Robinson, In re
| Decision Date | 29 October 1985 |
| Docket Number | No. 1002,D,1002 |
| Citation | 776 F.2d 30 |
| Parties | , 13 Collier Bankr.Cas.2d 933, 13 Bankr.Ct.Dec. 1061, Bankr. L. Rep. P 70,796 In re Carolyn ROBINSON, Debtor. Carolyn ROBINSON, Plaintiff-Appellant, v. Austin J. McGUIGAN, Chief State's Attorney, Division of Criminal Justice, Judicial Department; Director, Office of Adult Probation; Commissioner, Department of Income Maintenance; and Commissioner, Department of Administrative Services, Bureau of Collection Services, Defendants-Appellees. ocket 84-5077. |
| Court | U.S. Court of Appeals — Second Circuit |
Francis X. Dineen, New Haven, Conn. (Joanne S. Faulkner, New Haven, Conn., on brief), for plaintiff-appellant.
Carl Schuman, Asst. State's Atty., Wallingford, Conn. (Austin J. McGuigan, Chief State's Atty., Wallingford, Conn., Edward F. Reynolds, Jr., Asst. Atty. Gen., Hartford, Conn., on brief), for defendants-appellees.
Before MANSFIELD, KEARSE, and PRATT, Circuit Judges.
Plaintiff Carolyn Robinson, convicted of larceny in state court and ordered, as a condition of the probation to which she was sentenced, to repay the amount wrongfully received to the Connecticut Office of Adult Probation ("COAP"), appeals from a judgment of the United States District Court for the District of Connecticut, T.F. Gilroy Daly, Chief Judge, declaring that her obligation to make the criminal restitution payments to COAP was not discharged by the order of discharge granted Robinson in her subsequent bankruptcy proceeding under Chapter 7 of the Bankruptcy Code, 11 U.S.C. Secs. 701-766 (1982). The court ruled that criminal restitution obligations are not "debts" within the meaning of the Bankruptcy Code, 11 U.S.C. Sec. 101 et seq. (1982), and that, even if such obligations are debts, they are "penalties" excepted from discharge by Sec. 523(a)(7) of the Code, 11 U.S.C. Sec. 523(a)(7). For the reasons below, we disagree with the court's interpretations of the Code, and we reverse and remand.
The material facts are not in dispute. In 1980, Robinson was convicted of larceny in the second degree for wrongfully receiving $9,932.95 in Public Assistance benefits On February 5, 1981, Robinson filed a voluntary petition under Chapter 7 in the United States Bankruptcy Court for the District of Connecticut. Part of that petition was a schedule of creditors which listed, inter alios, CDIM as having a claim of $6,000 for "public assistance" and COAP as having a claim of $9,932.95 for "restitution." On February 20, 1981, the bankruptcy court notified both COAP and CDIM of Robinson's Chapter 7 petition, and informed them that April 27, 1981, was the last day for the filing of objections to discharge and "complaints to determine the dischargeability of any debt pursuant to 11 U.S.C. section 523(c)." Neither COAP nor CDIM filed a proof of claim, or an objection to discharge, or a complaint to determine the dischargeability of its claim. On May 14, 1981, the bankruptcy court issued an order (the "Discharge Order") discharging Robinson "from all dischargeable debts," declaring "null and void" all existing or future judgments that purported to hold Robinson personally liable with respect to any such dischargeable debts, and enjoining all creditors whose debts were thereby discharged from thereafter endeavoring to collect such debts.
from the Connecticut Department of Income Maintenance ("CDIM") while simultaneously receiving Social Security benefits. On November 14, 1980, she was sentenced by the Connecticut Superior Court to, inter alia, a five-year term of probation; as one of the conditions of that probation, the Connecticut court ordered Robinson to make restitution of the Public Assistance benefits wrongfully received by paying $9,932.95 to the predecessor of COAP (also referred to hereinafter as "COAP"), in monthly installments of $100 beginning January 16, 1981. Robinson complied through May 4, 1981, making payments totaling $450.
On May 20, 1981, Robinson's attorney wrote COAP, stating that the Discharge Order discharged Robinson's obligation to make restitution payments to COAP and that Robinson had been advised by the attorney that she need make no further restitution payments. The letter urged COAP, if it disagreed with the view that Robinson's obligation had been discharged, to contact the attorney immediately. COAP apparently did not respond, and Robinson ceased making restitution payments.
