Brandi Kykeisha Hicks

IN THE UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF ARKANSAS
CENTRAL DIVISION
IN RE: BRANDI KYKEISHA HICKS, Debtor 	No. 4:26-bk-12783
Chapter 13
ORDER AND OPINION GRANTING IN PART AND DENYING IN PART
DEBTOR’S MOTION TO ENFORCE THE AUTOMATIC STAY AND COMPEL
THE ARKANSAS DEPARTMENT OF FINANCE AND ADMINISTRATION TO
RELEASE VEHICLE REGISTRATION HOLD
On August 6, 2026, Brandi Hicks [Hicks or debtor], pro se, filed a Motion to Enforce the
Automatic Stay and Compel the Arkansas Department of Finance and Administration to
Release Vehicle Registration Hold [debtor’s motion or motion]. In her motion, the debtor
requests that the Court enter an order (1) finding that the Arkansas Department of Finance
and Administration [ADFA] is in willful violation of the automatic stay under 11 U.S.C.
§ 362(a) for refusing to register her 2024 Hyundai Elantra [vehicle] until the debtor pays
sales tax on the vehicle, as well as registration, title, and license fees, and related
penalties;1 and (2) compelling ADFA to register her vehicle and provide her with license
tags.
On August 12, ADFA filed a Response to Motion to Enforce the Automatic Stay and
Compel the Arkansas Department of Finance to Release Vehicle Registration Hold
[response], arguing this Court lacks jurisdiction over ADFA due to improper service of
the debtor’s motion and sovereign immunity; that because ADFA did not exercise control
over the vehicle, it did not violate the stay under City of Chicago, Illinois v. Fulton, 592
U.S. 154 (2021); and, in the alternative, that its actions were excepted from the stay under
11 U.S.C. § 362(b)(4) and (b)(9)(D). On August 14, the debtor filed Debtor’s Amendment
and Alternative Prayer for Relief Regarding Motion for Registration Hold Release
[supplemental motion]. The supplemental motion stated, in sum, that to the extent the
debtor did not prevail on her motion, she would like to be able to surrender the vehicle to
1 Although the debtor appeared to assert that the only impediment to the registration of
her vehicle was the payment of sales tax, ADFA asserted that in addition to sales tax, the
payment of fees and penalties was also a prerequisite to registration.
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the lien creditor. On August 19, the debtor filed Debtor’s Written Response to [ADFA’s]
Objection to Motion for Registration Hold Release [reply].
On August 26, 2026, the Court held a hearing on the debtor’s motion, ADFA’s response,
debtor’s supplemental motion, and debtor’s reply. The debtor appeared pro se. Attorney
Michelle Baker appeared on behalf of ADFA. At the conclusion of the hearing, the Court
took the matter under advisement. Based on a review of the Court’s docket in this case,
applicable law, and the pleadings, testimony, and other evidence presented at the August
26 hearing, and for the reasons stated below, the Court grants in part and denies in part
the debtor’s motion and orders ADFA to register the vehicle and provide the debtor with
physical tags upon payment of any outstanding post-petition fees and penalties related
thereto.
I. 	Facts
Hicks purchased the vehicle pre-petition but did not register it. On July 13, 2026, Hicks
filed her voluntary chapter 13 bankruptcy petition. On her schedule A/B, the debtor listed
the vehicle, valued it at $20,000, and stated that it had been repossessed by lienholder
Santander Bank [Santander]. On schedule D, she listed Santander’s lien on the vehicle
and stated a demand for turnover under § 542. At some point, the vehicle was returned to
the debtor.2
Post-petition, Hicks attempted to register her vehicle at the Department of Motor Vehicle
in Conway, Arkansas. Hicks testified that the clerk accepted her paperwork, then
requested a cash payment from Hicks in the amount of $1368.98 for sales tax, wrote that
amount on a sticky note, and gave the sticky note to Hicks. The sticky note was admitted
into evidence with the caveat that it was not being admitted for the purpose of
2 The Court’s records reflect that Hicks filed an Emergency Motion for Turnover on July
17, 2026, to which Santander responded on July 21. The Court held a telephonic hearing
on July 22, during which the parties announced that Santander had agreed to return
Hicks’s vehicle. Although the Court was not privy to the exact date on which the return
occurred, Hicks amended her schedule A/B on August 14 to remove the notation that the
vehicle was not in her possession.
