Court Opinion

ID: 4413788
Source: CourtListenerOpinion
Date Created: 2019-07-03 16:00:24.617415+00
Date Added: 2024-06-11T12:51:26.922873
License: Public Domain

United States Bankruptcy Appellate Panel
                         For the Eighth Circuit
                     ___________________________

                             No. 18-6032
                     ___________________________

                       In re: Teresa Cedreca Edwards

                                   llllDebtor

                          ------------------------------

                          Teresa Cedreca Edwards

                    lllllllllllllllllllllPlaintiff - Appellant

                                       v.

               The City of Ferguson, a municipal corporation

                    lllllllllllllllllllllDefendant - Appellee
                                   ____________

               Appeal from United States Bankruptcy Court
               for the Eastern District of Missouri - St. Louis
                               ____________

                         Submitted: June 18, 2019
                            Filed: July 3, 2019
                              ____________

Before SALADINO, Chief Judge, NAIL and SANBERG, Bankruptcy Judges.
                             ____________

SALADINO, Chief Judge.
       The Appellant, Teresa Cedreca Edwards, appeals the order of the bankruptcy
     1
court granting defendant City of Ferguson’s motion for summary judgment and
denying Appellant’s motion for summary judgment in an adversary proceeding
alleging, among other allegations, that the defendant willfully violated the automatic
stay provisions of 11 U.S.C. § 362(a)(1), (a)(6) and (k)(1); and for discrimination
under 11 U.S.C. § 525(a). We have jurisdiction over this appeal. See 28
U.S.C.§ 158(b). For the reasons that follow, we affirm.

                             STANDARD OF REVIEW

       We review a bankruptcy court’s grant of summary judgment de novo,
Mwesigwa v. DAP, Inc., 637 F.3d 884, 887 (8th Cir. 2011) (citing Anderson v.
Durham D & M, L.L.C., 606 F.3d 513, 518 (8th Cir. 2010)). When an appellate court
reviews a trial court’s entry of summary judgment de novo, it uses the same standard
applied by the trial court pursuant to Federal Rule of Civil Procedure 56(c). Bremer
Bank v. John Hancock Life Ins. Co., 601 F.3d 824, 829 (8th Cir. 2010). Under Rule
56(c), summary judgment is proper if the pleadings, affidavits, and other evidence
show there is no genuine issue of material fact and the moving party is entitled to
judgment as a matter of law. Fed. R. Civ. P. 56(c); Fed. R. Bankr. P. 7056. Once the
moving party has met this initial burden of proof, the non-moving party must set forth
specific facts sufficient to raise a genuine issue for trial and may not rest on its
pleadings; self-serving allegations or mere assertions of disputed fact are insufficient
to defeat the motion. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
574, 586-87 (1986); Bass v. SBC Commc’n, Inc., 418 F.3d 870, 872-73 (8th Cir.
2005).

         1
        The Honorable Kathy A. Surratt-States, Chief United States Bankruptcy Judge
for the Eastern District of Missouri.

                                          -2-
                            FACTUAL BACKGROUND

       The relevant facts are not in dispute. Appellant was issued a traffic citation on
April 16, 2010, by the City of Ferguson for driving thirty-nine miles per hour in a
twenty-five miles per hour school zone. Appellant failed to appear for her court date
so the municipal judge issued a warrant for her arrest on June 18, 2010. Appellant
was subsequently arrested and released on her own recognizance on March 26, 2015,
and a new court date was set. Appellant appeared in court on May 7, 2015, pleaded
guilty to speeding in a school zone, and agreed to pay a fine of $149.00.

       Appellant did not pay the fine, and the court re-issued a warrant for her arrest.
The City of Ferguson also notified the proper Missouri entities of the outstanding
fine, which Appellant contends is impeding her ability to renew her driver’s license.2
Since the re-issuance of the arrest warrant on July 15, 2015, the City of Ferguson has
not taken any affirmative action to enforce the warrant or collect the fine.

      On February 24, 2016, appellant filed a voluntary petition under Chapter 13 of
the United States Bankruptcy Code and listed the City of Ferguson as a creditor in her
bankruptcy schedules. On February 25, 2016, Appellant’s attorney notified the City
of Ferguson’s Municipal Court of the bankruptcy filing and included a letter
requesting release of the arrest warrant and issuance of a compliance letter to reinstate
Appellant’s driver’s license. On February 26, 2016, a municipal prosecutor for the

      2
        This statement is the finding of fact made by the bankruptcy court. In her brief,
Appellant asserts that “Upon her failure to pay the fine, Appellee placed Ms. Edwards
in warrant status and issued a notice to the Missouri Department of Revenue to place
a restriction which suspends Ms. Edwards’ driver’s license.” It is unclear to us
whether Appellant’s driver’s license has actually been suspended by the issuing
agency or whether it simply is refusing to renew it. In any event, by oral argument,
Appellant was focused on demanding that the City of Ferguson issue some sort of
“compliance letter” to allow her license to be renewed despite the non-payment of the
traffic fine.

