In re Kearns
| Citation | 161 BR 701 |
| Decision Date | 24 November 1993 |
| Docket Number | No. 92-2448-KHV.,92-2448-KHV. |
| Parties | In re Victor W. KEARNS Jr., Debtor. Victor W. KEARNS, Jr., Plaintiff/Appellant, v. James R. ORR, Bennett, Lytle, Wetzler, Winn & Martin; Lynda J. Leibner; Peggy A. Elliott; and Honorable Larry McClain, Defendants/Appellees. |
| Court | U.S. District Court — District of Kansas |
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Victor William Kearns, Jr., pro se.
Bruce F. Landeck, Bennett, Lytle, Wetzler, Winn & Martin, Prairie Village, KS, for James R. Orr, Bennett, Lytle, Wetzler, Winn & Martin.
J. Patrick Shepard, Hazelton, Laner & Bason, Kansas City, MO, for Lynda J. Leibner fka Lynda J. Kearns.
Carl A. Gallagher, Office of the Atty. Gen., Topeka, KS, for Larry McClain.
This matter comes before the court on appeal from various orders of the United States Bankruptcy Court granting appellees' motions to dismiss. On May 22, 1991, Victor William Kearns, Jr., filed for relief under Chapter 7 of the United States Bankruptcy Code, 11 U.S.C. § 101, et al.1 See Case No. 91-21100-7, United States Bankruptcy Court for the District of Kansas. On September 8, 1992, Kearns filed an adversary complaint under § 362(h) against his ex-wife Lynda J. Leibner, the law firm of Bennett, Lytle, Wetzler, Winn & Martin Bennett Lytle, James R. Orr (a partner with Bennett Lytle who represented Leibner), Johnson County District Court Trustee Peggy A. Elliott, and Johnson County District Judge Larry McClain. In that complaint, Kearns claimed that defendants had brought, prosecuted, and/or adjudicated contempt proceedings against him in state court for failure to pay maintenance and child support, and that such conduct constituted a willful violation of the automatic stay. Defendants filed motions to dismiss and on November 13, 1992, the bankruptcy court sustained those motions as to Orr, Bennett Lytle, Elliott and McClain. On February 17, 1993, the bankruptcy court entered an order of dismissal as to Leibner. Kearns claims that these orders were erroneous as a matter of law, and he appeals them to this court.2
Having thoroughly reviewed the briefs of the parties and the record from the bankruptcy court, the court has determined that the facts and legal arguments are adequately presented in the briefs and record, and that the decisional process would not be significantly aided by oral argument. Accordingly, oral argument will not be allowed pursuant to Bankruptcy Rule 8012.
In dismissing Kearns' complaint, the bankruptcy court held that defendants did not violate the automatic stay because (1) § 362(b)(2) provides an exception from the stay for the collection of alimony or support from property that is not property of the estate, and (2) Kearns' post-petition earnings were not property of the estate under § 523(a)(6). As to defendant McClain, the bankruptcy court found that the doctrine of absolute judicial immunity barred Kearns' complaint.
An order granting a motion to dismiss is subject to de novo review. See Morgan v. City of Rawlins, 792 F.2d 975, 978 (10th Cir.1986). When considering a motion to dismiss, the court must assume plaintiff's factual allegations to be true. Mitchell v. King, 537 F.2d 385, 386 (10th Cir.1976). The court may not grant a motion to dismiss "unless it appears without doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Kennedy v. Meacham, 540 F.2d 1057, 1060 (10th Cir.1976) (citations omitted).3
On January 5, 1993, the bankruptcy court denied Kearns a discharge in bankruptcy under §§ 727(a)(3) and (a)(4)(A). Specifically, the bankruptcy court held that Kearns had failed to keep adequate records, made false oaths at the § 341 creditors meeting, and had failed to disclose all interests and transfers in real estate. Defendants argue that in light of the denial of discharge, this appeal is moot for lack of case or controversy.4 On consideration, however, the court has concluded that an action for willful violation of the automatic stay under § 362(h) can be maintained even after the underlying bankruptcy proceedings have terminated. Price v. Rochford, 947 F.2d 829, 830 (7th Cir.1991) (). See also Carroll v. Tri-Growth Centre City, Ltd., 903 F.2d 1266, 1270 (9th Cir.1990) (). Therefore, the court will address the merits of this appeal.5
Whether a judge is immune from suit depends upon whether, at the time of the challenged action, he or she had jurisdiction over the subject matter of the issue presented for decision. Stump v. Sparkman, 435 U.S. 349, 356, 98 S.Ct. 1099, 1104, 55 L.Ed.2d 331 (1978). The scope of jurisdiction must be construed broadly, however, and a judge is entitled to immunity even if he or she acted in error, maliciously, or outside the scope of his or her authority. Id. Moreover, a judge is subject to liability only for action in the clear absence of all jurisdiction. Stump, 435 U.S. at 356-357, 98 S.Ct. at 1104-05.
