Court Opinion

ID: 4089531
Source: CourtListenerOpinion
Date Created: 2016-10-14 00:01:37.954552+00
Date Added: 2024-06-11T09:19:25.337655
License: Public Domain

FILED
                                                            OCT 13 2016
 1                         NOT FOR PUBLICATION
                                                        SUSAN M. SPRAUL, CLERK
                                                          U.S. BKCY. APP. PANEL
 2                                                        OF THE NINTH CIRCUIT

 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5   In re:                        )      BAP No. AZ-15-1397-LJuF
                                   )
 6   EMMA NOEMI HOBBS,             )      Bk. No. 4:13-bk-06690-BMW
                                   )
 7                  Debtor.        )
     ______________________________)
 8                                 )
     EMMA NOEMI HOBBS,             )
 9                                 )
                    Appellant,     )
10                                 )
     v.                            )      MEMORANDUM*
11                                 )
     STATE OF ARIZONA,             )
12                                 )
                    Appellee.      )
13                                 )
14              Argued and Submitted on September 23, 2016
                            at Phoenix, Arizona
15
                            Filed - October 13, 2016
16
              Appeal from the United States Bankruptcy Court
17                      for the District of Arizona
18      Honorable Brenda Moody Whinery, Bankruptcy Judge, Presiding
                          ________________________
19
     Appearances:     Gove L. Allen argued for Appellant Emma Noemi
20                    Hobbs; Kelly Elaine Gillilan-Gibson and Valerie
                      Love Marciano argued for Appellee State of Arizona
21                          ________________________
22
     Before: LAFFERTY, JURY, and FARIS, Bankruptcy Judges.
23
24
25
26        *
             This disposition is not appropriate for publication.
27   Although it may be cited for whatever persuasive value it may
     have (see Fed. R. App. P. 32.1), it has no precedential value.
28   See 9th Cir. BAP Rule 8024-1.
 1                            I. INTRODUCTION
 2        Debtor objected to the State of Arizona’s (“Arizona”)
 3   amended proof of claim, which was based on a state court judgment
 4   (“Judgment”) in favor of Arizona that included $70,000 in civil
 5   penalties against Debtor and others.    Debtor argued that the debt
 6   was discharged because Arizona had not filed a timely complaint
 7   to determine nondischargeability.     The bankruptcy court overruled
 8   Debtor’s objection, finding that the civil penalty was
 9   automatically nondischargeable under § 523(a)(7).1    Several
10   months later, Debtor moved for reconsideration of the bankruptcy
11   court’s order, asserting that the state court had not assessed a
12   penalty against Debtor in her sole and separate capacity, that
13   her state court attorney had been negligent, and that Arizona’s
14   attorney had made false representations to the state court.     The
15   bankruptcy court denied the motion as baseless.
16        The pleadings underlying the Judgment suggest that the civil
17   penalties were intended to be assessed only against Debtor’s
18   marital community interest.   Moreover, in the state court action,
19   Arizona sought a penalty of $10,000 per defendant.    Nevertheless,
20   the Judgment contains a finding that Debtor is liable for civil
21   penalties and awards Arizona a total of $70,000 without
22   differentiating among the defendants.    For the reasons explained
23   below, the bankruptcy court correctly found that it lacked
24   jurisdiction to look behind or modify the Judgment.    Accordingly,
25
          1
26           Unless otherwise indicated, all chapter and section
     references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
27   “Rule” references are to the Federal Rules of Bankruptcy
     Procedure. “Civil Rule” references are to the Federal Rules of
28   Civil Procedure.

