UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

UNITED STATES OF AMERICA,

Plaintiff, Case No. 09-50701

Honorable David M. Lawson

v. Magistrate Judge Paul J. Komives

JAMES W. KERN,

Defendant,

v.

CURT ANTHONY REDINGER,

Garnishee Defendant.

_______________________________________/

ORDER DISMISSING WITHOUT PREJUDICE DEFENDANT’S 

MOTION TO REVIEW AND MODIFY GARNISHMENT

Presently before the Court is a motion by defendant James Kern to review and modify writs

of garnishment issued by the Court at the request of the United States to collect a judgment for

restitution entered in connection with Kern’s conviction for assisting in the preparation of false tax

returns in violation of 26 U.S.C. § 7206(2). Kern operated a tax preparation business and assisted

taxpayers employed as state law enforcement personnel in preparing their federal income tax returns.

It was alleged that the defendant regularly inflated Schedule A deductions for charitable

contributions and Schedule C deductions for unreimbursed travel and other work-related expenses,

thereby understating tax liability on the returns. In many of the cases, the taxpayers were complicit

in the misconduct.

As part of the sentence imposed on October 1, 2007, the Court ordered restitution in the

amount of the tax loss of $115,869. The Court also ordered that the defendant receive credit against

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the restitution figure for the amount recovered from the taxpayers, who originally owed the income

tax. An amended judgment was entered on November 1, 2007 that was intended to clarify that point.

Subsequent litigation resulted in a measure of relief for Kern on that score.

In his current motion, Kern asks for additional relief from an order of periodic garnishment

of a debt owed to Kern by a former business partner. The government opposes the motion, which

was scheduled for a hearing this afternoon. However, late last week, Kern’s attorney informed the

Court that the defendant filed for Chapter 7 bankruptcy protection and suggested that the automatic

stay provisions in 11 U.S.C. § 362(a) may prevent adjudication of the pending motion. 

Under that statute, filing a petition in bankruptcy effectuates a stay “of a judicial,

administrative, or other action or proceeding against the debtor that was or could have been

commenced” before the bankruptcy petition was filed. 11 U.S.C. § 362(a)(1). The stay also reaches

collection attempts on judgments entered against the debtor. Id. § 362(a)(2) & (3). It is true that

in this case, Kern’s present motion was brought by him, not against him, and therefore one might

observe that the Court may proceed to determine its merits. However, the automatic stay is broadly

interpreted and is intended to implement “the bankruptcy goal of equal treatment” of creditors.

Chao v. Hospital Staffing Services, Inc., 270 F.3d 374, 382 (6th Cir. 2001); In re Cheesman, 25 F.3d

356, 360 (6th Cir. 1994). In applying the stay, the Court must look at the overall object and purpose

of the underlying proceeding “to determine whether they are in fact initiated ‘against the debtor.’”

Delpit v. C.I.R., 18 F.3d 768, 773 (9th Cir. 1994) (citing In re Bloom, 875 F.2d 224, 226 (9th

Cir.1989).

Kern’s present motion addresses the efforts of the United States to collect the restitution

judgment against him, which is decidedly a proceeding against Kern. The Court believes, therefore,

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that the automatic stay precludes further action on the motion unless the stay is lifted. Moreover,

since Kern chose to invoke the authority of the bankruptcy court, it is sensible to allow that process

take its course, especially in that it will allow a determination of how Kern’s assets — one of which

is the subject of the garnishment in this case — should be distributed equitably as prescribed by the

Bankruptcy Code.

Accordingly, it is ORDERED that the defendant’s motion to review and modify writs of

garnishment [dkt. #27] is DISMISSED without prejudice, and the hearing on that motion is

CANCELLED.

s/David M. Lawson 

DAVID M. LAWSON

United States District Judge

Dated: September 12, 2011

PROOF OF SERVICE

The undersigned certifies that a copy of the foregoing order was served

upon each attorney or party of record herein by electronic means or first

class U.S. mail on September 12, 2011.

s/Deborah R. Tofil 

DEBORAH R. TOFIL

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