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#2258 signed 8-5-96

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF KANSAS





In Re:

WILLIAM FRANKLIN STONEBARGER,

DEBTOR(S)

NO. 96-40337-13

CHAPTER 13



ORDER DENYING MOTION FOR CERTIFICATE OF CONTEMPT

This matter is before the Court on the debtor's "Motion for Certificate of Contempt" against Joseph M. Casson, the County Attorney for Jefferson County, Nebraska, whose mailing address is in Fairbury, Nebraska. The debtor appears by counsel Jerry L. Harper. Mr. Casson filed an objection, but indicated he would not be able to appear for the hearing on the motion and asked not to be ordered to appear for any further hearings.

FACTS

In November 1995, the debtor wrote a bad check to Pizza Hut for $24.41 and to Boogaarts for $40. In December, he wrote a bad check to Fairbury Livestock Company for $255.46. Mr. Casson commenced a criminal prosecution against the debtor on February 2, 1996, which he candidly admits was "in an effort to collect on behalf of the payee, Fairbury Livestock Company." A warrant for the debtor's arrest was issued on February 7, but it has apparently never been successfully enforced. On February 15, 1996, the debtor filed a chapter 13 bankruptcy petition, listing as unsecured creditors based on "NSF checks" a Pizza Hut and Boogaarts Supermarket in Fairbury, Nebraska, in the amounts noted above. He listed the Jefferson County Attorney and Fairbury Livestock as a single creditor owed $255.46 on an "NSF check," giving the County Attorney's Fairbury, Nebraska, post office box as the creditor's address. In the plan he filed with his petition, the debtor proposed to pay "NSF checks" and "restitution/court costs/fines" in full as a special class. The plan was confirmed on May 10.

On May 14, Mr. Casson amended the criminal complaint to add counts based on the Pizza Hut and Boogaarts checks. The debtor's attorney wrote Mr. Casson a letter advising him that the debtor had filed for bankruptcy and that the attorney believed pursuit of a criminal complaint in order to collect on a bad check violated the automatic stay. Mr. Casson swears this letter was the first notice of the debtor's bankruptcy that he had received. He adds that since receiving notice of the bankruptcy, he has made and will make no effort to require restitution in the criminal proceeding against the debtor, but indicates he intends to continue his efforts to have the debtor convicted for issuing the checks.

DISCUSSION AND CONCLUSIONS

This Court has previously held that while the automatic stay does not apply to a criminal proceeding against the debtor, it does apply to civil collection activities, and concluded that restitution is a civil remedy, even if it arises out of a criminal proceeding. Barnett v. K-Mart (In re Barnett), 15 B.R. 504, 510 (Bankr.D.Kan. 1981). The Supreme Court made clear in Pennsylvania Department of Public Welfare v. Davenport, 495 U.S. 552, 560-63 (1990), that restitution obligations are distinct from the criminal prosecutions that produce them, and are treated differently under the Bankruptcy Code. The Court held that restitution obligations were debts that could be discharged in chapter 13 despite the fact that criminal prosecutions were excepted from the automatic stay by §362(b)(1). Id. Congress has since amended §1328(a) to make restitution imposed in criminal sentencing nondischargeable in chapter 13, see §1328(a)(3), but the distinction between restitution and prosecution remains valid. Furthermore, as a leading treatise states: "[W]here private debt collection is the motivation for the action, rather than punishment, the criminal proceedings will be subject to the automatic stay and will not be excepted under Code §362(b)(1)." 2 Norton Bankruptcy Law and Practice 2d, §36:15, pp. 26-43 to 36-44 (1994). The Court is inclined to believe this statement can be true only of a creditor's actions rather than a prosecutor's, but does believe a prosecutor's actions can be enjoined under §105 if motivated simply by the desire to collect a debt.

In Younger v. Harris, 401 U.S. 37, 46, 54 (1971), the Supreme Court indicated a federal court may enjoin a state criminal proceeding only on a showing of irreparable injury and "bad faith, harassment, or any other unusual circumstance that would call for equitable relief." Mr. Casson's affidavit certainly raises the specter that he commenced the case against the debtor simply to collect on the first bad check, which makes his original and subsequent actions suspect. Thus, while the Court believes §362(b)(1) excepts the prosecution from the automatic stay, a hearing for injunctive relief under §105 might be appropriate. At this juncture, however, no such relief has been requested.

The debtor's motion for contempt for violation of the §362 automatic stay must be denied.

IT IS SO ORDERED.

Dated at Topeka, Kansas, this _____ day of August, 1996.















__________________________________

JAMES A. PUSATERI

CHIEF BANKRUPTCY JUDGE

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