Rivera v. Orange Cnty. Prob. Dep't (In re Rivera)

• Decision Date: 10 August 2016
• Docket Number: No. 14–60044,14–60044
• Citation: 832 F.3d 1103
• Parties: In re Maria G. Rivera, Debtor, Maria G. Rivera, Appellant, v. Orange County Probation Department, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

832 F.3d 1103

In re Maria G. Rivera, Debtor,

Maria G. Rivera, Appellant,

v.Orange County Probation Department, Appellee.

No. 14–60044

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 6, 2016, Pasadena, California

Filed August 10, 2016

Brett H. Ramsaur (argued) and Todd E. Lundell, Snell & Wilmer, Costa Mesa, California, for Appellant.

Adam C. Clanton (argued), Deputy; Laurie A. Shade, Senior Deputy; Nicholas S. Chrisos, County Counsel; Orange County Counsel, Santa Ana, California; for Appellee.

Before: Stephen Reinhardt, and Kim McLane Wardlaw, Circuit Judges, and Mark W. Bennett,^* District Judge.

OPINION

REINHARDT

, Circuit Judge:

INTRODUCTION

We must decide whether a mother's debt to Orange County arising from her son's involuntary juvenile detention is a “domestic support obligation” and thus excepted from discharge in bankruptcy. We conclude that it is not.

FACTUAL BACKGROUND

Appellant Maria Rivera is the mother of a minor who was held in juvenile detention in Orange County for more than a year, from 2008–2010. Upon her son's release, the County Probation Department sent Rivera a bill.

California law makes the parents of juvenile detainees “liable for the reasonable costs of support of the minor while the minor is” held in detention. Cal. Welf. & Inst. Code § 903(a)

. A county may seek reimbursement under § 903 only “for food and food preparation, clothing, personal supplies, and medical expenses,” id. , and the statute imposes a cap of $30 per day. § 903(c)

. Within those constraints, the statute limits the bill to the parents' “ability to pay” at the time the debt is imposed. Id.

As a result, Rivera's bill did not cover the entire cost to the County of her son's detention, but it was a large sum nevertheless. The County sought to recover $23.90 from Rivera for each day her son was detained, and $2,199 for legal expenses. The total bill came to $16,372.

Rivera did her best to pay. After selling her house, she paid $9,508 on May 10, 2010. Part of the debt remained, however, and the County continued sending Rivera regular bills. Eventually, she was served with an order to appear before the juvenile court, and when she failed to do so, the court entered a default judgment against her. The judgment stated that she still owed the County $9,905, despite her earlier payment.¹

Several months later, in September 2011, Rivera filed for bankruptcy under Chapter 7 of the Bankruptcy Code. She had no assets to distribute, only debts to discharge. In January 2012, Rivera received a full discharge and, thus, the “fresh start” that the protections of the Bankruptcy Code seek to provide. Harris v. Viegelahn , ––– U.S. ––––, 135 S.Ct. 1829, 1835, 191 L.Ed.2d 783 (2015)

.

Orange County, however, persisted in its efforts to collect Rivera's debt even after the conclusion of her bankruptcy case. The County believed that Rivera's debt was a “domestic support obligation” (“DSO”) like alimony or child support—the kind of debt that is not dischargable in bankruptcy under 11 U.S.C. § 523(a)(5)

.

Rivera believed that any remaining debt to the County had been fully discharged. In her bankruptcy petition, she had listed her unpaid obligation to the County as a priority unsecured debt, not a DSO, and the County did not object in writing to this characterization. Rivera moved to reopen her bankruptcy case and asked the bankruptcy court to sanction the County for attempting to collect a discharged debt. The court reopened the case, and issued a tentative ruling in Rivera's favor.

After further briefing, however, the bankruptcy judge changed his mind and ruled in favor of the County. The judge was persuaded that Congress expanded the category of DSOs in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) to include Rivera's debt. The judge agreed with the County that Rivera's debt was in the nature of support because the County sought to recover only the costs of her son's food, clothing, and medicine, not the full cost of his detention. The Bankruptcy Appellate Panel affirmed on largely the same ground, and Rivera appealed. Whether Rivera's debt to the County is a domestic support obligation is the issue before us.

DISCUSSION

I.

Bankruptcy gives people from all walks of life a “fresh start.” Harris , 135 S.Ct. at 1835

. “[A] debtor who successfully navigates the bankruptcy process is ordinarily entitled to a discharge of all pre-petition debts.”

