United States Court of Appeals

FOR THE EIGHTH CIRCUIT

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Nos. 97-1577/97-1727

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In re: Kim M. Ulwelling, *

 *

Debtor, *

 *

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 * Appeals from the United States

Kim M. Ulwelling, * District Court for the

 * District of Minnesota.

Appellant/Cross Appellee, *

 * [UNPUBLISHED]

v. *

 *

Dick Wehner Crane Service, Inc. *

 *

Appellee/Cross Appellant. *

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 Submitted: January 30, 1998

 Filed: February 5, 1998

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Before BEAM, HANSEN, and MORRIS SHEPPARD ARNOLD, Circuit Judges.

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PER CURIAM.
The Honorable John R. Tunheim, United States District Judge for the District 1

of Minnesota. 

The Honorable Dennis D. O&Brien, Chief Judge, United States Bankruptcy

2

Court for the District of Minnesota. 

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Kim Ulwelling appeals from the district court&s judgment affirming the

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bankruptcy court&s grant of summary judgment to Dick Wehner Crane Service, Inc.

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(Wehner) in an adversary proceeding to determine the dischargeability of a debt for

restitution under Chapter 13. Wehner cross-appeals the denial of attorney&s fees and

costs by the district court. We affirm.

Ulwelling embezzled approximately $70,000 from Wehner, her former employer,

and pleaded guilty to theft in Minnesota state court. In a sentencing order, the state

court stayed imposition of sentence and placed Ulwelling on supervised probation

subject to her paying restitution to Wehner. Pursuant to state law, the state district

court also entered a civil judgment for restitution against Ulwelling. Subsequently, the

state court found Ulwelling had violated her probation by failing to make any restitution

payments and ordered Ulwelling&s confinement. On appeal, Ulwelling argues that

when the state court vacated Ulwelling&s sentence and ordered her confinement, it also

vacated the restitution obligation under the sentencing order, leaving only a civil

judgment against Ulwelling. She argues that because her only remaining restitution

obligation is civil, and the purpose of a civil judgment is to compensate the victim, not

the state, the civil judgment in favor of Wehner cannot be considered “restitution”

pursuant to 11 U.S.C. § 1328(a)(3), and therefore is dischargeable. On cross-appeal,

Wehner argues the district court erred in denying its motion for attorney&s fees and

costs. Wehner has also filed a motion for attorney&s fees on appeal. 

After de novo review, see In re Cochrane, 124 F.3d 978, 981 (8th Cir. 1997), we

conclude the bankruptcy court properly granted Wehner summary judgment. Section

1328(a)(3) provides, as relevant: “[T]he court shall grant the debtor a discharge of all
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debts provided for by the plan . . . except any debt--(3) for restitution . . . included in

a sentence on the debtor&s conviction of a crime.” We conclude that it is plain the state

court did not intend to eradicate Ulwelling&s restitution obligation, imposed as part of

her sentence, when it ordered her incarceration. Likewise, we conclude that

Minnesota&s decision to allow enforcement of the restitution obligation as a civil

judgment does not divest the restitution obligation of its identity as part of a criminal

sentence. Cf. In re Sutherland, 161 B.R. 657, 658-59 (Bankr. E.D. Ark. 1993)

(rejecting debtor&s argument that restitution debt was dischargeable under section

1328(a)(3) because surety was required by state law to reimburse victim of debtor&s

embezzlement, and thus victim had already been made whole). We thus conclude that

Ulwelling&s debt to Wehner is nondischargeable under section 1328(a)(3). See In re

Hardenberg, 42 F.3d 986, 992 (6th Cir. 1994) (“Congress did not intend bankruptcy

courts to be able to discharge state criminal court restitution orders in either Chapter

7 or Chapter 13 cases.”). 

As to Wehner&s cross-appeal of the district court&s denial of attorney&s fees and

costs, we conclude the district court did not abuse its discretion in denying Wehner&s

motion. See Newhouse v. McCormick & Co., 130 F.3d 302, 305 (8th Cir. 1997)

(standard of review). Additionally, although Ulwelling&s arguments are unavailing, we

do not believe sanctions are warranted under Federal Rule of Civil Procedure 38, and

we thus deny Wehner&s motion for sanctions on appeal. See In re Grand Jury

Proceedings Relative to Perl, 838 F.2d 304, 309 (8th Cir. 1988) (denying Fed. R. App.

P. 38 sanctions where arguments not “so wholly without merit”).

A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.