In Re Robert Gruntz, Debtor. Robert Gruntz v. Opinion County of Los Angeles Los Angeles District AttorneyIn Re Robert Gruntz, Debtor. Robert Gruntz v. Opinion County of Los Angeles Los Angeles District Attorney
In this appeal, we consider (1) whether a state court modification of the bankruptcy automatic stay binds federal courts; and (2) whether the automatic stay enjoins a criminal prosecution for the willful failure to pay child support. We hold that federal courts are not bound by state court modifications of the automatic stay, but that the automatic stay does not enjoin state criminal prosecutions.
I
It is not an inspirational tale. A divorce decree obligated Robert Gruntz to pay the relatively modest sum of $300 a month in child support. He failed to do so and ultimately filed a Chapter 13 petition in bankruptcy. Under his confirmed reorganization plan, he was to pay $300 per month as continuing child support, plus $291 a month toward the discharge of an accrued $5,100 in past due child support payments. Gruntz began making the payments to the trustee, but the case was converted to Chapter 11. Accordingly, the Chapter 13 trustee did not disburse the child support payments to Gruntz’s ex-spouse. Frustrated, she took her complaints to the Los Angeles District Attorney, who filed a misdemeanor criminal complaint charging Gruntz with violation of
After conviction, Gruntz filed an adversary complaint against the County of Los Angeles (“County”) in bankruptcy court and sought a temporary restraining order to prevent the state court from proceeding with sentencing. The bankruptcy court declined the invitation to restrain the state proceedings, and Gruntz received a sentеnce of 360 days in jail. The California Court of Appeal affirmed his conviction.
See People v. Gruntz,
Subsequently, Gruntz filed the instant adversary proceeding against the County in bankruptcy court, requesting the court to declare the state criminal proceedings void as violative of the automatic stay imposed under
A divided three-judge panel of this court reversed, holding that the
Rooker-Feld-man
doctrine did not preclude the bankruptcy court from determining whether the conviction was void because the criminal proceedings violated the automatic stay.
See Gruntz v. County of Los Angeles,
II
Because Rooker-Feldman arises from federal jurisdictional statutes, the threshold question is whether the doctrine allows federal courts to entertain these adversary proceedings at all. In this appeal, the County contends that the state court’s judgment included a determination that the automatic stay did not enjoin the state criminal proceedings. Therefore, the County reasons, if a state court has concluded that the bankruptcy automatic stay does not apply, the resulting state judgment divests federal courts of jurisdiction to consider that question. Deciding whether the Rooker-Feldman doctrine has such an effect is not a simple matter and requires an examination of thе federal district court’s general, bankruptcy, and ha-beas corpus jurisdiction.
At its core, the
Rooker-Feldman
doctrine stands for the unremarkable proposition that federal district courts are courts of original, not appellate, jurisdiction.
See
Rooker-Feldman
is not a constitutional doctrine. Rather, the doctrine arises out of a pair of negative inferences drawn from two statutes: 28 U^.C. § 1331, which establishes the district court’s “original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States”; and
Rooker
itself relied upon “the legislation of Congress,” namely the predecessors of these statutes in the Judicial Code.
See Rooker,
Of course, the statutes that form the basis of the Rooker-Feldman doctrine coexist among other federal jurisdictional laws. To derive a coherent theory of federal jurisdiction, one must consider the entire federal jurisdictional constellation. In this case, aside from the statutes of general jurisdiction, two other fixed jurisdictional stars draw our attention: the fed-' eral law of habeas corpus and bankruptcy.
It is well-settled that the
Rooker-Feldman
doctrine does not touch the writ of habeas corpus.
See Plyler v. Moore,
So, too, it is with bankruptcy law. In apparent contradiction to the
Rooker-Feldman
theory, bankruptcy courts are empowered to avoid state judgments,
see, e.g.,
Thus, final judgments in state courts are not necessarily preclusive in United States bankruptcy courts. Indeed, the rule has long stood that “[a] state court judgment entered in a case that falls within the federal courts’ exclusive jurisdiction is subject to collateral attack in the federal courts.”
Gonzales v. Parks (In re Gonzales),
It is generally true that a judgment by a court of competent jurisdiction bears a presumption of regularity and is not thereaftеr subject to collateral attack. But Congress, because its power over the subject of bankruptcy is plenary, may by specific bankruptcy legislation create an exception to that principle and render judicial acts taken with respect to the person or property of a debtor whom the bankruptcy law protects nullities and vulnerable collaterally-
As Representative Kastenmeier further noted in discussing the Bankruptcy Code:
State law rights arising in core bankruptcy proceedings are functionally equivalent to congressionally created rights, because Congress has the power to modify State law rights in bankruptcy proceedings. Unlike the States, Congress may impair the obligation of contracts through the bankruptcy clause. Indeed, the very purpose of bankruptcy is to modify the rights of debtors and creditors, and the bankruptcy code authorizes the bankruptcy court to abrogate or modify State-created obligations in many ways.
