In re Gilliam

• Decision Date: 31 October 1986
• Docket Number: Adv. No. 386-0129.,Bankruptcy No. 385-02143
• Citation: 67 BR 83
• Parties: In re Othar GILLIAM, Debtor. Othar GILLIAM, Plaintiff, v. METROPOLITAN GOVERNMENT OF NASHVILLE and Davidson County, Tennessee and Thomas H. Shriver, District Attorney General, Defendants.
• Court: U.S. Bankruptcy Court — Middle District of Tennessee

67 B.R. 83 (1986)

In re Othar GILLIAM, Debtor.

Othar GILLIAM, Plaintiff, v. METROPOLITAN GOVERNMENT OF NASHVILLE and Davidson County, Tennessee and Thomas H. Shriver, District Attorney General, Defendants.

Bankruptcy No. 385-02143, Adv. No. 386-0129.

United States Bankruptcy Court, M.D. Tennessee.

October 31, 1986.

Edgar M. Rothschild, III, Thomas F. Bloom, Rothschild & Lefkovitz, Nashville, Tenn., for debtor.

Kevin S. Key, Metropolitan Atty., Nashville, Tenn., for Metropolitan Government of Nashville and Davidson County, Tenn.

James W. Thompson, Asst. Atty. Gen., Nashville, Tenn., for Dist. Atty. Gen. Shriver.

MEMORANDUM

KEITH M. LUNDIN, Bankruptcy Judge.

A Chapter 13 debtor seeks to enjoin the State of Tennessee from revoking the debtor's probation and suspended sentence for a DUI conviction.¹ The only unsatisfied condition of probation is payment to the state of a criminal fine and court costs. The debtor's confirmed Chapter 13 plan calls for full payment of the fine and costs. As explained below neither the automatic stay of 11 U.S.C. § 362 nor the discharge injunction of 11 U.S.C. § 524 is available to protect the debtor from probation revocation. The debtor has failed to demonstrate facts in support of other injunctive relief.

The following constitute findings of fact and conclusions of law. Bankr.R. 7052. This is a core proceeding. 28 U.S.C. §§ 157(b)(2)(A), (I), (O) (1982 ed. & Supp. II 1984).

I.

The facts are stipulated:

1. On July 19, 1985, the debtor filed a Chapter 13 petition.

2. The state criminal court clerk was listed as an unsecured claimholder in the amount of $368.75, representing a criminal fine of $250.00 for conviction of driving under the influence, plus court costs.

3. Except for payment of the fine and court costs, the debtor has fulfilled all requirements of his DUI sentence, including 48 hours in jail, five sessions of a chemical dependency program, and attendance at Alcoholics Anonymous.

4. On September 18, 1985, the debtor's Chapter 13 plan was confirmed and payments commenced. The plan proposes to pay 100% of the criminal fine and court costs.

5. On November 1, 1985, the debtor received a letter from the Department of Probation indicating that failure to pay the fine and court costs would "result in a revocation hearing and probably a 30 day jail sentence".

6. On December 27, 1985, Thomas H. Shriver, District Attorney General for Davidson County, Tennessee, filed a petition in the state criminal court to revoke probation and suspended sentence on the ground that the debtor "has failed to pay his fine and court costs as ordered by the court, thus violating a condition of his probation".

7. On January 14, 1986, General Sessions Judge Barbara Haynes heard the petition to revoke probation and suspended sentence, and extended the debtor's probation for a period of one year.

On April 10, 1986, debtor filed this "Complaint to Determine Status of Claim for Criminal Court Fines and Costs and Whether Revocation of Probation Proceedings for Nonpayment is Stayed by 11 U.S.C. Section 362." The debtor's theory is that the criminal fine and court costs are "debts" which may be dealt with in a Chapter 13 plan and discharged² upon completion of payments. The debtor reasons that the automatic stay of § 362 and the discharge injunction of § 524 prohibit the state to seek collection of its claims other than to accept payments under the plan. In the alternative, the debtor argues this court should exercise its equitable powers pursuant to 11 U.S.C. § 105 to enjoin the state from revoking probation while the debtor pays the state through the plan.

II.

The debtor's obligations to pay a criminal fine and court costs constitute "debts" for bankruptcy purposes. This holding is a logical deduction from Brown v. Shriver (In re Brown), 39 B.R. 820 (Bankr.M.D.Tenn.1984). In Brown we held that a state criminal court order to pay restitution as a condition of probation was a debt. As explained in Brown:

The relationship memorialized by a criminal court award of restitution is not beyond the scope of "debt" for bankruptcy purposes. "Debt" dischargeable in bankruptcy is not restricted to obligations incurred in consumer or business transactions, but includes all obligations, however, incurred. 11 U.S.C.A. § 101(11) (West 1979) defines "debt" broadly as a "liability on a claim." "Claim" is broadly defined as any "right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured." 11 U.S.C.A. § 101(4)(A) (West 1979). The legislative history indicates that "claim" should be interpreted to foster the widest scope of debtor relief:

The definition is any right to payment. . . . By this broadest possible definition, and by the use of the term throughout the title 11 . . . the bill contemplates that all legal obligations of the debtor, no matter how remote or contingent, will be able to be dealt with in the bankruptcy case. It permits the broadest possible relief in the bankruptcy court.

