Robert C. Thomas

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The following discussion constitutes the court's findings	1
of fact and conclusions of law. Fed. R. Bankr. P. 7052
(incorporating by reference Fed. R. Civ. P. 52(a)). Unless
otherwise indicated, all chapter, section and rule references are
to the Bankruptcy Code, 11 U.S.C. §§ 101-1330, and to the Federal
Rules of Bankruptcy Procedure, Rules 1001-9036, as enacted and
promulgated prior to the effective date of The Bankruptcy Abuse
Prevention and Consumer Protection Act of 2005, Pub. L. 109-8, 119
Stat. 23, because this case was filed before its effective date
(generally October 17, 2005).
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UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In re
ROBERT C. THOMAS,
Debtor.
Case No. 05-31615
Chapter 13
MEMORANDUM DECISION REGARDING DISCRIMINATION
FOR NON-PAYMENT OF DISCHARGEABLE PARKING TICKETS1
For the reasons set forth below the court will direct the
Department of Motor Vehicles (“DMV”) and the City and County of
San Francisco (“CCSF”) to permit debtor Robert C. Thomas
(“Debtor”) to register his vehicle and obtain a residential
parking permit, provided that Debtor pays post-petition street
sweeping citations and similar charges, and provided further that
Debtor remains eligible for a discharge of his pre-petition debts
Signed and Filed: April 05, 2007
________________________________________
DENNIS MONTALI
U.S. Bankruptcy Judge
________________________________________
Entered on Docket
April 06, 2007
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 05-31615 Doc# 82 Filed: 04/05/07 Entered: 04/06/07 11:52:33 Page 1 of
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to DMV and CCSF. The court will also enjoin CCSF, DMV, and the
California Franchise Tax Board (“FTB”) (collectively, the
“Governments”) from attempting to collect post-petition citations
for non-registration of Debtor’s vehicle, parking without a
residential parking permit, or other charges that are proximately
caused by their impermissible discrimination for nonpayment of
pre-petition debts. The court will deny Debtor’s requests for
damages.
I. Background
Debtor, who owns a 1973 Chevrolet, had at least seventeen
unpaid parking citations when he filed his Chapter 13 petition on
May 23, 2005 (the “Petition Date”). Any remaining debt on account
of those unpaid pre-petition citations will be discharged pursuant
to Section 1328(a) when and if Debtor completes his payments under
his Chapter 13 plan confirmed by the court on September 23, 2005.
The dischargeability of those citations has been conceded on the
record by counsel for the Governments.
In June of 2005 Debtor attempted to purchase a neighborhood
parking permit from CCSF’s Department of Parking and Traffic
(“DPT”). That permit was denied. According to Debtor, he has to
move his vehicle every two hours because he lacks a parking
permit. Debtor has been cited at least twice since the Petition
Date for parking in a residential zone without a residential
parking permit. (Ex. A to Houlihan Decl., filed 4/28/06, docket
no. 50 (“Houlihan Decl.”)) On July 16, 2005, Debtor wrote to the
Citation Review Center of the DPT objecting that “I was refused
because of outstanding parking tickets” and noting that “DPT was
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served with notice” of his Chapter 13 petition. (Ex. A to Thomas
Decl., filed 3/29/06, docket no. 36 (“Thomas Decl.”)) CCSF
nevertheless refuses to issue a parking permit to Debtor.
