NOT FOR PUBLICATION

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re:

LENORE L. ALBERT-SHERIDAN, DBA

Law Offices of Lenore Albert,

Debtor.

LENORE L. ALBERT-SHERIDAN,

Appellant,

v.

STATE BAR OF CALIFORNIA;

MARICRUZ FARFAN; BRANDON

TADY; ALEX HACKERT; YVETTE

ROLAND; PAUL BERNARDINO,

Appellees.

BAP No. CC-18-1222-LSF

Bk. No. 8:18-bk-10548-ES

Adv. No. 8:18-ap-01065-SC

MEMORANDUM*

Argued and Submitted on February 21, 2019

at Pasadena, California

Filed – April 11, 2019

FILED

APR 11 2019

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT

*This disposition is not appropriate for publication. Although it may be cited for

whatever persuasive value it may have, see Fed. R. App. P. 32.1, it has no precedential

value, see 9th Cir. BAP Rule 8024-1.
Appeal from the United States Bankruptcy Court

for the Central District of California

Honorable Scott C. Clarkson, Bankruptcy Judge, Presiding

 

Appearances: Lenore L. Albert-Sheridan argued pro se; Suzanne C.

Grandt argued for Appellees.

 

Before: LAFFERTY, SPRAKER, and FARIS, Bankruptcy Judges.

INTRODUCTION

Debtor Lenore Albert-Sheridan appeals the bankruptcy court’s order

dismissing her adversary proceeding against Appellees State Bar of

California and its employees Maricruz Farfan, Brandon Tady, Alex

Hackert, Yvette Roland, and Paul Bernardino. In that adversary

proceeding, Ms. Albert1

 sought, among other things, a declaration that

sanctions and costs ordered paid by the California Supreme Court as a

condition of reinstatement of her law license were dischargeable. The

bankruptcy court did not err in concluding that sanctions and costs were

nondischargeable under § 523(a)(7).2

 The remaining causes of action

1Although Debtor’s last name is listed on her bankruptcy petition as “AlbertSheridan,” she refers to herself as “Lenore Albert” and “Ms. Albert” in her papers. We

thus refer to her as “Ms. Albert” throughout this Memorandum.

2Unless specified otherwise, all chapter and section references are to the

(continued...)

2
pleaded in Ms. Albert’s complaint were reliant on the premise that the

entire amount was dischargeable. Because it found otherwise, the

bankruptcy court did not err in dismissing the balance of Ms. Albert’s

complaint.

Accordingly, we AFFIRM.

FACTUAL BACKGROUND

Ms. Albert was an attorney licensed to practice in the state of

California. In 2015 and 2016, the State Bar of California (“State Bar”) filed

Notices of Disciplinary Charges in State Bar Court alleging that Ms. Albert

had failed to cooperate with State Bar investigations, disobeyed superior

court orders ordering Ms. Albert to pay discovery sanctions, failed to

perform competent legal services, failed to render accounts of client funds,

and failed to refund unearned fees.

After a trial, the State Bar Court found Ms. Albert culpable on all but

one count and recommended a minimum 30-day suspension, after which

Ms. Albert would remain suspended until she provided to the State Bar

proof of payment of four court-ordered discovery sanctions. The State Bar

Court also recommended that costs be awarded to the State Bar under

California Business & Professions Code (“CBP”) § 6086.10. 

2

(...continued)

Bankruptcy Code, 11 U.S.C. §§ 101-1532, all “Rule” references are to the Federal Rules

of Bankruptcy Procedure, and all “Civil Rule” references are to the Federal Rules of

Civil Procedure.

3
Ms. Albert appealed the recommendation to the State Bar Review

Department, which found Ms. Albert culpable on two counts but dismissed

the other two for insufficient evidence. The Review Department agreed

with the recommendation of a 30-day suspension, proof of payment of

three of the four discovery sanctions totaling $5,735 plus interest, and an

award of costs to the State Bar.

Ms. Albert sought review of these determinations with the Supreme

Court of California. On December 13, 2017, that court issued a final order of

discipline reflecting the recommendation of the Review Department,

including suspension. Ms. Albert sought rehearing, which the supreme

court denied on February 14, 2018.

Ms. Albert filed for chapter 13 relief on February 20, 2018. She then

moved the State Bar and the supreme court to reinstate her license and

waive costs based on her inability to pay. The State Bar, believing the

monetary sanctions were dischargeable in chapter 13, reinstated

Ms. Albert’s license retroactive to March 16, 2018. 