H.R.REP. NO. 595, 95th Cong., 1st Sess. 309 (1977); S.REP. NO. 989, 95th Cong., 2d Sess. 21 (1978), U.S.Code Cong. & Admin.News 1978, pp. 5787, 5808, 6266. (emphasis added).

* * * * * *

If the Bankruptcy Code said that only orders to pay money by civil courts are debts for bankruptcy purposes, then credence could be given to the defendant\'s argument that a criminal court restitution order does not embody a "debt" dischargeable in bankruptcy. However, nothing in the Bankruptcy Code suggests that only civil courts enter orders to pay money that are subject to discharge in bankruptcy.

Id. at 822. The holding in Brown is consistent with the decisions of other courts. See Robinson v. McGuigan, 776 F.2d 30 (2d Cir.1985) cert. granted sub nom. Kelly v. Robinson, ___ U.S. ___, 106 S.Ct. 1181, 89 L.Ed.2d 298 (1986);³ Heincy v. Superior Court (In re Heincy), 58 B.R. 930 (Bankr.S.D.Cal.1986). Congress has considered but not enacted legislation to change this result.⁴

The logic of Brown is especially compelling in the context of a court order to pay a fine. Congress contemplated that fines payable to a governmental entity are debts for bankruptcy purposes. Among the exceptions to the dischargeability of debts in bankruptcy, Congress positioned 11 U.S.C. § 523(a)(7):

(a) A discharge . . . does not discharge . . . any debt —

(7) to the extent such debt is for a fine, . . . payable to . . . a governmental unit. . . . (emphasis added).

The provision for an exception to the dischargeability of debts for fines is persuasive that Congress intended fines to be debts in bankruptcy cases. See also 11 U.S.C. § 726(a)(4) (fourth priority of distribution in Chapter 7 cases for "any fine").

Because a criminal fine and court costs constitute debts, these obligations are subject to discharge in a Chapter 13 case. 11 U.S.C. § 1328(a) requires: "as soon as practicable after completion by the debtor of all payments under the plan, . . . the court shall grant the debtor a discharge of all debts provided for by the plan. . . ." (emphasis added).

The discharge in a Chapter 13 case after completion of all payments under a confirmed plan is broader than the discharge available in a Chapter 7 case and includes the potential for discharge of a criminal fine and court costs. As the Court of Appeals for this circuit explained in Memphis Bank & Trust v. Whitman, 692 F.2d 427, 428 (6th Cir.1982), the discharge in a Chapter 13 case relieves the debtor of all debts except "alimony and child support, claims not included in the plan and certain long-term obligations voluntarily excepted from the plan. . . . The nine exceptions to discharge, including fraud, applicable to Chapter 7 are not applicable to Chapter 13."⁵ The exception to discharge of criminal fines found in 11 U.S.C. § 523(a)(7) is not applicable in a Chapter 13 case if the conditions in § 1328(a) are satisfied.

The discharge injunction is broad enough to prohibit collection of a criminal fine or court costs after completion of all payments in a Chapter 13 case. The discharge after completion of all payments in a Chapter 13 case "operates as an injunction against the commencement or continuation of an action, the employment of process, or an act, to collect, recover or offset any debt discharged under § 1328 as a personal liability of the debtor. . . ." 11 U.S.C. § 524(a)(2) (1982 ed. & Supp. II 1984). As explained in Brown:

In the absence of a successful action under §§ 727 or 523, bankruptcy courts have the power and the responsibility to protect discharged debtors from any effort to collect a discharged debt even if the underlying obligation arises from criminal conduct. . . . Section 524(a)(2) enjoins the commencement or continuation of any action to collect or recover the discharged debt, releases the debtor from any legal duty to repay the obligation and renders the debt uncollectible by any legal process. . . .

. . . A criminal proceeding continued or initiated to recover or collect a discharged debt is enjoined by the § 524 discharge injunction.

39 B.R. at 828-29 (footnotes omitted).

However, the discharge injunction is not yet in effect in this case. Section 1328(a) operates to delay the entry of the discharge in a Chapter 13 case until completion of payments under the plan. During the interim between filing and discharge, the Chapter 13 debtor is protected from collection efforts not by § 524 but by the automatic stay of 11 U.S.C. § 362.

The automatic stay and the discharge injunction are not coextensive.⁶ 11 U.S.C. § 362(b)(1) (1982 ed. & Supp. II 1984) specifically excepts from the stay "the commencement or continuation of a criminal action or proceeding against the debtor." This exception does not appear in § 524, leading to the conclusion in Brown that even a criminal proceeding to collect a discharged debt transgresses the discharge injunction...