Jason Deocampo v. Jason Potts

FOR PUBLICATION

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

JASON EUGENE DEOCAMPO; JESUS No. 14-16192
SEBASTIAN GRANT; JAQUEZS TYREE
BERRY, D.C. No.
Plaintiffs-Appellees, 2:06-cv-01283-
WBS-CMK
v.

JASON POTTS, individually, and in OPINION
his capacity as a Vallejo Police
Officer; ERIC JENSEN, individually,
and in his capacity as a Vallejo
Police Officer,
Defendants-Appellants,

and

JEREMY PATZER, individually, and in
his capacity as a Vallejo Police
Officer,
Defendant.

Appeal from the United States District Court
for the Eastern District of California
William B. Shubb, Senior District Judge, Presiding

Argued and Submitted May 10, 2016
San Francisco, California
2 DEOCAMPO V. POTTS

Filed September 8, 2016

Before: John T. Noonan, Kim McLane Wardlaw,
and Richard A. Paez, Circuit Judges.

Opinion by Judge Wardlaw

SUMMARY*

Civil Rights/Bankruptcy

The panel affirmed the district court’s denial of a Rule 60
motion for relief from judgment, and agreed with the district
court that neither a judgment against individual City of
Vallejo police officers for excessive force nor a subsequent
attorney’s fee award in favor of plaintiffs was discharged by
the City of Vallejo’s bankruptcy proceedings.

Plaintiffs filed this action against Vallejo police officers
and others asserting excessive-force and other constitutional
claims under 42 U.S.C. § 1983 and state law. Subsequently,
Vallejo filed for Chapter 9 bankruptcy and the district court
stayed the § 1983 action. After Vallejo’s plan for adjustment
of debts was confirmed by the bankruptcy court, the district
court lifted the stay in the § 1983 action, and a jury returned
a verdict, finding that the officers used excessive force and
awarding plaintiffs $50,000 in compensatory damages and
attorney’s fees under § 1988. The officers moved for relief
from judgment, asserting that the judgment and fee award

*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
 DEOCAMPO V. POTTS 3

were effectively claims against the City of Vallejo that were
subject to adjustment under the bankruptcy adjustment plan.

The panel noted that under California law, Vallejo was
generally obligated to indemnify its employees for claims
against them arising from their employment. The panel held
that California’s indemnification statutes did not render a
judgment or concomitant fee award against an indemnifiable
municipal employee a liability of the municipal employer for
purposes of adjusting or discharging the debts of a Chapter 9
debtor. The panel further held that the bankruptcy court’s
plan confirmation did not release any debtor but the City of
Vallejo and did not expressly encompass claims or judgments
against the City’s employees. Accordingly, the panel held
that the judgment in the § 1983 action was the officers’
personal liability, not Vallejo’s. The panel emphasized,
however, that its conclusion that the judgment was against the
officers personally, and not Vallejo, did not relieve Vallejo of
its obligation to indemnify the officers under California law.

COUNSEL

Austin Byrne Conley (argued), Gibbons and Conley, Walnut
Creek, California; Noah G. Blechman and James V.
Fitzgerald, III, McNamara, Dodge, Ney, Beatty, Slattery,
Pfalzer, Borges & Brothers LLP, Walnut Creek, California;
Claudia M. Quintana, Deputy City Attorney, City of Vallejo,
Vallejo, California; for Defendants-Appellants.

Ayana Cuevas Curry (argued) and John L. Burris, Law
Offices of John L. Burris, Oakland, California, for Plaintiffs-
Appellees.
4 DEOCAMPO V. POTTS

Krista MacNevin Jee, James R. Touchstone, and Martin J.
Mayer, Law Offices of Jones & Mayer, Fullerton, California,
for Amici Curiae California State Sheriffs’ Association,
California State Police Chiefs’ Association, and California
Peace Officers’ Association.

OPINION

WARDLAW, Circuit Judge:

Does a municipality’s bankruptcy plan of adjustment
automatically discharge a judgment against individual
officers for excessive force by operation of a California
statute generally requiring public entities to defend and
indemnify their employees for actions within the scope of
their employment?

Like many a city in the wake of the 2007–08 financial
crisis, the city of Vallejo, California found itself burdened by
mounting debts as its tax base shrank. In 2008, Vallejo
responded by petitioning for Chapter 9 bankruptcy, a form of
relief available only to municipalities. Some two years after
the bankruptcy court confirmed Vallejo’s debt-adjustment
plan, a federal jury found that two police officers employed
by Vallejo used constitutionally excessive force when they
arrested Jason Eugene Deocampo. In accordance with the
verdict, the district court entered a judgment for money
damages against the officers in their personal capacities, and
awarded Deocampo his attorney’s fees.