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establishing the amount Hicks owed, which ADFA asserted was $1533.61.3 Hicks
testified she told the clerk about her bankruptcy case. She also testified that she had
assessed the vehicle and is current on the payment of her personal property taxes.4 Hicks
testified that the only thing that stopped her from being able to register her vehicle was
the clerk’s request that she pay sales tax because her exchange with the clerk ended
before reaching a point at which the payment of fees might have been raised. 	ADFA
does not dispute the debtor’s recitation of events and takes the position that it is unable to
register the vehicle until sales tax, fees, and penalties have been paid.
II. 	Arguments and Analysis
The debtor argues that by requesting payment of the sales tax and declining to register the
vehicle until she paid such tax, ADFA violated the automatic stay under § 362(a)(1) and
(a)(6), and should be ordered to register the vehicle. ADFA responds with several
defenses. First, in its response, ADFA alleged a lack of jurisdiction based on improper
service. However, ADFA did not pursue this argument at the August 26 hearing and
insufficient evidence was introduced to support ADFA’s allegation of improper service.
Therefore, ADFA’s request to dismiss the debtor’s motion for improper service is denied.
Second, ADFA argues that the Court lacks jurisdiction to grant the debtor’s requested
relief because of ADFA’s sovereign immunity as a state agency. Third, ADFA argues that
it took no action regarding the vehicle that violated the automatic stay under City of
Chicago, Illinois v. Fulton, 592 U.S. 154 (2021). 	Fourth, ADFA asserts that any action it
did take was excepted from the automatic stay under § 362(b)(4) or (b)(9)(D). Finally,
ADFA contends that state law prevents it from registering the vehicle without the
payment of sales tax and fees. The Court will address each of these arguments in turn.
3 The parties’ dispute about the precise amount owed to ADFA is not material to
determining the issue currently before the Court and may be resolved in the context of
plan confirmation, if appropriate in the light of the instant ruling.
4 Although counsel for ADFA stated in her opening statement that it had not yet “assessed
tax” on the vehicle, from the statements that followed, it appears she was referring to
sales tax paid at registration rather than the personal property taxes to which the debtor
was referring.
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A. Sovereign Immunity Does Not Protect ADFA From Alleged
Stay Violations
ADFA argued in its response and at the August 26 hearing that the Court “lacks
jurisdiction over [ADFA] due to sovereign immunity” and cited to the Eleventh
Amendment. As it pertains to the issue before the Court, ADFA’s assertion is incorrect.
The Eleventh Amendment expressly bars suits against states by citizens of other states,
and the Supreme Court has held that it also bars suits against a state by its own citizens.
In re Sacred Heart Hosp. of Norristown, 133 F.3d 237, 241 (3d Cir. 1998) (citing
Edelman v. Jordan, 415 U.S. 651, 662-63 (1974). However, the sovereign immunity
granted by the Eleventh Amendment is not absolute. Id. at 242. 	In addition, the
Supreme Court has held that the sovereign immunity of states has been abrogated in the
area of bankruptcy. Cent. Va. Cmty. Coll. v. Katz, 546 U.S. 356, 378 (2006). The states,
in ratifying the Constitution, which includes the Bankruptcy Clause of Article I, Section
8, Clause 4, consented to an abrogation of sovereign immunity in the laws on bankruptcy.
