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In re Partida

United States Court of Appeals, Ninth Circuit

July 7, 2017

In re Deborah Lynn Partida, Debtor,
v.
United States Department of Justice, Appellee. Deborah Lynn Partida, Appellant,

          Argued and Submitted April 19, 2017 San Francisco, California

         Appeal from the Ninth Circuit Bankruptcy Appellate Panel Pappas, Kurtz, and Jury, Bankruptcy Judges, Presiding BAP No. 14-1482

          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.

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

         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.

          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]ot with standing 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 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 ...

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