130 Cong. Rec. HI 110 (daily ed. Mar. 20, 1984).
Congress’s plenary power over bankruptcy derives from the constitutional imperative “[t]o establish ... uniform Laws on the subject of Bankruptcies throughout the United States.”
The current bankruptcy jurisdictional statute,
Not all matters related to bankruptcies fall within the orbit of those subject to federal plenary power. In this respect, the distinctions made between “core” and “non-core” proceedings in the Bankruptcy Amendments аnd Federal Judgeship Act of 1984, Pub.L. No. 98-353, 98 Stat. 340, are instructive. The 1984 Act was passed, in part, in response to
Northern Pipeline Construction Co. v. Marathon Pipe Line Co.,
Thereafter, Congress defined and distinguished “core” and “non-core” proceedings in the 1984 Act.
See
Central to the bankruptcy “case” as to which exclusive Article I federal jurisdiction lies is the automatic stay imposed by
The automatic stay is self-executing, effective upon the filing of the bankruptcy petition.
See
The automatic stay is an injunction issuing from the authority of the bankruptcy court, and bankruptcy court orders are not subject to collateral attack in other courts.
See Celotex Corp.,
Any state court modification of the automatic stay would constitute an unauthorized infringement upon the bankruptcy court’s jurisdiction to enforce the stay. “While Congress has seen fit to authorize courts of the United States to restrain state-court proceedings in some special circumstances,” such as the automatic stay, “it has in no way relaxed the old and well-established judicially declared rule that state courts аre completely without power to restrain federal-court proceedings in in personam actions.”
Donovan v. City of Dallas,
For these reasons, actions taken in violation of the automatic stay are void.
See Schwartz v. United States (In re Schwartz),
Because of the bankruptcy court’s plenary power over core proceedings, the County’s argument that states have concurrent jurisdiction over the automatic stay under
However, even assuming that the states had concurrent jurisdiction, their judgment would have to defer to the plenary power vested in the federal courts over bankruptcy proceedings. Indeed, that was precisely the issue in
Kalb,
in which the state was proceeding within its jurisdictional powers as to the subject matter, but in derogation of the federal bankruptcy stay. “A Congressional grant of exclusive jurisdiction to the federal courts includes the implied power to protect that grant.”
Gonzales,
In sum, by virtue of the power vested in them by Congress, the federal courts have the final authority to determine the scope and applicability of the automatic stay.
7
“The States cannot, in the exercise of control over local laws and practice, vest State courts with power to violate the supreme law of the land.”
Kalb,
The rule urged by the County would undermine the principle of a unified federal bankruptcy system, as declared in the Constitution and realized through the Bankruptcy Code. If state courts were empowered to issue binding judgments modifying the federal injunction created by the automatic stay, creditors would be free to
This is not to say that the
Rook-er-Feldman
doctrine or the related concepts of res judicata and collateral estoppel are wholly inapplicable in bankruptcy law. Preclusive effect is often extended to prepetition state judgments as to identical issues raised in subsequent bankruptcy proceedings.
See, e.g., Grogan v. Garner,
However, modifying the automatic stay is not the act of a state court merely interpreting federal law; it is an intervention in the operation of an ongoing federal bankruptcy case, the administration of which is vested exclusively in the bankruptcy court. Rooker-Feldman does not allow a state court to interfere with the core administrative functiоns of an operative bankruptcy. Just as federal district courts are not part of the state appellate system, neither are state courts granted supervisory or appellate jurisdiction over federal courts. Thus, Rooker-Feldman does not nullify federal courts’ authority to enforce the automatic stay, nor does it strip us of jurisdiction to entertain this appeal.
Ill
Having concluded that the final decision concerning the applicability of the automatic stay must rest with the federal courts, we proceed to the merits of whether the stay applied to the criminal prosecution of Gruntz. 9 In examining this question, we turn to the other side of the jurisdictional coin: the proper role of federal bankruptcy courts, if any, in state criminal proceedings.
We maintain the “deep conviction that federal bankruptcy courts should not invalidate the results of state criminal proceedings.”
Kelly v. Robinson,
With that philosophy in mind, we begin with an analysis of the statute. Although the automatic stay is extremely broad in scope, there are a number of statutory exceptions. Relevant to our case is the
(b) The filing of a petition under section 301, 302 or 303 of this title, or of an application under section 5(a)(3) of the Securities Investor Protection Act of 1970 dоes not operate as a stay—
(1) under subsection (a) of this section, of the commencement or continuation of a criminal action or proceeding against the debtor[.]
This exception would seem to end the argument because, under its plain wording, the automatic stay would not apply to the criminal action initiated against Gruntz. However, Gruntz claims that the purpose of the criminal actions against him is debt collection, thus falling within the protection afforded by
Hucke v. Oregon,
Although
Hucke
was well within the mainstream of thought at the time, it is time to reexamine it.
