Argument analysis: the metaphysics of bankruptcy-SCOTUSblog


Posted by Danielle D’Onfro at 11:24, October 16, 2020 (Friday)

On Tuesday, the Supreme Court City of Chicago v Fulton Through the phone. In this case, the question is a narrow statutory question about how the two parts of the US Bankruptcy Law interact. Since the argument closely revolves around the text of the regulations, there are few fireworks to report.

Craig Goldblatt defends Chicago (Art Lien)

The case originated from the practice of the City of Chicago, which impounded the car to not pay the fines and expenses owed to the city. To retrieve the car, an individual must not only pay the expenses owed to the market, but also the expenses related to the seizure. For many people, at least in the short term, they owe the city far more than they can pay.

After seizing their car, Robin Fulton, Jason Howard, George Pique and Timothy Shannon sought bankruptcy protection to help solve their financial problems in the city and retrieve the car. In all four cases, New York City refused to return the car until the debtor met certain procedures that New York City deemed necessary. §542(a) Bankruptcy Law and Federal Bankruptcy Procedure Rules. The debtor believes that the code has different provisions, §362(a)(3), Requiring the city to return the car as soon as possible when applying for bankruptcy relief. The bankruptcy court agreed to the debtor’s order, ordering the city to return their cars and pay sanctions. On appeal, the U.S. Court of Appeals for the Seventh Circuit reached an agreement with the Bankruptcy Court, thereby consolidating its divisions with the Second Circuit, the Eighth Circuit, the Ninth Circuit, the Eleventh Circuit and the current Seventh Circuit. Courts, the Tenth Circuit Court of the U.S. Federal Circuit and the Divisions of the District of Columbia Circuit Court.

The debate on Tuesday began and continues back to the action/inaction distinction. The question is whether the city violated Article 362(a)(3) when retaining ownership, which prohibits “any act of acquiring or controlling the ownership of real property”. The number of cars after the debtor has filed for bankruptcy relief. Article 362’s suspension measures suspended all collection actions and provided room for bankruptcy proceedings, and creditors did not compete with each other for assets. If impounding a car in a place of detention is an “act,” then the city has violated the suspension regulations.

Craig Goldblatt explained in arguing about the city that, under Article 362, the suspension usually retains the effect of ownership after a bankruptcy petition is filed. Goldblatt tried to focus on the status quo, rather than the difference between action and non-action. He called this distinction “the philosophy of metaphysics,” but the justices kept returning to metaphysics because of their own recognition. Chief Justice John Roberts wants to know whether it is a lawsuit to keep the car after someone asks to return it. Justice Samuel Alito asked whether moving cars between impoundment sites was a lawsuit. Judge Sonia Sotomayor asked about the possibility of exposing the car to weather or a thief breaking in.

Colleen Roh Sinzdak advocated that the United States is a “friend of the court” supporting the city. When asked whether the court needs to go beyond Section 362(a)(3) to decide the case, she dexterously explained that there is no-keeping the seized car is not necessarily an act. The decision on “metaphysics” may be the narrowest and simplest result. Sotomayor doubted this. She asked a university, as many courts have ruled, whether refusing to issue transcripts to students with poor grades would violate the suspension. Sinzdak responded that the court ruled on the transcript under section 362(a)(6), which prohibits “any debt collection.” Judge Neil Gorsuch also wanted to know whether the city might violate §362(a)(6), which would prevent the court from using the metaphysics of §362(a)(3).

Judge Elena Kagan asked some of the most challenging questions about how to arrange accommodation. She first asked whether the suspension was to maintain the status quo of the estate or marshal assets. Later, she wondered whether this reservation at least prevented the creditor from retaining the property that the debtor had to return.

In the questions raised by retired judge Eugene Wedoff for the debtor’s lawyers, the justices conducted a more in-depth study of the bankruptcy law. They are interested in whether the 1984 amendment to the bankruptcy law (adding the term “motion control” to §362(a)(3)) was intended to change bankruptcy practices. One accepted standard for constructing bankruptcy laws is to strongly assume that the code will not change existing bankruptcy practices. Wedoff argued that the bankruptcy law prohibited the retention of detained cars even before the 1984 amendment, but no judge seemed inclined to adopt this view. They seemed unwilling to accept the argument that the 1984 amendment changed bankruptcy practices. Gorsuch and Justice Brett Kavanaugh urged Wedoff to explain, if Congress meant it, why Congress did not add words such as “retention of ownership.”

The judges also asked Wedoff several questions about the role of section 542, which describes how the party that owns the debtor’s property transfers it to the bankruptcy trustee. Chief Justice and Judges Clarence Thomas and Stephen Breyer questioned whether the debtor’s interpretation of section 362(a)(3) made section 542 redundant. Under the debtor’s reading, the two overlapping tasks made Breyer almost annoyed, and once yelled: “So I can’t understand.”

At this point, the debate turned to why the case is so important. There is no doubt that the debtor can file an objection procedure under Article 542 to request the return of his car, but the process may take several weeks, during which the debtor will not have the car. Sotomayor expressed sympathy for the debtor’s need for a car to go to work and live. He questioned whether Article 362(a)(3) can really be understood as circumventing the procedures implied by Article 542 and the requirements of federal rules. Bankruptcy proceedings. She invited Wedoff to explain how Congress amended the bankruptcy law to speed up the vehicle turnover process. He replied: “You can add some language to section 362(a)(3), which fully shows that the explanation we are presenting is the correct explanation,” she replied: “Okay. You didn’t help.”

In addition to the narrow statutory issues in this case, there are many reasons to question the morality and wisdom of Chicago’s seizure policy. The improper behavior of detaining someone’s transportation to work is a means of squeezing money from them, and it continues to emerge at various intervals in the dispute. No bankruptcy case can solve this problem. If the bankruptcy process aggravates the debtor’s troubles, then the answer is to simplify the bankruptcy process by amending the code or the Federal Bankruptcy Procedure Rules. The debtors wanted the court to believe that it was what Congress did in the 1984 amendment, but the judges did not convince them.

Published on Chicago, Illinois v. Fulton, Featured, Excellent case

Recommended citation:
Danielle D’Onfro,
Argument analysis: the metaphysics of bankruptcy,
SCOTUS blog (October 16, 2020, 11:24 am),

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