Booting Car Not a Stay Violation

Posted by NCBRC - March 21, 2018

The City’s action in booting the debtor’s car after she had filed her bankruptcy petition did not violate the automatic stay where its purpose was to protect public safety. In re Hicks, No. 17-3663 (Bankr. N.D. Ill. Feb. 1, 2018).

Ashina Hicks entered chapter 13 bankruptcy with almost $16,000 in traffic fines owed to the City of Chicago. After her petition, the City booted her car and did not remove the boot until the following day. Ms. Hicks filed a motion to show cause why the City’s action should not be found to be a violation of the automatic stay, and she sought $6,000 in damages for emotional distress, inconvenience and embarrassment. The City countered that its action was within its governmental power to protect the public safety and was not subject to the automatic stay under section 362(b)(4). The court agreed.

Section 362(b)(4) provides that the automatic stay does not apply to “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, including the enforcement of a judgment other than a money judgment, obtained in an action or proceeding by the governmental unit to enforce such governmental unit’s or organization’s police or regulatory power.”

The court rejected Ms. Hicks’ contention that the stay exception applies only to governmental action addressing criminal conduct or bad faith dealing. Rather, the court found, the exception applies more broadly to police and regulatory power to enforce state laws affecting health, morals, welfare or safety. The court also found that its role was not to determine the legitimacy of the underlying tickets Ms. Hicks but only the legitimacy of the government’s purpose in incapacitating vehicles in general.

To determine whether the stay exception applies, courts subject the governmental action to two tests: the “pecuniary purpose” test, which looks to whether the government’s true motive is in protecting its own pecuniary interest, and the “public policy” test, where the government is motivated by an interest in protecting the public good. Considering the totality of the circumstances, only actions that further public policy are excepted from the stay.

The court found that the City’s purpose in immobilizing vehicles, while having a potential incidental monetary benefit for the City, was basically part of a three-tiered deterrence system intended to deal with vehicle operators who cause inconvenience or danger to the public. The court found that Ms. Hicks, who had over fifty citations many of which for moving violations, was precisely the type of reckless driver the City sought to protect the public from. The court concluded that this purpose satisfied the public policy test and that the automatic stay was inapplicable to the City’s action.

The court cautioned that its decision was based on the particular facts and circumstances before it and did not serve as a blanket decision that similar governmental action under different circumstances would give rise to the same holding.

Hicks Bankr ND Ill opinion Feb 2018


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