On or about July 14, 2005, Debtor received a Vehicle
Registration Renewal Notice from DMV. Debtor alleges, and DMV has
not denied, that the normal registration fees would be $182.00 but
DMV included an additional $1,600.00 for outstanding parking
tickets for a total demand of $1,782.00. The total demands
increased to $2,436.00 in December of 2005 and $2,956.00 in
January of 2006. CCSF concedes that since Debtor is unable to re-
register his vehicle with DMV he is unable to change his vehicle’s
address of record, which is an additional reason why he has not
been able to obtain a residential parking permit. Debtor alleges
that he has attempted to contact DMV by telephone but has been
unable to get through to anyone who can help him. (Thomas Decl.,
¶¶ 14-17 and Exs. C and J.) Debtor has been cited at least three
times by DPT and once by the City of Berkeley since the Petition
Date for not having vehicle registration tabs. (Houlihan Decl.,
Ex. A; Thomas Decl. ¶ 19-20.) Debtor wrote again to the Citation
Review Center of the DPT on January 26, 2006, objecting that “I
have been unable to purchase my current tabs and register my
vehicle with the DMV because of a hold placed on the renewal of my
vehicle by the DPT for parking tickets which have been [sic]
discharged in bankruptcy.” (Ex. H to Thomas Decl., emphasis in
original.) The liability for those tickets has not yet been
discharged but Debtor apparently means that his pre-petition
parking ticket debts will be discharged upon completion of his
Chapter 13 plan.
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On March 13, 2006, FTB issued a document entitled Demand for
Payment - Vehicle Registration Collections. The document states
that DMV has referred Debtor’s account to FTB for collection. It
demands payment of $2,956.00, failing which FTB threatens to
attach Debtor’s bank account, garnish his wages, and seize and
sell his personal property. (Ex. M to Thomas Decl.)
Debtor initially asserted that the Governments were violating
the automatic stay of Section 362(a). On March 29, 2006, Debtor
filed a Motion For Damages For Violation of The Automatic Stay
(docket no. 34), but the court denied that motion, Debtor
appealed, and the District Court affirmed as to the Section 362
issues. The District Court also remanded to consider an issue
raised by Debtor for the first time on appeal: whether the
Governments have violated Section 525(a) by denying Debtor’s
permit and registration applications.
The court set a status conference, the parties agreed to file
simultaneous briefs, and the matter came on for hearing on March
16, 2007. At the end of the hearing the court took the matter
under advisement.
II. Discussion
Section 525(a) provides, in full:
§ 525. Protection against discriminatory treatment
(a) Except as provided in the Perishable
Agricultural Commodities Act, 1930, the Packers and
Stockyards Act, 1921, and section 1 of the Act
entitled “An Act making appropriations for the
Department of Agriculture for the fiscal year
ending June 30, 1944, and for other purposes,”
approved July 12, 1943, a governmental unit may not
deny, revoke, suspend, or refuse to renew a
license, permit, charter, franchise, or other
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similar grant to, condition such a grant to,
discriminate with respect to such a grant against,
deny employment to, terminate the employment of, or
discriminate with respect to employment against, a
person that is or has been a debtor under this
title or a bankrupt or a debtor under the
Bankruptcy Act, or another person with whom such
bankrupt or debtor has been associated, solely
because such bankrupt or debtor is or has been a
debtor under this title or a bankrupt or debtor
under the Bankruptcy Act, has been insolvent before
the commencement of the case under this title, or
during the case but before the debtor is granted or
denied a discharge, or has not paid a debt that is
dischargeable in the case under this title or that
was discharged under the Bankruptcy Act.
11 U.S.C. § 525(a) (emphasis added).
The Governments argue that their refusal to register Debtor’s
car or grant him a residential parking permit is not “solely”
because of his non-payment of dischargeable debts. They claim
that Debtor is a parking scofflaw and that they acted as they did
to deter illegal parking. According to DMV and FTB, the District
Court has “in effect” already held that Debtor’s non-payment is
not “alone” the proximate cause because it held (as did this
court) that they were validly exercising police and regulatory
powers for purposes of Section 362(b)(4). (DMV and FTB brief,
docket no. 78, p.4:24-28.) CCSF also argues that Debtor has the
alternative of performing community service to satisfy his
citations, so he could have obtained his registration and parking
permit without paying the dischargeable debts.
