Court Opinion

ID: 9956617
Source: CourtListenerOpinion
Date Created: 2024-04-02 17:01:37.669939+00
Date Added: 2024-06-11T08:17:42.354750
License: Public Domain

FILED
                                                                  APR 2 2024
                      ORDERED PUBLISHED
                                                              SUSAN M. SPRAUL, CLERK
                                                                U.S. BKCY. APP. PANEL
                                                                OF THE NINTH CIRCUIT
        UNITED STATES BANKRUPTCY APPELLATE PANEL
                  OF THE NINTH CIRCUIT

In re:                                    BAP No. CC-23-1024-SFL
LENORE L. ALBERT-SHERIDAN,
             Debtor.                      Bk. No. 8:18-bk-10548-SC

LENORE L. ALBERT-SHERIDAN, dba            Adv. No. 8:18-ap-01065-SC
Law Offices of Lenore Albert
                 Appellant,
v.                                        OPINION
STATE BAR OF CALIFORNIA;
MARICRUZ FARFAN; BRANDON
TADY; ALEX HACKERT; PAUL
BERNARDINO; HON. YVETTE
ROLAND,
                 Appellees.

            Appeal from the United States Bankruptcy Court
                   for the Central District of California
             Scott C. Clarkson, Bankruptcy Judge, Presiding

                            APPEARANCES
Appellant Lenore L. Albert-Sheridan argued pro se; Suzanne C. Grandt
argued for appellees.

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

Opinion by Judge Spraker
Concurrence by Judge Faris

SPRAKER, Bankruptcy Judge:
                                INTRODUCTION

      Lenore L. Albert-Sheridan (“Albert”) sued the State Bar of California

(“State Bar”), its employees, and its representatives on various claims

relating to her suspension from the practice of law. Her claims included

violations of the automatic stay under § 3621 and violations of the

discharge injunction under § 524. The bankruptcy court dismissed some of

Albert’s claims and granted partial summary judgment as to others.

Ultimately, the court held trial on the narrow remainder of her claims and

entered judgment in Albert’s favor for $21,627.48. Albert appeals this

judgment together with the dismissal and summary judgment rulings.

      This appeal is but one chapter in the drawn-out litigation between

Albert and the State Bar. The State Bar suspended Albert’s law license and

ordered that, after a minimum period of suspension, she could reinstate

her license by paying certain discovery sanctions, restitution, and costs.

After Albert filed a chapter 13 bankruptcy petition, the State Bar eventually

(but tardily) reinstated her license. When the bankruptcy court converted

Albert’s case to chapter 7, the State Bar suspended her again.

      In earlier chapters of the litigation saga, Albert established that her

obligations to pay discovery sanctions, restitution, and the amounts owed

      1
        Unless specified otherwise, all chapter and section references are to the
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.

                                           2
to the State Bar’s Client Security Fund (“CSF”) were dischargeable. Prior

chapters also established that the disciplinary costs assessed against her in

her disciplinary proceedings were nondischargeable in a chapter 7 case

under § 523(a)(7).

      In the current chapter, Albert reprises these claims and argues that

the State Bar violated the automatic stay while Albert was in bankruptcy.

The bankruptcy court rejected these claims. We hold that the court was

correct in most respects but erred in others. The disciplinary proceedings

were valid regulatory proceedings excepted from the automatic stay by

§ 362(b)(4). But Albert originally filed her bankruptcy in chapter 13, in

which all debts owed to the State Bar were dischargeable under § 1328(a).

The State Bar’s efforts to collect discovery sanctions and disciplinary costs

violated the stay during this period. Upon conversion of her case to chapter

7, the disciplinary costs became nondischargeable as a matter of law. Yet,

§ 362(a)(6) still precluded the State Bar from taking any further actions to

collect those costs during the pendency of her bankruptcy case. We hold

that the bankruptcy court erred in dismissing Albert’s claims that the State

Bar’s alleged collection efforts violated the automatic stay and remand for

further proceedings on those claims.

      Upon the entry of the discharge, the State Bar was enjoined from

collecting any discovery sanctions, restitution, and the CSF obligation.

It was not enjoined, however, from collecting the outstanding disciplinary

costs or reinstating her suspension until she paid such costs. The State Bar

                                       3
was entitled to suspend her license because she did not pay the

nondischargeable disciplinary costs. It is true that the State Bar also

suspended her license because she did not pay discharged debts and that

this violated the discharge injunction. But Albert failed to plausibly allege

or credibly prove that she suffered additional compensable injury because

the State Bar suspended her license post-discharge for both proper and

improper reasons.

      Moreover, the State Bar had an objectively reasonable basis to believe

that it legally could pursue the discovery sanctions, the client restitution,

and the CSF debt after Albert received her discharge. At the time, this

Panel had ruled, based on a Supreme Court decision, that these types of

debts were nondischargeable. The Ninth Circuit later reversed our

decision, but it was objectively reasonable for the State Bar to rely on

decisions, including ours, holding that such debts were nondischargeable

in the meantime. This means that the State Bar was not liable for contempt

of the discharge injunction.

      We find no error in the court’s disposition on summary judgment or

at trial. However, mindful of the stringent legal standards governing

motions to dismiss, we hold that the court erred in dismissing Albert’s

claims for violation of the automatic stay under Civil Rule 12(b)(6)—but

only as to her allegations that the State Bar failed to reinstate her license

timely while she was in chapter 13 and reimposed the suspension after the

conversion to chapter 7. We also hold that the bankruptcy court erred

                                        4
when it held that it lacked subject matter jurisdiction of Albert’s claims

under the California constitution. We, therefore, AFFIRM in part,

REVERSE in part, and REMAND for further proceedings consistent with

this decision.

                                         FACTS 2

A.     The disciplinary proceedings leading to the 2017 Suspension
       Order.

       Albert is an attorney licensed to practice in California. In 2015 and

2016, the State Bar commenced disciplinary proceedings against Albert by

filing Notices of Disciplinary Charges (“NDCs”) in the State Bar Court

alleging that she had failed to (1) cooperate with its investigations, (2) pay

court-ordered discovery sanctions, (3) perform competent legal services,

(4) account for client funds, and (5) refund unearned attorney’s fees.3

       On June 30, 2017, the Review Department of the State Bar Court

found that Albert had received a fair trial, failed to cooperate with the

investigation of her misconduct, and failed to comply with three discovery

sanctions orders totaling $5,738 (“2017 Discovery Sanctions”). In December

2017, the California Supreme Court entered an order (“2017 Suspension

Order”) in which it adopted most of the State Bar’s recommendations and

       2
          We exercise our discretion to take judicial notice of documents electronically
filed in the underlying bankruptcy case and adversary proceeding. See Atwood v. Chase
Manhattan Mortg. Co. (In re Atwood), 293 B.R. 227, 233 n.9 (9th Cir. BAP 2003).
        3 For a description of the State Bar disciplinary process, see Hirsh v. Justices of

Supreme Court of California, 67 F.3d 708, 711–12 (9th Cir. 1995).
                                             5
suspended Albert from the practice of law for at least 30 days, but

continuing until she paid the 2017 Discovery Sanctions, as well as $18,714

in disciplinary costs awarded to the State Bar under California Business

and Professions Code § 6086.10(b)(3) (“Disciplinary Costs”).

B.    Albert’s bankruptcy and the first adversary proceeding against the
      State Bar.

      Albert did not immediately pay either the 2017 Discovery Sanctions

or the Disciplinary Costs. Instead, on February 20, 2018, she filed a chapter

13 petition.

      In March 2018, she moved for sanctions against the State Bar and

others. She claimed that the State Bar violated the automatic stay when it

refused to terminate her suspension and reinstate her as a licensed

California attorney. She claimed that the continuation of her suspension

was an impermissible attempt to collect dischargeable debts during the

pendency of her bankruptcy stay.

      The State Bar opposed the sanctions motion. It contended that it was

acting under its police or regulatory power and not merely enforcing a

monetary obligation. It further maintained that Albert was not entitled to

injunctive relief and that she had not demonstrated that the alleged stay

violation had injured her.

      In April 2018, before the bankruptcy court held a hearing on the

sanctions motion, Albert filed her first adversary complaint (“First

Adversary”) against the State Bar and several of its employees. Among

                                      6
other things, she alleged that her debts to the State Bar were dischargeable

and fell outside the scope of § 523(a)(7) and that the State Bar violated her

rights under § 525(a)’s anti-discrimination provision.

      After a hearing on May 3, 2018, the bankruptcy court deferred a final

ruling on the motion but noted that the State Bar’s “30-day actual

suspension of Debtor’s license to practice law as determined by the

California Supreme Court commenced on February 14, 2018 and ran

through and including March 16, 2018.” The court observed that this

“portion of the suspension [was] not based on condition of any payment of

sanctions or disciplinary costs.” The court further noted: “[w]hether the

suspension continues past March 16, 2018 based on certain reinstatement

conditions is the subject of an adversary proceeding which will be

adjudicated in due course.”

      Four days later, on May 7, 2018, the State Bar moved to dismiss the

First Adversary. The State Bar argued that the 2017 Discovery Sanctions

and Disciplinary Costs were nondischargeable debts under § 523(a)(7) and

that it properly continued Albert’s suspension after the initial 30 days

based on her failure to pay those debts. The State Bar also sought to dismiss

Albert’s other claims for relief.

      While its motion to dismiss was pending, on June 1, 2018, the State

Bar reinstated Albert effective as of March 16, 2018. It did not explain why

it changed its position.

      Shortly thereafter, on June 26, 2018, the bankruptcy court converted

                                       7
the bankruptcy case to chapter 7. The State Bar then reimposed Albert’s

suspension pending payment of the 2017 Discovery Sanctions and

Disciplinary Costs.

      On August 9, 2018, the bankruptcy court granted the defendants’

motion to dismiss the First Adversary. Albert appealed. This Panel

affirmed the dismissal. We interpreted the Supreme Court’s decision in

Kelly v. Robinson, 479 U.S. 36 (1986), to mean that the 2017 Discovery

Sanctions and Disciplinary Costs were nondischargeable under § 523(a)(7).

Albert-Sheridan v. State Bar (In re Albert-Sheridan), 2019 WL 1594012, at *5-7

(9th Cir. BAP Apr. 11, 2019) (“Albert I”), aff'd in part, rev'd in part and

remanded, 960 F.3d 1188 (9th Cir. 2020) (“Albert II”), and aff'd, 808 F. App’x

565 (9th Cir. Jun. 10, 2020) (“Albert III”). We further held that the State Bar

could condition the reinstatement of Albert’s law license on payment of

nondischargeable debts without violating § 525. Id. at *8. We also affirmed

the dismissal of Albert’s other causes of action.

