In re Kish
| Decision Date | 18 August 1997 |
| Docket Number | Civil No. 97-1405(GEB). |
| Citation | 212 BR 808 |
| Parties | In re Barbara June KISH, Debtor. Barbara June KISH, Plaintiff/Appellant, v. Peter VERNIERO in his capacity as Attorney General of New Jersey, et al., Defendants/Respondents. |
| Court | U.S. District Court — District of New Jersey |
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Gail Weirauch Chester, Middlesex County Legal Services Corp., Perth Amboy, NJ, for appellant.
Marc Alan Krefetz, State of New Jersey Dept. of Law and Public Safety, Division of Law, Trenton, NJ, for appellees.
This matter comes before the Court on the appeal of Barbara June Kish ("the debtor" or "appellant") of the Bankruptcy Court's February 4, 1997 Final Order ("February 4th Order"), wherein the Bankruptcy Court entered summary judgment in favor of defendants pursuant to FED. R. Civ. P. 56. For the reasons set forth in this Memorandum Opinion, this Court will reverse in part, vacate in part, and remand for proceedings consistent with this Memorandum Opinion.
Between 1985 and 1987, the debtor was convicted of three separate motor vehicle infractions: driving under the influence of alcohol, driving without insurance, and driving with a revoked license. In re Kish, 204 B.R. 122, 123 (Bankr.D.N.J.1997). As a result, she received a further license suspension and was assessed a fine. Id. The DMV also assessed motor vehicle surcharges totaling $6000 ($4500 for the alcohol-related conviction and $1,500 for the other municipal offenses) pursuant to N.J.S.A. 17:29A-35. Id.
Following the convictions, and as a result of her suspended licence, the debtor could no longer drive to work. Id. at 124. Consequently, the debtor could not maintain her position as a key-to-disk operator and data entry supervisor and instead accepted a position as a convenience store clerk at a substantially reduced salary. Id. This, in turn, resulted in the debtor's inability to pay her surcharges and the imposition of additional penalties, interest and costs due to her failure to pay the original amount. Id. Although the debtor attempted to repay the surcharges on an installment basis, the DMV refused to adjust the repayment schedule and declined to reinstate her driver's license until the surcharges and attendant penalties, interest and costs were remitted in full. Id.
On September 20, 1995, with debts totaling in excess of $15,000, including the motor vehicle surcharges, fees and costs, the debtor filed her petition for relief under Chapter 7 of the Bankruptcy Code. Id. During the pendency of her bankruptcy case, the DMV took no action to collect the surcharge debt or to determine its dischargeability. Id. On December 20, 1995, the debtor received her discharge, and all creditors, including the DMV Office of Surcharges and Collections, were notified. Id.
On May 22, 1996, the DMV restored the debtor's driver's license for a fee. Id. According to the debtor, the DMV also advised her, both orally and in writing, that she did not owe anything to the DMV. Id. Five days before restoring her license, however, the DMV sent the debtor a collection letter demanding repayment of $6,050 in surcharges and costs, plus an unspecified amount of interest relating to the pre-petition incidents. Id. The debtor did not receive the letter until after her license had been restored. Id.
On August 15, 1996, the Bankruptcy Court entered an Order permitting the debtor to reopen her bankruptcy case to file an adversary proceeding to determine the dischargeability of a debt. Shortly thereafter, on August 30, 1996, the debtor filed an Adversary Complaint against defendants, Peter Verniero, in his capacity as Attorney General of New Jersey, the Division of Motor Vehicles ("DMV"), C. Richard Kamin, in his capacity as Director of DMV, the New Jersey Automobile Full Insurance Underwriting Association ("JUA"), and the New Jersey Market Transition Facility ("MTF"). The debtor's Adversary Complaint seeks the following relief:
See Adversary Complaint to Determine the Dischargeability of a Debt ("Adv.Compl.") ¶¶ 86-95.
