FILED

United States Court of Appeals

Tenth Circuit

September 11, 2008

Elisabeth A. Shumaker

Clerk of Court

PUBLISH

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

In re:

JORGE H. SANDOVAL,

Debtor.

AFFORDABLE BAIL BONDS, INC.;

ROBERTA A. DAMPF-AGUILAR,

Plaintiffs-Appellants,

v.

JORGE H. SANDOVAL, a/k/a

Jorge Homero Sandival,

Defendant-Appellee.

SANDRA RAY THOMPSON;

MICHAEL REX THOMPSON,

 Amicus Curiae.

No. 07-5165

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF OKLAHOMA

(D.C. No. 06-01264-R)
* After examining the briefs and appellate record, this panel has determined

unanimously that oral argument would not materially assist the determination of

this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is

therefore ordered submitted without oral argument.

2

Submitted on the briefs:*

Bruce A. McKenna and Brandon J. Burris, of Glendening, McKenna & Prescott,

Tulsa, Oklahoma, for Plaintiffs-Appellants.

Mac D. Finlayson, of Morrel Saffa Craige, P.C., Tulsa, Oklahoma, for Amicus

Curiae.

Before HARTZ, EBEL, and O’BRIEN, Circuit Judges.

EBEL, Circuit Judge.

Section 523(a)(7) of Chapter 11 of the Bankruptcy Code provides, in

pertinent part:

(a) A discharge under section 727 . . . of this title does not discharge

an individual debtor from any debt —

. . . .

(7) to the extent such debt is for a fine, penalty, or forfeiture payable

to and for the benefit of a governmental unit, and is not

compensation for actual pecuniary loss. . . .

11 U.S.C. § 523(a)(7). This case presents a question of first impression in this

circuit: does 11 U.S.C. § 523(a)(7) render nondischargeable a debt incurred by a

debtor who has guaranteed a bail bondsman to make the bondsman whole in the

event a criminal defendant jumps bail? We agree with the bankruptcy court that it 
1 Sandoval also executed an indemnitor/guarantor checklist. All of the

documents Sandoval signed were in Spanish, but it is undisputed that unexecuted

English versions of the documents also appearing in the record are accurate

translations.

3

does not, and we affirm.

Plaintiff Roberta A. Dampf-Aguilar, a professional bail bondsman licensed

by the State of Oklahoma, is president of plaintiff Affordable Bail Bonds, Inc.

(collectively “the Bondsman”). The Bondsman posted two bonds with the District

Court of Tulsa County as surety for the promise of defendant, Bonito Yanez, to

appear in court as ordered or forfeit the bonds. The bonds’ face value totaled

$16,000 and were executed by Yanez as principal and by the Bondsman, through

an attorney-in-fact, as surety. The day before the bonds were posted, debtor Jorge

H. Sandoval signed a “plain-talk” contract and a bond agreement agreeing to

indemnify the Bondsman for the full amount of the bond posted in the event

Yanez failed to appear for trial.1

 When Yanez failed to appear, the bonds were

forfeited, Yanez and the Bondsman became responsible for payment of the bonds

to the State of Oklahoma, and an order and judgment of forfeiture was entered

against plaintiff Dampf-Aguilar and her attorney-in-fact. Aplt. App. at 27. 

Pursuant to the forfeiture judgment, the Bondsman paid $16,000 to the State of

Oklahoma on behalf of Yanez. 

The Bondsman then brought a breach of contract action against Sandoval in

state court where she obtained a default judgment in the amount of $20,150. 
2 In the case at bar, the bankruptcy court faced a situation indistinguishable

for all relevant purposes from another case pending before it. See Affordable Bail

Bonds, Inc. v. Thompson (In re Thompson), Bankr. No. 05-15680-R,

Adv. No. 07-1016-R, 2007 WL 2738171 (Bankr. N.D. Okla. Sept. 12, 2007). 

In deciding the Sandoval case, the bankruptcy court adopted “the analysis,

reasoning and authorities set forth in the Summary Judgment Order entered in the

Thompson Case in concluding that the Bondsman cannot prevail on a Section

523(a)(7) claim under the facts alleged in the Complaint in this case.” Aplt. App.

at 64. Because the Thompson bankruptcy was filed before the effective date of

§ 158(d)(2)(A), we assume, without deciding, that it was not eligible to be

appealed directly to this court. Sandoval’s case, however, was eligible for direct

appeal to this court, although Sandoval has not appeared in this appeal. We have

granted the Thompsons’ motion for leave to become amicus and have considered

the arguments and materials presented in their amicus-curiae brief.