Under California law, Vallejo is generally obligated to
indemnify its employees for claims against them arising from
their employment. We hold that where, as here, the plan
 DEOCAMPO V. POTTS 5

confirmed by the bankruptcy court did not expressly
encompass claims or judgments against the city’s employees,
the indemnification statutes do not subject such claims or
judgments to adjustment by operation of law nor by the fact
of the public employment itself. We affirm the district
court’s denial of the officers’ Rule 60 motion for relief from
judgment, and agree with the district court that neither the
judgment nor attorney’s fee award was discharged by
Vallejo’s bankruptcy proceedings.

I.

A. Vallejo police use excessive force against Deocampo.

On March 28, 2003, at approximately 8:00 p.m.,
Deocampo, Jesus Sebastian Grant, and Jaquezs Tyree Berry
(collectively, “Plaintiffs”) suffered a violent encounter with
police officers employed by Vallejo. According to Plaintiffs,
this encounter began when Officers Jason Potts and Jeremy
Patzer stopped Berry on the street. With no justification, they
kicked and slammed him to the ground, causing him to hit his
head on a wooden fence. Deocampo and Grant approached
the officers, asked why they were attacking Berry, and
informed them that their actions were wrong. Officer Potts
told them to go away, and Deocampo complied by walking
away from him. Officer Potts followed Deocampo, and
shoved him. Officer Potts and a third officer, Eric Jensen
(“the Officers”) beat Deocampo with their batons, and
refused to stop even when he raised his hands in the air and
said he would leave. The Officers also pepper-sprayed and
6 DEOCAMPO V. POTTS

beat Grant. Plaintiffs were falsely arrested and charged with
resisting, delaying, and obstructing the police.1

On March 30, 2006, Plaintiffs filed this action against
Vallejo, Vallejo’s chief of police, the Officers, and Patzer.
Plaintiffs asserted excessive-force and other constitutional
claims against the Officers and Patzer under 42 U.S.C.
§ 1983; Monell claims against Vallejo and its chief of police,
see Monell v. New York City Dep’t of Soc. Servs., 436 U.S.
658 (1978); and various state-law causes of action. On July
24, 2007, the parties stipulated to the dismissal with prejudice
of Plaintiffs’ Monell claims and of Vallejo and its chief of
police as defendants.

B. Vallejo petitions for bankruptcy.

Subsequently, on May 23, 2008, Vallejo filed for Chapter
9 bankruptcy. This was, at the time, one of the largest
municipal bankruptcies in history, and California’s largest
since Orange County filed for bankruptcy in 1994. See
Alison Vekshin & Michael B. Marois, Bankrupt Vallejo,
California, Approves Restructuring, Bloomberg (Dec. 1,
2010).2

According to the City of Vallejo, a number of converging
forces rendered the city insolvent and necessitated its

1
The criminal charges against Plaintiffs were ultimately dismissed.
California’s two-year statute of limitations for personal injury actions was
tolled while the criminal charges against Plaintiffs were pending. See Cal.
Civ. Proc. Code § 335.1; Cal. Gov’t Code § 945.3.
2
Available at http://www.bloomberg.com/news/articles/2010-12-01/
vallejo-approves-plan-to-exit-california-s-biggest-bankruptcy-since-1994.
 DEOCAMPO V. POTTS 7

bankruptcy filing. Vallejo derived most of its revenues from
property taxes, sales taxes, assessments, and fees. See In re
City of Vallejo, No. 08-26813-A-9, 2008 WL 4180008, at *2
(Bankr. E.D. Cal. Sept. 5, 2008), aff’d, 408 B.R. 280 (B.A.P.
9th Cir. 2009). “Recent adverse economic conditions” caused
Vallejo’s revenues to decrease. Id. These conditions
included not only those predictably associated with the
financial crisis, but such contingencies as the closure of a
Wal-Mart that had been a large source of sales tax revenue;
the loss of shared revenue from a Six Flags/Marine World
after Vallejo’s ownership interest in the amusement park was
bought out; and the unexpected retirement of several police
officers and firefighters, who became entitled to millions of
dollars in unbudgeted retiree payouts. Id. at *2, *5.

Vallejo implemented austerity measures, including
cutting funds to its senior center, library, parks, symphony,
and convention and visitors bureau; using vehicles and
equipment well beyond their expected lives; and reducing
employee rolls by 87 full-time positions. Id. at *3.
Nevertheless, Vallejo’s “ability to provide minimal levels of
service to its residents and provide for their basic health and
safety” was seriously threatened. Id. at *5. Pension
obligations and benefits due under collective bargaining
agreements with several unions could not easily be adjusted.
Id. at *3. California laws made it difficult for Vallejo to raise
taxes or borrow funds. As the Bankruptcy Appellate Panel
noted, “Proposition 13 capped property tax rates to 1% of full
cash value. Proposition 218 limited Vallejo’s ability to raise
any other taxes without a majority vote. Article XVI, section
18 of the California Constitution also restricted its ability to
borrow funds.” In re City of Vallejo, 408 B.R. at 286 & n.7.
Over the objections of several creditors, the Bankruptcy
Court for the Eastern District of California found Vallejo
8 DEOCAMPO V. POTTS

eligible to file a Chapter 9 petition, and the Bankruptcy
Appellate Panel affirmed. Id. at 299.

