### NOT FOR PU BLICA TION

U NIT E D ST A T E S BA NK RU PT CYA PPE L L A T E PA N E L

OF T HE NINT H CIRCU IT In re: LEN O R E L. A LBERT -SHER IDA N, DBA Law O ffic es o f Leno r e A lb ert,

Deb to r. LEN O R E L. A LBERT -SHER IDA N,

A p pellant,

v. STA T E BA R

O F C A LIFO RN IA ; MA R IC RU Z FA RFA N ; BRA N DO N TA DY; A LEXHA C K ERT; YVETTE R O LA N D; PA U L BERN A RDIN O,

A p pellees. BA P N o . C C -18-1222-LSF Bk. N o . 8:18-b k-10548-ES A dv. N o . 8:18-ap-01065-SC

M E M ORA ND U M *

A rgued and Sub m itted o n Feb ruary 21, 2019

at Pasadena, C alifo rnia Filed – A pril 11, 2019 

# FIL ED
APR 11 2019
SUSAN M . SPRAUL, CLERK U. S. BKCY

. A PP. PANEL O F T HE NI NT H CI RCUI T

* Thi s di sposi ti on i s not appr opr i ate for publi c ati on. Although i t may be ci ted for whatev er per suasiv e v alue i t may hav e, see Fed. R. App. P. 32.1, i t has no pr ecedenti al v alue, see9th Ci r . BAP Rule 8024-1.A ppeal fro m the U nited States Bankruptcy C o urt fo r the C entral Distric t o f C alifo rnia Ho no r ab le Sc o t t C . C larkso n, Bankruptcy Judge, Presiding A ppearanc es: Leno re L. A lb ert-Sheridan argued pro se; Suzanne C

.

Grandt argued fo r A ppellees.

Befo r e: LA FFERTY, SPRA K ER , and FA RIS, Bankruptcy Judges.

INT ROD U CT I ON Deb to r Leno re A lb ert-Sheridan appeals the b ankruptc y c o urt’s o rder dism issing her adversary pro c eeding against A ppellees State Bar o f C alifo rnia and its em plo yees Maric ruz Farfan, Brando n Tady, A lex Hac kert, Y vette R o land, and Paul Bernardino . In that adversary pro c eeding, Ms. A lb ert 1 so ught, am o ng o ther things, a dec laratio n that
sanc tio ns and c o sts o rdered paid b y the C a lifo rnia Suprem e C o u rt as a
c o nditio n o f reinstatem ent o f her law lic ense were dischargeab le. The b ankruptc y c o urt did no terr in c o nc luding that sanc tio ns and c o sts were
no ndischargeab le under § 523(a)(7). 2 The rem aining c a uses o f ac tio n

1 Although Debtor ’s last name i s li sted on her bankr uptcy peti ti on as “Alber tS her i dan,” she r efer s to her self as “Lenor e Alber t” and “Ms. Alber t” i n her paper s. We thus r efer to her as “Ms. Alber t” thr oughout thi s Memor andum.

2 Unless specifi ed other wi s e, all chapter and secti on r efer ences ar e to the (continued...) 2pleaded in Ms. A lb ert’s c o m plaint were reliant o n the prem ise that the

entire am o unt was dischargeab le. Bec ause it fo und o therwise, the b ankruptc y c o urt did no terr in dism issing the b alanc e o f Ms. A lb ert’s
c o m p laint. A c c o rdingly, we A FFIRM.

F A C T U A L BA CK GROU N D Ms. A lb ert was an atto rney lic ensed to prac tic e in the state o f C alifo rnia. In 2015 and 2016, the State Bar of C alifo rnia (“State Bar”) filed N o tic es o f Disc iplinary C harges in State Bar C o urt alleging that Ms. A lb ert had failed to c o o perate with State Bar investigatio ns, disob eyed superio r
c o u rt o rders o rdering Ms. A lb ert to pay disc o very sanc tio ns, failed to perfo rmc o m petent legal servic es, failed to render ac c o unts o f c lient funds, and failed to refund unearned fees. A fter a trial, the State Bar C o urt fo und Ms. A lb ert c ulpab le o n all b ut
o ne c o unt and rec o m m ended a m inim um30-day suspension, after which Ms. A lb ert wo u ld rem ain suspended until she pro vided to the State Bar pro o f o f paym ent o f fo ur c o u rt-o rdered disc o very sanc tio ns. The State Bar C o urt alsorec o m m ended that c o sts b e awarded tothe State Bar under C alifo rnia Business &Pro fessio ns C o de (“C BP”) § 6086.10.

2 (...continued) Bankr uptcy Code, 11 U.S

. C. §§ 101-1532, all “Rule” r efer ences ar e to the Feder a l Rules of Bankr uptcy Pr ocedur e, and all “Ci v i l Rule” r efer ences ar e to the Feder al Rules of Ci v i l Pr ocedur e. 3Ms. A lb ert appealed the rec o m m endatio n to the State Bar Review

Departm ent, whic h fo und Ms. A lb ert c ulpab le o n two c o unts b ut dism issed the o ther two fo r insuffic ient evidenc e. The R eview Departm ent agreed with the rec o m m endatio n o f a 30-day suspension, pro o f o f paym ent o f three o f the fo ur disc o very sanc t io ns to taling $5,735 plus interest, and an award o f c o sts tothe State Bar. Ms. A lb ert so ught review o f these determ inatio ns with the Suprem e C o urt o f C alifo rnia. O n Dec emb er 13, 2017, that c o u rt issued a final o rder o f disc ipline reflec ting the rec o m m endatio n o f the R eview Departm ent, inc luding suspensio n. Ms. A lb ert so ught rehearing, whic h the suprem e
c o u rt denied o n Feb r uary 14, 2018. Ms. A lb ert filed fo r chapter 13 relief o n Feb r uary 20, 2018. She then
m o ved the State Bar and the suprem e c o urt to reinstate her lic ense and waive c o sts b a sed o n her inab ility to pay. The State Bar, b elieving the
m o netary sanc t io ns were dischargeab le in c hapter 13, reinstated Ms. A lb ert’s lic ense retro ac t ive to March 16, 2018. O n June 26, 2018, the b ankruptc y c o u rt c o nverted Ms. A lb ert’s
chapter 13 c ase to chapter 7 b ased o n ineligib ility under § 109(e) and Ms. A lb ert’s inab ility to fund a c o nfirm ab le plan. Thereafter, the State Bar sent a letter to the suprem e c o urt explaining that the c ase had b een
c o nverted and request ing that the c o urt deny Ms. A lb ert’s m o tio n fo r reinstatem ent. Ms. A lb ert also sent a letter to the suprem e c o urt arguing