On June 26, 2018, the bankruptcy court converted Ms. Albert’s

chapter 13 case to chapter 7 based on ineligibility under § 109(e) and

Ms. Albert’s inability to fund a confirmable plan. Thereafter, the State Bar

sent a letter to the supreme court explaining that the case had been

converted and requesting that the court deny Ms. Albert’s motion for

reinstatement. Ms. Albert also sent a letter to the supreme court arguing

4
that the debt remained dischargeable despite conversion. On July 25, 2018,

the supreme court denied Ms. Albert’s motion for reinstatement.

In the meantime, Ms. Albert filed an adversary proceeding against

Appellees. The complaint alleged five causes of action: (1) dischargeability

of debt under § 523(a)(7); (2) violation of § 525(a); (3) violation of 42 U.S.C.

§ 1983; (4) violation of Rosenthal Act/Fair Debt Collection Practices Act

(“FDCPA”); and (5) unconstitutionality of CBP §§ 6103, 6086.10, and 6140.7.

Ms. Albert sought: (1) declarations that (a) the debt to the State Bar is

dischargeable; and (b) the statutes under which she was sanctioned and

disciplined are unconstitutional as applied; (2) injunctive relief requiring

the State Bar to reinstate her license based on its violations of § 525 and 42

U.S.C. § 1983; and (3) damages for violations of the Rosenthal Act/FDCPA.

Ms. Albert concurrently filed an emergency motion for a temporary

restraining order, which the bankruptcy court denied “due to insufficient

grounds stated.”

Appellees moved to dismiss the adversary proceeding for failure to

state a claim. Appellees also asserted that the bankruptcy court should

abstain pursuant to the Younger abstention and Rooker-Feldman doctrines.

Lastly, they argued that the State Bar was entitled to Eleventh Amendment

immunity and the individual defendants to judicial immunity. Ms. Albert

filed an opposition, and the State Bar a reply. In the meantime, Ms. Albert

filed a new Application for TRO and Order to Show Cause Why a

5
Preliminary Injunction Should Not Issue.

The bankruptcy court heard both matters on August 1, 2018. It

denied Ms. Albert’s motion for a TRO and granted the State Bar’s motion to

dismiss by separate orders entered August 9, 2018.

Ms. Albert timely appealed both orders.3

JURISDICTION

The bankruptcy court had jurisdiction pursuant to 28 U.S.C. §§ 1334

and 157(b)(2)(A), (I), and (O). We have jurisdiction under 28 U.S.C. § 158. 

ISSUES

Did the bankruptcy court err in dismissing the adversary

proceeding?

Did the bankruptcy court abuse its discretion in denying Ms. Albert’s

motion for a TRO and order to show cause?

STANDARDS OF REVIEW

We review de novo a bankruptcy court’s order granting a motion to

dismiss for failure to state a claim. Movsesian v. Victoria Versicherung AG,

670 F.3d 1067, 1071 (9th Cir. 2012) (en banc); Cedano v. Aurora Loan Servs.,

LLC (In re Cedano), 470 B.R. 522, 528 (9th Cir. BAP 2012). Under de novo

3On the same date Ms. Albert filed her notice of appeal, she filed an objection to

the State Bar’s proposed order and the bankruptcy court’s order denying her

application for a TRO. The bankruptcy court treated the objection as a motion to alter or

amend under Civil Rule 59(e), incorporated in bankruptcy via Rule 9023, and denied it

by order entered December 14, 2018. Ms. Albert did not separately appeal that order,

nor did she amend her notice of appeal in this case.

6
review, we look at the matter anew, as if it had not been heard before, and

as if no decision had been rendered previously, giving no deference to the

bankruptcy court’s determinations. Freeman v. DirecTV, Inc., 457 F.3d 1001,

1004 (9th Cir. 2006).

We review an order denying injunctive relief for an abuse of

discretion. See Pac. Radiation Oncology, LLC v. Queen’s Med. Ctr., 810 F.3d

631, 635 (9th Cir. 2015). To determine whether the bankruptcy court abused

its discretion, we conduct a two-step inquiry: (1) we review de novo

whether the bankruptcy court “identified the correct legal rule to apply to

the relief requested” and (2) if it did, whether the bankruptcy court’s

application of the legal standard was illogical, implausible, or “without

support in inferences that may be drawn from the facts in the record.”

