In Re Crockett

204 B.R. 705, 11 Tex.Bankr.Ct.Rep. 64, 3 Wage & Hour Cas.2d (BNA) 1373, 1997 Bankr. LEXIS 99, 1997 WL 49973
CourtUnited States Bankruptcy Court, W.D. Texas
DecidedJanuary 27, 1997
Docket19-10237
StatusPublished

This text of 204 B.R. 705 (In Re Crockett) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, W.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Crockett, 204 B.R. 705, 11 Tex.Bankr.Ct.Rep. 64, 3 Wage & Hour Cas.2d (BNA) 1373, 1997 Bankr. LEXIS 99, 1997 WL 49973 (Tex. 1997).

Opinion

MEMORANDUM OPINION

FRANK R. MONROE, Bankruptcy Judge.

The Court held a hearing on January 21, 1997, on the Debtor’s Expedited Motion for Clarification and Enforcement of Stay. At the conclusion of the hearing the Court made oral findings of fact and conclusions of law on the record on all the issues before it, but one. That issue was taken under advisement. The Court has considered the' arguments of counsel for the parties on that matter, the exhibits presented by counsel for the Debtor, the ease law provided by both counsel, and the Court’s own independent legal research. Based thereon this Memorandum Opinion is issued as written findings of fact and conclusions of law under Bankruptcy Rules 7052 and 9014 and incorporates by reference the Court’s previous oral findings of fact and conclusions of law.

Findings of Fact

There is a long procedural history of litigation between these parties. For the purposes of this Opinion the salient facts are that the Debtor was assessed civil money penalties in the amount of $202,000.00 for alleged repeated violations of sections 6, 7, and 15(a)(2) of the Fair Labor Standards Act, 27 U.S.C. § 201, et seq. (hereinafter “FLSA”). The Debtor timely filed an exception to the assessment. A formal administrative hearing was scheduled for November 18, 1996, before a Administrative Law Judge for a final determination with respect to the alleged violations. Although that review was to be de novo, it was limited to (1) whether the Debtor committed repeated or willful violations of Section 6 or 7 of the FLSA, and (2) whether the penalty currently assessed is appropriate. On November 15, 1996, the Debtor filed a petition under Chapter 11 of the Bankruptcy Code. Debtor’s bankruptcy counsel notified the Administrative Law Judge of the bankruptcy filing. On November 15, 1996, subsequent to the notification, the Administrative Law Judge issued an Order Denying Motion to Stay stating, that “the case scheduled for trial Monday, November 18, 1996, is exempt from the automatic stay proceedings under 11 U.S.C. § 361(b)(4). cf. Board of Governors v. Mcorp (sic) Financial, [502 U.S. 32] 112 S.Ct. 459 [116 L.Ed.2d 358] (1991).” Thereupon, the Debtor filed his Motion for Clarification and Enforcement of Stay with this Court. On December 2, 1996, the Administrative Law Judge suspended his administrative proceedings pending a ruling by this Court.

Issue

Are the administrative proceedings which were pending before the Office of Administrative Law Judges stayed or are they excepted from the automatic stay pursuant to 11 U.S.C. § 362(b)(4) and (b)(5)? 1

Conclusions of Law

The Debtor relies on In re Eagle Bus Manufacturing, Inc., 158 B.R. 421 (S.D.Tex.1993) in support of his argument that the stay applies to these administrative proceedings. In In re Eagle Bus Manufacturing the issue was whether the Ohio Bureau of Employment Services was entitled to relief from the automatic stay to redetermine the debt- or’s unemployment compensation experience rating. The District Court held that they were not and distinguished two earlier Fifth Circuit cases, National Labor Relations Board v. Evans Plumbing Company, 639 F.2d 291 (5th Cir.1981) and, In the Matter of Commonwealth Oil Refining Co., 805 F.2d 1175 (5th Cir.1986). In pertinent part the District Court said,

*707 “Evans and Commonwealth clearly support the proposition that a governmental unit in certain' instances may bring action against a bankruptcy petitioner under § 862(b)(4) to enforce its police or regulatory power and have a monetary judgment entered against said petitioner under § 362(b)(5). However, as stated above it was clearly the intent of Congress that the application of § 362(b)(4) be limited to governmental units seeking to prevent or stop the violation of particular laws or seeking to recover damages arising from the violation of such laws. A study of legislative history further shows the intent of Congress to limit the application of § 362(b)(4) to actions by a governmental unit seeking to protect public health and safety. Accordingly, this Court finds the facts in the case at bar clearly distinguishable from those in Evans and Commonwealth and further finds the holdings in both Evans and Commonwealth to support the Bankruptcy Court’s ruling.
Unlike the NLRB in Evans, Ohio Bureau did not seek to have the automatic stay lifted so that it could bring suit against Greyhound for allegedly violating federal or state labor laws; and unlike the EPA in Commonwealth, Ohio Bureau did not move the Bankruptcy Court to lift the stay to permit the prosecution of federal and state environmental law and regulation violations. In fact Ohio Bureau did not bring suit against Greyhound alleging a violation of any law and as such does not seek damages for the alleged violation of any law. Rather, the Ohio Bureau seeks to protect its pecuniary interest in the property of Greyhound the debtor or property of Greyhound’s estate by liquidating its tax claim against Greyhound. The Ohio Bureau’s tax claim is not based on the violation of any law and was not pursued in an effort to protect the public health and safety of the citizens of Ohio. Pursuant to Congress’ intent that the exception under § 362(b)(4) and (5) be narrowly construed, this Court is of the opinion that Ohio Bureau’s claim does not fall within the ambit of the exception § 362(b)(4) and as such the Ohio Bureau was not entitled to seek the entry of a monetary judgment against Greyhound.” (emphasis added).

In re Eagle Bus Manufacturing, 158 B.R. at 427-428.

Clearly, In re Eagle Bus Manufacturing is distinguishable from this case on the facts. Here the United States Department of Labor (hereinafter “DOL”) is alleging violations of federal labor law. The Debtor has already been assessed civil penalties for such alleged violations. All that remains is the final determination that such violations were repeated and willful and, thus, civil penalties were properly assessed pre-bankruptcy. This is a far cry from a state agency attempting to relitigate the amount potentially owed it where no violation of federal or state law has been alleged. Here the DOL is seeking, not to protect or increase a pecuniary interest in the property of this Debtor by liquidating its claim, but to prevent further alleged violations of federal law by this Debtor and to penalize him under the applicable FLSA statutes for prior alleged acts.

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204 B.R. 705, 11 Tex.Bankr.Ct.Rep. 64, 3 Wage & Hour Cas.2d (BNA) 1373, 1997 Bankr. LEXIS 99, 1997 WL 49973, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-crockett-txwb-1997.