Vallejo was not alone among cities severely affected by
the 2007–08 financial crisis. 2008 and the years since have
witnessed a small but impactful resurgence in municipal
bankruptcy filings. While most have been commenced by
special-purpose districts, such as hospital, utility, or
sanitation authorities, several cities have filed for Chapter 9
protection, including San Bernardino, California; Stockton,
California; Hillview, Kentucky; and Detroit, Michigan. See
Bankrupt Cities, Municipalities List and Map, Governing
(last updated Aug. 21, 2015).3

Scholars have criticized the very concept of municipal
bankruptcy as it is codified by Chapter 9 for a variety of
reasons, including that it harms creditors and makes future
lending unattractive, and that it hamstrings more flexible
state-law solutions. See Omer Kimhi, Chapter 9 of the
Bankruptcy Code: A Solution in Search of a Problem, 27 Yale
J. Reg. 351, 384–85 (2010) (advancing the former argument);
Michael W. McConnell & Randal C. Picker, When Cities Go
Broke: A Conceptual Introduction to Municipal Bankruptcy,
60 U. Chi. L. Rev. 425, 494–95 (1993) (advancing the latter).
Yet experts have warned that the surge in municipal
bankruptcies that began during the financial crisis may not be
over. See, e.g., William C. Dudley, President & Chief Exec.
Officer, Fed. Reserve Bank of N.Y., Opening Remarks for the
Chapter 9 and Alternatives for Distressed Municipalities and

3
Available at http://www.governing.com/gov-data/municipal-cities -
counties-bankruptcies-and-defaults.html.
 DEOCAMPO V. POTTS 9

States Workshop (Apr. 14, 2015),4 (opining that, while high-
profile bankruptcy filings like Detroit’s “have captured a
considerable amount of attention . . . they may foreshadow
more widespread problems than what might be implied by
current bond ratings”).

Our case law construing Chapter 9 is scant, and this
appeal confronts us with a novel legal issue, of the kind that
often surfaces when changing social and economic conditions
awaken dormant statutes. But Chapter 9 has awakened, and
we do not presume further disputes over its interpretive and
practical complexities will remain long at rest.

C. Vallejo’s bankruptcy filing results in a stay of
Deocampo’s lawsuit.

On May 30, 2008, one week after Vallejo’s initial
bankruptcy filing, Defendants filed a notice stating that this
action was automatically stayed pursuant to 11 U.S.C. § 362.
The district court—perhaps recognizing the oddity that
Vallejo’s bankruptcy could automatically stay an action in
which Vallejo was no longer a party, and neither the plaintiffs
nor the defendants were debtors—ordered the “non-bankrupt
parties [to] show cause why this action should not be stayed
in its entirety. . . .” In response, the parties stipulated in
writing that Vallejo’s bankruptcy filing triggered an
automatic stay “pursuant to 11 U.S.C. Section 362,” though

4
Available at https://www.newyorkfed.org/newsevents/speeches/2015/
dud150414.html. Cf. also Claire Shubik, Laura Horowitz & Thomas
Ginsberg, Tough Decisions and Limited Options: How Philadelphia and
Other Cities are Balancing Budgets in a Time of Recession, Pew 2 fig.1
(2009) (surveying 13 major cities and finding that 12 had annual deficits,
8 of which exceeded 10 percent of the city’s general fund).
10 DEOCAMPO V. POTTS

they did not elaborate as to why. On August 5, 2008, the
district court entered the parties’ jointly submitted stipulation
and proposed order, and stayed the proceedings. The case
would remain stayed for more than four years.

About a week after his case was stayed, Deocampo filed
a proof of claim in Vallejo’s pending bankruptcy
proceedings. This stated that the amount of his claim was
$300,000, and the basis for the claim was “Personal Injury.”5
The Officers did not file any proofs of claim in the
bankruptcy proceeding, for anticipated indemnity, defense
costs, or otherwise; nor did Vallejo’s bankruptcy court filings
list the Officers or any other employees as potential creditors
on the basis of defense or indemnification obligations.

