Hopp v. State (In re Hopp)

Citation606 B.R. 889
Decision Date27 September 2019
Docket NumberAdv. Pro. No. 18-01303-JGR,Case No. 13-20838-JGR
Parties IN RE: Robert John HOPP, Jr., SSN: xxx-xx-xxxx, Debtor. Robert John Hopp, Jr., Plaintiff, v. State of Colorado ex rel. Cynthia H. Coffman, Attorney General for the State of Colorado, Defendant.
CourtUnited States Bankruptcy Courts. Tenth Circuit. U.S. Bankruptcy Court — District of Colorado

Christopher P. Carrington, Denver, CO, for Robert John Hopp, Jr., for Plaintiff

Attorney General for the State of Colorado, pro se

James B. Holden, Erik R. Neusch, Denver, CO, for Defendant

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS

Joseph G. Rosania, Jr., United States Bankruptcy Judge This matter comes before the Court on the Motion to Dismiss (Doc. 5; the "Motion") filed by the State of Colorado, ex rel . Cynthia H. Coffman, Attorney General for the State of Colorado (the "State"). The threshold issue is whether the Rooker - Feldman Doctrine prohibits this Court from determining the dischargeability of a certain judgment for attorney's fees and costs, and mandates dismissal of the within adversary proceeding. The Court has jurisdiction to adjudicate the Motion pursuant to 28 U.S.C. §§ 157(b)(1), 157(b)(2)(I), and 1334.

BACKGROUND

The pertinent facts are undisputed. Robert John Hopp, Jr. ("Debtor") is an attorney. At all times relevant to this proceeding, the Debtor owned and operated two law firms, Robert J. Hopp & Associates, LLC and The Hopp Law Firm, LLC (collectively, the "Law Firms"), and had an indirect ownership interest in a title agency, National Title, LLC.

I. The Bankruptcy Case

The Debtor filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code on June 25, 2013. The Debtor's Schedule F listed the "Colorado Attorney General" (i.e., the State) as a general unsecured creditor of "Hopp Law Firm" for notice purposes (Case No. 13-20838-JGR; Doc. 1 at 37). The State was also listed in the Debtor's Creditor Matrix to receive notice (Id. at 90). The deadline to object to discharge and dischargeability was September 30, 2013. The State did not object to discharge or dischargeability in the Debtor's bankruptcy case. An Order Discharging Debtor was entered on February 10, 2014, and the Debtor's bankruptcy case was subsequently closed.

II. The State Court Proceedings

Thereafter, on December 19, 2014, the State filed suit against, inter alia , the Debtor, the Law Firms, and National Title, LLC, on behalf of the State of Colorado and the Administrator of the Uniform Consumer Credit Code in the District Court for the City and County of Denver, Case No. 2014-CV-34780 (the "State Court Case"). By the State Court Case, the State alleged that the Debtor and other defendants violated the Colorado Consumer Protection Act ("CCPA") and the Colorado Fair Debt Collection Practices Act ("CFDCPA") by overcharging for foreclosure commitments. After a bench trial, the District Court found in favor of the State, imposed civil penalties on the defendants, and awarded the State attorney's fees and costs (Doc. 13, Ex. 1).

In a post-trial motion, the Debtor moved to amend the findings and conclusions and accompanying judgment to bar the State's recovery of attorney's fees and costs against him personally, based upon his bankruptcy discharge (Doc. 13, Ex. 2). However, the District Court declined to address his argument and ultimately awarded the State $711,015.47 in attorney's fees and costs in connection with the State Court Case (the "Fees Judgment").

a. The Fees Judgment Appeal

The Debtor appealed the Fees Judgment to the Colorado Court of Appeals, Case No. 2017-CA-0303 (the "Fees Judgment Appeal"), arguing that although the bankruptcy discharge did not preclude the award of civil penalties issued in the underlying judgment, it did preclude the Fees Judgment against the Debtor personally. Specifically, the Debtor argued that 11 U.S.C. § 524 "voids any judgment at any time obtained, to the extent such judgment is a determination of the debtor's personal liability with respect to a debt discharged under 11 U.S.C. § 727" (Doc. 13, Ex. 7). The State argued that the Fees Judgment was non-dischargeable as to the Debtor under 11 U.S.C. § 523(a)(7), as a debt for a fine, penalty, or forfeiture payable to and for the benefit of a governmental unit, that is not compensation for actual pecuniary loss (Doc. 13, Ex. 8).