4that the deb t rem a ined dischargeab le despite c o nversio n. On July 25, 2018,

the suprem e c o urt denied Ms. A lb ert’s m o tio n fo rreinstatem ent. In the m eantim e, Ms. A lb ert filed an adversary pro c eeding against A ppellees. The c o m plaint alleged five c auses o f ac tio n: (1) dischargeab ility
o f deb t under § 523(a)(7); (2) vio latio n o f § 525(a); (3) vio latio n o f 42 U .S.C

. § 1983; (4) vio latio n o f R o senthal A c t/Fair Deb t C o llec tio n Prac tic es A c t (“FDC PA ”); and (5) unc o nstitutio nality o f C BP §§ 6103, 6086.10, and 6140.7. Ms. A lb ert so ught: (1) dec laratio ns that (a) the deb t to the State Bar is dischargeab le; and (b ) the statutes under which she was sanc tio ned and disc iplined are unc o nstitutio nal as applied; (2) injunc tive relief requiring the State Bar to reinstate her lic ense b ased o n its vio latio ns o f § 525 and 42 U .S.C

. § 1983; and (3) dam ages fo r vio latio ns o f the R o s enthal A c t/FDC PA

. Ms. A lb ert c o nc u r rently filed an em ergenc y m o tio n fo r a tem p o rary restraining o rder, which the b ankruptc y c o urt denied “due to insuffic ient gro unds stated.” A ppellees m o ved to dism iss the adversary pro c eeding fo r failure to state a c laim . A ppellees also asserted that the b ankruptc y c o u rt sho uld ab stain pursuant tothe Y o ungerab stentio n and R o o ker-Fe ldm a n do c trines. Lastly, they argued that the State Bar was entitled to Eleventh A m endm ent im m unity and the individual defendants to judic ial im munity. Ms. A lb ert filed an o ppo sitio n, and the State Bar a reply. In the m eantim e, Ms. A lb ert filed a new A p plic atio n fo r TRO and O rder to Sho w C ause Why a

5Prelim inary Injunc tio n Sho uld N o t Issue.

The b ankruptc y c o urt heard b o th m atters o n A ugust 1, 2018. It denied Ms. A lb ert’s m o tio n fo r a TROand granted the State Bar’s m o tio n to dism iss b y separate o rders entered A u gust 9, 2018. Ms. A lb ert tim ely appealed b o th o rders. 3 JU RISD ICT ION The b ankruptc y c o urt had jurisdic tio n pursuant to28 U .S.C . §§ 1334 and 157(b )(2)(A ), (I), and (O ). W e have jurisdic t io n under 28 U .S.C . § 158. ISSU E S Did the b ankruptc y c o urt err in dism issing the adversary pro c eeding? Did the b ankruptc y c o urt ab use its disc r etio n in denying Ms. A lb ert’s
m o tio n fo r a TROand o rder to sho w c ause? ST A ND A RD S OF RE V IE W W e review de no vo a b ankruptcy c o urt’s o rder granting a m o tio n to dism iss fo r failure to state a c laim

. Mo v sesia n v. V i cto riaV ersicherung AG

, 670 F.3d 1067, 1071 (9th Cir. 2012) (en b anc ); Ceda no v. Auro ra Lo a n S ervs., LLC(In re Ceda no ) , 470 B.R
. 522, 528 (9th C ir. BA P 2012). Under de no vo

3 On the same date Ms. Alber t fi led her noti ce of appeal, she fi led an obj ecti on to the S tate Bar ’s pr oposed or der and the bankr uptcy cour t’s or der denying her appli cati on for a TRO. The bankr uptcy cour t tr eated the obj ecti on as a moti on to alter or amend underCi v i l Rule 59(e), incor por ated i n bankr uptcy v i a Rule 9023, and deni ed i t by or der enter ed December14, 2018. Ms. Alber t di d not separ ately appeal that or der, nor di d she amend hernoti c e of appeal in thi s case. 6review, we lo o k at the m atter anew, as if it had no t b een heard b efo r e, and

as if no dec isio n had b een rendered previo usly, giving no deferenc e to the b ankruptc y c o urt’s determ inatio ns. F reem a n v. D i recTV , Inc. , 457 F.3d 1001, 1004 (9th C ir. 2006). W e review an o rder denying injunc tive relief fo r an ab use o f disc retio n. S ee Pa c. R a dia tio n O nco logy, LLC v. Q ueen’s Med. C tr. , 810 F.3d 631, 635 (9th C ir. 2015). Todeterm ine whether the b ankruptc y c o urt ab used its disc retio n, we c o nduc t a two -step inquiry: (1) we review de no vo whether the b ankruptc y c o urt “identified the c o r rec t legal rule to apply to the relief requested” and (2) if it did, whether the b ankruptc y c o urt’s applic atio n o f the legal standard was illo gic al, im plausib le, o r “witho ut suppo rt in inferenc es that m ay b e drawn fro mthe fac t s in the rec o rd.” United S ta tes v. Hinkso n , 585 F.3d 1247, 1261-62 (9th Cir. 2009) (en b anc ). D ISCU SSION In reviewing the b ankruptc y c o urt’s dec isio n o n a m o tio n to dism iss, we apply the sam e standards toC ivil Rule 12(b )(6) dism issal m o t io ns that all o ther federal c o urts are required toapply. Ba rnes v. Belice (In re Belice) , 461 B.R . 564, 572–73 (9th Cir. BA P 2011). Under C ivil Ru le 12(b )(6), m ade applic ab le in adversary pro c eedings b y Rule 7012, we m a y dism iss a
c o m p laint fo r “failure to state a c laimupo n which relief c an b e granted.” To survive a C ivil Rule 12(b )(6) dism issal m o tio n, a c o m plaint m u st present
c o gnizab le legal theo ries and suffic ient fac tual allegatio ns to suppo rt tho se

