Taggart Contempt Standard Applies in Chapter 13

Posted by NCBRC - June 21, 2022

A bankruptcy court in the District of South Carolina found that the objective standard in a civil contempt proceeding, under which the creditor may assert a fair ground of doubt as to whether its conduct violated a court order, applies in the context of a contempt action based on violation of a chapter 13 discharge order. In re Seaver, No. 20-2238 (Bankr. D. S.C. May 13, 2022).

The debtor completed her chapter 13 plan and the discharge order required TitleMax to release the lien on her vehicle within 30 days. Sixty days later, TitleMax still had failed to release the lien and had ignored all efforts by the debtor’s attorney to get it to comply. The action came before the court on the debtor’s motion for civil contempt sanctions against TitleMax. TitleMax failed to attend the hearing or oppose the debtor’s motion.

Where TitleMax’s failure to comply with the court’s order was undisputed, the court addressed only one issue in its brief opinion: whether the analysis for civil contempt established in Taggart v. Lorenzen, __ U.S. __, 139 S.Ct. 1795, 1801-02, 204 L. Ed. 2d 129 (2019), applies in the chapter 13 bankruptcy context.

In Taggart, the Court held that the standard for making a civil contempt finding “is generally an objective one,” and civil contempt “should not be resorted to where there is a fair ground of doubt as to the wrongfulness of the defendant’s conduct.” In Beckhart v. NewRez, LLC, 31 F.4th 274, 277 (4th Cir. 2022), the court applied the Taggart rule in the context of chapter 11 discharge order.

Noting that the Fourth Circuit has not addressed whether the Taggart rule applies in the chapter 13 context, the court here drew the logical conclusion that it does. Under that standard, the court held that TitleMax had no objective basis for failing to comply with the order.

In the absence of an objective “fair ground for doubt” the court held TitleMax in contempt and ordered it to release the lien and pay the debtor’s attorney’s fees in the amount of $2,337.50.

Seaver Bankr SC May 2022

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