The court is not persuaded. First, if the District Court had
already effectively decided the issue then it would not have
remanded. Second, the words and purposes of Section 362(b)(4) and
Section 525(a) are entirely different and the Supreme court has
interpreted the word “solely” in Section 525(a) to mean proximate
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cause or triggering event:
Section 525 means nothing more or less than that
the failure to pay a dischargeable debt must alone
be the proximate cause of the [government’s action
or refusal to act] -- the act or event that
triggers the agency’s decision . . ., whatever the
agency’s ultimate motive in pulling the trigger may
be.
F.C.C. v. NextWave Personal Communications Inc., 537 U.S. 293,
301-02 (2003) (emphasis added).
The Governments’ attorneys conceded at oral argument that if
Debtor were to pay their demands then they would issue his
registration and parking permit, even if Debtor is an
unrehabilitated scofflaw. Payment is the trigger. Debtor has
established proximate causation.
The Governments cite In re Kimsey, 263 B.R. 244 (Bankr. E.D.
Ark. 2001), but in that case the debtor pleaded guilty to “driving
without a driver’s license, unsafe driving, failing to have proof
of liability insurance (and, in a subsequent year, failing to have
liability insurance), leaving the scene of an accident, driving on
a suspended license, and failing to yield the right of way.” Id.
at 246. The debtor in Kimsey alleged that the refusal to
reinstate his license was for financial reasons, but the court
found “no evidence” that the government “has in fact taken any
action to collect the debt.” Id. Instead it found that “the City
is not refusing to reinstate the debtor’s license because of his
bankruptcy filing, but, rather, seeks to enforce the traffic laws
which permit termination of the driving privilege based upon
violations of the law.” Id. at 247.
The Governments cite cases involving what are called
financial responsibility laws for motor vehicle drivers. Those
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laws do not require drivers to maintain insurance unless they have
been in an accident resulting in an unpaid judgment. Such laws
have been held not to violate Section 525(a). See, e.g., Duffey
v. Dollison, 734 F.2d 265 (6th Cir. 1984). Duffey, however, held
that the statute at issue “neither provides creditors ‘leverage
for the collection of damages,’ nor under the facts here does it
coerce bankrupts into reaffirming discharged debts. Perez v.
Campbell, 402 U.S. 637 [1971].” Duffey, 734 F.2d at 272. In
contrast refusing to register Debtor’s vehicle and denying him a
parking permit both directly coerce his payment of dischargeable
debts.
The other cases cited by the Governments are similarly
distinguishable, unpersuasive, and mostly decided before NextWave.
See, e.g., In re Norton, 867 F.2d 313, 317 n.8 (6th Cir. 1989)
(every driver found to be financially irresponsible, whether
bankrupt or not, must pay $65 license restoration fee, and “It is
certainly within the legislature’s discretion to shift the costs
of the program to those drivers who make such a program
necessary.”); In re Geiger, 143 B.R. 30 (E.D. Pa. 1992) (Section
525(a) does not bar payment of $25 license restoration fee).
The Governments also argue that their refusals to register
Debtor’s car and issue a parking permit are justified because
Debtor has post-petition citations that were not caused by non-
payment of pre-petition debts. It is true that Debtor has post-
petition street sweeping citations but his brief clearly states
(docket no. 75, p. 2:21-24), “The debtor makes no claim that the
Bankruptcy Code protects him from post petition fines or penalties
that do not have their basis in lack of a permit or valid
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The court expresses no opinion whether in circumstances of	2
this particular case Debtor’s citations would be nondischargeable
if his case were converted to Chapter 7.
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registration.” Debtor’s counsel conceded at oral argument that
Debtor must pay these citations even if the court agrees with
Debtor on the Section 525(a) issues. Moreover, the Governments
provide no evidence that they ever told Debtor they would accept
anything less than full payment, including payment of all
dischargeable debts. FTB’s demand even warns, “Partial payment
will not stop collection action; you must pay the full amount
due.” (Ex. M to Thomas Decl.)
The Governments also suggest that it would be unfair to
require them to issue a registration and parking permit when
Debtor has not yet completed his Chapter 13 plan and therefore has
not yet discharged his pre-petition debts. That argument is not
persuasive because the statute clearly refers to “dischargeable”
debts, not “discharged” debts. In fact, NextWave involved a
Chapter 11 plan of reorganization that had yet to be confirmed so
there was no discharge when that case was decided but, as the
Supreme Court noted, the debts at issue were dischargeable.
