Consumer Bankruptcy

Adopting a narrow view of the section 362(b)(4)[1] “police and regulatory power” exception to the automatic stay, the Bankruptcy Court for the Western District of Texas, in In re Reyes,[2] held that Josie Jones (“Jones”) and her attorney Robert Wilson (“Wilson”) violated the automatic stay provision by reporting the debtors to the Texas Real Estate Commission (“the TREC”).[3] The court determined that Jones and Wilson had intentionally prosecuted the TREC complaint “to punish the debtor for filing, and to exert pressure on the debtor in order to collect on the judgment.”[4] The court noted that Jones and Wilson filed the TREC action against the debtors approximately two months after seeking to lift the stay, and held that this was sufficient to support a finding of civil contempt.[5]

Same-Sex Married Debtors May File a Joint Petition for Bankruptcy The DOMAs Definition of Spouse is Held Unconstitutional

By: Jennifer K. Arcarola

St. John's Law Student

American Bankruptcy Institute Law Review Staff

In In re Balas & Morales,[1] the United States Bankruptcy Court for the Central District of California held that a legally married same-sex couple could jointly petition for bankruptcy.[2] The debtors, Gene Balas and Carlos Morales, are a same-sex couple legally married in California who jointly filed for bankruptcy under chapter 13.[3] The United States Trustee (the “Trustee”) moved to dismiss the case, alleging that section 1307(c) of the United States Bankruptcy Code (the “Code”) prohibits two males from jointly filing for bankruptcy[4] because the Defense of Marriage Act (the “DOMA”) defines “spouse” as a person of the opposite sex who is a husband or a wife,[5] and so Trustee alleged that their case should be dismissed “for cause” pursuant to section 1307(c) of the Code.[6] The court concluded that (1) the DOMA was unconstitutional as applied to a same-sex married couple under the Equal Protection Clause of the Fifth Amendment, (2) no legitimate government interest was served in applying the statute, and (3) none of the eleven grounds for dismissal listed in section 1307 were implicated.[7]

Discrimination in Hiring Based on Past Bankruptcy Filing Allowed for Private Employers

By: Megan Quail

St. John’s Law Student

American Bankruptcy Institute Law Review Staff

Recently, in Myers v. Toojay’s Management Corp., the Court of Appeals for the Eleventh Circuit affirmed a grant of summary judgment in favor of a private business, Toojay’s, which refused to hire Myers, an individual, based on his prior bankruptcy filing.[1] Myers claimed that Toojay’s violated section 525(b) of the Bankruptcy Code (“the Code”) by declining to offer him employment after learning of his previously filed bankruptcy petition.[2] The court held that section 525(b) of the Code does not prohibit a private employer from declining to hire a person because of a prior bankruptcy despite prohibiting public employers from taking similar action.[3] As the third United States Court of Appeals ruling of its kind, Myers v. Toojay’s Management Corp. continues the trend of protecting the discriminatory hiring decisions of private employers.[4]