Ticket Plus, Inc. v. Makoul (In re Ticket Plus, Inc.)

103 B.R. 574, 1989 Bankr. LEXIS 1412
CourtDistrict Court, M.D. Pennsylvania
DecidedAugust 18, 1989
DocketBankruptcy No. 5-89-00069; Adv. No. 5-89-0015
StatusPublished
Cited by2 cases

This text of 103 B.R. 574 (Ticket Plus, Inc. v. Makoul (In re Ticket Plus, Inc.)) is published on Counsel Stack Legal Research, covering District Court, M.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ticket Plus, Inc. v. Makoul (In re Ticket Plus, Inc.), 103 B.R. 574, 1989 Bankr. LEXIS 1412 (M.D. Pa. 1989).

Opinion

OPINION AND ORDER

THOMAS C. GIBBONS, Bankruptcy Judge:

This matter is before the Court on complaint of the debtor, Ticket Plus, Inc.; and officers of the debtor, Mary Ann Zurenda and Donald R. Zurenda, Sr. (hereafter “plaintiff”) requesting a permanent injunction to prevent the defendant, Thomas J. Makoul, Makoul Productions, Inc. (hereinafter “defendant”) from proceeding with criminal charges in state court brought against the plaintiff by defendant alleging both the issuance of bad checks and theft by failure to make required disposition of funds. For the reasons provided herein, we deny plaintiff’s request for a permanent injunction.

FINDINGS OF FACT

1. The defendant is in the business of concert promotion.

2. During a period of approximately one year prior to the filing of the above referenced bankruptcy case, the plaintiff sold concert tickets on behalf of defendant for approximately 20 to 25 concerts.

3. Plaintiff sold the concert tickets at face value plus commission.

4. Plaintiff would remit to defendant the face amount of the ticket and retain the commission.

5. Pursuant to the above business relationship and on or about August 30, 1988, plaintiff issued to defendant two checks in the amounts of $40,000 and $22,060, respectively.

6. The check in the amount of $22,060 was post-dated to September 6, 1988.

7. The check was deposited by defendant on September 6, 1988, but was returned by the bank unpaid because of insufficient funds.

8. The check was deposited for a second time and once again returned unpaid.

9. On or about October 24, 1988, the defendant swore out an arrest warrant affidavit before a Magistrate in District Court 11-3-08.

10. Thereafter, on numerous occasions, the Magistrate contacted the plaintiff and made inquiry to determine whether or not payment could be made on the check. Defendant also made numerous requests that plaintiff make payment on the check.

11. On February 1, 1989, the debtor filed a voluntary Chapter 11 petition.

12. On February 2, 1989, two criminal complaints were issued by the Magistrate alleging in one instance a bad check charge and in the other a charge of theft for failing to make proper disposition of funds.

13. The bankruptcy petition was filed approximately five months after the issuance of the bad check and approximately [576]*576four months after the arrest warrant affidavit was sworn out by defendant.

DISCUSSION

The plaintiff advances arguments which are traditionally made in this type of adversary case. The plaintiff argues that the defendant is in violation of 11 U.S.C. § 362 because the criminal proceedings were instituted for the sole purpose of collecting an unsecured claim with the possible result that plaintiff might receive a preference over all other creditors., Further, plaintiff argues that the criminal actions against its officers will substantially impair plaintiffs ability to reorganize because of the necessity of devoting time to defending the criminal charges. Finally, plaintiff argues it will suffer immediate irreparable injury and loss if the injunction does not issue.

The defendant responds that the criminal charges were brought against the non-debt- or principals of the debtor corporation and, therefore, there was no violation of the provisions of 11 U.S.C. § 362. Defendant argues that the principles of equity and comity dictate that only in limited circumstances should this court enjoin a state court proceeding and that, in this particular case, plaintiff has not alleged sufficient facts to show irreparable harm to the estate or that the estate has no adequate remedy at law. Finally, by relying on In re Davis at 691 F.2d 176, 179 (3rd Cir.1982), plaintiff argues that in the absence of a showing of bad faith, defendant is presumed to have filed its state court action in good faith and that the costs, anxiety and inconvenience of defending a good faith criminal prosecution does not constitute irreparable harm.

We start our discussion by noting that plaintiff has not named the District Attorney as a defendant. This court has previously held that there are circumstances in which a creditor may be permanently enjoined from participating in a criminal prosecution of a debtor when the creditor is seeking to utilize the criminal process as a means of extracting a preference not afforded to other creditors similarly situated. See In re Bicro v. Mackes, 105 B.R. 255 (Bankr.M.D.Pa.1988). In Bicro, and in cases upon which Bicro relied, the court focused on both the timing of the institution of the criminal proceedings and the creditor’s motivation in bringing the criminal charges. In Bicro, this court found that the clear intent of the creditor was to extract a preference over all other creditors after the creditor determined it would receive nothing from the administration of the bankruptcy case. The facts of this case present a situation entirely different from that in Bicro. In the instant case we are asked to find that a particular creditor, utilizing all rights granted to it under state criminal law prior to a bankruptcy petition being filed has acted in bad faith and is trying to thwart the effect of the bankruptcy law. This court recognizes that in many situations, the institution of criminal proceedings on bad checks will result in the dropping of the charges should the defendant make restitution to the plaintiff. We note, in this case, the criminal charges were filed one day after the filing of the petition. However, the initial arrest warrant and attempts by the Magistrate to resolve this matter began months prior to the filing of the petition. We do not find, based upon these facts, that defendant’s primary motive was to extract a preference over all other creditors by the filing of the criminal complaint. Consequently, based upon the reasoning of the Bicro case we find the defendant should not be enjoined from proceeding with the criminal prosecution.

The plaintiff’s argument fails to address the primary issue in this case, namely whether the court can enjoin the state, through the District Attorney’s office, from proceeding with the criminal prosecution. This court was recently presented the identical issue in the ease of Ropietski v. Lackawanna County District Attorney and Tom Mineo, t/a Mineo Pies, 101 B.R. 437 (Bankr.M.D.Pa.1989). Because the issues in both cases are substantially the same, we will rely on our reasoning in the Ropietski case which provides as follows:

The issue for determination is whether or not this court has authority to issue [577]*577an injunction against the State to prevent a state criminal prosecution. While the cases dealing with the issue in question are legion, the leading case in the Third Circuit is Davis v. Sheldon found at 691 F.2d 176 (1982). The Davis court held that under proper circumstances a bankruptcy court may issue an injunction to prevent a state prosecution. Regardless, relying upon the Supreme Court’s Opinion in Younger v. Harris,

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Bluebook (online)
103 B.R. 574, 1989 Bankr. LEXIS 1412, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ticket-plus-inc-v-makoul-in-re-ticket-plus-inc-pamd-1989.