C.    The Ninth Circuit’s decisions.

      Albert appealed the Panel’s decision to the Ninth Circuit Court of

Appeals. This resulted in two decisions. In an unpublished decision, the

Ninth Circuit affirmed the dismissal of all the non-bankruptcy claims for

relief. Albert III, 808 F. App’x at 566. It held that most of the non-

bankruptcy claims depended on the dischargeability of both the

Disciplinary Costs and the 2017 Discovery Sanctions. As the Ninth Circuit

observed, this was a false premise because the Disciplinary Costs were

                                         8
nondischargeable, and the State Bar could properly condition Albert’s

reinstatement on payment of the Disciplinary Costs. Id. at 566-67.

      Separately, in a published decision, the Ninth Circuit held that the

2017 Discovery Sanctions were compensatory rather than punitive in

nature and were not excepted from discharge under § 523(a)(7). Albert II,

960 F.3d at 1188, 1195-96.

D.    Albert’s discharge and issuance of a new suspension order.

      In the meantime, on February 26, 2019, Albert received her chapter 7

discharge.

      In January 2019, between this Panel’s decision in Albert I and the

Ninth Circuit’s decisions in Albert II and III, the State Bar Court issued

another decision (“2019 Decision”), and in July 2019 the California

Supreme Court issued a second disciplinary order against Albert (“2019

Suspension Order”). The misconduct covered by this order was separate

from that covered by the 2017 Suspension Order. It mostly concerned

Albert’s retention by Dr. Nira Schwartz-Woods as patent litigation counsel

between 2014 and 2016. But it also addressed $875 in unpaid discovery

sanctions imposed against Albert in 2015 in a lawsuit she prosecuted as

plaintiffs’ counsel against Fin City Foods, Inc. (“Fin City Sanction”).

Between 2016 and 2018, the State Bar issued multiple NDCs regarding

these matters and continued its investigation and prosecution of these

disciplinary charges while Albert’s bankruptcy case was pending. On

January 9, 2019, prior to Albert’s discharge, the State Bar Court found that
                                       9
she willfully failed to: (1) perform her representation of Dr. Woods with

competence; (2) account for client funds; (3) refund $20,000 in unearned

fees; (4) cooperate in the State Bar’s disciplinary investigation; (5) release

the client’s file; and (6) obey the sanctions order in the Fin City Foods

litigation.

      Based on these findings of misconduct, the California Supreme Court

issued the 2019 Suspension Order. It placed Albert on probation for two

years and suspended her from practice for a minimum of six months. The

suspension would continue until she repaid the $20,000 retainer fee plus

interest to Dr. Woods (“Woods Restitution”), the Fin City Sanction, and

$18,841.90 in further Disciplinary Costs. 4

      Between 2019 and 2021, Albert and the State Bar communicated

about the terms and status of her probation and the amounts she needed to

pay to be eligible for reinstatement. Some of these communications took

the form of quarterly probation reports the State Bar required Albert to fill

out and the State Bar’s responses to her efforts. The State Bar also issued

additional NDCs and sent Albert emails in response to her inquiries

regarding what she needed to pay to be reinstated (“Alleged Email

Violations”).

      4
       In December 2020, the State Bar paid Dr. Woods $20,000 from the CSF. In
accordance with the terms of the 2019 Suspension Order, the CSF directed Albert to
reimburse it for this expenditure (“CSF Obligation”) as a condition to her reinstatement.
                                           10
E.    Albert’s second adversary proceeding.

      In June 2020, Albert filed her second adversary proceeding against

the State Bar and some of its employees (“Individual State Bar

Defendants”). The parties stipulated to consolidate the remnants of her

First Adversary with the second adversary proceeding and to allow her to

file an amended consolidated complaint with additional claims

(“Consolidated Adversary”). Albert’s First Amended Complaint (“FAC”)

stated claims for: (1) dischargeability of debts under § 523(a)(7) against all

defendants; (2) violation of the automatic stay and discharge injunction

against all defendants; (3) violation of the Eighth Amendment of the U.S.

Constitution for excessive fines against the State Bar; (4) violation of Article

1, Section 17, of the California Constitution for excessive fines against the

State Bar; and (5) violation of § 525(a) against the State Bar for its failure to

reinstate Albert’s license based on a dischargeable debt.

      In April 2021, Albert paid the State Bar $37,555.90, representing all

outstanding Disciplinary Costs and all of the CSF Obligation. The State Bar

reinstated Albert as an active licensed attorney on May 5, 2021.

F.    Partial dismissal of the Consolidated Adversary.

      In June 2021, the bankruptcy court granted the State Bar’s motion to

dismiss some of Albert’s claims in the Consolidated Adversary.

      The court dismissed her claims for violation of the automatic stay.

The bankruptcy court concluded that the 2019 Decision was exempt from

the automatic stay under § 362(b)(4). It did not directly address the

                                        11
allegations pertaining to the timeliness of her reinstatement during the

chapter 13 phase of her bankruptcy case, but the court rejected Albert’s

claim that the State Bar violated the automatic stay by reimposing her

suspension after the conversion of her case to chapter 7. The court

interpreted the Ninth Circuit’s decision in Albert II to mean that the State

Bar could properly condition Albert’s reinstatement upon the payment of

nondischargeable debt.

      The bankruptcy court also dismissed Albert’s claims for violation of

the United States and California constitutions and under § 525(a), as well as

all claims against the Individual State Bar Defendants. It denied leave to

amend the dismissed claims.

      The only surviving claims after the court’s ruling on the motion to

dismiss were Albert’s: (1) first claim for relief against the State Bar seeking

to determine the dischargeability of the debts she owed to the State Bar;

and (2) second claim for relief against the State Bar for violation of the

discharge injunction.

G.    Partial summary judgment in the Consolidated Adversary.

      In April 2022, the State Bar moved for partial summary judgment on

the two remaining claims for relief. But it excluded from its motion a small

portion of the claim for violation of the discharge injunction: it admitted

that it should have reinstated Albert’s law license on April 21, 2021, when

she paid the Disciplinary Costs and the CSF Obligation, that it did not do

so until May 5, 2021, and that its delay violated the discharge injunction.

                                       12
      With respect to the first claim for relief, the State Bar argued that

there was no genuine factual dispute regarding the dischargeability of the

discovery sanctions, the Disciplinary Costs, and the Woods Restitution/CSF

Obligation. All that remained was for the bankruptcy court to determine as

a pure matter of law whether these debts were nondischargeable under

§ 523(a)(7).

      As for the second claim for contempt, the State Bar asserted that none

of its challenged conduct constituted an attempt to collect a discharged

debt. But even if it did, the State Bar argued that there was no genuine

dispute that it reasonably believed it was acting lawfully and not in

violation of the discharge injunction.

      The bankruptcy court granted the motion for partial summary

judgment in June 2022. The court recognized that under Albert II, the

discovery sanctions had been discharged but the Disciplinary Costs

remained nondischargeable. The bankruptcy court also ruled that Albert’s

CSF Obligation was excepted from discharge under § 523(a)(7).

      As for the contempt claim, the bankruptcy court held that the

probation reports, the NDCs, and the Alleged Email Violations were not

actions to collect discharged debts but rather served regulatory or

disciplinary purposes. The court alternatively held that, even if some of

these activities constituted actions to collect a debt, the Disciplinary Costs

remained nondischargeable. As for the discovery sanctions, the bankruptcy

court ruled that Albert failed to show that the State Bar lacked an

                                         13
objectively reasonable basis for concluding that these debts were

nondischargeable when the alleged collection efforts occurred. To the

contrary, the bankruptcy court remarked that, “until the Ninth Circuit

rendered its opinion in [Albert II] . . . , there was no [Ninth Circuit]

precedent on this issue and both this Court and the Ninth Circuit B.A.P.

were under the same impression as the State Bar that discovery sanctions

were nondischargeable.”

      Shortly after the bankruptcy court’s partial summary judgment, the

Ninth Circuit held in Kassas v. State Bar, 49 F.4th 1158 (9th Cir. 2022)

(“Kassas II”), rev’g Kassas v. State Bar (In re Kassas), 631 B.R. 469 (Bankr. C.D.

Cal. 2021) (“Kassas I”), that restitution obligations payable to the CSF were

dischargeable in bankruptcy. Albert thereafter moved for reconsideration

of the bankruptcy court’s summary judgment ruling. The bankruptcy court

partially granted the motion, acknowledging that, under Kassas II, the CSF

Obligation had been discharged.

H.    Trial and final judgment.

      The bankruptcy court’s decisions on the motions to dismiss and

summary judgment left for trial only the issue of the State Bar’s contempt

for violation of the discharge injunction from the date on which Albert paid

the Disciplinary Costs and the CSF Obligation (April 21, 2021) through the

date of Albert’s reinstatement (May 5, 2021). After a one-day trial, the court

issued its memorandum decision holding the State Bar in contempt for the

15-day period. As the court explained, when Albert made the payment on

                                        14
April 21, 2021, the State Bar told her that it would forthwith reinstate her.

But, as the State Bar admitted, “through its employees, [it] continued to

place administrative barriers, which delayed the re-activation of her license

until May 5, 2021.”

      The court then made rulings regarding Albert’s entitlement to

damages against the State Bar. Albert claimed 22 categories of damages.

For most of these categories, the court awarded little or no damages. It

ruled that Albert presented insufficient evidence that she incurred any

compensable damages or losses as a result of the 15-day delay.

      Albert admitted that she could not recover her attorney’s fees for self-

representation. Still, she sought $300,133.75 for the “time” she spent on the

matter. The court considered this to be a thinly disguised attempt to

recover attorney’s fees by a pro se litigant. It awarded her $922.50 ($45 per

hour for 20.5 hours) for the time she said she spent over the 15 days

attempting to push through her reinstatement after she paid the State Bar.

      The court also awarded Albert $20,705.48 for various litigation costs

she incurred. The bankruptcy court entered final judgment for Albert in the

amount of $21,627.48 on January 27, 2023. Albert timely appealed. The

State Bar has not appealed the entry of judgment against it.

