In re Bazzi

481 B.R. 397, 2012 Bankr. LEXIS 5133, 2012 WL 5328628
CourtUnited States Bankruptcy Court, E.D. Michigan
DecidedOctober 12, 2012
DocketNo. 12-60627
StatusPublished
Cited by3 cases

This text of 481 B.R. 397 (In re Bazzi) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Bazzi, 481 B.R. 397, 2012 Bankr. LEXIS 5133, 2012 WL 5328628 (Mich. 2012).

Opinion

[398]*398OPINION REGARDING DEBTOR’S MOTION TO HOLD THE HONORABLE CYNTHIA GREY HATHAWAY [AND OTHERS] IN CONTEMPT FOR VIOLATION OF THE AUTOMATIC STAY

THOMAS J. TUCKER,Bankruptcy Judge.

I.Introduction

This case came before the Court on October 8, 2012, for an expedited hearing on Debtor’s motion entitled “Debtor’s Motion to Hold the Honorable Cynthia Grey Hathaway, Lori A. Dawson, Cyril C. Hall, and Sunshine Oil Company, Inc. in Contempt for Violation of the Automatic Stay” (Docket # 17, the “Motion”). The Court has considered the arguments made by the parties during the hearing and in writing, and all of the briefs, exhibits, and other papers filed by the parties, both before and after the hearing (including those not authorized by the Court’s October 3, 2012 Order (Docket #27), that were filed on October 11, 2012 (Docket # # 40, 41).)

Because the Debtor in this case is incarcerated, and contends that his incarceration is in violation of the automatic stay under 11 U.S.C. § 362(a), the Court has considered it urgent to rule on the Motion as quickly as possible after the parties’ post-hearing briefing concluded, earlier this week. Because of the urgency of this Motion, this opinion will state the reasons for the Court’s ruling in a somewhat abbreviated form.

In the Motion, the Debtor seeks an order requiring that he be released from his incarceration, and other, related injunctive relief, as well as damages under 11 U.S.C. § 362(k)(l) against some (but not all) of the Respondents named in the Motion, for their alleged willful violation of the automatic stay. Respondents all oppose the Motion, for a variety of reasons.

For the reasons stated in this opinion, the Court will deny the Motion, and will annul the automatic stay for cause under 11 U.S.C. § 362(d)(1), to the extent discussed below.

II.Jurisdiction

This Court has subject matter jurisdiction over this bankruptcy case and this contested matter under 28 U.S.C. §§ 1334(b), 157(a) and 157(b)(1), and Local Rule 83.50(a) (E.D. Mich.). This matter is a core proceeding under 28 U.S.C. § 157(b)(2)(0). This matter also is “core” because it falls within the definition of a proceeding “arising under title 11” and of a proceeding “arising in” a case under title II, within the meaning of 28 U.S.C. § 1334(b). Matters falling within either of these categories in § 1334(b) are deemed to be core proceedings. See Allard v. Coenen (In re Trans-Industries, Inc.), 419 B.R. 21, 27 (Bankr.E.D.Mich.2009). This matter is a proceeding “arising under title 11” because it is “created or determined by a statutory provision of title 11,” id., namely, the Bankruptcy Code sections discussed below. And this matter is a proceeding “arising in” a case under title 11, because it is a proceeding that “by [its] very nature, could arise only in bankruptcy cases.” Id.

III. Discussion

The Court finds it unnecessary to discuss all of the arguments of the parties. It is not necessary, for example, to determine whether the “criminal action or proceeding” exception to the automatic stay, contained in 11 U.S.C. § 362(b)(1), applies to the probation-violation proceeding and the Debtor’s current incarceration in the [399]*399state criminal case.1 This is so because the Court concludes that there is cause to annul the automatic stay, to the extent it does apply to the actions Debtor complains of, retroactively to the petition date, and that the Court should exercise its discretion, in the presence of such cause, to annul the stay in this way.

The Debtor’s current incarceration, and the charge that he has violated the terms of the state court’s probation order, arises from Debtor’s alleged failure to pay restitution as ordered by the state court as part of its sentence.

Debtor’s obligation to make restitution payments in his criminal case first arose from the state court’s December 3, 2009 Order of Probation,2 which placed Debtor on probation for five years and ordered Debtor to pay “to the court ... Restitution” of $578,268.21. This was Debtor’s sentence for his conviction, following a nolo contendere plea, on seven criminal counts. One of these counts was for the use of a “false pretense” “with the intent to defraud or cheat” another of property with a value of more than $20,000, in violation of Mich.Comp.Laws § 750.218(1) and (5). The six other counts were for passing checks without sufficient funds, in the amount of $500 or more, “with intent to defraud,” in violation of Mich.Comp.Laws § 750.131(1) and (3)(c).3

The victim of Debtor’s fraudulent crimes was Sunshine Oil Company. It is undisputed that the Debtor’s payment of the $578,268.21 in restitution in Debtor’s criminal case, though payable “to the court,” ultimately benefit, and be passed by the court on to, Sunshine Oil Company. In addition, Sunshine Oil Company obtained a civil judgment against Debtor, in this Court, as discussed below.

On December 9, 2009, Debtor filed a Chapter 11 bankruptcy case in this Court, Case No. 09-77600. Although that case was filed only a few days after Debtor was ordered, by the state court’s December 3, 2009 Order of Probation, to pay $578,268.21 in restitution to the state court, Debtor did not list this restitution debt in his bankruptcy schedules. He did list in his Schedule F the debt to Sunshine Oil Company (which he named as “Sunshine Oil”), however, in the exact amount of the criminal restitution.4 Debtor’s Chapter 11 case was converted to Chapter 7, on May 4, 2010.5

Thereafter, Sunshine Oil Company timely filed an adversary proceeding, on August 16, 2010, Case No. 10-6451, seeking a judgment against Debtor for $560,109.52, and a determination that the debt was nondischargeable under 11 U.S.C. §§ 523(a)(2)(A), 523(a)(4), 523(a)(6), and 523(a)(7). The complaint contained four counts, each based on a different section of § 523(a). Count IV of Sunshine’s complaint described Debtor’s December 3, 2009 criminal conviction and sentence, including Debtor’s obligation to pay restitution of $578,268.21, and alleged that this debt was nondischargeable under 11 U.S.C.

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Cite This Page — Counsel Stack

Bluebook (online)
481 B.R. 397, 2012 Bankr. LEXIS 5133, 2012 WL 5328628, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-bazzi-mieb-2012.