In re Maloney
| Decision Date | 30 December 1996 |
| Docket Number | Bankruptcy No. 196-22241-575. |
| Parties | In re Brian MALONEY, Debtor. |
| Court | United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — Eastern District of New York |
Corash & Hollender, P.C. by Paul Hollender, Staten Island, NY, for Debtor.
Behrins & Behrins, P.C. by Bruce G. Behrins, Staten Island, NY, for Rita Maloney.
Brian Maloney ("Debtor") has moved by order to show cause for, among other things, a determination that the automatic stay arising under 11 U.S.C. § 362(a) in this Chapter 7 case operates to preclude his continued incarceration pursuant to a state court order. Specifically, the Debtor seeks relief from a commitment order issued by the Supreme Court of the State of New York, Richmond County (the "State Court"), based upon a finding that Debtor had failed to comply with the terms of a prior State Court contempt order requiring, among other things, Debtor's payment of certain amounts to his former wife as an equitable distribution of marital property. The commitment order, entered on December 16, 1996, provides that Debtor shall be held for a term of ninety days commencing on that same date.
The Court heard argument on Debtor's motion on December 24, 1996 and, having considered thoroughly the parties' documentary and oral submissions, hereby makes its findings and conclusions. The Court has jurisdiction of this matter pursuant to 28 U.S.C. § 1334.
The following facts are undisputed. Debtor, who is a physician, and his former wife, Rita Maloney ("Mrs. Maloney"), were married in 1969. They have two children, have lived apart since 1980, and were divorced in 1986 following protracted litigation. In connection with the parties' divorce and equitable distribution proceedings, the State Court found that the Debtor's medical license was marital property for the purposes of equitable distribution and determined that Mrs. Maloney was entitled to 35% of the value of the Debtor's medical license. The State Court entered a judgment requiring Debtor to, among other things, make payments to Mrs. Maloney totaling approximately $680,000 over a period of ten years. Debtor unsuccessfully appealed the judgment; the parties have been engaged in litigation over this financial obligation ever since.
On September 17, 1990, the State Court entered an amendment to its original order and judgment, upon a stipulation of the parties, restructuring Debtor's payment obligations in respect of the equitable distribution award. Debtor defaulted on the payments, and Mrs. Maloney commenced contempt proceedings in 1994, which led to the State Court's entry of a consent order on February 7, 1995 (1) finding Debtor in wilful contempt of that court's September 17, 1990 order and judgment, (2) providing that Debtor could purge himself of that contempt by complying with a further restructured payment schedule in respect of the equitable distribution award and maintaining certain insurance until the award is paid in full, and (3) providing that, in the event of Debtor's failure to purge himself as described above, application could be made for a warrant of arrest directing the sheriff "to seize and arrest Debtor forthwith, and to bring him before this court to be committed or for such further disposition as the court shall direct."
Debtor continued to default on his payment obligations. An arrest warrant issued upon Mrs. Maloney's application and further contempt proceedings were held beginning in the late summer of 1996. The State Court found that Debtor had failed to purge himself of his previously established contempt by complying with its February 7, 1995 order, and entered the commitment order now at issue, on December 16, 1996. Debtor has been incarcerated since that date and is currently in the Bronx House of Detention.
On December 19, 1996, Debtor, who is employed as a physician by the New York City Fire Department and also maintains a private practice on Staten Island, filed a petition for relief under Chapter 7 of the Bankruptcy Code. Debtor presented the instant order to show cause to this Court on December 20, 1996.
Debtor argues that his incarceration, arising as it does from protracted proceedings directed at the collection of a pre-petition obligation, violates the automatic stay. For the following reasons, the Court holds that it does not and, accordingly, denies Debtor's motion in its entirety.
As a preliminary matter, the Court notes that it is concerned solely with the applicability of the provisions of the 11 U.S.C. section 362 automatic stay to the State Court's commitment order entered on December 16, 1996 (the "December 16 Order"). The parties have been engaged in acrimonious litigation over their familial and economic relationships for more than a decade and, not surprisingly, bring with them strong views as to the equities of their relative positions on family law issues and the merits of the State Court's decisions. The merits of those decisions are not, however, subject to review here. The Court presumes for purposes of this analysis the validity under New York State law of the December 16 Order. The fundamental question before this Court at this time is whether the continued execution of the December 16 Order is stayed by section 362(a) of the Bankruptcy Code in light of Debtor's Chapter 7 filing.
Section 362(a) of the Bankruptcy Code provides, in pertinent part, as follows:
11 U.S.C. § 362(a).
11 U.S.C. § 362(b).
The filing of a petition in bankruptcy thus stays the commencement or continuation of all state or federal litigation against the debtor based on claims or causes of action which arose prior to the filing of the bankruptcy petition, and the enforcement of judgments arising from such claims, other than those proceedings that are specifically excepted by statute. In re Newman, 196 B.R. 700, 703 (Bankr.S.D.N.Y.1996). The imposition of the automatic stay protects the estate for the benefit of creditors and promotes the orderly disposition of the property of the estate. See Carver v. Carver, 954 F.2d 1573, 1576 (11th Cir.1992), cert. denied, 506 U.S. 986, 113 S.Ct. 496, 121 L.Ed.2d 434 (1992); In re Rook, 102 B.R. 490, 492 (Bankr. E.D.Va.1989), aff'd, 929 F.2d 694 (4th Cir. 1991).
It is well-established that New York State recognizes two types of judicial contempt orders — civil and criminal. N.Y. Judiciary Law, §§ 750, 753 (McKinney 1975 and Supp.1996); In re Newman, 196 B.R. 700, 703 and cases cited therein. Civil contempt serves to vindicate the private rights of a party to litigation. The penalty assessed against a party under a civil contempt order compensates the other party to the litigation or operates to coerce compliance with a court order for the other party's benefit. In re Newman, 196 B.R. at 703. An order which by its terms permits the debtor to avoid punishment by complying with the court's directive is a civil contempt order. In re Moon, 201 B.R. 79, 84 (Bankr.S.D.N.Y.1996). Criminal contempt orders, on the other hand, serve to sanction offenses against public justice and to compel respect for court orders, rather than to enforce the rights of a party. In re Newman, 196 B.R. at 704 and cases cited therein.
Courts determine whether a contempt order is civil or criminal not by how the order is denominated (if, indeed, the issuing court even labels the order as civil or criminal), but, rather, by examining the provisions of the order itself and its surrounding circumstances. See, e.g., In re Rook, 102 B.R. at 493-494. A contempt order that permits the contemnor to mitigate or avoid punishment by taking action consistent with the vindication of the rights of another party to the litigation is considered a civil contempt order. A contempt order that, on the other hand, incarcerates a party for a definite period of time or imposes another penalty, without any provision for purge of the contempt, does not serve...
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Wheeler-Brown v. Brown
...contempt actions are specifically exempted from the application of the automatic stay. (11 USC § 362 [b] [1]; see also In re Maloney, 204 BR 671 [ED NY 1996] [commitment order that is criminal in nature, as it was designed to punish debtor for disregarding state court's prior order, does no......
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