                                     -2-
 1   we AFFIRM.
 2                         II. FACTUAL BACKGROUND
 3        In 2008, Arizona sued Appellant-Debtor Emma Hobbs and others
 4   in Pima County Superior Court for injunctive and other relief for
 5   violations of Arizona’s Consumer Fraud Act (“CFA”).     Mrs. Hobbs
 6   and her husband were both named as defendants in that lawsuit,
 7   individually and as a marital community.    On January 27, 2010,
 8   the state court granted Arizona’s motion for partial summary
 9   judgment, finding all defendants liable under the CFA.
10   Thereafter, Arizona moved for partial summary judgment seeking
11   injunctive relief, restitution, civil penalties, and attorneys’
12   fees, which the state court also granted.    Both of Arizona’s
13   summary judgment motions defined “Defendants” as seven parties,
14   not including Mrs. Hobbs, and stated that Mrs. Hobbs was a
15   defendant for community property purposes.     Arizona’s second
16   summary judgment motion requested “that each Defendant be
17   assessed one civil penalty of $10,000.00 for a total of
18   $70,000.00.”   On August 24, 2010, the state court entered the
19   Judgment in favor of Arizona, which included $70,000 in civil
20   penalties under Ariz. Rev. Stat. § 44-1531.2    Mrs. Hobbs did not
21   move for reconsideration or appeal the Judgment.
22        Mrs. Hobbs filed an individual chapter 7 petition on
23   April 24, 2013.   Arizona filed a timely proof of claim that it
24
          2
              That statute provides:
25
26        If a court finds that any person has wilfully violated
          § 44-1522, the attorney general upon petition to the
27        court may recover from the person on behalf of the
          state a civil penalty of not more than ten thousand
28        dollars per violation.

                                       -3-
 1   later amended, asserting a claim of $635,014.60 based on the
 2   Judgment.   The claim included the $70,000 in civil penalties
 3   awarded to Arizona and designated those penalties as
 4   nondischargeable under § 523(a)(7).     That section excepts from
 5   discharge (subject to exceptions that are not applicable here) a
 6   debt for a “fine, penalty, or forfeiture payable to and for the
 7   benefit of a governmental unit, [that] is not compensation for
 8   actual pecuniary loss[.]”     § 523(a)(7).
 9        Mrs. Hobbs objected to Arizona’s claim, arguing that the
10   entire claim was dischargeable because Arizona had not filed a
11   timely complaint objecting to dischargeability of the penalty
12   portion.    Mrs. Hobbs also asserted that she was not involved in
13   the actions giving rise to the consumer fraud claim and that the
14   Judgment should have been entered against her only to the extent
15   necessary to bind the marital community.     Mrs. Hobbs pointed out
16   that she had listed on her bankruptcy schedules a negligence
17   claim against her state court counsel for allowing the Judgment
18   to be entered against her.3
19        At the hearing on the claim objection, the bankruptcy court
20   found that it lacked the ability to set aside the Judgment and
21   that the civil penalties were automatically excepted from
22   discharge under § 523(a)(7).     Thereafter, on January 18, 2015,
23   the bankruptcy court entered an order overruling Mrs. Hobbs’
24   objection to Arizona’s claim.
25        Seven months later, on August 22, 2015, Mrs. Hobbs, through
26
27
          3
             Mrs. Hobbs also argued that the claim was unsecured
28   because she owns no property. Arizona conceded that point.

