Com., Dept. of Environmental Resources v. Peggs Run Coal Co.

• Decision Date: 15 December 1980
• Citation: 55 Pa.Cmwlth. 312,423 A.2d 765
• Parties: , Bankr. L. Rep. P 67,842 COMMONWEALTH of Pennsylvania, DEPARTMENT OF ENVIRONMENTAL RESOURCES, Plaintiff, v. PEGGS RUN COAL COMPANY and Peggs Run Coal Company, Debtor in Possession, Michael Cimba, Warren Hinks and Jack S. Courtney, Defendants.
• Court: Pennsylvania Commonwealth Court

Page 765

423 A.2d 765 55 Pa.Cmwlth. 312, Bankr. L. Rep. P 67,842 COMMONWEALTH of Pennsylvania, DEPARTMENT OF ENVIRONMENTAL
RESOURCES, Plaintiff,
v.
PEGGS RUN COAL COMPANY and Peggs Run Coal Company, Debtor in
Possession, Michael Cimba, Warren Hinks and Jack
S. Courtney, Defendants. Commonwealth Court of Pennsylvania. Argued Nov. 17, 1980.
Decided Dec. 15, 1980.

Page 766

[55 Pa.Cmwlth. 313] Howard Wein, Bob Ging, Asst. Attys. Gen., Diane J. Stares, Pittsburgh, for plaintiff.

Kenneth P. Simon, Reed Smith, Shaw & McClay, Pittsburgh, for Peggs Run Coal Co.

Franklyn E. Conflenti, James S. Birsic, Cauley, Birsic & Conflenti, Pittsburgh, for Michael Cimba, Warren Hinks and Jack S. Courtney.

Before WILKINSON, CRAIG and PALLADINO, JJ.

OPINION

WILKINSON, Judge.

Peggs Run Coal Company (Peggs Run) is the owner of a coal mine and cleaning plant on its premises in Beaver County and a coal refuse disposal area nearby. In October 1979 Peggs Run filed a petition for relief under Chapter XI of the Bankruptcy Code, 11 U.S.C. § 1101 et seq. An Order for Relief was entered, and that proceeding has been pending since the filing date. Peggs Run is a debtor-in-possession under the Bankruptcy Code. In May 1980 the Department of Environmental Resources (Department) filed a complaint in equity against Peggs Run and the three principal shareholders as individuals for alleged maintenance of a public nuisance and numerous violations[55 Pa.Cmwlth. 314] of the Clean Streams Law, Act of June 22, 1937, P.L. 1987, as amended, 35 P.S. § 691.1 et seq., the Air Pollution Control Act, Act of January 8, 1960, P.L. (1959) 2119, as amended, 35 P.S. § 4001 et seq., and the Rules and Regulations of the Environmental Quality Board, 25 Pa.Code § 1.1 et seq. The complaint requests injunctive relief and the posting of bonds to assure compliance with the orders. Presently before the Court are the preliminary objections of the corporate defendant and the individual defendants.

Peggs Run has filed a preliminary objection contesting the jurisdiction of this Court and a preliminary objection in the nature of a demurrer. In that first preliminary objection Peggs Run contends that the Department has in the past and is presently seeking imposition of criminal sanctions against Peggs Run and has thereby effected an election of remedies precluding the present action.

(W)e have no difficulty in accepting the conclusion that both the criminal penalties as well as the abatement remedies may be applied against a violator of The Clean Streams Law. Section 701, 35 P.S. § 691.701, clearly declares it the purpose of the act to provide additional and cumulative remedies to abate the pollution of the waters of this Commonwealth.

Department of Environmental Resources v. Fleetwood Borough Authority, 21 Pa.Cmwlth. 349, 352-3, 346 A.2d 867, 869 (1975).

In the second preliminary objection Peggs Run contends that the Department's complaint is a civil action restrained by the Bankruptcy Code. The main thrust of Peggs Run's argument is that the Bankruptcy Code provides for an automatic stay preventing all creditors from pursuing normal legal processes against the debtor's estate. Section 362 of the Bankruptcy Code provides in pertinent part:

[55 Pa.Cmwlth. 315] § 362. Automatic stay

(a) Except as provided in subsection (b) of this section, a petition filed under section 301, 302, or 303 of this title operates as a stay, applicable to all entities, of-

Page 767

(1) the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title;

(2) the enforcement, against the debtor or against property of the estate, of a judgment obtained before the commencement of the case under this title ....

11 U.S.C. § 362(a)(1), (2).

However, a reading of Section 362 must continue:

(b) The filing of a petition under section 301, 302, or 303 of this title does not operate as a stay-

(4) under subsection (a)(1) of this section, of the commencement or continuation of an action or proceeding by a governmental unit to enforce such governmental unit's police or regulatory power;

(5) under subsection (a)(2) of this section, of the enforcement of a judgment, other than a money judgment, obtained in an action or proceeding by a governmental unit to enforce such governmental unit's police or regulatory power....

11 U.S.C. § 362(b)(4), (5).

The question presented to this Court is whether the Department's complaint, charging the corporation [55 Pa.Cmwlth. 316] with violations of the cited statutes and regulations, and asking for affirmative relief and the posting of bonds, is a proceeding by a governmental unit to enforce its police or regulatory power and as such is exempted from the stay provisions of Section 362 of the Bankruptcy Code, or whether it is more akin to an action for enforcement of a money judgment to enforce the Department's police or regulatory power and as such is not exempted from the Bankruptcy Code's stay provisions.

We must conclude that the instant complaint, brought to enforce the Department's regulatory power, is not automatically stayed by the commencement of any proceeding in the bankruptcy court. Initially we note that the exception described in Section 362(b)(5) should be read in connection with part (a)(2) of the section; the instant case does not deal with a judgment obtained prior to October 1979. Secondly, we consider the analysis of...