United States v. F.E. Gregory & Sons, Inc.

58 B.R. 590, 24 ERC 1110, 24 ERC (BNA) 1110, 1986 U.S. Dist. LEXIS 28805
CourtDistrict Court, W.D. Pennsylvania
DecidedFebruary 27, 1986
DocketCiv. A. 85-962
StatusPublished
Cited by3 cases

This text of 58 B.R. 590 (United States v. F.E. Gregory & Sons, Inc.) is published on Counsel Stack Legal Research, covering District Court, W.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. F.E. Gregory & Sons, Inc., 58 B.R. 590, 24 ERC 1110, 24 ERC (BNA) 1110, 1986 U.S. Dist. LEXIS 28805 (W.D. Pa. 1986).

Opinion

OPINION

ZIEGLER, District Judge.

(1) For a period prior to and including 1978, defendant F.E. Gregory & Sons performed surface coal mining operations on leased land in Greene County, Pennsylvania. On February 22,1985, defendant filed *591 a voluntary petition for Bankruptcy under Chapter 11 of the Code in the United States Bankruptcy Court for the District of Maryland. Two months later, plaintiff filed a complaint seeking an injunction ordering defendant to perform reclamation work at the abandoned mine site. 30 U.S.C. § 1271. Defendant subsequently filed a Suggestion of Bankruptcy in this court and requested a stay of all proceedings in the instant action pursuant to 11 U.S.C. § 362. By order of June 7, 1985, we granted the stay and plaintiff filed a motion for reconsideration shortly thereafter, alleging that it had failed to respond to defendant’s motion because of lack of notice. Plaintiff’s explanation appears legitimate and we will reach the merits of the motion for reconsideration. The instant action falls within an exception to the automatic stay set forth in § 362 and therefore the stay granted in the June 7 order will be lifted.

(2) Jurisdiction is predicated upon 30 U.S.C. §§ 1268(d), 1271(c) and 28 U.S.C. § 1345.

(3) Subject to several important exceptions, the filing of a petition in bankruptcy automatically stays all judicial and administrative proceedings against the debtor. 11 U.S.C. § 362(a). One of the exceptions exempts actions by the government pursuant to its police or regulatory power from the automatic stay. 11 U.S.C. § 362(b)(4)-(5). However, the government may not enforce money judgments against a debtor. 11 U.S.C. § 362(b)(5). This is sometimes referred to as the “exception within the exception.” Penn Terra Ltd. v. Department of Environmental Resources, 733 F.2d 267, 272 (3d Cir.1984).

(4) Defendant contends that an injunction ordering it to clean up the mine site would be tantamount to imposing a monetary judgment. According to defendant, it makes little difference in substance if it pays its own employees to clean up the property or hires another entity to perform the same work. Defendant emphasizes that it never owned the property, but merely leased it, and it no longer has any interest, possessory or otherwise, in the property-

(5) Penn Terra, supra, which contains facts remarkably similar to those here, is controlling. The Pennsylvania Department of Environmental Resources obtained an injunction directing Penn Terra to reclaim certain coal surface mines in Armstrong County, Pennsylvania by backfilling, grading and other means of controlling erosion and sedimentation. Id. at 270 n. 3. Penn Terra had previously filed a petition for bankruptcy under Chapter 7. The bankruptcy court and the district court held that since the debtor was insolvent and had no realistic means of complying with the injunction, the effect of the action would be to collect a money judgment against Penn Terra. Id. at 270.

(6) The Court of Appeals reversed, holding that the action fell squarely within the exception for governmental suits to enforce police and regulatory powers. Id. The House and Senate reports both explicitly acknowledge environmental protection as part of the police power. Id. at 274. See S.Rep. No. 95-989 at 52, 1978 U.S.Code Cong. & Ad.News at 5787, 5838; H.Rep. No. 95-595 at 343, 1978 U.S.Code Cong. & Ad.News at 6299. Indeed, the Court of Appeals stated, “No more obvious exercise of the State’s power to protect the health, safety, and welfare of the public can be imagined.” Id. at 274. Thus the present action falls within 11 U.S.C. § 362(b)(4)-(5). The crucial question remaining is whether the government’s suit is in effect an action for a money judgment which should be stayed pursuant to the “exception within the exception,” 11 U.S.C. § 362(b)(5).

(7) The Penn Terra court held that the injunction did not seek a money judgment in either substance or form. Such an order does not contemplate payment of a sum certain, a traditional and essential element of a money judgment. Id. at 275. Even more important, the injunction was not intended to compensate for past injuries, the type of remedy traditionally associated with a money judgment. Id. at 278. Rather, its purpose was to prevent future harm *592 to, and to restore, the environment. Id. The court specifically rejected the notion, advanced by defendant here, that a money judgment is any order which requires the expenditure of money. Id. at 277.

(8) The Supreme Court’s recent decision in Ohio v. Kovacs, — U.S. -, 105 S.Ct. 705, 83 L.Ed.2d 649 (1985), does not cast doubt on the validity of Penn Terra. In Kovacs the Court ruled that the obligation of Kovacs to clean up a hazardous waste site pursuant to a state court judgment order was a “debt” or “liability on a claim” dischargeable in bankruptcy. Id., 105 S.Ct. at 711. The Court agreed with the Sixth Circuit Court of Appeals that, under the circumstances of the case, the “cleanup duty had been reduced to a monetary obligation.” Id. at 710.

(9) Kovacs is clearly distinguishable. When Kovacs failed to comply with the state court cleanup order, the state secured the appointment of a receiver who took possession of Kovacs’ nonexempt assets, including the mine site. Id. at 707. Ko-vacs then filed a bankruptcy petition under Chapter 11 which he converted to a liquidation bankruptcy under Chapter 7. Id. at 707 n. 1. The receivership disabled Kovacs “from personally taking charge of and carrying out the removal of wastes from the property.” Id. at 710. Government counsel conceded at oral argument that the only performance sought from Kovacs was the payment of money, presumably out of his post-bankruptcy income. Id. In light of these circumstances, the Court’s conclusion that the cleanup order had been converted into an obligation to pay money is not surprising. See id. at 711.

(10) In contrast to the situation in

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Bluebook (online)
58 B.R. 590, 24 ERC 1110, 24 ERC (BNA) 1110, 1986 U.S. Dist. LEXIS 28805, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-fe-gregory-sons-inc-pawd-1986.