Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-14-16192/USCOURTS-ca9-14-16192-0/pdf.json

Nature of Suit Code: 440
Nature of Suit: Other Civil Rights
Cause of Action: 

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

JASON EUGENE DEOCAMPO; JESUS

SEBASTIAN GRANT; JAQUEZS TYREE

BERRY,

Plaintiffs-Appellees,

v.

JASON POTTS, individually, and in

his capacity as a Vallejo Police

Officer; ERIC JENSEN, individually,

and in his capacity as a Vallejo

Police Officer,

Defendants-Appellants,

and

JEREMY PATZER, individually, and in

his capacity as a Vallejo Police

Officer,

Defendant.

No. 14-16192

D.C. No.

2:06-cv-01283-

WBS-CMK

OPINION

Appeal from the United States District Court

for the Eastern District of California

William B. Shubb, Senior District Judge, Presiding

Argued and Submitted May 10, 2016

San Francisco, California

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2 DEOCAMPO V. POTTS

Filed September 8, 2016

Before: John T. Noonan, Kim McLane Wardlaw,

and Richard A. Paez, Circuit Judges.

Opinion by Judge Wardlaw

SUMMARY*

Civil Rights/Bankruptcy

The panel affirmed the district court’s denial of a Rule 60

motion for relief from judgment, and agreed with the district

court that neither a judgment against individual City of

Vallejo police officers for excessive force nor a subsequent

attorney’s fee award in favor of plaintiffs was discharged by

the City of Vallejo’s bankruptcy proceedings.

Plaintiffs filed this action against Vallejo police officers

and others asserting excessive-force and other constitutional

claims under 42 U.S.C. § 1983 and state law. Subsequently,

Vallejo filed for Chapter 9 bankruptcy and the district court

stayed the § 1983 action. After Vallejo’s plan for adjustment

of debts was confirmed by the bankruptcy court, the district

court lifted the stay in the § 1983 action, and a jury returned

a verdict, finding that the officers used excessive force and

awarding plaintiffs $50,000 in compensatory damages and

attorney’s fees under § 1988. The officers moved for relief

from judgment, asserting that the judgment and fee award

* This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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DEOCAMPO V. POTTS 3

were effectively claims against the City of Vallejo that were

subject to adjustment under the bankruptcy adjustment plan. 

The panel noted that under California law, Vallejo was

generally obligated to indemnify its employees for claims

against them arising from their employment. The panel held

that California’s indemnification statutes did not render a

judgment or concomitant fee award against an indemnifiable

municipal employee a liability of the municipal employer for

purposes of adjusting or discharging the debts of a Chapter 9

debtor. The panel further held that the bankruptcy court’s

plan confirmation did not release any debtor but the City of

Vallejo and did not expressly encompass claims or judgments

against the City’s employees. Accordingly, the panel held

that the judgment in the § 1983 action was the officers’

personal liability, not Vallejo’s. The panel emphasized,

however, that its conclusion that the judgment was against the

officers personally, and not Vallejo, did not relieve Vallejo of

its obligation to indemnify the officers under California law.

COUNSEL

Austin Byrne Conley (argued), Gibbons and Conley, Walnut

Creek, California; Noah G. Blechman and James V.

Fitzgerald, III, McNamara, Dodge, Ney, Beatty, Slattery,

Pfalzer, Borges & Brothers LLP, Walnut Creek, California;

Claudia M. Quintana, Deputy City Attorney, City of Vallejo,

Vallejo, California; for Defendants-Appellants.

Ayana Cuevas Curry (argued) and John L. Burris, Law

Offices of John L. Burris, Oakland, California, for PlaintiffsAppellees.

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4 DEOCAMPO V. POTTS

Krista MacNevin Jee, James R. Touchstone, and Martin J.

Mayer, Law Offices of Jones & Mayer, Fullerton, California,

for Amici Curiae California State Sheriffs’ Association,

California State Police Chiefs’ Association, and California

Peace Officers’ Association.

OPINION

WARDLAW, Circuit Judge:

Does a municipality’s bankruptcy plan of adjustment

automatically discharge a judgment against individual

officers for excessive force by operation of a California

statute generally requiring public entities to defend and

indemnify their employees for actions within the scope of

their employment?

Like many a city in the wake of the 2007–08 financial

crisis, the city of Vallejo, California found itself burdened by

mounting debts as its tax base shrank. In 2008, Vallejo

responded by petitioning for Chapter 9 bankruptcy, a form of

relief available only to municipalities. Some two years after

the bankruptcy court confirmed Vallejo’s debt-adjustment

plan, a federal jury found that two police officers employed

by Vallejo used constitutionally excessive force when they

arrested Jason Eugene Deocampo. In accordance with the

verdict, the district court entered a judgment for money

damages against the officers in their personal capacities, and

awarded Deocampo his attorney’s fees.