11
Other circuits have declined to follow our lead and, as this case demonstrates, it is a doctrine difficult to apply in practice. Most importantly, it is at odds with the plain words of the statute. Quite simply, the Bankruptcy Code declares that
Interpreting
Gruntz contends that the purpose of bankruptcy would be thwarted if a criminal prosecution were allowed as a means of debt collection for dissatisfied creditors. However, there is “no rationale or justification for severing economic and noneco-nomic ramifications of the debtor’s crimi
Further, any criminal prosecution of the debtor is on behalf of all the citizens of the state, not on behalf of the creditor.
See Davis v. Sheldon (In re Davis),
There is, of course, a federal remedy for state court convictions obtained in violation of Constitution or statute: a writ of habeas corpus.
See, e.g.
when a state prisoner is challenging the very fact or duration of his physical imprisonment, and the relief he seeks is a determination that he is entitled to immediate or speedier release ... his sole federal remedy is a writ of habeas corpus.
Id.
at 500,
Congress has provided for а comprehensive legislative scheme to provide state prisoners a post-conviction federal remedy to challenge their confinement. Any alternative relief that one might conjure from the general provisions of bankruptcy law must yield to specific habeas remedy that Congress created.
Cf. id.
at 490,
There also is a procedural avenue to forfend state actions that are not subject to the automatic stay but that threaten the bankruptcy estate: a request for an injunction under
In the end, this is not a chronicle of creditor and debtor, but of crime and punishment. Gruntz was lawfully prosecuted, convicted, and ordered to be incarcerated. As a matter of law, the automatic stay did not apply to prevent this course of events. The words of the statute mean what they say: all criminal proceedings, including those to which Gruntz was subject, are excepted from the reach of the automatic stay. Thus, unless a specific
IV
In sum, bankruptcy courts have the ultimate authority to determine the scope of the automatic stay imposed by
The veneer of this case suggested jurisdictional discord among the bankruptcy, federal habeas corpus and state court criminal systems; in reality, there is harmony. “Federalism in this nation relies in large part on the proper functioning of two separate court systems.”
Davis,
We also find concinnity among the relevant federal jurisdictional statutes. Congress established separate, but complementary, comprehensive statutory schemes governing federal habeas corpus and bankruptcy law. Rooker-Feldman, derived from the laws of general jurisdiction, does not supplant specific bankruptcy or habeas corpus jurisdiction.
Although the Rooker-Feldman doctrine does not apply in this instance, the result is consistent with its philosophy of respect for state court decisions. Twice the State of California has elected to prosecute Mr. Gruntz, twice he has been convicted, and twice the stаte’s courts have duly sentenced him to a prison term. It is not the proper function of the bankruptcy court to disturb those decisions. Any post-conviction federal remedy lies in the writ of habeas corpus. Thus, both the bankruptcy court and the federal district court correctly concluded that the automatic stay did not void the state criminal judgments. We agree, albeit for different reasons.
AFFIRMED
Notes
. The doctrine takes its name from
Rooker v. Fidelity Trust Co.,
. The history of
. In
Pennzoil Co. v. Texaco, Inc.,
. By the powers afforded them under
. A non-exclusive list of "core” bankruptcy proceedings, set forth in
. Because, among other reasons, judicial proceedings in violation of the stay are void
ab initio,
the bankruptcy court is not obligated to extend full faith and credit to such judgments. Infirm judgments are not entitled to full faith and credit in federal courts.
See Kremer v. Chemical Construction Corp.,
. For this reason, among others, the County’s reliance on dicta in
Erti v. Paine Webber Jackson & Curtis, Inc. (In re Baldwin-United Corp. Litigation),
.
See Appeal of Gajkowski (In re Highway Truck Drivers & Helpers Local Union
#
107),
. The bankruptcy court’s decision granting or denying relief from an automatic stay is a final decision which we review for an abuse of discretion.
See Benedor,
. Bankruptcy courts have attempted an array of tests for assaying any hint of a collector in the prosecutor's guise, such as examining the primary motivation for the prosecution or applying a "bad faith” test.
See generally Brinkman v. City of Edina (In re Brinkman),
. The three-judge panel that considered this appeal was bound by
Hucke;
however, an en banc court is not.
See Nghiem v. NEC Electronic, Inc.,
.This statutory brand of comity conforms with other federal legislation enabling state prosecutions for domestic аrrearage. Congress itself has criminalized child support delinquency to the limits of its Commerce Clause powers in the Child Support Recovery Act of 1992,
. In other contexts, we have eschewed general examination of prosecutorial motives.
See Roe v. City and County of San Francisco,
. In fact, Congress first inserted, then removed, a provision that would have allowed bankruptcy courts to grant writs of habeas corpus in certain circumstances. The Bankruptcy Reform Act of 1978 specifically provided for a habeas remedy in bankruptcy court.
See
P.L. 95-598, Title II, § 250(a), Title III, § 314(j)(l), 92 Stat. 2672, 2677. The provision was scheduled to take effect on June 28,
. Other circuits have held that this authority must be exercised in conformance with the principles of
Younger
abstention.
See Fussell v. Price (In re Fussell),