NOT FOR PUBLICATION * UNITED STATES BANKRUPTCY APPELLATE PANEL OF THE TENTH CIRCUIT

_________________________________ IN RE BILLY RUSSELL DAMPIER, JR.,
Debtor.

__________________________________ MEDICAL LIEN MANAGEMENT, INC. and CREDIT INVESTMENTS, INC.,
Plaintiffs

– Appellees,

v. BILLY RUSSE LL DAMPIER, JR.,
Defendant

– Appellant. BAP No. CO

- 16

- 020

Bankr. No. 14

- 24526

Adv. No. 15

- 01028 Chapter 7

OPINION

_________________________________ Appeal from the United States Bankruptcy Court for the District of Colorado

_________________________________ Before KARLIN , Chief Judge, JACOBVITZ , and MOSIER , Bankruptcy Judges.

_________________________________ MOSIER , Bankruptcy Judge.

_________________________________ As part of a state criminal sentence for theft , Billy Russell Dampier , Jr. was ordered to pay restitution to the State of Colorado . The Bankruptcy C ourt declared Dampier ’ s

* This unpublished opinion may be cited for its persuasive value, but is not precedential, except under the doctrines of law of the case, claim preclusion, and issue preclusion. 10th Cir. BAP L.R. 8026

- 6. FILED U.S. Bankruptcy Appellate Panel of the Tenth Circuit April 11, 2017
Blaine F. Bates Clerkcriminal restitution debt to be nondischargeable pursuant to 11 U.S.C. § 523(a) (7)

. 1 Dampier contends that the Bankruptcy Court committed legal error because the plain meaning of § 523(a)(7 ) does not bar discharge of his restitution debt

. W e find Dampier ’ s restitution debt i s excepted from discharge under § 523(a)(7 )

. On that basis, we affirm.
I. FACTUAL AND PROCEDURAL HISTORY Dampier stole money from his employers, Credit Investments, Inc. and Medical Lien Management, Inc. (Appellees ) and was formally charged with theft and forgery. 2 Dampier p leaded guilty to criminal theft under Colorado law

. As part of his criminal
sentence, t he state criminal court ordered Dampier to pay restitution (Restitution Order) for
Credit Investments in the amount of $108,343.11 and f o r Medical Lien Management in the
amount of $88,348.58

. After he was sentenced, Dampier filed his c hapter 7 petition and t he Appelle e s filed their complaint 3 objecting to the discharge of Dampier ’ s debts pursuant to § 523(a) (2) (A), (a)(4), (a)(6), and (a)(7)

. Appellees subsequently amended the complaint. 4 Dampier
answered the amended complaint 5 denying the allegations relating to § 523(a)(2)(A),

1 All future references to “Code,” “Section,” and “§” are to the Bankruptcy Code, Title 11 of the United States Code, unless otherwise indicated.

2 Complaint at 5, in Appellant’s App. at 14.

3 Appellant’s App. at 10.

4 Appellant’s App. at 40.

5 Appellant’s App. at 52.
2(a)(4), and (a)(6). 6 With respect to the § 523(a)(7) claims , Dampier admitted that he was charged with and had ple a d ed guilty to criminal theft and that he was ordered to pay restitution totaling $196,691 , 7 but h e denied the R estitution Order was a nondischargeable fine, penalty, or forfeiture payable to and for the benefit of a governmental unit within the meaning of § 523(a)(7). 8
The Appellees moved for summary judgment on the ir § 523(a)(6) and (a)(7)
claims. 9 T he Bankruptcy C ourt found the restitution debt was excepted from discharge under § 523(a)(7) and entered an order granting partial s ummary j udgment ( Summary Judgment Order)

. 10 In light of this finding, t he Bankruptcy C ourt concluded that it was not necessary to addr ess the Appellees ’ remaining § 523(a)(6) argument , and also noted that
the Appellees ’ claims under § 523(a)(2)(A) and (a)(4) were “ similarly duplicative. ” 11 A t the Bankruptcy C ourt ’ s request , the Appellees filed a motion to dismiss their § 523(a)(2)(A), (a)(4) , and (a)(6) claims , 12 and t he Bankruptcy C ourt entered an o rder