7theo ries. S ee Jo hnso n v. R iverside H ea lthca re S ys., LP, 534 F.3d 1116, 1121–22 (9th C ir. 2008). A s the Suprem e C o urt has explained:
a c o m p laint m ust c o ntain suffic ient fac tual m a tter, ac c epted as true, to state a c laim to relief that is plausib le o n its fac e. . . . A c laimhas fac ial plausib ility when the plaintiff pleads fac tual c o ntent that allo ws the c o urt to draw the reaso nab le inferenc e that the defendant is liab le fo r the m isc o nduc t alleged. . . . Threadb a re rec itals o f the elem ents o f a c ause o f ac tio n, suppo rted b y m ere c o nc luso ry statem ents, do no t suffic e. Ashcro ft v. Iqba l, 556 U .S. 662, 678 (2009) (citatio ns and internal quo t atio n
m arks o m itted). In reviewing the suffic ienc y o f a c o m plaint under C ivil Rule 12(b )(6), we m ust ac c ept as true all fac ts alleged in the c o m plaint and draw all reaso nab le inferenc es in favo r o f the plaintiff. S e e N ewca l Indus., Inc. v. Iko n O

ffice S o ls. , 513 F.3d 1038, 1043 n.2 (9th Cir. 2008). Ho wever, we do no t need to ac c ept as true c o nc luso ry allegatio ns o r legal
charac t erizatio ns c ast in the fo rmo f fac tual allegatio ns. S ee Bell Atl. C o rp. v. Two m bly, 550 U .S. 544, 555–56 (2007). W e m a y use judic ially no tic ed fac ts to estab lish that a c o m plaint do es
no t state a c laimfo r relief. S k ilsta f, Inc. v. C V

S Ca rem a rk Co rp. , 669 F.3d 1005, 1016 n.9 (9th C ir. 2012). A . T he bankruptcy c ourt did not err in granting A p pellees ’ m otion to dis m is s . The C alifo rnia Suprem e C o urt o rdered Ms. A lb ert to pay, as a
c o nditio n to her lic ense reinstatem ent: (1) c o sts o f $18,714 incurred b y the

8State Bar in pro secuting Ms. A lb ert’s m isc o nduc t pursuant toC BP

§ 6086.10(b )(3); and (2) unpaid disc o very sanc tio ns o rdered b y the superio r
c o u rt in the am o unt o f $5,738 plus interest, payab le to 10675 O range Park Blvd LLC . The b ankruptcy c o urt fo und that b o th o f these awards were
no ndischargeab le under § 523(a)(7). 1. T he bankruptcy c ourt did not err in dis m is s ingthe firs t c aus e of ac tion for a dec laration of dis c harg eability. Sec tio n 523(a)(7)(A ) pro vides that a discharge under § 727 do es no t discharge an individual fro ma deb t “to the extent such deb t is fo r a fine, penalty, o r fo rfeiture payab le to and fo rthe b enefit o f a go vernm ental unit, and is no t c o m pensatio n fo r ac tual pecuniary lo ss . . . .” There are three requirem ents fo r a deb t to b e exc epted fro mdischarge under § 523(a)(7): (1) the deb t m ust b e fo r a fine, penalty o r fo r feiture; (2) the deb t m ust b e payab le to and fo r the b enefit o f a go vernm ental unit; and (3) the deb t
c anno t c o nstitute c o m pensatio n fo r ac tual pecuniary lo ss. S ea rcy v. AdaC ty. Pro secuting Atto rney’s O ffice (In re S ea rcy) , 463 B.R . 888, 891 (9th C ir. BA P 2012), a ff’d , 561 F. A pp’x 644 (9th C ir. 2014). 4 “A ltho ugh the questio n o f whether a deb t is a ‘fine, penalty o r fo rfeiture’ fo r purpo s es o f § 523(a)(7) is a questio n o f federal law, we lo o k to state law todeterm ine whether the subjec t deb t is such an ob ligatio n.” Id. at 892 (c itatio ns o m itted).

4 In Searcy, although the Panel cor r ectly quoted the statute, i ni ts r eci tati on of the r equi r ements, i t er r oneously stated that the debt must be payable to orfor the benefi t of a gov er nmental uni t, when the statute i s in the conj uncti v e. 9The Suprem e C o urt has held that c rim inal restitutio n o rdered to b e

paid to the State o f C o nnec tic ut as a c o nditio n o f prob atio n in state c rim inal pro c eedings was no ndischargeab le under § 523(a)(7). K elly v. R o binso n , 479 U .S. 36 (1986). In K

e lly , the defendant pleaded guilty to larc eny fo r
wro ngful rec eipt o f welfare b enefits. The state c o u rt c o nditio ned the defendant’s prob atio n o n m aking restitutio n to the State o f C o nnec tic ut O ffic e o f A dult Prob atio n. In her sub sequent chapter 7 filing, the defendant
so ught a dec laratio n o f no ndischargeab ility o f the restitutio n. The b ankruptc y c o urt fo und the deb t no ndischargeab le, the distric t c o urt affirm ed, and the Sec o nd C irc uit C o urt o f A p peals reversed. The Suprem e C o urt reversed the c o urt o f appeals, ho lding that despite the fac t that the restitutio n at issue was facially fo r the b enefit o f the vic tim, it fell within the rub rico f a fine o r penalty under § 523(a)(7). This was b ec ause: (1) the vic timhas no c o ntro l o ver the am o unt o f restitutio n awarded o r the dec isio n to award restitutio n; and (2) the dec isio n to im po se restitutio n do es no tturn o n the vic tim ’s injury b ut o n the penal go als o f the state and the situatio n o f the defendant. Id. at 52.