                                       -4-
 1   new counsel, moved for rehearing.     Mrs. Hobbs did not contest the
 2   bankruptcy court’s conclusion that the penalties were
 3   nondischargeable under § 523(a)(7).     Instead, Mrs. Hobbs again
 4   contended that she was not liable for the penalties because she
 5   was not personally involved in the conduct giving rise to the
 6   consumer fraud claim, and that the attorneys involved in the
 7   original hearing on her objection to Arizona’s claim were grossly
 8   negligent or dishonest in not pointing out to the bankruptcy
 9   court that the Judgment was not against Mrs. Hobbs in her “sole
10   and separate property capacity.”    Mrs. Hobbs also argued that the
11   Judgment was not entitled to preclusive effect.4
12        After a hearing, the bankruptcy court denied Mrs. Hobbs’
13   motion for rehearing, finding that Mrs. Hobbs had not established
14   any grounds for relief under Civil Rule 60(b) (applicable in
15   bankruptcy via Rule 9024).   The bankruptcy court determined that
16   Mrs. Hobbs had not shown that the court’s initial interpretation
17   of the Judgment was incorrect, and that the Judgment was entitled
18   to be given full faith and credit.     Mrs. Hobbs timely appealed.
19                           III. JURISDICTION
20        The bankruptcy court had jurisdiction pursuant to 28 U.S.C.
21   §§ 1334 and 157(b)(2)(B) and (I).     We have jurisdiction under
22
          4
23           Mrs. Hobbs’ counsel uses the terms “collateral estoppel”
     and “res judicata” in his briefing in the bankruptcy court and
24   before this Panel. We refer to these doctrines as “issue
     preclusion” and “claim preclusion,” respectively, to conform to
25   the Restatement (Second) of Judgments and United States Supreme
26   Court usage. See Migra v. Warren City School Dist. Bd. of Educ.,
     465 U.S. 75, 77 n.1 (1984); Robi v. Five Platters, Inc., 838 F.2d
27   318, 321 n.2 (9th Cir. 1988); The Alary Corp. v. Sims
     (In re Associated Vintage Group, Inc.), 283 B.R. 549, 554-55 (9th
28   Cir. BAP 2002).

                                     -5-
 1   28 U.S.C. § 158.
 2                                 IV. ISSUE
 3        Did the bankruptcy court abuse its discretion in denying
 4   Mrs. Hobbs’ motion for rehearing of the order overruling her
 5   objection to Arizona’s claim?
 6                          V. STANDARD OF REVIEW
 7        We review denials of motions for relief under Civil
 8   Rule 60(b) for abuse of discretion.    See United States v.
 9   Stonehill, 660 F.3d 415, 443 (9th Cir. 2011).    Accordingly, we
10   reverse only where the bankruptcy court applied an incorrect
11   legal rule or where its application of the law to the facts was
12   illogical, implausible, or without support in inferences that may
13   be drawn from the record.    Ahanchian v. Xenon Pictures, Inc.,
14   624 F.3d 1253, 1258 (9th Cir. 2010) (citing United States v.
15   Hinkson, 585 F.3d 1247, 1262 (9th Cir. 2009) (en banc)).
16        An appeal from an order denying a Civil Rule 60 motion that
17   was filed more than 14 days after the underlying order or
18   judgment raises only the merits of the order denying the motion
19   and does not raise the merits of the underlying judgment or
20   order.   See Maraziti v. Thorpe, 52 F.3d 252, 254 (9th Cir. 1995).
21                               VI. DISCUSSION
22   A.   Standard on Motion for Rehearing
23        Mrs. Hobbs moved for rehearing under § 105(a), Rule 3008,
24   and Civil Rule 60(b)(6).5    Rule 3008 permits a party in interest
25
          5
26           Pursuant to § 105(a), the bankruptcy court may
     reconsider, modify, or vacate its previous orders, but such
27   relief is sought by motion under Rule 9024. Meyer v. Lenox
     (In re Lenox), 902 F.2d 737, 739-40 (9th Cir. 1990). In other
28                                                      (continued...)

