Opinion ID: 435023
Heading Depth: 2
Heading Rank: 4

Heading: Definition of the Term Enforcement of a Money Judgment

Text: 46 Having found that DER's actions constitute an exercise of the Commonwealth's police power, the dispositive issue in this case is whether the Commonwealth Court injunction ordering Penn Terra to perform reclamation work is in fact an attempt to enforce a money judgment. The Bankruptcy Court found that it was, as did the district court. Our analysis suggests otherwise. 47 In using the words enforcement of a money judgment, Congress did not provide any definition for that term. Its meaning must therefore be gleaned from the commonly accepted usage and from whatever indications of congressional intent we find persuasive. Where Congress uses terms that have accumulated settled meaning under either equity or common law, a court must infer, unless the statute otherwise dictates, that Congress means to incorporate the established meaning of these terms. NLRB v. Amax Coal Co., 453 U.S. 322, 329, 101 S.Ct. 2789, 2794, 69 L.Ed.2d 672 (1981). In attempting to arrive at a working definition of enforcement of a money judgment, therefore, we must look to legal custom and practice to determine what was traditionally understood to be a recovery for money damages. This empirical approach is mandated by the fact that, in using the term enforcement of a money judgment, Congress left us with a term whose words, standing alone, do not convey the legislative intent, and indeed are merely a shorthand notation for common practice as it has gradually developed in our legal history. 48 In common understanding, a money judgment is an order entered by the court or by the clerk, after a verdict has been rendered for plaintiff, which adjudges that the defendant shall pay a sum of money to the plaintiff. Essentially, it need consist of only two elements: (1) an identification of the parties for and against whom judgment is being entered, and (2) a definite and certain designation of the amount which plaintiff is owed by defendant. It need not, and generally does not, contain provisions for its enforcement. See generally 49 C.J.S. Judgments, Secs. 71-82 (describing proper form of money judgment). As the legislative history explicitly notes, 8 the mere entry of a money judgment by a governmental unit is not affected by the automatic stay, provided of course that such proceedings are related to that government's police or regulatory powers. 49 Quite separate from the entry of a money judgment, however, is a proceeding to enforce that money judgment. The paradigm for such a proceeding is when, having obtained a judgment for a sum certain, a plaintiff attempts to seize property of the defendant in order to satisfy that judgment. 9 It is this seizure of a defendant-debtor's property, to satisfy the judgment obtained by a plaintiff-creditor, which is proscribed by subsection 362(b)(5). 50 At least as a matter of form, it is clear to us that the proceeding initiated by DER in Commonwealth Court was not to enforce a money judgment. Indeed, it could not have resulted even in the mere entry of a money judgment. DER brought its action in equity to compel the performance of certain remedial acts by Penn Terra. It did not seek the payment of compensation to the Commonwealth's coffers, and the injunction actually issued by the Commonwealth Court did not direct such payment. This proceeding, therefore, could never have resulted in the adjudication of liability for a sum certain, an essential element of a money judgment. Since this action was in form and substance (see discussion infra), not one to obtain a money judgment, it follows that it could not be one to enforce the payment of such a judgment. 51 Penn Terra contends, however, that whatever the appearance in form of DER's suit may have been, it was in substance an action to obtain and enforce a money judgment, and therefore was affected by the automatic stay. We generally agree, of course, that the legislative intent behind subsection 362(b)(5) should not be defeated by artful pleading that depends on form rather than substance. We must therefore determine whether, although not facially resembling an enforcement of a money judgment, DER's action in Commonwealth Court sought to achieve in actuality what a money judgment was traditionally intended to accomplish and no more. 52 In Jaffee v. United States, 592 F.2d 712 (3d Cir.1979), this Court considered whether a request for an order requiring medical examinations and all necessary medical care and treatment of plaintiff was a request for an injunction, such that its denial would be appealable under 28 U.S.C. Sec. 1291(a)(1), or rather was merely an attempt to collect money damages. The Court noted: 53 We agree with the Government that the request for prompt medical examination and all medical care and necessary treatment, in fact, is a claim for money damages. A plaintiff cannot transform a claim for damages into an equitable action by asking for an injunction that orders the payment of money. Jaffee requests a traditional form of damages in tort--compensation for medical expenses to be incurred in the future. Indeed, his complaint seeks an injunction ordering either the provision of medical services by the Government or payment for medical services. The payment of money would fully satisfy Jaffee's equitable claim for medical care. 54 Id. at 715 (citations omitted) (emphasis added). 55 The Jaffee Court also considered whether a petition that the Government warn members of a class about medical risks was a request for injunctive or monetary relief. However, the Court there held that: 56 The payment of money cannot satisfy this claim. Although providing the warning will impose an expense on the Government, the creation of expense does not necessarily remove a form of relief from the category of equitable remedies. 57 Id. The Court found, therefore, that this aspect of the appeal was in substance a petition for an injunction. 58 In United States v. Price, 688 F.2d 204 (3d Cir.1982), this Court held that an order requiring the owner of a landfill to conduct a diagnostic study of the toxic hazards emanating from its property was a proper use of the court's equitable powers, even though it required expenditure of money. The Court noted: 59 We do not agree that Jaffee leads to the conclusion that, in this case, plaintiff's request for an injunction was actually a claim for damages. Damages are awarded as a form of substitutional redress. They are intended to compensate a party for an injury suffered or other loss. A request for funds for a diagnostic study of the public health threat posed by the continuing contamination and its abatement is not, in any sense, a traditional form of damages. The funding of a diagnostic study in the present case, though it would require monetary payments, would be preventive rather than compensatory. The study is intended to be the first step in the remedial process of abating an existing but growing hazard which, if left unchecked, will result in even graver future injury, i.e., the contamination of Atlantic City's water supply. 