STATE EX REL. UDALL V. WIMBERLY, 1994-NMCA-121,
118 N.M. 627, 884 P.2d 518 (Ct. App. 1994)
STATE OF NEW MEXICO, ex rel. TOM UDALL,
Attorney General,
Plaintiff-in-Intervention, Appellee,
vs.
JAMES L. WIMBERLY, et al., Defendants-Appellants.
COURT OF APPEALS OF NEW MEXICO
1994-NMCA-121, 118 N.M. 627, 884 P.2d 518
APPEAL FROM THE DISTRICT COURT OF
LINCOLN COUNTY. Richard A. Parsons, District Judge
Certiorari not Applied for
Tom Udall, Attorney General, Roberta D.
Joe, Assistant Attorney General, Santa Fe, New Mexico, Attorneys for
Plaintiff-in-Intervention-Appellee.
S. Thomas Overstreet, Overstreet &
Lane, P.C., Alamogordo, New Mexico, Attorneys for Defendant-Appellant.
{1} Defendant James L.
Wimberly appeals from a district court order holding him in contempt of court
for refusing to comply with a prior judgment. Wimberly raises several issues on
appeal: (1) whether the district court erred in finding him in contempt of court
because he had done everything within his means to satisfy the judgment; (2)
whether the district court's order holding him in contempt exceeded its
jurisdiction because the court required him to satisfy the State to purge
himself of contempt; and (3) whether the automatic stay applicable in
bankruptcy proceedings filed by Alto Land & Cattle Co. (Alto) stayed the
proceedings against Wimberly individually. There was substantial evidence that
Wimberly was in willful non-compliance with the judgment; the district court
did not exceed its jurisdiction; and the automatic stay filed by Alto did not
stay the proceedings against Wimberly individually. Therefore, we affirm.
{2} In 1985, the Lincoln
County Board of Commissioners (County) filed a complaint for injunctive relief
and mandamus against Alto and Wimberly for violating the New Mexico
{*629} Subdivision Act (Act) and the county
subdivision regulations. In 1987, the attorney general filed a motion to
intervene as a plaintiff-in-intervention against Alto and Wimberly. The
attorney general's motion to intervene was granted, and in 1988 the County's
complaint was dismissed with prejudice. Following a bench trial, the district
court concluded that Alto and Wimberly were in violation of both the Act and
the county subdivision regulations. In 1989, the court ordered Alto and
Wimberly to comply with the Act and the county subdivision regulations; the
court also ordered them to take specific steps to commence compliance with
respect to all property they had previously sold or now held.
{3} On appeal, this Court
affirmed in part, reversed in part, and remanded with instructions to enter an
amended order.
See State ex rel. Stratton v. Alto Land & Cattle Co.,
113 N.M. 276, 277,
824 P.2d 1078, 1079 (Ct. App. 1991). We concluded that
several specific requirements of the order were premature and that the order
should impose only those requirements which are "necessary to put the
board in a position to consider and act upon a proposed plat."
Id.
at 284, 824 P.2d at 1086. We noted that "certain portions of the first
paragraph of the order are not appropriate subjects of injunctive relief at
this time, because no plat has as yet been submitted, and the board has not yet
acted."
Id. at 287, 824 P.2d at 1089.
{4} On April 21, 1993, the
district court entered a judgment on the mandate which Alto and Wimberly
appealed. This Court assigned the case to the summary calendar and proposed
summary reversal in part and summary affirmance in part. In our second calendar
notice, we proposed to rule that the district court could have compelled Alto
and Wimberly to prepare a certified plat acknowledged in accordance with the
Act and to submit it with the information the Board of County Commissioners
required. We also proposed to hold that Alto and Wimberly were required to
comply with the regulations in effect at the time the parcels were sold.
Neither side responded to the second calendar notice, and the appeal was disposed
of in a memorandum opinion noting that fact and relying on the reasoning of the
two calendar notices.
See SCRA 1986, 12-210(D) (Repl. 1992) (Effective
August 1, 1992).
