Court Opinion

ID: 4184430
Source: CourtListenerOpinion
Date Created: 2017-07-07 17:01:25.204479+00
Date Added: 2024-06-11T07:47:00.511704
License: Public Domain

FOR PUBLICATION

    UNITED STATES COURT OF APPEALS
         FOR THE NINTH CIRCUIT

 IN RE DEBORAH LYNN PARTIDA,                          No. 15-60045
                          Debtor,
                                                         BAP No.
                                                         14-1482
 DEBORAH LYNN PARTIDA,
                                   Appellant,
                                                         OPINION
                       v.

 UNITED STATES DEPARTMENT OF
 JUSTICE,
                       Appellee.

              Appeal from the Ninth Circuit
               Bankruptcy Appellate Panel
   Pappas, Kurtz, and Jury, Bankruptcy Judges, Presiding

             Argued and Submitted April 19, 2017
                  San Francisco, California

                            Filed July 7, 2017

  Before: Mary M. Schroeder and Johnnie B. Rawlinson,
   Circuit Judges, and William H. Stafford, Jr.,* District
                          Judge.

                   Opinion by Judge Schroeder

     *
       The Honorable William H. Stafford, Jr., United States District Judge
for the Northern District of Florida, sitting by designation.
2                           IN RE PARTIDA

                            SUMMARY**

                             Bankruptcy

   Affirming a decision of the Bankruptcy Appellate Panel,
and agreeing with other circuits, the panel held that the
Bankruptcy Code’s automatic stay provision does not
prevent the government from collecting criminal restitution
under the Mandatory Victims Restitution Act.

                             COUNSEL

Daniel L. Geyser (argued), Stris & Maher LLP, Los Angeles,
California; Christopher P. Burke, Las Vegas, Nevada; for
Appellant.

Roger Wenthe (argued), Assistant United States Attorney;
Daniel G. Bogden, United States Attorney; United States
Attorney’s Office, Las Vegas, Nevada; for Appellee.

    **
       This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                       IN RE PARTIDA                         3

                         OPINION

SCHROEDER, Circuit Judge:

    This bankruptcy appeal presents a question of first
impression in this circuit concerning whether the Bankruptcy
Code’s automatic stay provision, 11 U.S.C. § 362, operates to
prevent the government’s collection of criminal restitution
under the Mandatory Victims Restitution Act (“MVRA”).
The MVRA provides the government with broad powers to
enforce a civil judgment “[n]otwithstanding any other federal
law.” 18 U.S.C. § 3613(a). We agree with the Bankruptcy
Appellate Panel (“BAP”) that the MVRA allows the
government to collect restitution despite the automatic stay.
The two other circuits to consider similar issues have reached
the same result. See In re Robinson, 764 F.3d 554 (6th Cir.
2014); United States v. Colasuonno, 697 F.3d 164 (2d Cir.
2012).

    We begin by comparing the two statutes. The Bankruptcy
Code’s automatic stay provision was passed in 1978.
Bankruptcy Reform Act of 1978, Pub. L. No. 95-598, 92 Stat.
2549, 2570 (1978). The stay is triggered upon a debtor filing
for bankruptcy, and the stay suspends all activity relating to
collection of pre-filing debts, with a number of exceptions.
See 11 U.S.C. § 362(a), (b). The legislative history explains
the stay’s purpose is to “give[] the debtor a breathing spell
from his creditors” by stopping “all collection efforts, all
harassment, and all foreclosure actions.” H.R. Rep. No. 95-
595, at 340 (1977). The stay gives the debtor time to attempt
a repayment or reorganization plan, “or simply to be relieved
of the financial pressures that drove him into bankruptcy.”
Id. But the drafters were also mindful that the stay should not
be “a haven for criminal offenders.” S. Rep. No. 95-989, at
4                       IN RE PARTIDA

51 (1978); accord H.R. Rep. No. 95-595, at 342. As a result,
the automatic stay does not apply to collection efforts
undertaken in “the commencement or continuation of a
criminal action or proceeding against the debtor.” 11 U.S.C.
§ 362(b)(1).

    The MVRA was passed in 1996, nearly two decades after
the automatic stay. See Mandatory Victims Restitution Act,
Pub. L. No. 104-132, 110 Stat. 1238 (1996). Its history
explains it is for the purpose of “ensur[ing] that criminals pay
full restitution to their victims for all damages caused as a
result of the crime,” regardless of the criminals’ economic
status. H.R. Rep. No. 104-16, at 4 (1995). The MVRA’s
enforcement provision, at issue in this case, provides:

       The United States may enforce a judgment
       imposing a fine in accordance with the
       practices and procedures for the enforcement
       of a civil judgment under Federal law or State
       law. Notwithstanding any other Federal law
       (including section 207 of the Social Security
       Act), a judgment imposing a fine may be
       enforced against all property or rights to
       property of the person fined . . . .