                              JURISDICTION

      The bankruptcy court had jurisdiction under 28 U.S.C. § 1334, and we

have jurisdiction under 28 U.S.C. § 158.

                                      15
                                    ISSUES

1.    Did the bankruptcy court err when it dismissed some of Albert’s

claims for relief?

2.    Did the bankruptcy court err when it granted the State Bar partial

summary judgment?

3.    Did the bankruptcy court err when it entered judgment in favor of

Albert but awarded her damages of only $21,627.48?

4.    Do any of Albert’s evidentiary or discovery arguments support

reversal?

                         STANDARDS OF REVIEW

      We review de novo the bankruptcy court’s dismissal under Civil

Rule 12(b)(6), which is made applicable in adversary proceedings by Rule

7012(b). Barnes v. Belice (In re Belice), 461 B.R. 564, 570-72 & n.3 (9th Cir. BAP

2011). We also review de novo its summary judgment ruling. Stadtmueller

v. Sarkisian (In re Medina), 619 B.R. 236, 240 (9th Cir. BAP 2020), aff'd, 2021

WL 3214757 (9th Cir. July 29, 2021). Jurisdictional issues also are reviewed

de novo. See McCowan v. Fraley (In re McCowan), 296 B.R. 1, 2 (9th Cir. BAP

2003) (“Whether a court has subject matter jurisdiction is a question of law

that we review de novo.”). “De novo review requires that we consider a

matter anew, as if no decision had been made previously.” Francis v.

Wallace (In re Francis), 505 B.R. 914, 917 (9th Cir. BAP 2014).

      The bankruptcy court’s legal conclusions after trial are reviewed de

novo, and its factual findings are reviewed under the clearly erroneous

                                       16
standard. Oney v. Weinberg (In re Weinberg), 410 B.R. 19, 28 (9th Cir. BAP

2009), aff'd, 407 F. App’x 176 (2010). Factual findings are clearly erroneous

if they are illogical, implausible, or without support in the record. Retz v.

Samson (In re Retz), 606 F.3d 1189, 1196 (9th Cir. 2010).

                     CIVIL RULE 12(b)(6) STANDARDS

      When we review an order granting a Civil Rule 12(b)(6) motion, we

consider the legal sufficiency of the plaintiff’s complaint. See Johnson v.

Riverside Healthcare Sys., LP, 534 F.3d 1116, 1121–22 (9th Cir. 2008). We must

assess whether the complaint presents a cognizable legal theory and

whether it contains sufficient factual allegations to support that theory. Id.

Thus, “for a complaint to survive a motion to dismiss, the non-conclusory

‘factual content,’ and reasonable inferences from that content, must be

plausibly suggestive of a claim entitling the plaintiff to relief.” Moss v. U.S.

Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (citing Ashcroft v. Iqbal, 556 U.S.

662, 677-78 (2009)). A claim is facially plausible when it contains factual

allegations that, if taken as true, would allow the court to reasonably infer

that the defendant is liable to the plaintiff. Iqbal, 556 U.S. at 678.

“Threadbare recitals of the elements of a cause of action, supported by

mere conclusory statements, do not suffice.” Id. Additionally, we do not

accept as true mere legal conclusions because they cannot by themselves

establish a plausible claim for relief. Id.

                  SUMMARY JUDGMENT STANDARDS

      A court must grant summary judgment when the pleadings and

                                        17
evidence submitted show that there are no genuine issues of material fact

and the movant is entitled to judgment as a matter of law. Civil Rule 56(a)

(incorporated by Rule 7056); Roussos v. Michaelides (In re Roussos), 251 B.R.

86, 91 (9th Cir. BAP 2000), aff'd, 33 F. App’x 365 (9th Cir. 2002). The moving

party bears the initial burden of demonstrating an absence of a genuine

issue of material fact. Once the moving party has met its initial burden, the

non-moving party must show specific facts establishing the existence of

genuine issues for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256

(1986).

                                DISCUSSION

A.    Events During the Bankruptcy Case.

      Albert’s first set of claims are based on alleged violations of the

automatic stay that went into effect when she filed her chapter 13 petition

and remained in effect until she received her chapter 7 discharge. The

automatic stay is a statutory injunction that prohibits most actions to collect

prepetition debts or to execute upon property of the estate. § 362(a); see also

Gruntz v. Cnty. of L.A. (In re Gruntz), 202 F.3d 1074, 1081–82 (9th Cir. 2000)

(en banc) (describing sweeping scope of automatic stay).

      The automatic stay is broad, but it is subject to exceptions. The

exception that is particularly relevant to this appeal is § 362(b)(4), which

provides that the automatic stay does not apply to “the commencement or

continuation of an action by a governmental unit . . . to enforce such

governmental unit’s . . . police and regulatory power, including the
                                       18
enforcement of a judgment other than a monetary judgment . . . .”

      This exception covers professional disciplinary proceedings

conducted by state licensing agencies. It does not, however, apply to

actions solely serving a pecuniary interest. See Poule v. Registrar of

Contractors (In re Poule), 91 B.R. 83, 85-88 (9th Cir. BAP 1988). Courts must

distinguish between valid and necessary governmental action and “a

circumvented method of collecting a dischargeable judgment from the

debtor.” Watson v. Shandell (In re Watson), 192 B.R. 739, 745 n.5 (9th Cir.

BAP 1996) (citing Stovall v. Stovall, 126 B.R. 814, 815–16 (N.D. Ga. 1990)),

aff’d, 116 F.3d 488 (9th Cir. 1997).

      Violations of the automatic stay have consequences. Actions taken in

violation of the automatic stay are void. Schwartz v. United States (In re

Schwartz), 954 F.2d 569, 571-72 (9th Cir. 1992). Additionally, § 362(k) allows

individual debtors to recover damages caused by a violation of the

automatic stay. See Koeberer v. Cal. Bank of Com. (In re Koeberer), 632 B.R. 680,

687 (9th Cir. BAP 2021); Ramirez v. Fuselier (In re Ramirez), 183 B.R. 583, 589

(9th Cir. BAP 1995), appeal dismissed sub nom., Ramirez v. Sharp (In re

Ramirez), 201 F.3d 444 (9th Cir. 1999) (table). To recover actual damages

under § 362(k), the debtor must allege and prove that the stay violation was

willful, specifically that the defendant “knew of the automatic stay, and its

actions in violation of the stay were intentional.” Stuart v. City of Scottsdale

(In re Stuart), 632 B.R. 531, 538 (9th Cir. BAP 2021) (quoting Eskanos & Adler,

P.C. v. Leetien, 309 F.3d 1210, 1215 (9th Cir. 2002)), aff’d, 2023 WL 5011739

                                       19
(9th Cir. Aug. 7, 2023). Importantly, the debtor need not prove that the

defendants intended to violate the stay. Pinkstaff v. United States (In re

Pinkstaff), 974 F.2d 113, 115 (9th Cir. 1992).

      1.    Period 1: Chapter 13 petition date to end of minimum
            suspension.

      We begin our analysis with the period that began when Albert filed

her bankruptcy petition and the automatic stay was invoked, and ended on

March 16, 2018, when the minimum 30-day suspension period under the

2017 Suspension Order expired. Although Albert’s contentions are

muddled, she seemed to concede that the State Bar did not violate the

automatic stay during this period. Her concession is correct. The automatic

stay did not prevent the State Bar from exercising its police or regulatory

powers unless it was employing those powers solely for pecuniary

purposes. During Period 1, the 2017 Suspension Order provided that

Albert could not reinstate her license even if she paid all of her debts in

full. Therefore, the suspension during Period 1 had no pecuniary purpose,

and it did not violate the automatic stay.

      2.    Period 2: End of minimum suspension to reinstatement in
            chapter 13.

      After the minimum suspension term ended on March 16, 2018, the

2017 Suspension Order entitled Albert to reinstatement if she paid the 2017

Discovery Sanctions and the Disciplinary Costs. In short, the only thing

that stood between Albert and her license during this period was the

                                        20
payment of debt. Albert alleged in her FAC that the State Bar violated the

automatic stay by refusing to reinstate her law license until June 1, 2018,

based on her failure to pay debt. 5

       The bankruptcy court rejected this claim, reasoning that the State Bar

did not violate the automatic stay during this period because some of those

debts (the Disciplinary Costs) were not dischargeable. It relied on the Ninth

Circuit’s decision in Albert II. In this respect, the bankruptcy court

misconstrued Albert II. In that decision, the court of appeals held that the

State Bar did not violate § 525(a). That section bars a governmental unit

from withholding a license “solely because [the debtor] . . . has not paid a

debt that is dischargeable . . . .” The court of appeals did not discuss the

effect of the automatic stay because no stay violation claims were before

the court. Section 525(a) is different from § 362(a) in a crucial respect: the

former only protects debtors against adverse consequences from

dischargeable debts; while the latter protects debtors from the enforcement

of “claims,” which includes both dischargeable and nondischargeable

debts. Compare § 525(a) (preventing discrimination against debtors and

others by virtue of being a debtor or not having “paid a debt that is

dischargeable in the case under this title . . .”), with § 362(a)(6) (staying “any

act to collect, assess, or recover a claim against the debtor that arose before

       5 The State Bar claimed that it backdated the reinstatement of Albert’s license as
of March 16, 2018. We need not decide which date is relevant because it would only
affect the amount of any damages, and we leave that issue to the bankruptcy court on
remand.
                                            21
commencement of the case under this title”); see generally Johnson v. Home

State Bank, 501 U.S. 78, 83 (1991) (explaining that “claim” means “right to

payment, whether or not such right is reduced to judgment, liquidated,

unliquidated, fixed, contingent, matured, unmatured, disputed,

undisputed, legal, equitable, secured, or unsecured” and that “Congress

intended by this language to adopt the broadest available definition of

‘claim’” (citations omitted)).

      The Ninth Circuit affirmed the prior dismissal of Albert’s claims

under § 525, but her subsequent claim under § 362(k) remains. Albert’s

FAC is poorly drafted, but it contains sufficient allegations to sustain this

portion of her claim. Albert alleged that, “[o]n March 16, 2018, after the 30-

day suspension period had ended, Ms. Albert demanded the State Bar

defendants reinstate her license, but they failed and refused to do so on the

ground Ms. Albert had not paid [the 2017 Discovery Sanctions] plus 10%

interest.” FAC at ¶ 22. Albert also specifically alleged that “[s]uch illegal

attempt included but is not limited to refusing to reinstate Ms. Albert’s law

license from March 16, 2018 to May 30, 2018 in a timely manner and then

by revoking her license again on June 28, 2018 through at least February 2,

2019 because the [2017 Discovery Sanctions] was dischargeable debt.” FAC

at ¶ 100. Albert further alleged that she suffered actual damages

proximately caused by the State Bar’s willful stay violation.

