United States v. Robinson (In re Robinson)

• Decision Date: 21 November 2012
• Docket Number: No. 12–24747.,12–24747.
• Citation: 483 B.R. 147
• Parties: In re James D. ROBINSON, Jr., Debtor. SS No. XXX–XX–XXXX. United States of America, Movant, v. James D. Robinson, Jr., The Above–Named Chapter 7 Debtor and Respondent.
• Court: U.S. Bankruptcy Court — Western District of Tennessee

483 B.R. 147

In re James D. ROBINSON, Jr., Debtor. SS No. XXX–XX–XXXX.United States of America, Movant,

v.James D. Robinson, Jr., The Above–Named Chapter 7 Debtor and Respondent.

No. 12–24747.

United States Bankruptcy Court,

W.D. Tennessee,

Western Division.

Nov. 21, 2012.

Barbara M. Zoccola, Esq., Memphis, TN, Assistant U.S. Attorney.

George W. Stevenson, Esq., Memphis, TN, Standing Chapter 13 Trustee.

Thomas C. Fila, Esq., John E. Dunlap, Esq., Memphis, TN, for Debtor.

Chontele McIntyre, Esq., Memphis, TN, for Chapter 13 Trustee.

James D. Robinson, Jr., Memphis, TN, Chapter 13 Debtor.

United States Trustee, Region 8, Memphis, TN, Office of the U.S. Trustee.

MEMORANDUM AND ORDER RE BIFURCATED “MOTION FOR DECLARATORY JUDGMENT OR ALTERNATIVELY FOR DISMISSAL OR TERMINATION OF THE AUTOMATIC STAY” FILED BY THE MOVANT, UNITED STATES OF AMERICA, COMBINED WITH NOTICE OF THE ENTRY THEREOF

DAVID S. KENNEDY, Chief Judge.

INTRODUCTION

These bifurcated core proceedings ¹ arise out of a “Motion for Declaratory Judgment or Alternatively for Dismissal or Termination of the Automatic Stay” (“the Motion”) filed by the Movant, the United States of America (the “U.S.A.”), seeking, inter alia, a declaratory judgment ² regarding (1) whether the automatic stay created by operation of law under 11 U.S.C. § 362(a) applies to postpetition collection and enforcement efforts arising out of two prepetition Federal criminal restitution judgments against the above-named Debtor/Respondent, James D. Robinson, Jr. (“Debtor”), (2) whether the § 362(a) automatic stay temporarily protects “property of the estate” created by operation of law under 11 U.S.C. § 541(a) notwithstanding the provisions of 11 U.S.C. § 362(b)(1) and (4) and 18 U.S.C. § 3613³, or alternatively, (3) whether the U.S.A. “for cause” should be granted relief from the automatic stay under 11 U.S.C. § 362(d)(1) and Fed. R. Bankr.P. 4001(a)⁴ As will be discussed below,the Debtor ⁵ objects to portions of the relief sought by the U.S.A.

Based on consideration of the case record as a whole including the four trial exhibits and statements of counsel for the U.S.A. and the Debtor, the following shall constitute the court's findings of fact and conclusions of law in accordance with Fed. R. Bankr.P. 7052.⁶

BACKGROUND FACTS, JUDICIAL HISTORY, AND DISCUSSION

Although the parties have a difference of opinion regarding portions of the outcome of this bifurcated motion, the relevant background facts and judicial history are not in substantial dispute, have been stipulated to by the parties, ⁷ and are briefly summarized as follows. On November 27, 1996, the Debtor plead guilty to criminal violations under 18 U.S.C. §§ 1341 and 1342 for mail fraud and aiding and abetting that occurred on or before March 21, 1993. The Order of Judgment in the criminal case was entered in the United States District Court for the Western District of Tennessee, being Case No. 2:95CR20252–001, by District Judge Jon Phipps McCalla on November 27, 1996. The Order imprisoned the Debtor for 97.5 months, provided for three months of supervised release after his release from imprisonment, and also directed criminal restitution payments totaling $286,875.00 to be paid “in full immediately.”

On March 4, 1997, the Debtor plead guilty to a second set of criminal violations under 18 U.S.C. §§ 1343 and 1342 for wire fraud and aiding and abetting. The Order of Judgment in the criminal case also was entered in the United States District Court for the Western District of Tennessee, being Case No. 2:96CR20161–001, by Judge Julia Smith Gibbons on March 4, 1997. The Order imprisoned the Debtor for 24 months and also directed additional criminal restitution payments totaling $100,000.00 to be paid “in full immediately.”