United States v. Hinkson, 585 F.3d 1247, 1261-62 (9th Cir. 2009) (en banc).

DISCUSSION

In reviewing the bankruptcy court’s decision on a motion to dismiss,

we apply the same standards to Civil Rule 12(b)(6) dismissal motions that

all other federal courts are required to apply. Barnes v. Belice (In re Belice),

461 B.R. 564, 572–73 (9th Cir. BAP 2011). Under Civil Rule 12(b)(6), made

applicable in adversary proceedings by Rule 7012, we may dismiss a

complaint for “failure to state a claim upon which relief can be granted.”

To survive a Civil Rule 12(b)(6) dismissal motion, a complaint must present

cognizable legal theories and sufficient factual allegations to support those

7
theories. See Johnson v. Riverside Healthcare Sys., LP, 534 F.3d 1116, 1121–22

(9th Cir. 2008). As the Supreme Court has explained:

a complaint must contain sufficient factual matter, accepted as

true, to state a claim to relief that is plausible on its face. . . . A

claim has facial plausibility when the plaintiff pleads factual

content that allows the court to draw the reasonable inference

that the defendant is liable for the misconduct alleged. . . .

Threadbare recitals of the elements of a cause of action,

supported by mere conclusory statements, do not suffice.

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citations and internal quotation

marks omitted). In reviewing the sufficiency of a complaint under Civil

Rule 12(b)(6), we must accept as true all facts alleged in the complaint and

draw all reasonable inferences in favor of the plaintiff. See Newcal Indus.,

Inc. v. Ikon Office Sols., 513 F.3d 1038, 1043 n.2 (9th Cir. 2008). However, we

do not need to accept as true conclusory allegations or legal

characterizations cast in the form of factual allegations. See Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 555–56 (2007).

We may use judicially noticed facts to establish that a complaint does

not state a claim for relief. Skilstaf, Inc. v. CVS Caremark Corp., 669 F.3d 1005,

1016 n.9 (9th Cir. 2012).

A. The bankruptcy court did not err in granting Appellees’ motion to

dismiss.

The California Supreme Court ordered Ms. Albert to pay, as a

condition to her license reinstatement: (1) costs of $18,714 incurred by the

8
State Bar in prosecuting Ms. Albert’s misconduct pursuant to CBP

§ 6086.10(b)(3); and (2) unpaid discovery sanctions ordered by the superior

court in the amount of $5,738 plus interest, payable to 10675 Orange Park

Blvd LLC. The bankruptcy court found that both of these awards were

nondischargeable under § 523(a)(7).

1. The bankruptcy court did not err in dismissing the first cause

of action for a declaration of dischargeability.

Section 523(a)(7)(A) provides that a discharge under § 727 does not

discharge an individual from a debt “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 . . . .” There are three

requirements for a debt to be excepted from discharge under § 523(a)(7):

(1) the debt must be for a fine, penalty or forfeiture; (2) the debt must be

payable to and for the benefit of a governmental unit; and (3) the debt

cannot constitute compensation for actual pecuniary loss. Searcy v. Ada Cty.

Prosecuting Attorney’s Office (In re Searcy), 463 B.R. 888, 891 (9th Cir. BAP

2012), aff’d, 561 F. App’x 644 (9th Cir. 2014).4

 “Although the question of

whether a debt is a ‘fine, penalty or forfeiture’ for purposes of § 523(a)(7) is

a question of federal law, we look to state law to determine whether the

subject debt is such an obligation.” Id. at 892 (citations omitted).

4

In Searcy, although the Panel correctly quoted the statute, in its recitation of the

requirements, it erroneously stated that the debt must be payable to or for the benefit of

a governmental unit, when the statute is in the conjunctive.

9
The Supreme Court has held that criminal restitution ordered to be

paid to the State of Connecticut as a condition of probation in state criminal

proceedings was nondischargeable under § 523(a)(7). Kelly v. Robinson, 479

U.S. 36 (1986). In Kelly, the defendant pleaded guilty to larceny for

wrongful receipt of welfare benefits. The state court conditioned the

defendant’s probation on making restitution to the State of Connecticut

Office of Adult Probation. In her subsequent chapter 7 filing, the defendant

sought a declaration of nondischargeability of the restitution. The

bankruptcy court found the debt nondischargeable, the district court

affirmed, and the Second Circuit Court of Appeals reversed. 