Id. The scope of the consent was limited to that “necessary to effectuate the in rem
jurisdiction of the bankruptcy courts.” Id. As the Supreme Court explained in Katz:
the jurisdiction exercised in bankruptcy proceedings was chiefly in rem—a
narrow jurisdiction that does not implicate state sovereignty to nearly the
same degree as other kinds of jurisdiction. But while the principal focus
of the bankruptcy proceedings is and was always the res, some exercises
of bankruptcy courts’ powers—issuance of writs of habeas corpus
included—unquestionably involved more than mere adjudication of rights
in a res. In ratifying the Bankruptcy Clause, the States acquiesced in a
subordination of whatever sovereign immunity they might otherwise have
asserted in proceedings necessary to effectuate the in rem jurisdiction of
the bankruptcy courts.
Katz, 546 U.S. at 378. Because sovereign immunity has been abrogated by ratification of
the Constitution, the Supreme Court concluded that Congress’s enactment of 11 U.S.C.
§ 106 entitled “Waiver of sovereign immunity” was a valid exercise of congressional
power though not the source of abrogation. Id. at 379. 	More recently, the Supreme
Court further explained, and renewed, its holding in Katz, including that “[i]n bankruptcy
. . . sovereign immunity has no place.” Allen v. Cooper, 589 U.S. 248, 257 (2020).
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The question, therefore, is whether the automatic stay imposed by § 362, and alleged
violations of it, are matters necessary to effectuate the in rem jurisdiction of the
bankruptcy courts. Without reservation, the answer is yes. There are few, if any, statutes
more fundamentally necessary for the bankruptcy process to be effectuated than the
staying of collection proceedings in order to maintain and preserve property of the
bankruptcy estate for treatment under Title 11. And, though not the source of abrogation,
the Court notes that the relief requested by the debtor plainly falls within § 106(a)(1),
which provides in relevant part that “[n]otwithstanding an assertion of sovereign
immunity, sovereign immunity is abrogated as to a governmental unit to the extent set
forth in this section with respect to . . . [s]ection[] 362 . . . .” Subsection (a)(2) provides
that “[t]he court may hear and determine any issue arising with respect to the application
of such sections to governmental units[,]” and (a)(3) prohibits the award of punitive
damages against a governmental unit, which the debtor in the instant case is not seeking.
11 U.S.C. § 106(a)(1)-(3).
Further, pursuant to § 362(a), the automatic stay is imposed on all “entities.” The
definition of “entities” includes “governmental units.” 11 U.S.C. § 101(15). ADFA is a
governmental unit because it is an agency of the state of Arkansas. See 11 U.S.C.
§ 101(27). As discussed above, sovereign immunity does not protect ADFA from
application of the automatic stay. The Court will now turn to whether ADFA violated the
automatic stay.
B. ADFA’s Actions Constituted More Than the “Mere
Possession” of Property of the Estate Dealt With in City of
Chicago, Illinois v. Fulton
As stated above, the debtor alleges that ADFA’s actions violate both § 362(a)(1) and
(a)(6). These subsections “may sometimes prohibit the same conduct.” TooBaRoo, LLC
v. Burri Props., LLC (In re W. Robidoux, Inc.), No. 22-mc-9005-NKL, 2022 WL
17620269, at *11 (W.D. Mo. Dec. 13, 2022). However, § 362(a)(1) prohibits formal
actions to recover claims against the debtor that arose pre-petition, while § 362(a)(6)
could be read to preclude both formal and informal actions. Id. In this case, ADFA’s
actions were not part of a formal action or proceeding, making § 362(a)(1) potentially
inapplicable. However, it is unnecessary to decide whether ADFA’s request for payment
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and refusal to register the vehicle without payment fall outside the parameters of
§ 362(a)(1), because ADFA’s actions fall squarely within § 362(a)(6).
Section 362(a)(6) prohibits any act to collect or recover a claim against the debtor that
arose pre-petition. ADFA argues that it took no affirmative action against property of the
debtor’s estate, relying on City of Chicago, Illinois v. Fulton, 592 U.S. 154 (2021). In
Fulton the Supreme Court found that merely retaining property of the estate does not
violate § 362(a)(3), which subsection prohibits “any act . . . to exercise control over
property” of the bankruptcy estate. Fulton, 592 U.S. at 158. However, the Supreme
Court also stated it was not settling “the meaning of other subsections of § 362(a).” Id. at
161. Here, § 362(a)(3) was not raised. While the Fulton case is not on point as ADFA
contends, it is nonetheless instructive regarding acts that constitute a violation of the stay
under subsection (a)(6).