Kearns alleges that defendant McClain (1) lacked jurisdiction and authority to lift or modify the bankruptcy stay; (2) acted outside the scope of his authority; and (3) disregarded Kearns' rights afforded under the Bankruptcy Code. These allegations are precisely the type which fall under the doctrine of absolute judicial immunity. See, e.g., Van Sickle v. Holloway, 791 F.2d 1431, 1435 (10th Cir.1986) () (quoting Pierson v. Ray, 386 U.S. 547, 554, 87 S.Ct. 1213, 1218, 18 L.Ed.2d 288 (1967)).
At most, Kearns alleges that defendant McClain acted maliciously and outside the scope of his authority. Although there is a split of authority on the issue, many courts have held that nonbankruptcy courts have concurrent jurisdiction to determine whether the automatic stay applies to nonbankruptcy proceedings before the court. See, e.g., NLRB v. Edward Cooper Painting, Inc., 804 F.2d 934, 939 (6th Cir.1986); In re Baldwin-United Corp. Litigation, 765 F.2d 343, 347 (2d Cir.1985); In re Bona, 124 B.R. 11, 15 (S.D.N.Y.1991); In re Mann, 88 B.R. 427, 429 (Bankr.S.D.Fla.1988). See also Smith-St. John Manuf. Co. v. Price, 1989 WL 7922, Case No. 88-2108 (D.Kan. Jan. 9, 1989) ().6 In light of these authorities, the alleged actions of defendant McClain certainly were not "in clear absence of all jurisdiction." Defendant McClain was immune from suit and the bankruptcy court properly dismissed the complaint as to him.
Kearns alleges that on June 16, July 7, and July 30, 1992, defendants prosecuted and/or adjudicated indirect civil contempt proceedings against him for nonpayment of maintenance and child support, knowing that he had filed bankruptcy and that the automatic stay had not been modified. Kearns contends that such actions constitute a willful violation of the automatic stay.
The filing of a bankruptcy petition operates as a stay against the enforcement of judgment or proceedings against the debtor or against property of the estate. 11 U.S.C. § 362(a). A deliberate act in violation of the stay, which the violator knows to be in existence, justifies an award of actual damages under § 362(h). See In re Drexel Burnham Lambert Group Inc., 120 B.R. 724, 738 (Bankr.S.D.N.Y.1990). An additional finding of maliciousness or bad faith warrants the imposition of punitive damages. Id. If there is uncertainty as to whether the automatic stay applies, the prudent practitioner should petition the court for clarification.7 See, e.g., In re Brock, 58 B.R. 797, 804 (Bankr.S.D.Ohio 1986); In re Daugherty, 117 B.R. 515, 517 (Bankr.D.Neb.1990). Otherwise, he or she takes a calculated risk of being held in contempt. Brock, 58 B.R. at 804.
The contempt proceedings arose from a confinement order which the District Court of Johnson County entered on May 12, 1992, directing Kearns to serve each weekend in the county jail. The order stated (1) that at a previous hearing the court had found Kearns guilty of indirect civil contempt and had ordered him to serve each weekend in the county jail; (2) that the previous order had been stayed on the condition that Kearns make certain support payments as ordered; and (3) that Kearns had failed to abide by that order. The order further provided that Kearns could earn two credit hours toward every weekend in custody for each payment of $100.
On January 21, 1992, prior to the contempt proceedings, the bankruptcy court had held that Kearns' alimony and support obligations to Leibner were nondischargeable; however, the court did not rule on the legitimacy of the amounts claimed by Leibner.8 In dismissing Kearns' complaint for willful violation of the automatic stay, the bankruptcy court held that since the debts to Leibner were nondischargeable, the contempt proceedings were excepted from the automatic stay under § 362(b)(2), because Kearns' post-petition earnings were not property of the bankruptcy estate.
Section 362(b)(2) excepts from the automatic stay "the collection of alimony, maintenance, or support from property that is not property of the estate." 11 U.S.C. § 362(b)(2). Kearns argues, and the court agrees, that the contempt proceedings against Kearns were brought against him personally and, therefore, are not excepted under § 362(b)(2). As a Chapter 7 debtor, Kearns' post-petition earnings were not property of the estate and would have been available to pay nondischargeable support obligations.9Mann, 88 B.R. at 430 (...
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