      These factual allegations are adequate. On our review of the

bankruptcy court’s order partially granting the State Bar’s motion to

                                       22
dismiss, we are obligated to accept her allegations as true and construe

them in the light most favorable to Albert. See Johnson, 534 F.3d at 1122. The

allegations sufficiently state a claim for violation of the automatic stay.

While Albert was in chapter 13, all debts owed to the State Bar were

dischargeable under § 1328(a), including the Disciplinary Costs, because

§ 523(a)(7) does not apply in chapter 13. Accordingly, there is no question

that § 362(a)(6) stayed the State Bar from attempting to collect any debts

owed by Albert while she was in chapter 13. Any effort to collect these

debts as a condition of reinstatement of Albert’s law license, therefore,

violated the automatic stay. The bankruptcy court erred in dismissing this

claim under Civil Rule 12(b)(6). We remand for further proceedings on

Albert’s claim that the State Bar violated the stay by attempting to collect

the 2017 Discovery Sanction and Disciplinary Costs while she was in

chapter 13.

      3.      Period 3: First reinstatement to chapter 7 conversion.

      In her FAC, Albert alleged that the State Bar continuously violated

the automatic stay during this period. These allegations do not meet the

test of plausibility. Albert did not identify any act of the State Bar that

violated the stay during the limited period after the State Bar reinstated her

license up to the conversion of her bankruptcy and the reimposition of her

suspension. The bankruptcy court did not err in dismissing this portion of

                                       23
her claims.

      4.      Period 4: Conversion to chapter 7 to discharge (2/26/19).

      The bankruptcy court converted Albert’s bankruptcy case from

chapter 13 to chapter 7 on June 26, 2018. Conversion of her bankruptcy case

to chapter 7 made § 523(a)(7) applicable where it was not in chapter 13.

Compare § 523(a), with § 1328(a)(2). As a result, the Disciplinary Costs

became nondischargeable upon conversion of the case while the 2017

Discovery Sanctions remained dischargeable as held in Albert II, 960 F.3d at

1188, 1195-96. The State Bar then reimposed Albert’s suspension from the

practice of law subject to paying the 2017 Discovery Sanctions and the

Disciplinary Costs. Albert has alleged in the FAC that the State Bar violated

the automatic stay by seeking to collect both debts through various actions,

including the reimposition of her suspension.

      The bankruptcy court dismissed Albert’s claims for stay violations on

the basis that that the Disciplinary Costs were nondischargeable. It

reasoned that the State Bar properly conditioned her reinstatement to

practice law on the payment of that debt. Section 362(a)(6) continued to

stay the State Bar’s efforts to collect the dischargeable 2017 Discovery

Sanctions, but the question arises whether it also stayed collection of the

nondischargeable Disciplinary Costs while Albert was in chapter 7.

      Section 362(a) defines the scope of the automatic stay and specifically

precludes any act to collect any prepetition claims, which the 2017

Discovery Sanctions and the Disciplinary Costs were. As noted above,

                                       24
§ 362(a)(6) stays “any act to collect, assess, or recover a claim against the

debtor that arose before the commencement of the case . . . .” Section 362(b)

lists the exceptions to the automatic stay. The State Bar acted under

§ 362(b)(4) to investigate and adjudicate the claims of professional

misconduct against Albert, and then to enforce its judgments against her.

Section 362(b)(4) provides:

      under paragraph (1), (2), (3), or (6) of subsection (a) of this
      section, of the commencement or continuation of an action or
      proceeding by a governmental unit . . . to enforce such
      governmental unit’s or organization’s police and regulatory
      power, including the enforcement of a judgment other than a
      money judgment, obtained in an action or proceeding by the
      governmental unit to enforce such governmental unit’s or
      organization’s police or regulatory power[.]

(Emphasis added.)

      While § 362(b)(4) excepts actions and enforcement of judgments

invoking a governmental unit’s police and regulatory power, the statute

specifically excludes enforcement of money judgments from its exception.

Accordingly, “section 362(b)(4) by its own terms does not permit a

[governmental creditor] to ‘enforce . . . a money judgment’ obtained in a

police power proceeding. Thus, section 362(b)(4) defers to other provisions

of the Code to determine whether the state may collect money.” Hawaii v.

Parsons (In re Parsons), 505 B.R. 540, 545 (Bankr. D. Haw. 2014); see also

United States v. Perez (In re Perez), 61 B.R. 367, 368 (Bankr. E.D. Cal. 1986)

(permitting governmental action to proceed to judgment under § 362(b)(4)

                                       25
but holding “that any attempts to collect any money judgment which

might be rendered in that action shall not be pursued except through

debtor’s bankruptcy proceeding”).

      Neither § 362(a) nor § 362(b) differentiates between dischargeable

and nondischargeable debts in the application of the stay or its exceptions.

Yet, binding authority in this circuit holds that creditors who obtain a

nondischargeable judgment are not stayed from collecting

nondischargeable debts so long as collection is sought from property that is

not property of the bankruptcy estate. Palm v. Klapperman (In re Cady), 266

B.R. 172, 180 (9th Cir. BAP 2001) (“Section 362 [does] not preclude the

execution of a judgment, which has been held by the bankruptcy court to

be non-dischargeable, upon property of the debtor which is not property of

the estate.” (quoting Watson v. City Nat’l Bank (In re Watson), 78 B.R. 232,

235 (9th Cir. BAP 1987)), aff’d, 315 F.3d 1121 (9th Cir. 2003); see Cal. State

Univ. v. Gustafson (In re Gustafson), 111 B.R. 282, 286 (9th Cir. BAP 1990)

(“We therefore determine that the automatic stay applies to preclude a

creditor’s attempts to collect a claim that is presumed, but not yet

determined by the bankruptcy court, to be nondischargeable under section

523(a)(8).”), rev'd on other grounds, 934 F.2d 216 (9th Cir. 1991); In re Watson,

78 B.R. at 233-34 (holding that a creditor who obtains a § 523 judgment of

nondischargeability may proceed with execution on non-estate property

without obtaining relief from the automatic stay).

      These cases do not address whether creditors holding

                                        26
nondischargeable debts that are neither presumed nondischargeable, such

as under § 523(a)(8), nor require a bankruptcy court judgment under

§ 523(c), are subject to the automatic stay. As relevant here, § 362(b)(4)

provides that judgment debts arising from governmental police and

regulatory powers are not excepted from the automatic stay. Because

§ 362(b)(4) is clear that the recovery of monetary judgments remains subject

to the automatic stay, any actions to recover such a debt violates the

automatic stay absent relief from stay under § 362(d). As a result, any

action by the State Bar to collect either the 2017 Discovery Sanctions or the

Disciplinary Costs during Albert’s bankruptcy necessarily violated the

automatic stay.

      Albert’s allegations of stay violations in the FAC are chaotic. We have

focused on the allegations pertaining to her liability under the 2017

Suspension Order, but she also asserts that the State Bar’s later disciplinary

proceedings involving her representation of Dr. Woods and the Fin City

Sanction violated the automatic stay. As discussed in more detail elsewhere

in this decision, we agree with the bankruptcy court that the adjudication

of the disciplinary proceedings against Albert during the pendency of her

bankruptcy that ultimately resulted in the 2019 Decision and the 2019

Suspension Order fall squarely within the stay exception provided by

§ 362(b)(4). Those actions did not violate the automatic stay.

      We reverse and remand the bankruptcy court’s dismissal of Albert’s

claims that the State Bar’s efforts to collect the 2017 Discovery Sanctions

                                      27
and Disciplinary Costs violated the automatic stay. The court erred in

concluding that the automatic stay did not apply to the State Bar’s

collection efforts while Albert was in chapter 7. Albert’s allegations that the

State Bar sought to collect the 2017 Discovery Sanctions and Disciplinary

Costs in violation of the automatic stay state viable claims for purposes of

defeating the motion to dismiss.

B.    Post-Discharge Events.

      As we have noted, Albert received her discharge under chapter 7 on

February 26, 2019. The discharge has two effects. First, it “voids any

judgment at any time obtained, to the extent that such judgment is a

determination of the personal liability of the debtor with respect to any

debt discharged under section 727 . . . .” § 524(a)(1). Second, it “operates as

an injunction against . . . an act[ ] to collect, recover or offset any

[discharged] debt as a personal liability of the debtor . . . .” § 524(a)(2).

      The discharge only applies to dischargeable debts. Among the debts

that are not discharged in chapter 7 is “any 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 . . . .“

§ 523(a)(7).

      Unlike violations of the automatic stay, the Bankruptcy Code does

not provide a statutory remedy to debtors for a violation of the discharge

injunction. But because it is an injunction, a party who violates it may be

liable for contempt. See Walls v. Wells Fargo Bank, N.A., 276 F.3d 502, 507

                                        28
(9th Cir. 2002). Contempt arises from a knowing violation of a clear order

of the court. See ZiLOG, Inc. v. Corning (In re ZiLOG, Inc.), 450 F.3d 996,

1007-09 (9th Cir. 2006); Nash v. Clark Cnty. Dist. Att'y's Off. (In re Nash), 464

B.R. 874, 880 (9th Cir. BAP 2012).

      The discharge injunction is a “specific and definite” court order that

may support contempt. In re Bennett, 298 F.3d at 1069. To impose liability,

however, Albert was required to show by “clear and convincing evidence”

that the State Bar “(1) knew the discharge injunction was applicable and

(2) intended the actions which violated the injunction.” In re ZiLOG, Inc.,

450 F.3d at 1007 (quoting In re Bennett, 298 F.3d at 1069).

      The creditor’s knowledge of the discharge injunction for purposes of

contempt is subject to an objective standard. In Taggart v. Lorenzen, 139

S. Ct. 1795 (2019), the Supreme Court held that civil contempt sanctions

only are appropriate “when there is no objectively reasonable basis for

concluding that the creditor’s conduct might be lawful under the discharge

order.” Id. at 1801 (emphasis added). Thus, to hold a party in contempt, the

debtor must prove that there was “[no] fair ground of doubt as to the

wrongfulness of the defendant’s conduct.” Id. (emphasis added) (quoting

Cal. Artificial Stone Paving Co. v. Molitor, 113 U.S. 609, 618 (1885)).