6 Answer to Amended Complaint at 2, in Appellant’s App. at 53.

7 Id. in Appellant’s App. at 53.

8 Id. in Appellant’s App. at 53.

9 Motion for Partial Summary Judgment on the Fourth and Fifth Claims for Relief in Amended Compla int Pursuant to Fed. R. Civ. P. 56 in Appellant’s App. at 60; Supplement to Motion for Partial Summary Judgment on the Fourth and Fifth Claims for Relief in Amended Complaint Pursuant to Fed. R. Civ. P. 56 in Appellant’s App. at 76 ; Amended Motion for Part ial Summary Judgment on the Fourth and Fifth Claims for Relief in Amended Complaint Pursuant to Fed. R. Civ. P. 56 in Appellant’s App. at 82.

10 Appellant’s App. at 251.

11 Summary Judgment Order at 3, in Appellant’s App. at 253.

12 Motion to Dismiss Counts I, II, III, and IV in Appellant’s App. at 254. 3d ismiss ing the § 523(a)(2)(A), (a)(4), and (a)(6) claims (Dismissal Order) “ without prejudice

. ” 13 Dampier timely appealed the Summary Judgment Order and the Dismissal
Order. 14
II. JURISDICTION AND STANDARD OF REVIEW This Court has jurisdiction to hear appeals of final orders. 15 “ An order granting

s ummary judgment disposing of [ a ] plaintiff ’ s claims against [ a ] defendant is a final order for purposes of appeal. ” 16 Although the Summary Judgment Order was a partial summary judgment, it disposed of the Appellees ’ § 523(a)(7) claims and required the dismissal of the remaining causes of action . The Summary Judgment Order and the Dismissal Order are final and appealable. We review an order granting summary judgment de novo

. 17
III. DISCUSSION
A. The Appellee s ’ § 523(a)(7) Claim
. The relevant portion of § 523(a)(7) provides that a discharge in bankruptcy does not discharge an individual debtor from any deb t “ to the extent such debt is for a fine, penalty,

13 Appellant’s App. at 261.

14 Notice of Appeal and Statement of Election in Appellant’s App. at 262.

15 28 U.S.C. § 158(a)(1), (b)(1), and (c)(1).

16 Expert S. Tulsa, LLC v. Cornerstone Creek Partners, LLC (In re Expert S. Tulsa, LLC) , 534 B.R. 400, 407 (10th Cir. BAP 2015) (citing Tanner v. Barber (In re Barber) , 326 B.R. 463, 466 (10th Cir. BAP 2005) ) , aff’d , 842 F.3d 1293 (10th Cir. 2016).

17 Russell v. Tadlock (In re Tadlock) , 338 B.R. 436, 438 (10t h Cir. BAP 2006).
4or forfeiture payable to and for the benefit of a governmental unit, and is not compensation for actual pecuniary loss . . . . ” 18
1
. The Applicable Law
. T he Supreme Court addressed § 523(a)(7) i n Kelly v. Robinson

. 19 In Kelly , the debtor was convicted of larceny and the sentencing judge ordered the debtor to make restitution as a condition of probation. The debtor subsequently filed for bankruptcy under chapter 7. T he Supreme Court held “ that § 523(a)(7 ) pre serves from discharge any condition a state criminal court imposes as part of a criminal sentence , ” 20 and determined
that restitution obligations, imposed as conditions of probation, are non dischargeable in proceedings under c hapter 7 of the Code. Kelly ’ s holding reaches beyond its facts , 21 but the Supreme Court clearly expla ined the basis for its decision

. It noted that its
i nterpretation of the Code “ must reflect

. . . a deep conviction that federal bankruptcy
courts should not invalid ate the results of state criminal proceedings. The right to formulate and enforce penal sanctions is an important aspect of the sovereignty retained by
the States. ” 22

“ S ection 523(a)(7) protects traditional criminal fines ; it codifies the judicially

create d e xception to discharge for fines. ” 23 The Kelly Court observed that r estitution

18 § 523(a)(7).

19 479 U.S. 36 (1986).