The Supreme Court reversed the court of appeals, holding that

despite the fact that the restitution at issue was facially for the benefit of the

victim, it fell within the rubric of a fine or penalty under § 523(a)(7). This

was because: (1) the victim has no control over the amount of restitution

awarded or the decision to award restitution; and (2) the decision to

impose restitution does not turn on the victim’s injury but on the penal

goals of the state and the situation of the defendant. Id. at 52. 

Because criminal proceedings focus on the State’s

interests in rehabilitation and punishment, rather than the

victim’s desire for compensation, we conclude that restitution

orders imposed in such proceedings operate “for the benefit of”

the State. Similarly, they are not assessed “for . . .

compensation” of the victim. The sentence following a criminal

conviction necessarily considers the penal and rehabilitative

10
interests of the State. Those interests are sufficient to place

restitution orders within the meaning of § 523(a)(7). . . .”

Id. at 53. The Court’s broad holding was that “§ 523(a)(7) preserves from

discharge any condition a state criminal court imposes as part of a criminal

sentence.” Id. at 50.

Under Kelly, then, notwithstanding the statutory language (“payable

to and for the benefit of a governmental unit”), the determination of

nondischargeability turns on the purpose of the restitution award rather

than the ultimate recipient of the funds. See id. at 52-53. Where the purpose

of the restitution is to further a governmental interest in rehabilitation and

punishment, the ultimate payee of the restitution is not determinative of

dischargeability. Id.

Courts in this circuit have applied Kelly’s holding to criminal

restitution debts. See, e.g., Armstrong v. Kaplon (In re Armstrong), 677 F.

App'x 434 (9th Cir. 2017); Steiger v. Clark Cty. (In re Steiger), 159 B.R. 907 (9th

Cir. BAP 1993). Additionally, this Panel has held that attorney’s fees

assessed against an incarcerated debtor, payable to a county district

attorney as a penalty for pursuing frivolous claims, qualified as a fine,

penalty or forfeiture under § 523(a)(7). In re Searcy, 463 B.R. at 893.

Further, as discussed below, courts in the Ninth Circuit have applied

Kelly’s holding to restitution ordered in attorney disciplinary proceedings

as a condition of license reinstatement under under CBP § 6086.10 (costs

11
payable to the State Bar) and CBP § 6140.5(c)

5

 (reimbursement to Client

Security Fund). See State Bar of Cal. v. Findley (In re Findley), 593 F.3d 1048

(9th Cir. 2010); In re Phillips, No. CV 09-2138 AHM, 2010 WL 4916633 (C.D.

Cal. Dec. 1, 2010).

In contrast, in Scheer v. State Bar of California, 819 F.3d 1206 (9th Cir.

2016), the court of appeals held dischargeable under § 523(a)(7) a refund of

client fees ordered paid by the State Bar Court (and affirmed by the

California Supreme Court) as a condition of an attorney’s reinstatement of

active enrollment status. Id. at 1208-09. The refund was ordered by an

arbitrator who found that the debtor had competently performed services

and had done nothing willful or malicious, but California law required her

to return the funds. The court of appeals found the debt dischargeable

because it was not assessed for disciplinary reasons. Id. at 1211.

In all of these cases, dischargeability turned on the punitive nature of

the fine or penalty at issue.

a. Under Findley, the cost reimbursement ordered paid by

the California Supreme Court pursuant to CBP § 6086.10

is nondischargeable under § 523(a)(7).

The California Supreme Court ordered Ms. Albert to pay costs

5That statute provides, in relevant part: “Any attorney whose actions have

caused the payment of funds to a claimant from the Client Security Fund shall

reimburse the fund for all moneys paid out as a result of his or her conduct with

interest, in addition to payment of the assessment for the procedural costs of processing

the claim, as a condition of continued practice. . . .”

12
pursuant to CBP § 6086.10(a), which provides:

Any order imposing a public reproval on a licensee of the State

Bar shall include a direction that the licensee shall pay costs. In

any order imposing discipline, or accepting a resignation with a

disciplinary matter pending, the Supreme Court shall include a

direction that the licensee shall pay costs. An order pursuant to

this subdivision is enforceable both as provided in Section

6140.7 and as a money judgment.

