In Re Pincombe
MEMORANDUM OPINION
Charles and Janet Pincombe, (the “Debtors”) brought this Motion to Hold Persons in Contempt against Respondents Susan Landman (“Landman”), the law firm of Pontikes and Garcia
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and the Illinois Department of Human Rights, (the “IDHR”). The Motion seeks to hold the Respondents in civil contempt for violation of the automatic stay provision under § 362(a) and the post-discharge injunction under § 524(a) of the Bankruptcy Code,
Landman and the IDHR have filed briefs in opposition to the Motion, and the Equal Employment Opportunity Commission, (the “EEOC”) has filed an amicus brief on behalf of the Respondents. Land-man also seeks sanctions against Pincombe for malicious prosecution pursuant to
BACKGROUND
The controversy at issue arises from a default order entered by the IDHR against Northwest Builders and Remode-lers, Inc., and its owner, Pincombe. After the IDHR took that action, its order was served upon the Illinois Human Rights Commission, (“IHRC”). The IHRC in turn entered an order of default against Pincombe on June 29, 2000. Significantly, both orders were entered after this Court granted Pincombe’s Chapter 7 discharge.
The IDHR’s order of default was entered on a charge filed on February 8, 1999 by Landman, an employee of Northwest Builders, for sex discrimination, sexual harassment and retaliatory discharge. In her charge, Landman alleged that Pin-combe sexually harassed and assaulted her during her employment with his company. Landman further alleged that Pincombe ultimately discharged her in retaliation for her resistance to his sexual advances. Pincombe has denied all allegations.
Although there is some question whether Pincombe received advance written notice informing him of the date when the IDHR had scheduled a fact finding conference on Landman’s charge, Pincombe acknowledges that on April 1, 1999, the IDHR notified his former attorney by telephone of a fact finding conference. At that time, Pincombe’s attorney stated that
On July 15, 1999, Northwest Builders filed a petition for relief under Chapter 7 in Chicago and the Debtors filed for Chapter 7 relief in Rockford. Landman was listed as a creditor in both cases, and the statement of affairs in each case disclosed the pendency of the IDHR’s investigation of Landman’s discrimination and retaliation charges.
Notices sent in both bankruptcy cases informed creditors of the automatic stay. Further, notices to the creditors in Pin-combe’s individual case advised them that the deadline for filing dischargeability complaints was October 18, 1999. Although listed as a creditor on both petitions, Landman never filed a nondis-chargeability complaint.
On August 19, 1999, the IDHR called Pincombe to inquire about his failure to attend the June 22, 1999 fact finding conference. At that time, Pincombe allegedly told the IDHR’s representative that he had been unaware of the date of the conference. During the conversation, the IDHR alleges that it requested that Pin-combe put his reasons for failure to attend the conference in writing. Subsequently, Pincombe has made contradictory statements as to whether the IDHR requested a written explanation for his failure to attend the fact finding conference. 2
On or about December 28, 1999, the IDHR sent Pincombe a notice to show cause why an order of default should not be entered due to his failure to provide the IDHR with a written explanation for his failure to attend the fact finding conference. In response, Pincombe allegedly sent a letter dated January 2, 2000 to IDHR investigator Charlie Branch. In that letter, Pincombe acknowledged receipt of the IDHR’s notice to show cause. Pincombe also stated in his letter that on or about June 22,1999 he expressed to Mr. Branch that “due to his pending bankruptcies that he had lost contact with his attorney and that the Fact Finding conference date was not clear’ to him.” Pincombe further stated that if a new fact finding conference would be scheduled, “he would guarantee his appearance with or without representation.”
According to Pincombe, on or about January 15, 2000, he forwarded a copy of the automatic stay and notice of the creditors’ meeting for both his individual case and that of Northwest Builders to Mr. Branch. In ¶ 6(c) of their motion for contempt, the Debtors acknowledge that on January 20, 2000, the IDHR sent Pincombe a Notice of Default for failure to attend the fact finding conference and for failure to show cause.
On March 28, 2000, this Court granted a discharge to Pincombe under § 727(a) of the Code. Although Pincombe’s bankruptcy case was not closed until April 26, 2000, § 362(c) provides that in an individual case under Chapter 7, the automatic stay continues only to the earliest of the time the case is closed or the time at which the debtor is granted a discharge. In this case, the automatic stay terminated on March 28, 2000, the date Pincombe was granted a discharge by this Court.
On April 17, 2000, the IDHR’s Chief Legal Counsel entered an order of default against Pincombe for his failure to attend the June 22, 1999 fact finding conference and for failure to show cause. The order was served upon the IHRC for proceedings under § 7-101.1(0 of the Human Rights Act.