In Fulton, the Court determined that “[a]n ‘act’ is ‘[s]omething done or performed . . . ; a
deed.’” Id.. at 158 (quoting Black’s Law Dictionary 30 (11th ed. 2019); also quoting
Webster's New International Dictionary 25 (2d ed. 1934) (“that which is done,” “the
exercise of power,” “a deed”). 	The Court acknowledged that an “act” may include
omissions, and also concluded that an “act” in the context of § 362(a)(3) requires more
than merely retaining power over a thing in order to violate that section. Id. at 158-59.
Here, ADFA did not merely retain the power to issue registration. It requested payment
from the debtor for sales tax. This act of requesting payment was affirmative and
undisputed, and the Court finds the debtor credible in her description of these events.
Further, it withheld registration of the vehicle without the payment of taxes. Even if this
is an omission, Fulton makes clear that an “act” may include omissions. And,
regardless, it is certainly a coercive position because the debtor cannot drive her vehicle
lawfully on public roads without registering it. Ark. Code Ann. § 27-14-903(a); see also
Jessamey v. Saugus (In re Jessamey), 330 B.R. 80, 85 (Bankr. D. Mass. 2005) (finding
that the “that the continued blocking of access to motor vehicle privileges is . . . a stayed
‘act’ under § 362(a)(6).”) Therefore, Fulton does not end the Court’s analysis as to
whether ADFA’s action violated the automatic stay under § 362(a)(6) because ADFA did
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act within § 362(a)(6) when it requested payment of the sales tax and when it refused to
register the vehicle without payment of such tax.
C. ADFA Violated § 362(a)(6) When It Withheld Registration of
the Vehicle in Order to Collect Sales Tax and No Exception
Applies
Here, the challenged actions are two-fold: ADFA requested payment of the sales tax and
refused to register the vehicle and provide physical registration tags to the debtor without
payment of sales tax. For the following reasons, the Court finds ADFA violated
§ 362(a)(6) by refusing to register the vehicle without the payment of the sales tax, a pre-
petition debt, and there is no exception to the automatic stay for such act. The Court also
finds that ADFA did not violate the stay by informing the debtor of the amount of sales
tax due nor did it violate the stay to the extent it refused to register the vehicle because of
any outstanding fees, as exceptions apply to both acts under § 362(b).
1. 	AFDA’s Claim for Sales Tax Arose Pre-Petition
ADFA’s claim for sales tax arose pre-petition, specifically at the time of the sale of the
vehicle.5 A claim is defined under the bankruptcy code as “a right to payment, whether
or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured . . . .”
11 U.S.C. 101(5). Title 26 of the Arkansas Code deals with sales tax on motor vehicles.
Arkansas Code Annotated section 26-52-510 states in relevant part:
(a)(1) On or before the time for registration as prescribed by § 27-14-
903(a), a consumer shall pay to the Secretary of the Department of
Finance and Administration the tax levied by this chapter and all other
gross receipts taxes levied by the state with respect to the sale of a new or
used motor vehicle . . . required to be licensed in this state, instead of the
taxes being collected by the dealer or seller.
Ark. Code Ann. § 26-52-510 (emphasis added). From a plain reading of this statute, the
obligation to pay sales tax arose prior to registration because the statute allows for the
possibility of sales tax being paid prior to the time of registration. Further, if no sales tax
5 Counsel for ADFA stated in opening and closing that sales tax relates back to the date
of sale. Regardless of that position, the Court must analyze this issue so that it is
determined as matter of law.