4

Sometime after the entry of the default judgment against him, Sandoval filed for

Chapter 7 protection, and the Bondsman brought this adversary proceeding

seeking a determination that the debt owed her by Sandoval was nondischargeable

under 11 U.S.C. § 523(a)(7).

The bankruptcy court held that the debt was dischargeable because

§ 523(a)(7) did not apply. It therefore dismissed the Bondsman’s complaint for

failure to state a claim under Fed. R. Civ. P. 12(b)(6), made applicable to the

proceeding by Bankruptcy Rule 7012. The Bondsman elected to appeal to the

district court which granted her motion for certification to appeal directly to this

court under 28 U.S.C. § 158(d)(2)(A). We subsequently granted the Bondsman’s

petition for permission to appeal. See 28 U.S.C. § 158(d)(2)(A).

2

The appearance bonds filed in the Tulsa County district court are signed by

defendant Yanez, the attorney-in-fact for the Bondsman, and a deputy court clerk. 
3 The copy of the contract included in the record has a signature line for

“agent,” but that line is unsigned. Aplt. App. at 35.

5

They obligate Yanez and the Bondsman, to pay the State of Oklahoma $15,000

and $1,000 respectively upon the nonappearance of Yanez in court at the time

stated on the bonds. Neither bond is signed by or refers to Sandoval. 

The order and judgment of forfeiture lists only the Bondsman and her

attorney-in-fact as “bondsman” and finds “that the conditions of said appearance

bond[s] have been broken by both the defendant and the bondsman.” Aplt. App.

at 27, 33. Neither the judgment of forfeiture nor the receipt for payment of the

forfeiture refer in any way to Sandoval. Id.

As mentioned above, Sandoval did sign three documents in relation to this

matter. The “plain talk” contract, printed on the Bondsman’s letterhead, was

signed by defendant Yanez, and by Sandoval as the indemnitor.3

 In it, Sandoval

promised to pay the full amount of the bond, including any unpaid bond premium,

in the event of forfeiture. Id. at 35, 36. In the Bond Agreement, signed only by

Sandoval, he promised to pay the Bondsman $1600 for the bond and to reimburse

the Bondsman for actual expenses in case of forfeiture. Id. at 38-39. The

Indemnitor/Guarantor Checklist, again signed only by Sandoval, memorialized

Sandoval’s understanding that he was “responsible for paying the full amount of

the bond posted if the defendant does not appear in court for every appearance

and any other time ordered by the court,” and further that “if the bond is ordered
6

forfeited . . . [he] must pay the full amount of the bail forfeited to the bail

agency.” Id. at 42. 

“In reviewing a bankruptcy court decision under 28 U.S.C. § 158(a) and

(d), the district court and the court of appeals apply the same standards of review

that govern appellate review in other cases. Because this case requires us to

determine the meaning of 11 U.S.C. § 523(a)(7), we review the [bankruptcy]

court’s decision de novo.” Troff v. Utah (In re Troff), 488 F.3d 1237, 1239

(10th Cir. 2007) (quotations and citation omitted). 

It is important at the outset to understand what this case is not. It is not a

case where the debtor was the defendant in the underlying criminal action who

had previously jumped bail and is now attempting to get his debt to a

governmental unit discharged in bankruptcy. Nor is it a case involving a

bail-bondsman debtor or other type of surety debtor who is attempting to

discharge a debt owing directly to a governmental unit incurred as a result of the

nonappearance of a defendant. We are not concerned here with the nature, scope,

or operation of the bond agreement between the Bondsman and the State of

Oklahoma. With those caveats in mind, we turn to the statutory exception to

discharge provided by 11 U.S.C. § 523(a)(7). As noted above, the statute

provides, in pertinent part:

(a) A discharge under section 727 . . . of this title does not

discharge an individual debtor from any debt —
7

. . . .

(7) to the extent such debt is for a fine, penalty, or forfeiture

payable to and for the benefit of a governmental unit, and is not

compensation for actual pecuniary loss. . . .