      The Ninth Circuit’s consideration of the contempt claim in Taggart

after remand from the Supreme Court is instructive. There, the underlying

question was whether the debtor had “returned to the fray” in postpetition

litigation such that attorney’s fees could be awarded for his postpetition

                                        29
conduct despite entry of the discharge. The Ninth Circuit observed that the

question it needed to answer was “whether the Creditors had some—

indeed, any—objectively reasonable basis for concluding that Taggart

might have ‘returned to the fray’ and that their motion for post-petition

attorney’s fees might have been lawful.” Lorenzen v. Taggart (In re Taggart),

980 F.3d 1340, 1348 (9th Cir. 2020) (citing Taggart, 139 S. Ct. at 1799).

      1.     The Discharge Did Not Entirely Void the 2019 Suspension
             Order.

      Albert argues that the 2019 Suspension Order violated the discharge

and is therefore void. The bankruptcy court correctly rejected this

contention.6

      The 2019 Suspension Order was the culmination of lengthy

disciplinary proceedings examining Albert’s prepetition conduct and her

compliance with her professional obligations. Albert was charged with

eight counts of professional misconduct involving two distinct matters.

With respect to Albert’s representation of Dr. Woods, the State Bar Court

found that Albert failed to: (1) provide competent representation; (2)

render an account of client funds; (3) return unearned fees; (4) cooperate

with the State Bar investigation; and (5) return client papers and property.

      6
         Albert also challenges the 2019 Decision as void. The 2019 Decision was issued
in January 2019, before the bankruptcy court granted Albert a discharge in February
2019. It was subject to the automatic stay rather than the discharge injunction. The
disciplinary proceedings resulting in the 2019 Decision against Albert were proper
exercises of the regulatory powers of the State Bar excepted from the stay under
§ 362(b)(4). Wade v. State Bar (In re Wade), 948 F.2d 1122, 1123 (9th Cir. 1991).
                                           30
Most of these findings do not concern Albert’s failure to pay her debts—

dischargeable or otherwise. Thus, there is no basis to say that the entirety

of the 2019 Suspension Order violated the discharge.

       Albert vaguely argues that the State Bar used the disciplinary

proceedings leading up to and including the 2019 Suspension Order as a

form of leverage solely to collect dischargeable debts. This bald allegation

is neither specific nor plausible enough to withstand dismissal under Civil

Rule 12(b)(6). Iqbal, 556 U.S. at 678. The record makes clear that the State

Bar had ample non-pecuniary reasons to take disciplinary action against

Albert.7

       Admittedly, the 2019 Suspension Order did provide for the

continuation of a mandatory suspension conditioned on repayment of the

Woods Restitution and the Fin City Sanction. Albert has established that

those debts are dischargeable. But this alone does not render the

disciplinary proceedings pecuniary in nature, because her license was

suspended for multiple, independently sufficient reasons, many of which

had nothing to do with Albert’s failure to pay her debts. A judgment

       7 Bertuccio v. California State Contractors License Board (In re Bertuccio), 414 B.R. 604,
616-17 (Bankr. N.D. Cal. 2008), does not help Albert. In that case, two California state
agencies suspended Bertuccio’s contractor’s license solely because he failed to pay state
taxes. The agencies refused to reinstate the license immediately after he filed his chapter
13 bankruptcy. Id. at 607-08. The parties ultimately agreed that the taxes were
dischargeable and that Bertuccio was entitled to reinstatement of his license. Bertuccio
differs from this case because the agencies had no reason to suspend Bertuccio’s license
other than his failure to pay a dischargeable debt. In contrast, Albert committed
multiple unprofessional acts that had nothing to do with the payment of money.
                                               31
subsuming both dischargeable and nondischargeable debt is not void in its

entirety under § 524(a)(1) simply because it also included the discharged

debt. See In re Poule, 91 B.R. at 85-88.

      Albert argues that In re Slater, 573 B.R. 247 (Bankr. D. Utah 2017),

permits courts to void the entirety of a judgment if it includes any

dischargeable debt. Slater involved a default judgment entered against the

debtor for both discharged prepetition debts and postpetition debts not

subject to the debtor’s discharge. The bankruptcy court held that the

judgment was void. In a footnote, the court observed that, “although an

argument could be made that only part of the [judgment] relating to the

2007 Note is void, the Court determines that carving the [judgment] up as

to void and not void would be problematic.” Id. at 257 n.50.

      We respectfully decline to follow Slater. The court did not explain

why it would be “problematic” to separate the nondischargeable and

dischargeable parts of the judgment; the decision lays out the dollar

amount of each part. Id. at 251-52. More importantly, § 524(a)

unambiguously provides that a judgment is void only “to the extent” it

rests on a discharged debt, so the Slater’s decision to void the entire

judgment lacked a statutory basis.

      Section 524(a)(1) is clear, and we are bound to apply it to void the

2019 Suspension Order—but only to the extent it imposed continued

liability for the Fin City Sanction, the Woods Restitution, and the CSF

Obligation. See Lamie v. U.S. Tr., 540 U.S. 526, 534 (2004). Accordingly, we

                                           32
affirm the bankruptcy court’s dismissal of Albert’s claim that the 2019

Decision and 2019 Suspension Order were void in their entirety for

violation of the discharge.

      2.    The bankruptcy court did not err by granting partial
            summary judgment on Albert’s claims for contempt against
            the State Bar.

      Albert further argues that the bankruptcy court erred by granting

summary judgment to the State Bar on her claims for contempt arising

from its post-discharge efforts to collect the dischargeable Woods

Restitution, CSF Obligation, and Fin City Sanction imposed under the 2019

Suspension Order. She is wrong. She has established that these debts are

dischargeable. It follows that the State Bar violated the discharge injunction

by attempting to collect those debts. But Albert failed to show that the State

Bar was in contempt and liable for damages.

            a.    Before Albert II.

      Not every violation of the discharge injunction results in liability for

contempt. Albert was required to establish that there was no “objectively

reasonable basis” for the State Bar to believe that its actions did not violate

the discharge. Taggart, 139 S. Ct. at 1801.

      Prior to the Ninth Circuit’s decisions in Albert II and Kassas II,

bankruptcy courts and the BAP ruled that liabilities like the Fin City

Sanction, Woods Restitution, and CSF Obligation were nondischargeable.

Indeed, when the California Supreme Court entered its 2019 Suspension

                                       33
Order, we had just affirmed the bankruptcy court’s ruling that the 2017

Discovery Sanctions were nondischargeable under § 523(a)(7). The Ninth

Circuit later decided that our decision was incorrect, recognizing that there

was “considerable confusion among federal courts and practitioners about

section 523(a)(7)’s scope.” Albert II, 960 F.3d at 1195 (quoting Scheer v. State

Bar (In re Scheer), 819 F.3d 1206, 1210 (9th Cir. 2016)). Until the Ninth

Circuit decided Albert II, our decision in Albert I gave the California

Supreme Court and the State Bar an objectively reasonable basis to believe

that their conduct did not violate the discharge.

      Albert also maintains that the State Bar was in contempt of the

discharge injunction when it refused to reinstate her law license on

February 24, 2020, when the mandatory six-month suspension under the

2019 Suspension Order expired. Again, the continuation of the suspension

was improperly conditioned on the repayment of the Fin City Sanction and

the Woods Restitution, but this was not established until June 10, 2020,

when the Ninth Circuit entered its decision in Albert II. Until then, our

decision in Albert I gave the State Bar an objectively reasonable basis to

condition reinstatement on the repayment of the Fin City Sanction and

Woods Restitution.

      Further, the continued post-discharge suspension was also

conditioned on the payment of the Disciplinary Costs imposed by the 2019

Suspension Order, and the Ninth Circuit held that such costs are not

discharged. In other words, the State Bar was entitled to suspend Albert

                                       34
based on her failure to pay the nondischargeable Disciplinary Costs, and

Albert failed to establish that she suffered additional damage because the

State Bar also continued the suspension based on her failure to pay

discharged debts. This also warranted the bankruptcy court’s partial

summary judgment.

            b.    After Albert II.

      Albert argues that the post-discharge conversion of the Woods

Restitution into the CSF Obligation is a separate basis for contempt. The

CSF paid the Woods Restitution on December 18, 2020, after the Ninth

Circuit had decided Albert II. She argues that by paying Dr. Woods what

Albert owed her in dischargeable client restitution, the State Bar

improperly changed her debt from one owed to a third party to one owed

to a governmental entity. Once the obligation was owed to the State Bar’s

CSF, the State Bar argued that the CSF Obligation fell within the scope of

§ 523(a)(7)’s discharge exception. But Albert has established that both debts

are dischargeable. As such, the conversion of the Woods Restitution into

the CSF Obligation did not change Albert’s rights.

      Albert cites the bankruptcy court’s decision in Kassas I as evidence

that the State Bar did not have a fair ground to doubt that the CSF

Obligation was dischargeable. This is simply wrong. The bankruptcy court

in Kassas I recognized that Albert II did not address the dischargeability of

CSF debt. 631 B.R. at 472. Based on the Supreme Court’s decision in Kelly,

Kassas I concluded that “[t]he reimbursement obligation consequently

                                      35
bears the hallmarks of a ‘fine, penalty, or forfeiture’ because it forces [the

attorney] to ‘confront, in concrete terms, the harms his actions have

caused.’” Id. at 475 (quoting Kelly, 479 U.S. at 49 n.10). Indeed, the

bankruptcy court here granted summary judgment in large part based on

Kassas I. It was not until the Ninth Circuit published its opinion reversing

Kassas I on August 1, 2022, that the law in this circuit established that CSF

debts are dischargeable. By that time, Albert’s license had been reinstated

for over a year. Accordingly, even if Albert could state some damage from

the State Bar’s efforts to collect the CSF Obligation, the State Bar had fair

ground to doubt that the debt was discharged when it took its actions. This

ground of doubt negated the claim for contempt based on the CSF

Obligation.

              c.     Failure to reinstate immediately after payment of the
                     CSF Obligation and Disciplinary Costs.