On May 17, 2018, the Court of Appeals affirmed the District Court in a 19-page opinion, reported at State ex rel. Coffman v. Robert J. Hopp & Assocs., LLC , 422 P.3d 617 (Colo. App. 2018), and explicitly found that the Fees Judgment was nondischargeable as to the Debtor under 11 U.S.C. § 523(a)(7) (Doc. 13, Ex. 9). The Court of Appeals reasoned as follows:

Hopp contends the trial court erred when it imposed an award of attorney fees and costs against him because it was precluded from doing so by his discharge of debts in bankruptcy. We disagree.
Hopp filed for bankruptcy on January 25, 2013, and obtained a discharge on February 10, 2014. Plaintiffs' enforcement action was filed ten months later, on December 19, 2014. Plaintiffs contend Hopp failed to preserve the issue of the effect of his bankruptcy discharge in the trial court because he raised this issue "for the first and only time" in his C.R.C.P. 59 motion after trial. Plaintiffs further argue that a C.R.C.P. 59 motion, which contemplates amending a judgment or seeking a new trial, was not the proper procedural avenue for raising a bankruptcy discharge.
Hopp argues that he preserved his bankruptcy argument at numerous points in the proceedings. First, Hopp contends that he asserted in his answer to plaintiffs' complaint that his bankruptcy discharge barred, at least in part, some of plaintiffs' claims against him. He did not provide any further details about his bankruptcy in the answer. After trial, in his C.R.C.P. 59 motion to amend the court's findings and conclusions, Hopp argued that his bankruptcy discharge precluded the trial court's award of attorney fees against him because they were awarded to compensate the state for its actual pecuniary loss. The trial court declined to address this argument in the context of Hopp's C.R.C.P. 59 motion because it held Hopp had presented no evidence of his bankruptcy at trial. Hopp does not dispute the trial court's finding that he presented no evidence of his bankruptcy during the trial.
...
Even assuming that Hopp properly preserved the consideration of the effect of his bankruptcy discharge on any attorney fees award in the trial court, we reject Hopp's arguments on the merits.
Hopp argues that the district court was precluded from awarding fees and costs against him by Bankruptcy Code § 727, which prohibits any attempt to collect from the debtor a debt that has been discharged. 11 U.S.C. § 727 (2012). He contends that the bankruptcy discharge applies to any claim for attorney fees and costs that could have been fairly or reasonably contemplated during the bankruptcy case. We are not persuaded.
Bankruptcy Code § 524(a)(1) voids any judgment at any time obtained for a determination of a personal liability of the debtor for a debt discharged, as relevant here, under § 727, 11 U.S.C. § 524(a)(1) (2012). A debt is not dischargeable, however, 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) (2012). The fine, penalty, or forfeiture may be criminal or civil in nature. In re Jensen , 395 B.R. 472, 480 (Bankr. D. Colo. 2008). We review whether a particular debt meets the elements of § 523(a)(7), which is a question of law, de novo. Id.
First, Hopp argues that, under In re Castellino Villas, A. K. F. LLC , 836 F.3d 1028 (9th Cir. 2016), the attorney fees award constitutes a prepetition debt which was fairly contemplatable prior to the bankruptcy discharge, and therefore is subject to the discharge.
...
Castellino Villas is inapposite here. The claims underlying the attorney fees award in Castellino Villas arose out of dischargeable debts. That is not true in this case. Hopp concedes that the award of penalties under the CCPA and CFDCPA is nondischargeable. The United States Bankruptcy Court for the District of Colorado has held that a civil penalty imposed under the CCPA is a nondischargeable penalty within the meaning of § 523(a)(7). Jensen , 395 B.R. at 482. Federal courts are divided on the issue of whether an award of attorney fees and costs may be held nondischargeable under § 523(a)(7). However, the bankruptcy courts look to state law to reach this determination. Id. at 487.
The Bankruptcy Court for the District of Colorado has considered the CCPA's attorney fees provision and noted that Colorado cases hold it serves both punitive and deterrent purposes. Id. (citing Hall v. Walter , 969 P.2d 224, 231 (Colo. 1998) ). The fact that such an award also serves to enable enforcement by defraying the government's expenses did not change the primary purpose of the provision. Id. at 487-88. Accordingly, the Bankruptcy Court concluded that an award of attorney fees made under the CCPA's mandatory provision was sufficiently penal to constitute a "fine, penalty or forfeiture" under § 523(a)(7) and was not dischargeable. Id. at 488. We are persuaded by the Bankruptcy Court's interpretation of the CCPA's attorney fees provision and apply it here.
We further note that there is no reason to believe that the subsections of the CFDCPA allowing an award of attorney fees and costs payable to the administrator do not serve the same penal purposes as the CCPA. The CFDCPA serves a similar purpose as the CCPA, namely consumer protection. SeeFlood v. Mercantile Adjustment Bureau, LLC , 176 P.3d 769, 773 (Colo. 2008) (The FDCPA has the "remedial purpose of protecting consumers against debt collection practices that take advantage of gullible, unwary, trustful, or cowed persons who receive a debt collection communication."). Thus, we conclude that the trial court's attorney fees awards made
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1 cases
  • In re Pearson
    • United States
    • United States Bankruptcy Courts. Tenth Circuit. U.S. Bankruptcy Court — District of Utah
    • February 8, 2023
    ... ... Cascade's judgment was declared excepted from the ... Debtor's discharge during state court supplemental ... proceedings. Then, when the Debtor tried to reopen her prior ... Massa v. Addona (In re ... Massa) , 187 F.3d 292 (2d Cir. 1999); see also Hopp ... v. Colorado ex rel. Coffman (In re Hopp) , 606 B.R. 889, ... 896 (Bankr. D. Colo ... ...

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