                            File Name: 11a0872n.06
                 NOT RECOMMENDED FOR FULL-TEXT PUBLICATION

                                         No. 10-3654                                   FILED
                            UNITED STATES COURT OF APPEALS                        Dec 21, 2011
                                 FOR THE SIXTH CIRCUIT                      LEONARD GREEN, Clerk


In re: JAMES ALLEN MICHALSKI, JR.,                     )
                                                       )       ON APPEAL FROM THE
        Debtor.                                        )       BANKRUPTCY
----------------------------------                     )       APPELLATE PANEL FOR
                                                       )       THE SIXTH CIRCUIT
                                                       )
JAMES ALLEN MICHALSKI, JR.,
                                                       )
                                                       )
        Appellant,                                     )
                                                       )
v.                                                     )
                                                       )
CHARLES COULSON, Lake County Prosecuting               )
Attorney,                                              )
                                                       )
        Appellee.                                      )
                                                       )



Before: GUY, KETHLEDGE, and WHITE, Circuit Judges.

        HELENE N. WHITE, Circuit Judge. Appellant James Michalski (“Michalski”) appeals

the decisions of the Bankruptcy Court for the Northern District of Ohio (“Bankruptcy Court”) and

the Bankruptcy Appellate Panel for the Sixth Circuit (“BAP”) denying his request for damages for

a prosecution assertedly in violation of the Bankruptcy Code. See 11 U.S.C. § 362(k). We

AFFIRM.

                                               I.
       In December 2006, Michalski, the sole owner of a carpet store in Madison, Ohio, issued a

check to vendor Michael Sherman in the amount of $500.00 that was returned for insufficient funds.

Michalski also issued two checks to Jerry Balzas in the amounts of $1,000.00 and $1,010.00 that

were returned for insufficient funds. The Madison Village Police Department issued Michalski a

ten-day notice to make the Sherman check good, as did Jerry Balzas’s attorney with respect to the

Balzas checks. Michalski did not make the checks good; instead he filed a petition for voluntary

Chapter 7 bankruptcy on September 28, 2007, which listed Sherman and Balzas as creditors. On

October 30, 2007, three criminal complaints were filed in the Painesville Municipal Court based on

Michalski’s bad checks to Sherman and Balzas. Michalski waived a preliminary hearing and the

matter was bound over to the Lake County Court of Common Pleas on January 29, 2008.

       Michalski was discharged from bankruptcy on February 1, 2008 and the final decree of

bankruptcy issued on June 16, 2008. Neither Sherman nor Balzas filed objections to the discharge.

In the interim, on May 30, 2008, the Lake County Prosecutor’s Office (“LCPO”) dismissed the three

cases bound over from the Painesville Municipal Court.

       Subsequently, on April 13, 2009, the LCPO brought a secret indictment based on the same

three bad checks. On June 1, 2009, Michalski filed a motion to reopen his bankruptcy case. In the

motion, Michalski requested an injunction to prohibit the LCPO from proceeding with the criminal

prosecution on the ground that such prosecution violated the automatic stay and discharge injunction.

Michalski also requested that the LCPO, Sherman and Balzas be held in civil contempt for these

violations and be required to pay damages. The Bankruptcy Court determined the LCPO had neither

violated the automatic stay nor the discharge injunction and denied Michalski’s injunctive and

                                                -2-
contempt claims on July 23, 2009. The Bankruptcy Court did not address the issue of damages and

Michalski admits he had not incurred any damages at the time of the Bankruptcy Court’s decision.

       Michalski filed a Notice of Appeal to the BAP on August 3, 2009. The LCPO filed a nolle

prosequi on October 5, 2009, which effectively dismissed the charges against Michalski. The LCPO

then moved to dismiss Michalski’s appeal on the ground that it was moot. Although the BAP agreed

that Michalski’s injunction claim was moot, it found Michalski could still seek damages for the

contempt claim. The BAP denied Mickalski’s appeal on the merits on May 3, 2010.

                                                 II.

                                                 A.

