Searcy v. Ada County Prosecuting Attorney's Office (In Re Searcy)Searcy v. Ada County Prosecuting Attorney's Office (In Re Searcy)
CONCLUSION
Because the bankruptcy court lacked subject matter jurisdiction to hear Cawley‘s motion to determine his claims, we affirm the bankruptcy court‘s order denying Cawley‘s motion.5
Barryngton Eugene Searcy, appellant pro se, on brief.
Before: DUNN, JURY, and MARKELL, Bankruptcy Judges.
DUNN, Bankruptcy Judge.
The appellant Barryngton Eugene Searcy (“Mr. Searcy“) appeals the bankruptcy court‘s Memorandum of Decision (“Memorandum Decision“) and Order determining that attorney‘s fees and costs in the total amount of $13,172.00, awarded by the Idaho state District Court and Court of Appeals against Mr. Searcy and in favor of the appellee Ada County Prosecuting Attorney‘s Office (“Ada County“), are excepted from Mr. Searcy‘s discharge in bankruptcy under
Factual Background
The essential facts in this appeal are not in dispute. The following factual narrative is derived from the statement of facts set forth by the bankruptcy court in the Memorandum Decision, supplemented from the Excerpts of Record filed by Ada County and the bankruptcy court‘s electronic docket for adversary proceeding no. 09-06082-TLM.2
Mr. Searcy is a prisoner serving a fixed life sentence in the custody of the Idaho Department of Corrections. On June 14, 2006, while incarcerated, Mr. Searcy filed a civil complaint in the Ada County District Court (“District Court“) against, among others, Ada County and several of its employees (collectively, the “Ada County Defendants“). Mr. Searcy‘s complaint, as amended, alleged claims for negligence and intentional infliction of emotional distress and sought a declaratory judgment that the Ada County Defendants had violated his rights.
On March 17, 2007, the District Court dismissed two of Mr. Searcy‘s claims pursuant to
Mr. Searcy appealed the District Court‘s dismissal and summary judgment orders. In August 2008, the Idaho Court of Appeals (“Court of Appeals“) affirmed the District Court‘s orders and concluded that the District Court‘s award of attorney‘s fees to the Ada County Defendants was proper under
On February 5, 2009, Mr. Searcy filed a petition for relief under chapter 7. Mr. Searcy disclosed the two awards of attorney‘s fees and costs in his schedules as claims. Mr. Searcy received his discharge on May 12, 2009.
On October 8, 2009, Ada County filed an adversary proceeding complaint (“Com-
The Complaint was tried on October 27, 2010. Mr. Searcy stipulated to the amounts of the District Court‘s judgment for attorney‘s fees and the Court of Appeals’ order awarding attorney‘s fees and costs, as well as to the admission as evidence of the District Court‘s judgment and the Court of Appeals’ order.
After hearing argument, the bankruptcy court took the matter under advisement. On January 12, 2011, the bankruptcy court issued its Memorandum Decision concluding that the attorney‘s fees and costs awarded to Ada County by the District Court and the Court of Appeals against Mr. Searcy were excepted from his discharge under
Jurisdiction
The bankruptcy court had jurisdiction under
Issue
Did the bankruptcy court err in concluding that Ada County‘s claims for attorney‘s fees and costs were excepted from Mr. Searcy‘s discharge?
Standard of Review
We review a bankruptcy court‘s legal conclusions, including its interpretation of the Bankruptcy Code and state laws, de novo. Roberts v. Erhard (In re Roberts), 331 B.R. 876, 880 (9th Cir. BAP 2005), aff‘d, 241 Fed.Appx. 420 (9th Cir.2007); B-Real, LLC v. Chaussee (In re Chaussee), 399 B.R. 225, 229 (9th Cir. BAP 2008).