Bec ause c rim inal pro c eedings fo cus o n the State’s interests in rehab ilitatio n and punishm ent, rather than the vic tim ’s desire fo r c o m pensatio n, we c o nc lude that restitutio n o rders im po sed in such pro c eedings o perate “fo r the b enefit o f” the State. Sim ilarly, they are no t assessed “fo r . . . c o m pensatio n” o f the vic t im
. The sentenc e fo llo wing a c rim inal c o nvic tio n nec essarily c o nsiders the penal and rehab ilitative

10interests o f the State. Tho se interests are suffic ient to plac e

restitutio n o rders within the m eaning o f § 523(a)(7). . . .” Id. at 53. The C o urt’s b ro ad ho lding was that “§ 523(a)(7) preserves fro m discharge any c o nditio n a state c rim inal c o u rt im po ses as part o f a c rim inal sentenc e.” Id. at 50. Under K elly , then, no twithstanding the statuto ry language (“payab le to and fo r the b enefit o f a go vernm ental unit”), the determ inatio n o f
no ndischargeab ility turns o n the purpo se o f the restitutio n award rather than the ultim ate rec ipient o f the funds. S ee id. at 52-53. Where the purpo s e
o f the restitutio n is to further a go vernm ental interest in rehab ilitatio n and punishm ent, the ultim ate payee o f the restitutio n is no t determ inative o f dischargeab ility. Id. C o urts in this c irc u it have applied K elly ’s ho lding to c rim inal restitutio n deb ts. S ee, e.g., Arm stro ng v. K aplo n (In re Arm stro ng) , 677 F. A pp'x 434 (9th C ir. 2017); S teiger v. Cl a rk C ty. (In re S teiger) , 159 B.R . 907 (9th C ir. BA P 1993). A dditio nally, this Panel has held that atto rney’s fees assessed against an inc arc erated deb to r, payab le to a c o unty distric t atto rney as a penalty fo r pursuing frivo lo us c laim s, qualified as a fine, penalty o r fo rfeiture under § 523(a)(7). In re S ea rcy , 463 B.R . at 893. Further, as discussed b elo w, c o urts in the N inth C irc uit have applied K elly ’s ho lding to restitutio n o rdered in atto rney disc iplinary pro c eedings
as a c o nditio n o f lic ense reinstatem ent under under C BP § 6086.10 (c o sts

11payab le to the State Bar) and C BP § 6140.5(c ) 5 (reimb ursem ent to C lient

Sec urity Fund). S ee S ta te Ba r o f Ca l. v. F indley (In re F indley) , 593 F.3d 1048 (9th C ir. 2010); In re Phillips, N o . C V 09-2138 A HM, 2010 WL 4916633 (C .D. C al. Dec . 1, 2010). In c o ntrast, in S cheer v. S ta te Ba r o f Ca lifo rnia, 819 F.3d 1206 (9th C ir. 2016), the c o urt o f appeals held dischargeab le under § 523(a)(7) a refund o f
c lient fees o rdered paid b y the State Bar C o urt (and affirm ed b y the C alifo rnia Suprem e C o urt) as a c o nditio n o f an atto rney’s reinstatem ent o f
ac tive enro llm ent status. Id. at 1208-09. The refund was o rdered b y an arb itrato r who fo und that the deb t o r had c o m petently perfo rm ed servic es and had do ne no thing willful o rm alic io us, b ut C alifo rnia law required her to return the funds. The c o urt o f appeals fo und the deb t dischargeab le b ec ause it was no t assessed fo r disc iplinary reaso ns. Id. at 1211. In all o f these c ases, dischargeab ility turned o n the punitive nature o f the fine o r penalty at issue.

a. U n der Findle y, the c os t reim b urs em ent ordered paid by the California Suprem e Court purs uant to CBP § 6086.10 is nondis c harg eable under § 523(a)(7). The C alifo rnia Suprem e C o urt o rdered Ms. A lb ert to pay c o sts

5 That statute pr ov i d es, in r elev a nt par t: “Any attor ney whose acti ons hav e caused the payment of funds to a claim ant fr om the Cli ent S ecur i ty Fund shall r ei mbur se the fund forall moneys pai d out as a r esult of hi s or her conduct wi th inter est, in addi ti on to payment of the assessment for the pr ocedur a l costs of pr ocessing the clai m, as a condi ti on of continued pr acti c e. . . .” 12pursuant toC BP § 6086.10(a), whic h pro vides: A ny o r der im po sing a pub licrepro val o n a lic ensee o f the State Bar shall inc lude a direc tio n that the lic ensee shall pay c o sts. In any o rder im po sing disc ipline, o r ac c epting a resignatio n with a disc iplinary m atter pending, the Suprem e C o urt shall inc lude a direc tio n that the lic ensee shall pay c o sts. An o rder pursuant to this sub divisio n is enfo rc eab le b o th as pro vided in Sec tio n 6140.7 and as a m o ney judgm ent. In F indley