In Findley, the Ninth Circuit Court of Appeals considered the

identical statute, CBP § 6086.10(a), and determined that costs imposed

under it were nondischargeable under § 523(a)(7). 593 F.3d at 1054. The

debtor in Findley was an attorney who was found to have violated the

California Rules of Professional Conduct and the California Business &

Professions Code in dealings with a client and was suspended from

practice for one year. The supreme court adopted the State Bar’s

assessment of fees under CBP § 6086.10(a) to cover the cost of the

disciplinary proceedings. While the disciplinary proceedings were

pending, Findley filed a chapter 7 case and received a discharge. He then

declined to pay the disciplinary cost award and sought reinstatement.

In the State Bar’s adversary proceeding to determine the

dischargeability of the cost award, the bankruptcy court ruled that the

award was nondischargeable under § 523(a)(7). This Panel reversed,

relying on State Bar of California v. Taggart (In re Taggart), 249 F.3d 987 (9th

Cir. 2001), in which the Ninth Circuit held that costs assessed under the

13
prior version of CBP § 6086.10 were dischargeable. On appeal to the Ninth

Circuit, the court of appeals noted that after Taggart was decided, the

California legislature had amended CBP § 6086.10 by adding subsection (e),

which provides:

In addition to other monetary sanctions as may be ordered by

the Supreme Court pursuant to Section 6086.13, costs imposed

pursuant to this section are penalties, payable to and for the

benefit of the State Bar of California, a public corporation

created pursuant to Article VI of the California Constitution, to

promote rehabilitation and to protect the public. This

subdivision is declaratory of existing law.

The Circuit cited the legislative history of the amendment, which

made clear that its purpose was to clarify that orders to pay disciplinary

costs were nondischargeable penalties imposed on California lawyers for

professional misconduct. In re Findley, 593 F.3d at 1053. The Circuit held

that the amendment was “sufficient to render attorney discipline costs

imposed by the California State Bar Court non-dischargeable in bankruptcy

pursuant to 11 U.S.C. § 523(a)(7).” Id. at 1054.

Accordingly, the bankruptcy court did not err in concluding that

Findley mandated the conclusion that the costs assessed pursuant to CBP

§ 6086.10 are nondischargeable. 

Ms. Albert contends that Findley’s conclusion that the California

legislature amended the statute in response to Taggart was wrong, and that

in any event the State of California did not have the power to legislate

14
around federal law, citing Perez v. Campbell, 402 U.S. 637, 652 (1971)

(holding that state laws that frustrate the full effectiveness of federal law

are rendered invalid by the Supremacy Clause). However, the bankruptcy

court–and this Panel–are bound to follow Ninth Circuit precedent unless

that precedent is overturned by the Supreme Court. Deitz v. Ford (In re

Deitz), 469 B.R. 11, 22 (9th Cir. BAP 2012) (citing United States v. MartinezRodriguez, 472 F.3d 1087, 1093 (9th Cir. 2007)). Because Findley controls the

outcome here, we need not address Ms. Albert’s other arguments

regarding the cost award.6

The bankruptcy court did not err in ruling that the costs ordered by

the California Supreme Court to be paid to the State Bar under CBP

§ 6086.10 as a condition of Ms. Albert’s license reinstatement are

nondischargeable.

b. The bankruptcy court did not err in concluding that the

discovery sanctions ordered to be paid by the California

Supreme Court were nondischargeable.

The California Supreme Court also ordered Ms. Albert to pay to the

affected parties the discovery sanctions ordered by the superior court.

Alternatively, it ordered Ms. Albert to reimburse the Client Security Fund

to the extent of any payment from that fund to the payees.

6Ms. Albert notes that the cost form submitted by the State Bar states that it is for

compensation for the State Bar’s costs in prosecuting the Notices of Disciplinary

Charges, arguing that this supports her position that such an award is purely

compensatory. In light of Findley, we do not find this argument persuasive.

15
The discovery sanctions were imposed under California Civil

Procedure Code § 2023.030, which provides in relevant part:

(a) The court may impose a monetary sanction ordering

that one engaging in the misuse of the discovery process, or any

attorney advising that conduct, or both pay the reasonable

expenses, including attorney’s fees, incurred by anyone as a

result of that conduct. The court may also impose this sanction

on one unsuccessfully asserting that another has engaged in the

misuse of the discovery process, or on any attorney who

advised that assertion, or on both. If a monetary sanction is

authorized by any provision of this title, the court shall impose

that sanction unless it finds that the one subject to the sanction

acted with substantial justification or that other circumstances

make the imposition of the sanction unjust.