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was owed until registration, there would be no reason to direct consumers to pay ADFA
instead of the dealer or seller. If there was no right to payment created previous to
registration, this language would be superfluous. The “time for registration” is found in
Arkansas Code Annotated section 27-14-903, which provides, in sum, that the transferee
of a new or used vehicle must apply for registration within sixty (60) days after the
transfer, and that the transferee may not operate the vehicle until a registration plate is
attached within that same time. Ark. Code Ann. § 27-14-903(a)(1), (2).
Registration, however, is not the act that gives rise to the claim for sales tax. Requiring
payment of sales tax at registration functions as a collection mechanism for the state.
This interpretation is supported by Arkansas case law. In Pledger v. Brunner & Lay, Inc.,
825 S.W.2d 599 (Ark. 1992), the Supreme Court of Arkansas recognized that “[t]he
registration itself is not the taxable event under the sales and use tax scheme, only the
point at which any properly imposed but unpaid Arkansas sales or use taxes would be
collected.” Pledger v. Brunner & Lay, Inc., 825 S.W.2d 599, 605 (Ark. 1992)
(determining whether the sales and use tax scheme violated the equal protection and
commerce clauses). While the Court cannot find language in the Arkansas statutes that
plainly states the sale is the event that gives rise to the right to payment of sales tax, with
registration excluded and absent any other directive, it could be no other event.
Therefore, because ADFA’s right to payment of sales tax on the debtor’s vehicle arose at
the time of purchase, it was a pre-petition claim. Acts to collect, assess, or recover on a
pre-petition claim against the debtor are stayed under § 362(a)(6). Unless an exception
applies, such actions violate the automatic stay.
2. 	ADFA’s Act of Refusing to Register the Vehicle Until
the Debtor’s Payment of Pre-Petition Sales Tax Is Not
Excepted from the Automatic Stay
ADFA argues that if the Court finds its actions were in contravention of the stay, they
were excepted under either § 362(b)(4) or (b)(9)(D). The Court will address each in turn.
Section 362(b)(4) excepts, in relevant part, the “commencement or continuation of an
action or proceeding by a governmental unit . . . to enforce such governmental unit’s or
organization’s police and regulatory power . . . .” 11 U.S.C. § 362(b)(4). Some courts
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have held that “[t]he police power exception must be narrowly construed and is only
meant to apply to actions that further public health and safety.” Bertuccio v. Cal. State
Contractors Lic. Bd. (In re Bertuccio), 414 B.R. 604, 615 (Bankr. N.D. Cal. 2008). Hicks
argued this standard at the August 26 hearing. However, the Eighth Circuit has rejected
this interpretation of § 362(b)(4), stating that “[t]he statutory language does not contain or
suggest such a limitation of purpose.” United States v. Commonwealth Cos., Inc. (In re
Commonwealth Cos., Inc.), 913 F.2d 518, 521-22 (8th Cir. 1990) (citing Midatlantic
Nat’l Bank v. New Jersey Dep’t of Envtl. Prot., 474 U.S. 494, 503 (1986) (“one of the
purposes of [the police or regulatory power] exception is to protect public health and
safety”)).
Commonwealth did not deal with the collection of pre-petition taxes. In Commonwealth,
the Eighth Circuit found that the entry of a money judgment “would not conflict with the
bankruptcy court’s control of property of the debtor or of the estate, and would not
otherwise create a pecuniary advantage for the government” and it “decline[d] to place it
outside the scope of § 362(b)(4) on the ground that it seeks to ‘protect’ the government’s
‘pecuniary interest.’” In re Commonwealth Cos., Inc., 913 F.2d at 525. However,
importantly, in doing so the Eighth Circuit stated “[t]he entry of judgment would simply
fix the amount of the government's unsecured claim against the debtors. It would not
convert the government into a secured creditor, force the payment of a prepetition debt,
or otherwise give the government a pecuniary advantage over other creditors of the
debtors’ estate.” Id. at 524.
Here, at least two facts are present that were not present in Commonwealth: ADFA’s
action would force the payment of a pre-petition debt and would give ADFA a pecuniary
advantage. Sales tax falls within priority payment status under two possible subsections
of the bankruptcy code. “Under [§] 507(a)(8)(E), sales taxes that are excise taxes are
entitled to priority unless they are ‘stale’; that is, unless the taxes were due prior to three
years before the bankruptcy petition date.” In re Kogut, 325 B.R. 400, 403 (Bankr. W.D.