, the N inth C irc uit C o urt o f A ppeals c o nsidered the identic al statute, C BP § 6086.10(a), and determined that c o sts im po sed under it were no ndischargeab le under § 523(a)(7). 593 F.3d at 1054. The deb to r in F indleywas an atto rney who was fo und to have vio lated the C alifo rnia Rules o f Pro fessio nal C o nduc t and the C alifo rnia Business & Pro fessio ns C o de in dealings with a c lient and was suspended fro m prac tic e fo r o ne year. The suprem e c o urt ado pted the State Bar’s
assessm ent o f fees under C BP § 6086.10(a) toc o ver the c o s t o f the disc iplinary pro c eedings. While the disc iplinary pro c eedings were pending, Findley filed a c hapter 7 c a se and rec eived a discharge. He then dec lined to pay the disc iplinary c o st award and sought reinstatem ent. In the State Bar’s adversary pro c eeding to determ ine the dischargeab ility o f the c o s taward, the b ankruptc y c o urt ruled that the award was nondischargeab le under § 523(a)(7). This Panel reversed, relying o n S ta te Ba r o

f Ca lifo r nia v. Ta

g ga rt (In re Ta

gga rt) , 249 F.3d 987 (9th C ir. 2001), in which the N inth C irc uit held that c o s ts assessed under the

13prio r versio n o f C BP § 6086.10 were disc hargeab le. O n appeal to the N inth C irc uit, the c o urt o f appeals no ted that after Tagga rtwas dec ided, the C alifo rnia legislature had am ended C BP § 6086.10 b y adding sub sec t io n (e), which pro vides: In additio n to o ther m o netary sanc tio ns as m ay b e o rdered b y the Suprem e C o u r t pursuant toSec t io n 6086.13, c o sts im po sed pursuant tothis sec tio n are penalties, payab le to and fo r the b enefit o f the State Bar o f C alifo rnia, a pub licc o rpo r atio n c reated pursuant toA rtic le VI o f the C alifo rnia C o nstitutio n, to pro m o te rehab ilitatio n and to pro tec t the pub lic . This sub divisio n is dec larato ry o f existing law. The C irc uit c ited the legislative histo ry o f the am endm ent, whic h
m ade c lear that its purpo s e was toc larify that o rders to pay disc iplinary
c o s ts were no ndischargeab le penalties im p o sed o n C alifo rnia lawyers fo r pro fessio nal m isc o nduc t. In re F indley , 593 F.3d at 1053. The Circ uit held that the am endm ent was “suffic ient to render atto rney disc ipline c o sts im po sed b y the C alifo rnia State Bar C o urt no n-dischargeab le in b ankruptcy pursuant to11 U .S.C . § 523(a)(7).” Id. at 1054. A c c o rdingly, the b ankruptc y c o urt did no t err in c o nc luding that F indleym andated the c o nc lusio n that the c o sts assessed pursuant to C BP § 6086.10 are nondischargeab le. Ms. A lb ert c o ntends that F indley ’ s c o nc lusio n that the C alifo rnia legislature am ended the statute in respo nse to Tagga rt was wro ng, and that in any event the State o f C alifo rnia did no t have the po wer to legislate

14aro und federal law, c iting Perezv. Ca m p bell, 402 U
. S. 637, 652 (1971)

(ho lding that state laws that frustrate the full effec tiveness o f federal law are rendered invalid b y the Suprem acy C lause). Ho wever, the b ankruptcy
c o u rt–and this Panel–are b o und to fo llo wN inth C irc uit prec edent unless that prec edent is o verturned b y the Suprem e C o u rt. D eitzv. Fo rd (In re D eitz ) , 469 B.R
. 11, 22 (9th C ir. BA P 2012) (c iting United S ta tes v. Ma rtinez

R o driguez, 472 F.3d 1087, 1093 (9th Cir. 2007)). Bec ause F indleyc o ntro ls the
o utc o m e here, we need no t address Ms. Alb ert’s o ther argum ents regarding the c o st award. 6 The b ankruptc y c o urt did no t err in ruling that the c o sts o rdered b y the C alifo rnia Suprem e C o urt to b e paid to the State Bar under C BP § 6086.10 as a co nditio n o f Ms. A lb ert’s lic ense reinstatem ent are
no ndischargeab le.

b. T he bankruptcy c ourt did not err in c onc ludingthat the dis c ov ery s anc tions ordered to be paid by the California Suprem e Court were nondis c harg eable. The C alifo rnia Suprem e C o urt alsoo rdered Ms. A lb ert to pay to the affec ted parties the disc o very sanc tio ns o rdered b y the superio r c o urt. A lternatively, it o rdered Ms. A lb ert to reimb urse the C lient Sec urity Fund to the extent o f any paym ent fro mthat fund to the payees.

6 Ms. Alber t notes that the cost for m submitted by the S tate Bar states that i t i s for compensati on for the S tate Bar ’s costs inpr osecuting the Noti ces of Di sci plinar y Char ges, ar guing that thi s suppor ts her posi ti on that such an awar d i s pur ely compensator y. In li ght of Findley, we do not fi nd thi s ar gument per suasiv e. 15The disc o very sanc tio ns were im po sed under C alifo rnia C ivil

