Court Opinion

ID: 9746824
Source: CourtListenerOpinion
Date Created: 2023-08-27 14:39:30.76781+00
Date Added: 2024-06-11T07:25:17.355503
License: Public Domain

OPINION ON REHEARING
REIF, J.:
11 On May 12, 2009, this Court issued an opinion that denied Jami Lynn Stewart's application to be reinstated to the practice of law. Both the General Counsel of the Oklahoma Bar Association and the Professional Responsibility Tribunal had recommended denial of Ms. Stewart's application for reinstatement.
¢2 The point of contention over Ms. Stewart's reinstatement centers on her failure to pay the tax liability that led to her suspension in 2002.2 Ms. Stewart concedes that the tax liability has not been fully paid, but explains that the tax lability was discharged in bankruptcy in 2006.
T3 Relying on prior cases in which reinstatement turned on payment of the tax liability that lead to suspension 3 the opinion of May 12, 2009, held that the discharge in bankruptey "cannot be treated as tantamount to having paid the [tax] debt as did the attorneys in [the prior reinstatement cases]." The opinion tied restoration of Ms. Stewart's fitness to practice law to the fulfillment of her moral obligation to pay the tax liability, notwithstanding its discharge in bankruptey. The dissenting opinion argued that the discharged tax liability can not be a basis to deny Ms. Stewart a license to practice law.
T4 In her petition for rehearing, Ms. Stewart argued (as did the dissenting opinion) that refusing to restore her license based on her nonpayment of the discharged tax liability is contrary to 11 U.S.C. § 525(a),4 and the United States Supreme Court's deci*668sion in Perez v. Campbell, 402 U.S. 637, 91 S.Ct. 1704, 29 L.Ed.2d 233 (1971). Upon further consideration, we now conclude that § 525(a) precludes any consideration of a debt discharged in bankruptey in connection with the debtor's application for a government granted license.
T5 To be sure, an important state interest is served by recognizing that suspended attorneys have a moral obligation to pay any tax liability that led to their suspension. Likewise, this Court has an interest in applying such a standard fairly and consistently to achieve justice, to rehabilitate errant members of the bar and to protect the public. However, the United States Supreme Court has made it clear that such interests cannot be enforced when to do so would frustrate the purpose of the Bankruptey Act.
I 6 In Perez, the Supreme Court said that " 'Come of the primary purposes of the Bank-ruptey Act' is to give debtors 'a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of pre-existing debt'" 402 U.S. at 648, 91 S.Ct. 1704 (citations omitted). The Court also concluded that section 525(a) was enacted to fulfill this purpose and observed that "any state [action] which frustrates the full effectiveness of federal law is rendered invalid by the Supremacy Clause." 402 U.S. at 652, 91 S.Ct. 1704. Suspended attorneys who obtain a bankruptcy discharge of the tax liability that led to their suspension are not excepted from the protection afforded by seetion 525(a), and the existence of a state interest in perpetuating such liability is not a sufficient reason to deprive such attorneys of "the full effectiveness of the federal law."
T7 Aside from Ms. Stewart's nonpayment of the tax liability that led to her suspension, she has otherwise met the requirements for reinstatement. The record reflects that Ms. Stewart has demonstrated (1) appreciation for the seriousness of the misconduct that led to her suspension; (2) remorse for the harm done and the adverse impact of the misconduct on her clients, the legal profession, and the judicial system; (8) compliance with the condition of suspension to refrain from the practice of law; and (4) competence in the learning of the law. If this Court gives the bankruptcy discharge and § 525(a) "full effectiveness," then we have no further inquiry to make about the bona fides 5 of Ms. Stewart's resort to bankruptey vis-a-vis her reinstatement to the practice of law. Not only has Ms. Stewart's inability to pay the tax liability been conclusively established and the liability extinguished, but the party to whom the liability was owed-the United States Internal Revenue Service-raised no objection to such actions by the bankruptey court.
THE APPLICATION FOR REINSTATEMENT IS GRANTED AND PETITIONER IS REINSTATED TO THE PRACTICE OF LAW UPON PAYMENT oF COSTS.
8 EDMONDSON, C.J., KAUGER, COLBERT, REIF, JJ., and LAVENDER, S.J., concur.
T9 TAYLOR, V.C.J., OPALA, WATT, and WINCHESTER, JJ., dissent.
10 HARGRAVE, J., disqualified.