5
Deocampo’s proof of claim in the Vallejo proceedings was
unnecessary and without legal effect, because his lawsuit was against the
Officers in their personal—not official—capacities, and any judgment
against them would be a determination of their liability, not Vallejo’s. We
do not fault Deocampo’s counsel for filing the proof of claim, however,
given the uncertainty in this area of law at that time, and we reject the
Officers’ arguments to the contrary. If Deocampo’s counsel had not filed
a proof of claim in Vallejo’s bankruptcy proceedings on the ground that
any judgment against the Officers was not Vallejo’s debt, and had
counsel’s legal judgment not to do so been wrong, counsel would have
risked forfeiting Deocampo’s ability to collect on the judgment. See
11 U.S.C. §§ 524(a), 944; Fed. R. Bankr. P. 3003(c)(2) (in a Chapter 9
proceeding, “[a]ny creditor . . . whose claim or interest is not scheduled
or scheduled as disputed, contingent, or unliquidated shall file a proof of
claim or interest within the time prescribed . . . any creditor who fails to
do so shall not be treated as a creditor with respect to such claim for the
purposes of voting and distribution”). The choice to file a proof of claim,
on the other hand, did not create any risk of harm—at worst, it would be
a nullity. We therefore decline to infer from counsel’s precautionary filing
in this unsettled area of the law any concession or judicial admission that
a judgment against the Officers would be a personal liability of Vallejo.
 DEOCAMPO V. POTTS 11

D. Vallejo’s plan of adjustment is confirmed by the
bankruptcy court.

Subsequently, Vallejo filed a Second Amended Plan for
the Adjustment of Debts (“Plan”) with the bankruptcy court.
Vallejo anticipated that, under that Plan, litigation claimants
would recover approximately 20 to 30 percent of the value of
any claims below $500,000. On August 4, 2011, the
bankruptcy court entered an order confirming the Plan, which
became binding on all creditors on November 1, 2011.

E. Deocampo’s lawsuit against the officers is reinstated
following Vallejo’s bankruptcy plan confirmation.

The district court lifted the stay on Plaintiffs’ case on
August 24, 2012. Following a 13-day trial, the jury returned
a special verdict in favor of Deocampo. The jury found that
the Officers had unreasonably seized Deocampo by using
excessive force against him during the course of the arrest.
It awarded Deocampo $50,000 in compensatory damages.
On August 23, 2013, the district court entered judgment in
accordance with the jury verdict.6 The court subsequently
awarded Deocampo costs and attorney’s fees under 42 U.S.C.
§ 1988.

The Officers then moved for relief from judgment
pursuant to Federal Rule of Civil Procedure 60(b). They
contended the judgment and fee award (collectively, the
“Judgment”) were effectively claims against Vallejo that
were subject to adjustment under the Plan. The district court

6
Deocampo did not prevail on his other claims; Grant and Berry failed
to prevail on any claim; and Officer Patzer was found not liable as to any
claim.
12 DEOCAMPO V. POTTS

denied the Rule 60(b) motion, reasoning that, because
Deocampo sought and obtained relief against the Officers in
only their personal, rather than official, capacities, the
Judgment was not discharged by Vallejo’s bankruptcy. The
Officers timely appealed.7

II.

We have jurisdiction under 28 U.S.C. § 1291. We review
for an abuse of discretion the district court’s decision to deny
a Rule 60(b) motion, and review de novo any questions of
law underlying the decision to deny the motion. Lal v.
California, 610 F.3d 518, 523 (9th Cir. 2010).

III.

A. Chapter 9 bankruptcy.

The Constitution empowers Congress to establish
“uniform Laws on the subject of Bankruptcies throughout the
United States.” U.S. Const. art. I, § 8, cl. 4. Congress first
entered the field of municipal bankruptcy in the 1930s, when,
confronted by the Great Depression, it enacted the precursor
to Chapter 9. See Puerto Rico v. Franklin Cal. Tax-Free
Trust, —U.S.—, 136 S. Ct. 1938, 1944 (2016). In the late
1970s, also a time of economic hardship for local

7
The district court then awarded Deocampo supplemental attorney’s
fees for the time spent opposing the Rule 60(b) motion and litigating the
original motion for fees. The Officers contend that this award, like the
Judgment, is subject to adjustment under the Plan. However, because the
Officers did not amend their prior notice of appeal or separately appeal the
supplemental fee award, we lack jurisdiction to review it. See Hunt v. City
of Los Angeles, 638 F.3d 703, 719 (9th Cir. 2011); Fed. R. App. P.
4(a)(1)(A).
 DEOCAMPO V. POTTS 13

governments, Congress enacted the most recent major
overhaul to Chapter 9. See generally Kimhi, supra, at
366–69. The House Report observed that “the term
‘bankruptcy’ in its strict sense is really a misnomer for a
[C]hapter 9 case.” H.R. Rep. No. 95-595, at 263 (1977).
Thus, although the “general policy underlying” Chapter 9 is
to give the municipal debtor “a breathing spell from debt
collection efforts in order that it can work out a repayment
plan with its creditors,” the municipal debtor,8 unlike others,
“cannot liquidate its assets to satisfy its creditors totally and
finally.” Id. Further, “there are no involuntary [C]hapter 9
cases,” id. at 394, and Chapter 9 proceedings may be
commenced only by a municipality that “desires to effect a
plan to adjust [its] debts” and files a voluntary petition to do
so, with authorization from the state. 11 U.S.C. §§ 109(c)(4),
301, 921.9 It is not necessary that all or even a majority of
creditors consent to a municipal plan of adjustment.
11 U.S.C. § 109(c)(5). For a plan to be confirmed, the
bankruptcy court must find, inter alia, that “the plan is in the
best interests of creditors and is feasible.” 11 U.S.C.
§ 943(b)(7).