Under California law, Vallejo is generally obligated to

indemnify its employees for claims against them arising from

their employment. We hold that where, as here, the plan

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DEOCAMPO V. POTTS 5

confirmed by the bankruptcy court did not expressly

encompass claims or judgments against the city’s employees,

the indemnification statutes do not subject such claims or

judgments to adjustment by operation of law nor by the fact

of the public employment itself. We affirm the district

court’s denial of the officers’ Rule 60 motion for relief from

judgment, and agree with the district court that neither the

judgment nor attorney’s fee award was discharged by

Vallejo’s bankruptcy proceedings.

I.

A. Vallejo police use excessive force against Deocampo.

On March 28, 2003, at approximately 8:00 p.m.,

Deocampo, Jesus Sebastian Grant, and Jaquezs Tyree Berry

(collectively, “Plaintiffs”) suffered a violent encounter with

police officers employed by Vallejo. According to Plaintiffs,

this encounter began when Officers Jason Potts and Jeremy

Patzer stopped Berry on the street. With no justification, they

kicked and slammed him to the ground, causing him to hit his

head on a wooden fence. Deocampo and Grant approached

the officers, asked why they were attacking Berry, and

informed them that their actions were wrong. Officer Potts

told them to go away, and Deocampo complied by walking

away from him. Officer Potts followed Deocampo, and

shoved him. Officer Potts and a third officer, Eric Jensen

(“the Officers”) beat Deocampo with their batons, and

refused to stop even when he raised his hands in the air and

said he would leave. The Officers also pepper-sprayed and

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6 DEOCAMPO V. POTTS

beat Grant. Plaintiffs were falsely arrested and charged with

resisting, delaying, and obstructing the police.1

On March 30, 2006, Plaintiffs filed this action against

Vallejo, Vallejo’s chief of police, the Officers, and Patzer. 

Plaintiffs asserted excessive-force and other constitutional

claims against the Officers and Patzer under 42 U.S.C.

§ 1983; Monell claims against Vallejo and its chief of police,

see Monell v. New York City Dep’t of Soc. Servs., 436 U.S.

658 (1978); and various state-law causes of action. On July

24, 2007, the parties stipulated to the dismissal with prejudice

of Plaintiffs’ Monell claims and of Vallejo and its chief of

police as defendants.

B. Vallejo petitions for bankruptcy.

Subsequently, on May 23, 2008, Vallejo filed for Chapter

9 bankruptcy. This was, at the time, one of the largest

municipal bankruptcies in history, and California’s largest

since Orange County filed for bankruptcy in 1994. See

Alison Vekshin & Michael B. Marois, Bankrupt Vallejo,

California, Approves Restructuring, Bloomberg (Dec. 1,

2010).2

According to the City of Vallejo, a number of converging

forces rendered the city insolvent and necessitated its

1 The criminal charges against Plaintiffs were ultimately dismissed. 

California’s two-year statute of limitations for personal injury actions was

tolled while the criminal charges against Plaintiffs were pending. See Cal.

Civ. Proc. Code § 335.1; Cal. Gov’t Code § 945.3.

2 Available at http://www.bloomberg.com/news/articles/2010-12-01/

vallejo-approves-plan-to-exit-california-s-biggest-bankruptcy-since-1994.

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DEOCAMPO V. POTTS 7

bankruptcy filing. Vallejo derived most of its revenues from

property taxes, sales taxes, assessments, and fees. See In re

City of Vallejo, No. 08-26813-A-9, 2008 WL 4180008, at *2

(Bankr. E.D. Cal. Sept. 5, 2008), aff’d, 408 B.R. 280 (B.A.P.

9th Cir. 2009). “Recent adverse economic conditions” caused

Vallejo’s revenues to decrease. Id. These conditions

included not only those predictably associated with the

financial crisis, but such contingencies as the closure of a

Wal-Mart that had been a large source of sales tax revenue;

the loss of shared revenue from a Six Flags/Marine World

after Vallejo’s ownership interest in the amusement park was

bought out; and the unexpected retirement of several police

officers and firefighters, who became entitled to millions of

dollars in unbudgeted retiree payouts. Id. at *2, *5.

Vallejo implemented austerity measures, including

cutting funds to its senior center, library, parks, symphony,

and convention and visitors bureau; using vehicles and

equipment well beyond their expected lives; and reducing

employee rolls by 87 full-time positions. Id. at *3. 

Nevertheless, Vallejo’s “ability to provide minimal levels of

service to its residents and provide for their basic health and

safety” was seriously threatened. Id. at *5. Pension

obligations and benefits due under collective bargaining

agreements with several unions could not easily be adjusted. 

Id. at *3. California laws made it difficult for Vallejo to raise

taxes or borrow funds. As the Bankruptcy Appellate Panel

noted, “Proposition 13 capped property tax rates to 1% of full

cash value. Proposition 218 limited Vallejo’s ability to raise

any other taxes without a majority vote. Article XVI, section

18 of the California Constitution also restricted its ability to

borrow funds.” In re City of Vallejo, 408 B.R. at 286 & n.7. 

