PHH Mortgage Corporation v. Mark Anthony Guthrie

When a debt is discharged in bankruptcy, the bankruptcy court issues a discharge order that “operates as an injunction against” efforts by a creditor to collect that debt. 11 U.S.C. § 524(a)(2)-(3). The bankruptcy court enforces its discharge injunction using the contempt power. And this Court has held that there can be no civil contempt of a discharge injunction where there is a “‘fair ground of doubt as to whether the creditor’s conduct might be lawful under the discharge order.” Taggart v. Lorenzen, 139 S. Ct. 1795, 1801, 1804 (2019). Three circuits have long held that the Code preempts state-law claims premised on alleged collection efforts by a creditor in violation of the discharge injunction, given bankruptcy’s uniquely federal character, its insistence upon uniformity, and the bankruptcy court’s authority to remedy any violations of its own orders through contempt. In the decision below, the Fourth Circuit broke from that consensus and held that such state-law claims are not preempted, even when they would impose liability without regard to the “fair ground of doubt” standard and award relief not available in the bankruptcy court. The question presented is as follows: Whether the Bankruptcy Code preempts state-law claims premised on alleged efforts to collect a debt in violation of the bankruptcy court’s discharge injunction.