Court Opinion

ID: 989918
Source: CourtListenerOpinion
Date Created: 2013-07-03 23:14:12.344264+00
Date Added: 2024-06-11T15:22:34.418789
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

In Re: WILLIAM REID THOMPSON,
Debtor.

WILLIAM REID THOMPSON,
Plaintiff-Appellant,
                                                               No. 95-3112
v.

BOARD OF TRUSTEES OF THE FAIRFAX
COUNTY POLICE OFFICERS RETIREMENT
SYSTEM,
Defendant-Appellee.

Appeal from the United States District Court
for the Eastern District of Virginia, at Alexandria.
Albert V. Bryan, Jr., Senior District Judge.
(CA-95-1221-A, BK-93-15316)

Argued: July 8, 1996

Decided: August 2, 1996

Before WILKINS, LUTTIG, and WILLIAMS, Circuit Judges.

_________________________________________________________________

Affirmed by unpublished per curiam opinion.

_________________________________________________________________

COUNSEL

ARGUED: Robert Lee Vaughn, Jr., GLENNON, GOODMAN &
LUBELEY, Reston, Virginia, for Appellant. William McCauley
Arnold, MCCANDLISH & LILLARD, P.C., Fairfax, Virginia, for
Appellee.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

Appellant William Reid Thompson became a police officer with
Fairfax county in 1969, at which time he became a participant in the
disability and retirement plan administered by appellee Board of
Trustees of Fairfax County Police Officers ("the Board"). In 1971,
Thompson was injured in a work-related automobile accident, for
which he began to receive disability benefits in 1973. In 1987, the
Board discontinued Thompson's disability payments because it deter-
mined that Thompson had been ineligible for disability benefits he
had previously received in the amount of $89,017.49. The Board's
determination was based on Thompson's plea of guilty in federal dis-
trict court to four felony charges, including conspiracy to distribute
drugs, from which it was determined that Thompson made a profit of
six million dollars while collecting disability. Because disability ben-
efits are reduced if the recipient receives other income, Thompson's
profits were more than sufficient to disqualify him from the disability
benefits he received from 1974-78 and 1984-86.

On January 1, 1994, Thompson became eligible to receive retire-
ment benefits, and ineligible to receive further disability benefits, by
virtue of obtaining twenty-five years of "service credit" with the
police force. Three days prior to January 1, 1994, Thompson filed for
bankruptcy under Chapter 7. Although Thompson listed the Board as
an unsecured creditor and notified the board that any further attempt
to recover disability benefits would be in violation of the automatic
stay imposed by 11 U.S.C. § 362, the Board withheld Thompson's
retirement benefits and applied them to the amount Thompson owed

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the Board for the prior disability overpayments. Thompson filed an
adversary hearing in the bankruptcy court seeking injunctive relief,
damages, and sanctions against the Board for violation of the auto-
matic stay and discharge injunction imposed by the Bankruptcy Code.

At the hearing, the Board asserted a right to recoupment, which
acts as an "equitable exception" to the automatic stay, or in the alter-
native a right to setoff Thompson's future retirement benefits against
his disability overpayments. The bankruptcy court found no right of
recoupment because the disability overpayments and retirement bene-
fits arose from separate transactions, and thus they failed to meet the
requirement for recoupment that the two parties' claims arise from the
"same transaction." J.A. at 188. However, the bankruptcy court did
hold that the right of setoff existed.

In holding that the Board had a right of setoff under 11 U.S.C.
§ 553, the bankruptcy court concluded that the parties had the requi-
site mutuality, because both Thomas and the Board were asserting
rights that had existed before the filing of the bankruptcy petition. See
J.A. at 190. The bankruptcy court specifically determined that
Thompson's claim arose pre-petition, finding that, although it was
contingent on Thompson's obtaining twenty-five years service credit,
Thompson's claim for retirement benefits had arisen when he joined
the police force. See J.A. at 203. The bankruptcy court further found
that only $1.00 of Thompson's estate was exempted from setoff by
state law, because the schedules filed by Thompson were ambiguous.
See J.A. at 205. The bankruptcy court then exercised its discretion to
annul the automatic stay and provided retroactive relief to the Board,
allowing the Board to exercise its right to setoff against the remainder
of Thompson's estate exceeding $1.00. See J.A. at 207. Thompson
appealed, and the district court affirmed each of the bankruptcy
court's findings.

Thompson challenges the bankruptcy court's decision on several
grounds. First, Thompson asserts that the term "debt" is more limited
than the term "claim" under the bankruptcy code, and does not
include contingent claims such as Thompson's claim for retirement
benefits at the time of the filing of the bankruptcy petition. Second,
Thompson asserts that the bankruptcy court had no discretion to annul
the automatic stay. Third, Thompson asserts that his retirement bene-

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fits were exempt from setoff under federal and state law. Fourth,
Thompson asserts that the bankruptcy court erred in finding that the
Board was not barred by failure to file a proof of claim. Last, Thomp-
son asserts that the district court judge erred in failing to recuse him-
self from the proceedings, based on the judge's alleged bias against
Thompson arising from the judge's involvement in earlier criminal
proceedings against Thompson's co-conspirators.

Having reviewed the lower court opinions, the record, and the
briefs and materials submitted by the parties, we conclude that the
district court committed no error. Accordingly, we affirm on the thor-
ough opinions of the bankruptcy court, see Thompson v. Board of
Trustees, 182 B.R. 140 (Bankr. E.D. Va. 1995), and the district court.

AFFIRMED

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