                                          -3-
City of Ferguson responded to Appellant’s attorney stating the Municipal Judge had
the authority to recall the warrant and suggested that counsel file an entry of
appearance and an appropriate motion.

       Appellant did not seek relief from the Ferguson Municipal court. Instead, she
filed an adversary proceeding against the City of Ferguson. The complaint alleged the
City of Ferguson willfully violated the automatic stay by refusing to release the
warrant for Appellant’s arrest and refusing to release Appellant’s driver’s license
without payment of the fine. Appellant also asserted that since she is insolvent and
unable to pay the fine, the City of Ferguson is discriminating unfairly against her due
to her bankruptcy filing and is denying her a fresh start. Appellant sought actual
damages, attorney fees, and punitive damages.

      The parties filed cross-motions for summary judgment, and on November 7,
2018, the bankruptcy court granted the City of Ferguson’s motion and denied
Appellant’s motion.

                                   DISCUSSION

       Section 362(a) of the Bankruptcy Code provides that upon the filing of a
petition in bankruptcy, a stay is imposed upon the commencement or continuation of
an action or proceeding against the debtor that was or could have been commenced
before the commencement of the bankruptcy case. It also prohibits any act to collect,
assess, or recover a claim against the debtor that arose before the commencement of
the case. 11 U.S.C. § 362(a)(1) and (6). This is known as the automatic stay.

      Appellant describes the issue on appeal as follows: “Is coercion by a
municipality to collect a civil debt during a bankruptcy a willful violation of the
automatic stay?” If that were truly the issue on appeal, a result in Appellant’s favor
might seem obvious. However, that sentence is not a proper statement of the issue on

                                         -4-
appeal—it is more akin to an argument. The actual issue on appeal is whether the
bankruptcy court erred in granting summary judgment in favor of the City and
finding that the City did not violate the automatic stay under 11 U.S.C. § 362(a)(1)
and 362(a)(6) when it failed to take post-petition actions to rescind its arrest warrant
and issue a compliance letter to assist in reinstatement of Appellant’s driver’s
license.3

        Appellant takes the position that by failing to take affirmative action to rescind
the arrest warrant and issue a compliance letter, the City has willfully violated the
automatic stay through coercion by continuing a process to collect a debt that arose
before the commencement of the case. The City disagrees and notes the bankruptcy
court findings that all of the City’s actions (issuance of the warrant and any notices
regarding the driver’s license) took place well before the bankruptcy case, and that
the City has not taken any action in furtherance of the warrant since the bankruptcy
filing.

        In her brief, Appellant attempts to argue the question of whether mere inaction
can, by itself, constitute a violation of the automatic stay. The answer to that question
is really not in dispute. See United States v. Whiting Pools, Inc., 462 U.S. 198 (1983)
(property seized but not yet sold before the filing of the bankruptcy petition is
property of the estate subject to turnover requirements of § 542); Knaus v. Concordia
Lumber Co., Inc. (In re Knaus), 889 F.2d 773 (8th Cir. 1989) (creditor's failure to turn
over assets seized pre-petition violated automatic stay); In re See, 301 B.R. 549
(Bankr. N.D. Iowa 2003) (post-petition garnishment violates automatic stay). The
case law is clear that under certain circumstances—such as where there is a post-
petition turnover obligation and where inaction will clearly result in a stay violation

      3
       During this appeal, Appellant has not argued the question of whether the City
violated 11 U.S.C. §525(a). Therefore, those issues are abandoned on appeal.
Schlehuber v. Fremont Nat'l Bank & Trust Co. (In re Schlehuber), 489 B.R. 570, 572
n.2 (B.A.P. 8th Cir. 2013).

                                           -5-
(by continuation of a wage garnishment, for example)—some action needs to be taken
by a creditor to prevent a violation of the automatic stay. The question is whether
those circumstances exist here.

