In re Erickson
| Decision Date | 14 August 1989 |
| Docket Number | Bankruptcy No. 88 B 3124 A,Adv. No. 88 E 1083. |
| Citation | 104 BR 364 |
| Parties | In re Stanley Wayne ERICKSON, Debtor. Stanley Wayne ERICKSON, Plaintiff, v. DISTRICT COURT OF the STATE OF COLORADO, Defendant. |
| Court | U.S. Bankruptcy Court — District of Colorado |
George T. Carlson, Denver, Colo., for debtor/plaintiff.
Carol Mullins, Asst. Atty. Gen., Denver, Colo., for defendant.
ORDER ON MOTION FOR SUMMARY JUDGMENT
This matter is before the Court on the Motion for Summary Judgment, With Citation to Authorities ("Motion for Summary Judgment") filed by Stanley Wayne Erickson ("Debtor" or "Plaintiff") and the briefs filed by both parties. The parties have stipulated that the issue presented in Plaintiff's Motion for Summary Judgment is dispositive of the case and have requested that this Court rule thereon in the normal course. Accordingly, this Order issues.
The facts which are pertinent to this decision and which are undisputed by the parties are as follows:
1. On March 15, 1988, Debtor filed a voluntary petition pursuant to Chapter 13 of Title 11, United States Code ("Bankruptcy Code" or "Code"), and listed Defendant, Jefferson County District Court, as an unsecured creditor in the amount of $1,300.00.
2. Prior to the filing herein, Debtor pled guilty to certain criminal charges, the penalty for which included one to four years prison term. Debtor was sentenced to a term of six months in jail, which the court recommended be served in a work release program, and to five years of probation. The terms of Debtor's probation included payment to the court of $75.00 for the Victim Compensation Fund, $2,857.13 in restitution ($2,484.98 of which was to compensate the victims for their daughter's burial expenses),1 $100.00 supervision fee, and $15.00 court costs — for a total of $3,047.13 to be paid at the rate of $50.00 per month.
3. The Defendant, despite proper notice, filed no objection to confirmation of the Chapter 13 plan. The Defendant was included among the Class 4 unsecured creditors who were to receive a pro rata share of $100.00 under the plan.
4. On June 7, 1988, the United States Bankruptcy Court for the District of Colorado entered its order confirming the Debtor's Chapter 13 plan.
5. Debtor has not made a payment to Jefferson County District Court since the filing of this Chapter 13.
6. Defendant contends that Debtor is in violation of his probation and sought revocation of the probation order. The District Court set a hearing for December 19, 1988.
7. On December 2, 1988, Debtor filed his Complaint for Injunction ("Complaint") pursuant to 11 U.S.C. § 105(a).
8. On December 20, 1988, upon Debtor's motion for restraining order and following hearing thereon, this Court entered an order enjoining the Defendant District Court from revoking Debtor's probation.
The issues presented by the Motion for Summary Judgment on Debtor's Complaint are (1) whether the Debtor's criminal restitution obligation is a debt which is dischargeable pursuant to 11 U.S.C. § 1328(a); and (2) whether, upon answering the foregoing affirmatively, the Bankruptcy Court can permanently enjoin the state from revoking probation of the Debtor due to nonpayment of restitution obligations when the plan has been confirmed but an order of discharge has not entered.
The Debtor argues that In re Cullens, 77 B.R. 825 (Bankr.D.Colo.1987), previously decided by this Court, is dispositive of the issues. Defendant, on the other hand, argues that this Court should reconsider its prior decision in light of the contrary authority of other decisions from this District. In re Ferris, 93 B.R. 729 (Bankr.D.Colo. 1988); In re Johnson, 32 B.R. 614 (Bankr. D.Colo.1983). Because there are no material facts in dispute, and in light of the parties' stipulation that the Motion for Summary Judgment is dispositive of the issue, summary judgment may be granted as a matter of law.