20 Id . at 50

. 21 Troff v. Utah (In re Troff) , 488 F.3d 1237, 1240 (10th Cir. 2007)

. 22 Kelly , 479 U.S. at 47

. 5differs from tradit ional fines in two major ways: restitution (1) is forwarded to the victim , and (2) may be calculated based on the harm the defendant has caused. 24 But the Supreme
Court concluded that these t wo differences make no difference under § 523(a)(7)

—

s ection 523(a)(7) does not allow the “ discharge of a criminal judgment that take s t he form
of restitution. ” 25 The Court elaborated:
The criminal justice system is not operated primarily for the benefit of victims, but for the benefit of society as a whole. Thus, it is concerned not only with punishing the offender, but also with rehabilitating him. Although restitution does resemble a judg ment “ for the benefit of ” the victim, the context in which it is imposed undermines th at conclusion. The victim has no control over the amount of restitution awarded or over the decision to award restitution. Moreover, the decision to impose restitution ge nerally does not turn on the victim ’ s injury, but on the penal goals of the State

. . . . 26 Unlike obligations that arise out of contractual, statutory or common law dut ies , restitution is “ rooted in the traditional responsibility of a state to protect it s citizens

. . . and to rehabilitate an offender

. ” 27 Although restitution order s m ay result in compensation to victim s , they are not assessed for that purpose ; they are assessed because of the penal and rehabilitative interests of the state. 28 And those interests are
what “ place restitution orders within the meaning of § 523(a)(7). ” 29

23 Id. at 51.

24 Id . at 51

- 52.

25 Id . at 52.

26 Id.

27 Id. (citation and internal quotation marks omitted).

28 Id. at 53.

29 Id. 6The United States Court of Appeals for the Tenth Circuit addressed § 523(a)(7) in Troff v. Utah (In re Troff)

. 30 I n Troff , the debt or plead ed guilty to arson , and the sentencing judge ordered the debtor to make restitution as a condition of probation. After the debtor completed his probation, his restitution obligation was converted to a civil judgment made payable to the victim. The debtor subsequently filed f or bankruptcy under chapter 7. The
Tenth Circuit determined that it was bound by Kelly and held that a criminal restitution obligation that was imposed as part of the Utah state criminal sentence was nondischargeable under § 5 23(a)(7)

. 31 The Kelly Court ’ s method of statutory interpretation emphasized the policy considerations behind § 523(a)(7)

. Although t he Tenth Circuit noted
that a “ strict plain meaning reading ” of § 523(a)(7) might have strengthened Troff ’ s argument , 32 it conclud ed that “ the Kelly Court ’ s reasoning made clear that it would apply
the rule to any obligation imposed as part of a criminal sentence. ” 33 T he Tenth Circu it also
observed that it was not free to disregard Kelly because it “‘ considers itself bound by Supreme Court dicta almost as by the Co urt ’ s outright holdings

. . . . ’ Thus, Kelly

— dicta
and all

— applies. ” 34

30 488 F.3d 1237 (10th Cir. 2007).

31 Id . at 1243

. 32 Id. at 1239

. Troff’s argument was that his restitution payments, which were made to the state but eventually forwarded to the victim, were not “payable to and for the benefit of a governmental unit.” Accordingly, the restitution debt did not come within the plain meaning of § 523(a)(7) and was dischargeable. Id.

33 Id. at 1240 (emphasis added).

34 Id . at 1241 (quoting Gaylor v. United States , 74 F.3d 214, 217 (10th Cir. 1996)).
7U nder the pertinent Utah law, restitution “ is not merely ‘ compensation for [ a victim ’ s ] actual pecuniary loss ’ under § 523(a)(7); rather , it serves the goals of the state ’ s criminal justice system. ” 35 The Tenth Circuit noted that : [c] ourt

- ordered restitution . . . takes into account not only the amount necessary to make a victim whole, but also the financial burden on the defendant, his ability to pay on an installment basis, and “ the rehabilitative effect on the defendant of the payment of restitution and the method of payment. ” 36 Following Kelly , the Tenth Circuit stated that the focus of court

- ordered restitution is “ on the State ’ s interests in rehabilitation and punishment, rather than the vi ctim ’ s desire for compensation. ” 37 The fact that Troff ’ s restitution obligation was converted to a civil judgment payable to the victim made no difference. 2. Application of Controlling Law. Here, the Bankruptcy C ourt concluded that it was bound by Kelly and Troff and
found Dampier ’ s “ payment obligation under the Restitution Order to be nondischargeable under § 523(a)(7), as a matter of law. ” 38 Dampier argues that Kelly and Troff are not binding because Colorado ’ s restitution laws are different

. He contends that under a strict plain meaning reading of the statute , the Restitution Order is expressly excluded from § 523(a)(7)

. But “ t he Supreme Court ’ s decision in Kelly makes clear that we must look

35 Id

. 36 Id . ( citing Utah Code Ann. § 76

- 3

- 201(8)(c) (1999)).