California courts have held that discovery sanctions awarded under

this statute are not intended to be punitive, but “to prevent abuse of the

discovery process and correct the problem presented.” Parker v. Wolters

Kluwer U.S., Inc., 149 Cal. App. 4th 285, 301 (2007). See also Doppes v. Bentley

Motors, Inc., 174 Cal. App. 4th 967, 992 (2009) (“The trial court cannot

impose sanctions for misuse of the discovery process as a punishment.”).

Despite this characterization, Kelly and its progeny support the conclusion

that once the discovery sanctions were ordered paid by the supreme court

as part of a disciplinary proceeding, they were transformed into a primarily

punitive sanction that was nondischargeable under § 523(a)(7), despite the

fact that the sanctions are payable to the affected parties rather than the

State Bar.

16
The California Supreme Court has held that restitution ordered to be

paid to the Client Security Fund as part of an attorney disciplinary

proceeding would be nondischargeable in bankruptcy despite the fact that

it had a compensatory effect. The court reasoned that 

[r]estitution imposed as a condition of probation serves the

state interest of rehabilitating culpable attorneys (and

protecting the public) by forcing the attorney to “confront, in

concrete terms, the harm his actions have caused.” Such

restitution--especially when, as here, it is made payable to the

State Bar Client Security Fund--is clearly for the benefit of the

public at large, not the underlying victim in this case (who, we

note, has already been compensated by the State Bar Client

Security Fund). Because such restitution fundamentally serves

the goal of rehabilitation, it is not merely compensation to the

government for “actual pecuniary loss.”

Brookman v. State Bar, 46 Cal. 3d 1004, 1009 (1988) (quoting Kelly, 479 U.S. at

49). See also In re Phillips, 2010 WL 4916633, at *5 (holding that debt to State

Bar consisting of attorney’s obligation under CBP § 6140.5(c) to reimburse

the Client Security Fund was excepted from discharge under § 532(a)(7)). 

Based on these authorities, regardless of whether Ms. Albert was

required to reimburse the third parties or the Client Security Fund, the

bankruptcy court did not err in concluding that the discovery sanctions

ordered to be paid as a condition of reinstatement of her law license were

nondischargeable under § 523(a)(7). At that point, the purpose of the

payment of the discovery sanctions was punitive and rehabilitative, and

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

under Kelly. See In re Phillips, 2010 WL 4916633, at *4 (noting that the

Supreme Court’s focus in Kelly was on the governmental interest and

purpose in imposing a fine or penalty, not on the ultimate destination of

the money).7

7We note that Kelly seems to have been expanded to the point where the

requirement that the fine or penalty must be payable “to and for the benefit of a

governmental unit” has been read out of the statute. See Kelly, 479 U.S. at 56 n.3

(Marshall, J., dissenting) (noting that the majority did not need to consider whether the

payee was a governmental unit because the ultimate beneficiary of the restitution was

the State of Connecticut, and pointing out that to hold all criminal restitution

nondischargeable, including where the victim is a private individual, would read the

“payable to and for the benefit of a governmental unit” requirement out of the statute).

We also note, however, that Congress has amended the Bankruptcy Code several times

in the thirty-three years since Kelly was decided; Congress could have overruled Kelly,

but it has not done so. Further, we must follow Kelly and its Ninth Circuit progeny in

any event.

Appellees cite three cases to support their contention that the payee of a fine does

not matter so long as the fine is sufficiently penal and the state has sufficient interests:

In re Armstrong, 677 F. App’x 434; Hansbrough v. Birdsell (In re Hercules Enters., Inc.), 387

F.3d 1024 (9th Cir. 2004); and In re Steiger, 159 B.R. 907. Although we conclude that the

bankruptcy court did not err in holding the discovery sanctions nondischargeable

under § 523(a)(7), we do not rely on these cases. Both Armstrong and Steiger involved

criminal restitution, which the respective reviewing courts held was nondischargeable

under the Supreme Court’s broad holding in Kelly. In re Armstrong, 677 F. App’x at 436;

In re Steiger, 159 B.R. at 912. The Armstrong opinion did not state or analyze whether the

restitution was payable to a governmental unit. In Steiger, although the restitution was

payable to an individual, the BAP relied on Kelly’s broad holding that § 523(a)(7)

preserves from discharge any condition a state criminal court imposes as part of a

criminal sentence. 159 B.R. at 911. In Hercules, the Circuit held that the bankruptcy court

erred in ordering that a contempt sanction imposed on a non-party would be

nondischargeable in any subsequent personal bankruptcy filed by the non-party. But in

(continued...)

