NORTHERN DISTRICT OF CALIFORNIA
PAUL and VEDA GARSKE, No. 98-13427
VEDA GARSKE, et al.,
v. A.P. No. 00-1139
ARCADIA FINANCIAL, LTD.,
Memorandum on Motion for Reconsideration
On November 4, 2000, this court issued a written decision that there is a private right of action
for violation of the bankruptcy discharge injunction provided by § 524 of the Bankruptcy Code. The
court noted that several other courts had addressed the issue, so that it was neither necessary nor
appropriate for this court to re-invent the wheel. Rather, its first task was to determine whether binding
authority has addressed the issue. Malone v. Norwest Financial California, Inc.
, 245 B.R. 389, 395
(E.D.Cal. 2000). In this district, Judge Conti's decision in Rogers v. Nationscredit Financial Services
, 233 B.R. 98 (N.D.Cal. 1999) appeared binding and dispositive, so the court followed it.
On December 7, 2000, the Bankruptcy Appellate Panel published its decision in In re Bassett
B.R. - (9th
Cir. BAP 2000). The court in Bassett
carefully considered the issue, noted that Rogers
a minority position, and concluded that there is no private right of action under § 524. Defendant
Arcadia Financial, Ltd., has moved the court for reconsideration based on Bassett
Both sides framed the issue on reconsideration to be the effect of the doctrine of stare decisis
Arcadia argues that the court should not defer to the district court decision in Rogers because it was not
an appellate decision. Plaintiff Garske argues that the court must follow Rogers
because it is an Article
III court decision, and therefore must be preferred over the rule of the Article I judges of the Appellate
Panel. The court finds neither argument persuasive.
Without digressing into the dispute over the binding effect of district court decisions, the court
sees no basis for disregarding a published district court decision just because it was issued as a trial
court and not while sitting as an appellate court. It is the decision of a higher court, no matter how
rendered. Unless there is a compelling reason, bankruptcy courts should not create conflicts of law. In
, 214 B.R. 1, 9 (9th
Cir. BAP 1997); In re Berg
, 188 B.R. 615, 620 (9th
Cir. BAP 1995). If
were the only word on the issue in this district, the court would follow it without regard to
whether it was made as a trial court or an appellate court.
On the other hand, the court sees no merit to the argument that district court decisions are
entitled to more deference than appellate panel decisions because of district courts are Article III courts.
Both courts have equal power to review bankruptcy court decisions. Both courts are subject to review
by the Court of Appeals. There is no meaningful basis for the bankruptcy court to give more weight to
either court's decisions.
It is not unusual in the world of jurisprudence for a lower court to be faced with the conflicting
decisions of two appellate courts of equal jurisdiction. As this court has previously noted, in such cases
the court exercising inferior jurisdiction can and must make a choice between the conflicting decisions.
In re Donaldson
, 156 B.R. 51, 54 (Bkrtcy.N.D.Cal.1993), citing Auto Equity Sales, Inc. v. Superior
, 57 Cal.2d 450, 456, 20 Cal.Rptr. 321, 369 P.2d 937 (1962).
After considering the reasoning of both cases, the court believes that the better view is that of
the Appellate Panel. If there is a private right of action for violation of § 524, then the court has no
discretion to forgive minor or innocent violation of a debtor's discharge rights, and its traditional
equitable powers to fashion an appropriate remedy are curtailed. Congress has never expressed an
intent to deprive bankruptcy courts of this discretion. Contempt proceedings have been considered an
appropriate method of enforcing the discharge for over a century. The court accordingly elects to
. Insofar as its prior ruling is inconsistent with Bassett, Arcadia's motion for
reconsideration will be granted. Counsel for Arcadia shall submit an appropriate form of order.
Dated: January 18, 2001 ___________________________