Skinner, In re

• Decision Date: 22 October 1990
• Docket Number: No. 89-4111,89-4111
• Citation: 917 F.2d 444
• Parties: , 23 Collier Bankr.Cas.2d 1559, 21 Bankr.Ct.Dec. 49, Bankr. L. Rep. P 73,664 In re Stephen Wayne SKINNER and Marlene McCausland Skinner, Debtors. MOUNTAIN AMERICA CREDIT UNION, formerly known as Utah State Credit Union, Appellant, v. Stephen Wayne SKINNER and Marlene McCausland Skinner, Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 444

917 F.2d 444

59 USLW 2287, 23 Collier Bankr.Cas.2d

1559, 21 Bankr.Ct.Dec. 49,

Bankr. L. Rep. P 73,664

In re Stephen Wayne SKINNER and Marlene McCausland Skinner, Debtors MOUNTAIN AMERICA CREDIT UNION, formerly known as Utah State Credit Union, Appellant, v. Stephen Wayne SKINNER and Marlene McCausland Skinner, Appellees.

No. 89-4111.

United States Court of Appeals, Tenth Circuit.

Oct. 22, 1990.

Dale R. Kent, Scott C. Pierce of McKay, Burton & Thurman, Salt Lake City, Utah, for appellant.

Phillip A. Harding, Salt Lake City, Utah, for appellees.

Before SEYMOUR, BRORBY, and EBEL, Circuit Judges.

PER CURIAM.

After examining the briefs and appellate record, this panel has determined unanimously that oral argument would not materially assist the determination of this appeal. See Fed.R.App.P. 34(a); 10th Cir.R. 34.1.9. The case is therefore ordered submitted without oral argument.

This appeal raises two primary issues: whether bankruptcy courts have authority to exercise civil contempt powers and enter sanctions for civil contempt and, if so, whether the imposition of sanctions by the bankruptcy court in this case was appropriate. We answer both questions in the affirmative.

On December 11, 1987, the bankruptcy court entered sanctions against appellant Mountain America Credit Union pursuant to 11 U.S.C. Sec. 362(h), for violating the automatic stay by selling debtors-appellees' car after the bankruptcy petition was filed. Appellant appealed the order to the district court, arguing that sanctions were inappropriate under section 362(h) because the violation was not "willful." ¹ The record on appeal does not reflect that appellant challenged the amount of the sanctions.

On appeal, the district court concluded that the facts found by the bankruptcy court did not support the imposition of sanctions under section 362(h) for a willful violation of the stay. Utah State Credit Union v. Skinner (In re Skinner), 90 B.R. 470, 475 (D.Utah 1988). The court discussed the availability of sanctions under 11 U.S.C. Sec. 105, however, and concluded both that the bankruptcy court had authority to enter sanctions for contempt under that section, id. at 476-77, and that such sanctions would be appropriate under the circumstances, id. at 479-81. The district court vacated the bankruptcy court's order and remanded the action to the bankruptcy court "with instructions to impose civil contempt sanctions, within its discretion, in accordance with this memorandum decision." Id. at 481.

On remand, the bankruptcy court held an evidentiary hearing concerning sanctions against appellant under section 105. On December 20, 1988, the court entered an order finding appellant in contempt and imposing sanctions against it in the amount of $3,500.00 compensatory damages and $4,721.12 attorneys' fees and costs.

Appellant appealed this second order to the district court, challenging the authority of the bankruptcy court to exercise civil contempt power under section 105. The record on appeal does not reflect that appellant challenged the amount of the sanctions. The district court summarily affirmed the bankruptcy court's order since the only issue raised by appellant was one which the district court had addressed in the prior appeal. The district court stated that its order constituted a final order. Appellant then filed a timely notice of appeal from this order.

I. Scope of Review

As an initial matter, we must define the proper scope of review of the issues raised by appellant in this appeal. Appellees contend that the only issues we may review are those that concern the district court's second order from which appellant filed a notice of appeal, and that we should not review any issues that concern the district court's first order. We disagree.

The district court's first order was not final and, therefore, not appealable, because it remanded the action to the bankruptcy court for further significant proceedings. See Homa Ltd. v. Stone (In re Commercial Contractors, Inc.), 771 F.2d 1373, 1375 (10th Cir.1985). The district court's second order was final and appealable, and appellant's appeal from that order raised all prior orders of the district court. Since appellant never appealed the issue of the amount of sanctions to the district court, however, appellant cannot raise that issue for the first time on appeal to this court. See Gillihan v. Shillinger, 872 F.2d 935, 938 (10th Cir.1989). Therefore, the only issues before this court are whether the bankruptcy court had authority to enter sanctions against appellant for civil contempt ² and, if so, whether the imposition of sanctions was appropriate under the circumstances.