NextWave, 537 U.S. at 298-99 and 303. One case cited by Debtor
offers an even-handed means of implementing the statute:
[The debtor] is entitled to a renewal license
during the pendency of her Chapter 13 case, and
discharge of her obligations upon completion of the
payments provided for in her Chapter 13 plan.
Should [the debtor] convert to a liquidation case
under Chapter 7 of the Code, the obligation for the
traffic fine would not be dischargeable,[ ] and the	2
Department of Motor Vehicles would be justified in
revoking [the debtor’s] license. Likewise if [the
debtor] receives a hardship discharge under the
provisions of section 1328(b), the Department could
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revoke [the debtor’s] license.
In re Young, 10 B.R. 17, 19 (Bankr. S.D. Cal. 1980).
The court adopts a similar approach to that taken by Young.
Debtor is presently entitled to renewal of his registration by DMV
and issuance of a parking permit from CCSF, without waiting for
his actual discharge under Section 1328(a), on two conditions.
First, if Debtor’s case is dismissed or if for any other reason
the pre-petition citations cease to be dischargeable then by its
terms Section 525(a) will not apply thereafter and the Governments
can refuse to issue or can revoke their licenses or permits.
Second, Debtor will have to pay any post-petition obligations,
such as street sweeping citations, that were not proximately
caused by his non-payment of dischargeable debts. Among the
charges that Debtor should not have to pay are any interest and
late payment fees, even as to street sweeping citations, because
any such interest and fees were proximately caused by the
Governments’ refusal to issue a registration or parking permit
without payment in full, including payment of dischargeable debts.
Debtor asks that, in addition to renewal of his registration
and issuance of a parking permit, the court should void all post-
petition fines incurred because he did not have a registration or
parking permit, or else should award money damages equal to the
fines “to the extent that the fines may have been issued by
entities not before the court.” (Debtor’s brief, docket no. 75,
p. 5:8-9.) Debtor also seeks an award of attorneys’ fees based on
Section 105(a).
The court denies Debtor’s request to void any fines, assuming
without deciding that the court could do so. It is true that
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The Governments are already prohibited from attempting to	3
collect pre-petition debts from Debtor personally or from property
that has revested in him, pursuant to Section 362(c)(2), the
confirmed Chapter 13 plan (¶ 6, docket no. 19), and
Section 1327(c).
The court recognizes that an adversary proceeding is	4
generally required for issuance of an injunction, other equitable
relief, or certain declaratory judgments and that no such
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collection of some post-petition fines would be incompatible with
Section 525(a) -- for example, CCSF should have issued Debtor a
parking permit without requiring him to pay dischargeable pre-
petition debts and therefore DPT should not have fined Debtor for
parking in front of his home without a permit. Nevertheless, it
is not clear that the fines are a nullity. If Debtor dismisses
his Chapter 13 case, for example, the court may be asked to
consider whether the fines remain uncollectible because the
violation of Section 525(a) already occurred or if instead the
fines can be collected because the pre-petition debts are no
longer dischargeable. The court expresses no opinion on this
issue, which can be raised when and if it is relevant.
Meanwhile injunctive relief is appropriate to preclude the
Governments from attempting to collect fines or other debts that
only arose because the Governments would not issue permits or
licenses in violation of Section 525(a). The court will use its
powers under Section 105(a) to enjoin the Governments from
attempting to collect post-petition debts proximately caused by	3
Debtor’s non-registration and lack of a parking permit, including
interest and late fees. See In re Exquisito Services, Inc., 823
F.2d 151, 155 (5th Cir. 1987) (authority under Section 105 to
direct Air Force to order contract with debtor renewed).4
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adversary proceeding has been commenced in this case. See Fed. R.
