstrong seconded the motion to hire Richie as chief of police, his deposition at p. 30 stated that he had never met him before Richie's appointment. The newly elected mayor and city council also voted to appoint a new city clerk and a new municipal judge. (Walls deposition at pp. 50-51)

Potter has alleged in his complaint that the Hanceville defendants denied him continued employment based only on the fact that he had filed bankruptcy; and that the alleged violation of 11 U.S.C. § 525(a) entitled him to damages pursuant to the discrimination cause of action created by 42 U.S.C.§ 1983,

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and to attorneys fees under 42 U.S.C. § 1988.

The defendants, in their motions for summary judgment, argue (1) that their action did not constitute a Section 525(a) violation; (2) that, even if it did, a Section 525(a) violation cannot serve as a predicate for a Section 1983 suit; and (3) that, even if a Section 525(a) violation made Potter eligible for Section 1983 damages, "qualified immunity" shielded named council members from suit as individuals.

This court heard the arguments for and against summary judgment on these three grounds at a July 27, 2006 hearing. The court took the motions under submission following that hearing. The record includes seven depositions, and 14 exhibits in support of, and in opposition to, the six motions for summary judgment.

The following portion of the memoranda will constitute a more detailed analysis of the factual record, as well as the court's conclusions of law. Orders, consistent with these findings pursuant to Fed. R. Bankr.P. 7052, will be entered separately.


The Bankruptcy Court for the Northern Division of the Northern District of Alabama has jurisdiction over Edward Lee Potter's Chapter 7 case pursuant to 28 U.S.C. § 1334(a). This Bankruptcy Court for the Western Division of the Northern District has jurisdiction of this adversary proceeding pursuant to 28 U.S.C. § 1334(b). Jurisdiction is referred to the bankruptcy courts by the General Order of Reference of the United States District Courts for the Northern District of Alabama, Signed July 16, 1984, As Amended July 17, 1984.

Summary judgment is proper only if the record shows that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c) and Fed. R. Bankr.P. 7056. A genuine issue exists only when "the evidence is such that a reasonable jury (trier of fact) could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); and Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).


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