In re Leibowitz , 217 F.3d 799, 801 (9th Cir. 2000)

. Some debts, however, are not eligible for discharge. Among them are domestic support obligations—the financial obligations upon which family members and former family members rely. Section 523(a)(5) of the Bankruptcy Code excepts DSOs from discharge. The purpose of this exception is to ensure that spouses and children continue to receive support even if the support provider has declared bankruptcy. See

In re Chang , 163 F.3d 1138, 1140 (9th Cir. 1998). The exception to discharge for DSOs thus “strikes a balance between competing policies.” Id. On the one hand, bankruptcy permits a petitioner to wipe his slate clean when debts become impossible to overcome. “On the other hand, this court has recognized an overriding public policy favoring the enforcement of familial obligations.” Id. Bankruptcy provides a way to leave one's debts, but not one's most fundamental family obligations, behind.

Before 2005, the Bankruptcy Code provided that a debt was a DSO and thus excepted from discharge if it was owed “to a spouse, former spouse, or child of the debtor, for alimony to, maintenance for, or support of such spouse or child, in connection with a separation agreement, divorce decree or other order of a court of record, determination made in accordance with State or territorial law by a governmental unit, or property settlement agreement....” 11 U.S.C. § 523(a)(5)

(pre-2005). The definition also provided for several exceptions.

Under this definition, it was clear that ordinary family support obligations owed directly to a child or former spouse were DSOs. Courts divided, however, on the DSO status of debts owed to government agencies concerned with family support. Compare, e.g. , City of Oakland v. Fralick , 215 B.R. 132, 133 (W.D. Mich. 1997)

(foster care debt is not a DSO because it is “owed to an entity other than a child, spouse or ex-spouse”); with

In re Burton , 132 B.R. 575 (Bankr. N.D. Ind. 1988) (foster care debt is a DSO because it is in the nature of familial support). Compare also, e.g. , In re Spencer , 182 B.R. 263 (Bankr. E.D. Cal. 1995) (a debt owed to a state wardship unit is not a DSO because it is owed to a government unit); with

In re Canganelli , 132 B.R. 369 (Bankr. N.D. Ind. 1991) (wardship debt is a DSO because it is in the nature of domestic support). Compare also, e.g. , In re Linn , 38 B.R. 762, 762 (9th Cir. BAP 1984) (debt arising from a “court appointed attorney and psychiatrist for [a] minor child” in a custody proceeding is not a DSO because it is owed to a government entity); with

Chang , 163 F.3d at 1141 (debt arising from a court appointed guardian ad litem and neutral mental health expert in a custody proceeding is a DSO because it is in the nature of child support).

BAPCPA, the statute that modified the Bankruptcy Code in 2005, resolved the dispute. Following the 2005 amendment, a debt does not lose its DSO status simply because it is owed to a governmental unit. The statute now states that a debt is a DSO if it is “owed to or recoverable by ... a spouse, former spouse, or child of the debtor or such child's parent, legal guardian, or responsible relative” or “a governmental unit ” and is “in the nature of alimony, maintenance, or support (including assistance provided by a governmental unit) of such spouse, former spouse, or child of the debtor or such child's parent, without regard to whether such debt is expressly so designated.” 11 U.S.C. § 101(14A)

(emphasis added). This definition does not change the substance or core meaning of the term DSO. It did, however, remove any doubt that debts owed to various government units for temporary child or spousal aid payments; for support provided in foster care, wardship, and residential treatment centers; or for expenses incurred for a child's benefit in divorce and custody proceedings could qualify as DSOs.² Thus, BAPCPA carries forward the core purpose of the DSO exception by ensuring that bankruptcy will not hinder the enforcement of family obligations in circumstances in which the government's family support infrastructure—the network of foster systems, aid agencies, family courts, and the like—has intervened on a spouse's, former spouse's, or child's behalf.

The question before us, however, is whether debts owed to government units that are not part of the government's family support infrastructure, and specifically debts to a Probation Department for costs related to a juvenile's detention, are “in the nature of ... support,” and thus are DSOs. The answer to this question is the same after BAPCPA as it was before, as BAPCPA changed only the parties who could qualify as creditors to whom a DSO was owed, not the definition or nature of family support itself.

II.

Rivera owes her debt to the Orange County Probation Department—a law enforcement unit. The Department's mission statement describes it as a “public safety agency” that makes use of “efficient and research supported corrections practices to Reduce Crime[,] Assist the Courts in Managing Offenders[,] Promote Lawful and Productive Lifestyles[, and] Assist Victims.”³ The “support” that the Probation Department provided to Rivera's son in the course of his detention was incidental to—and the price of—its larger governmental purpose of promoting “public safety” and “reduc[ing] crime” through “corrections practices.” In short, the purpose of Rivera's son's detention was to enforce the criminal law.

This sets Rivera's case apart from all other cases in which debts have been found to be...