Nearly three years later, in February 1984, COAP informed Robinson that its policy was "that the condition of probation concerning restitution is valid and not dischargeable," that it "intend[ed] to enforce the [restitution] order to the fullest extent possible," and that it was requesting that Robinson resume payment. Robinson responded by filing the present adversary proceeding in bankruptcy court against COAP, CDIM, and other state officials, seeking a judgment, inter alia, declaring that the Discharge Order had discharged her restitution obligations to COAP and CDIM, enjoining defendants from taking any steps to obtain further restitution payments, and awarding her compensatory and punitive damages and attorney's fees. Robinson moved for preliminary injunctive relief against defendants' taking steps to enforce payment, revoke probation, or report a violation of probation.
Following a brief trial on the merits, the bankruptcy court, Alan H.W. Shiff, Judge, entered a brief Memorandum and Proposed Order, reported at 45 B.R. 423 (Bankr.D.Conn.1984), denying all of the relief sought by Robinson. The court concluded that
[t]he State court's order that the plaintiff make restitution to the State of Connecticut of $9,932.95 as a condition of probation following the plaintiff's larceny conviction did not create a "debt" as defined in Code Sec. 101(11). Therefore the plaintiff's obligation to pay restitution was unaffected by this court's May 14, 1981 discharge order.
Assuming arguendo that the state court's order of restitution did create a "debt" within the purview of the Bankruptcy Code, such a debt is a "penalty" and therefore excepted from discharge under Sec. 523(a)(7).
Id. at 424-25 (footnotes omitted). The court based its ruling on its prior, more fully explicated, decision in In re Pellegrino, 42 B.R. 129 (Bankr.D.Conn.1984), which the court viewed as virtually identical to the present case. The bankruptcy court's proposed order was adopted by the district court, and judgment was entered in favor of the defendants, declaring that Robinson's restitution obligation had not been discharged by the Discharge Order and denying her any other relief.
On this appeal, Robinson contends that her restitution obligation was a debt within the meaning of Sec. 101(11) of the Code, 11 U.S.C. Sec. 101(11), that it was not excepted from discharge by any of the exceptions set forth in 11 U.S.C. Sec. 523, and that it was, therefore, under 11 U.S.C. Sec. 727, discharged by the Discharge Order. We agree with this interpretation of the Code, and we therefore reverse the district court's judgment and remand for entry of declaratory and injunctive relief in favor of Robinson, and for further proceedings on her claims for other relief.
Chapter 7 of the Bankruptcy Code allows an individual debtor who meets certain criteria, not in issue here, to obtain a discharge in bankruptcy which, "[e]xcept as provided in section 523 of [the Code], ... discharges the debtor from all debts that arose before the date of the order for relief under this chapter [here, the date of the filing of the voluntary petition, see 11 U.S.C. Sec. 301 (1982) ]...." 11 U.S.C. Sec. 727(b). The effect of a discharge is to
(1) void[ ] any judgment at any time obtained, to the extent that such judgment is a determination of the personal liability of the debtor with respect to any debt discharged under section 727 ...; [and to]
(2) operate[ ] as an injunction against the commencement or continuation of an action, the employment of process, or any act, to collect, recover or offset any such debt as a personal liability of the debtor, or from property of the debtor....
11 U.S.C. Sec. 524(a).
The applicability of Secs. 727(b) and 524(a) to Robinson depends, first, on whether her obligation to make restitution to COAP is properly construed as a "debt" within the meaning of those sections, and, second, if it is such a "debt," on whether any provision of Sec. 523 makes that debt nondischargeable.
"Debt" is defined in the Code as "liability on a claim." 11 U.S.C. Sec. 101(11). A "claim" is defined as a
(A) right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured; or
(B) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured....
11 U.S.C. Sec. 101(4). Focusing on the "right to payment" part of the definition, we see that a debt, within the meaning of the Code, is a liability as to which someone has a right of payment.
In ruling that Robinson's criminal restitution obligation was not a debt, the bankruptcy court adopted the opinion in In re Pellegrino, 42 B.R. 129, in which the court had concluded that a similar obligation was not a debt for two reasons. First, the Pellegrino court concluded, as a matter of statutory interpretation, that the obligation to make criminal restitution was not within the Code's definition of debt because the victim of the crime had no right to payment: "Under the [Connecticut] penal code, a victim cannot enforce a court's order of restitution if the criminal defendant fails to make payments to [COAP]." Id. at 132. Second, the Pellegrino court ruled as...
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