                                      -6-
 1   to move for reconsideration of an order allowing or disallowing a
 2   claim against the estate.   Under Civil Rule 60(b), the court may
 3   relieve a party from a final judgment, order, or proceeding for
 4   any of six enumerated reasons, including the ground invoked by
 5   Mrs. Hobbs here: “any other reason that justifies relief.”   Civil
 6   Rule 60(b)(6).6
 7
     B.   Mrs. Hobbs did not demonstrate that relief was warranted
 8        under Civil Rule 60(b)(6).
 9        In ruling on the initial objection, the bankruptcy court
10   concluded that the Judgment was clear on its face in establishing
11   that Mrs. Hobbs was liable for the $70,000 in civil penalties.
12   The Judgment provides, in relevant part:
13             By Minute Entry filed January 28, 2010, the Court
          granted the State’s Motion for Partial Summary Judgment
14        as to Liability against Defendants . . . Emma Hobbs
          . . . . By Minute Entry filed July 16, 2010, the Court
15        granted the State’s Motion for Partial Summary Judgment
          for Injunctive Relief, Restitution, Civil Penalties and
16        Attorney’s Fees against Defendants.
17        . . . .
18             2. Defendants[] wilfully violated A.R.S. § 44-1552
          and are liable for civil penalties pursuant to A.R.S.
19        § 44-1531.
20
          5
           (...continued)
21   words, § 105(a) does not provide an independent ground for
22   relief.
          6
23           The other enumerated grounds for relief under Civil
     Rule 60(b) are (1) mistake, inadvertence, surprise, or excusable
24   neglect; (2) newly discovered evidence that, with reasonable
     diligence, could not have been discovered in time to move for a
25   new trial under Rule 59(b); (3) fraud (whether previously called
26   intrinsic or extrinsic), misrepresentation, or misconduct by an
     opposing party; (4) the judgment is void; and (5) the judgment
27   has been satisfied, released or discharged; it is based on an
     earlier judgment that has been reversed or vacated; or applying
28   it prospectively is no longer equitable.

                                     -7-
 1        . . . .
 2             IT IS THEREFORE ORDERED, ADJUDGED, AND DECREED
          that Claude Thomas Kennedy, Martina J. Alsemgeest,
 3        Donald W. Kennedy, Granite Hobbs, Emma Hobbs, Kennedy
          Motorhome Services, LLC, Kennedy's Financial Services,
 4        LLC, Kenneth W. Griffith and Banker’s First of Tucson,
          LLC be and hereby are permanently enjoined, directly or
 5        indirectly, from engaging in any fraudulent, deceptive
          or illegal acts or practices in violation A.R.S.
 6        § 44 1522; and it is further
 7             ORDERED, ADJUDGED, AND DECREED that Defendants
          Claude Thomas Kennedy, Martina J. Alsemgeest, Donald W.
 8        Kennedy, Granite Hobbs, Emma Hobbs, Kennedy Motorhome
          Services, LLC, Kennedy’s Financial Services, LLC,
 9        Kenneth W. Griffith and Banker’s First of Tucson, LLC
          be and hereby are permanently enjoined directly or
10        indirectly from engaging in the advertisement and/or
          sale of Financial Services to or from Arizona now and
11        in the future; and it is further
12             ORDERED, ADJUDGED, AND DECREED that Defendants,
          joint and severally, pay $494,364.00 in restitution to
13        the Arizona Attorney General’s Office pursuant to
          A.R.S. § 44-1528(2); and it is further
14
               ORDERED, ADJUDGED, AND DECREED that the Plaintiff
15        be awarded $70,000.00 in civil penalties pursuant to
          A.R.S. § 44-1531[.]
16
17   Judgment, August 24, 2010, Pima County Superior Court Case No.
18   C2007 7274.
19        We find no error in the bankruptcy court’s interpretation of
20   the Judgment that the civil penalties are against all defendants,
21   including Mrs. Hobbs.   The state court determined that
22   “Defendants[] wilfully violated A.R.S. § 44-1552 and are liable
23   for civil penalties pursuant to A.R.S. § 44-1531.”   Mrs. Hobbs is
24   included as a named defendant in the lawsuit in her individual
25   capacity, and despite the wording of Arizona’s summary judgment
26   motions, nothing in the Judgment suggests that Mrs. Hobbs’
27   liability was limited to the marital community.
28        On appeal, Mrs. Hobbs contends that (1) the bankruptcy court

