United States Court of Appeals FOR THE EIGHTH CIRCUIT

__________________ Nos. 97-1577/97-1727

__________________ In re: Kim M. Ulwelling, * * Debtor, * *

---------------------- * * 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 Appellant/Cross Appellee, * * [UNPUBLISHED] v. * * Dick Wehner Crane Service, Inc. * * Appellee/Cross Appellant. *

___________ Submitted: January 30, 1998 Filed: February 5, 1998

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

___________ PER CURIAM.The Honorable John R. Tunheim, United States District Judge for the District 1 of Minnesota. The Ho norable Dennis D. O & Brien, Chief Judge, United States Bankruptc y 2 Court for the District of Minnesota. -2- Kim Ulw elling appeals from the district court & s judgment affirming th e 1 ba nkruptcy court & s grant of summary judgment to Dick Wehner Crane Service, Inc

. 2 (Weh ner) in an adversary proceeding to determine the dischargeability of a debt fo r r e stitution 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 stat e cou rt stayed imposition of sentence and placed Ulwelling on supervised probatio n sub jectto her paying restitution to Wehner. Pursuant to state law, the state distric t court also entered a civil judgment for res titution against Ulwelling. Subsequently, the state court found Ulwelling had violated her probation by failing to mak e any restitution payments and ordered Ulwelling & s confinement. On appeal, Ulwelling argues tha t when the state court vacated Ulwelling & s sentence and ordered her confinement, it also vacate d the restitution obligation under the sentencing order, leaving only a civi l judgmentagainst Ulwelling. She argues that because her only remaining restitutio n obligation is civil, and the purpos e 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 1 1 U.S.C. § 1328(a)(3), and therefore is dischargeable. On cross-appeal, Wehner arg ues the district court erred in denying its motion for attorney & s fees an d 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 C ir. 1997), we conclude the

bankruptcy court properly granted Wehner summary judgment. Section 1328(a)(3) provi des, as relevant: “[T]he court shall grant the debtor a discharge of all-3-

de bts 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 n ot intend to eradicate Ulwelling & s restitution obligation, imposed as part of her se ntence, when it ordered her incarceration. Likewise, we conclude tha t Minn esota & s decision to allow enforcement of the restitution obligation as a civi l judgment does not divest the restitution obligation of its identity as part of a criminal sente nce. Cf. In re Sutherland, 161 B.R. 657, 658-59 (Bankr. E.D. Ark. 1993 ) (rejec ting debtor & s argument that restitution debt was dischargeable under sectio n 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 Ulwelli ng & 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 di strict court & s denial of attorney & s fees and
cos ts, 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, althoug h Ulwelling & s arguments are unavailing, we do not believe s anctions are warranted under Federal Rule of Civil Procedure 38, and
we thus de ny Wehner & s motion for sanctions on appeal. See In re Grand Jur y 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.