When a Chapter 9 debtor’s plan has been confirmed by
the bankruptcy court, and certain other procedural
requirements have been fulfilled, see 11 U.S.C. § 943(b), the
debtor is generally discharged from debts that have not been

8
The Bankruptcy Code defines “municipality” to mean a “political
subdivision or public agency or instrumentality of a State.” 11 U.S.C.
§ 101(40).
9
See also 11 U.S.C. § 904 (providing that, unless the municipal debtor
consents or its plan so provides, the court cannot “interfere with” a
municipal debtor’s political or governmental powers, property or
revenues, or use or enjoyment of income-producing property).
14 DEOCAMPO V. POTTS

“excepted from discharge by the plan or order confirming the
plan.”10 11 U.S.C. § 944(b), (c)(1). The discharge:

(1) 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 . . . 944 . . . of this title, whether
or not discharge of such debt is waived; [and]

(2) operates as an injunction against the
commencement or continuation of an action,
the employment of process, or an act, to
collect, recover or offset any such debt as a
personal liability of the debtor, whether or not
discharge of such debt is waived.

11 U.S.C. §§ 524(a)(1)–(2), 901.

10
Nor is the debtor discharged from debts owed to entities that had
neither notice nor actual knowledge of the case before confirmation of the
plan. 11 U.S.C. § 944(c)(2). However, the exceptions to dischargeability
set forth by 11 U.S.C. § 523(a), including the exception that renders non-
dischargeable debt arising from “willful and malicious injury,” id.
§ 523(a)(6), do not apply in a Chapter 9 bankruptcy. See V.W. ex rel.
Barber v. City of Vallejo, No. CIV. S-12-1629, 2013 WL 3992403, at
*2–3 (E.D. Cal. Aug. 2, 2013) (opining that this is a “somewhat
surprising, indeed, alarming result”).
 DEOCAMPO V. POTTS 15

B. The Plan did not adjust or discharge the Judgment
against the Officers.

1. California’s statutory indemnification framework.

The Officers do not contend that Vallejo’s bankruptcy
discharge wiped out the Judgment against them entirely.
Rather, it is their position that the claim for which Deocampo
filed proof in Vallejo’s bankruptcy proceedings was subject
to the Plan’s adjustment schedule, reducing the claim’s value
to 20 to 30 percent of the Judgment. The Officers contend
that, to the extent the Judgment purports to create an
obligation distinct from that adjusted claim, the confirmation
of the Plan discharged and rendered this obligation void. See
11 U.S.C. §§ 524(a)(1)–(2), 944(b)–(c).

Of course, it was Vallejo, not the Officers, that declared
bankruptcy and adjusted its debts, and the Judgment was
entered against the Officers solely in their personal capacities.
The Officers argue, however, that the Judgment was brought
within the ambit of the Plan by the California Government
Code, which broadly requires public entities like Vallejo to
indemnify their employees in litigation arising from the
employees’ performance of official duties. The Officers rely
principally upon Section 825 of the Government Code, which
in relevant part provides:

[I]f an employee or former employee of a
public entity requests the public entity to
defend him or her against any claim or action
against him or her for an injury arising out of
an act or omission occurring within the scope
of his or her employment as an employee of
the public entity and the request is made in
16 DEOCAMPO V. POTTS

writing not less than 10 days before the day of
trial, and the employee or former employee
reasonably cooperates in good faith in the
defense of the claim or action, the public
entity shall pay any judgment based thereon
or any compromise or settlement of the claim
or action to which the public entity has
agreed.

Cal. Gov’t Code § 825(a).11

Section 825 requires the public entity to indemnify its
employee for compensatory damages awarded under
42 U.S.C. § 1983 and attorney’s fees the employee is ordered
to pay under 42 U.S.C. § 1988. See Williams v. Horvath,
548 P.2d 1125, 1132–34 (Cal. 1976) (en banc). Other
California Government Code provisions require the public
entity to provide for its employee’s defense against an
indemnifiable action upon the employee’s request, and
authorize the employee to compel his or her employer to
make any required defense or indemnification payments, or
to reimburse the employee for any such payments the
employee has already made. See Cal. Gov’t Code §§ 825.2,
970.2, 995, 996.4. Indeed, less than three weeks before the
trial, the Vallejo City Attorney wrote to the Officers, stating
that the City had undertaken their defense and would
indemnify them for any damages.

11
California Government Code Section 825(b) sets forth additional
requirements for the indemnification of punitive or exemplary damages
awarded against a public employee. These requirements do not apply in
this case because the jury awarded only compensatory damages.
 DEOCAMPO V. POTTS 17

The Officers advance two related arguments why
Vallejo’s statutory indemnification obligations subjected the
Judgment to adjustment under the Plan. First, they argue that,
by operation of law, the Judgment is Vallejo’s liability rather
than their own. Second, the Officers argue that, even if the
Judgment is deemed one against them personally rather than
Vallejo, there is “such identity” between Vallejo and
themselves that adjustment of the Judgment “fall[s] within
the language or intent of the Plan.” We address these
arguments in turn.

