Chicago v. Fulton (19-357)
argument 19-357Chicago v. Fulton
Supreme Court of the United States
1h 21m
8 speakers
8 chapters
transcribed 5 days ago
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Transcript
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What is the core legal issue presented in Chicago v. Fulton?
We'll hear argument next in case nineteen three fifty seven, City of Chicago versus Fulton. Mr Goldblatt.
Mr Chief Justice, and may it please the court. This case presents the question whether the bankruptcy codes automatic stay requires a creditor in lawful possession of a state property when a bankruptcy petition is filed to return that property to the debtor immediately or else pay damages. It does not. The automatic state freezes the state of affairs as of the bankruptcy filing by enjoining creditors from taking post petition acts to improve their position vis a visa debt. As this court has repeatedly observed, the automatic state's purpose is to preserve the status quo. It does not require creditors to turn over property lawfully in their possessions. An entirely separate provision of the code, the turnover provision, addresses that situation.
But unlike the automatic stay, the turnover provision does not operate as an injunction or mandate the payment of damages if property is not immediately turned over. The turnover provision contains a number of statutory exceptions and defenses. For example, a creditor is not required to turn over an asset if the debtor cannot provide adequate protection for the creditor's interest in the asset. A creditor that contends in good faith that an asset is not subject to turnover is entitled to judicial process to resolve that dispute without owing damages if the debtor ultimately prepares. Respondents' contrary argument fails for multiple reasons. First, reading the automatic state to require turnover contravenes the ordinary meaning of the term stay, which is status quo preservant.
Second, it would render the actual turnover provision superfluous and would nullify the statutory exceptions and defences to turnover. Finally, no one contends that the Automatic Stay imposed a turnover duty before the nineteen eighty four amendment that added the words exercise control. Reading that amendment to the Automatic Stay to effect a sea change in turnover practice violates this court's repeated admonition that changes to the bankruptcy code should not be read to disrupt established practice absent an indication that Congress so intended.
Uh counsel, y you agree that you're exercising control over the car. Your argument is simply that exercising control is not an action, right?
Mr. Chief Justice, we d we don't intend to um our position doesn't turn on fine distinction between action and inaction. Our fundamental position is that the entire frat statutory phrase, act to exercise control, is a prohibition on actions that change the status quo. And because what we did preserved the status quo. It is not inconsistent with the command of the automatic step.
So we should understand that I understood your brief to put a different emphasis on it. We should understand that you're covered by subsection three because you're in are engaged in an action.
Y Your Honor. Um we we think that the question here about whether or not this is or isn't an act um recalls the discussion in Your Honor's opinion in NFIB, in which y you correctly observe that drawing the distinction between action and inaction at the extremes devolves into the work of of metaphysical philosophy. And just like you observe the commerce clause does not require a court to engage in such an analysis, we think the same is true of the bankruptcy code. We think that that as long as nothing is happening well just
if I could could just interrupt. Once the dairy asks you to give back the car That resolves this metaphysical debate, right? You make the action at that point to decide either to return it or not, correct?
Y your Honor, we we we we Our our fundamental position is that the the work of the automatic stay, as long as we're preserving the status quo. um is not violated. Now it is true that the debtor there is a mechanism in the bankruptcy code by which the debtor can get back the car. That's the turnover provision. And the debtor can initiate the uh Justice Thomas
Uh you do agree though, council, that um that uh the code um would prevent you from even though you do have control
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Chapters
8 chapters
1
What is the core legal issue presented in Chicago v. Fulton?
0:00–10:43
2
How does the automatic stay under § 362 A‑3 preserve the status quo?
10:43–20:55
3
What role does the turnover provision (§ 542) play in returning property to the estate?
20:55–31:37
4
When does holding property count as an “act to exercise control” under the bankruptcy code?
31:37–40:24
5
How do the parties illustrate the dispute with real‑world examples like impounded cars?
40:24–52:17
6
What are the policy arguments about debtor rehabilitation versus creditor leverage?
52:17–1:01:25
7
How do the Justices’ questions clarify the interaction between §§ 362 A‑3, 363 E and § 542?
1:01:25–1:11:01
8
What is the final position on whether the Seventh Circuit’s interpretation should be affirmed?
1:11:01–1:21:36