                                     -8-
 1   improperly applied the Rooker-Feldman doctrine in concluding that
 2   it had no power to look behind the Judgment; (2) the bankruptcy
 3   court should have reviewed the record of the Superior Court case
 4   to determine whether Mrs. Hobbs was liable for the civil
 5   penalties; (3) the requirements for the application of issue
 6   preclusion in determining that Mrs. Hobbs was liable were not
 7   satisfied; and (4) the bankruptcy court erroneously denied the
 8   motion for rehearing because Arizona’s claim is based on a “false
 9   debt.”    Because the first issue is dispositive, we need not
10   extensively analyze the remaining issues.
11        1.     Full Faith and Credit and the Rooker-Feldman doctrine
                 precluded the bankruptcy court from looking behind the
12               Judgment.
13        Federal courts are bound by 28 U.S.C. § 1738 to give full
14   faith and credit to state court judgments.    Robi v. Five
15   Platters, Inc., 838 F.2d 318, 322 (9th Cir. 1988).7
16
17        7
               28 U.S.C. § 1738 provides:
18        The Acts of the legislature of any State, Territory, or
19        Possession of the United States, or copies thereof,
          shall be authenticated by affixing the seal of such
20        State, Territory or Possession thereto.

21        The records and judicial proceedings of any court of
          any such State, Territory or Possession, or copies
22
          thereof, shall be proved or admitted in other courts
23        within the United States and its Territories and
          Possessions by the attestation of the clerk and seal of
24        the court annexed, if a seal exists, together with a
          certificate of a judge of the court that the said
25        attestation is in proper form.
26
          Such Acts, records and judicial proceedings or copies
27        thereof, so authenticated, shall have the same full
          faith and credit in every court within the United
28                                                      (continued...)

                                      -9-
 1   Additionally, the Rooker-Feldman doctrine bars a lower federal
 2   court, including a bankruptcy court, from reviewing a state
 3   court’s final decision.    See Worldwide Church of God v. McNair,
 4   805 F.2d 888, 890 (9th Cir. 1986) (citing Rooker v. Fidelity
 5   Trust Co., 263 U.S. 413, 415-16 (1923); District of Columbia
 6   Court of Appeals v. Feldman, 460 U.S. 462, 476 (1983)).
 7        However, the Rooker-Feldman doctrine
 8        is confined to cases of the kind from which the
          doctrine acquired its name: cases brought by
 9        state-court losers complaining of injuries caused by
          state-court judgments rendered before the district
10        court proceedings commenced and inviting district court
          review and rejection of those judgments. Rooker-
11        Feldman does not otherwise override or supplant
          preclusion doctrine or augment the circumscribed
12        doctrines that allow federal courts to stay or dismiss
          proceedings in deference to state-court actions.
13
14   Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284
15   (2005).
16        Accordingly, the Rooker-Feldman doctrine does not ordinarily
17   preclude a bankruptcy court from examining the record in a state
18   court case to determine whether issue preclusion applies to
19   establish the elements of a nondischargeability claim.     See Lopez
20   v. Emergency Serv. Restoration, Inc. (In re Lopez), 367 B.R. 99,
21   103 (9th Cir. BAP 2007).   This is because dischargeability is
22   ordinarily a separate federal question over which the bankruptcy
23   court has exclusive jurisdiction.      Id. (citing Brown v. Felsen,
24   442 U.S. 127, 138 (1979)).   “[A] nondischargeability claim is an
25
26        7
           (...continued)
27        States and its Territories and Possessions as they have
          by law or usage in the courts of such State, Territory
28        or Possession from which they are taken.

