78 B.R. 951 (W.D.Mo. 1986), 86-0508-CV-W-5, Matter of Reserves Development Corp.

Docket NºNo. 86-0508-CV-W-5.
Citation78 B.R. 951
Party NameIn the Matter of RESERVES DEVELOPMENT CORPORATION and RDC Monongah, Inc., Debtors. Barbara C. JEFFRIES and Melvin P. Ketter, Plaintiffs-Appellees, v. Chauncey H. BROWNING, Attorney General of the State of West Virginia, et al., Defendants-Appellants.
Case DateAugust 22, 1986
CourtUnited States District Courts, 8th Circuit, Western District of Missouri

Page 951

78 B.R. 951 (W.D.Mo. 1986)

In the Matter of RESERVES DEVELOPMENT CORPORATION and RDC Monongah, Inc., Debtors.

Barbara C. JEFFRIES and Melvin P. Ketter, Plaintiffs-Appellees,

v.

Chauncey H. BROWNING, Attorney General of the State of West Virginia, et al., Defendants-Appellants.

No. 86-0508-CV-W-5.

United States District Court, W.D. Missouri, Western Division.

August 22, 1986

Page 952

[Copyrighted Material Omitted]

Page 953

John J. Williams, Kansas City, Mo., for Jeffries.

Irving Blezer, Smith, Gill, Fisher & Butts, Kansas City, Mo., for Ketter.

J. Bradley Russell, Donald L. Darling, Deputy Atty. Gen., Charleston, W. Va., for Browning, et al.

ORDER

SCOTT O. WRIGHT, Chief Judge.

This is an appeal from a Memorandum Opinion and Order of Bankruptcy Judge Joel Pelofsky, wherein that Court enjoined appellants from attaching property, located in West Virginia and owned by the debtor, and in which plaintiffs-appellees had acquired a pre-Bankruptcy security interest. Appellants, the West Virginia Attorney General's office and Commissioner of Labor, allege a number of issues on appeal, some novel and some not so novel, most of which challenge the constitutionality of the Bankruptcy Court's order. However, for the following reasons, this Court affirms the Bankruptcy Court's order.

Page 954

I. Statement of Facts

The facts in this case are generally undisputed. On April 12, 1983, two corporations, Reserve Development Corporation and R.D.C. Monongah, Inc. ("Debtors"), filed a Chapter 11 Reorganization petition under Title 11, U.S.C., in the United States Bankruptcy Court for the Western District of Missouri. After filing the petition, the debtors continued their business operations, which included the operation of a coalwashing facility in Marion County, West Virginia, as a debtor in possession. Plaintiffs-appellees, Jeffries and Ketter, held a security interest in certain coalwashing units located on the facility.

On October 5, 1984, the West Virginia Attorney General's office filed suit in Kanawha County, West Virginia, on behalf of the West Virginia Commissioner of Labor and eleven of the debtors' employees, seeking recovery of unpaid wages for the months of April, May, June, July and August of 1983, pursuant to the West Virginia Wage Payment and Collection Act, W.Va. Code §§ 21-5-1 et seq. On November 5, 1984, appellants obtained a prejudgment attachment of the coalwashing facility. The record is unclear as to whether appellants had any notice of the Chapter 11 proceeding at the time of the attachment.

Prior to the attachment, appellees Jeffries and Ketter sought and obtained relief from the automatic stay in the Bankruptcy Court, and a public sale was held on October 31, 1985 in which appellees became the buyers of the coalwashing units.

