Dobrek v. Phelan

• Citation: 419 F.3d 259
• Decision Date: 17 August 2005
• Docket Number: No. 04-3391.,04-3391.
• Parties: Thomas L. DOBREK, Appellant v. Donald F. PHELAN, Individually for Damages and in His Official Capacity as Clerk of the Superior Court of the State of New Jersey for Prospective Relief.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

419 F.3d 259

Thomas L. DOBREK, Appellant v. Donald F. PHELAN, Individually for Damages and in His Official Capacity as Clerk of the Superior Court of the State of New Jersey for Prospective Relief.

No. 04-3391.

United States Court of Appeals, Third Circuit.

Argued March 31, 2005.

Filed August 17, 2005.

Joseph M. Pinto (Argued), Joseph F. Polino, P.C., Moorestown, NJ, for Appellant.

Tracy E. Richardson (Argued), Office of Attorney General of New Jersey, Division of Law, Trenton, NJ, for Appellee.

Before ALITO, SMITH, and FISHER, Circuit Judges.

OPINION OF THE COURT

FISHER, Circuit Judge.

This case presents the issue of whether the debts of a commercial bail bondsman are excepted from discharge, i.e., non-dischargeable, in a Chapter 7 bankruptcy proceeding under 11 U.S.C. § 523(a)(7). Though this precise issue is one of first impression in the Circuit, in In re Gi Nam, 273 F.3d 281 (3d Cir.2001), we considered the related issue of whether the bail bond debts of an individual family member acting as a surety are excepted from discharge under § 523(a)(7). Relying on the plain meaning of the statute, the purpose and context of Pennsylvania's bail forfeiture laws, and public policy considerations, we determined in Gi Nam that such bail bond debts are non-dischargeable. Because we are persuaded by the reasoning of Gi Nam and the soundness of its expanded application to commercial bondsmen in New Jersey, we will affirm the judgment of the District Court.

I. FACTS

New Jersey courts permit individuals and companies to post bail bonds for criminal defendants in return for a fee. See Capital Bonding Corp. v. N.J. Supreme Court, 127 F.Supp.2d 582, 584 (D.N.J.2001) (explaining this system). Once the bondsman posts bail for an accused, it becomes the bondsman's responsibility to produce the defendant for required court proceedings. See id. If the defendant fails to appear, then the bail posted is "forfeited," and the bondsman becomes responsible for the amount of bail or for ensuring that the fugitive defendant is captured and brought to court. Id. The bondsman's obligation to satisfy bail in this circumstance may be underwritten by insurance companies licensed to do business in New Jersey. Id.

Appellant Thomas Dobrek ("Dobrek") is an insurance representative licensed to write bail bonds in New Jersey. Prior to filing a Chapter 7 bankruptcy petition in the United States Bankruptcy Court for the District of New Jersey, Dobrek was, at different times, an authorized agent of various commercial surety companies. In connection with this work, Dobrek was listed on the New Jersey Bail Registry ("Bail Registry"), a list of insurance producers and limited insurance representatives licensed to write bail bonds in New Jersey. See Capital Bonding Corp., 127 F.Supp.2d at 584. Individuals who are not listed on the Bail Registry cannot engage in the business of writing bonds in that state.¹

As an agent who executed bail bonds on behalf of surety companies, Dobrek, like all other such agents in New Jersey, was responsible for the contractual default of these companies in the event that a defendant failed to appear in court, at least to the extent of being precluded from writing additional bonds until the bail forfeiture judgments were satisfied. In re Preclusion of Brice, 366 N.J.Super. 519, 841 A.2d 927, 929 (App.Div.2004). In other words, in instances where defendants failed to appear, judgment was entered against both the commercial sureties and Dobrek, as the signer of the bail bond. See id. As a result, Dobrek was jointly bound to pay to the court any amount of money specified in a court order setting bail where a defendant failed to appear at any required court proceedings. See id.

Dobrek filed his Chapter 7 bankruptcy petition on October 29, 2002. On January 25, 2003, he received a discharge from the Bankruptcy Court, relieving him of all debts which arose before that date pursuant to 11 U.S.C. § 727.²

New Jersey Court Rule 1:13-3(e)(2) requires the removal of any bail agents, agencies, guarantors, and other persons or entities authorized to administer or manage an insurer's bail bond business from the Bail Registry for failure to satisfy a judgment. N.J. R. 1:13-3(e)(2).³ Consequently, on January 29, 2003, Dobrek's name was removed from the Bail Registry due to accumulated bail forfeitures resulting from bails in which Dobrek had been the producer for corporate sureties. As a result, Dobrek could not continue to write bail bonds in New Jersey.