On April 19, 2000, the IDHR filed a Petition for Hearing to Determine Complainant’s Damages with the IHRC. Pin-
On April 26, 2000, Mr. Theodore McGinn, counsel for Pincombe, sent a letter to the IDHR via certified mail, requesting that all current proceedings pending on behalf of Landman be terminated since Pincombe had been discharged in bankruptcy and any liability that might have existed related to Landsman’s claim had been discharged. Landman along with her attorney were copied on the letter.
On June 29, 2000, the IHRC also entered its own order of order of default against Pincombe pursuant to the IDHR’s Petition for Entry of Default Order. Upon the entry of the IHRC’s default order, the matter was transferred an administrative law judge for a hearing to determine the amount of damages and for further proceedings not inconsistent with the default order.
The Debtors allege that on several occasions in July and August 2000, their attorney contacted the IDHR and counsel for Landman and again reiterated their request to have all proceedings on Land-man’s charge terminated. According to the Debtors, both the IDHR and Landman refused Pincombe’s request to terminate the administrative proceedings against him.
The pleadings contain no allegations that Landman’s activities included anything more than filing a charge with the IDHR and appearing at the fact finding conference. Both activities occurred prior to Pincombe’s Chapter 7 filing. The Debtors contend that Landman violated the automatic stay because she refused to withdraw her IDHR charge, and they allege that the subsequent investigatory actions by the IDHR were in violation of the automatic stay.
In her response, Landman states that at no time during the pendency of the IDHR proceedings has she ever made a demand for monetary damages against Pincombe. Landman asserts that she merely wants a substantive hearing concerning Pincombe’s illegal actions and a finding that he violated the Illinois Human Rights Act. According to Landman, she seeks an official record of Pincombe’s “sexual harassment, assault and illegal retaliation.”
If the state administrative proceedings go forward, the EEOC will ultimately be involved in this matter. In its amicus brief, the EEOC states that Landman’s IDHR charge against Pincombe was automatically cross-filed with the EEOC pursuant to a Worksharing Agreement between the two agencies. The EEOC states that it has held the charge in suspension pending the completion of the IHRC’s damage proceedings against Pin-combe. Upon conclusion of those proceedings, the EEOC will review the findings of the IDHR and IHRC and make a determination on the final resolution of Landman’s charge.
It is not clear whether the governmental agencies will seek only declaratory or in-junctive relief, or whether they will seek to enforce a money judgment against Pin-combe. The EEOC and Landman defend against the Debtors’ allegations of violation of the automatic stay by relying on Code § 362(b)(4), which creates an exception to the automatic stay provision for the “commencement or continuation of an action or proceeding by a governmental unit to enforce such governmental unit’s police or regulatory power.” Respondents argue that since governmental agencies are involved in the investigation of the charges brought against Pincombe, this is an action to eradicate discrimination for the benefit of the public interest, rather than a private cause of action for damages.
The Debtors respond to this argument by stating that the “IDHR has never requested a fine, penalty, or injunction” against Pincombe, and that the agency’s efforts have been focused towards the award of monetary damages on behalf of Landman.
DISCUSSION
This motion seeks to enjoin an administrative proceeding that began before the automatic stay was in effect, and was not completed before Pincombe received his discharge in bankruptcy. With respect to the period that preceded their discharge, the Debtors move under Code § 362(h) for sanctions for violation of the automatic stay. Because the administrative proceedings continued after the Debtors’ discharge, there is also a question as to whether ongoing proceedings violate the post-discharge injunction under Code § 524(a).
Alleged Violation of the Automatic Stay
The automatic stay provision under § 362(a) of the Bankruptcy Code provides in relevant part:
(a) “Except at provided in subsection (b) of this section, a petition filed under section 301, 302, or 303 of this title, or an application filed under section 5(a)(3) of the Securities Investor Protection Act of 1970, operates as a stay, applicable to all entities of—
(1) the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title;
(2) the enforcement, against the debt- or or against property of the estate, of a judgment obtained before the commencement of the case under this title
It is fundamental that the automatic stay provision under
Under
However, an exception exists under the automatic stay provision. Under
(b) “The filing of a petition under section 301, 302, or 303 of this title, ... does not operate as a stay ...
(4) under subsection (a)(1) of this section, of the commencement or continuation of an action or proceeding by a governmental unit to enforce such governmental unit’s police or regulatory power ...”
Looking to whether the proceedings on Landman’s charge fall within the exception under Code
If an action falls within the scope of the exception,
Applying these principles here, neither the facts nor the case law support the Debtors’ contention that the IDHR violated the automatic stay by continuing the administrative proceedings on Landman’s charge after Pincombe filed for bankruptcy relief. As discussed above, the case law is clear that proceedings on a charge of employment discrimination fall within the exception under Code
There remains the question whether Landman might have violated the automatic stay even though the IDHR’s actions were exempt under
Landman’s first act of participation with the IDHR occurred on February 8, 1999 when she filed her charge against Pin-combe. This act occurred more than five months before the automatic stay became effective. Landman’s next activity took place on June 22, 1999 when she attended a fact finding conference related to her charge against Pincombe. This conference took place nearly a month before Pin-combe’s Chapter 7 filing. Because both the filing of the charge and the fact finding conference occurred prior to Pincombe’s filing for Chapter 7 protection on July 15, 1999, those actions necessarily could not have violated the automatic stay.
