NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS FEB 22 2017
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: DAVID A. ARMSTRONG, No. 15-56475
Debtor, D.C. No. 2:14-cv-09349-JAK
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DAVID A. ARMSTRONG,
MEMORANDUM *
Appellant,
v.
KRISTI KAPLON,
Appellee.
Appeal from the United States District Court
for the Central District of California
John A. Kronstadt, District Judge, Presiding
Submitted February 16, 2017**
Pasadena, California
Before: M. SMITH and OWENS, Circuit Judges, and HELLERSTEIN,*** District
Judge.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
***
The Honorable Alvin K. Hellerstein, United States District Judge for
the Southern District of New York, sitting by designation.
Appellant David Armstrong appeals from the district court’s order affirming
a final order of the bankruptcy court, which held that a criminal restitution order
imposed against Armstrong was nondischargeable pursuant to 11 U.S.C.
§ 523(a)(7). We have jurisdiction pursuant to 28 U.S.C. § 158(a) and 28 U.S.C. §
1291, and we affirm.
Section 523(a)(7) of the Bankruptcy Code states that a debtor may not
discharge 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[.]” In Kelly v. Robinson, 479 U.S. 36 (1986), the Supreme
Court held that Ҥ 523(a)(7) preserves from discharge any condition a state
criminal court imposes as part of a criminal sentence.” Id. at 50 (emphasis added).
This includes criminal restitution orders such as the one imposed on Armstrong.
As the Supreme Court held:
Because criminal proceedings focus on the State’s interests in
rehabilitation and punishment, rather than the victim’s desire for
compensation, we conclude that restitution orders imposed in such
proceedings operate “for the benefit of” the State. Similarly, they are
not assessed “for ... compensation” of the victim. The sentence
following a criminal conviction necessarily considers the penal and
rehabilitative interests of the State. Those interests are sufficient to
place restitution orders within the meaning of § 523(a)(7).
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Id. at 53. The Supreme Court based this broad holding upon a “deep conviction
that federal bankruptcy courts should not invalidate the results of state criminal
proceedings.” Id. at 47.
We have followed Kelly. See In re Silverman, 616 F.3d 1001, 1008 (9th Cir.
2010) (“As Kelly made clear, criminal restitution payments are non-
dischargeable.”); In re Taggart, 249 F.3d 987, 994 n.9 (9th Cir. 2001) (“The
Supreme Court has held that Ԥ 523(a)(7) preserves from discharge any condition a
state criminal court imposes as part of a criminal sentence.’”) (quoting Kelly, 479
U.S. at 50); In re Levy, 951 F.2d 196, 198–99 (9th Cir. 1991) (Kelly “held that
restitution obligations imposed in state criminal proceedings are not
dischargeable.”).
Nevertheless, Armstrong contends that his criminal restitution is
dischargeable because, unlike the state statute at issue in Kelly, the California penal
code provides for both “restitution” and a “restitution fine.” Compare Cal. Penal
Code § 1202.4(f) (“[I]n every case in which a victim has suffered economic loss as
a result of the defendant’s conduct, the court shall require that the defendant make
restitution to the victim or victims in an amount established by court order, based
on the amount of loss claimed by the victim or victims or any other showing to the
court.”) with Cal. Penal Code § 1202.4(b) (“In every case where a person is
convicted of a crime, the court shall impose a separate and additional restitution
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fine, unless it finds compelling and extraordinary reasons for not doing so and
states those reasons on the record.”). Armstrong argues that the holding of Kelly
extends only to the “restitution fine,” and not to a restitution order issued pursuant
to California Penal Code § 1202.4(f).
This argument is squarely precluded by Kelly, which categorically held that
criminal restitution orders are nondischargeable. 479 U.S. at 49–50. The Court’s
holding did not hinge upon the specific language or structure of the state law at
issue. Rather, it was based upon the desire not to interfere with state courts’
“unfettered administration of their criminal justice systems.” Id. at 44. Here,
Armstrong’s restitution order served California’s penological interests and was
imposed as a function of the administration of that state’s criminal justice system.
It therefore falls within the scope of Kelly, even though the California penal statute
also provides for the imposition of a separate “restitution fine.” To hold otherwise
“would hamper the flexibility of state criminal judges in choosing the combination
of imprisonment, fines, and restitution most likely to further the rehabilitative and
deterrent goals of state criminal justice systems.” Id. at 49.
Armstrong’s remaining arguments are unavailing. First, we have no
occasion to revisit or challenge Kelly. Second, the principle of federalism
supports, not subverts, the Supreme Court’s interpretation of Section 523(a)(7), for
“[t]o allow a debtor to discharge this [restitution] obligation would be abhorrent to
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the standards of federalism expressed in Kelly that bankruptcy statutes should not
be interpreted so as to remit state criminal judgments.” In re Warfel, 268 B.R. 205,
212 (B.A.P. 9th Cir. 2001). Third, the fact that the California statute provides that
restitution is to be based on the amount of loss “claimed by the victim or victims”
is irrelevant, for “such [is] the nature of restitution.” In re Steiger, 159 B.R. 907,
912 (B.A.P. 9th Cir. 1993). The fact that restitution “may be determined by
reference to the amount of harm caused by the offender . . . does not alter its penal
character.” Warfel, 268 B.R. at 210 (citing Kelly, 479 U.S. at 51–52).
AFFIRMED.
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