                                     -10-
 1   independent federal claim as to which the effect of a prior state
 2   court judgment is governed by principles of preclusion.”    Id.
 3   (citing Grogan v. Garner, 498 U.S. 279, 284 n.11 (1991); Brown,
 4   442 U.S. at 132).
 5        However, when determining nondischargeability under
 6   § 523(a)(7), the bankruptcy court’s review is limited to
 7   determining the nature of the debt, not the debtor’s conduct or
 8   the correctness of the judgment.   Colorado v. Jensen
 9   (In re Jensen), 395 B.R. 472, 488 (Bankr. D. Colo. 2008).
10        [A] governmental unit that has obtained a judgment may
          tender to the bankruptcy court a copy of the judgment
11        and rest its case under § 523(a)(7). The bankruptcy
          court then has to examine that judgment to determine
12        whether the obligation evidenced in it is in the nature
          of a “fine, penalty, or forfeiture,” whether the debt
13        is payable to and for the benefit of the government,
          and whether it represents something other than
14        compensation for actual pecuniary losses. Of course,
          the bankruptcy court is not precluded from examining
15        the true nature of the debt rather than any label that
          may be attached to it in the judgment. But nothing in
16        this line of inquiry requires or even allows the
          bankruptcy court to determine whether the debtor did in
17        fact violate a law, giving rise to the imposition of a
          fine, penalty or forfeiture. The validity and amount
18        of the debt, including whether the debtor committed a
          violation of the law, are no longer relevant.
19
20   Id. (citation omitted) (emphasis added).
21        Because the bankruptcy court looks only to the nature of the
22   obligation represented by the judgment, any attack on the
23   underlying finding of culpability is prohibited by the Rooker-
24   Feldman doctrine.   See Arizona v. Ott (In re Ott), 218 B.R. 118,
25   125 (Bankr. W.D. Wash. 1998).
26        Here, the bankruptcy court determined that the civil
27   penalties met the criteria for nondischargeability under
28   § 523(a)(7).   Mrs. Hobbs does not challenge that determination.

                                     -11-
 1   Instead, she seeks to attack the underlying finding of liability,
 2   which is specifically prohibited under Rooker-Feldman.
 3        2.   The doctrine of issue preclusion did not require the
               bankruptcy court to review the record in the state
 4             court litigation.
 5        Mrs. Hobbs argues that the bankruptcy court incorrectly
 6   applied issue preclusion in determining that the civil penalties
 7   were nondischargeable.   This argument reflects a misunderstanding
 8   of the bankruptcy court’s ruling and the applicable law.
 9        The bankruptcy court did not apply issue preclusion in
10   determining that the civil penalties were nondischargeable.     As
11   explained above, the bankruptcy court was required only to
12   examine the Judgment to determine whether the civil penalties at
13   issue represented a debt for a “fine, penalty, or forfeiture
14   payable to and for the benefit of a governmental unit, [that] is
15   not compensation for actual pecuniary loss[.]”   § 523(a)(7).
16   Once the bankruptcy court made that determination, no further
17   analysis was required.   See In re Jensen, 395 B.R. at 488.
18        3.   Mrs. Hobbs’ remaining arguments are foreclosed by the
               Rooker-Feldman doctrine.
19
20        The rest of Mrs. Hobbs’ arguments focus on the
21   inconsistencies between Arizona’s motions and the Judgment.
22   However, as noted, the bankruptcy court was required to give full
23   faith and credit to the Judgment, which clearly imposes civil
24   penalties against Mrs. Hobbs individually.   Any error in the
25   underlying state court findings should have been addressed in a
26   motion for reconsideration or an appeal to the appropriate state
27   tribunal; the bankruptcy court was without jurisdiction to alter
28   the Judgment.

                                    -12-
 1
     C.   The Judgment is not consistent with the evidence presented
 2        or arguments made to the state court.
 3        And one last point.
 4        For the reasons noted above, we have concluded that, under
 5   the Rooker-Feldman doctrine, the bankruptcy court’s decision was
 6   correct.   However, we also note here, as we noted during
 7   Arizona’s presentation at oral argument of this matter, that the
 8   Judgment is not consistent with the evidence or the arguments
 9   presented by the Arizona attorney general’s office.    We raise the
10   point explicitly, if briefly, in the hope that Arizona’s
11   attorneys will move the state court to correct their error.
12        Arizona filed two motions for summary judgment.    The first
13   sought a determination of liability, and the second sought the
14   imposition of remedies.    Both motions carefully defined the term
15   “Defendant” to mean only seven of the named defendants, not
16   including Mrs. Hobbs.   Both motions stated that Mrs. Hobbs and
17   another defendant were “defendants for community property
18   purposes.”   The motions argued, and offered evidence, that the
19   “Defendants” violated the CFA.    Because Mrs. Hobbs was not one of
20   the “Defendants,” the motions did not argue or prove that she
21   violated the CFA.   According to the motions, Mrs. Hobbs’ only
22   involvement in the scheme is that her husband, who is one of the
23   “Defendants,” “acted on behalf of the marital community,” that
24   she “received money” from a company that was among the
25   “Defendants,” and that “Defendants’ marital communities
26   benefitted from Defendants’ violation(s) of the CFA.”    Neither
27   motion argued that this limited involvement subjected Mrs. Hobbs
28   to personal liability for penalties.