2. The Judgment against the Officers was not a personal
liability of Vallejo.

The Officers argue that the California indemnification
provisions rendered the Judgment a personal liability of
Vallejo. We disagree.

It is a basic precept of Section 1983 litigation that a
judgment against a government official in his personal
capacity leads to the imposition of liability “against the
individual defendant, rather than against the entity that
employs him.” Kentucky v. Graham, 473 U.S. 159, 167–68
(1985). Thus, “an award of damages against an official in his
personal capacity can be executed only against the official’s
personal assets.” Id. at 166.

We have held that, for purposes of the Eleventh
Amendment, the indemnification obligation imposed by
California Government Code Section 825 does not render a
personal-capacity suit against a state employee one against
the state, and so sovereign immunity does not extend to the
employee. Demery v. Kupperman, 735 F.2d 1139, 1147 (9th
Cir. 1984); see also Ashker v. Cal. Dep’t of Corr., 112 F.3d
18 DEOCAMPO V. POTTS

392, 395 (9th Cir. 1997); cf. Ronwin v. Shapiro, 657 F.2d
1071, 1074–75 (9th Cir. 1981). Rather, the statute creates a
“purely intramural arrangement between a state and its
officers,” because if a plaintiff “prevails on the merits, the
court will not be ordering the state to do anything; it will only
be ordering the official to pay damages. If the state official
desires indemnification under the state statute, he must bring
suit in a state court.” Demery, 735 F.2d at 1147–48.

We find the Demery line of cases persuasive with respect
to the matter at hand. It is true that these cases addressed
disputes over the scope of sovereign immunity rather than
bankruptcy discharge. However, the Officers’ contention that
the reach of these cases must be cabined to sovereign
immunity is belied by the thoughtful and generally applicable
approach with which these cases analyze the attribution of
liability between public entities and their officers. This
approach is equally applicable here. The Judgment embodies
the jury’s determination, by a preponderance of the evidence,
that the Officers, acting in their personal capacities, seriously
injured Deocampo while acting under the color of state law,
as well as a concomitant Section 1988 fee award that
Congress has seen fit to authorize for injuries of this nature.
Deocampo is entitled to enforce the Judgment against the
Officers personally, but he has no right to enforce it directly
against Vallejo or its property. Graham, 473 U.S. at 166.
Vallejo may be obligated by statute to indemnify the Officers
for the amount of the Judgment, but this “purely intramural
arrangement” does not alter the fact that the Judgment itself
is binding on the Officers and the Officers alone. Demery,
735 F.3d at 1147–48.

Therefore, we hold that California’s indemnification
statutes do not render a judgment or concomitant fee award
 DEOCAMPO V. POTTS 19

against an indemnifiable municipal employee a liability of the
municipal employer for purposes of adjusting or discharging
the debts of a Chapter 9 debtor. The Judgment is the
Officers’ personal liability, not Vallejo’s.

3. The Plan does not effect a third-party adjustment or
discharge of the Officers’ judgment debts.

Alternatively, the Officers argue that, even if the
Judgment is not Vallejo’s debt by operation of law, the
indemnity statutes create such identity between Vallejo’s
interests and their own that the Judgment is actually against
the debtor and is thus subject to the Plan.

Other Circuits have held that a debtor’s Chapter 11
bankruptcy plan may operate to discharge the debts of certain
non-debtor third parties, provided the bankruptcy court has
“accepted and confirmed [this discharge] as an integral part
of reorganization.” In re A.H. Robins Co., 880 F.2d 694, 702
(4th Cir. 1989) (quoting Republic Supply Co. v. Shoaf,
815 F.2d 1046, 1050 (5th Cir. 1987)). We have rejected this
construction of the Bankruptcy Code. While the bankruptcy
court has broad powers to “issue any order, process, or
judgment that is necessary or appropriate to carry out the
provisions of this title,” 11 U.S.C. § 105(a), it cannot confirm
a plan that does not comply with applicable Code provisions.
11 U.S.C. § 1129(a)(1). In general, 11 U.S.C. § 524(e)
provides that “discharge of a debt of the debtor does not
affect the liability of any other entity on, or the property of
any other entity for, such debt.” Thus, we have “repeatedly
held, without exception,” that, in a Chapter 11 proceeding,
Ҥ 524(e) precludes bankruptcy courts from discharging the
liabilities of non-debtors.” In re Lowenschuss, 67 F.3d 1394,
1401 (9th Cir. 1995) (citations omitted).
20 DEOCAMPO V. POTTS

However, as the Officers point out, Chapter 9, unlike
Chapter 11, does not incorporate Section 524(e). 11 U.S.C.
§ 901. As such, the rationale relied upon by Lowenschuss
does not apply in Chapter 9 proceedings. We have not
previously addressed the question of whether, in a proceeding
to which Section 524(e) does not apply, Section 105
authorizes a bankruptcy court to confirm a plan that effects
the adjustment or discharge of the debts of non-debtor third
parties. We need not, and do not, answer this question here.
Because the Plan does not, by its terms, purport to effect the
third-party discharge advocated by the Officers, we do not
opine on the power of the bankruptcy court to confirm a
hypothetical plan that does so.