Ark. 2005). And, “sales taxes collected from customers by a merchant upon the sale of
goods or services are the kind of tax described in 11 U.S.C. § 507(a)(8)(C) . . . .” Id. at
403-04. As a more recent Eighth Circuit case noted “when the government’s actions
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‘would result in an economic advantage to the government or its citizens over third
parties in relation to the debtor's estate,’ then the government is not exercising its police
or regulatory power. It is acting as a creditor.” In re Peabody Energy Corp., 958 F.3d
717, 723 (8th Cir. 2020) (citing In re Commonwealth Cos., 913 F.2d at 523).
These factual distinctions require a different result here than that reached in
Commonwealth. In both seeking to collect motor vehicle sales tax and withholding
registration on the condition that it is collected, the state is acting as a creditor and not
exercising a police or regulatory power.6
And, importantly, the Arkansas Supreme Court has recognized in other contexts that there
is “a distinction between a tax imposed for general revenue purposes and a fee charged in
the exercise of police power.” N. Little Rock v. Graham, 647 S.W.2d 452, 453 (Ark.
1983) (citing Parking Auth. of Trenton v. Trenton, 191 A.2d 289 (N.J. 1963); see also
Morningstar v. Bush, 383 S.W.3d 840, 845 (Ark. 2011) (quoting from Harris v. Little
Rock, 40 S.W.3d 214, 221 (Ark. 2001) that “[t]his court has distinguished between a fee
and a tax as ‘government imposes a tax for general revenue purposes, but a fee is
imposed in the government's exercise of its police powers.’”) The “taxing power is
usually exercised to provide funding for public services at large, while police power is
usually exercised to cover the cost of administering a regulatory scheme or providing a
service.” Morningstar, 383 S.W.3d at 845. Although not determinative, whether a
charge is designated as a tax versus a fee is some indication of whether the charge is an
exercise of the state’s police power. See Physicians’ Specialty Hosp., LLC v. Ark. Dep’t of
Hum. Servs., 666 S.W.3d 107, 112 (Ark. Ct. App. 2023). Courts in Arkansas “look[] to
the true character of the levy to determine which it is.” Id.
There is nothing remarkable about the imposition of a sales tax on motor vehicles in
Arkansas that causes it to fall outside of this usual rule. The charge is designated as a tax.
The tax certainly generates revenue. And, unlike the statutes relating to fees, there is
6 Further, it would arguably be incompatible to apply an exception to the automatic stay
for the collection of pre-petition taxes that fall squarely within the code’s priority
payment scheme that places such taxes eighth in line for payment. See 11 U.S.C.
§ 507(a)(8).
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nothing in the relevant tax statutes that designates the tax as a payment or reimbursement
for any particular privilege or specific service. See discussion infra. In fact, the nature of
the tax appears to be one that generates revenue to be used by the state for public services
generally. See Ark. Code. Ann. §§ 26-52-102, -107. The sales tax is not an exercise of a
police or regulatory power of ADFA, and ADFA provided no case law or statute stating
otherwise or even supporting such a proposition. While ADFA argued in closing that
Arkansas Code Annotated section 26-52-501(a) requires it to collect such tax before it
may register the vehicle, this subsection merely sets a duty to pay. Section 26-52-
510(a)(2) admittedly goes further and states that “[t]he secretary shall require the
payment of the taxes at the time of registration before issuing a license for the new or
used motor vehicle, trailer, or semitrailer.” 	However, the Court finds that section 26-52-
510 is simply a collection statute that is superseded by the bankruptcy code and stayed by
§ 362(a). See Rivera v. Lake Berkley Resort Master Ass’n., Inc. (In re Rivera), 511 B.R.