       Albert argues that the State Bar was in contempt for failing to

reinstate her license immediately after she paid the CSF Obligation and the

Disciplinary Costs on April 20, 2021. 8 The bankruptcy court agreed with

this proposition: it held the State Bar in contempt for the period from April

       8 Albert states that the State Bar also violated the discharge order by petitioning
“the California Supreme Court to modify the Orders to include the payments Albert
made on April 20, 2021.” Albert never develops this argument or states how this
conduct might have resulted in damages different from those caused by the State Bar’s
failure to reinstate her license after she paid the CSF Obligation and Disciplinary Costs.
Accordingly, she has failed to establish any reversible error (assuming she means to
suggest that this was a separate ground for contempt).
                                            36
21, 2021 through May 5, 2021, when the State Bar reinstated her license, and

entered judgment against the State Bar for the amount she paid.

      But Albert also contends that she is entitled to interest on the $20,801

she paid to the State Bar to satisfy the CSF Obligation until the State Bar

reimbursed her. Again, Albert confuses the State Bar’s discharge violation

with its liability for contempt. The State Bar did violate the discharge

injunction by collecting the CSF Obligation, but it did so with an

objectively reasonable basis for concluding that the CSF Obligation was

nondischargeable. The record reflects that the State Bar promptly

reimbursed Albert for her payment of the CSF Obligation after the Ninth

Circuit issued its Kassas II decision. Accordingly, the State Bar was not

liable for contempt damages (in the form of interest or otherwise) for

collecting and temporarily retaining the $20,801 Albert paid to satisfy the

CSF Obligation.

C.    The bankruptcy court correctly dismissed Albert’s § 525 claim.

      In her FAC, Albert alleged that the State Bar had violated § 525(a) by

refusing to reinstate her license solely based on her failure to pay

discharged debts. The bankruptcy court dismissed this claim as moot and

because reinstatement was conditioned on payment of nondischargeable

debt as well.

      Albert’s claim is frivolous. She completely ignores the fact that this

Panel and the Ninth Circuit upheld the dismissal of a similar § 525(a) claim

for relief stated in her First Adversary. As both decisions explained, the

                                      37
State Bar validly conditioned her reinstatement on the payment of a

nondischargeable debt without violating § 525(a). Albert II, 960 F.3d at 1196;

Albert I, 2019 WL 1594012, at *8. These holdings are law of the case. See

FDIC v. Kipperman (In re Com. Money Ctr., Inc.), 392 B.R. 814, 832-33 (9th Cir.

BAP 2008). They are fatal to this claim.

      We also agree with the bankruptcy court that Albert’s § 525(a) claim

was moot. The only relief she sought in respect of this claim was injunctive

relief, costs, and attorney’s fees, and “[a]ny further relief this Court may

deem fair and just.” By the time of the hearing on the State Bar’s motion to

dismiss, the State Bar had reinstated her, so there was no basis for

injunctive relief, and she never alleged anything plausibly establishing her

right to “further relief.”

      Albert cites United States v. W. T. Grant Co., 345 U.S. 629, 632 (1953), in

support of her argument that the State Bar’s voluntary cessation of the

allegedly unlawful activity does not justify dismissal of the claim as moot.

However, W. T. Grant and other Supreme Court cases have held that

voluntary cessation of the unlawful conduct moots requests for declaratory

and injunctive relief when the plaintiff lacks a “reasonable expectation that

the wrong will be repeated[.]” Preiser v. Newkirk, 422 U.S. 395, 402-03 (1975)

(quoting W. T. Grant Co., 345 U.S. at 633) (listing cases). Albert has

speculated that other future wrongs might occur, but she offered nothing

to show that her fears amounted to a “reasonable expectation.”

      Albert has not demonstrated that the bankruptcy court erred in

                                       38
dismissing her § 525(a) claim.

D.    The bankruptcy court did not commit reversible error in granting
      summary judgment on Albert’s claim for declaratory relief.

      Albert argues that the bankruptcy court erred “[b]ecause there was

no order after summary judgment in Albert’s favor declaring the debts

discharged . . . .” (Emphasis added). Albert contends that, “[w]ithout

correcting the record, the Orders stood as collectible to the world . . . .” She

maintains that a declaratory judgment is necessary to state the

dischargeability of the debts the State Bar attempted to collect from her.

She does not explain why anything other than the orders and judgment

entered in the Consolidated Adversary were required.

      To state a claim for declaratory judgment under the Federal

Declaratory Judgment Act, 28 U.S.C. § 2201, the plaintiff must demonstrate

that an “actual controversy” exists between the parties as required by

Article III of the U.S. Constitution, and the court must consider whether in

its discretion to exercise its jurisdiction over the actual controversy. GEICO

v. Dizol, 133 F.3d 1220, 1222-23 (9th Cir. 1998); Am. States Ins. Co. v. Kearns,

15 F.3d 142, 143-44 (9th Cir. 1994). An actual controversy exists if the

dispute is “definite and concrete, touching the legal relations of parties

having adverse legal interests; and that it be real and substantial and admit

of specific relief through a decree of a conclusive character, as

distinguished from an opinion advising what the law would be upon a

hypothetical state of facts.” MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118,

                                       39
127 (2007) (cleaned up). A court may dismiss a claim for declaratory relief if

it is duplicative of, substantially similar to, or commensurate with relief

sought under another cause of action. Mangindin v. Wash. Mut. Bank, 637 F.

Supp. 2d 700, 707-08 (N.D. Cal. 2009). A claim brought under the Federal

Declaratory Judgment Act “should be denied when it will neither serve a

useful purpose in clarifying and settling the legal relations in issue nor

terminate the proceedings and afford relief from the uncertainty and

controversy faced by the parties.” United States v. Washington, 759 F.2d

1353, 1357 (9th Cir. 1985) (en banc).

      In Albert II and Kassas II, the Ninth Circuit held that obligations like

the Fin City Sanction, the Woods Restitution, and the CSF Obligation were

dischargeable. After those decisions, the State Bar did not contend

otherwise. Accordingly, there was no immediate and actual controversy

about the dischargeability of these debts and no basis for a declaratory

judgment in the exact form that Albert demanded.

      The bankruptcy court did not err in entering summary judgment on

Albert’s claim for declaratory relief.

E.    Albert’s challenges to the Disciplinary Costs as constitutional
      violations.

      Albert’s third claim for relief in the FAC alleged that the State Bar’s

Disciplinary Costs were excessive and violated the Eighth Amendment of

the U.S. Constitution, as made applicable to the States by the Fourteenth

Amendment. She similarly alleged in her fourth claim for relief that the

                                         40
Disciplinary Costs also violated Article I, Section 17, of the California

Constitution. Albert argues that the Disciplinary Costs were improperly

assessed in fixed amounts regardless of the amount in controversy in the

underlying disciplinary action. She further alleged that most of the

Disciplinary Costs assessed against her bore no relationship to the minor

nature of her violations.

      1.     The bankruptcy court properly dismissed Albert’s Eighth
             Amendment Claim for excessive fines against the State Bar.

      The bankruptcy court dismissed Albert’s claim under the Eighth

Amendment pursuant to Civil Rule 12(b)(1) for lack of subject matter

jurisdiction. While we disagree with the bankruptcy court’s decision that it

lacked subject matter jurisdiction (for the reasons given in the next section),

we agree that dismissal of this claim was proper. The State Bar was not

amenable to suit on this basis, so the FAC failed to state a claim against the

defendants.

      The court correctly observed that claims for violation of

constitutional rights require statutory authority and treated her claim as if

it were premised on 42 U.S.C. § 1983 (“§ 1983”). See, e.g., Pimentel v. City of

L.A., 974 F.3d 917, 922 (9th Cir. 2020) (excessive fee claim brought against a

municipality under § 1983); Blickenstaff v. City of Hayward, 2023 WL 187100,

at *3 (N.D. Cal. Jan. 13, 2023) (same). Albert has not challenged these

decisions.

      The bankruptcy court held that the State Bar was not amenable to suit

                                       41
under § 1983 because this statute only covers violation of constitutional

rights by “persons.” State agencies are not “persons” within the meaning of

the statute. See Isaacs v. USC Keck Sch. of Med., 853 F. App’x 114, 117 (9th

Cir. 2021) (citing Maldonado v. Harris, 370 F.3d 945, 951 (9th Cir. 2004));

Johnson v. Dep't of Soc. & Health Servs., 800 F. App’x 595 (9th Cir. 2020);

McReynolds v. Washington, 2021 WL 736927, at *10 (W.D. Wash. Feb. 25,

2021), aff'd, 2022 WL 16756387 (9th Cir. Nov. 8, 2022).

      On appeal, Albert cites Timbs v. Indiana, 139 S. Ct. 682, 687 (2019),

which applied the Eighth Amendment’s Excessive Fines Clause to state

governments within a civil forfeiture proceeding. Albert also cites Pimentel

v. City of Los Angeles, 966 F.3d 934, 937-38 (9th Cir.), as amended on denial of

reh’g, 974 F.3d 917, 920 (9th Cir. 2020), which applied Timbs to a

municipality in a § 1983 action. But local governments are recognized as

persons subject to § 1983. Monell v. Dep’t of Social Servs., 436 U.S. 658, 690

(1978). Neither of these cases involved a state agency like the State Bar.

      The bankruptcy court had subject matter jurisdiction, but Albert had

no claim because the State Bar was not amenable to suit on the claim. The

court thus did not err when it dismissed these claims.

      2.    The court had subject matter jurisdiction of Albert’s excessive
            fines claim based on the California Constitution.

      The bankruptcy court also dismissed Albert’s excessive fines claim

under Article 1, Section 17, of the California Constitution based on Civil

Rule 12(b)(1) for lack of jurisdiction. The State Bar sought dismissal of the

                                        42
state law claim because Albert failed to allege how the claim was related to

the core bankruptcy matters raised in the FAC. Albert opposed dismissal

because she alleged in the FAC that the Consolidated Adversary was a core

proceeding “within the meaning of 28 USC § 157 and 28 USC § 1334

pursuant to FCP 7001 [sic].”

      Courts ordinarily must examine their subject matter jurisdiction for

each claim brought. See, e.g., Holdner v. Krietzberg, 2019 WL 1783057, at *4

(D. Or. Mar. 14, 2019), report and recommendation adopted, 2019 WL 1783044

(D. Or. Apr. 23, 2019); Gentile Fam. Indus. v. Diatom, LLC, 2015 WL 13917008,

at *5 (C.D. Cal. Mar. 5, 2015). To establish bankruptcy jurisdiction over a

particular claim, a plaintiff must prove that the claim arises in the

bankruptcy case, arises under the Bankruptcy Code, or is related to the

bankruptcy case. 28 U.S.C. § 1334(b). Albert failed to identify the basis for

jurisdiction under 28 U.S.C. § 1334(b) or the facts alleged in the FAC

supporting such jurisdiction. Instead, she argued that the motion must be

denied because no party had made a motion to have her ancillary state law

claim heard in state court.