The Plan makes no express reference to indemnification
or the discharge of claims against Vallejo employees. In
asserting that the Plan nevertheless contemplated the
discharge of such claims, the Officers rely upon open-ended,
boilerplate language. The Plan provides that, following its
effective date, all “Claims” are fully discharged, “whether
against the City or any of its properties, assets or interests in
property.” The Plan defines “Claim” to mean “a claim
against the City or the property of the City within the
meaning of section 101(5) of the Bankruptcy Code.”12 The

12
Section 101(5) provides:

The term “claim” means—

(A) 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; or
 DEOCAMPO V. POTTS 21

Officers argue that, broadly construed, this language
encompasses the Judgment, and a broad construction is
necessary to further the Bankruptcy Code’s policy of
providing debtors with a fresh start.

The Officers confuse the breadth of the Bankruptcy
Code’s definition of “claim” with the breadth of the discharge
or adjustment effected by a particular plan, including one that
recites the statutory definition.13 An ambiguity in a
bankruptcy plan drafted by a debtor is construed against the
debtor. In re Brawders, 503 F.3d 856, 867 (9th Cir. 2007);
Miller v. United States, 363 F.3d 999, 1005–06 (9th Cir.
2004). Relatedly, “any ambiguity may also reflect that the
court that originally confirmed the plan did not make any
final determination of the matter at issue.” In re Brawders,
503 F.3d at 867. The Circuits that have permitted Chapter 11

(B) right to an equitable remedy for breach of
performance if such breach gives rise to a right to
payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured, or
unsecured.
13
The Officers rely upon several cases in which courts ruled that an
indemnity obligation triggers the automatic stay provisions of 11 U.S.C.
§§ 362(a) & 922. However, the discharge provisions are narrower than
the automatic stay provisions, the broad reach of which furthers their
purpose to freeze the status quo at the time a petition is filed, ensure that
all claims against the debtor will be brought in a single forum, and protect
creditors by providing for the orderly administration of claims. See Hillis
Motors, Inc. v. Haw. Auto. Dealers’ Ass’n, 997 F.2d 581, 585 (9th Cir.
1993). Among other differences, the stay provisions “do[] not contain
such limiting concepts as ‘personal liability of the debtor.’” In re Munoz,
287 B.R. 546, 554 n.8 (B.A.P. 9th Cir. 2002) (quoting 11 U.S.C.
§ 524(a)(2)). The district court correctly determined that the automatic
stay cases do not control the outcome of the Officers’ Rule 60(b) motion.
22 DEOCAMPO V. POTTS

plans to release non-debtors have required that the release be
express, see In re Applewood Chair Co., 203 F.3d 914, 919
(5th Cir. 2000) (per curiam), and that it be supported by
“specific factual findings,” see Behrmann v. Nat’l Heritage
Found., 663 F.3d 704, 712–13 (4th Cir. 2011). While we
reserve judgment on the validity of an express third-party
release in a Chapter 9 proceeding within our jurisdiction, we
observe that at least two large municipalities that have filed
for bankruptcy, Detroit and San Bernardino, have included in
their proposed plans the express discharge of claims against
indemnifiable employees. See In re City of Detroit, 524 B.R.
147, 265 (Bankr. E.D. Mich. 2014);14 Third Am. Plan for the
Adjustment of Debts of the City of San Bernardino, Cal., at
55–59, In re City of San Bernardino (Bankr. C.D. Cal. filed
July 29, 2016) (No. 6:12-bk-28006-MJ), Dkt. 1880.15 Thus,
when Vallejo filed the Plan, it was not beyond fathom that it
should propose a putative third-party release. Vallejo simply
failed to include such a proposal.

