Albert-Sheridan v. State Bar of California, No. 19-60023 (9th Cir. 2020)
Annotate this Case
After the State Bar of California suspended one of its members for misconduct, it conditioned her reinstatement of the payment of court-ordered discovery sanctions and costs associated with its disciplinary proceedings. The suspended attorney sought to discharge the payment in bankruptcy.
The Ninth Circuit held that, while a debtor may not discharge the costs of the State Bar's attorney disciplinary proceedings imposed under California Business and Professions Code 6086.10, the discovery sanctions under California Procedure Code 2023.030 were dischargeable. Under the plain text of 11 U.S.C. 523(a)(7), they were not payable to and for the benefit of a governmental unit and were compensation for actual pecuniary losses. Finally, the panel rejected the attorney's claim that the State Bar violated 11 U.S.C. 525(a) by failing to reinstate her law license because of her nonpayment of dischargeable debts. Accordingly, the panel affirmed in part and reversed in part.
Court Description: Bankruptcy. The panel affirmed in part and reversed in part the Bankruptcy Appellate Panel’s affirmance of the bankruptcy court’s dismissal and remanded in a chapter 7 debtor’s adversary proceeding asserting that fees imposed by the State Bar of California on a member suspended for misconduct were dischargeable debts. The State Bar conditioned the debtor’s reinstatement on the payment of court-ordered discovery sanctions and costs associated with its disciplinary proceedings. Affirming in part, the panel followed In re Findley, 593 F.3d 1048 (9th Cir. 2010), and held that the costs of the State Bar disciplinary proceeding under Cal. Bus. & Prof. Code §§ 6086.10(b)(3) and 6140.7 were non-dischargeable under 11 U.S.C. § 523(a)(7), which makes non-dischargeable a debt that 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 RE ALBERT-SHERIDAN 3 Reversing in part, the panel held that the discovery sanctions under Cal. Civ. Proc. Code § 2023.030 were dischargeable because, under the plain test of 11 U.S.C. § 523(a)(7), they were not payable to and for the benefit of a governmental unit and were compensation for actual pecuniary losses. The panel found inapplicable the holding of Kelly v. Robinson, 479 U.S. 36 (1986), that the dischargeability of a debt turns on the purpose of a restitution award rather than the ultimate recipient of the funds. The panel affirmed as to the dismissal of the debtor’s claim that by failing to reinstate her law license, the State Bar violated 11 U.S.C. § 525(a), which prohibits a government unit from denying, revoking, suspending, or refusing to renew a debtor’s license solely because the debtor filed for bankruptcy or failed to pay a dischargeable debt. In a separate memorandum disposition, the panel affirmed as to the dismissal of the debtor’s non-bankruptcy claims and the denial of leave to amend her complaint.
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.