Billy Dampier, Jr. v. United States Bankruptcy Court for the District of Colorado
16-20
| 10th Cir. BAP | Apr 11, 2017Background
- Dampier pleaded guilty to state criminal theft; the Colorado court ordered restitution totaling $196,691 as part of his sentence.
- After sentencing, Dampier filed Chapter 7 bankruptcy; victims (Credit Investments, Inc. and Medical Lien Management, Inc.) objected to discharge under 11 U.S.C. § 523(a)(2)(A), (a)(4), (a)(6), and (a)(7).
- Dampier admitted the conviction and the restitution order but disputed that the restitution was a nondischargeable “fine, penalty, or forfeiture payable to and for the benefit of a governmental unit” under § 523(a)(7).
- Bankruptcy Court granted summary judgment holding the restitution nondischargeable under § 523(a)(7) and dismissed the other claims without prejudice; Dampier appealed.
- The Bankruptcy Appellate Panel reviewed de novo and affirmed, concluding Kelly v. Robinson and Tenth Circuit precedent control and place restitution imposed as part of a criminal sentence within § 523(a)(7).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether criminal restitution ordered as part of a state sentence is nondischargeable under 11 U.S.C. § 523(a)(7) | Dampier: Colorado restitution statute defines restitution as compensation for actual pecuniary loss, so it falls outside § 523(a)(7)’s "fine, penalty, or forfeiture payable to and for the benefit of a governmental unit" | Appellees: Restitution here is imposed as part of a criminal sentence, serving penal and rehabilitative state interests, so § 523(a)(7) applies | The panel affirmed: restitution imposed as part of a criminal sentence is nondischargeable under § 523(a)(7), per Kelly and Troff |
| Whether differences in Colorado law (restitution payable to victims / civil judgment aspects) change the § 523(a)(7) analysis | Dampier: Colorado’s scheme makes restitution effectively compensation payable to victims, so discharge should be allowed | Appellees: Collection and control by the State and the penal/rehabilitative purpose make it § 523(a)(7) debt | The court held Colorado statutory features do not overcome Kelly/Troff; state penal interests control |
| Whether the Bankruptcy Court erred by dismissing other claims without prejudice after granting § 523(a)(7) relief | Dampier: Dismissal without prejudice could preclude refiling if § 523(a)(7) ruling reversed | Appellees: Dismissal was appropriate given summary judgment result | Moot: Affirmance of § 523(a)(7) ruling rendered the dismissal issue moot |
| Whether the appeal was frivolous so as to warrant appellate attorney fees under Fed. R. Bankr. P. 8020 | Appellees: Appeal is frivolous and fees warranted | Dampier: Had arguable grounds based on statutory text and Colorado law | Denied: Appeal not frivolous; arguments had at least some merit |
Key Cases Cited
- Kelly v. Robinson, 479 U.S. 36 (holding restitution imposed as part of a state criminal sentence is nondischargeable under § 523(a)(7))
- Troff v. Utah (In re Troff), 488 F.3d 1237 (10th Cir.) (applying Kelly; restitution ordered in criminal sentencing is nondischargeable even if later reduced to a civil judgment)
- Gaylor v. United States, 74 F.3d 214 (10th Cir. 1996) (noting lower courts treat Supreme Court dicta as binding for stare decisis purposes)