II. Statutory Authority to Exercise Civil Contempt Power

While bankruptcy courts do not have inherent civil contempt power, see Plastiras v. Idell (In re Sequoia Auto Brokers, Ltd.), 827 F.2d 1281, 1284 (9th Cir.1987), we conclude that Congress has granted them civil contempt power by statute. This statutory authority derives from 11 U.S.C. Sec. 105 and 28 U.S.C. Sec. 157. Section 105 provides in pertinent part:

(a) The court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title. No provision of this title providing for the raising of an issue by a party in interest shall be construed to preclude the court from, sua sponte, taking any action or making any determination necessary or appropriate to enforce or implement court orders or rules, or to prevent an abuse of process.

Like the Fourth Circuit, "[w]e see no reason to read into th[e] language [of section 105(a) ] anything other than its plain meaning that a court of bankruptcy has authority to issue any order necessary or appropriate to carry out the provisions of the bankruptcy code." Burd v. Walters (In re Walters), 868 F.2d 665, 669 (4th Cir.1989). An order like that entered by the bankruptcy court below, which compensates a debtor for injuries suffered as a result of a creditor's violation of the automatic stay, is both necessary and appropriate to carry out the provisions of the bankruptcy code and to enforce or implement a previous court order.

When statutory language is not ambiguous, it is controlling. See Roberts v. United States (In re Roberts), 906 F.2d 1440, 1442 (10th Cir.1990); Miller v. Commissioner, 836 F.2d 1274, 1280-85 (10th Cir.1988). While we are mindful of the opinion of the Ninth Circuit in In re Sequoia Auto Brokers, Ltd., 827 F.2d at 1289-90, that civil contempt powers should not be implied from section 105(a), based on the legislative history of the bankruptcy statutes, we disagree that the language of section 105(a) is ambiguous, and, therefore, we do not think the Ninth Circuit's reasoning is sufficient to overcome the plain language of the section. See In re Walters, 868 F.2d at 669.

Furthermore, the weight of authority supports our holding that section 105(a) empowers bankruptcy courts to enter civil contempt orders. See, e.g., Id.; Kellogg v. Chester, 71 B.R. 36, 37 (N.D.Tex.1987); Better Homes of Va., Inc. v. Budget Serv. Co. (In re Better Homes of Va., Inc.), 52 B.R. 426, 428-30 (E.D.Va.1985), aff'd on other grounds, 804 F.2d 289 (4th Cir.1986); Dubin v. Jakobowski (In re Stephen W. Grosse, P.C.), 84 B.R. 377, 385-86 (Bankr.E.D.Pa.1988), aff'd, 96 B.R. 29 (E.D.Pa.), aff'd, 879 F.2d 856 (3d Cir.) (table), cert. denied, --- U.S. ----, 110 S.Ct. 501, 107 L.Ed.2d 504 (1989); Miller v. Mayer (In re Miller), 81 B.R. 669, 676-77 (Bankr.M.D.Fla.1988); In re Haddad, 68 B.R. at 948-49.

A bankruptcy court's powers under section 105(a) are limited by the provisions of Title 28. 11 U.S.C. Sec. 105(c). ³ Section 157 of Title 28 provides in pertinent part (a) Each district court may provide that any or all cases under title 11 and any or all proceedings arising under title 11 or arising in or related to a case under title 11 shall be referred to the bankruptcy judges for the district.

(b)(1) Bankruptcy judges may hear and determine all cases under title 11 and all core proceedings arising under title 11, or arising in a case under title 11, referred under subsection (a) of this section, and may enter appropriate orders and judgments, subject to review under section 158 of this title.

Civil contempt proceedings arising out of core matters are themselves core matters. See Better Homes of Va., Inc., 804 F.2d at 292; Haile v. New York State Higher Educ. Servs. Corp., 90 B.R. 51, 54 (W.D.N.Y.1988); Kellogg v. Chester, 71 B.R. at 38; In re Stephen W. Grosse, P.C., 84 B.R. at 386; In re Miller, 81 B.R. at 677; but see In re Sequoia Auto Brokers, Ltd., 827 F.2d at 1289; Omega Equip. Corp. v. John C. Louis Co. (In re Omega Equip. Corp.), 51 B.R. 569, 574 (D.D.C.1985). Civil contempt proceedings not involving punishment with imprisonment have been referred to the bankruptcy courts in the District of Utah in accordance with 28 U.S.C. Sec. 157. ⁴ Therefore, the bankruptcy court below had the power to enter monetary sanctions against appellant for civil contempt. ⁵

III. Constitutional Authority to Exercise Civil Contempt Power

Although appellant's challenge to the bankruptcy court's exercise of civil contempt power concerned only the statutory authority for such exercise, having determined that statutory authority does exist, we must now consider whether the grant of such authority by Congress is constitutional.

Under the Bankruptcy Act of November 6, 1978, Pub.L. No. 95-598, 92 Stat. 2549 (codified as amended at 11 U.S.C. and scattered sections of 28 U.S.C.) (1978 Act), Congress granted the bankruptcy courts sweeping powers, including civil and criminal contempt powers. These powers emanated largely from 28 U.S.C. Sec. 451, which added bankruptcy courts to the definition of "courts of the United States," and 28 U.S.C. Sec. 1481, which provided:

A bankruptcy court shall have the powers of a court of equity, law, and admiralty, but may not enjoin another court or punish a...