Court Opinion

ID: 9858612
Source: CourtListenerOpinion
Date Created: 2023-09-24 16:33:59.254831+00
Date Added: 2024-06-11T09:55:11.281368
License: Public Domain

ON MOTION FOR REHEARING
In our original opinion in this cause we observed that we found no documentary evidence in the record to support appellant’s assertion that they had filed for bankruptcy. We have since granted appellants’ motion to enlarge the record and allowed a certified copy of the petition in bankruptcy to be filed among the papers in this cause. Appellants earnestly contend that proper notice to this court of the filing of said petition should result in a stay of further proceedings in this appeal, under the automatic stay provision of the Bankruptcy Code (11 U.S.C. § 362(a)).
We find, however, that the present action falls squarely within the exceptions to the automatic stay in § 362(b)(4) and (5), which provide:
(b) The filing of a petition under section 301, 302, or 303 of this title does not operate as a stay—

(4) under subsection (a)(1) of this section, of the commencement or continuation of an action or proceeding by a governmental unit to enforce such governmental unit’s police or regulatory power;
(5) under subsection (a)(2) of this section, of the enforcement of a judgment, other than a money judgment, obtained in an action or proceeding by a governmental unit to enforce such governmental unit’s police or regulatory power;
Appellants contend that the legislative history surrounding the adoption of the Bankruptcy Reform Act supports a stay in this case. However, in our view the legislative history cited by appellants actually supports the applicability of the above-cited exceptions to the stay. Both H.R.Rep. No. 595, 95th Cong., 1st Sess. 343, reprinted in *3601978 U.S.Code Cong. & Ad.News 5963, 6299; and S.Rep. No. 989, 95th Cong., 2nd Sess. 52, reprinted in 1978 U.S.Code Cong. & Ad. News 5787, 5838, contain the following language:
Paragraph (4) excepts commencement or continuation of actions and proceedings by governmental units to enforce police or regulatory powers. Thus, where a governmental unit is suing a debtor to prevent or stop violation of ... environmental protection, ... safety, or similar police or regulatory laws, ... the action or proceeding is not stayed under the automatic stay. Paragraph (5) makes clear that the exception extends to permit an injunction and enforcement of an injunction ....
Both Upper Neches River Municipal Water Authority and the Texas Department of Water Resources were proceeding against the debtor (Fan Reed) to stop violations of environmental protection laws, thus bringing the present action squarely within the letter and spirit of the above-quoted exceptions to the automatic stay provisions of the Bankruptcy Code. Appellants’ motion for rehearing is in all respects overruled.