11 U.S.C. § 523(a)(7). In order to determine whether Sandoval’s debt is immune

from discharge, we must decide whether it meets all three requirements specified

in § 523(a)(7). City of Philadelphia v. Gi Nam (In re Nam), 273 F.3d 281, 285

(3rd Cir. 2001).

The bankruptcy court held that “Sandoval was not a party to the Bonds that

were forfeited, and therefore his debt is not for a forfeiture of a bond, nor is his

debt for a fine or penalty imposed upon him by the State.” Aplt. App. at 64. On

appeal, the Bondsman again argues that this debt is a forfeiture. It is

unnecessary, however, for us to decide that question because this debt is not

payable to and for the benefit of a governmental unit, and thus the statute does

not bar discharge.

There is no obligation here flowing from Sandoval to the State of

Oklahoma. Both the bond agreement between Sandoval and the Bondsman and

the checklist provide that any money owed is payable to the Bondsman. Aplt.

App. at 37, 42. In the Bondsman’s opening brief, the corporate disclosure

statement required by Fed. R. App. P. 26.1 indicates that the Bondsman is a

nongovernmental corporate entity. Plaintiff Dampf-Aguilar’s affidavit states that

she is the sole shareholder and director of plaintiff Affordable Bail Bonds, Inc. 
8

Aplt. App. at 30. The Bondsman is not a governmental unit, and the fact that she

ultimately paid money to the State of Oklahoma after Yanez failed to appear does

not change her status from that of a private corporate entity. See Empire Bonding

Agency v. Lopes (In re Lopes), 339 B.R. 82, 89 (Bankr. S.D.N.Y. 2006). 

The Bondsman attempts to satisfy the government-entity prong of

§ 523(a)(7) by arguing that she should be subrogated to the rights of the State of

Oklahoma. The bankruptcy court was correct, however, that the State had no

rights on the bail bond or otherwise against Sandoval. Thus, “stepping into the

shoes” of the State as a subrogee avails the Bondsman nothing in regard to the

dischargeability of the debt and fails to afford the Bondsman status as a

governmental unit. See In re Lopes, 339 B.R. at 90; Correales v. Sanchez (In re

Sanchez), 365 B.R. 414, 417 (Bankr. S.D.N.Y. 2007).

As must be clear, there is very little published law in this area. There is

one anomalous and unpublished case, however, from the bankruptcy court for the

Southern District of New York that runs counter to the bankruptcy court here and

to In re Lopes and In re Sanchez. The Bondsman urges this court to follow

Amwest Surety Ins. Co. v. Contreras (In re Contreras), 2006 Bankr. LEXIS 4402

(Bankr. S.D.N.Y. 2006). Contreras, however, decided after the published

authority of the same court in Lopes, failed to cite or distinguish the Lopes

precedent and is unpersuasive because it is devoid of meaningful analysis.

The Bondsman argues that In re Lopes was wrongly decided and that the
9

precedent of In re Nam, 273 F.3d 281, Dobrek v. Phelan, 419 F.3d 259 (3d Cir.

2005), and United States v. Zamora, 238 B.R. 842 (D. Ariz. 1999), compels

reversal. Those cases are all inapposite, however, because in each of them the

debtor was directly obligated to the governmental unit. It is the relationship (or

non-relationship) of Sandoval to the State of Oklahoma here that brings this case

outside the ambit of the Bondsman’s cited authority.

The Bondsman argues that “[a]s a matter of public policy, it makes no

sense to except from discharge the bondsman’s obligation for the forfeiture but []

allow the guarantor/co-signer on the forfeited bond to obtain a discharge for the

debt.” Aplt. Br. at 20. This circuit has yet to determine whether, under the usual

circumstances, a bondsman-debtor’s obligation under a forfeited bond may be

discharged, and this case does not present that issue. In any event, the application

of the statute in this case is clear.

“[E]xceptions to discharge are to be narrowly construed, and because of the

fresh start objectives of bankruptcy, doubt is to be resolved in the debtor’s favor.”

Bellco First Fed. Credit Union v. Kaspar (In re Kaspar), 125 F.3d 1358, 1361

(10th Cir. 1997). Treating this debt as nondischargeable under § 523(a)(7) would

be inconsistent with the plain language of the section.

The judgment of the bankruptcy court is AFFIRMED.