Pro c edure C o de § 2023.030, whic h pro vides in relevant part: (a) The c o urt m ay im po se a m o netary sanc t io n o rdering that o ne engaging in the m isuse o f the disc o very pro c ess, o r any atto rney advising that c o nduc t, o r b o th pay the reaso nab le expenses, inc luding atto rney’s fees, inc urred b y anyo ne as a result o f that c o nduc t . The c o urt m ay also im po se this sanc tio n o n o ne unsuc c essfully asserting that ano ther has engaged in the m isuse o f the disc o very pro c ess, o r o n any atto rney who advised that assertion, o r o n b o th. If a m o netary sanc tio n is autho rized b y any pro visio n o f this title, the c o urt shall im po se that sanc tio n unless it finds that the o ne subj ec t to the sanc tio n ac ted with sub stantial justific atio n o rthat o ther c irc u m stanc es m ake the im po sitio n o f the sanc tio n unjust. C alifo rnia c o u rts have held that disc o very sanc tio ns awarded under this statute are no t intended to b e punitive, b ut “to prevent ab use o f the disc o very pro c ess and c o r rec t the prob lempresented.” Pa rker v. W o lters Kluwer U.S ., Inc. , 149 C al. A pp. 4th 285, 301 (2007). S e e a l so D o ppes v. Bentley Mo to rs, Inc. , 174 C al. A pp. 4th 967, 992 (2009) (“The trial co urt c anno t im po se sanc tio ns fo r m isuse o f the disc o very pro c ess as a punishm ent.”). Despite this charac terizatio n, K ellyand its pro geny suppo rt the c o nc lusio n that o nc e the disc o very sanc tio ns were o rdered paid b y the suprem e c o urt as part o f a disc iplinary pro c eeding, they were transfo r m ed into a prim arily punitive sanc tio n that was no ndischargeab le under § 523(a)(7), despite the fac tthat the sanc tio ns are payab le to the affec t ed parties rather than the State Bar.
16The C alifo rnia Suprem e C o urt has held that restitutio n o rdered to b e

paid to the C lient Sec urity Fund as part o f an atto rney disc iplinary pro c eeding wo uld b e no ndischargeab le in b a nkruptcy despite the fac t that it had a c o m pensato r y effec t. The c o urt reaso ned that [r]estitutio n im po sed as a c o nditio n o f prob atio n serves the state interest o f rehab ilitating c ulpab le atto rneys (and pro tec ting the pub lic ) b y fo rc ing the atto rney to “c o nfro nt, in c o nc rete term s, the harmhis ac tio ns have c aused.” Such restitutio n--espec ially when, as here, it is m ade payab le to the State Bar C lient Sec urity Fund--is c learly fo rthe b enefit o f the pub licat large, no t the underlying vic timin this c ase (who, we no te, has already b een c o m p ensated b y the State Bar C lient Sec urity Fund). Bec ause such restitutio n fundam entally serves the go al o f rehab ilitatio n, it is no tm erely c o m pensatio n to the go vernm ent fo r “ac tual pecuniary lo ss.” Bro o km a n v. S ta te Ba r

, 46 C a l. 3d 1004, 1009 (1988) (quoting K elly , 479 U .S. at 49). S ee a lso In re Phillips, 2010 WL 4916633, at *5 (ho lding that deb t to State Bar c o nsisting o f atto rney’s ob ligatio n under C BP § 6140.5(c ) to reimb urse the C lient Sec urity Fund was exc epted fro m discharge under § 532(a)(7)). Based o n these autho rities, regardless o f whether Ms. A lb ert was required to reimb urse the third parties o r the C lient Sec urity Fund, the b ankruptc y c o urt did no terr in c o nc luding that the disc o very sanc t io ns
o rdered to b e paid as a c o nditio n o f reinstatem ent o f her law lic ense were
no ndischargeab le under § 523(a)(7). A t that po int, the purpo se o f the paym ent o f the disc o very sanc tio ns was punitive and rehab ilitative, and

17served the State’s interest in regulating atto rneys; it thus passed muster

under K elly

. S ee In re Phillips, 2010 WL 4916633, at *4 (no ting that the Suprem e C o urt’s fo c us in K ellywas o n the go vernm ental interest and purpo se in im po sing a fine o r penalty, no t o n the ultim ate destinatio n o f the m o ney). 7

7 We note that Kelly seems to hav e been expanded to the poi nt wher e the r equi r ement that the fi ne or penalty must be payable “to and for the benefi t of a gov er nmental uni t” has been r ead out of the statute. See Kelly, 479 U.S . at 56 n.3 (Mar shall, J., di ssenting) (noti ng that the maj or i ty di d not need to consi der whether the payee was a gov er nmental uni t because the ulti mate benefi ci ar y of the r esti tuti on was the S tate of Connecti cut, and pointing out that to hold all cr i m inal r esti tuti on nondi schar geable, including wher e the v i cti m i s a pr i v ate i ndi v i dual, would r ead the “payable to and for the benefi t of a gov er nmental uni t” r equi r ement out of the statute). We also note, howev er, that Congr ess has amended the Bankruptcy Code sev er al ti mes in the thi r ty-thr ee year s since Kellywas deci ded; Congr ess could hav e ov er r uled Kelly, but i t has not done so. Fur ther, we must follow Kellyand i ts Nin th Ci r cui t pr ogeny i n any ev ent. Appellees ci te thr ee cases to suppor t thei r contenti on that the payee of a fi ne does not matter so long as the fine i s suffi ci ently penal and the state has suffi ci ent i nter ests: In re Armstrong, 677 F. App’x 434; Hansbrough v. Birdsell (In re Hercules Enters., Inc.) , 387 F.3d 1024 (9th Ci r . 2004); and In re Steiger, 159 B.R. 907. Although we conclude that the bankr uptcy cour t di d not er r in holding the di s cov er y sancti ons nondi schar geable under§ 523(a)(7), we do not r ely on these cases. Both Armstrongand Steigerinv olv ed cr i minal r esti tuti on, whi ch the r especti v e r ev i ewin g cour ts held was nondi schar geable underthe S u pr eme Cour t’s br oad holding i n Kelly