14
Detroit’s proposal of this third-party discharge did not result in its
automatic confirmation, underscoring the critical role bankruptcy courts
play in adjudicating whether a plan shall be confirmed. See In re City of
Detroit, 524 B.R. at 265–67 (sustaining Section 1983 judgment creditors’
objection to a Chapter 9 plan that expressly released indemnified officers
because “[t]he record is devoid of any evidence suggesting that the
additional protection of a third-party release for these officers is necessary
to the City’s efficient and effective functioning, to its revitalization, or to
the success of its plan”).
15
Available at http://www.sbcity.org/home_nav/chapter_9_bankruptcy/
default.asp. But cf. Katy Stech, San Bernardino Bankruptcy Plan Would
Shield Police from Claims, Wall St. J. (Apr. 18, 2016),
http://www.wsj.com/articles/san-bernardino-bankruptcy-plan-would-
shield-police-from-claims-1461017965 (describing objection to this
feature of San Bernardino’s previous proposed plan filed by plaintiffs in
police excessive-force lawsuits).
 DEOCAMPO V. POTTS 23

The Plan does not expressly release any debtor but
Vallejo. The bankruptcy court’s Plan confirmation order, and
the minute order it incorporates, make no reference to
indemnity or third-party discharge. These orders cannot
reasonably be construed to set forth a judicial finding that
third-party discharge or adjustment was an “integral part of
reorganization.” In re A.H. Robins Co., 880 F.2d at 702
(citation omitted). For these reasons, the Judgment remains
undischarged, unadjusted, and untouched by Vallejo’s
bankruptcy.

4. The consequences of affirming the denial of Rule
60(b) relief.

On appeal, the Officers and various law enforcement
association amici make a third, policy-oriented argument that
denying the Officers relief from judgment would have dire
consequences. They are concerned that a ruling in favor of
Deocampo will inject uncertainty into the scope of indemnity
coverage, demoralize officers, and dissuade them from
zealously performing their duties, or deter them from even
becoming police officers. These concerns are misplaced.
The Officers will not be required to pay the Judgment out of
their own pockets. Our conclusion that the Judgment is
against the Officers personally, and not Vallejo, does not
relieve Vallejo of its obligation to indemnify the Officers
under California law. Although the Officers did not file
proofs of claim in the bankruptcy proceedings, and Vallejo
did not list them as creditors, it was not necessary for them to
have done so to preserve their right to statutory
indemnification.

Critically, under California law, the event giving rise to
the Officers’ claim for indemnification is Vallejo’s provision
24 DEOCAMPO V. POTTS

of a defense for the Officers, not the alleged injury inflicted
by the Officers or the plaintiffs’ filing of a lawsuit. See Rivas
v. City of Kerman, 13 Cal. Rptr. 2d 147, 150 (Ct. App. 1992),
as modified (Nov. 23, 1992) (construing Cal. Gov’t Code
§ 825). Here, Vallejo undertook the Officers’ defense on July
18, 2013, after the confirmation of the Plan.16 Because this
triggering event occurred after the discharge, Vallejo’s
indemnification obligation is a post-petition debt that is not
subject to adjustment, discharge, or the bankruptcy
injunction. See O’Loghlin v. Cty. of Orange, 229 F.3d 871,
874 (9th Cir. 2000). The Plan also committed Vallejo to
“continue to operate pursuant to the City Charter, the
Constitution of the State of California and other applicable
laws,” and thereby excepted from discharge any § 825 claims.
See 11 U.S.C. § 944(c)(1). Our decision thus does not
unsettle the commitment of California municipalities to
indemnify their employees, nor should it chill legitimate law
enforcement activity.

All of the practical consequences of our decision fall upon
Vallejo rather than the Officers. The Officers acknowledge
as much in their briefing, which is replete with concerns
about “the complete subversion of the goals of bankruptcy
reorganization,” and unsecured judgment creditors cutting
ahead of others more senior in priority in a plan of
adjustment. While we do not speculate why the Officers are

16
In the July 18, 2013 letter, the Vallejo City Attorney wrote to the
Officers, “The City of Vallejo has undertaken your defense and will
represent your interests in this lawsuit. In addition, should any damages
award be rendered against you, the City of Vallejo will indemnify you for
such damages. The City of Vallejo believes that you were acting in the
course and scope of your employment during the incident, and accordingly
would pay for the damages which stem from your actions during the
arrest.”
 DEOCAMPO V. POTTS 25

so solicitous of these matters despite lacking any skin in the
bankruptcy game, we note that, though Vallejo has not been
a party to this action since 2007, Vallejo furnished the
Officers’ defense, and Vallejo’s City Attorney, among others,
continues to represent them on appeal. Like the misplaced
concern with the demoralization of law enforcement, these
additional, structural concerns lack force. We need not weigh
policy considerations here to glean the plain meaning of the
bankruptcy and state statutes dictating the outcome of this
appeal. We note, however, that, were it appropriate to
consider policy, the policies of satisfying the goals of
bankruptcy and ensuring that our law enforcement officers
can effectively perform their jobs are not the sole policies in
play. Deocampo’s position is supported by the significant
public policies of (1) holding accountable state actors who
misuse their positions of power to violate the constitutional
and human rights of their fellow citizens; and (2) fully
redressing the harms they have caused to their victims.

IV.

Even if Chapter 9 clears a path for some municipal debtor
to discharge or adjust the judgment debts of its indemnified
employees in bankruptcy, Vallejo is not that debtor, and the
Plan is not that path. The Officers are not entitled to relief
from judgment, and the district court properly denied their
Rule 60(b) motion.

AFFIRMED.