18 U.S.C. § 3613(a).

   This case provides an excellent example of how the
MVRA operates, “[n]otwithstanding any other federal law.”
See id.

    The facts are not in dispute. In 2002, Deborah Lynn
Partida pleaded guilty to one count of embezzlement and theft
of labor union assets, for which she served eighteen months
                        IN RE PARTIDA                         5

in prison and agreed to pay $193,337.33 in criminal
restitution. Partida failed to pay the restitution and, on March
5, 2013, she filed for Chapter 13 bankruptcy. At the time of
filing, Partida reported owing $218,500.77 for the 2002
conviction.

    Following the bankruptcy filing, the government sent
Partida notices relating the restitution balance and the
government’s intent to offset Partida’s income. Then, on
March 1, 2014, the government provided notice that it had, in
fact, offset payments made as income to Partida against the
balance of the restitution debt and would continue to do so.

    Partida’s Chapter 13 plan was confirmed on March 6,
2014. Partida then filed a motion to hold the government in
contempt for violating the automatic stay through its
collection efforts. The bankruptcy court denied the motion.

    The BAP affirmed in a published opinion, holding that the
MVRA’s enforcement provision overrides the automatic stay.
Partida v. United States (In re Partida), 531 B.R. 811, 811
(B.A.P. 9th Cir. 2015). The BAP first recognized that the
MVRA was “[i]n direct conflict” with the automatic stay
provision because the MVRA allowed for collection where
the automatic stay would otherwise prevent it. Id. at 812.
The BAP resolved this conflict in favor of the MVRA, noting
the MVRA’s enactment after the automatic stay and its
“broad sweeping language” providing for enforcement
despite any other federal laws. Id. at 814. Partida then
appealed to this court.

    We review de novo the legal question whether the
automatic stay provisions of 11 U.S.C. § 362(a) have been
violated, Eskanos & Adler, P.C. v. Leetien, 309 F.3d 1210,
6                      IN RE PARTIDA

1213 (9th Cir. 2002), and agree with the BAP there has been
no violation of the automatic stay because the MVRA trumps
the automatic stay.

    On appeal, Partida makes the novel argument that the
MVRA overrides only “substantive” federal laws—meaning
laws relating to property that is subject to collection—not
“procedural” laws, like the stay, that relate to the timing of
collection. According to Partida, the first sentence of the
MVRA’s enforcement provision binds the government to all
existing state and federal procedural laws. That sentence
reads: “The United States may enforce a judgment imposing
a fine in accordance with the practices and procedures for the
enforcement of a civil judgment under Federal law or State
law.” 18 U.S.C. § 3613(a). Partida reads the MVRA’s next
sentence—which states that the MVRA allows enforcement
“[n]otwithstanding any other Federal law,” id.—as applying
only to laws determining what property is available for
collection. Although Partida did not make this argument
directly to the BAP or the bankruptcy court, the argument
supports the same claim made in the lower courts that the
automatic stay overrides the MVRA. The argument is
therefore not waived. See United States v. Pallares-Galan,
359 F.3d 1088, 1095 (9th Cir. 2004). We nonetheless
disagree with it on the merits.

    This is because the plain language of the MVRA makes
clear that the government can collect restitution, despite any
federal laws to the contrary. That is the function and purpose
of the “notwithstanding” clause. We have recognized a
“general proposition that statutory ‘notwithstanding’ clauses
broadly sweep aside potentially conflicting laws.” See United
States v. Novak, 476 F.3d 1041, 1046 (9th Cir. 2007) (en
banc) (citing Cisneros v. Alpine Ridge Group, 508 U.S. 10, 18
                        IN RE PARTIDA                          7

(1993)).       The broad language of the MVRA’s
“notwithstanding any other federal laws” clause eliminates
any potential conflict with the automatic stay. That the
MVRA was passed nearly two decades after the automatic
stay further supports this interpretation. “[A] specific policy
embodied in a later federal statute should control our
construction of the priority statute even though it had not
been expressly amended.” 523 U.S. 517, 530–31 (1998).