6, 15 (finding that “any [state] statute that prevents, lacerates or inhibits a debtor's basic
right to the automatic stay afforded in 11 U.S.C. § 362 is preempted by the United States
Bankruptcy Code[.]”)
Further, unlike Title 27 that pertains to the payment of fees prior to vehicle registration,
Title 26 does not include a statute prohibiting the issuance of registration without the
payment of sales tax. Arkansas Code Annotated section 27-14-710 states that the “Office
of Motor Vehicle shall refuse registration or issuance of a certificate of title or any
transfer of registration upon any of the following grounds,” which includes “the required
fee” but not taxes. See Ark Code Ann § 19-42-201(11), which deals with special
revenues, and identifies the fee in section 27-14-710 as a “registration fee.”) This
supports the Court’s reading of the requirement that the clerk require payment of sales tax
at registration in section 26-52-510 as simply a collection mechanism and not an exercise
of any police or regulatory power. In sum, neither of ADFA’s two actions regarding sales
tax (request for payment or refusal to register until such payment) fall within the
exception set forth in § 362(b)(4).
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However, ADFA’s act of requesting payment from the debtor of the amount owed does
fall within a different exception. Subsection (b)(9)(D) provides an exception to the
automatic stay for
the making of an assessment for any tax and issuance of a notice and
demand for payment of such an assessment (but any tax lien that would
otherwise attach to property of the estate by reason of such an assessment
shall not take effect unless such tax is a debt of the debtor that will not be
discharged in the case and such property or its proceeds are transferred out
of the estate to, or otherwise revested in, the debtor).
11 U.S.C. § 362(b)(9)(D). Here, ADFA did not issue a formal assessment, but the sticky
note was an informal notice and demand for payment within this section and that, by
itself, was not a stay violation.
However, ADFA did not simply issue a notice of an amount due and request payment. It
refused to register the debtor’s vehicle and provide license tags unless the amount on a
sticky note was paid. This wades further into coercing collection of a pre-petition debt
similar to actions prohibited in In re Jessamey, cited supra. In Jessamey, a Massachusetts
statute prohibited a registrar from renewing a debtor’s driver’s license and motor vehicle
registration until certain excise taxes were paid. In re Jessamey, 330 B.R. at 84-85.
Among the arguments raised, the town asserted that its action was excepted from the stay
under § 362(b)(9). The court rejected this argument, stating:
The Town contends that its action was protected as a demand for payment
of a tax. See 11 U.S.C. § 362(b)(9)(D) (excepting from the stay “the
making of an assessment for any tax and issuance of a notice and demand
for payment of such an assessment”). Of course, this argument misses the
point. The Debtor has not complained about, and seeks no remedy for, the
Town's demand for payment. Rather, the Debtor complains that the stay
was violated by the Town's enforcement of the demand by the coercive
pressure of the hold.
Id. at 86. Similarly, here, the demand for payment of sales tax by ADFA is excepted from
the stay under § 362(b)(9)(D); however, the enforcement of that demand to pay a pre-
petition debt by coercive pressure is not, even if that coercive pressure is the product of a
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clerk following state statutes.7 See In re Pomeroy, 343 B.R. 279, 280 (Bankr. M.D. Fla.
2005) (indicating that an attempt to coerce the payment of a debt would be a violation of
the stay); In re Rivera, 511 B.R. at 14-15 (citing cases for the proposition that the
bankruptcy code preempts conflicting state laws).
Therefore, ADFA’s act of requesting payment of the sales tax is excepted from the
automatic stay, but its refusal to register the vehicle until such payment is not. The Court
now turns to the issues presented by the outstanding fees.
D. ADFA Did Not Violate the Automatic Stay to the Extent it
Sought to Collect Registration, License, or Title Fees and
Any Related Penalties, Including By Withholding
Registration, and the Court Cannot Order ADFA to Register
the Vehicle Without Payment of Such Fees
The debtor testified that her discussion with the clerk did not include a demand for fees.