      The bankruptcy court dismissed this state law claim because it did

not arise under the Bankruptcy Code or in a case under the Code. See

Wilshire Courtyard v. Cal. Franchise Tax Bd. (In re Wilshire Courtyard), 729

F.3d 1279, 1285-87 (9th Cir. 2013). The bankruptcy court also noted that

Albert had the burden of alleging facts supporting its jurisdiction, but the

FAC did not contain any facts suggesting that the bankruptcy court had

                                       43
“related to” jurisdiction over the fourth claim for relief. The bankruptcy

court rejected the notion that it had “ancillary jurisdiction” over the state

law claim. It observed that ancillary jurisdiction is permitted to dispose of

“factually interdependent claims” by a single court. Battleground Plaza v.

Ray (In re Ray), 624 F.3d 1124, 1135 (9th Cir. 2010) (citing Sea Hawk Seafoods,

Inc. v. Alaska (In re Valdez Fisheries Dev. Ass’n), 439 F.3d 545, 549 (9th Cir.

2006)). But the court held that nothing in the FAC indicated that the fourth

claim for relief was factually interdependent with Albert’s dischargeability

claim, her contempt claim, or her § 525(a) claim.

      On appeal, Albert summarily argued that jurisdiction exists because

the excessive nature of the Disciplinary Costs are interrelated to her claims

under § 525(a) and § 524. Again, she failed to develop this argument.

Instead, in her reply brief, she argued that the bankruptcy court had core

jurisdiction to rule on the allowance or disallowance of the State Bar’s

proof of claim. She has not effectively challenged the bankruptcy court’s

discussion of ancillary jurisdiction.

      We disagree with the bankruptcy court’s jurisdictional analysis.

Bankruptcy courts have subject matter jurisdiction over proceedings

“arising under title 11, or arising in or related to cases under title 11.” 28

U.S.C. § 1334. A proceeding “arises under” title 11 if it presents claims for

relief created or controlled by title 11. A proceeding “arises in” a

bankruptcy case if the claims would have no existence outside of a

bankruptcy case, even if they are not explicitly created or controlled by title

                                        44
11. Double Diamond Distrib., Ltd. v. Garman Turner Gordon LLP (In re U.S.A.

Dawgs, Inc), 657 B.R. 98, 110 (9th Cir. BAP 2024) (citing In re Ray, 624 F.3d at

1131). “Related to” jurisdiction exists if

      the outcome of the proceeding could conceivably have any
      effect on the estate being administered in bankruptcy. . . . An
      action is related to bankruptcy if the outcome could alter the
      debtor’s rights, liabilities, options, or freedom of action (either
      positively or negatively) and which in any way impacts upon
      the handling and administration of the bankrupt estate.

Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (9th Cir. 1984) (cleaned up), partially

overruled on other grounds by Things Remembered, Inc. v. Petrarca, 516 U.S. 124

(1995).

      We agree that Albert’s constitutional claims do not “arise under” the

Bankruptcy Code; rather, they arise under the applicable constitutional

provisions. We also agree that those claims did not “arise in” her

bankruptcy case, because the same claims could arise in a non-bankruptcy

setting. But Albert’s claims were “related to” her bankruptcy case because

they affected the amount of Albert’s nondischargeable obligations and thus

“could alter [her] rights, liabilities, options, or freedom of action (either

positively or negatively) . . . .” Id. The bankruptcy court has subject matter

jurisdiction to determine the amount of any claim against the debtor,

whether that claim is or is not discharged.

      Both Albert and the bankruptcy court went astray when they

evaluated the relatedness of Albert’s state constitutional claims to the

                                        45
categories of “core proceedings.” This was incorrect. The court’s subject

matter jurisdiction turned on the relationship between those claims and

Albert’s bankruptcy case. Whether those claims were “core proceedings”

bears on whether the bankruptcy court or the district court may enter final

judgment on the claims, and does not pertain to either court’s subject

matter jurisdiction.

      Albert’s scattered pleading and ever-changing arguments have

confused the jurisdictional analysis. But again mindful of the standards

applied to the State Bar’s motion to dismiss, we must reverse the dismissal

of Albert’s claims under the California Constitution. We express no opinion

on any other aspect of those claims, including (1) whether the bankruptcy

court may or must decline to decide those claims on grounds other than

subject matter jurisdiction, (2) whether the California Supreme Court’s final

decisions in the 2017 Suspension Order and the 2019 Suspension Order

have preclusive effect that bars those claims in whole or in part,

(3) whether the Rooker-Feldman doctrine bars a federal court from

addressing those claims, or (4) the merits of those claims.

F.    The bankruptcy court correctly applied quasi-judicial immunity to
      the Individual State Bar Defendants.

      Albert challenges the bankruptcy court’s dismissal of all claims

against the Individual State Bar Defendants. She named them as

defendants as to the first claim for declaratory relief and the second claim

for violations of the automatic stay and discharge injunction. The

                                      46
bankruptcy court followed our decision in Albert I and held that state bar

judges, prosecutors, and probation officers are “entitled to absolute quasi-

judicial immunity under the Civil Rights Act for acts performed in their

official capacities.” 2019 WL 1594012, at *9. This is not only a correct

statement of law; it is law of the case. See generally Am. Express Travel

Related Servs. Co. v. Fraschilla (In re Fraschilla), 235 B.R. 449, 454 (9th Cir.

BAP 1999) (explaining legal standards governing law of the case doctrine),

aff'd, 242 F.3d 381 (9th Cir. 2000) (table).

      Albert does not explain how her claims could withstand quasi-

judicial immunity. In her FAC, she sued the Individual State Bar

Defendants for: (1) the instigation and prosecution of the disciplinary

proceedings themselves; (2) the resulting recommendations that led to the

California Supreme Court’s issuance of the 2017 and 2019 Suspension

Orders; and (3) the monitoring and reporting associated with Albert’s

probation as contemplated in those orders. These are prototypical quasi-

judicial activities that are protected by such immunity. See Hirsh, 67 F.3d at

715 (citing Butz v. Economou, 438 U.S. 478, 511-17 (1978)); Demoran v. Witt,

781 F.2d 155, 157 (9th Cir. 1985); see also Fort v. Washington, 41 F.4th 1141,

1144 (9th Cir. 2022) (holding that quasi-judicial immunity extended to the

administrative act of scheduling a parole hearing by the state’s parole

board); Sellars v. Procunier, 641 F.2d 1295, 1303 (9th Cir. 1981) (“If an

official’s role is functionally equivalent to that of a judge, the official will be

                                         47
granted equivalent immunity.”).

      Albert alleges that the Individual State Bar Defendants’ actions were

motivated by politics, personal animus, or her failure to pay the discharged

debts. But their motivations are irrelevant. As the Supreme Court has

explained, “judicial immunity is an immunity from suit, not just from

ultimate assessment of damages. Accordingly, judicial immunity is not

overcome by allegations of bad faith or malice, the existence of which

ordinarily cannot be resolved without engaging in discovery and eventual

trial.” Mireles v. Waco, 502 U.S. 9, 11 (1991) (citations omitted). 9

      The bankruptcy court did not commit reversible error when it

dismissed the Individual State Bar Defendants.

G.    The bankruptcy court’s damages findings were not clearly
      erroneous.

      Albert argues that the bankruptcy court should have awarded her

damages for emotional distress and “delay and harassment.” The court

declined to do so. It explained that Albert provided insufficient evidence

      9
         Albert also argues that there could never be quasi-judicial immunity for
violating a federal court order. She cites Hutto v. Finney, 437 U.S. 678 (1978), and Twin
Sisters Gun Club v. Emlen, 2018 WL 1335394, at *9 (E.D. Cal. Mar. 15, 2018), in support of
her argument. Hutto is inapposite. It dealt with the sovereign immunity of state officials
and whether that immunity insulated them from being held in contempt when they
violated orders issued by a federal court that was hearing a matter in which the officials
already were parties. 437 U.S. at 690-91. Twin Sisters Gun Club applied quasi-judicial
immunity to one of the two individual defendants in that case but analyzed why the
other defendant was not entitled to a separate and distinct qualified or “good faith”
immunity. 2018 WL 1335394, at *10-11. Neither case addressed quasi-judicial immunity
as it applies to the Individual State Bar Defendants.
                                           48
that, during the 15-day period of the State Bar’s admitted violation of the

discharge injunction, she suffered compensable damages on either ground.

It also found that there was insufficient evidence to justify a larger

damages award for this 15-day period on any other ground.

      Albert does not explain why these findings were clearly erroneous.

She merely disagrees with the court’s findings. She also cites several cases

that she maintains support the proposition that she might have incurred

compensable damages. See Schmitt v. SN Servicing Corp., 2021 WL 3493754,

at *8-9 (N.D. Cal. Aug. 9, 2021); Copeland v. Kandi (In re Copeland), 441 B.R.

352, 367-68 (Bankr. W.D. Wash. 2010); In re Ramirez, 183 B.R. at 590. None of

these cases help explain why the bankruptcy court’s damages findings

were clearly erroneous on this record. Given our review of the record, we

cannot say that these findings were illogical, implausible, or without

support in the record.

      Albert additionally argues that the bankruptcy court should have

awarded her at least $125,169.25 in punitive damages. The bankruptcy

court found that the evidence presented did not justify any punitive

damages. Once again, Albert has not done anything to demonstrate on

appeal that this finding was clearly erroneous. Moreover, a bankruptcy

court has no authority to award punitive damages for contempt other than

“relatively mild” non-compensatory fines. See Ocwen Loan Servicing, LLC v.

Marino (In re Marino), 577 B.R. 772, 788–89 & n.12 (9th Cir. BAP 2017), aff'd

in part, dismissed in part, 949 F.3d 483 (9th Cir. 2020).

                                        49
H.    The challenged evidentiary and discovery rulings did not affect the
      outcome of this appeal.

      Albert challenges the bankruptcy court’s decision to excuse the State

Bar’s former counsel, James Chang, from testifying at trial. She also

disputes the exclusion from trial of some of her expert witnesses. Finally,

she asserts that the court erroneously denied her motion to compel

discovery.

