Court Opinion

ID: 8499473
Source: CourtListenerOpinion
Date Created: 2022-11-22 22:45:47.369573+00
Date Added: 2024-06-11T12:25:00.545145
License: Public Domain

SALADINO, Bankruptcy Judge,
dissenting.
Although I agree with most of what is stated in the majority opinion, I respectfully disagree with the majority’s conclusion. I believe the majority has characterized the underlying motion and the bankruptcy court’s order too narrowly. The majority states that the motion sought contempt and sanctions for “violating the discharge injunction” and that the bankruptcy court found the division “had violated, the discharge injunction.” While those are accurate statements in isolation, the underlying motion and the bankruptcy court order reveal much more — enough, I believe, to hold that the bankruptcy court’s award of attorney fees was not an abuse of discretion and should be affirmed.
Specifically, the underlying motion by the debtors asks that the division be held in contempt for trying to collect debts “that have been paid through the chapter 13 plan.” After a hearing, the bankruptcy court issued its order which found that the debtor’s “prepetition obligation to the Family Support Division ... is fully paid; He owes no prepetition or pre-discharge debt (nondischargeable or otherwise) to the Family Support Division and/or Mary Spencer.” The bankruptcy court then held the division in contempt and awarded attorney fees as a sanction.
Granted, the bankruptcy court did specifically find that the division willfully violated the discharge injunction, which the majority noted does not apply to debts that are excepted from discharge by operation of § 1328(a)(2). However, the majority refused to consider the debtors’ argument that the division could be sanctioned for abuse of the bankruptcy process-asserting that it was raised for the first time on appeal. I believe that is incorrect. The bankruptcy court clearly expressed its position that it was sanctioning the division
*773because the debt it was trying to collect— dischargeable or nob — was fully paid. The bankruptcy court even included a citation to Walton v. LaBarge (In re Clark), 223 F.3d 859, 864 (8th Cir.2000), an Eighth Circuit case holding that § 105 of the Code gives bankruptcy courts broad authority to issue sanctions for abuse of the bankruptcy process. So, the bankruptcy court’s decision was, at its core, much more than a finding that the division violated the discharge injunction.
We recently said:
Bankruptcy. Code § 105(a) provides a bankruptcy court with authority to “issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of’ the Bankruptcy Code, and allows the court to “tak[e] action or mak[e] any determination necessary or appropriate to ... prevent an abuse of process.” 11 U.S.C. § 105(a). And, a bankruptcy court “may also possess ‘inherent power ... to sanction “abusive litigation practices.” ’ ” Law v. Siegel, — U.S.-, 134 S.Ct. 1188, [1191,] 188 L.Ed.2d 146, 2014 WL 813702, at *5 (2014) (citing Marrama v. Citizens Bank of Mass., 549 U.S. 365, 375-76, 127 S.Ct. 1105, 166 L.Ed.2d 956 (2007)) (quotation marks omitted).”
Needier v. Casamatta (In re Miller Automotive Group, Inc.), 536 B.R. 828, 835 (8th Cir. BAP 2015) (quoting Young v. Young (In re Young), 507 B.R. 286, 291-92 (8th Cir. BAP 2014)).
Semantics aside, the bankruptcy court ordered the division to reimburse the debtors for attorney fees spent defending the division’s attempts to collect a debt that had been determined in a contested matter and paid under the Chapter 13 plan. Clearly, the bankruptcy court had the authority under § 105 and the inherent power to issue such a sanction. Referencing the discharge injunction may have been incorrect; sanctioning a creditor trying to collect a debt that had been paid in full was not. Accordingly, I do not believe the bankruptcy court’s order was an abuse of discretion. I would affirm,1

. The Panel may affirm on any basis supported by the record. Kaler v. Charles (In re Charles), 474 B.R. 680, 687 (8th Cir. BAP 2012).