. The circumstances surrounding Ms. Stewart's suspension in 2002 are set forth in State ex rel. Oklahoma Bar Association v. Stewart, 2003 OK 13, 71 P.3d 1.

. Matter of Reinstatement of Hardin, 1996 OK 115, 927 P.2d 545, Matter of Reinstatement of Crabtree, 1990 OK 49, 793 P.2d 296, Matter of Reinstatement of Clifton, SCBD No. 3451, 59 O.B.J. 1632, No. 25 (June 14, 1988).

. Protection against discriminatory treatment is found in 11 U.S.C. § 525 (2005) (emphasis added), which states:
(a) Except as provided in the Perishable Agricultural Commodities Act, 1930, the Packers and Stockyards Act, 1921, and section 1 of the Act entitled "An Act making appropriations for the Department of Agriculture for the fiscal year ending June 30, 1944, and for other purposes," approved July 12, 1943, a governmental unit may not deny, revoke, suspend, or refuse to renew a license, permit, charter, franchise, or other similar grant to, condition such a grant to, discriminate with respect to such a grant against, deny employment to, terminate the employment of, or discriminate with respect to employment against, a person that is or has been a debtor under this title or a bankrupt or a debtor under the Bankruptcy Act, or another person with whom such bankrupt or debtor has been associated, solely because such bankrupt or debtor is or has been a debtor under this title or a bankrupt or debtor under the Bankruptcy Act, has been insolvent before the commencement of the case under this title, or during the case but before the debtor is granted or denied a discharge, or has not paid a debt that is dischargea-ble in the case under this title or that was discharged under the Bankruptcy Act.
(b) No private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title, a debtor or bankrupt under the Bankruptcy Act, or an individual associated with such debtor or bankrupt, solely because such debtor or bankrupt-
(1) is or has been a debtor under this title or a debtor or bankrupt under the Bankruptcy Act;
(2) has been insolvent before the commencement of a case under this title or during the case but before the grant or denial of a discharge; or
(3) has not paid a debt that is dischargeable in a case under this title or that was discharged under the Bankruptcy Act.
(c)(1) A governmental unit that operates a student grant or loan program and a person engaged in a business that includes the making of loans guaranteed or insured under a student loan program may not deny a student grant, loan, loan guarantee, or loan insurance to a person that is or has been a debtor under this title or a bankrupt or debtor under the Bankruptcy Act, or another person with whom the debtor or bankrupt has been associated, because the debtor or bankrupt is or has been a debtor under this title or a bankrupt or debtor under the Bankruptcy Act, has been insolvent before the commence*668ment of a case under this title or during the pendency of the case but before the debtor is granted or denied a discharge, or has not paid a debt that is dischargeable in the case under this title or that was discharged under the Bankruptcy Act.
(2) In this section, "student loan program" means any program operated under title IV of the Higher Education Act of 1965 or a similar program operated under State or local law.

. After closing her practice, Ms. Stewart worked for a drilling company from November 2002 to September 2003. The president of the company testified that Ms. Stewart was doing well, and had put together the company's first drilling program when she had a terrible car wreck. Her injuries included a broken ankle, a broken sternum and five broken ribs. Ms. Stewart required physical therapy for almost a year for these injuries. Medical bills for these injuries totaled just over $11,000 and were included in her bankruptcy schedules. Due to her injuries, she was out of work several months. Her physical condition also led her to another change of occupation. Viewed in the totality of the circumstances, Ms. Stewart's resort to bankruptcy was not intended as a short cut to reinstatement.