"This exception is intended to allow governmental units to sue a debtor `to prevent or stop violation of fraud, environmental protection, consumer protection, safety, or similar police or regulatory laws, or attempting to fix damages for violation of such a law....'" In re Dunbar, 235 B.R. 465, 471 (9th Cir. BAP 1999), aff'd, 245 F.3d 1058 (9th Cir.2001), quoting, House and Senate Reports (Reform Act of 1978) (H.Rep. No. 595, 95th Cong., 1st Sess. 343 (1977); S.Rep. No. 989, 95th Cong., 2d Sess. 52 (1978)). The police power exception must be narrowly construed and is only meant to apply to actions that further public health and safety.
" This exception is intended to allow governmental units to sue a debtor ‘ to prevent or stop violation of fraud, environmental protection, consumer protection, safety, or similar police or regulatory laws, or attempting to fix damages for violation of such a law....’ " In re Dunbar, 235 B.R. 465, 471 (9th Cir. BAP 1999), aff'd, 245 F.3d 1058 (9th Cir.2001), quoting, House and Senate Reports (Reform Act of 1978) (H.Rep. No. 595, 95th Cong., 1st Sess. 343 (1977); S.Rep. No. 989, 95th Cong., 2d Sess. 52 (1978)). The police power exception must be narrowly construed and is only meant to apply to actions that further public health and safety.
See id.; In re Dunbar, 235 B.R. 465, 471 (B.A.P. 9th Cir. 1999); In re Charter First Mortgage, Inc., 42 B.R. 380, 382 (Bankr. D. Or. 1984). This test requires courts to distinguish between a police and regulatory enforcement action and an attempt by a governmental unit to collect money damages that do not arise from an exercise of a governmental unit's police or regulatory power.
The Code provides certain exceptions to the automatic stay, which are read narrowly. In re Dunbar, 235 B.R. 465, 470 (9th Cir. BAP 1999), aff'd, 245 F.3d 1058 2001 WL 322158 (9th Cir. April 4, 2001). Section 362(b)(4) provides an exception for certain governmental police and regulatory actions.
05[5][b] (16th ed. 1999). See also In re Dunbar, 235 B.R. 465, 469 (9th Cir. BAP 1999) (relying on prior case law to interpret new section 362(b)(4)). With respect to the issues now before this Court, the result under the former Code sections or the present Code sections would be the same. Because the Bankruptcy Code does not define the term "police or regulatory power," courts have looked to the legislative history of § 362(b)(4) for guidance.
"This exception is intended to allow governmental units to sue a debtor `to prevent or stop violation of fraud, environmental protection, consumer protection, safety, or similar police or regulatory laws, or attempting to fix damages for violation of such a law . . . `House and Senate Reports (Reform Act of 1978) (H.Rep. No. 595, 95th Cong., 1st Sess. 343 (1977); S.Rep. No. 989, 95th Cong., 2d Sess. 52 (1978)). See In re Dunbar, 235 B.R. 465, 471 (9th Cir. BAP 1999), aff'd, 245 F.3d 1058 (9th Cir. 2001). To assess whether a state's administrative actions are within the scope of the police powers exception, the Ninth Circuit has identified two tests: the pecuniary purpose and the public policy tests.
An appeal from a bankruptcy court's order granting or denying injunctive relief is reviewed for abuse of discretion. In re Dunbar, 235 B.R. 465, 470 (B.A.P. 9th Cir. 1999) (citing Graham v. Teledyne-Continental Motors, a Div. of Teledyne Indies., Inc., 805 F.2d 1386, 1388 (9th Cir. 1986)). Under the abuse of discretion standard, the reviewing court must have a firm conviction that the court below committed a clear error of judgment in the conclusion it reached before reversal is proper.
An appeal from a bankruptcy court's order granting or denying injunctive relief is reviewed for abuse of discretion. In re Dunbar, 235 B.R. 465, 470 (9th Cir. BAP 1999) (citing Graham v. Teledyne-Continental Motors, a Div. of Teledyne Indus., Inc., 805 F.2d 1386, 1388 (9th Cir.1986)). Under the abuse of discretion standard, the reviewing court must have a firm conviction that the court below committed a clear error of judgment in the conclusion it reached before reversal is proper.
E.g., In re Dunbar, 235 B.R. 465, 475 (B.A.P. 9th Cir. 1999); In re Poule, 91 B.R. at 87; In re Charter First, 42 B.R. at 384-85. According to First Alliance, courts in Massachusetts and Illinois determined that the actions of those states against First Alliance fell within the exception except in so far as they sought restitution.
E.g., In re Dunbar, 235 B.R. 465, 475 (9th Cir. BAP 1999); In re Poule, 91 B.R. at 87; In re Charter First, 42 B.R. at 384-85. According to First Alliance, courts in Massachusetts and Illinois determined that the actions of those states against First Alliance fell within the exception except in so far as they sought restitution.