       When a bankruptcy court decision has been appealed to the BAP, this Court directly reviews

the bankruptcy court’s findings of facts for clear error and conclusions of law de novo. In re Behlke,

358 F.3d 429, 433 (6th Cir. 2004).1

       Pursuant to 11 U.S.C. § 362, upon the filing of a bankruptcy petition an automatic stay is

entered that prohibits actions to recover pre-petition debts. However, the protections of the

automatic stay do not apply to “the commencement or continuation of a criminal action or

proceeding against the debtor.” 11 U.S.C. § 362(b)(1). Courts are divided over whether § 362(b)(1)

operates as an absolute exception to the protections of the automatic stay or whether this provision

is inapplicable when the primary motivation of the criminal proceeding is to collect a pre-petition

debt. Compare In re Dovell, 311 B.R. 492, 494 (Bankr. S.D. Ohio 2004) (“The exception to the



       1
         The parties filed a joint stipulation of facts below, which the Bankruptcy Court incorporated
in its opinion.
                                                    -3-
automatic stay set forth in 11 U.S.C. § 362(b)(1) is inapplicable where the criminal proceeding is

initiated for the purpose of collecting a debt.”), with In re Bartel, 404 B.R. 584, 590 (B.A.P. 1st Cir.

2009) (“[A] criminal proceeding is not subject to the automatic stay, even where it relates to debt

collection or where the debtor alleges that the state is proceeding in bad faith.”). This Circuit has

not yet addressed the issue and we need not do so here because it is clear the LCPO did not violate

the automatic stay when it brought the second indictment against Michalski on April 13, 2009. The

automatic stay was lifted upon Michalski’s discharge from bankruptcy on February 1, 2008, and was

supplanted by the order of discharge. See 11 U.S.C. § 362(c)(2)(C). Accordingly, the LCPO could

not have violated the automatic stay when it initiated criminal proceedings against Michalski over

one year later.

        Although Michalski explicitly requests damages based only on the April 13, 2009

indictment, he implicitly suggests that the indictment should be viewed as a continuation of the 2007

criminal action, which was commenced while the automatic stay was still in effect. However, even

under this scenario Michalski would not be entitled to relief. The only evidence Michalski presented

to demonstrate the LCPO initiated criminal proceedings against him to collect the outstanding debts

was the LCPO’s request for restitution in the amount of $2,500, approximately the same amount as

the bad checks. Although the LCPO sought restitution, it declined Michalski’s offer to pay the bad

checks in exchange for dismissal of the criminal charges. Based on the record, there is insufficient

evidence to support Michalski’s contention that the LCPO’s underlying motive for prosecuting him

was debt collection. Thus, whether we follow the line of reasoning that the automatic stay does not




                                                 -4-
apply to criminal proceedings or that the automatic stay applies to criminal proceedings initiated

primarily to collect a debt, the LCPO did not violate the automatic stay.



                                               B.

       Upon Michalski’s discharge from bankruptcy, the automatic stay lifted and an injunction

entered to prohibit any act “to collect, recover or offset any such debt as a personal liability of the

debtor[.]” 11 U.S.C. § 524(a)(2).2 However, “[t]he mere fact that a debt has been discharged in

bankruptcy does not preclude a criminal action from proceeding based on the debtor’s alleged

criminal conduct in relation to the debt.” In re Daulton, 966 F.2d 1025, 1028 (6th Cir. 1992).

       Michalski does not contend that the LCPO lacks authority to prosecute individuals who write

bad checks. That Michalski filed a bankruptcy petition after he wrote the bad checks would not

render his pre-petition conduct any less criminal. While Michalski does claim that the prosecution

was a ruse to collect a debt, in violation of the discharge injunction, the LCPO sought permission

from the Bankruptcy Court to continue the criminal proceedings even if restitution was not an

available penalty. The record does not support Michalski’s claim. Accordingly, we AFFIRM the

decisions of the Bankruptcy Court and the BAP.




       2
        Although Michalski seeks damages for the LCPO’s purported violation of the discharge
injunction under 11 U.S.C. § 362(k), that provision applies solely to automatic stay violations.
However, a debtor may recover damages for a violation of the discharge injunction in a contempt
action. See In re Motichko, 395 B.R. 25, 29-30 (Bankr. N.D. Ohio 2008).

                                                 -5-