. In re Armstrong, 677 F. App’x at 436; In re Steiger, 159 B.R. at 912. The Armstrongopi ni on di d not state or analyze whether the r esti tuti on was payable to a gov er nmental uni t. In Steiger, although the r esti tuti on was payable to an i ndi v i dual, the BAP r eli ed on Kelly ’s br oad holdi ng that § 523(a)(7) pr eser v es fr om di schar ge any condi ti on a state cr i minal cour t i mposes as par t of a cr i minal sentence. 159 B.R. at 911. In Hercules , the Ci r cui t held that the bankr u ptcy cour t er r ed in or der ing that a contempt sancti on i mposed on a non-par ty would be nondi schar geable inany subsequent per sonal bankr uptcy fi led by the non-par ty. But i n (continued...) 18Ms. A lb ert argues o n appeal that the disc o very sanc tio ns o rders

them s elves were a “legal nullity” b ec ause the request fo r sanc tio ns did no t
c o m p ly with C alifo rnia C ivil Pro c edure C o de § 2023.040, whic h requires the no tic e o f m o t io n to inc lude the nam es o f all “perso ns, parties o r atto rneys” to b e sanc tio ned, and her nam e was no t listed. 8 Ms. A lb ert did
no t present this argum ent to the b ankruptc y c o urt. Thus, we need no t
c o nsider it. S ee O ’R o urke v. S ea bo a rd S urety Co . (In re E.R

. Fegert, Inc.) , 887 F.2d 955, 957 (9th C ir. 1989). 9 2. T he bankruptcy c ourt did not err in dis m is s ingM s . A lbert’s c aus e of ac tion under § 525. Ms. A lb ert alleged in her c o m plaint that the State Bar was in vio latio n
o f § 525 b ec ause it refused toreinstate her lic ense until she paid the c o sts and sanc tio ns as o rdered b y the suprem e c o urt. Sec tio n 525 pro vides in

7 (...continued) di cta, the Ci r cui t noted that under § 523(a)(7), “civ i l contempt sancti ons ar e gener ally non-di schar geable wher e, as her e, they ar e i mposed to uphold the di gni ty and author i ty of the cour t.” In re Hercules Enters. , 387 F.3d at 1029. The Ci rcui t di d not hold that the debt at i ssue (whi ch was payable to the chapter7 tr ustee) would be nondi schar geable, nor di d i t analyze whether the fact that the tr ustee was the payee made a di ffer ence.

8 That statute pr ov i d es, in r elev a nt par t, “[a] r equest for a sancti on shall, in the noti ce of moti on, i denti f y ev er y per son, par ty, and attor ney agai nst whom the sancti on i s sought, and speci f

y the type of sancti on sought.”

9 In Ms. Alber t’s opposi ti on to the moti on to di smi ss fi led in the bankr uptcy cour t, she ar gued that the di scov er y sancti on or der was v oi d because the commi ssi oner who or d er ed the sancti ons later r ecused himself “due to bi as.” S he di d not pur sue thi s ar gument at the hear ing on the moti on, howev er . Addi ti onally, Ms. Alber t di d not r ai se thi s i ssue wi th the Cali for n i a S upr eme Cour t. 19relevant part:

a go vernm ental unit m ay no t deny, revo ke, suspend, o r refuse to renew a lic ense, perm it, charter, franchise, o r o ther sim ilar grant to , c o nditio n such a grant to, disc rim inate with respec tto such a grant against, deny em plo ym ent to, term inate the em plo ym ent o f, o r disc rim inate with respec t to em plo ym ent against, a perso n that is o r has b een a deb to r under this title o r a b ankrupt o r a deb to r under the Bankruptcy A c t, o r ano ther perso n with who msuch b ankrupt o r deb to r has b een asso c iated, so lely b ec ause such b a nkrupt o r deb to r is o r has b een a deb to runder this title o ra b ankrupt o r deb to r under the Bankruptcy A c t, has b een inso lvent b efo re the c o m m enc em ent o f the c ase under this title, o r during the c ase b ut b efo re the deb to r is granted o r denied a discharge, o rhas no t paid a deb t that is dischargeab le in the c ase under this title o r that was discharged under the Bankruptcy A c t. The b ankruptc y c o urt dism issed this c laimb a sed o n its c o nc lusio n that the c o sts and disc o very sanc tio ns were no ndischargeab le. Bec ause the b ankruptc y c o urt did no terr in finding tho se deb ts no ndischargeab le, it did no t err in dism issing the § 525 c laim, as it is prem ised entirely o n the deb t at issue b eing dischargeab le. 3. T he bankruptcy c ourt did not err in dis m is s ingM s . A lbert’s 42 U .S.C. § 1983 c laim . Aplaintiff m u s t allege two elem ents to state a c ause o f ac tio n under 42 U .S.C . § 1983: (1) that so m e perso n has deprived himo f a federal right; and (2) that the perso n who has deprived himo f that right ac t ed under
c o lo r o f state o r territo rial law. G o m ezv. To l edo, 446 U .S. 635, 640 (1980).

20Here, Ms. A lb ert alleged that the individual defendants, ac ting under

c o lo r o f law, had vio lated her c o nstitutio nal rights under the First, Fo urth, Fifth, and Fo urteenth A m endm ents. She requested “injunc tive relief” and dam ages against tho se defendants. The ac ts c o m plained o f appear to b e the State Bar’s failure to explain why she was tob e suspended effec tive Feb ruary 14, 2018, b y failing to give no t ic e o f the suspensio n, and b y “snatching” her law lic ense while she was in b ankruptc y. She alleged that her suspensio n thwarted her attem pt to run fo rO range C o unty Distric t A tto rney and disqualified her fro mrepresenting a c lient in federal c o urt. The b ankruptc y c o urt dism issed this c laimo n gro unds that the individual defendants had ab so lute im m unity and that the c ause o f ac tio n was b a sed upo n the presum ptio n that the c o sts and sanc tio ns were dischargeab le. Ms. A lb ert po ints o ut that the State Bar filed a pro o f o f c laim, which resulted in a waiver o f so vereign im m unity. But the 42 U .S.C . § 1983 c ause
o f ac tio n was b ro ught against the individual defendants o nly. A s to tho se defendants, the b ankruptc y c o urt did no t err in ruling that they were entitled to im munity. State Bar em plo yees are entitled to ab so lute quasijudic ial im m unity under the C ivil R ights A c t fo rac ts perfo rm ed in their
o ffic ial c apac ities. S ee Greene v. Za nk , 158 C al. A pp. 3d 497, 508-09 (1984). Ms. A lb ert argues that A ppellee Maric ruz Farfan did no t perfo rm ac ts o f a judic ial nature b ec ause she was in charge o f prob atio n. But under

