Opinion ID: 204485
Heading Depth: 3
Heading Rank: 3

Heading: Contested Matters Versus Adversary Proceedings

Text: Bankruptcy Rule 9020 provides that Bankruptcy Rule 9014 governs contempt proceedings in bankruptcy. Fed. R. Bankr.P. 9020 (Rule 9014 governs a motion for an order of contempt made by the United States trustee or a party in interest.). Bankruptcy Rule 9014 in turn is the rule that governs contested matters. See Fed. R. Bankr.P. 9014(a). In other words, a contempt proceeding by the United States trustee or a party in interest in bankruptcy is a contested matter. ( Id.; Fed. R. Bankr.P. 9020; see 10 Collier on Bankruptcy ¶ 9020.02 (Alan N. Resnick & Henry J. Sommer eds., 15th ed. rev. 2007)). Bankruptcy Rule 9014 adopts many procedures from Part VII of the Bankruptcy Rules (which governs adversary proceedings), but not all such procedures. See Fed. R. Bankr.P. 9014(c). Contested matter in the bankruptcy context is a term of art. There is a distinction among contested matters, adversary proceedings, and administrative matters. See 10 Collier on Bankruptcy ¶ 9014.01 (Alan N. Resnick & Henry J. Sommer eds., 15th ed. rev. 2007). Administrative matters are those issues that are not contested, such as unopposed motions. Id. Adversary proceedings are a species of contested matters governed by Part VII of the Bankruptcy Rules. Id. A matter qualifies as an adversary proceeding, as opposed to a contested matter, if it is included in the list given in Bankruptcy Rule 7001. Id.; see Fed. R. Bankr.P. 7001. Otherwise, it is a contested matter. See Fed. R. Bankr.P. 9014(a). Contempt proceedings are not listed under Bankruptcy Rule 7001, see Fed. R. Bankr.P. 7001, and are therefore contested matters not qualifying as adversary proceedings. At oral argument, Appellant argued that because Bankruptcy Rule 9014 invokes certain rules utilized for adversary proceedings under Part VII of the Bankruptcy Rules, any motion brought pursuant to Bankruptcy Rule 9014 could also impliedly be brought as an adversary proceeding. Such a construction does not follow, and if adopted it would obliterate the difference between contested matters and adversary proceedings, obviating the list under Rule 7001, because under this construction any contested matter under Bankruptcy Rule 9014 could necessarily be brought as an adversary proceeding under Rule 7001. Appellant argues that contempt proceedings seeking to enforce injunctions are impliedly included under subsection (7) of Rule 7001, which includes proceeding[s] to obtain an injunction or other equitable relief, except when a chapter 9, chapter 11, chapter 12, or chapter 13 plan provides for the relief. Fed. R. Bankr.P. 7001(7). A plain reading of Bankruptcy Rule 9020 compels the contrary conclusion, however, that contempt proceedings brought by the trustee or a party in interest are contested matters that must be brought by motion in the bankruptcy case under Bankruptcy Rule 9014. Bankruptcy Rule 9020 in fact exists solely for the purpose of mandating this. It does nothing else. Appellant might argue that Bankruptcy Rule 9020 only applies to a  motion for an order of contempt, and that he has not filed a motion but an adversary proceeding. Such an argument would be wordplay. But even if Bankruptcy Rule 9020 did not apply, in order to qualify as an adversary proceeding, the FAAC must fit within one of the categories listed in Bankruptcy Rule 7001, and it does not. As pointed out at oral argument, Appellant specifically requests punitive damages in the FAAC, and such damages are not a form of equitable relief. Appellant also prays for an injunction in the FAAC, but he does not in fact seek any injunction he does not already have, which is his only possible purchase onto Bankruptcy Rule 7001. See Fed. R. Bankr.P. 7001(7). An injunction against violation of the discharge already exists by operation of law. See 11 U.S.C. § 524(a)(2) (A discharge in a case under this title ... operates as an injunction against the commencement or continuation of an action, the employment of process, or an act, to collect, recover or offset any such debt as a personal liability of the debtor....). Plaintiff in reality seeks a contempt order for the violation of an injunction that already exists, regardless of how he has characterized his prayer for relief in the FAAC. He cannot seek a second-order injunction, as it were. An injunction against violating an existing injunction would be superfluous, adding no judicial action and providing no additional relief. The remedy for violating an injunction is not a repetitive injunction, but an order of contempt. See 1 Dan B. Dobbs, Law of Remedies § 2.8(1), at 186-89 (2d ed. 1993). For this precise reason, the Second Circuit recently rejected the argument that Bankruptcy Rule 7001(7) permitted a litigant to demand an adversary proceeding to enforce a violation of an existing discharge injunction. See Solow v. Kalikow (In re Kalikow ), 602 F.3d 82, 93-94 (2d Cir.2010) (affirming a district court's affirmation of a bankruptcy court's decision to proceed by motion in the bankruptcy case, and not by adversary proceeding, to enforce an existing § 524 injunction). Furthermore, like in In re Kalikow, where the appellants had prevailed despite the unavailability of an adversary proceeding, see id. at 94-95, Appellant here can allege no prejudice from the bankruptcy court's requirement to proceed by motion rather than by adversary proceeding, because he has failed to pursue the avenue of relief that no court has denied is available to him: a motion in the bankruptcy case. The district court correctly ruled that contempt proceedings for a violation of § 524 must be initiated by motion in the bankruptcy case under Rule 9014 and not by adversary proceeding.