60 .... 61 The fact that an injunction may require the payment or expenditure of money does not necessarily foreclose the possibility of equitable relief.... 62 It is not unusual for a defendant in equity to expend money in order to obey or perform the act mandated by the injunction. Injunctions, which by their terms compel expenditures of money, may similarly be permissible forms of equitable relief. Id. at 212 (emphasis added). 10 63 The cases which we have just cited suggest, albeit in other contexts, that an important factor in identifying a proceeding as one to enforce a money judgment is whether the remedy would compensate for past wrongful acts resulting in injuries already suffered, or protect against potential future harm. Thus, it is unlikely that any action which seeks to prevent culpable conduct in futuro will, in normal course, manifest itself as an action for a money judgment, or one to enforce a money judgment. This is consistent with our earlier observations, since a traditional money judgment requires liquidated damages, i.e. a sum certain, and one cannot liquidate damages which have not yet been suffered due to conduct not yet committed. Nor can one calculate such a sum with any certainty. Indeed, the very nature of injunctive relief is that it addresses injuries which may not be compensated by money. 64 The bankruptcy court adopted a totally different functional definition of money judgment, however. In its opinion, it apparently reasoned that a money judgment is anything which costs money to enforce. The court stated: 65 Although DER characterizes its action as a governmental action in the exercise of its police or regulatory powers, it seeks a mandatory injunction requiring the debtor's expenditure of funds for the correction of violations. This Court concludes that the mandatory injunction sought by DER requiring the expenditure of funds is in essence the attempted enforcement of a money judgment. As such, it is subject to the automatic stay by virtue of Sec. 362(b)(5). 66 In re Penn Terra Ltd., 24 B.R. 427, 432 (Bkrtcy.W.D.Pa.1982). The court below drew support from In re Kovacs, 681 F.2d 454 (6th Cir.1982), vacated and remanded, --- U.S. ---, 103 S.Ct. 810, 74 L.Ed.2d 1010 (1983) (Kovacs I). There, as here, the debtor had not complied with various environmental control laws. A state court had ordered him to cease pollution and remove hazardous wastes from the premises. When Kovacs did not comply, the state court appointed a receiver to take possession of the debtor's property and effect a clean-up of the site. The Court of Appeals for the Sixth Circuit found that such action amounted to enforcement of a money judgment and was therefore automatically stayed. 67 To the extent that it found that a state effort to force a debtor to clean up his waste was in essence a money judgment, Kovacs lends support to the bankruptcy court's position. 11 We find, however, that the definition of money judgment implied in Kovacs and adopted by the bankruptcy court is unduly broad. Were we to find that any order which requires the expenditure of money is a money judgment, then the exception to section 362 for government police action, which should be construed broadly, would instead be narrowed into virtual nonexistence. Yet we cannot ignore the fundamental fact that, in contemporary times, almost everything costs something. An injunction which does not compel some expenditure or loss of monies may often be an effective nullity. 12 68 It appears that, in defining the scope of the exception to the automatic stay, the Bankruptcy Court in this case placed too much weight on the value of preserving the corpus of the debtor's funds and estate under its own exclusive control. Admittedly, that goal is normally central to the statutory scheme of the Bankruptcy Code. As noted at the beginning of this opinion, however, in some instances this policy is in inexorable conflict with other, no less salutary, governmental goals. We believe that the resolution of this conflict is contained in the statute itself. In enacting the exceptions to section 362, Congress recognized that in some circumstances, bankruptcy policy must yield to higher priorities. Indeed, if the policy of preservation of the estate is to be invariably paramount, then one could not have exceptions to the rule. Since Congress did provide for exceptions, however, we may assume that the goal of preserving the debtor's estate is not always the dominant goal. 69 We believe that the inquiry is more properly focused on the nature of the injuries which the challenged remedy is intended to redress--including whether plaintiff seeks compensation for past damages or prevention of future harm--in order to reach the ultimate conclusion as to whether these injuries are traditionally rectified by a money judgment and its enforcement. Here, the Commonwealth Court injunction was, neither in form nor substance, the type of remedy traditionally associated with the conventional money judgment. It was not intended to provide compensation for past injuries. It was not reduceable to a sum certain. No monies were sought by the Commonwealth as a creditor or obligee. The Commonwealth was not seeking a traditional form of damages in tort or contract, and the mere payment of money, without more, even if it could be estimated, could not satisfy the Commonwealth Court's direction to complete the backfilling, to update erosion plans, to seal mine openings, to spread topsoil, and to implement plans for erosion and sedimentation control. Rather, the Commonwealth Court's injunction was meant to prevent future harm to, and to restore, the environment. Indeed, examining the state order, 13 it is clear that erosion control, backfilling, and reseeding were additionally meant to preserve the soil conditions from further deterioration (as well as to rectify a safety hazard). 70 Absent some other clear indication that these proceedings, although appearing in the guise of a request for equitable relief, are actually aimed toward the enforcement of a money judgment, we decline to equate DER's actions, which are those of a governmental unit enforcing the Commonwealth's police power, with those affected by the automatic stay of Section 362(a). We therefore conclude that the suit brought by DER to compel Penn Terra to remedy environmental hazards was properly brought as an equitable action to prevent future harm, and did not constitute an action to enforce a money judgment. The automatic stay provision of 11 U.S.C. Sec. 362 is therefore inapplicable. 14