1999 #28 Herbst 11-16-99

IN RE DEAN HERBST, Chapter 12; Bankr. No. 91-40279

The matter before the Court is Debtor's Motion for Order Directing Clerk of Court to Discharge Judgments Discharged in Bankruptcy and the letter-response filed by CorInsurance. This is a core proceeding under 28 U.S.C. § 157(b)(2). This letter decision and accompanying Order shall constitute the Court's findings and conclusions under F.R.Bankr.P. 7052. As set forth below, the Court concludes that Debtor's Motion must be denied.

Summary of material facts. On April 12, 1991, Dean Herbst ("Debtor") filed a Chapter 12 petition. Livestock Insurance Services was not listed as a creditor. Livestock Insurance Services was not served with a copy of the notice of commencement of case.

Livestock Insurance Services obtained a judgment against Dean Herbst for $606.04 plus costs. The judgment was entered May 3, 1991.

A plan of reorganization was confirmed August 26, 1992. Livestock Insurance Services was not included as a creditor in Debtor's plan. It also did not receive notice that a plan had been proposed or confirmed.

Debtor filed some motions to modify his confirmed plan. None addressed any pre-petition claim by Livestock Insurance Services. Debtor filed his final report and account on November 4, 1997. Livestock Insurance Services was not given notice of the report.

Debtor's discharge was entered December 5, 1997. The case trustee filed his final report on December 10, 1997. His report did not acknowledge any payments to Livestock Insurance Services. The case was closed a month later.

On October 8, 1999, Debtor filed a motion seeking the discharge of the 1991 judgment held by Livestock Insurance Services. On October 15, 1999, Livestock Insurance Services, now known as CorInsurance, filed an objection. It stated it was owed, as of November 1, 1999, $1,193.87 plus accruing daily interest.

Applicable law. In a Chapter 12 case, a discharge of debts affects "all debts provided for by the plan." 11 U.S.C. § 1228(a). Under § 524(a)(1) of the Bankruptcy Code, the discharge order also voids any judgment which represents a discharged claim.

Section 15-16-20 of the South Dakota Code establishes the procedure for removing a judgment from the records of a county clerk of courts. Once a bankruptcy debtor receives a discharge of debts in bankruptcy, he must file a motion before the Bankruptcy Court and get an order that lists each judgment to be discharged. When the clerk of courts receives that order, she must indicate on her records that the judgment is deemed discharged or satisfied.

Discussion. In this case, Livestock Insurance Service's claim was not "provided for" by Debtor's confirmed plan. Therefore, it was not discharged. Under § 524(a), the judgment also was not discharged. Debtor thus has no grounds to seek to have Livestock Insurance Service's judgment voided under S.D.C.L. § 15-16-20. His motion must be denied. The debt to Livestock Insurance Service survives this Chapter 12 bankruptcy proceeding intact.

It is true that Livestock Insurance Services's judgment was entered while the automatic stay was in place. However, it does not appear that Livestock Insurance Services had notice of the bankruptcy case. Also, the underlying debt was not discharged or would not be discharged even if the judgment were voided. Further, a motion to void the judgment as one taken in violation of the automatic stay is not before the Court. Accordingly, on the present record, the Court can find no basis for voiding this judgment. See LaBarge v. Vierkant (In re Vierkant), ___ B.R.___, 1999 WL 989132 (B.A.P. 8^th Cir. Nov. 2, 1999)(though Court of Appeals for the Eighth Circuit has not ruled on the issue, the Bankruptcy Appellate Panel concluded a judgment on a former employee's retaliatory discharge claim that violated the automatic stay should be deemed void).

An order consistent with this letter decision shall be entered.