37 Id. (quoting Kelly v. Robinson , 479 U.S. 36, 53 (1986) )

. 38 Summary Judgment Order at 2

- 3, in Appellant’s App. at 252

- 53.
8beyond such a reading to federalism concerns and to the history of this statute

. ” 39 The Kelly Court concluded that any restitution obligation imposed a s part of a state criminal sentence confers a benefit on the government and is not asse ssed for the benefit of the
victim. 40 And like the Troff Court, we are bound by the Supreme Court ’ s holdings and
dicta and are not free to disregard Kelly

. 41 A state ’ s penal and rehabilitative interests in criminal proceedings “ are sufficient to place restitution orders within the meaning of § 523(a)(7)

. ” 42 Dampier attempts to distinguish his case by characterizing the Restitution Order as being “ payable to, and wholly under the control of, a non

- governmental entity. ” 43 Damp ier ’ s characterization is wrong; t he Restitution Order is not wholly under the control
of a non

- governmental entity. Criminal restitution orders may only be obtained by the government , and victims have no control over the amount of restitution awarded or the
dec ision to impose restitution

. The judgment creditor is the State of Colorado , 44 and the Colorado State Judicial Department is responsible for collection of the restitution orders. 45 Among other things, the Judicial Department has the responsibility to conduct an initial

39 Troff , 488 F.3d at 1239

. 40 Kelly , 479 U.S. at 53

. 41 Troff , 488 F.3d at 1241 (quoting Gaylor v. United States , 74 F.3d 214, 217 (10th Cir. 1996)).

42 Kelly , 479 U.S. at 53

. 43 Appellant’s Br. at 26.

44 Appellant’s App. at 119

- 127

. 45 Colo. Rev. Stat. §§ 16

- 18.5

- 104.
9collections investigation, establish payment schedules, file transcripts of restitution orders with various agencies to create liens , and monitor payment of restituti on orders. 46
U nder Colorado law, restitution is defined as compensation for actual pecuniary loss 47 and is “ a final civil judgment in favo r of the state and any
victim. ” 48 But the fact that a restitution order may be enforce d by victims or may result in comp ensation to victims does not change the fundamental nature and purpose of the restitution. As the Supreme Court explained, the context in which restitution is imposed undermines the conclusion that restitution is for the benefit of
the victim. The criminal justice system is operated for the benefit of society as a
whole and is concerned not only with punishing the offender, but also with rehabilitating him. Restitution is “ rooted in [ this ] traditional responsibility of a state to protect its citizens

. . . and to rehabilitate an offender

. ” 49

R estitution orders are a statutorily created penalty created under the Colorado
Criminal Code. 50 The State of Colorado has declared that restitution “ is a mechanism for

46 Id

. 47 Colo. Rev. Stat. § 18

- 1.3

- 602(3)( a). Restitution “means any pecuniary loss suffered by a victim and includes but is not limited to all out

- of

- pocket expenses, interest, loss of use of money, anticipated future expenses, rewards paid by victims . . . , and other losses or injuries proximately caused by a n offender’s conduct and that can be reasonably calculated and recompensed in money.” Id.

48 Colo. Rev. Stat. § 18

- 1.3

- 603(4)(a)(I) (emphasis added).