18
Ms. Albert argues on appeal that the discovery sanctions orders

themselves were a “legal nullity” because the request for sanctions did not

comply with California Civil Procedure Code § 2023.040, which requires

the notice of motion to include the names of all “persons, parties or

attorneys” to be sanctioned, and her name was not listed.8

 Ms. Albert did

not present this argument to the bankruptcy court. Thus, we need not

consider it. See O’Rourke v. Seaboard Surety Co. (In re E.R. Fegert, Inc.), 887

F.2d 955, 957 (9th Cir. 1989).9

2. The bankruptcy court did not err in dismissing Ms. Albert’s

cause of action under § 525.

Ms. Albert alleged in her complaint that the State Bar was in violation

of § 525 because it refused to reinstate her license until she paid the costs

and sanctions as ordered by the supreme court. Section 525 provides in

7

(...continued)

dicta, the Circuit noted that under § 523(a)(7), “civil contempt sanctions are generally

non-dischargeable where, as here, they are imposed to uphold the dignity and authority

of the court.” In re Hercules Enters., 387 F.3d at 1029. The Circuit did not hold that the

debt at issue (which was payable to the chapter 7 trustee) would be nondischargeable,

nor did it analyze whether the fact that the trustee was the payee made a difference.

8That statute provides, in relevant part, “[a] request for a sanction shall, in the

notice of motion, identify every person, party, and attorney against whom the sanction

is sought, and specify the type of sanction sought.”

9

In Ms. Albert’s opposition to the motion to dismiss filed in the bankruptcy court,

she argued that the discovery sanction order was void because the commissioner who

ordered the sanctions later recused himself “due to bias.” She did not pursue this

argument at the hearing on the motion, however. Additionally, Ms. Albert did not raise

this issue with the California Supreme Court.

19
relevant part:

a governmental unit may not deny, revoke, suspend, or refuse

to renew a license, permit, charter, franchise, or other similar

grant to, condition such a grant to, discriminate with respect to

such a grant against, deny employment to, terminate the

employment of, or discriminate with respect to employment

against, a person that is or has been a debtor under this title or

a bankrupt or a debtor under the Bankruptcy Act, or another

person with whom such bankrupt or debtor has been

associated, solely because such bankrupt or debtor is or has

been a debtor under this title or a bankrupt or debtor under the

Bankruptcy Act, has been insolvent before the commencement

of the case under this title, or during the case but before the

debtor is granted or denied a discharge, or has not paid a debt

that is dischargeable in the case under this title or that was

discharged under the Bankruptcy Act.

The bankruptcy court dismissed this claim based on its conclusion

that the costs and discovery sanctions were nondischargeable. Because the

bankruptcy court did not err in finding those debts nondischargeable, it

did not err in dismissing the § 525 claim, as it is premised entirely on the

debt at issue being dischargeable.

3. The bankruptcy court did not err in dismissing Ms. Albert’s

42 U.S.C. § 1983 claim.

A plaintiff must allege two elements to state a cause of action under

42 U.S.C. § 1983: (1) that some person has deprived him of a federal right;

and (2) that the person who has deprived him of that right acted under

color of state or territorial law. Gomez v. Toledo, 446 U.S. 635, 640 (1980). 

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Here, Ms. Albert alleged that the individual defendants, acting under

color of law, had violated her constitutional rights under the First, Fourth,

Fifth, and Fourteenth Amendments. She requested “injunctive relief” and

damages against those defendants. The acts complained of appear to be the

State Bar’s failure to explain why she was to be suspended effective

February 14, 2018, by failing to give notice of the suspension, and by

“snatching” her law license while she was in bankruptcy. She alleged that

her suspension thwarted her attempt to run for Orange County District

Attorney and disqualified her from representing a client in federal court.

The bankruptcy court dismissed this claim on grounds that the

individual defendants had absolute immunity and that the cause of action

was based upon the presumption that the costs and sanctions were

dischargeable. 