Discussion
A. Exceptions to Discharge Generally and § 523(a)(7) in Particular
Section 523(a)(7) provides an exception to discharge for a debt “to the extent such debt is for a fine, penalty, or forfeiture payable to and for the benefit of a governmental unit, and is not compensation for actual pecuniary loss,....” There are three requirements for a debt to be excepted from discharge under
While Mr. Searcy does not dispute that Ada County is a governmental unit for purposes of the
1. Awards of Attorney‘s Fees and Costs under Idaho Code § 31-3220A(16) are Penalties
We agree with Mr. Searcy that the statutory exceptions to discharge generally are to be construed strictly in favor of the debtor and against those seeking to except debts from the debtor‘s discharge. See, e.g., Snoke v. Riso (In re Riso), 978 F.2d 1151, 1154 (9th Cir.1992). In inter-
The starting point in discerning congressional intent is the existing statutory text, see Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 438, 119 S.Ct. 755, 142 L.Ed.2d 881 (1999).... It is well established that “when the statute‘s language is plain, the sole function of the court—at least where the disposition required by the text is not absurd—is to enforce it according to its terms.” Lamie v. United States Trustee, 540 U.S. 526, 534, 124 S.Ct. 1023, 157 L.Ed.2d 1024 (2004) (citations omitted).
However, where statutory language is ambiguous, courts need to look beyond the specific language of the subject statute to the context in which that language is used and to relevant legislative history, if it exists. “[W]hether a statute is ambiguous is determined by reference to the language itself, the specific context in which that language is used, and the broader context of the statute as a whole.” Hough v. Fry (In re Hough), 239 B.R. 412, 414 (9th Cir.BAP1999) (quoting Robinson v. Shell Oil Co., 519 U.S. 337, 341, 117 S.Ct. 843, 136 L.Ed.2d 808 (1997)).
Interpretation of
In this appeal, the question is whether the
The court shall award reasonable costs and attorney‘s fees to the defendant or respondent if the court finds that:
(a) Any allegation in the prisoner‘s affidavit is false;
(b) The action or any part of the action is frivolous or malicious; or
(c) The action or any part of the action is dismissed for failure to state a claim upon which relief can be granted.
As noted in the statement of Factual Background above, the District Court dismissed two of Mr. Searcy‘s claims as frivo-
By its terms, awards of attorney‘s fees and costs against prisoners under
The purpose of this legislation is to place prison and jail inmates on an equal footing with other civil law litigants concerning claims against the state and counties. Under current law, there are no disincentives for the filing of frivolous claims by inmates. While preserving the right of inmates to file meritorious claims, this legislation imposes financial costs and consequences upon inmates who file frivolous claims and subject the Idaho taxpayers to literally millions of dollars in defense costs. (Emphasis added.)
It is true, as argued by Mr. Searcy and as noted by the bankruptcy court, that the terms “fine,” “penalty” and “forfeiture” are not found in
The language of
We conclude that
2. Awards of Attorney‘s Fees and Costs under Idaho Code § 31-3220A(16) are not Dischargeable as “Compensation for Actual Pecuniary Loss”
Mr. Searcy further argues that awards under
Requiring non-indigent prisoners to pay normal filing fees and costs would increase court revenues. Subjecting prisoner assets to execution would increase cost recovery by the state and local governments.
However, we disagree with Mr. Searcy that cost reimbursement is the essence or primary function of
Returning to the Supreme Court‘s decision in Kelly v. Robinson, the court recognized the differences between the restitution condition to probation considered in that case and traditional fines and penalties. “Unlike traditional fines, restitution is forwarded to the victim, and may be calculated by reference to the amount of harm the offender has caused.” Kelly v. Robinson, 479 U.S. at 51-52, 107 S.Ct. 353. However, the Supreme Court concluded that the compensatory aspect of restitution was incidental to the primary purposes served by the restitution remedy in the criminal justice context.
The criminal justice system is not operated primarily for the benefit of victims, but for the benefit of society as a whole. Thus, it is concerned not only with punishing the offender, but also with rehabilitating him. Although restitution does resemble a judgment “for the benefit of” the victim, the context in which it is imposed undermines that conclusion. The victim has no control over the amount of restitution awarded or over the decision to award restitution. Moreover, the decision to impose restitution generally does not turn on the victim‘s injury, but on the penal goals of the State and the situation of the defendant. Id. at 52, 107 S.Ct. 353. Accordingly, the Supreme Court determined that the compensatory aspects of the criminal restitution remedy did not remove it from the
The Ninth Circuit has considered this issue in State Bar of California v. Taggart (In re Taggart), 249 F.3d 987 (9th Cir. 2001), and State Bar of California v. Findley (In re Findley), 593 F.3d 1048 (9th Cir.2010).