Over the objections of several creditors, the Bankruptcy

Court for the Eastern District of California found Vallejo

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8 DEOCAMPO V. POTTS

eligible to file a Chapter 9 petition, and the Bankruptcy

Appellate Panel affirmed. Id. at 299.

Vallejo was not alone among cities severely affected by

the 2007–08 financial crisis. 2008 and the years since have

witnessed a small but impactful resurgence in municipal

bankruptcy filings. While most have been commenced by

special-purpose districts, such as hospital, utility, or

sanitation authorities, several cities have filed for Chapter 9

protection, including San Bernardino, California; Stockton,

California; Hillview, Kentucky; and Detroit, Michigan. See

Bankrupt Cities, Municipalities List and Map, Governing

(last updated Aug. 21, 2015).3

Scholars have criticized the very concept of municipal

bankruptcy as it is codified by Chapter 9 for a variety of

reasons, including that it harms creditors and makes future

lending unattractive, and that it hamstrings more flexible

state-law solutions. See Omer Kimhi, Chapter 9 of the

Bankruptcy Code: A Solution in Search of a Problem, 27 Yale

J. Reg. 351, 384–85 (2010) (advancing the former argument);

Michael W. McConnell & Randal C. Picker, When Cities Go

Broke: A Conceptual Introduction to Municipal Bankruptcy,

60 U. Chi. L. Rev. 425, 494–95 (1993) (advancing the latter). 

Yet experts have warned that the surge in municipal

bankruptcies that began during the financial crisis may not be

over. See, e.g., William C. Dudley, President & Chief Exec.

Officer, Fed. Reserve Bank of N.Y., OpeningRemarks for the

Chapter 9 and Alternatives for Distressed Municipalities and

3 Available at http://www.governing.com/gov-data/municipal-cities -

counties-bankruptcies-and-defaults.html.

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DEOCAMPO V. POTTS 9

States Workshop (Apr. 14, 2015),4(opining that, while highprofile bankruptcy filings like Detroit’s “have captured a

considerable amount of attention . . . they may foreshadow

more widespread problems than what might be implied by

current bond ratings”).

Our case law construing Chapter 9 is scant, and this

appeal confronts us with a novel legal issue, of the kind that

often surfaces when changing social and economic conditions

awaken dormant statutes. But Chapter 9 has awakened, and

we do not presume further disputes over its interpretive and

practical complexities will remain long at rest.

C. Vallejo’s bankruptcy filing results in a stay of

Deocampo’s lawsuit.

On May 30, 2008, one week after Vallejo’s initial

bankruptcy filing, Defendants filed a notice stating that this

action was automatically stayed pursuant to 11 U.S.C. § 362. 

The district court—perhaps recognizing the oddity that

Vallejo’s bankruptcy could automatically stay an action in

which Vallejo was no longer a party, and neither the plaintiffs

nor the defendants were debtors—ordered the “non-bankrupt

parties [to] show cause why this action should not be stayed

in its entirety. . . .” In response, the parties stipulated in

writing that Vallejo’s bankruptcy filing triggered an

automatic stay “pursuant to 11 U.S.C. Section 362,” though

4 Available at https://www.newyorkfed.org/newsevents/speeches/2015/

dud150414.html. Cf. also Claire Shubik, Laura Horowitz & Thomas

Ginsberg, Tough Decisions and Limited Options: How Philadelphia and

Other Cities are Balancing Budgets in a Time of Recession, Pew 2 fig.1

(2009) (surveying 13 major cities and finding that 12 had annual deficits,

8 of which exceeded 10 percent of the city’s general fund).

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10 DEOCAMPO V. POTTS

they did not elaborate as to why. On August 5, 2008, the

district court entered the parties’ jointly submitted stipulation

and proposed order, and stayed the proceedings. The case

would remain stayed for more than four years.

About a week after his case was stayed, Deocampo filed

a proof of claim in Vallejo’s pending bankruptcy

proceedings. This stated that the amount of his claim was

$300,000, and the basis for the claim was “Personal Injury.”5

The Officers did not file any proofs of claim in the

bankruptcy proceeding, for anticipated indemnity, defense

costs, or otherwise; nor did Vallejo’s bankruptcy court filings

list the Officers or any other employees as potential creditors

on the basis of defense or indemnification obligations.