The only question, then, becomes whether Landman’s acquiescence to the continuation of the proceedings before the IDHR might have violated the stay. While the Debtors contend that Land-man’s refusal to withdraw her charge after filing for bankruptcy protection violated the automatic stay, they cite no authority to support that proposition. Although this Court’s research has not found cases addressing that specific proposition either, a
The withdrawal of a discrimination charge is governed by the Code of Federal Regulations which provides: “A charge filed by or on behalf of a person claiming to be aggrieved may be withdrawn only by the person claiming to be aggrieved and only with the consent of the Commission.” 29C.F.R. § 1601.10 (2000). “If the EEOC does not consent to the withdrawal of a charge, it may proceed on its own initiative to prosecute a civil action ...”
EEOC v. Harvey L. Walner & Assoc.,
The language of
In order to recover damages under Code
While Respondents do not dispute that the Debtors can establish the first two of the elements under
Alleged Violation of the Post-Discharge Injunction
The permanent discharge injunction arises under § 524(a) of the Bankruptcy Code, which provides in relevant part that “[a] discharge in a case under this title-
(1) voids any judgment at any time obtained, to the extent that such judgment is a determination of the personal liability of the debtor with respect to any debt discharged under section 727 ... of this title, whether or not discharge of such debt is waived;
(2) operates as an injunction against the commencement or continuation of an action, the employment of process, or an act, to collect, recover or offset any such debt as a personal liability of the debtor, whether or not discharge of such debt is waived;”
A willful violation of the post-discharge injunction
In its amicus brief, the EEOC 3 argues that the post-discharge injunction does not apply to the regulatory powers of the agency. As the EEOC frames the issue, “an employee’s right to communicate with the EEOC must be protected not to safeguard the settling employee’s entitlement to recompense but instead to safeguard the public interest.” The EEOC further asserts that by protecting employees’ right to communicate acts of employment discrimination to state and federal enforcement agencies, the agencies can fully investigate such charges for the benefit of the public interest in eradicating employment discrimination.
This Court agrees that if administrative proceedings in pursuit of a governmental entity’s regulatory powers are excepted from the automatic stay, continuation of the same proceedings after a debtor’s discharge should not violate the post-discharge injunction under
Here the Debtors argue that Landman’s IDHR charge asserts a claim for willful and malicious injury by Pincombe and that any debt attributable to his conduct has been discharged due to Landman’s failure to file a timely complaint under § 523(a)(6).
See, e.g., In re Mendiola,
Looking separately to what each Respondent seeks to accomplish in the administrative proceeding, Landman denies that she seeks an award of money damages from Pincombe. Instead, Landman states that she seeks only an official record that Pincombe’s alleged conduct of sexual harassment, assault and retaliatory dis
The IDHR and the EEOC have not articulated what form of relief they are seeking against Pincombe. Without evidence that proceedings to date have progressed beyond entry of a money judgment, the Debtor has not shown that IDHR has attempted to collect a prepetition debt, or that there is a need to enjoin future proceedings before the agencies. Accordingly, Pincombe’s request for sanctions for violation of the discharge injunction is denied.
Landman’s Request for Sanctions
Lastly, the Court addresses Landman’s request of this Court to impose
Without expressing any conclusion on the substantive question whether the Debtor’s arguments lack a basis in fact or in law, this Court denies Landman’s request. In this case, Landman’s request for sanctions under
CONCLUSION
For the reasons set forth above, the Debtors’ motion to hold Landman, Pon-tikes and Garcia, and the IDHR in civil contempt for violation of the automatic stay under
Notes
. Pontikes and Garcia are the attorneys representing Landman in the Illinois Department of Human Rights administrative proceedings against Charles Pincombe and Northwest Builders and Remodelers, Inc. To simplify the discussion here, references made to
. In ¶ 6(a) of his motion for contempt, the Debtors acknowledge that the IDHR requested that Pincombe submit his reasons in wril-ing for failure to attend the fact finding conference. However, in his written response to the IDHR's December 28, 1999 notice to show cause, Pincombe denied that this request was ever made by the IDHR.
. Landman's charge was cross-filed with the IDHR and the EEOC. Under the agencies’ Worksharing Agreement, when the IDHR completes the processing of an employment discrimination charge, it submits its investigation, including the relief provided, if any, to the EEOC for a "substantial weight” review. While this means that the EEOC would ultimately become involved with the administrative proceedings in connection with Land-man's charge, it might be noted that the agency has a right to bring actions for monetary damages on behalf of individual claimants.
EEOC v. Harris Chernin, Inc.,