Bankr. P. 7001(7) and (9). Nevertheless, the court treats this
procedural defect as having been waived in the circumstances of
this case. The Governments did not raise this issue in their
briefs or in oral argument before the court and there is no
apparent prejudice. See also In re Cox, 68 B.R. 788, 803 (Bankr.
D. Or. 1987) (waiver of need for adversary proceeding when, among
other things, “the parties stipulated to all facts; thus the
procedural provisions incorporated by Bankruptcy Rule 7001 for the
parties’ protection, were here not required” and “both parties,
recognizing the legal importance and complexity of the issues
raised, allowed themselves sufficient time for legal research and
briefing”). Cf. In re Munoz, 287 B.R. 546, 551 (9th Cir. BAP
2002) (error to determine scope of discharge under Section 524
without adversary proceeding, but error was harmless when record
was sufficiently developed not to affect substantial rights of
parties or be inconsistent with substantial justice).
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The court denies Debtor’s request for damages. Most of
Debtor’s alleged damages consist of attorneys’ fees and “Section
525 of the Bankruptcy Code does not authorize attorney fees to a
prevailing litigant . . . .” In re McKibben, 233 B.R. 378, 386
(Bankr. E.D. Tex. 1999). The only authority cited by Debtor in
support of an award of attorneys fees involved a “sanction for
ordinary civil contempt” in a case involving “egregious facts.”
Havelock v. Taxel, 67 F.3d 187, 193-94 (9th Cir. 1995). This is
not a similar case. Debtor’s remaining alleged damages consist of
fines that “may” have been issued by entities not before the
court, which might or might not mean the parking ticket he
received from the City of Berkeley. (Debtor’s brief, docket no.
75, p.5:8-9.) The court lacks jurisdiction over entities that are
not before it; Debtor has provided no evidence of the dollar
amount of these alleged damages; it is not clear why the
Governments should pay for acts of other entities who are not
before the court; and there is no evidence that Debtor mitigated
his damages by contesting liability and citing Section 525(a) to
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the City of Berkeley (or other entity). See In re Oksentowicz,
324 B.R. 628, 630-31 (Bankr. E.D. Mich. 2005) (duty to warn of
Section 525 violation and provide opportunity to cure).
Therefore, assuming without deciding that damages could be awarded
under Section 525(a), the court declines to award any.
III. Conclusion
The court will issue orders directing DMV to register
Debtor’s vehicle and CCSF to issue him a residential parking
permit upon his payment of the normal fees and any post-petition
obligations, such as street sweeping citations, that were not
proximately caused by his non-payment of dischargeable pre-
petition debts. Such orders will no longer apply, and the
Governments may refuse to issue or may revoke any licenses or
permits, if Debtor ceases to be eligible for a discharge of his
pre-petition debts.
The court will also enjoin the Governments from collecting
any post-petition debts that were proximately caused by Debtor’s
non-payment of dischargeable pre-petition debts, such as citations
for parking without registration tags or a residential parking
permit. Such injunctions will be without prejudice to the
Governments seeking relief in the event that Debtor’s Chapter 13
case is dismissed or the pre-petition debts become
nondischargeable for any other reason.
* END OF MEMORANDUM DECISION *
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COURT SERVICE LIST
John I. Kennedy, Esq.
Deputy City Attorney, CCSF
1390 Market St., 5th Floor
San Francisco, CA 94102-5408
Kristian D. Whitten, Esq.
Deputy Attorney General
455 Golden Gate Ave., Suite 11000
San Francisco, CA 94102-7004
Benjamin F. Bucceri, Jr., Esq. Courtesy copy
Department of Motor Vehicles
Legal Office, E-128
P.O. Box 932382
Sacramento, CA 94237-3820
Carissa Lynch, Esq. Courtesy copy
Franchise Tax Board
P.O. Box 1720, MS A-260
Rancho Cordova, CA 95741-1720
(Note to parties: Persons who are registered with the court’s
electronic filing system will receive email notification of the
entry of this order so their names may not appear on the above
service list, which is used for service via U.S. mail.)
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