The Bondsman sued Sandoval for breach of the indemnification agreement and obtained a state-court default judgment in the amount of $20,150. Sandoval thereafter filed for bankruptcy under Chapter 7, and the Bondsman brought an adversary proceeding in an attempt to have the judgment declared nondischargeable. The Bankruptcy Court found the debt to be dischargeable because 11 U.S.C. §523(a)(7) only applies to certain debts “payable to and for the benefit of a governmental unit” and this debt was payable to and for the benefit of the Bondsman. The Bondsman appealed to the District Court (N.D. Okla.), which certified the issue for appeal directly to the Court of Appeals.
The Court of Appeals stated that the bonds in the case were signed only by Yanez and the Bondsman, obligating only them to pay the State of Oklahoma in the event that Yanez did not appear. Neither the judgment ordering forfeiture nor the receipt for payment made any mention of Sandoval. Sandoval merely entered into a private agreement with the Bondsman. Sandoval’s obligation was to the Bondsman, and the Bondsman was a corporate entity, not a governmental unit.
The Bondsman argued that she qualified as a governmental unit because she paid the bond to the State and should therefore be subrogated to the State’s rights; however, the Court held that the State had no right to payment from Sandoval. The Court held that the debt involved was not “payable to and for the benefit of a governmental unit,” and that §523(a)(7) did not bar the discharge of the debt. The judgment of the Bankruptcy Court was affirmed.
Judge(s): Ebel, Circuit Judge
Jurisdiction: U.S. Court of Appeals, Tenth Circuit
Related Categories: Criminal Justice
|Amicus Lawyer(s)||Amicus Law Firm(s)|
|Mac D. Finlayson||Morrel Saffa Craige PC|
|Appellant Lawyer(s)||Appellant Law Firm(s)|
|Brandon Burris||Glendening McKenna & Prescott|
|Bruce McKenna||Glendening McKenna & Prescott|