566 B.R. 286
D.R.I.2017Background
- State Superior Court imposed Rule 11 sanction against debtor Keven McKenna in March 2015; monetary sanction balance was $17,267.06 as of November 9, 2016.
- State Court set an installment payment schedule and threatened incarceration for nonpayment; McKenna missed the second installment due March 1, 2017.
- McKenna filed a Chapter 13 petition on March 1, 2017 and proposed to pay the sanction through his plan.
- Creditor Ronald Blanchard filed an emergency motion arguing the Rule 11 sanction enforcement is exempt from the automatic stay under 11 U.S.C. § 362(b)(4).
- Bankruptcy Court held the dispute focused on enforcement/collection of an already-imposed monetary judgment, not the initial imposition of Rule 11 sanctions.
- Court denied Blanchard’s Stay Exemption Motion, holding enforcement/collection of money judgments is stayed under § 362(a).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does § 362(b)(4) exempt enforcement/collection of a state-court Rule 11 monetary sanction from the automatic stay? | Blanchard: § 362(b)(4) allows governmental or court actions to continue to enforce police/regulatory powers, so Rule 11 sanction enforcement is exempt. | McKenna: § 362(b)(4) does not cover enforcement/collection of money judgments; the automatic stay prevents collection. | Denied — enforcement/collection of an already-imposed monetary sanction is subject to the automatic stay under § 362(a); § 362(b)(4) does not exempt money-judgment collections. |
Key Cases Cited
- Alpern v. Lieb, 11 F.3d 689 (7th Cir. 1993) (distinguishes proceedings to impose Rule 11 sanctions from enforcement of resulting money judgments)
- Maritan v. Todd, 203 B.R. 740 (N.D. Okla. 1996) (enforcement of a money judgment by a governmental unit is subject to § 362(a))
- In re McMullen, 386 F.3d 320 (1st Cir. 2004) (describing the automatic stay’s purpose to protect estate and orderly distribution)
- In re First Alliance Mortgage Co., 263 B.R. 99 (9th Cir. B.A.P. 2001) (§ 362(b)(4) may permit actions to fix non-monetary relief but collection/enforcement of restitution is stayed)