    Partida is incorrect in contending that the first sentence of
the MVRA’s enforcement provision limits the scope of the
“notwithstanding” clause. By providing that the government
“may enforce a judgment imposing a fine in accordance with
the practices and procedures for the enforcement of a civil
judgment under Federal law,” the MVRA was broadening,
rather than curtailing, the government’s collection powers.
See 18 U.S.C. § 3613(a). This effect is borne out by the
MVRA’s legislative history. Congress envisioned that the
MVRA would “ensure that criminals pay full restitution to
their victims for all damages caused as a result of the crime.”
H.R. Rep. No. 104-16, at 4. To make collection easier, the
MVRA “consolidate[ed] the procedures for the collection of
unpaid restitution with existing procedures for the collection
of unpaid fines, while at the same time strengthening these
procedures.” S. Rep. No. 104-179, at 12 (1995).

    The practical effect of the MVRA’s language providing
for enforcement “in accordance” with federal “practices and
procedures” is to allow the government to collect under the
Federal Debt Collection Practices Act (“FDCPA”), 15 U.S.C.
§ 1692 et seq., in addition to individual state laws. See
United States v. Mays, 430 F.3d 963, 965 (9th Cir. 2005)
(recognizing that the MVRA “expressly, albeit tortuously,
provides that the FDCPA’s civil enforcement remedies may
8                       IN RE PARTIDA

be used to enforce orders of restitution entered under the
MVRA”). This was a significant change, because prior to
passage of the MVRA, there was uncertainty as to whether
the government could only collect restitution using the law of
that state from which the judgment issued. See, e.g., United
States v. Timilty, 148 F.3d 1, 5 (1st Cir. 1998) (explaining
that, under the predecessor to the MVRA, the government
was forced to pursue collection efforts “in the same manner”
as civil judgments, and so could only collect under the
practices of the state laws of the district court that issued the
judgment). The MVRA’s incorporation of the FDCPA into
the government’s enforcement arsenal accords with the
congressional intent to consolidate and strengthen collection
efforts.

    Thus, Partida’s reading of the enforcement provision as
forcing the government to comply with any and all
“procedural laws” contained in other federal statutes (like the
Bankruptcy Code) that may limit the collection process, is
plainly at odds with the MVRA’s purpose to simplify and
strengthen the government’s collection efforts. The MVRA
expanded, rather than curtailed, the collection procedures
available to the government. The automatic stay therefore
cannot interrupt the government’s efforts to collect criminal
restitution.

    Our conclusion is consistent with decisions of other
circuits. Both the Sixth and Second Circuits have considered
the question whether the government can collect restitution
despite the automatic stay, and both courts have concluded
that it can. In In re Robinson, the Sixth Circuit held that the
MVRA overrides the automatic stay. 764 F.3d at 557. Like
the BAP in this case, the Sixth Circuit proceeded by looking
to the plain meaning of the MVRA’s “notwithstanding any
                       IN RE PARTIDA                         9

other federal law” clause and to the intent behind the MVRA,
as well as by comparing the timing of the MVRA’s passage
in 1996 to the automatic stay’s passage in 1978. See id. at
559–62. In addition, the court noted that Congress referenced
another bankruptcy provision in the MVRA, see 18 U.S.C.
§ 3613(e), thereby indicating that Congress “had the potential
effects of the Bankruptcy Code in mind when it drafted
§ 3613(a),” yet still chose not to include the automatic stay
provision in the MVRA’s list of enforcement exceptions. Id.
at 561–62. The Sixth Circuit thus concluded that because of
the MVRA, the automatic stay could not impede restitution
collection.

    In United States v. Colasuonno, the Second Circuit
reached a similar result, but for a reason other than the
MVRA. See 697 F.3d at 169. The Second Circuit’s case
involved a criminal defendant still serving a sentence of
probation. Id. at 168–69. The court held that proceedings to
enforce a probationary sentence, which required the debtor to
pay restitution, fell within the automatic stay provision’s
exception for the “continuation of a criminal action or
proceeding against the debtor,” set down at 11 U.S.C.
§ 362(b)(1). Id. at 172. Giving the statutory terms their
ordinary or natural meanings, the court concluded that
Congress intended to create an exception for “any action or
proceeding that relates to an adjudication of guilt or that
punishes a defendant for crimes.” Id. at 173.

    Colasuonno involved a probationer, whose sentence had
not yet been completed. We recognize that the exception to
the automatic stay for ongoing criminal actions or
proceedings could well apply to criminal restitution collection
per se. We do not rest our holding today on the exception,
however, because the MVRA is expressly directed toward
10                    IN RE PARTIDA

preserving the government’s post-judgment ability to collect
restitution. The BAP correctly determined in this case that
the automatic stay must yield to the government’s collection
efforts under the MVRA.

     AFFIRMED.