The question whether payments in the nature of criminal restitution are dischargeable in bankruptcy has been addressed in different procedural contexts by a number of courts, including the United States Supreme Court in Kelly v. Robinson, 479 U.S. 36, 107 S.Ct. 353, 93 L.Ed.2d 216 (1986). As a result, there are as many and divergent analyses, particularly as to whether restitution obligations are "debts," as there are courts which have visited this question. Generally, the analytical construct includes first, a determination whether restitution payments are "debts" as defined by section 101(11) and second, if they are "debts," whether they are dischargeable. Regardless of the specific approach used, the majority of courts have concluded that restitution payments are not "debts" and, therefore, are non-dischargeable whether in Chapter 13 or Chapter 7. See, In re Johnson-Allen, 871 F.2d 421, 424 (3rd Cir.1989), reh'g denied (April 27, 1989), citing In re Kohr, 82 B.R. 706, 712 (Bankr.M.D.Penn.1988); In re Thompson, 77 B.R. 646, 648 (Bankr.E.D.Tenn.1987); In re Oslager, 46 B.R. 58, 82 (Bankr.M.D. Penn.1985); In re Pellegrino, 42 B.R. 129, 132 (Bankr.D.Conn.1984); In re Johnson, 32 B.R. 614, 616 (Bankr.D.Colo.1983); In re Button, 8 B.R. 692, 694 (Bankr.W.D.N.Y. 1981). See also, In re Ferris, 93 B.R. 729 (Bankr.D.Colo.1988). This divergence in analyses, both in this District and without, is indicative of the difficulty this question presents.
This Court has also previously examined this issue in In re Cullens, supra. In Cullens, a Chapter 13 debtor sought to discharge a criminal restitution obligation pursuant to his confirmed Chapter 13 plan. As in the instant case, the governmental agency had not objected to confirmation. Cullens, without explicitly deciding whether restitution payments are "debts," relied on the weighty precedent of the majority opinion of Kelly v. Robinson, supra, which held that 11 U.S.C. § 523(a)(7) excepts from a Chapter 7 discharge any payment obligation a state criminal court imposes as part of a criminal sentence. Id. at 107 S.Ct. at 361. Cullens then went the next step and accepted the invitation of the Kelly dissent which opined that the Supreme Court's solution left open the possibility that such restitution obligations are dischargeable under Chapter 13. See, Kelly v. Robinson, supra 107 S.Ct. at 366 n. 6. This Court interpreted the plain language of section 1328(a) to provide a broad discharge of all debts, (including fines, penalties and forfeitures as enumerated under section 523(a)(7)), excepting only alimony, maintenance and support, (section 523(a)(5)), and debts of the types specified under section 1322(b)(5) dealing with secured claims extending beyond the date of the plan. See, In re Cullens, supra at 827 and 828.
Since Cullens, two significant decisions have been handed down by the Supreme Court and Third Circuit, respectively. Each influences this Court to render this opinion rather than rest on Cullens.
Kelly v. Robinson, in sidestepping the issue of whether restitution obligations are "debts," went so far as to express "serious doubts" that Congress intended that they be considered "debts." Kelly v. Robinson, supra 107 S.Ct. at 361. What is most remarkable about the majority opinion in Kelly is that while in one breath Kelly fails to decide whether criminal penalties are debts, in the next it launches into an analysis of section 523(a)(7) and glosses over a very basic requisite contained in the language of section 523(a). Only a "debt" may be excepted from discharge. Following this line of logic, either restitution is not a debt and the Bankruptcy Code does not apply in its entirety, or it is a debt and section 523 applies and the interpretation which the Supreme Court has given to section 523(a)(7) will stand. Without belaboring the point, logically, one does not get to an analysis of section 523 without first reaching the determination that the obligation which is sought to be discharged is a "debt" within the meaning of section 101(11).
The "serious doubts" expressed by the Court in Kelly v. Robinson arose out of the Court's review of the cases dealing with the dischargeability of criminal fines and penalties under the predecessor Bankruptcy Act. The Court recognized that by the "clear statutory language" of the Act, id. 107 S.Ct. at 358, criminal fines and penalties were "debts" which could have been discharged. Nonetheless, courts had almost uniformly ruled that such obligations were not "debts" for such purposes. "Thus, Congress enacted the Code in 1978 against the background of an established judicial exception to discharge for criminal sentences, including restitution orders, an exception created in the face of a statute drafted with considerable care and specificity." Id. at 359.
The United States Supreme Court, in United States v. Ron Pair Enterprises, Inc., 489 U.S. ___, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989), indirectly revisited Kelly v. Robinson in the context of statutory interpretation through reference to pre-Code practice. In Ron Pair the issue before the Court was whether 11 U.S.C. § 506(b) entitles a nonconsensual oversecured creditor to receive postpetition interest.
The respondents in Ron Pair urged that pre-Code practice was at odds with the conclusion that the Ron Pair Court would ultimately reach (that section 506 entitles a creditor to receive postpetition interest on a nonconsensual oversecured claim allowed in a bankruptcy proceeding) and that the decisions in Kelly v. Robinson, supra, and Midlantic National Bank v. New Jersey Department of Environmental Protection, 474 U.S. 494, 106 S.Ct. 755, 88 L.Ed.2d 859 (1986), required the Ron Pair Court to interpret section 506 in light of...
To continue reading
Request your trial