On September 20, 1985, appellees Jeffries and Ketter filed an application with the Bankruptcy Court seeking to enjoin the attachment and continued state court action, and sought the issuance of civil contempt citations against appellants for violation of the Chapter 11 automatic stay. The Bankruptcy Court entered an order on September 27, 1985, directing appellants to appear and show cause why the requested relief should not be granted. The show cause hearing was held and evidence was taken on October 21, 1985. The Bankruptcy Judge, in overruling appellants' motion to dismiss for lack of jurisdiction, insufficient service of process and inadequate standing on the part of appellees Jeffries and Ketter, concluded that the appellant's attachment of the coalwashing facility was in violation of the automatic stay, and thus, the attachment was void. Consequently, the court enjoined appellants from attaching the property without relief from the automatic stay and, additionally, enjoined the continuation of the state court action by appellants as to the wages allegedly owed for the month of April, 1983. However, the Bankruptcy Court ruled that appellants could proceed to judgment on allegations of wage payments due for the months of May, June, July and August of 1983. The court also concluded that appellants' violation of the automatic stay was not a willful one and, thus, denied appellees' motion for contempt against appellants.

Appellants have challenged the order of the Bankruptcy Court by raising the following issues on appeal:

(1) That the Bankruptcy Court lacked both subject matter and personal jurisdiction, and, thus, the Bankruptcy judge erred in not dismissing the show cause proceeding;

(2) That appellees Jeffries and Ketter lacked standing to bring this proceeding;

(3) That since the West Virginia civil action arose after the filing of the Chapter 11 petition, the § 362 automatic stay is inapplicable;

(4) That even if the § 362 automatic stay is applicable, the West Virginia civil action is an exercise of the state's police power and, thus, falls within the § 362(b)(4) governmental unit exemption;

(5) That service of process on the West Virginia Attorney General and the Commissioner of Labor was inadequate.

II. Discussion

A. Jurisdiction

Appellants contend that the Bankruptcy Court lacked personal jurisdiction over the West Virginia Attorney General and Commissioner of Labor, as the named defendants, because the defendants-appellants

Page 955

lacked the requisite minimum contacts with the State of Missouri. International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). Appellants urge this Court to adopt, as a limitation on a federal court's exercise of personal jurisdiction, the 14th Amendment limitations on personal jurisdiction as set out in International Shoe. In other words, appellants argue that since the defendants have no connection with the State of Missouri, then the federal Bankruptcy Court's exercise of personal jurisdiction violates the 5th Amendment Due Process Clause. While appellants concede that the federal courts have not given a definitive answer on the question of whether a defendant must have "minimum contacts" with the federal forum, they have cited to this Court federal cases which have hinted that such limitations are applicable to federal courts under the 5th Amendment Due Process Clause. See Insurance Corp. v. Compagnie Des Bauxites, 456 U.S. 694, 702-03, 102 S.Ct. 2099, 2104-05, 72 L.Ed.2d 492 (1982); Lone Star Package Car Co., Inc. v. B & O Railroad Co., 212 F.2d 147 (5th Cir.1954).

However, there is no need for this Court to decide this particular question since the Supreme Court has made clear that, for 5th Amendment Due Process purposes, a state is not a "person" under the 5th Amendment. See State of South Carolina v. Katzenbach, 383...