Ms. Albert points out that the State Bar filed a proof of claim, which

resulted in a waiver of sovereign immunity. But the 42 U.S.C. § 1983 cause

of action was brought against the individual defendants only. As to those

defendants, the bankruptcy court did not err in ruling that they were

entitled to immunity. State Bar employees are entitled to absolute quasijudicial immunity under the Civil Rights Act for acts performed in their

official capacities. See Greene v. Zank, 158 Cal. App. 3d 497, 508-09 (1984). 

Ms. Albert argues that Appellee Maricruz Farfan did not perform acts of a

judicial nature because she was in charge of probation. But under

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California law, probation officers performing their official duties of

monitoring probation are performing quasi-judicial functions and are

entitled to immunity. Demoran v. Witt, 781 F.2d 155, 158 (9th Cir. 1985);

Burkes v. Callion, 433 F.2d 318, 319 (9th Cir. 1970).

In any event, conduct by the State Bar and its agents cannot

constitute a deprivation of any federally protected rights. See, e.g., Margulis

v. State Bar of Cal., 845 F.2d 215, 216-17 (9th Cir. 1988); Giannini v. Comm. of

Bar Examiners, 847 F.2d 1434, 1435 (9th Cir. 1988); Chaney v. State Bar of Cal.,

386 F.2d 962, 966 (9th Cir. 1967). Finally, because this cause of action was

premised upon the dischargeability of the underlying debt, as a matter of

law the complaint does not state a claim for relief under 42 U.S.C. § 1983.

The bankruptcy court did not err in dismissing this cause of action.

4. The bankruptcy court did not err in dismissing Ms. Albert’s

cause of action for violations of the Rosenthal Act/FDCPA.

The bankruptcy court correctly found that the activities of the State

Bar did not fall within the scope of either California’s Rosenthal Act or the

federal FDCPA and dismissed the cause of action on that ground. 

This cause of action depends on the premise that the State Bar is

acting as a debt collector under federal and state fair debt collection

statutes. A debt collector is defined under the FDCPA as “any person who

uses any instrumentality of interstate commerce or the mails in any

business the principal purpose of which is the collection of any debts, or

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who regularly collects or attempts to collect, directly or indirectly, debts

owed or due or asserted to be owed or due another.” 15 U.S.C. § 1692a(6).

The definition under the Rosenthal Act is similar, but specifically excludes

attorneys. Cal. Civ. Code § 1788.2(c). 

Attorney disciplinary proceedings are not designed or intended to be

debt collection mechanisms for private parties, even where attorneys are

ordered to pay money. See Bach v. State Bar, 52 Cal. 3d 1201, 1207 (1991) (in

rejecting the argument that the State Bar and the California Supreme Court

lacked jurisdiction to impose discipline in the form of suspension

conditioned upon restitution to a former client, the court noted that in

exercising their power to discipline attorneys, the State Bar and the

California Supreme Court further the goals of protecting the public,

preserving confidence in the legal profession, and the rehabilitation of

errant attorneys; they do not “sit in disciplinary matters as a collection

board for clients aggrieved over fee matters.”). Ms. Albert has not cited any

authority even suggesting that the State Bar or the individual defendants

qualify as debt collectors under either the federal or state statutes.

The bankruptcy court did not err in dismissing this cause of action.

5. The bankruptcy court did not err in dismissing Ms. Albert’s

cause of action for a declaration that CBP §§ 6086.10, 6103, and

6047 are unconstitutional.

The bankruptcy court observed that the constitutional challenges

were “indecipherable.” We agree. The allegations supporting this cause of

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action are rambling and seem to be based solely on the fact that Ms. Albert

was disciplined and her various complaints about the process and result.

Nothing in the allegations, even if taken as true, states a claim that the

statutes are unconstitutional, even as applied. In her brief, Ms. Albert

clarifies this cause of action by alleging that the statutes in question are

being used to condition reinstatement of her license on payment of the

costs and sanctions and thus are in violation of § 525 and Perez. Because the

bankruptcy court correctly found no violation of § 525, it did not err in

dismissing this cause of action. 

B. We need not reach the issue of whether the bankruptcy court

abused its discretion in denying Ms. Albert’s application for a

TRO.

Because we are affirming the dismissal of Ms. Albert’s complaint, we

need not address the bankruptcy court’s denial of her application for a

TRO.

CONCLUSION

The bankruptcy court did not err in dismissing Ms. Albert’s

complaint. Even taking the allegations of her complaint as true, as a matter

of law she did not state any plausible claims for relief. We AFFIRM.

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