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SUPREME COURT OF THE UNITED STATES
CITY OF CHICAGO, ILLINOIS, PETITIONER v. ROBBIN L. FULTON, et al.
on writ of certiorari to the united states court docket of appeals for the seventh circuit
[January 14, 2021]
Justice Alito brought the opinion of the Court.
When a debtor files a petition for bankruptcy, the Bankruptcy Code protects the debtor’s hobbies by way of enforcing an automatic live on efforts to acquire prepetition money owed outside the financial ruin discussion board. Ritzen Group, Inc. v. Jackson Masonry, LLC, 589 U. S. ___, ___–___ (2020) (slip op., at 6–7). Those prohibited efforts include “any act . . . to exercising control over property” of the financial ruin estate.
11 U. S. C. §362(a)(three). The query in this situation is whether or not an entity violates that prohibition by way of retaining ownership of a debtor’s assets after a financial ruin petition is filed. We maintain that mere retention of property does now not violate §362(a)(3).
Under the Bankruptcy Code, the submitting of a bankruptcy petition has certain instant outcomes. For one element, a petition “creates an estate” that, with some exceptions, incorporates “all legal or equitable interests of the debtor in assets as of the commencement of the case.” §541(a)(1). Section 541 “is meant to encompass within the estate any property made available to the property through other provisions of the Bankruptcy Code.” United States v. Whiting Pools, Inc.,
462 U.S. 198, 205 (1983). One such provision, §542, is critical for gift functions. Titled “Turnover of property to the property,” §542 offers, with just a few exceptions, that an entity (aside from a custodian) in possession of assets of the bankruptcy property “shall supply to the trustee, and account for” that assets.
A 2nd automatic consequence of the submitting of a financial disaster petition is that, with positive exceptions, the petition “operates as a stay, applicable to all entities,” of efforts to gather from the debtor outside of the financial disaster forum. §362(a). The automated live serves the debtor’s pursuits with the aid of shielding the estate from dismemberment, and it additionally benefits lenders as a set via preventing individual creditors from pursuing their own pastimes to the detriment of the others. Under the Code, an individual injured by means of any willful violation of the stay “shall get better real damages, together with prices and legal professionals’ fees, and in suitable situations, might also recover punitive damages.” §362(ok)(1).
Among the numerous series efforts prohibited by using the stay is “any act to acquire possession of belongings of the property or of assets from the estate or to exercising manipulate over belongings of the estate.” §362(a)(three) (emphasis brought). The prohibition in opposition to workout manage over property property is the issue of the existing dispute.
In the case earlier than us, the metropolis of Chicago (City) impounded each respondent’s automobile for failure to pay fines for motor vehicle infractions. Each respondent filed a Chapter thirteen financial ruin petition and requested that the City return his or her car. The City refused, and in every case a bankruptcy courtroom held that the City’s refusal violated the automated stay. The Court of Appeals affirmed all of the judgments in a consolidated opinion. In re Fulton, 926 F.3d 916 (CA7 2019). The court concluded that “by way of keeping ownership of the debtors’ vehicles when they declared financial ruin,” the City had acted “to exercising manipulate over” respondents’ property in violation of §362(a)(three). Id., at 924–925. We granted certiorari to remedy a break up within the Courts of Appeals over whether an entity that keeps ownership of the property of a financial disaster estate violates §362(a)(3). 589 U. S. ___ (2019). We now vacate the judgment under.
The language utilized in §362(a)(3) shows that simply retaining possession of property property does now not violate the automatic live. Under that provision, the submitting of a financial disaster petition operates as a “live” of “any act” to “workout control” over the belongings of the estate. Taken together, the maximum herbal studying of those phrases—“stay,” “act,” and “exercise control”—is that §362(a)(3) prohibits affirmative acts that might disturb the repute quo of property assets as of the time when the financial disaster petition was filed.
Taking the provision’s operative words in turn, the term “live” is generally used to explain an order that “suspend[s] judicial alteration of the reputation quo.” Nken v. Holder,
556 U.S. 418, 429 (2009) (brackets in authentic; inner quotation marks omitted). An “act” is “[s]omething executed or completed . . . ; a deed.” Black’s Law Dictionary 30 (11th ed. 2019); see additionally Webster’s New International Dictionary 25 (2nd ed. 1934) (“that that's accomplished,” “the workout of energy,” “a deed”). To “workout” inside the feel applicable here approach “to carry into play” or “make effective in movement.” Webster’s Third New International Dictionary 795 (1993). And to “exercising” some thing like control is “to install exercise or perform in motion.” Webster’s New International Dictionary, at 892. The inspiration conveyed by means of the aggregate of these terms is that §362(a)(three) halts any affirmative act that might adjust the fame quo as of the time of the filing of a financial disaster petition.
We do not maintain that those phrases definitively rule out the alternative interpretation followed by using the court docket beneath and endorsed by respondents. As respondents factor out, omissions can qualify as “acts” in certain contexts, and the term “ ‘manipulate’ ” can suggest “ ‘to have energy over.’ ” Thompson v. General Motors Acceptance Corp., 566 F.3d 699, 702 (CA7 2009) (quoting Merriam-Webster’s Collegiate Dictionary 272 (11th ed. 2003)). But pronouncing that a person engages in an “act” to “exercising” his or her power over a aspect communicates extra than merely “having” that energy. Thus the language of §362(a)(3) implies that some thing more than simply keeping strength is required to violate the disputed provision.
