DECISION AND ORDER GRANTING RELIEF FROM AUTOMATIC STAY
WILLIAM A. CLARK, Bankruptcy Judge.
This matter is before the court upon the motion of the State of Ohio to obtain relief from the automatic stay provisions of 11 U.S.C. § 362. This court has jurisdiction pursuant to 28 U.S.C. § 1334 and the referral to this court by the standing order of reference in this district. This matter is a core proceeding under 28 U.S.C. § 157(b)(2)(G).
The basic facts, which were uncontroverted by the debtor at the hearing for relief from stay, are contained in Movant's motion:
1) An action is presently pending in the Court of Common Pleas, Greene County, Ohio in which movant is the plaintiff and the debtor is one of the defendants.
2) Said action was brought to obtain a permanent injunction, civil penalties, attorneys' fees, investigative costs, and consumer restitution based on federal and state odometer rollback and disclosure laws and Ohio's Consumer Sales Practices Act.
The issue before the court is whether the state law suit falls within an exception to the automatic stay, thereby permitting the State of Ohio to proceed with its litigation.
CONCLUSIONS OF LAW
Upon the filing of a petition in bankruptcy, Section 362 of the Bankruptcy Code imposes an automatic stay upon judicial proceedings as well as other proceedings and acts to recover and enforce claims against a debtor and the bankruptcy estate. 11 U.S.C. § 362(a). Section 362 also enumerates certain exceptions to the operation of the automatic stay which are contained in 11 U.S.C. § 362(b). Of importance to the instant proceeding is the statutory exception for the commencement or continuation of an action or proceeding by a governmental unit against the debtor to enforce such governmental unit's police or regulatory power. 11 U.S.C. § 362(b)(4). In addition Section 362(b)(5) permits "the enforcement 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."
Not all proceedings by a state are excepted from the automatic stay and Congress has indicated the types of actions it envisioned as qualifying for the exception:
The debtor does not dispute that the State of Ohio is seeking to enforce its police or regulatory power or that the relevant state laws are for consumer protection. Nor does she contend that the state should not be permitted to proceed in state court with respect to injunctive relief. She does, however, assert that the automatic stay prevents the state from seeking a judgment for damages in state court. In light of the legislative history, set out above, this court is unable to agree with the debtor's position.
The pecuniary purpose test has its origin in remarks made by Rep. Don Edwards during the debates on the Bankruptcy Reform Act. The remarks suggest a limitation on Section 362(b)(4):
The courts are not in agreement, however, as to the weight to be accorded these remarks, i.e. whether the remarks amplify the earlier legislative history of Section 362(b)(4) as contained in the Committee Reports, conflict with the earlier legislative history, or do no more than state the problem to be resolved by the courts. See, e.g., Penn Terra Ltd. v. Dept. of Environmental Resources, 733 F.2d 267, 274 (3rd Cir. 1984); CPI Crude, Inc. v. U.S. Dept. of Energy, 77 B.R. 320, 322 (D.D.C. 1987); Organized Maintenance, Inc. v. Ford (In re Organized Maintenance, Inc.), 47 B.R. 791, 795 (Bankr.E.D.N.Y. 1985). As a result, conflicting decisions have been reached.
Because of the request for damages by the State of Ohio, there is certainly a pecuniary component to the state court proceedings. Nevertheless, this court is of the opinion that the automatic stay is not applicable for the reasons put forth by the court in CPI Crude:
The second test used by courts in deciding the applicability of Section 362(b)(4) is the "public policy test" which "distinguishes between proceedings that effectuate public policy and those that adjudicate private rights: only the former are excepted from the automatic stay." N.L.R.B. v. Edward Cooper Painting, Inc, supra, 804 F.2d, at 942 (quoting In re Herr, 28 B.R. at 468). Although the State of Ohio's state law suit would benefit specific individuals, it also acts to vindicate the public interest in preventing deception through odometer tampering. Therefore, when the State of Ohio sues to enforce its state statutes with respect to odometer tampering, it seeks to stop a harm to the public. The state is not functioning simply as a vehicle for conducting litigation on behalf of private parties and its actions are exempt from the automatic stay. See E.E.O.C. v. Rath Packing Co., 787 F.2d 318 (8th Cir.1986). Similarly, in the case of backpay owed by a debtor to its former employees, the Sixth Circuit has found that a proceeding to fix the amount of wages and an entry of a money judgment in that amount is excepted from the automatic stay pursuant to Section 362(b)(4). N.L.R.B. v. Edward Cooper Painting, Inc., supra, 804 F.2d, at 943.
Counsel for the State of Ohio requested advice as to whether the state is always required to file a motion for relief from stay to continue an action under the Ohio Consumer Sales Practices Act. The facts and circumstances of each case will determine the answer. Certainly such a motion is not always required. However, in the instant case the motion was the prudent and most prompt method of determining whether the state could proceed in the state court. The matter could have been litigated by the debtor suing to enforce the automatic stay or for a violation of stay under 11 U.S.C. § 362. An action by the debtor would be out of the control of the state agency and would require more time for process and resolution in the bankruptcy court. In this case the choice by the State of Ohio to move for relief from the stay was the more expeditious way to resolve the matter so that the state court may proceed with the action.
Although the State of Ohio will be permitted to proceed to judgment in this matter, it is obviously not permitted to enforce any money judgment it may obtain against the debtor. 11 U.S.C. § 362(b)(5). For the foregoing reasons it is hereby ORDERED that the State of Ohio is granted relief from the automatic stay to proceed with its action against the debtor in state court.