Court Opinion

ID: 9861934
Source: CourtListenerOpinion
Date Created: 2023-09-25 00:55:03.308283+00
Date Added: 2024-06-11T11:29:49.564860
License: Public Domain

MYERSCOUGH, J., dissenting: I respectfully dissent. The Champaign County trial court abused its discretion in holding Farmers Merchants in indirect contempt. There is no real dispute over the facts in this case. The trial court entered a turnover order on May 27, 1997, against Farmers Merchants in favor of Busey. On May 30, 1997, the Salyards filed bankruptcy. On November 21, 1987, the Arizona bankruptcy court vacated Busey’s judicial lien. The Salyards then received their account balance less $4,500 paid to Farmers Merchants on a car loan. On August 10, 1998, the Champaign County trial court held Farmers Merchant in indirect civil contempt for failing to make payment to Busey as ordered on May 27, 1997. This court has affirmed the Champaign County trial court finding that (1) a valid turnover order was in effect, (2) Farmers Merchants had possession of the funds, (3) Farmers Merchants was capable of complying with the order, and (4) Farmers Merchants did not comply with the order. However, in this case, there clearly could be no wilful contempt. Farmers Merchants was subject to the bankruptcy stay only three days after entry of the turnover order. That turnover order was still subject to appeal at the time. Any transactions, including judicial liens, occurring within 90 days of the filing of bankruptcy are subject to stay. In fact, once a debtor declares bankruptcy, the debtor is allowed to avoid any judicial lien that impairs any exemption that the debtor is entitled to under state law. 11 U.S.C. § 522(f)(1)(A) (1994). The majority found that it was not necessary to decide the legal issue — whether the turnover order transferred ownership of the funds to Busey. I agree. Whether ownership was transferred is not determinative of the indirect contempt issue. Even if ownership were transferred by the turnover order to Busey, upon the filing of bankruptcy, the property had to remain in the bankruptcy estate. Given the automatic stay, as well as the subsequent avoidance of the turnover order, Farmers Merchants was never capable of complying with the turnover order without subjecting itself to contempt of the bankruptcy court. Moreover, the trial court failed to accord full faith and credit to the Arizona bankruptcy court. That bankruptcy court granted the motion to avoid the judgment for turnover of exempt property of the respondent, Busey, and recognized the Salyards’ IRA exemption. The Champaign County trial court, however, imposed a sanction for contempt for failure to make payment as required under the avoided turnover order and entered a purge provision that required payment of the full amount of the IRA plus interest. The trial court erred in refusing to grant full faith and credit to the order of the Arizona bankruptcy court. Additionally, the very complexity of the legal issues herein and the vagaries of bankruptcy law and most especially the issue of ownership vitiate any arguments of indirect contempt. Farmers Merchants took the appropriate actions following the Arizona bankruptcy court’s orders. Any complaints that Busey had with the Salyards’ statutory exemption should have been raised in the Arizona bankruptcy court.