On January 27, 2004, Dobrek commenced this action in the United States District Court for the District of New Jersey. The Defendant in the matter, Donald Phelan ("Phelan"), is the Clerk of the Superior Court for the State of New Jersey and is responsible for maintaining the Bail Registry. The crux of Dobrek's Complaint is that he was wrongfully removed from the Bail Registry because his bail bond debts were discharged in bankruptcy pursuant to 11 U.S.C. § 727. Dobrek's Complaint specifically alleges that Phelan (i) willfully or otherwise violated the discharge injunction pursuant to 11 U.S.C. § 524(a) and the protections against discriminatory treatment of debtors afforded under 11 U.S.C. § 525(a) by refusing to reinstate Dobrek's name to the Bail Registry and attempting to force him to pay discharged debts; (ii) violated 42 U.S.C. § 1983 by depriving Dobrek of his rights, privileges, and immunities secured by the Constitution and Federal statutes of the United States, specifically the Supremacy Clause and the Bankruptcy Clause of the United States Constitution and 11 U.S.C. § 524(a) and 11 U.S.C. § 525(a); and (iii) intentionally or negligently inflicted emotional distress upon Dobrek.

On May 14, 2004, Phelan filed a Motion to Dismiss. Dobrek responded to that motion and filed a Cross Motion for Partial Summary Judgment on June 10, 2004. On August 4, 2004, the District Court found that Dobrek's bail bond debts were not discharged pursuant to § 523(a)(7), and accordingly, granted Phelan's Motion to Dismiss and denied Dobrek's Cross Motion for Partial Summary Judgment. Dobrek filed a timely notice of appeal on August 16, 2004. Before this Court, Dobrek alleges that the District Court erred in its determination that these debts were excepted from discharge in bankruptcy pursuant to § 523(a)(7). More generally, he argues that the indebtedness of an individual bail bondsman on a defaulted bail bond written as an agent for a corporate surety is dischargeable under Chapter 7 of the Bankruptcy Code.

II. STANDARD OF REVIEW

This Court exercises plenary review over the District Court's grant of a motion to dismiss for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6). Alston v. Parker, 363 F.3d 229, 232-33 (3d Cir.2004) (citing Nami v. Fauver, 82 F.3d 63, 65 (3d Cir.1996)). The Court must take all factual allegations and reasonable inferences as true and view them in the light most favorable to the Plaintiff. Mariana v. Fisher, 338 F.3d 189, 195 (3d Cir.2003), cert. denied, 540 U.S. 1179, 124 S.Ct. 1413, 158 L.Ed.2d 80 (2004). Thus, the Court should affirm the District Court's dismissal only if it appears that the Plaintiff could prove no set of facts that would entitle him to relief. Alston, 363 F.3d at 232-33 (citing Nami, 82 F.3d at 65). Furthermore, this appeal presents questions of law which this Court reviews de novo. United States v. Hendricks, 395 F.3d 173, 176 (3d Cir.2005).

III. DISCUSSION

The starting point of any statutory analysis is the language of the statute. Pa. Dep't of Pub. Welfare v. Davenport, 495 U.S. 552, 557-58, 110 S.Ct. 2126, 109 L.Ed.2d 588 (1990). Under § 523(a)(7), a discharge in bankruptcy does not discharge a debtor from 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, other than a tax penalty. . . ." 11 U.S.C. § 523(a)(7) (2004). Thus, in order for debts to be non-dischargeable in bankruptcy under § 523(a)(7), they must satisfy the three requirements of that section. Because the parties do not dispute that the bail bond debts are "payable to and for the benefit of a governmental unit" and not "compensation for actual pecuniary loss, other than a tax penalty," we address ourselves solely to the question of whether the debt at issue is a "fine, penalty, or forfeiture" within the meaning of § 523(a)(7).

When interpreting statutes or regulations, the first step is to determine whether the language at issue has a plain and unambiguous meaning. Barnhart v. Sigmon Coal Co., 534 U.S. 438, 450, 122 S.Ct. 941, 151 L.Ed.2d 908 (2002) (citing Robinson v. Shell Oil Co., 519 U.S. 337, 340, 117 S.Ct. 843, 136 L.Ed.2d 808 (1997)). The inquiry ends if the statutory language is unambiguous and the statutory scheme is coherent and consistent. Id. (citing Robinson, 519 U.S. at 340, 117 S.Ct. 843). The plain meaning of "forfeiture" as used in § 523(a)(7) is unambiguous. As we noted in Gi Nam, a "`forfeiture' is defined in Black's Law Dictionary as `a divestiture of specific property without compensation; . . . [a] deprivation or destruction of a right in consequence of the nonperformance of some obligation or condition.'" 273 F.3d at 286 (citing BLACK'S LAW DICTIONARY 650 (6th ed.1990)). Consistent with our analysis in Gi Nam, Dobrek's judgments arose from the various defendants' nonperformance of their obligations to appear in court and Dobrek's and the commercial sureties' breach of duty to produce those defendants. Cf. id. at 286. As such, the plain meaning of "forfeiture" appears to encompass the judgments against Dobrek.

Nonetheless, in the event the words and provisions are "ambiguous — that is, whether they are reasonably susceptible of different interpretations," Nat'l R.R. Passenger Corp. v. Atchison Topeka & Santa Fe Ry. Co., 470 U.S. 451, 473 n. 27, 105 S.Ct. 1441, 84 L.Ed.2d 432 (1985) — we look next at the surrounding words...