49 Kelly v. Robinson , 479 U.S. 36, 52 (1986) (citation and internal quotation marks omitted).

50 See Colo . Rev. Stat. § 18

- 1.3

- 601.
10the rehabilitation of offenders ” and “ will aid the offender in reintegration as a productive member of society. ” 51 The state court clearly weighed these considerations in sentencing Dampier , as it sought to impose “ the appropriate sentence, given [the] individual, given
these circumstances. ” 52 Furthermore, t he criminal sentence included two years of work

release and ten years of probation , which was conditioned on payment of the court

- o rdered
restitution and gave Dampier the opportun ity to prove his stated “ desire to pay back restitution and to make good on w hat he has done wrong. ” 53 The Restitution Order here is a penalty, payable to the State of Colorado, not for its actual pecuniary loss, but to benefit the State in its effort to protect its citizens and to rehabilitate Mr. Dampier

. Although the Appellees may ultimately receive the restitution payments through their own collection efforts , that fact makes no difference. T he Restitution Order focused on punishment and rehabilitation and is clearly within the meaning of § 523(a)(7) , and Dampier ’ s “ attempt to discharge the debt is squarely within
the cross

- hairs of the Supreme Court ’ s decision in Kelly

. ” 54 The Bankruptcy C ourt appropriately considered and applied the holdings in Kelly and Troff , and concluded it was bound by those decisions. W e a gree
.

51 Colo. Rev. Stat. § 18

- 1. 3

- 601(1)(c) , (2).

52 Exhibit 13, Summary Judgment Motion at 52, in Appellant’s App. at 196.

53 Id . at 53

- 54, in Appellant’s App. at 197

- 98. We also note the Tenth Circuit’s recognition that holding a restitution obligation to the victim is dischargeable would “disrupt two decades of Congressional reliance on the notion that the [ Kelly ] holding applied whether the crime’s victim was the govern ment or a private individual.” Troff v. Utah (In re Troff) , 488 F.3d 1237, 1242 (10th Cir. 2007).

54 Troff , 488 F.3d at 1241

. 11B. The Appeal of the Dismissal Order is Moot. Dampier also argues that the B ankruptcy Court erred in dismissing the remaining
causes of action “ without prejudice ” and that, if the Court reverses, the Appellees are precluded from refiling any of the dismissed claims. 55 A ny dispute over the Dismissal
Order has been rendered moot by this Court ’ s affirmance of the Summary Judgment Order. Accordingly, we decline to address this issue on appeal

. C. Appellees ’ Motion for Attorney ’ s Fees . The Appellee s seek an award of attorney ’ s fees under Fed. R. Bankr. P. 8020

. 56
Rule 8020 allows the Court to “ award just damages and . . . costs ” to an appellee if the
Court finds that the appeal is frivolous

. Although Rule 8020 does not establish a standard
for frivoli ty, this Court has held that an appeal is frivolous “ if the result is obvious or the arguments are wholly without merit. ” 57 W e deny Appellees ’ motion for two reasons. First,
we do not find Appellant ’ s argument that the Colorado statute defining restitution as compensation for actual pecuniary loss is different from the statutes at issue in Kelly and Troff to be frivolous . Second, Appellant ’ s argument that the Court should not deviat e from the plain language of § 523(a)( 7) is not wholly without merit

. Judge Tymkovich ’ s concurring opinion in Troff t ook issue with the Supreme Court ’ s decision in Kelly , which

55 Appellant’s Br. at 58.

56 Motion for Attorney’s Fees Pursuant to Fed. R. Bankr. P. 8020 , BAP ECF No. 26.

57 Williamson v. Murray ( In re Murray ) , 506 B.R. 129, 141 (10th Cir. BAP 2014) (quoting Joseph v. Lindsey (In re Lindsey) , 229 B.R. 797, 802 (10th Cir. BAP 1999)).

“ Some of the factors that courts have considered in analyzing the frivolity of an appeal include an appellant ’ s bad faith, [and] whether the argument presented on appeal is meritless in toto or only partially frivolous

. . . .” Id.
12“ discount [ ed ] the statutory text for policy considerations. ” 58 Judge Tymkovich argued that

“ subject to the vagaries of stare decisis , the Supreme Court could and should correct its error by . . . narrowing the holding of Kelly to the statutory text. ” 59 Accordingly, the Appellees ’ request for attorney ’ s fees is DENIED.
IV. CONCLUSION The Bankruptcy C ourt did not err in granting summary judgment in favor of the Appellees on the ir § 523(a)(7) claim

. Accordingly, the Bankruptcy C ourt ’ s decision is
AFFIRMED.

58 Troff , 488 F.3d at 1243 (T ymkovich, J., concurring )

. 59 Id. at 1243

- 44 ( Tymkovich, J., concurring )

.

13