        Regarding the arrest warrant, the only factual finding in the record is that the
City has not taken any action to enforce the warrant post-petition. Appellant does not
dispute that finding. Instead, Appellant argues—without factual support—that the
failure of the City to recall the warrant will eventually result in her arrest which is an
attempt to coerce her to pay the fine. We have not been presented with any evidence
in the record to establish whether that is a true statement. In fact, all we know is that
the City has not acted on it. Unlike a garnishment (which will result in wages being
withheld unless withdrawn), nothing will happen as a result of an arrest warrant until
it is actually enforced.

        The parties are in agreement that the automatic stay prevents the City from
arresting Appellant as a way of attempting to collect her debt. But, there is a
significant difference between staying enforcement of the warrant and recalling or
rescinding it in its entirety. This adversary proceeding arose in a Chapter 13
bankruptcy case, which can last as long as five years after plan confirmation. If the
bankruptcy case gets dismissed before completion (as many do), Appellant will not
receive a discharge of her debts. Upon such a dismissal, collection of the fine and
enforcement of the warrant would no longer be stayed, and the City could proceed
with enforcement as if the bankruptcy never happened. But, if the warrant were
rescinded as Appellant requests, the City would then have to go through additional
legal and procedural steps to be in the same position it was in prior to bankruptcy
filing.

       Unfortunately, we have no evidence in the record as to what steps the City has
available to it or has actually taken to ensure that enforcement of the warrant is
actually stayed. All we know is that the City has not acted to enforce the warrant.

                                           -6-
Appellant argues that if the warrant is not recalled, she may be arrested if she
encounters a police officer—whether in the City or even in another jurisdiction. We
have no evidence to support that argument and will not speculate as to whether it is
a true statement. Certainly, recalling the warrant would be the safest route for the
City to ensure that it does not cause a violation of the automatic stay—but Appellant
has not shown us any compelling authority supporting the proposition that the City
is required to do so.4 Enforcement of the warrant is simply stayed while the
automatic stay is in effect. Appellant has failed to identify any post-petition action by
the City that would be in violation of the stay.

       For similar reasons, we agree with the bankruptcy court that the City is not
required to issue a compliance letter regarding Appellant’s driver’s license. There is
no dispute that the fine has not been paid. There is nothing in the Bankruptcy Code
requiring a municipality to write a letter saying a debtor has paid a fine or otherwise
complied with its municipal code when the debtor has not done so. The answer may
be different once a debtor actually pays a fine or obtains discharge of a debt—but
those facts are not present here. Appellant admittedly has not paid the fine and is
years away from having it discharged.

      Appellant asserts that failing to submit the compliance letter is an attempt to
coerce her into paying the debt so that she can get her driver’s license renewed. As
indicated above, the Bankruptcy Code simply does not require a statement that a

      4
       The only case cited by appellant that appears on point is a bankruptcy court
decision—In re Walters, 219 B.R. 520 (Bankr. W.D. Ark. 1998). In that case the
bankruptcy court did opine that upon notice of a bankruptcy filing, a municipality
should cancel any outstanding warrants for the debtor’s arrest that may have been
issued pre-petition for an unpaid fine or restitution obligation. Id. at 527. We
disagree with that conclusion and note that Walters involved some fairly egregious
acts by the police officers involved. The debtor was actually arrested post-petition
and misrepresentations were made to her by the officers. The Walters court did not
discuss why a simple stay of the enforcement of the warrant would not be sufficient.

                                          -7-
debtor has complied when the debtor has not done so. Further, Appellant (through
counsel) admitted at oral argument that the City does not issue driver’s licenses—that
is a state function. The State of Missouri is not a party to this adversary proceeding
and there is no evidence in the record as to (i) whether Appellant has even asked the
State to issue her license; (ii) whether the State has refused to do so and its stated
reasons for the refusal; and (iii) what requirements the State may impose for issuance
of a license under the facts of this case. As such, Appellant has failed to show that the
City’s inaction regarding the compliance letter has somehow led to her inability to
obtain a driver’s license.

       Finally, appellant argues in her brief that the bankruptcy court considered an
irrelevant factor—whether a driver’s license is property of the estate. We agree with
the City that the reference in the bankruptcy court’s order to a driver’s license being
property of the estate was taken out of context by appellant and was not a factor in
the bankruptcy court’s decision. Appellant also argues the City prosecutor’s response
to her attorney’s inquiry was somehow a violation of the automatic stay. We agree
with the bankruptcy court that the response was just that—a response to an inquiry.
It was not an attempt to collect a debt.

                                   CONCLUSION

      For the foregoing reasons, we affirm the judgment of the bankruptcy court.
                      ______________________________

                                          -8-