A Pennsylvania appellate court upheld revocation of the license of a bankrupt dealership that had been convicted of theft charges.
The Commonwealth Court of Pennsylvania unanimously rejected the dealer's challenge to the revocation.
According to the court, Harry Pappas, the owner and president of Krystal Jeep-Eagle Inc. in Gettys-burg, Pa., had been charged personally with misdemeanor criminal offenses for theft by deception and theft by failing to forward sales-tax revenue to the state.
After Krystal filed a bankruptcy petition, the bankruptcy trustee negotiated a plea agreement under which the dealership was substituted for Pappas as the criminal defendant. Krystal pleaded no contest to the charges, which has the same legal effect as a conviction, and paid a $4,500 fine.
Pappas contended that he objected to the no-contest plea, the court noted, 'insisting he wanted his day in court to clear his name.'
In 1995, the trustee liquidated the dealership's assets, including its Jeep-Eagle new-vehicle franchise agreement, but kept the lot and dealer license. The plan was to sell used vehicles on the site.
However, the state used the criminal conviction as the basis to revoke Krystal's dealer license.
The appellate court upheld that action, ruling that the Vehicle Manufacturers, Dealers and Sales-persons Board had authority to revoke the license while the bankruptcy proceedings were under way. It also found sufficient evidence that the dealership had committed acts of 'moral turpitude.'
Government agencies can enforce police or regulatory powers, including professional licensing programs, during a bankruptcy, appellate Judge Emil Narick said for the three-member panel.
Thomas Blackburn, counsel to the vehicle board, said the decision's biggest impact will be felt in bankruptcy cases where a dealership wants to reorganize and continue in operation.
'It recognizes that (government) actions involving licenses are not stayed' - blocked - while bankruptcy proceedings are pending, Blackburn said. 'We're authorized to operate for the protection of the public.'
Krystal's lawyers referred questions to Pappas, who did not return the calls.