{5} Following the second
appeal, the district court again entered a judgment on the mandate from this
Court. This order, entered in 1993, compelled Alto and Wimberly to prepare a
certified plat in compliance with the state and county regulations in effect
when each parcel was sold "to the extent that those laws relate to the
submission of the plat." Alto and Wimberly were also ordered to have the
plat acknowledged in accordance with the Act and submitted to the Lincoln
County Commissioners for board approval no later than sixty days after the
entry of judgment. The judgment further stated that failure to comply with its
requirements would trigger SCRA 1986, 1-070 (Repl. 1992), entitling the State
to obtain an entry of a money judgment and/or issuance of a writ of attachment
to cover the costs of performance by a person appointed by the court. The
language of the judgment on mandate closely follows the language used by this
Court in its calendar notices proposing summary disposition of the second
appeal.
{6} The Attorney General
filed a motion for an order to show cause why Alto and Wimberly should not be
held in contempt for failure to comply with the 1993 judgment on mandate, why
writs of attachment should not issue against their property, and why judgment
should not be entered against them. On September 13, 1993, Alto filed for
bankruptcy in federal district court and filed a notice of automatic stay with
the state district court on September 17. The state district court held a
hearing on September 20 on the order to show cause. At that hearing, the State
indicated it was not seeking relief against Alto, but only against Wimberly.
The court found that Wimberly and Alto were separate parties, that the former
was familiar with the terms of the 1993 judgment on mandate, and that he had
"made no effort whatsoever to comply with [it]." At the close of the
hearing the court orally held Wimberly in contempt of court. The court
provided, however, that execution would not issue until October 20, 1993
"in order to enable James L. Wimberly to purge himself of contempt by
complying with or making arrangements satisfactory to
{*630}
the State and Lincoln County to comply with the terms of the Judgment on
Mandate." On November 1 the court filed a written order holding Wimberly
in contempt of court.
{7} Wimberly urges this Court
to reverse the contempt charge because (a) he was not in willful noncompliance,
and (b) he lacked the financial means to comply. Second, he argues that the
district court exceeded its jurisdiction. Third, he argues that the automatic
stay, of which Alto notified the court prior to the September 20 hearing,
deprived the court of the authority to hold him in contempt. We address his
jurisdictional argument first.
{8} Wimberly contends that
the district court exceeded its jurisdiction by ordering him to make
arrangements satisfactory to the State and Lincoln County to purge himself of
contempt. He argues that since this Court's memorandum opinion disposing of the
second appeal required revisions in the prior judgment on mandate, the district
court exceeded that mandate by referring to the State's satisfaction with the
plat. In support, Wimberly cites cases holding that the district court has
authority only over those matters remanded by the mandate.
E.g., Vinton
Eppsco Inc. v. Showe Homes, Inc., 97 N.M. 225,
638 P.2d 1070 (1981).
However, this Court, in reaching its initial decision to remand following the
first appeal, noted that "the conduct the state might compel at this stage
includes the preparation of a certified plat, its acknowledgement in accordance
with the Act, and submission to the board for approval with information
required by the board."
Alto Land & Cattle Co., 113 N.M. at
285, 824 P.2d at 1087. In remanding after the second appeal, we relied on
similar language in the calendar notices. The 1993 judgment on the mandate
scrupulously followed that language. The district court's order after the
September 20, 1993 hearing is not inconsistent with either mandate. The
district court did not exceed the mandate of this Court.
See Genuine Parts
Co. v. Garcia, 92 N.M. 57, 60,
582 P.2d 1270, 1273 (Ct. App. 1978).
{9} Wimberly argues that the
automatic stay applicable to Alto's bankruptcy proceedings "would in
effect apply to Wimberly because Wimberly would be in contempt of the
bankruptcy court by taking control, possession or exercising control over the
property that was before the bankruptcy proceeding . . . ." He asserts
that as an individual he would be violating Section 362(a)(3) and (4) "by
engaging in surveying, title work and in general exercising control over the
property by filing a plat."
See 11 U.S.C. § 362(a)(3), (4) (1988);
see
also Hillis Motors, Inc. v. Hawaii Auto. Dealers' Ass'n, 997 F.2d 581, 586
(9th Cir. 1993).