                                      -13-
 1        The second motion makes the situation even more clear:
 2        [T]he State respectfully requests that each Defendant
          be assessed one civil penalty of $10,000.00 for a total
 3        of $70,000.00.
 4   Arizona again used the defined term “Defendants,” which did not
 5   include Mrs. Hobbs.   Simple arithmetic further confirms that
 6   Arizona sought penalties against only the seven “Defendants,” not
 7   Mrs. Hobbs.
 8        Unfortunately, Arizona’s attorneys did not draft the
 9   proposed judgment which they presented to the state court with
10   the same care and precision as the motions.   The Judgment uses
11   the term “Defendants” but does not include the definition
12   provided in the motions.   The Judgment grants $70,000.00 in civil
13   penalties but does not explain that the penalties apply to only
14   seven of the defendants.
15        Put simply, Arizona’s attorneys presented to the state court
16   a judgment which their evidence and arguments do not support.
17        For the same reasons that compel us to affirm the decision
18   of the bankruptcy court, i.e., the Rooker-Feldman doctrine’s
19   prohibition on federal courts acting as courts of appeal from
20   state court judgments, neither this court, nor any other federal
21   court, is empowered now to probe the basis for the obvious
22   defects in the judgment presented to the state court.   To be
23   sure, on the spectrum of likely scenarios, we surmise that the
24   disconnect between, on the one hand, the claims stated and the
25   evidence presented by Arizona and, on the other, the form of
26   judgment prepared by Arizona that was ultimately entered by the
27   state court, is more likely the result of inadvertence and error
28   than a blatant attempt to mislead the state court and improperly

                                    -14-
 1   disadvantage a party.   Yet, to this debtor, the effect even of
 2   such inadvertence is just as ruinous as truly nefarious behavior
 3   would have been.   And there is no question but that, as officers
 4   of the court, attorneys have a duty to correct mistakes such as
 5   the ones presented here.
 6        Moreover, the Arizona Supreme Court has recognized that a
 7   government lawyer is a “shepherd of justice,” “with enormous
 8   resources at her disposal,” and thus bears a heightened
 9   responsibility to act ethically in all respects to avoid
10   undermining the public trust or inflicting severe damage to our
11   system of justice: “[T]his alone compels the responsible and
12   ethical exercise of this power.”   In re Peasley, 90 P.3d 764,
13   772-73 (Ariz. 2004) (en banc) (citation omitted); see generally
14   In re City of Newark, 788 A.2d 776, 782 (N.J. Super. 2002)
15   (“Undoubtedly, the need to dispel all appearances of impropriety
16   becomes even more compelling and acute when the attorney is a
17   government lawyer.”);   State ex rel. Neb. State Bar Ass’n v.
18   Rhodes, 453 N.W.2d 73, 90 (Neb. 1990) (“the conduct of a
19   government attorney is required to be more circumspect than that
20   of a private lawyer because improper conduct on the part of such
21   an attorney reflects upon the entire system of justice in terms
22   of public trust”).
23        This panel is powerless to correct this obvious error.     But
24   Arizona’s attorneys can (and should) move the state court to
25   correct the Judgment which they should never have presented.
26                              VII. CONCLUSION
27        Because the bankruptcy court did not abuse its discretion in
28   denying Mrs. Hobbs relief under Civil Rule 60(b), we AFFIRM.

                                     -15-