On February 4, 1997, the Bankruptcy Court entered an Order granting defendants summary judgment. The court entered summary judgment after: (1) converting sua sponte defendants' Rule 12(b)(6) motion into a Rule 56 motion; (2) determining that the surcharge debt, net of administrative expenses, is nondischargeable under 11 U.S.C. § 523(a)(7); and (3) finding that the debtor's remaining claims were moot in light of the court's dischargeability ruling.
On February 10, 1997, the debtor filed a Notice of Appeal. She contends that the Bankruptcy Court erred as a matter of law: (1) by converting defendants' Rule 12(b)(6) motion without providing sufficient notice to the parties; and (2) by finding that the surcharge bills at issue constitute a "fine, penalty, or forfeiture to and for the benefit of a governmental unit." See Appellant's Brief at 1.
On April 25, 1997, after reviewing the parties' submissions for this appeal, this Court requested that the parties submit supplemental briefs regarding the impact of the Supreme Court's recent decision in Seminole Tribe of Florida v. Florida, ___ U.S. ___, 116 S.Ct. 1114, 134 L.Ed.2d 252 (1996) on this appeal.1 The Court also notified the Attorney General of the United States of a possible challenge to 11 U.S.C. § 106(a) pursuant to 28 U.S.C. § 2403 and Rule 24.1 of the General Rules for the District of New Jersey. To date, however, the Court has not received any response from the United States indicating an intention to intervene.
Bankruptcy Rule 8013 provides in pertinent part: 11 U.S.C.A. Rule 8013 (West Supp.1995); Resyn Corp. v. United States, 851 F.2d 660, 664 (3d Cir.1988). In defining the term "clearly erroneous" the United States Supreme Court has stated that "a finding is clearly erroneous when, although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conclusion that a mistake has been committed." United States v. U.S. Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 542, 92 L.Ed. 746 (1948). A bankruptcy court's conclusions of law are subject to plenary review. Brown v. Pennsylvania State Employees Credit Union, 851 F.2d 81, 84 (3d Cir.1988). Where mixed questions of law and fact are presented, the appropriate standard must be applied to each component. In re Sharon Steel Corp., 871 F.2d 1217, 1222 (3d Cir.1989).
As noted above, on April 25, 1997, this Court asked the parties to submit supplemental briefs regarding the possible impact Seminole Tribe may have on this appeal.2 Appellant responded by arguing that consideration of the instant appeal does not implicate the Eleventh Amendment because: (1) the Eleventh Amendment was not raised below by either the parties or the Bankruptcy Court and should not be raised for the first time on appeal; (2) the JUA and the MTF are the only real parties in interest remaining in this appeal and, thus, they are not entitled to Eleventh Amendment immunity because they are not arms of the State of New Jersey; and (3) appellant is seeking only declaratory and injunctive relief, rather than monetary relief from the treasury of the State of New Jersey. Appellant also contends that, even assuming that the Eleventh Amendment is somehow implicated in this matter, the DMV — the only arm of the State — waived its immunity because it "made a general appearance in this action, never objected to the Bankruptcy Court's jurisdiction, never claimed any defense of sovereign immunity, and was successful in winning a summary judgment in its favor on the merits." See Appellant's Supplemental Brief ("App.Supp.Br.") at 11. Finally, appellant asserts that Congress effectively abrogated the States' Eleventh Amendment immunity by enacting 11 U.S.C. § 106(a) pursuant to § 5 of the Fourteenth Amendment. For the following reasons, each of these arguments must fail.
Appellant first argues that this Court should not consider whether the Eleventh Amendment impacts on the instant appeal because neither the parties nor the Bankruptcy Court raised this issue below. Appellant is wrong. This Court recently observed that the Eleventh Amendment, in the wake of the Supreme Court's decision in Seminole Tribe, "is jurisdictional in the same sense as the complete diversity requirement, or the well-pleaded complaint rule." In re Fennelly, 212 B.R. 61 (D.N.J.1997) (G...
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