{10} Section 362(a)(3) and
(4) provide as follows:
(a) Except as provided in subsection (b) of this
section, a petition filed under section 301, 302, or 303 of this title, or an
application filed under section 5(a)(3) of the Securities Investor Protection
Act of 1970 (15 U.S.C.S. 78eee(a)(3)), operates as a stay, applicable to all
entities, of--
(3) any act to obtain possession of property of the estate or
of property from the estate or to exercise control over property of the estate;
(4) any act to create, perfect, or enforce any lien against
property of the estate[.]
{11} "A principal
purpose of [Section 362 (a) (3) is to preserve property for use in the
reorganization of the debtor and to prevent the dismemberment of the
estate."
Hillis Motors, Inc., 997 F.2d at 586. Wimberly presented
no evidence at the hearing in support of his claim that the actions the
district court had ordered him to take would affect the bankruptcy court's
control of Alto's property. Absent such evidence, we cannot be certain that the
court order required Wimberly to create a lien against or otherwise exercise
control over Alto's property. Under these circumstances, we think the State has
the right to proceed to enforce its judgment against Wimberly individually.
{12} The State has argued
that the automatic stay "does not operate as a stay of the enforcement
{*631} of a judgment, other than a money
judgment, obtained in an action or proceeding by a governmental unit to enforce
such governmental unit's police or regulatory power."
See 11 U.S.C.
§ 362(b)(4), (5);
see also In re Timberon Water Co., 114 N.M. 154, 159,
836 P.2d 73, 78 (1992). We recognize there appears to be debate among federal
courts regarding the applicability of the statutory provision on which the
State relies.
Compare Cournoyer v. Town of Lincoln, 790 F.2d 971, 975
(1st Cir. 1986) (applying provision)
with Hillis Motors, Inc., 997 F.2d
at 590-91 (refusing to apply provision)
and In re Goodwin, 163 Bankr.
825, 828 (Bankr. D. Idaho 1993) (same). That is, courts disagree as to whether
Section 362(b)(4) and (5) provide an exception to Section 362(a)(3) or (4).
See
In re Goodwin, 163 Bankr. at 828. We need not resolve that issue here,
however.
{13} The automatic stay
statute does not control actions brought against non-debtor entities, even
where there is a close nexus between those non-debtors and their bankruptcy
affiliates.
In re Winer, 158 Bankr. 736, 743 (Bankr. N.D. Ill. 1993).
This includes situations where the non-debtor is a corporation wholly owned by
the debtor.
Id.
The protection of this stay is personal to the debtor
and does not extend to those jointly liable with the debtor. As to actions
against those entities, this stay is not effective. Also, it does not extend to
separate legal entities such as corporate affiliates, partners in debtor
partnerships, or to codefendants in pending litigation. [Footnote omitted.]
1 Collier Bankruptcy Manual P 362.03, at 362-15
(Lawrence P. King, Editor-in-Chief, 3d ed. 1994). "It has been a cardinal
principle of bankruptcy law from the beginning that its effects do not normally
benefit those who have not themselves 'come into' the bankruptcy court with
their liabilities and all their assets." In re Venture
Properties, Inc., 37 Bankr. 175, 177 (Bankr. D.N.H. 1984).
{14} We conclude that
Wimberly failed to show that the automatic stay provisions contained in
Sections 362(a)(3) and (4) apply to the present proceeding. He has shown no
other basis that would preclude the court's authority. "Courts will
examine the substance of an action, and not its form, to determine whether the
action is stayed under subsection (a) . . . ."
In re Goodwin, 163
Bankr. at 827. The State has proceeded against Wimberly individually, and the
stay relating to Alto therefore does not apply.
{15} The elements necessary
for a finding of civil contempt are (1) knowledge of the court's order; (2) an
ability to comply; and (3) willful noncompliance with the order.
Rhinehart
v. Nowlin, 111 N.M. 319, 326,
805 P.2d 88, 95 (Ct. App. 1990);
Dial v.
