Burnett v. Stewart Title Inc

• Citation: 431 B.R. 894
• Decision Date: 29 March 2010
• Docket Number: Adversary Action No. H-08-3239.,Civil Action No. H-08-3193.
• Parties: Shani BURNETT, Appellant,v.STEWART TITLE, INC., Appellee.
• Court: U.S. District Court — Southern District of Texas

431 B.R. 894

Shani BURNETT, Appellant,v.STEWART TITLE, INC., Appellee.

Civil Action No. H-08-3193.

Adversary Action No. H-08-3239.

United States District Court,

S.D. Texas,

Houston Division.

March 29, 2010.

Memorandum Opinion & OrderGRAY H. MILLER, District Judge.

Pending before the court is appellant's appeal of a final judgment by a bankruptcy court pursuant to 28 U.S.C. § 158(a)(1). Dkt. 1. After considering the parties' arguments and the applicable law, the bankruptcy court's 12(b)(6) dismissal of appellant's claims is AFFIRMED.

BACKGROUND

A. Statement of Facts

The appellant, Shani Burnett, filed a voluntary petition under Chapter 13 of the Bankruptcy Code, 11 U.S.C. §§ 1301-30 (2006), on September 1, 2006. Dkt. 6 at 97. The appellee, Stewart Title, interviewed Burnett for prospective employment twice, July 3 and 11, 2007. Dkt. 6 at 97. Two days following the second interview, Burnett completed the mandatory forms for pre-employment, a drug screening and background check. Dkt. 6 at 97. Beverly Harmsen, a Stewart Title human resources employee, conveyed an offer of employment to Burnett contingent upon the favorable results of the drug screening and background check. Dkt. 6 at 97. During the background check, Stewart Title discovered Burnett's bankruptcy status and rescinded its offer before Burnett began her employment. Dkt. 6 at 97-98.

B. Procedural History

On July 3, 2008, Burnett filed an adversary suit against Stewart Title, as well as an unknown person or organization who recommended against hiring her. Dkt. 6 at 11-12. Burnett asserted that Stewart Title unlawfully discriminated against her due solely to her bankruptcy status and sought damages, declaratory, and other relief. Dkt. 6 at 16-18. On August 8, 2008, Stewart Title filed a motion to dismiss under Rule 12(b)(6). Dkt. 6 at 47-54. Stewart Title later filed an amended answer. Dkt. 6 at 64-70. The bankruptcy court held hearings on September 10 and 26, 2008 and took the matter under advisement. Dkt. 6-1 at 23-40, 42-47.

On October 14, 2008, the bankruptcy court issued a memorandum opinion on Stewart Title's motion to dismiss under Rule 12(b)(6). Dkt. 6 at 96-102. The bankruptcy court found that 11 U.S.C. § 525(b)'s omission of the phrase “deny[ing] employment to” precluded any assertion of discrimination due to bankruptcy status by prospective employees before private employers formally make offers of employment. Dkt. 6 at 100. Because § 525(b) did not cover Burnett's claim of discrimination on the basis of bankruptcy status, the bankruptcy court entered an order granting Stewart Title's motion to dismiss Burnett's complaint and denying all requested relief. Dct. 6 at 104-05.

C. Legal Standards

This court has jurisdiction of the appeal under 28 U.S.C. § 158(a)(1), and in reviewing the findings of a bankruptcy court, a district court acts in an appellate capacity. See Perry v. Dearing, 345 F.3d 303, 308-09 (5th Cir.2003). The burden is on the appellant to show that a finding of fact made by a bankruptcy court is clearly in error. See Perry, 345 F.3d at 309; Butler Aviation Int'l, Inc. v. Whyte, 6 F.3d 1119, 1127-28 (5th Cir.1993); see also Fed. R. Bankr. P. 8013 (“Findings of fact ... shall not be set aside unless clearly erroneous ...”). A finding of fact is clearly erroneous when, even in the presence of evidence to support it, the reviewing court is left with a “definite and firm conviction” that the bankruptcy court has made an error. See Carroll v. Quinlivan, 434 F.3d 314, 318 (5th Cir.2005). A bankruptcy court's conclusions of law are reviewed de novo. See Perry, 345 F.3d at 309; Southmark Corp. v. Coopers & Lybrand, 163 F.3d 925, 928 (5th Cir.1999).

ANALYSIS

Burnett asserts that the bankruptcy court improperly construed 11 U.S.C. § 525(b) when it found that the statute permits discrimination by private employers against prospective employees on the basis of bankruptcy status. There are two primary issues. First, Burnett argues that the bankruptcy court incorrectly applied the expressio unis est exclusio alteris¹ canon of statutory construction (“exclusionary rule”) in evaluating 11 U.S.C. § 525(b). Second, Burnett states that the plain meaning of the statute prohibits this type of discrimination, and that the bankruptcy court's decision results in an incoherent and inconsistent statutory scheme.