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12 practice notes
  • Ditto v. Delaware Savings Bank, 021407 TNCIV, E2006-01439-COA-R3
    • United States
    • Tennessee Court of Appeals of Tennessee
    • February 14, 2007
    ...[where] they have a pecuniary interest that was adversely affected” by a postpetition transfer of property. In re Reserves Dev. Corp ., 78 B.R. 951, 957 (W.D. Mo. 1986) rev ’ d on other grounds, 821 F.2d 520 (8th Cir. 1987). The legislative history of _ 362 clearly recognizes that creditors......
  • 172 B.R. 170 (Bkrtcy.E.D.N.Y. 1994), 194-1048-260, In re Ted A. Petras Furs, Inc.
    • United States
    • Federal Cases United States Bankruptcy Courts Second Circuit
    • September 16, 1994
    ...to reach the defendant. This Court agrees with such indisposition. See Jeffries v. Browning (In re Reserves Development Corp.), 78 B.R. 951, 959 (W.D.Mo.1986) (service by Federal Express sufficient although technically defective); In re D.H. Overmyer, Co., 40 B.R. 990, 995 (S.D.N.Y.1984) (s......
  • 213 B.R. 744 (Bkrtcy.W.D.Mo. 1997), 97-20353, In re Carpio
    • United States
    • Federal Cases United States Bankruptcy Courts Eighth Circuit
    • October 2, 1997
    ...B.R. 157 (Bankr.E.D.Ark.1989); In re Olson, 101 B.R. 134 (Bankr.D.Neb.1989), aff'd, 133 B.R. 1016 (D.Neb.1991); In re Reserves Dev. Corp., 78 B.R. 951 (W.D.Mo.1986); In re Henstra, 75 B.R. 260 (Bankr.D.Minn.1986); In re Tanksley, 70 B.R. 429 (Bankr.E.D.Mo.1987); In re Pester Refining Co., 5......
  • 952 F.2d 82 (5th Cir. 1992), 90-7072, Matter of Pointer
    • United States
    • Federal Cases United States Courts of Appeals Court of Appeals for the Fifth Circuit
    • January 14, 1992
    ...standing to seek redress for an automatic stay violation are debtors-in-possession or trustees"). But see In re Reserves Dev. Corp., 78 B.R. 951 (W.D.Mo.1986), rev'd on other grounds, 821 F.2d 520 (8th [6] The legislative history of § 549 is instructive. "[Section 549] modifies se......
  • Request a trial to view additional results
12 cases
  • Ditto v. Delaware Savings Bank, 021407 TNCIV, E2006-01439-COA-R3
    • United States
    • Tennessee Court of Appeals of Tennessee
    • February 14, 2007
    ...[where] they have a pecuniary interest that was adversely affected” by a postpetition transfer of property. In re Reserves Dev. Corp ., 78 B.R. 951, 957 (W.D. Mo. 1986) rev ’ d on other grounds, 821 F.2d 520 (8th Cir. 1987). The legislative history of _ 362 clearly recognizes that creditors......
  • 172 B.R. 170 (Bkrtcy.E.D.N.Y. 1994), 194-1048-260, In re Ted A. Petras Furs, Inc.
    • United States
    • Federal Cases United States Bankruptcy Courts Second Circuit
    • September 16, 1994
    ...to reach the defendant. This Court agrees with such indisposition. See Jeffries v. Browning (In re Reserves Development Corp.), 78 B.R. 951, 959 (W.D.Mo.1986) (service by Federal Express sufficient although technically defective); In re D.H. Overmyer, Co., 40 B.R. 990, 995 (S.D.N.Y.1984) (s......
  • 213 B.R. 744 (Bkrtcy.W.D.Mo. 1997), 97-20353, In re Carpio
    • United States
    • Federal Cases United States Bankruptcy Courts Eighth Circuit
    • October 2, 1997
    ...B.R. 157 (Bankr.E.D.Ark.1989); In re Olson, 101 B.R. 134 (Bankr.D.Neb.1989), aff'd, 133 B.R. 1016 (D.Neb.1991); In re Reserves Dev. Corp., 78 B.R. 951 (W.D.Mo.1986); In re Henstra, 75 B.R. 260 (Bankr.D.Minn.1986); In re Tanksley, 70 B.R. 429 (Bankr.E.D.Mo.1987); In re Pester Refining Co., 5......
  • 952 F.2d 82 (5th Cir. 1992), 90-7072, Matter of Pointer
    • United States
    • Federal Cases United States Courts of Appeals Court of Appeals for the Fifth Circuit
    • January 14, 1992
    ...standing to seek redress for an automatic stay violation are debtors-in-possession or trustees"). But see In re Reserves Dev. Corp., 78 B.R. 951 (W.D.Mo.1986), rev'd on other grounds, 821 F.2d 520 (8th [6] The legislative history of § 549 is instructive. "[Section 549] modifies se......
  • Request a trial to view additional results