Any ambiguity inside the text of §362(a)(3) is resolved decidedly in the City’s favor by using the existence of a separate provision, §542, that expressly governs the turnover of estate belongings. Section 542(a), with two exceptions, offers as follows:
“[A]n entity, other than a custodian, in possession, custody, or control, during the case, of assets that the trustee may use, sell, or lease underneath segment 363 of this title, or that the debtor might also exempt below section 522 of this title, shall deliver to the trustee, and account for, such property or the fee of such assets, except such assets is of inconsequential value or gain to the estate.”
The exceptions to §542(a) shield (1) transfers of estate belongings crafted from one entity to every other in accurate religion with out note or information of the financial disaster petition and (2) exact-faith transfers to satisfy positive life insurance duties. See §§542(c), (d). Reading §362(a)(three) to cowl mere retention of belongings, as respondents endorse, would create at the least two severe troubles.
First, it might render the critical command of §542 in large part superfluous. “The canon against surplusage is most powerful while an interpretation might render superfluous some other a part of the equal statutory scheme.” Yates v. United States,
574 U.S. 528, 543 (2015) (plurality opinion; inner quotation marks and brackets omitted). Reading “any act . . . to exercise manage” in §362(a)(three) to include simply retaining ownership of a debtor’s belongings would make that section a blanket turnover provision. But as cited, §542 expressly governs “[t]urnover of property to the property,” and subsection (a) describes the wide variety of property that an entity “shall supply to the trustee.” That mandate might be surplusage if §362(a)(three) already required an entity affirmatively to relinquish manipulate of the debtor’s property in the mean time a financial disaster petition is filed.
Respondents and their amici contend that §542(a) could still perform a few work by means of specifying the birthday celebration to whom the assets in question need to be became over and by using requiring that an entity “account for . . . the cost of ” the debtor’s belongings if the assets is damaged or misplaced. But that could be a small amount of labor for a large quantity of textual content in a section that looks to be the Code provision this is designed to govern the turnover of estate belongings. Under this alternative interpretation, §362(a)(three), not §542, would be the leader provision governing turnover—despite the fact that §362(a)(three) says nothing expressly on that question. And §542 would be decreased to a footnote—although it seems on its face to be the governing provision. The higher account of the 2 provisions is that §362(a)(three) prohibits collection efforts out of doors the bankruptcy intending that would change the repute quo, at the same time as §542(a) works within the bankruptcy procedure to attract a ways-flung estate belongings lower back into the palms of the debtor or trustee.
Second, respondents’ studying could render the instructions of §362(a)(three) and §542 contradictory. Section 542 carves out exceptions to the turnover command, and §542(a) by means of its terms does not mandate turnover of assets that is “of inconsequential price or benefit to the estate.” Under respondents’ studying, in instances in which the ones exceptions to turnover under §542 might practice, §362(a)(3) could command turnover all of the same. But it would be “an extraordinary creation” of §362(a)(three) to require a creditor to do immediately what §542 specially excuses. Citizens Bank of Md. v. Strumpf,
516 U.S. 16, 20 (1995). Respondents would have us resolve the conflicting instructions by means of engrafting §542’s exceptions onto §362(a)(three), but there is no textual foundation for doing so.
The history of the Bankruptcy Code confirms what its textual content and shape convey. Both §362(a)(3) and §542(a) were blanketed in the unique Bankruptcy Code in 1978. See Bankruptcy Reform Act of 1978,
2595. At the time, §362(a)(3) applied the stay most effective to “any act to reap ownership of property of the property or of property from the property.” Id., at 2570. The word “or to workout manipulate over belongings of the estate” turned into not added till 1984. Bankruptcy Amendments and Federal Judgeship Act of 1984,
Respondents do no longer seriously dispute that §362(a)(three) imposed no turnover responsibility previous to the 1984 amendment. But transforming the stay in §362 into an affirmative turnover obligation would have constituted an crucial exchange. And it might had been atypical for Congress to accomplish that alternate by way of virtually adding the phrase “exercising control,” a phrase that doesn't certainly recognize the mere retention of assets and that does not admit of the exceptions set out in §542. Had Congress wanted to make §362(a)(3) an enforcement arm of types for §542(a), the least one might assume would be a pass-connection with the latter provision, but Congress did not encompass any such cross- reference or offer every other indication that it was reworking §362(a)(3). The better account of the statutory records is that the 1984 change, by adding the phrase regarding the workout of control, surely prolonged the live to acts that would change the popularity quo with admire to intangible assets and acts that would exchange the reputation quo with appreciate to tangible assets without “achieve[ing]” such property.
* * *
Though the parties debate the difficulty at a few period, we want not determine how the turnover duty in §542 operates. Nor do we settle the which means of different subsections of §362(a). We hold best that mere retention of estate property after the filing of a financial ruin petition does no longer violate §362(a)(3) of the Bankruptcy Code. The judgment of the Court of Appeals is vacated, and the case is remanded for similarly proceedings regular with this opinion.
It is so ordered.
Justice Barrett took no element within the consideration or choice of this situation.