5 Deocampo’s proof of claim in the Vallejo proceedings was

unnecessary and without legal effect, because his lawsuit was against the

Officers in their personal—not official—capacities, and any judgment

against them would be a determination oftheir liability, not Vallejo’s. We

do not fault Deocampo’s counsel for filing the proof of claim, however,

given the uncertainty in this area of law at that time, and we reject the

Officers’ arguments to the contrary. If Deocampo’s counsel had not filed

a proof of claim in Vallejo’s bankruptcy proceedings on the ground that

any judgment against the Officers was not Vallejo’s debt, and had

counsel’s legal judgment not to do so been wrong, counsel would have

risked forfeiting Deocampo’s ability to collect on the judgment. See

11 U.S.C. §§ 524(a), 944; Fed. R. Bankr. P. 3003(c)(2) (in a Chapter 9

proceeding, “[a]ny creditor . . . whose claim or interest is not scheduled

or scheduled as disputed, contingent, or unliquidated shall file a proof of

claim or interest within the time prescribed . . . any creditor who fails to

do so shall not be treated as a creditor with respect to such claim for the

purposes of voting and distribution”). The choice to file a proof of claim,

on the other hand, did not create any risk of harm—at worst, it would be

a nullity. We therefore decline to infer fromcounsel’s precautionary filing

in this unsettled area of the law any concession or judicial admission that

a judgment against the Officers would be a personal liability of Vallejo.

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DEOCAMPO V. POTTS 11

D. Vallejo’s plan of adjustment is confirmed by the

bankruptcy court.

Subsequently, Vallejo filed a Second Amended Plan for

the Adjustment of Debts (“Plan”) with the bankruptcy court. 

Vallejo anticipated that, under that Plan, litigation claimants

would recover approximately 20 to 30 percent of the value of

any claims below $500,000. On August 4, 2011, the

bankruptcy court entered an order confirming the Plan, which

became binding on all creditors on November 1, 2011.

E. Deocampo’s lawsuit against the officers is reinstated

following Vallejo’s bankruptcy plan confirmation.

The district court lifted the stay on Plaintiffs’ case on

August 24, 2012. Following a 13-day trial, the jury returned

a special verdict in favor of Deocampo. The jury found that

the Officers had unreasonably seized Deocampo by using

excessive force against him during the course of the arrest. 

It awarded Deocampo $50,000 in compensatory damages. 

On August 23, 2013, the district court entered judgment in

accordance with the jury verdict.

6 The court subsequently

awarded Deocampo costs and attorney’s fees under 42 U.S.C.

§ 1988.

The Officers then moved for relief from judgment

pursuant to Federal Rule of Civil Procedure 60(b). They

contended the judgment and fee award (collectively, the

“Judgment”) were effectively claims against Vallejo that

were subject to adjustment under the Plan. The district court

6 Deocampo did not prevail on his other claims; Grant and Berry failed

to prevail on any claim; and Officer Patzer was found not liable as to any

claim.

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12 DEOCAMPO V. POTTS

denied the Rule 60(b) motion, reasoning that, because

Deocampo sought and obtained relief against the Officers in

only their personal, rather than official, capacities, the

Judgment was not discharged by Vallejo’s bankruptcy. The

Officers timely appealed.7

II.

We have jurisdiction under 28 U.S.C. § 1291. We review

for an abuse of discretion the district court’s decision to deny

a Rule 60(b) motion, and review de novo any questions of

law underlying the decision to deny the motion. Lal v.

California, 610 F.3d 518, 523 (9th Cir. 2010).

III.

A. Chapter 9 bankruptcy.

The Constitution empowers Congress to establish

“uniform Laws on the subject of Bankruptcies throughout the

United States.” U.S. Const. art. I, § 8, cl. 4. Congress first

entered the field of municipal bankruptcy in the 1930s, when,

confronted by the Great Depression, it enacted the precursor

to Chapter 9. See Puerto Rico v. Franklin Cal. Tax-Free

Trust, —U.S.—, 136 S. Ct. 1938, 1944 (2016). In the late

1970s, also a time of economic hardship for local

7 The district court then awarded Deocampo supplemental attorney’s

fees for the time spent opposing the Rule 60(b) motion and litigating the

original motion for fees. The Officers contend that this award, like the

Judgment, is subject to adjustment under the Plan. However, because the

Officers did not amend their prior notice of appeal or separately appeal the

supplemental fee award, we lack jurisdiction to review it. See Hunt v. City

of Los Angeles, 638 F.3d 703, 719 (9th Cir. 2011); Fed. R. App. P.

4(a)(1)(A).

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DEOCAMPO V. POTTS 13

governments, Congress enacted the most recent major

overhaul to Chapter 9. See generally Kimhi, supra, at

366–69. The House Report observed that “the term

‘bankruptcy’ in its strict sense is really a misnomer for a

[C]hapter 9 case.” H.R. Rep. No. 95-595, at 263 (1977). 

Thus, although the “general policy underlying” Chapter 9 is

to give the municipal debtor “a breathing spell from debt

collection efforts in order that it can work out a repayment

plan with its creditors,” the municipal debtor,8

unlike others,

“cannot liquidate its assets to satisfy its creditors totally and

finally.” Id. Further, “there are no involuntary [C]hapter 9

cases,” id. at 394, and Chapter 9 proceedings may be

commenced only by a municipality that “desires to effect a

plan to adjust [its] debts” and files a voluntary petition to do

so, with authorization from the state. 11 U.S.C. §§ 109(c)(4),

301, 921.9It is not necessary that all or even a majority of

creditors consent to a municipal plan of adjustment. 

