Court Opinion

ID: 7016066
Source: CourtListenerOpinion
Date Created: 2022-07-24 04:21:00.370795+00
Date Added: 2024-06-11T16:10:23.502557
License: Public Domain

JOHN M. WALKER, JR.,
Chief Judge, dissenting:
Because I believe that 11 U.S.C. § 525(a) of the Bankruptcy Code does not apply to residential leases and that 11 U.S.C. § 365 does apply to public housing leases, I respectfully dissent.
Like the Majority, I start with the text of § 525(a). “[A] governmental unit may not deny, revoke, suspend, or refuse to renew a license, permit, charter, franchise, or other similar grant ... solely because” a person is or has been bankrupt. 11 U.S.C. § 525(a). Because a residential lease is not included among the four enumerated governmental grants to which § 525 applies, the question is whether a residential lease is a “similar grant.”
The Majority states that the common quality connecting “license, permit, charter [and] franchise” is “that these property interests are unobtainable from the private sector and essential to a debtor’s fresh start.” Maj. Op., supra, at 90. But the fact that these interests are unobtainable from the private sector derives from the fact that § 525(a) is directed to “government unit[s]” and not to the particular character of licenses, permits, charters and franchises, as these interests can also be obtained from the private sector. Nor does the quality of being “essential to the debtor’s fresh start” plainly derive from “license, permit, charter, [and] franchise.” Although some interests such as a vendor license, may be essential to a bankrupt’s fresh start, others, such as a recreational fishing license, are not. The Majority seems to have read “similar” out of the statute because its definition of “similar grant” is likely to encompass all possible government grants to individuals.
The specified grants — license, permit, charter, and franchise — share a more definite similarity: Each allows the grant-holder to engage in certain regulated conduct. The government grants real estate, drivers, liquor, or medical licenses; building or emissions permits; bank or corporate charters; and cable television or electricity distribution franchises. As the Sixth Circuit recently stated, the common thread is the “government’s role as a gatekeeper in determining who may pursue certain livelihoods.” Toth v. Mich. State Hous. Auth., 136 F.3d 477, 480 (6th Cir. 1998) (holding that § 525(a) does not apply to an extension of a home improvement loan). Thus, I believe that a “similar grant” is a grant relating to authorization to engage in income-generating conduct. This interpretation of “similar grant” is supported by the focus on employment in the remainder of § 525(a) and in § 525(b), each of which forbids the firing of bank*96rupt employees. 11 U.S.C. § 525(a) and (b). Because education is often critical to getting a job, § 525(c)’s prohibition of discrimination against bankrupts in the granting of student loans is also consistent with the goal of allowing bankrupts to earn a living. 11 U.S.C. § 525(c).
Therefore, I read § 525(a) not to apply to a residential lease. Such leases do not directly enable their holders to engage in the kind of an income-generating activity as do licenses, permits, charters, and franchises. This reading finds additional support from the fact that Congress specifically refers to leases elsewhere in the Bankruptcy Code, see, e.g., 11 U.S.C. §§ 363, 365, 929, and 1169, but failed to include leases among § 525(a)’s enumerated interests.
Any lingering uncertainty about this interpretation evaporates when one considers § 525(a) in the context of the entire Bankruptcy Code. “[Ejvery part of a statute must be construed in connection with the whole, so as to make all the parts harmonize.... ” Market Co. v. Hoffman, 101 U.S. 112, 116, 25 L.Ed. 782 (1879). In particular, “where possible, provisions of a statute should be read so as not to create a conflict.” La. Pub. Serv. Comm’n v. FCC, 476 U.S. 355, 370, 106 S.Ct. 1890, 90 L.Ed.2d 369 (1986).
Thus, the potential conflict between § 365 and § 525(a) is properly considered when interpreting § 525(a). As the Majority recognizes, if we read § 525(a) to apply to residential leases, it is placed in direct conflict with § 365 of the Bankruptcy Code. Maj. Op., supra, at 92. Thus, as a matter of sound statutory construction, if it is reasonable to construe “similar grants” as not including residential leases, that course is preferable if it will avoid creating a conflict.
Finally, construing § 525(a) to not include leases makes sense as a matter of public housing policy. It is important to recognize that Stoltz is not simply asking to be allowed to keep her lease; she is asking for a preference over other families waiting for public housing whose need for housing is as great as hers. Moreover, governments depend on the rent received on public housing leases to sustain the viability of the entire program. Congress emphasized the importance of requiring prompt rental payments from public housing tenants when it conditioned contributions to public housing agencies on “the establishment of satisfactory procedures designed to assure the prompt payment and collection of rents and the prompt processing of evictions in the case of nonpayment of rent.” 42 U.S.C. § 1437d(c)(4)(B). The Majority’s interpretation will remove the incentive for bankrupt public housing tenants to assume the lease and cure pre-petition debts to the public housing authority as is required by § 365. See 11 U.S.C. § 365(b)(1)(A). My interpretation will better enable public housing systems to remain viable through a regime of prompt rental receipts. Replacing delinquent tenants who have rejected their lease during bankruptcy with the next needy family in line will encourage assumption of residential leases during bankruptcy and enhance the system as a whole.
I respectfully dissent.