21C alifo rnia law, prob atio n o ffic ers perfo rm ing their o ffic ial duties o f

m o nito ring prob atio n are perfo r m ing quasi-judic ial func tio ns and are entitled to im munity. D e m o ra n v. W i tt, 781 F.2d 155, 158 (9th Cir. 1985); Burkes v. Ca llio n , 433 F.2d 318, 319 (9th Cir. 1970). In any event, c o nduc t b y the State Bar and its agents c anno t
c o nstitute a deprivation o f any federally pro tec ted rights. S ee, e.g., Ma rgulis v. S ta te Ba r o

f Ca l

. , 845 F.2d 215, 216-17 (9th Cir. 1988); Gia nnini v. Co m m . o f Ba r Exa m iners , 847 F.2d 1434, 1435 (9th Cir. 1988); Cha ney v. S ta te Ba r o f Ca l. , 386 F.2d 962, 966 (9th Cir. 1967). Finally, b ec ause this c ause o f ac tio n was prem ised upo n the dischargeab ility o f the underlying deb t, as a m atter o f law the c o m plaint do es no t state a c laimfo r relief under 42 U .S.C . § 1983. The b ankruptc y c o urt did no t err in dism issing this c ause o f ac tio n. 4. T he bankruptcy c ourt did not err in dis m is s ingM s . A lbert’s c aus e of ac tion for v iolations of the Ros enthal A c t/FD CPA . The b ankruptc y c o urt c o rrec tly fo und that the ac tivities o f the State Bar did no t fall within the sc o pe o f either C a lifo rnia’s R o senthal A c t o r the federal FDC PAand dism issed the c ause o f ac tio n o n that gro und. This c ause o f ac tio n depends o n the prem ise that the State Bar is
ac ting as a deb t c o llec to r under federal and state fair deb t c o llec tio n statutes. Adeb t c o llec to r is defined under the FDC PAas “any perso n who uses any instrum entality o f interstate c o m m erc e o r the m ails in any b usiness the princ ipal purpo se o f which is the c o llec tio n o f any deb ts, o r

22who regularly c o llec ts o r attem pts to c o llec t, direc tly o r indirec tly, deb ts

o wed o rdue o r asserted tob e o wed o rdue ano ther.” 15 U .S.C . § 1692a(6). The definitio n under the R o senthal A c t is sim ilar, b ut spec ific ally exc ludes atto rneys. C al. C iv. C o de § 1788.2(c ). A tto rney disc iplinary pro c eedings are no t designed o rintended to b e deb t c o llec tio n m echanism s fo r private parties, even where atto rneys are
o rdered to pay m o ney. S ee Ba ch v. S ta te Ba r , 52 C al. 3d 1201, 1207 (1991) (in rejec ting the argum ent that the State Bar and the C alifo rnia Suprem e C o urt lac ked jurisdic t io n to im po se disc ipline in the fo rm o f suspensio n
c o nditio ned upo n restitutio n to a fo rm er c lient, the c o urt no ted that in
exerc ising their po w er to disc ipline atto rneys, the State Bar and the C alifo rnia Suprem e C o urt further the go als o f pro tec ting the pub lic, preserving c o nfidenc e in the legal pro fessio n, and the rehab ilitatio n o f errant atto rneys; they do no t “sit in disc iplinary m atters as a c o llec tio n b o ard fo r c lients aggrieved o ver fee m a t ters.”). Ms. A lb ert has no t c ited any autho r ity even suggesting that the State Bar o rthe individual defendants qualify as deb t c o llec to rs under either the federal o r state statutes. The b ankruptc y c o urt did no t err in dism issing this c ause o f ac tio n. 5. T he bankruptcy c ourt did not err in dis m is s ingM s . A lbert’s c aus e of ac tion for a dec laration that CBP §§ 6086.10, 6103, and 6047 are unc ons titutional. The b ankruptc y c o urt ob served that the c o nstitutio nal challenges were “indec ipherab le.” W e agree. The allegatio ns suppo rting this c ause o f
23ac tio n are ramb ling and seemto b e b a sed so lely o n the fac t that Ms. A lb ert

was disc iplined and her vario us c o m plaints ab o ut the pro c ess and result. N o thing in the allegatio ns, even if taken as true, states a claimthat the statutes are unc o nstitutio nal, even as applied. In her b r ief, Ms. A lb ert
c larifies this c ause o f ac t io n b y alleging that the statutes in questio n are b eing used to c o nditio n reinstatem ent o f her lic ense o n paym ent o f the
c o s ts and sanc tio ns and thus are in vio latio n o f § 525 and Perez
. Bec ause the b ankruptc y c o urt c o rrec tly fo und no vio latio n o f § 525, it did no t err in dism issing this c ause o f ac tio n. B. W e need not reac h the is s ue of whether the bankruptc y c ourt abus ed its dis c retion in denying M s . A lbert’s applic ation for a T RO. Bec ause we are affirm ing the dism issal o f Ms. A lb ert’s c o m plaint, we need no t address the b ankruptc y c o urt’s denial o f her applic atio n fo ra TRO

. CONCL U SION The b ankruptc y c o urt did no t err in dism issing Ms. A lb ert’s
c o m p laint. Even taking the allegatio ns o f her c o m plaint as true, as a m atter
o f law she did no t state any plausib le c laim s fo r relief. W e A FFIRM.

24