11 U.S.C. § 109(c)(5). For a plan to be confirmed, the

bankruptcy court must find, inter alia, that “the plan is in the

best interests of creditors and is feasible.” 11 U.S.C.

§ 943(b)(7).

When a Chapter 9 debtor’s plan has been confirmed by

the bankruptcy court, and certain other procedural

requirements have been fulfilled, see 11 U.S.C. § 943(b), the

debtor is generally discharged from debts that have not been

8 The Bankruptcy Code defines “municipality” to mean a “political

subdivision or public agency or instrumentality of a State.” 11 U.S.C.

§ 101(40).

9

See also 11 U.S.C. § 904 (providing that, unless the municipal debtor

consents or its plan so provides, the court cannot “interfere with” a

municipal debtor’s political or governmental powers, property or

revenues, or use or enjoyment of income-producing property).

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14 DEOCAMPO V. POTTS

“excepted from discharge by the plan or order confirming the

plan.”10 11 U.S.C. § 944(b), (c)(1). The discharge:

(1) voids 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 . . . 944 . . . of this title, whether

or not discharge of such debt is waived; [and]

(2) operates as an injunction against the

commencement or continuation of an action,

the employment of process, or an act, to

collect, recover or offset any such debt as a

personal liability of the debtor, whether or not

discharge of such debt is waived.

11 U.S.C. §§ 524(a)(1)–(2), 901.

10 Nor is the debtor discharged from debts owed to entities that had

neither notice nor actual knowledge of the case before confirmation of the

plan. 11 U.S.C. § 944(c)(2). However, the exceptions to dischargeability

set forth by 11 U.S.C. § 523(a), including the exception that renders nondischargeable debt arising from “willful and malicious injury,” id.

§ 523(a)(6), do not apply in a Chapter 9 bankruptcy. See V.W. ex rel.

Barber v. City of Vallejo, No. CIV. S-12-1629, 2013 WL 3992403, at

*2–3 (E.D. Cal. Aug. 2, 2013) (opining that this is a “somewhat

surprising, indeed, alarming result”).

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DEOCAMPO V. POTTS 15

B. The Plan did not adjust or discharge the Judgment

against the Officers.

1. California’s statutory indemnification framework.

The Officers do not contend that Vallejo’s bankruptcy

discharge wiped out the Judgment against them entirely. 

Rather, it is their position that the claim for which Deocampo

filed proof in Vallejo’s bankruptcy proceedings was subject

to the Plan’s adjustment schedule, reducing the claim’s value

to 20 to 30 percent of the Judgment. The Officers contend

that, to the extent the Judgment purports to create an

obligation distinct from that adjusted claim, the confirmation

of the Plan discharged and rendered this obligation void. See

11 U.S.C. §§ 524(a)(1)–(2), 944(b)–(c).

Of course, it was Vallejo, not the Officers, that declared

bankruptcy and adjusted its debts, and the Judgment was

entered against the Officers solely in their personal capacities. 

The Officers argue, however, that the Judgment was brought

within the ambit of the Plan by the California Government

Code, which broadly requires public entities like Vallejo to

indemnify their employees in litigation arising from the

employees’ performance of official duties. The Officers rely

principally upon Section 825 of the Government Code, which

in relevant part provides:

[I]f an employee or former employee of a

public entity requests the public entity to

defend him or her against any claim or action

against him or her for an injury arising out of

an act or omission occurring within the scope

of his or her employment as an employee of

the public entity and the request is made in

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16 DEOCAMPO V. POTTS

writing not less than 10 days before the day of

trial, and the employee or former employee

reasonably cooperates in good faith in the

defense of the claim or action, the public

entity shall pay any judgment based thereon

or any compromise or settlement of the claim

or action to which the public entity has

agreed.

Cal. Gov’t Code § 825(a).11

Section 825 requires the public entity to indemnify its

employee for compensatory damages awarded under

42 U.S.C. § 1983 and attorney’s fees the employee is ordered

to pay under 42 U.S.C. § 1988. See Williams v. Horvath,

548 P.2d 1125, 1132–34 (Cal. 1976) (en banc). Other

California Government Code provisions require the public

entity to provide for its employee’s defense against an

indemnifiable action upon the employee’s request, and

authorize the employee to compel his or her employer to

make any required defense or indemnification payments, or

to reimburse the employee for any such payments the

employee has already made. See Cal. Gov’t Code §§ 825.2,

970.2, 995, 996.4. Indeed, less than three weeks before the

trial, the Vallejo City Attorney wrote to the Officers, stating

that the City had undertaken their defense and would

indemnify them for any damages.

11 California Government Code Section 825(b) sets forth additional

requirements for the indemnification of punitive or exemplary damages

awarded against a public employee. These requirements do not apply in

this case because the jury awarded only compensatory damages.