On May 7, 2012, the Debtor filed, among other documents, a chapter 13 petition, a proposed repayment plan, schedules, and statement of affairs. Due to a subsequent sua sponte case recusal order, this chapter 13 case was thereafter reassigned to this court. As of the commencement of this chapter 13 case, the Debtor had paid $7,779.44 of the first criminal restitution judgment and only $200.00 towards the second criminal restitution judgment. From December 8, 1998, through October 20, 2005, the Debtor made regular payments on the first criminal restitution balance for amounts between $25.00 and $300.00. ⁸ No payments were received by the U.S.A. after October 20, 2005, except for an applied involuntary payment of $4,006.08, which represents an April 2012 intercepted tax refund later identified in the Debtor's Schedule B herein. Only three payments were made by the Debtor on the second criminal restitution balance with the last payment occurring on September 20, 2006.

In this chapter 13 case, the Debtor listed assets in his Schedule B that include, among other properties, an IRA account valued at $47,000.00, a tax refund valued at $4,500.00, and three automobiles: a 2006 Highlander valued at $6,000.00, a 2001 Solara valued at $2,000.00, and a 1999 Infiniti I30 valued at $900.00. Debtor claimed exemptions in Schedule C totaling $57,650.00. Specifically, the Debtor claimed the full value of the IRA account as exempt under TENN. CODE ANN. § 26–2–111(1)(D) and claimed an exemption of $1,500.00 in the 2006 Highlander under TENN. CODE ANN. § 26–2–103. The United States Department of Justice is listed as a general unsecured creditor under the Debtor's Schedule F with a claim of $283,101.00 ⁹. Schedule I reflects that the Debtor is employed in sales by a local Memphis automobile dealership for seven years earning a monthly income (commissions) of $4,983.33. His Statement of Affairs in Question 4 and Schedule F identify the criminal restitution judgments entered against the Debtor in the United States District Court for the Western District of Tennessee.

On June 26, 2012, the U.S. Attorney, on behalf of the U.S.A., filed the instant “Motion for Declaratory Judgment or Alternatively for Dismissal or Termination of the Automatic Stay.” This motion seeks, inter alia, to have the automatic stay under 11 U.S.C. § 362(a) judicially declared inapplicable to the U.S.A.'s efforts to collect and enforce the prepetition criminal restitution judgments against the Debtor under 11 U.S.C. § 362(b)(1) and 18 U.S.C. § 3613(a). The U.S.A. cites and relies upon Bryan v. Rainwater, 254 B.R. 273, 278 (N.D.Ala.2000); In re Johnson, Case No. 04–11494, slip op. (Bankr.S.D.Ala. Oct. 14, 2006); and Barnette v. Evans, 673 F.2d 1250, 1251 (11th Cir.1982). The U.S.A. proceeds on two alternative theories: (1) this case should be dismissed due to the Debtor's alleged bad faith case filing arising from an asserted attempt to delay the collection and enforcement of the pre-petition criminal restitution judgments and (2) if the automatic stay is applicable, the U.S.A. requests the court to terminate the § 362(a) automatic stay as to all assets of the Debtor but particularly to allow for the enforcement and execution on the Debtor's IRA account and two of the Debtor's three automobiles. On September 14, 2012, the Debtor objected to portions of the U.S.A.'s instant motion.

On July 5, 2012, the Chapter 13 Trustee filed an objection to the Debtor's chapter 13 plan and pursuant to Fed. R. Bankr.P. 3015(f) and also a separate Motion to Dismiss this case under 11 U.S.C. § 1307(c) stating that the Debtor's aggregate unsecured debts exceeds the statutory debt limitations of 11 U.S.C. § 109(e). These proceedings are pending and will be addressed later. Upon being noticed of the Chapter 13 Trustee's position, the Debtor moved to convert the chapter 13 case to a case under chapter 11, which does not have the same debt limitations. Debtor's motion to convert to chapter 11 under § 1307(f)–(g) also is pending and will be decided later. ¹⁰

Application of the Automatic Stay

The filing of a bankruptcy petition operates as a stay applicable to “all entities” as defined in 11 U.S.C. § 101(15) except under circumstances expressly enumerated in § 362(b) of the Bankruptcy Code. 11 U.S.C. § 362(a) and (b). This statutory stay under § 362 is referred to as the “automatic stay.” The automatic stay, in essence, is akin to a preliminary injunction; it does not last forever. See11 U.S.C. § 362(c)–(d) and § 524(a). Specifically, the automatic stay operates to statutorily stay eight expressly enumerated acts:

(1) the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title;

(2) the enforcement, against the debtor or against property of the estate, of a judgment obtained before the commencement of the case under this title;

(3) any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate;

(4) any act to create, perfect, or enforce any lien against property of the estate;

(5) any act to create, perfect, or enforce against property of the debtor any lien to the extent that such lien secures a claim that arose before the commencement of the case under this title;

(6) any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case under this title;

(7) the setoff of any debt owing to the debtor that arose before the commencement of the case under this title against any claim against the debtor: and

(8) the commencement or continuation of a proceeding before the U.S.A. Tax Court concerning a tax liability of a debtor that is a corporation for a taxable period the bankruptcy court may determine or concerning the tax liability of a debtor who is an individual for a taxable period ending before the date of the order for relief under this title.

11 U.S.C. § 362(a) (emphasis...