1. The Exclusionary RuleA. Standard of Review

When initially construing a statute, the starting point should be the language itself, “for if the intent of Congress is clear, that is the end of the matter.” Arif v. Mukasey, 509 F.3d 677, 681 (5th Cir.2007) (quoting Good Samaritan Hosp. v. Shalala, 508 U.S. 402, 409-10, 113 S.Ct. 2151, 2157, 124 L.Ed.2d 368 (1993)) (internal quotations omitted). Courts have articulated the exclusionary rule as “[w]here Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.” Id. (quoting Russello v. United States, 464 U.S. 16, 23, 104 S.Ct. 296, 78 L.Ed.2d 17 (1983)) (internal quotations omitted). However, the exclusionary rule is not absolute, and can be overcome by contravening legislative intent. U.S. Dep't of Justice v. Fed. Labor Relations Auth., 727 F.2d 481, 491 (5th Cir.1984) (“The rule of exclusion ... is only an aid to statutory construction, not a rule of law.”).

B. Analysis

The bankruptcy court compared 11 U.S.C. § 525(a) ², prohibiting discrimination by a governmental unit, with 11 U.S.C. § 525(b) ³, prohibiting discrimination by private employers. The bankruptcy court found that, unlike in § 525(a), in § 525(b) Congress intentionally left out the phrase “deny employment to” when listing prohibitions on private employers. Therefore, the bankruptcy court held that, according to the exclusionary rule, § 525(b) did not prohibit private employers from refusing to hire persons with a bankruptcy on their record.

Burnett argues that Congress did not consider 11 U.S.C. §§ 525(a) and (b) simultaneously, and that this temporal disparity makes the exclusionary rule inapplicable. Relying on the Supreme Court's decision in Gomez-Perez v. Potter, Burnett asserts that, because Congress enacted 11 U.S.C. § 525(b) six years after 11 U.S.C. § 525(a), this passage in time creates “[n]egative implications raised by the disparate provisions,” and weakens any exclusionary inference from seemingly deliberate omissions. Gomez-Perez v. Potter, 553 U.S. 474, 128 S.Ct. 1931, 1940, 170 L.Ed.2d 887 (quoting Lindh v. Murphy, 521 U.S. 320, 330, 117 S.Ct. 2059, 138 L.Ed.2d 481 (1997)). In Gomez-Perez, the primary issue was whether the federal-sector provision of the Age Discrimination in Employment Act (ADEA) included retaliation based upon filing of an age discrimination complaint. Gomez-Perez, 128 S.Ct. at 1936. The respondent argued that the existence of a provision prohibiting retaliation against individuals who complain of age discrimination in the private-sector, coupled with the absence of a similar provision relating to federal employment, demonstrated that Congress acted “intentionally and purposefully” in the latter omission. Id. at 1939-40. The Supreme Court held that the statutory phrase “discrimination based on age” did cover such retaliation under the federal-sector provision, observing that prior decisions interpreting similar language in racial and sex discrimination statutes included “retaliation” for discrimination claims under “discrimination.” Id. at 1936-37 (citing Sullivan v. Little Hunting Park, Inc., 396 U.S. 229, 90 S.Ct. 400, 24 L.Ed.2d 386 (1969) Jackson v. Birmingham Bd. Of Ed., 544 U.S. 167, 125 S.Ct. 1497, 161 L.Ed.2d 361 (2005)). The Supreme Court further determined that the exclusionary rule did not apply, in part because Congress considered the federal and private-sector provisions of the ADEA seven years apart, and due to the provisions' differing language. Id. at 1940-41. Burnett asserts that the Supreme Court's unwillingness to use the exclusionary rule in Gomez-Perez should control here.

Burnett's reading ignores the Supreme Court's observation that the statutes at issue in Gomez-Perez were not enacted with reference to one another and differed greatly in their language. Id. at 1940 (“The ADEA federal-sector provision, however, was not modeled after [the private-sector provision] and is couched in very different terms”). Here, unlike the sections in Gomez-Perez, §§ 525(a) and (b) have many significant factors in common. First, with the exception of one phrase, the language regarding employment discrimination in both sections is identical. Further, §§ 525(a) and (b) share the same subject matter, employment discrimination based on bankruptcy status. And, although not enacted simultaneously, Congress chose to make the two passages adjacent subsections of the same statutory provision. See In re Stinson, 285 B.R. 239, 249 (Bankr.W.D.Va.2002) (“[T]he phrases here are used in the same context (prohibited discriminatory conduct) and in the same section ...”). Therefore, the lack of temporal proximity does not lessen the import of the omission of “deny[ing] employment to” in § 525(b).

Burnett next asserts that the exclusionary rule's application is inappropriate because §§ 525(a) and (b) address different types of employers, government and private, and are therefore not a part of an associated group. Even ignoring the fact that these subsections were included under the same statutory provision, specifically addressing protection against discriminatory treatment, the similar language regarding employment discrimination clearly indicates association. While Burnett contends that it would be “nonsensical” to read §§ 525(a) and (b) together, the opposite is true. To separate §§ 525(a) and (b) and treat them as disparate solely because they address different types of employers would irrationally ignore that Congress purposefully placed...