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DEOCAMPO V. POTTS 17

The Officers advance two related arguments why

Vallejo’s statutory indemnification obligations subjected the

Judgment to adjustment under the Plan. First, they argue that,

by operation of law, the Judgment is Vallejo’s liability rather

than their own. Second, the Officers argue that, even if the

Judgment is deemed one against them personally rather than

Vallejo, there is “such identity” between Vallejo and

themselves that adjustment of the Judgment “fall[s] within

the language or intent of the Plan.” We address these

arguments in turn.

2. The Judgment against the Officers was not a personal

liability of Vallejo.

The Officers argue that the California indemnification

provisions rendered the Judgment a personal liability of

Vallejo. We disagree.

It is a basic precept of Section 1983 litigation that a

judgment against a government official in his personal

capacity leads to the imposition of liability “against the

individual defendant, rather than against the entity that

employs him.” Kentucky v. Graham, 473 U.S. 159, 167–68

(1985). Thus, “an award of damages against an official in his

personal capacity can be executed only against the official’s

personal assets.” Id. at 166.

We have held that, for purposes of the Eleventh

Amendment, the indemnification obligation imposed by

California Government Code Section 825 does not render a

personal-capacity suit against a state employee one against

the state, and so sovereign immunity does not extend to the

employee. Demery v. Kupperman, 735 F.2d 1139, 1147 (9th

Cir. 1984); see also Ashker v. Cal. Dep’t of Corr., 112 F.3d

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18 DEOCAMPO V. POTTS

392, 395 (9th Cir. 1997); cf. Ronwin v. Shapiro, 657 F.2d

1071, 1074–75 (9th Cir. 1981). Rather, the statute creates a

“purely intramural arrangement between a state and its

officers,” because if a plaintiff “prevails on the merits, the

court will not be ordering the state to do anything; it will only

be ordering the official to pay damages. If the state official

desires indemnification under the state statute, he must bring

suit in a state court.” Demery, 735 F.2d at 1147–48.

We find the Demery line of cases persuasive with respect

to the matter at hand. It is true that these cases addressed

disputes over the scope of sovereign immunity rather than

bankruptcydischarge. However, the Officers’ contention that

the reach of these cases must be cabined to sovereign

immunity is belied by the thoughtful and generally applicable

approach with which these cases analyze the attribution of

liability between public entities and their officers. This

approach is equally applicable here. The Judgment embodies

the jury’s determination, by a preponderance of the evidence,

that the Officers, acting in their personal capacities, seriously

injured Deocampo while acting under the color of state law,

as well as a concomitant Section 1988 fee award that

Congress has seen fit to authorize for injuries of this nature. 

Deocampo is entitled to enforce the Judgment against the

Officers personally, but he has no right to enforce it directly

against Vallejo or its property. Graham, 473 U.S. at 166. 

Vallejo may be obligated by statute to indemnify the Officers

for the amount of the Judgment, but this “purely intramural

arrangement” does not alter the fact that the Judgment itself

is binding on the Officers and the Officers alone. Demery,

735 F.3d at 1147–48.

Therefore, we hold that California’s indemnification

statutes do not render a judgment or concomitant fee award

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DEOCAMPO V. POTTS 19

against an indemnifiable municipal employee a liability of the

municipal employer for purposes of adjusting or discharging

the debts of a Chapter 9 debtor. The Judgment is the

Officers’ personal liability, not Vallejo’s.

3. The Plan does not effect a third-party adjustment or

discharge of the Officers’ judgment debts.

Alternatively, the Officers argue that, even if the

Judgment is not Vallejo’s debt by operation of law, the

indemnity statutes create such identity between Vallejo’s

interests and their own that the Judgment is actually against

the debtor and is thus subject to the Plan.

Other Circuits have held that a debtor’s Chapter 11

bankruptcy plan may operate to discharge the debts of certain

non-debtor third parties, provided the bankruptcy court has

“accepted and confirmed [this discharge] as an integral part

of reorganization.” In re A.H. Robins Co., 880 F.2d 694, 702

(4th Cir. 1989) (quoting Republic Supply Co. v. Shoaf,

815 F.2d 1046, 1050 (5th Cir. 1987)). We have rejected this

construction of the Bankruptcy Code. While the bankruptcy

court has broad powers to “issue any order, process, or

judgment that is necessary or appropriate to carry out the

provisions of this title,” 11 U.S.C. § 105(a), it cannot confirm

a plan that does not comply with applicable Code provisions. 

11 U.S.C. § 1129(a)(1). In general, 11 U.S.C. § 524(e)

provides that “discharge of a debt of the debtor does not

affect the liability of any other entity on, or the property of

any other entity for, such debt.” Thus, we have “repeatedly

held, without exception,” that, in a Chapter 11 proceeding,

“§ 524(e) precludes bankruptcy courts from discharging the

liabilities of non-debtors.” In re Lowenschuss, 67 F.3d 1394,

1401 (9th Cir. 1995) (citations omitted).