      The denial of discovery-related motions is not grounds for reversal

absent a clear showing of prejudice. Kobold v. Good Samaritan Reg'l Med.

Ctr., 832 F.3d 1024, 1048 (9th Cir. 2016). Similarly, we only will reverse an

evidentiary ruling “if any error would have been prejudicial to the

appellant.” Van Zandt v. Mbunda (In re Mbunda), 484 B.R. 344, 351 (9th Cir.

BAP 2012) (citing Johnson v. Neilson (In re Slatkin), 525 F.3d 805, 811 (9th Cir.

2008)).

      Albert has not demonstrated any prejudice arising from the

bankruptcy court’s evidentiary and discovery rulings. Nor is any evident

to us in light of our review of the record and our analysis of this appeal.

Consequently, Albert’s arguments based on the bankruptcy court’s

evidentiary and discovery rulings do not justify reversal.

I.    The bankruptcy court properly denied leave to amend.

      In three sentences, Albert argues that the bankruptcy court should

have granted her leave to amend the portions of the FAC that the

bankruptcy court dismissed with prejudice. But the trial court is not

                                       50
obliged to grant leave to amend when amendment would be futile. Ebner v.

Fresh, Inc., 838 F.3d 958, 968 (9th Cir. 2016) (citing Doe v. United States, 58

F.3d 494, 497 (9th Cir. 1995)). The bankruptcy court denied leave after

considering that the First Adversary and the Consolidated Adversary

already had been pending for three years, Albert already had made two

full attempts to plead legally sufficient claims for relief, and the dismissed

claims largely suffered from “substantive” deficiencies. “[W]hen the

district court has already afforded a plaintiff an opportunity to amend the

complaint, it has wide discretion in granting or refusing leave to amend

after the first amendment, and only upon gross abuse will its rulings be

disturbed.” Rich v. Shrader, 823 F.3d 1205, 1209 (9th Cir. 2016) (cleaned up).

Here, both the First Adversary and the Consolidated Adversary concerned

essentially the same conduct by the State Bar, its officials, and its other

representatives. Albert never explained how she could amend the FAC to

cure its defects. The bankruptcy court did not abuse its discretion.

                                CONCLUSION

      For the reasons set forth above, we REVERSE the portions of the

bankruptcy court’s decision: (1) dismissing Albert’s stay violation claim

based on the State Bar’s failure to promptly reinstate her license to practice

law while she was in chapter 13 and its reimposition of the suspension

after her case was converted to chapter 7; and (2) dismissing her claims

under the California Constitution. As to those matters, we REMAND for

further proceedings consistent with this decision. We AFFIRM the

                                        51
bankruptcy court’s decision in all other respects.

Concurrence begins on next page.

                                      52
FARIS, Bankruptcy Judge, concurring:

      I agree with the majority’s result and reasoning. I write separately to

make three additional points.

                                        I.

      In section A.4 of the Discussion, the majority holds that the State Bar

violated the automatic stay when it reimposed Albert’s conditional

suspension after the court converted her case from chapter 13 to chapter 7.

The majority discusses and distinguishes prior decisions of this Panel and

the Ninth Circuit holding that the automatic stay does not bar enforcement

of a nondischargeable claim, at least against property that is not property

of the estate. Watson v. City Nat’l Bank (In re Watson), 78 B.R. 232 (9th Cir.

BAP 1987); Palm v. Klapperman (In re Cady), 266 B.R. 172 (9th Cir. BAP 2001),

aﬀ’d, 315 F.3d 1121 (9th Cir. 2003). I agree that those decisions are

distinguishable, and I also think that they are no longer good law.

      Section 362(a) does not distinguish between dischargeable and

nondischargeable debts. That section bars (among other things) the

enforcement of a “claim.” § 362(a)(1), (5), (6). The Bankruptcy Code

provides a sweeping deﬁnition of the term “claim.” § 101(5). The deﬁnition

of “claim” does not even mention, let alone distinguish between,

dischargeable and nondischargeable obligations. Further, the language of

§ 523 makes clear that an obligation is a “claim” whether it is dischargeable

or not. That section makes certain kinds of “debt” nondischargeable. “The

term ‘debt’ means liability on a claim.” § 101(12). If the word “claim” did
                                        1
not include nondischargeable obligations, then the reference to “debts” that

are not “discharged” would be redundant.

      It is equally clear that the automatic stay often protects property that

is not property of the estate. For example, § 362(a)(1) blocks the

“commencement or continuation . . . of [any] action or proceeding against

the debtor [on a prepetition claim] or to recover a claim against the debtor

that arose” prepetition. This section applies regardless of whether the

claimant seeks recovery from estate or non-estate property. Similarly,

§ 362(a)(6) bars “any act to collect, assess, or recover a claim against the

debtor that arose” prepetition. Again, this subsection eﬀectively protects

property whether it belongs to the estate or not.

      In short, there is no textual support for the argument that the

automatic stay does not apply to nondischargeable claims.

      In Watson and Cady, this Panel and the Ninth Circuit held that “the

automatic stay provisions of Section 362 do not preclude the execution of a

judgment, which has been held by the bankruptcy court to be non-

dischargeable, upon property of the debtor which is not property of the

estate.” In re Watson, 78 B.R. at 235; see also In re Cady, 266 B.R. at 176; cf. Cal.

State Univ. v. Gustafson (In re Gustafson), 111 B.R. 282, 286 (9th Cir. BAP

1990) (“We therefore determine that the automatic stay applies to preclude

a creditor’s attempts to collect a claim that is presumed, but not yet

determined by the bankruptcy court, to be nondischargeable under section

523(a)(8).”), rev'd on other grounds, 934 F.2d 216 (9th Cir. 1991). Those cases
                                          2
rely on policy justiﬁcations and legislative history, not the language of the

statute. In Watson, the majority of this Panel was persuaded that there was

“no valid reason” to give a debtor who has suﬀered a nondischargeable

judgment “the opportunity to delay and/or hinder the creditor from

executing upon post-petition property, which is not property of the

bankruptcy estate . . . .” 78 B.R. at 234. The Panel also quoted legislative

history stating that the automatic stay is “one means of protecting the

debtor’s discharge[,]” id. at 234 (quoting H.R. Rep. No. 95-595 (1978), as

reprinted in U.S.C.C.A.N. 5787, 6299), and reasoned that “[t]here is a lack of

logic in allowing a creditor release from a discharge only to hold him in

place as if he were still aﬀected by the discharge or the prospect thereof[,]”

id. at 235. In Cady, this Panel followed Watson as “binding authority,” 266

B.R. at 180, and the Ninth Circuit aﬃrmed, simply adopting this Panel’s

decision, 315 F.3d 1121.

      Judge Meyers dissented from the Panel’s decision in Watson, pointing

out that the language of the statute did not support the majority’s decision.

78 B.R. at 236-37 (Meyers, J., dissenting). In Cady, Judge Berzon dissented

from the Ninth Circuit’s majority decision, agreeing with Judge Meyers’

reasoning in Watson. 315 F.3d at 1122-23 (Berzon, J., dissenting).

      The dissenters were prescient. Almost two decades after Judge

Berzon wrote her dissent, the Supreme Court unanimously held in City of

Chicago v. Fulton, 592 U.S. 154 (2021), that the City of Chicago did not

violate the automatic stay when it retained possession of a vehicle that it
                                       3
had impounded before the debtor ﬁled a bankruptcy petition. The Court’s

analysis focused entirely on the language of § 362 (including that section

prior to an amendment) and a related provision (§ 542(a)). The Court was

aware that its decision would have negative practical consequences for

debtors, because Justice Sotomayor explained them in detail in a separate

opinion. 592 U.S. at 163-64 (Sotomayor, J., concurring). But those

consequences did not change any justice’s mind. Even Justice Sotomayor

concurred.

      Fulton makes clear that, when interpreting § 362, we must begin with

the statute’s language, and our analysis must also end there unless the

statute is ambiguous. As Judges Berzon and Meyers pointed out, the

language of § 362 does not support the holding of Watson, Gustafson, or

Cady. I would therefore hold that those decisions are no longer good law.

This reinforces our unanimous holding that the State Bar violated the

automatic stay when it reimposed Albert’s suspension upon the conversion

to chapter 7.

                                       II.

      Our partial reversal of the bankruptcy court’s decision may not lead

to a victory for Albert.

      First, if she is proceeding on a contempt theory, she would have to

surmount the Taggart standard by proving that there was no “fair ground

of doubt” that the State Bar’s reinstatement of the suspension would violate

the automatic stay. See Taggart v. Lorenzen, 139 S. Ct. 1795, 1804 (2019).
                                       4
Given that Watson and Cady were on the books when the State Bar acted,

this may be an impossible task.

      Second, whether she employs a contempt theory or § 362(k), she

would have to prove that she suﬀered compensable damages due to the

stay violation. These damages would be limited at best, and might be

nonexistent, because the State Bar was fully entitled to reimpose the

suspension when Albert received her discharge. In other words, the State

Bar jumped the gun by only a few months. Albert would have to show that

she could have restarted her practice and made it proﬁtable between the

time the State Bar incorrectly reimposed the suspension (in mid-2018) and

the date of her discharge (February 26, 2019).

      Third, the bankruptcy court might (or might not) exercise its

discretionary power to grant the State Bar retroactive relief from the stay.

See Fjeldsted v. Lien (In re Fjeldsted), 293 B.R. 12, 21 (9th Cir. BAP 2003) (“A

bankruptcy court has authority to [grant]. . . annulment [of the automatic

stay] providing retroactive relief, which, if granted, moots any issue as to

whether the violating sale was void because, then, there would have been

no actionable stay violation.” (citation omitted)).

                                        III.

      We do not condone any of Albert’s conduct. The State Bar charged

her with very serious professional misconduct, including (in eﬀect) stealing

money from her clients. Her brieﬁng and oral argument before this Panel

were incompetent. She richly deserved the suspension and other discipline
                                         5
that the California Supreme Court imposed.

     There is an irony at the core of this case: if the supreme court had

imposed an unconditional suspension, or had simply disbarred her, Albert

would have no recourse under the Bankruptcy Code. Albert has claims

under the Bankruptcy Code only because the supreme court oﬀered her a

way to salvage her legal career. Although we hold that the State Bar failed

(in some relatively minor respects) to comply with the Bankruptcy Code,

our decision should not meaningfully hinder the crucial work of the State

Bar in protecting the public from incompetent and unethical attorneys.

                                     6