However, the debtor is asking this Court to order ADFA to register her vehicle and
provide her with license tags. The Court cannot do so without requiring the debtor to
first pay those fees. To the extent any registration, title, or license fees were a part of the
amount requested from Hicks or registration was withheld on that basis, the Court finds
that the collection of such fees are excepted from the automatic stay under § 362(b)(4)
because the collection of these fees is an exercise of ADFA’s regulatory power.
Title 27 deals with fees for the licensing, registering and titling of motor vehicles. Under
Arkansas Code Annotated section 27-19-205, in relevant part, the term “license” means
the “privilege of any person to drive a motor vehicle whether or not the person holds a
valid license.” Under Arkansas Code Annotated section 27-19-213, the term
“registration” means “the registration certificate or certificates and registration plates
issued under the laws of this state pertaining to the registration of vehicles.” Arkansas
Code Annotated section 27-14-601 sets out the fees to both license and register a motor
vehicle. Arkansas Code Annotated section 27-14-705 imposes a title application fee that
“shall be paid to the Office of Motor Vehicle at the time that application for registration
thereof is made.” Ark. Code Ann. § 27-14-705(c). Arkansas Code Annotated section 27-
7 The Court need not determine whether the violation was willful because the debtor did
not seek damages under § 362(k).
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14-601 specifies the purpose of fee for registration and licensing: “(c) Nature of Fees.
Each of the fees authorized in this section is declared to be a tax for the privilege of using
and operating a vehicle on the public roads and highways of the State of Arkansas.”
Unlike the sales tax, the statutes cited above make clear that registration and license fees
are an exercise of the government’s police and regulatory powers because the fees are
imposed for the privilege of using a vehicle on a public road. See also Blackwood v.
Sibeck, 23 S.W.2d 259 (Ark. 1930) (quoting with approval Ft. Smith v. Scruggs, 69 S.W.
679, 680 (Ark. 1902) that “[t]he license fee imposed [for using a wheeled vehicle] is,
then, not a tax upon property, but is in the nature of a toll for the use of the improved
streets. In other words, it is the privilege of using vehicles on the improved streets, and
not the vehicle itself, that is taxed.”) Arguably, because the title fee is outside of the
description of the nature of the fees in Arkansas Code Annotated section 27-14-601, that
purpose does not extend to it. However, the title fee is often coupled with the registration
fee. See e.g., Ark. Code Ann. §§ 27-14-710,-712. And, the charge for a certificate of title
is referred to as a “fee” versus a “tax,” which per the case law cited above is some
evidence that it is an exercise of the government’s police and regulatory power.
Therefore, to the extent that the amount requested included amounts for registration, title,
or license fees, or penalties related thereto, ADFA did not violate the stay by requiring
such payment, and therefore, the Court will not order ADFA to register the vehicle
without payment of the fees and any related penalties.
E. Without an Objection to Confirmation Before It, the Court
Declines to Mandate Plan Treatment
Lastly, in an effort to harmonize federal and state law, ADFA’s counsel suggested in her
closing that the Court could require the debtor to pay the sales tax on her vehicle through
certain treatment in the debtor’s plan. However, at the hearing, the Court had no
proposed plan and no objection to confirmation before it. As such, without a controversy
or notice to the debtor that such issues would be tried on August 26, it would be
inappropriate to determine the viability of ADFA’s suggested plan treatment at this time.
That being said, the debtor should provide for ADFA’s claim for sales tax and any related
penalties in her plan.
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IV. Conclusion and Order for Relief
Based on the findings of fact and conclusions of law stated herein, the Court finds that
ADFA violated the automatic stay by refusing to register the debtor’s vehicle and provide
her with license tags until she paid pre-petition sales tax and any related penalties, but not
fees. Upon payment of any outstanding fees, including registration, title, license, and any
penalties related thereto, ADFA is ordered to register the vehicle and provide physical
tags to the debtor.
IT IS SO ORDERED.
cc: 	Brandi Kykeisha Hicks, debtor
Michelle Lynn Baker, attorney for ADFA
Jack W. Gooding, chapter 13 trustee
United States Trustee
10/07/2026
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