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However, as the Officers point out, Chapter 9, unlike

Chapter 11, does not incorporate Section 524(e). 11 U.S.C.

§ 901. As such, the rationale relied upon by Lowenschuss

does not apply in Chapter 9 proceedings. We have not

previously addressed the question of whether, in a proceeding

to which Section 524(e) does not apply, Section 105

authorizes a bankruptcy court to confirm a plan that effects

the adjustment or discharge of the debts of non-debtor third

parties. We need not, and do not, answer this question here. 

Because the Plan does not, by its terms, purport to effect the

third-party discharge advocated by the Officers, we do not

opine on the power of the bankruptcy court to confirm a

hypothetical plan that does so.

The Plan makes no express reference to indemnification

or the discharge of claims against Vallejo employees. In

asserting that the Plan nevertheless contemplated the

discharge of such claims, the Officers rely upon open-ended,

boilerplate language. The Plan provides that, following its

effective date, all “Claims” are fully discharged, “whether

against the City or any of its properties, assets or interests in

property.” The Plan defines “Claim” to mean “a claim

against the City or the property of the City within the

meaning of section 101(5) of the Bankruptcy Code.”12 The

 

12 Section 101(5) provides:

The term “claim” means—

(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

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DEOCAMPO V. POTTS 21

Officers argue that, broadly construed, this language

encompasses the Judgment, and a broad construction is

necessary to further the Bankruptcy Code’s policy of

providing debtors with a fresh start.

The Officers confuse the breadth of the Bankruptcy

Code’s definition of “claim” with the breadth of the discharge

or adjustment effected by a particular plan, including one that

recites the statutory definition.13 An ambiguity in a

bankruptcy plan drafted by a debtor is construed against the

debtor. In re Brawders, 503 F.3d 856, 867 (9th Cir. 2007);

Miller v. United States, 363 F.3d 999, 1005–06 (9th Cir.

2004). Relatedly, “any ambiguity may also reflect that the

court that originally confirmed the plan did not make any

final determination of the matter at issue.” In re Brawders,

503 F.3d at 867. The Circuits that have permitted Chapter 11

(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.

13 The Officers rely upon several cases in which courts ruled that an

indemnity obligation triggers the automatic stay provisions of 11 U.S.C.

§§ 362(a) & 922. However, the discharge provisions are narrower than

the automatic stay provisions, the broad reach of which furthers their

purpose to freeze the status quo at the time a petition is filed, ensure that

all claims against the debtor will be brought in a single forum, and protect

creditors by providing for the orderly administration of claims. See Hillis

Motors, Inc. v. Haw. Auto. Dealers’ Ass’n, 997 F.2d 581, 585 (9th Cir.

1993). Among other differences, the stay provisions “do[] not contain

such limiting concepts as ‘personal liability of the debtor.’” In re Munoz,

287 B.R. 546, 554 n.8 (B.A.P. 9th Cir. 2002) (quoting 11 U.S.C.

§ 524(a)(2)). The district court correctly determined that the automatic

stay cases do not control the outcome of the Officers’ Rule 60(b) motion.

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22 DEOCAMPO V. POTTS

plans to release non-debtors have required that the release be

express, see In re Applewood Chair Co., 203 F.3d 914, 919

(5th Cir. 2000) (per curiam), and that it be supported by

“specific factual findings,” see Behrmann v. Nat’l Heritage

Found., 663 F.3d 704, 712–13 (4th Cir. 2011). While we

reserve judgment on the validity of an express third-party

release in a Chapter 9 proceeding within our jurisdiction, we

observe that at least two large municipalities that have filed

for bankruptcy, Detroit and San Bernardino, have included in

their proposed plans the express discharge of claims against

indemnifiable employees. See In re City of Detroit, 524 B.R.

147, 265 (Bankr. E.D. Mich. 2014);14 Third Am. Plan for the

Adjustment of Debts of the City of San Bernardino, Cal., at

55–59, In re City of San Bernardino (Bankr. C.D. Cal. filed

July 29, 2016) (No. 6:12-bk-28006-MJ), Dkt. 1880.15 Thus,

when Vallejo filed the Plan, it was not beyond fathom that it

should propose a putative third-party release. Vallejo simply

failed to include such a proposal.

14 Detroit’s proposal of this third-party discharge did not result in its

automatic confirmation, underscoring the critical role bankruptcy courts

play in adjudicating whether a plan shall be confirmed. See In re City of

Detroit, 524 B.R. at 265–67 (sustaining Section 1983 judgment creditors’

objection to a Chapter 9 plan that expressly released indemnified officers

because “[t]he record is devoid of any evidence suggesting that the

additional protection of a third-party release for these officers is necessary

to the City’s efficient and effective functioning, to its revitalization, or to

the success of its plan”).