Dial, 103 N.M. 133, 136,
703 P.2d 910, 913 (Ct. App. 1985). When reviewing
a charge of civil contempt, the action of the trial court will not be disturbed
absent an abuse of discretion.
Local 890 of Int'l Union of Mine, Mill &
Smelter Workers v. New Jersey Zinc Co., 58 N.M. 416, 422,
272 P.2d 322, 326
(1954). The burden of proof in a civil contempt case is the preponderance of
the evidence.
Greer v. Johnson, 83 N.M. 334, 335,
491 P.2d 1145, 1146
(1971). "The credibility of the witnesses and the weight to be given the
evidence is for the trier of the facts."
Id. at 336, 491 P.2d at
1147.
{16} Wimberly challenges the
district court's finding that he "made no effort whatsoever to comply with
the Judgment on Mandate." Wimberly concedes that he had knowledge of the
order, but he argues that he did everything within his means to comply with the
judgment on mandate, and any failure to comply was a result of financial
inability to do so rather than willful noncompliance. We first address his
challenge to the court's finding.
{17} The district court
refused to admit into evidence any of Wimberly's actions to comply occurring
prior to the issuance of the 1993 judgment on mandate. The actions Wimberly
wished to have submitted into evidence included preparation of a list of
property owners who would have to sign the plat, acquisition of estimates on
the preparation and presentation of a certified plat and cost for road
construction, and placement on the agenda of the Planning and Zoning Commission
of Lincoln County. All of these actions
{*632}
occurred prior to the Court of Appeals memorandum opinion disposing of the
second appeal. In fact, the actions occurred between 1989 and 1992 with no
further follow-up after May 1992. The mandates from this Court contemplated
subsequent action by Wimberly. In 1993 the district court ordered appropriate
subsequent action. Wimberly neither appealed nor sought clarification. In fact,
the district court gave Wimberly an option to meet with the County Clerk to set
up a plan for compliance with the order in lieu of presenting the completed
plat, and Wimberly did not arrange for a meeting. That fact alone defeats Wimberly's
claim that he did everything within his means to comply with the order. Under
these circumstances, the district court did not err in refusing to find
sufficient compliance to quash the order, which is the gist of the challenged
finding.
{18} Next, Wimberly argues
that he is not in contempt of the judgment on mandate because he is financially
unable to comply.
See Dial, 103 N.M. at 137, 703 P.2d at 914 (inability
to pay is a defense to a contempt proceeding). In
Dial, the only
evidence that the defendant presented to prove his inability to pay was his
affidavit attached to a motion requesting that his testimony be taken by
telephone because of "'severe financial and business
considerations.'"
Id. at 137-38, 703 P.2d at 914-15;
see Nelson
v. Nelson, 82 N.M. 324, 327,
481 P.2d 403, 406 (1971). Based on this
evidence, we held that the defendant failed to prove an inability to pay. In
this case, Wimberly was afforded an opportunity to meet his burden at the
hearing on the order to show cause. He proffered his uncontroverted testimony
that filing a certified plat would cost between $ 50,000 and $ 75,000, a $
975,000 personal judgment is pending against him, his business interests have a
negative net worth, and he could not borrow any money. However, he also testified
that he owns four companies, one of which is the parent company and owner of
the condominiums where he and his wife live and are salaried managers. He did
not present any testimony regarding his personal cash flow, earnings versus
liabilities, and the equity of his corporations. Furthermore, the record is
void of any suggestion that Wimberly tried to borrow money or that he even
tried to get a plat. Based on Wimberly's unsubstantiated testimony, the
district court did not abuse its discretion.
See Nelson, 82 N.M. at 327,
481 P.2d at 406 ("inasmuch as [the defendant] carried the burden of proof,
the court's refusal to find his inability to pay is deemed an adverse finding
on that issue.").
{19} We hold that the
district court did not err in finding Wimberly in contempt of court and did not
exceed its jurisdiction. We also hold that the automatic stay applicable to
proceedings against Alto does not apply to this contempt proceeding against
Wimberly. For the foregoing reasons, we affirm the order of the district court.
PAMELA B. MINZNER, Chief Judge