The Taggart decision turned on the Ninth Circuit‘s interpretation of two statutes under the then-current version of the California Business and Professions Code (“BPC“). BPC § 6086.10 characterized attorney‘s fees imposed for reimbursement of expenses in attorney disciplinary proceedings as “costs.” Taggart, 249 F.3d at 992. However, BPC § 6086.13 authorized the California Supreme Court to award additional “monetary sanctions” in such proceedings. Id. at 991-92. The Ninth Circuit held that the structure of the BPC along with its legislative history indicated that “costs” were not fines or penalties. Id. at 994. The Ninth Circuit noted specifically that all indications were that California did not consider the assessment of costs in the subject context as penal in nature. Id. Accordingly, the costs of the chapter 7 debtor‘s attorney disciplinary
In response to the Taggart decision, the California legislature amended BPC § 6086.10 to add a new subsection (e) that states:
In addition to other monetary sanctions as may be ordered by the Supreme Court pursuant to Section 6086.13, costs imposed pursuant to this section are penalties, payable to and for the benefit of the State Bar of California, a public corporation created pursuant to Article VI of the California Constitution, to promote rehabilitation and to protect the public. This subdivision is declaratory of existing law.
When the Taggart analysis was next considered by the Ninth Circuit in Findley, the court determined that the Taggart decision had been undermined for several reasons: First, the addition of subsection (e) to the statute clarified the legislative intent “to promote rehabilitation and to protect the public,’ rather than to provide compensation.” In re Findley, 593 F.3d at 1052-53. Second, the distinction between “costs” and “sanctions” was eliminated by the California legislature‘s designating attorney disciplinary costs as “penalties” imposed “[i]n addition to other monetary sanctions.” Id. at 1053 (citing Taggart, 249 F.3d at 991-93). Finally, the draftsman of the amended version of BPC § 6086.10, stated in a declaration submitted for the record that:
Section 6086.10(e) was added to the California [BPC] to expressly clarify and restate the intent of the California Legislature that disciplinary costs are monetary sanctions and are a part of the punishment imposed on California lawyers for professional misconduct by making him or her pay for part of the costs of the proceeding.
593 F.3d at 1053 (emphasis added). The Ninth Circuit recognized that even as revised, BPC 6086.10 retained provisions indicating a compensatory purpose. “Section 6086.10 costs continue to reimburse the State Bar for ‘actual expenses’ and ‘reasonable costs’ and depend on state expenditures for their imposition.” Id. Nevertheless, the Ninth Circuit determined that the overriding penal and rehabilitative functions of the amended version of BPC § 6086.10 precluded discharge in bankruptcy of costs imposed under BPC § 6086.10 pursuant to
Consistent with the Ninth Circuit‘s rationale in Findley, a number of other courts have concluded that even where a debt is intended to help defray government expenses, including attorney‘s fees, it may not be dischargeable if the primary purpose for its imposition is penal. See, e.g., United States Dept. of Hous. & Urban Dev. v. Cost Control Mktg. & Sales Mgmt. of Va., Inc., 64 F.3d 920, 928 (4th Cir. 1995); Thompson v. Commonwealth of Virginia (In re Thompson), 16 F.3d 576, 580-81 (4th Cir.1994); In re Zarzynski, 771 F.2d 304, 306 (7th Cir.1985); In re Jensen, 395 B.R. at 487-88.
As noted above, by its terms and consistent with its stated purpose to discourage the filing of frivolous litigation by Idaho prison inmates,
B. § 523(a)(17)
Mr. Searcy further appeals the bankruptcy court‘s determination that his debt to Ada County was excepted from his discharge under
Conclusion
For the foregoing reasons, we AFFIRM.
DUNN, Bankruptcy Judge