15 Available at http://www.sbcity.org/home_nav/chapter_9_bankruptcy/

default.asp. But cf. Katy Stech, San Bernardino Bankruptcy Plan Would

Shield Police from Claims, Wall St. J. (Apr. 18, 2016),

http://www.wsj.com/articles/san-bernardino-bankruptcy-plan-wouldshield-police-from-claims-1461017965 (describing objection to this

feature of San Bernardino’s previous proposed plan filed by plaintiffs in

police excessive-force lawsuits).

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DEOCAMPO V. POTTS 23

The Plan does not expressly release any debtor but

Vallejo. The bankruptcycourt’s Plan confirmation order, and

the minute order it incorporates, make no reference to

indemnity or third-party discharge. These orders cannot

reasonably be construed to set forth a judicial finding that

third-party discharge or adjustment was an “integral part of

reorganization.” In re A.H. Robins Co., 880 F.2d at 702

(citation omitted). For these reasons, the Judgment remains

undischarged, unadjusted, and untouched by Vallejo’s

bankruptcy.

4. The consequences of affirming the denial of Rule

60(b) relief.

On appeal, the Officers and various law enforcement

association amici make a third, policy-oriented argument that

denying the Officers relief from judgment would have dire

consequences. They are concerned that a ruling in favor of

Deocampo will inject uncertainty into the scope of indemnity

coverage, demoralize officers, and dissuade them from

zealously performing their duties, or deter them from even

becoming police officers. These concerns are misplaced. 

The Officers will not be required to pay the Judgment out of

their own pockets. Our conclusion that the Judgment is

against the Officers personally, and not Vallejo, does not

relieve Vallejo of its obligation to indemnify the Officers

under California law. Although the Officers did not file

proofs of claim in the bankruptcy proceedings, and Vallejo

did not list them as creditors, it was not necessary for them to

have done so to preserve their right to statutory

indemnification.

Critically, under California law, the event giving rise to

the Officers’ claim for indemnification is Vallejo’s provision

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24 DEOCAMPO V. POTTS

of a defense for the Officers, not the alleged injury inflicted

by the Officers or the plaintiffs’ filing of a lawsuit. See Rivas

v. City of Kerman, 13 Cal. Rptr. 2d 147, 150 (Ct. App. 1992),

as modified (Nov. 23, 1992) (construing Cal. Gov’t Code

§ 825). Here, Vallejo undertook the Officers’ defense on July

18, 2013, after the confirmation of the Plan.16 Because this

triggering event occurred after the discharge, Vallejo’s

indemnification obligation is a post-petition debt that is not

subject to adjustment, discharge, or the bankruptcy

injunction. See O’Loghlin v. Cty. of Orange, 229 F.3d 871,

874 (9th Cir. 2000). The Plan also committed Vallejo to

“continue to operate pursuant to the City Charter, the

Constitution of the State of California and other applicable

laws,” and therebyexcepted from discharge any § 825 claims. 

See 11 U.S.C. § 944(c)(1). Our decision thus does not

unsettle the commitment of California municipalities to

indemnify their employees, nor should it chill legitimate law

enforcement activity.

All of the practical consequences of our decision fall upon

Vallejo rather than the Officers. The Officers acknowledge

as much in their briefing, which is replete with concerns

about “the complete subversion of the goals of bankruptcy

reorganization,” and unsecured judgment creditors cutting

ahead of others more senior in priority in a plan of

adjustment. While we do not speculate why the Officers are

16 In the July 18, 2013 letter, the Vallejo City Attorney wrote to the

Officers, “The City of Vallejo has undertaken your defense and will

represent your interests in this lawsuit. In addition, should any damages

award be rendered against you, the City of Vallejo will indemnify you for

such damages. The City of Vallejo believes that you were acting in the

course and scope of your employment during the incident, and accordingly

would pay for the damages which stem from your actions during the

arrest.”

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DEOCAMPO V. POTTS 25

so solicitous of these matters despite lacking any skin in the

bankruptcy game, we note that, though Vallejo has not been

a party to this action since 2007, Vallejo furnished the

Officers’ defense, and Vallejo’s City Attorney, among others,

continues to represent them on appeal. Like the misplaced

concern with the demoralization of law enforcement, these

additional, structural concerns lack force. We need not weigh

policy considerations here to glean the plain meaning of the

bankruptcy and state statutes dictating the outcome of this

appeal. We note, however, that, were it appropriate to

consider policy, the policies of satisfying the goals of

bankruptcy and ensuring that our law enforcement officers

can effectively perform their jobs are not the sole policies in

play. Deocampo’s position is supported by the significant

public policies of (1) holding accountable state actors who

misuse their positions of power to violate the constitutional

and human rights of their fellow citizens; and (2) fully

redressing the harms they have caused to their victims.

IV.

Even if Chapter 9 clears a path for some municipal debtor

to discharge or adjust the judgment debts of its indemnified

employees in bankruptcy, Vallejo is not that debtor, and the

Plan is not that path. The Officers are not entitled to relief

from judgment, and the district court properly denied their

Rule 60(b) motion.

AFFIRMED.

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