United States Bankruptcy Appellate Panel of the Eighth Circuit
Submitted: August 12, 2016
from United States Bankruptcy Court for the District of
Minnesota - St. Paul
SCHERMER, NAIL and SHODEEN, Bankruptcy Judges.
SHODEEN, Bankruptcy Judge.
of Dakota appeals the bankruptcy court's order and judgment discharging the debt
owed to it by Jacob Milan for costs incurred related to his
incarceration. We have jurisdiction of this appeal from entry
of the bankruptcy court's final order pursuant to 28
U.S.C. § 158(b). For the reasons set forth below, we
Dakota County Jail is operated by the Dakota County
Sheriff's Office ("DCSO"). Room and board costs
for each prisoner in its custody exceed $100 per day. The
DCSO imposes a fixed rate for a portion of these costs
against criminally convicted inmates ("Incarceration
Costs"), commonly referred to as "pay to stay"
that is expressly authorized under Minnesota
law. The current rate of $25 per day
was proposed by the DCSO and approved by the Dakota County
the course of several years Milan was incarcerated in the
Dakota County Jail for a cumulative 179 days following
various criminal convictions. In 2014, Milan filed a Chapter
7 bankruptcy petition which included his Incarceration Costs
as a non-priority unsecured debt. Dakota County filed an
adversary proceeding seeking to have its debt in the amount
of $3, 504.77 excepted from discharge pursuant to 11 U.S.C.
motions for summary judgment were filed by the parties.
Dakota County's motion for summary judgment was denied
and summary judgment was granted in favor of Milan based upon
the bankruptcy court's determination that the
Incarceration Costs did not meet the statutory requirements
to be excepted from discharge under the statute.
appeal arises from entry of an order and judgment on cross
motions for summary judgment involving an issue of statutory
interpretation, which are both subject to de novo review.
See Behlmann v. Century Sur. Co., 794 F.3d 960, 962
(8th Cir. 2015); Roubideaux v. N.D. Dep't of Corr.
and Rehab., 570 F.3d 966, 972 (8th Cir. 2009).
bankruptcy code precludes discharge of a debt for a fine,
penalty or forfeiture owing to a governmental
unit unless it is pecuniary in nature.
See 11 U.S.C. § 523(a)(7); Kelly v.
Robinson, 479 U.S. 36 (1986). Whether a debt is
dischargeable based upon these factors is easily determined
when the words "fine, penalty, or forfeiture"
appear as the basis for the debt or when the obligation
arises in the context of a criminal proceeding or is
contained in a court order. Id. at 50-53. Because
the Incarceration Costs are not identified as a fine or
penalty, were not ordered by the state criminal court, and
were not a condition of Milan's sentence, the procedural
and substantive characteristics of the debt must be examined
to determine whether the discharge exception under §
Fine, Penalty or Forfeiture
agree with Dakota County that 11 U.S.C. § 523(a)(7) does
not require a court order to impose a debt with the
characteristics of a fine or penalty. See Lopez v. First
Judicial Dist. of Pa. (In re Lopez), 579
F.App'x. 100, 103 (3d Cir. 2014) (citing In re Gi
Nam, 273 F.3d 281, 287 (3d Cir. 2001)). To be excepted
from discharge such a debt must be penal in nature, and must
serve some punitive or rehabilitative governmental aim which
may be shown directly through statutory or regulatory
language that indicates an intent to punish a debtor.
Neb. ex rel. Linder v. Strong (In re
Strong), 305 B.R. 292, 296 (B.A.P. 8th Cir.); In re
Miller, 511 B.R. 621, 631 (Bankr. W.D. Mo. ...