Restitution Under the Crimes Code:  Subject to Discharge in Bankruptcy?

Com. v. Petrick, 2018 WL 947167 (Pa. Super. 2018) (unreported), allocatur granted Aug. 29, 2018, appeal docket 47 MAP 2018 

Petrick, a building contractor, was convicted of theft by deception for fraudulent failure to honor a contract for home remodeling, and sentenced to a short term of imprisonment and the requirement to pay restitution to the victimized homeowner in the amount of $6,700.

Superior Court on appeal affirmed.  On the restitution issue, it rejected Petrick’s argument that the order directing him to pay restitution is illegal because the debt owed was discharged in his bankruptcy proceeding.  Citing a 1981 Florida Bankruptcy Court decision, Petrick argued that the state may not use a criminal proceeding for the sole purpose of collecting a debt dischargeable in bankruptcy.  Superior Court, however, relying on its decision on the same issue in Commonwealth v. Shotwell, 717 A.2d 1039 (Pa. Super. 1998),where the defendant defrauded the victim, filed for bankruptcy, listed the debt owed the victim as an unsecured debt in dispute, and was discharged in bankruptcy before his conviction, disagreed. Superior Court quoted Shotwell’s rationale and treated it as dispositive:

we hold that an order of restitution, payable pursuant to the Pennsylvania Crimes Code, is not subject to discharge under the Bankruptcy Code. See 11 U.S.C.A. § 523(a)(7); Kelly v. Robinson, [479 U.S. 36 (1986) ]. We further hold that an order of restitution entered subsequent to a bankruptcy discharge is separate and distinct from any discharge involving a civil debt. Here, the trial court’s order of restitution arose out of the traditional responsibility of the Commonwealth to protect its citizens by enforcing its criminal statutes and to rehabilitate offenders by imposing a criminal sanction intended for that purpose. See id. Neither the Bankruptcy Code nor Pennsylvania law will allow appellant to avoid the consequences of his criminal scheme, as the decision to impose restitution turns on the penal goals of the State and the situation of the offender. A condition of restitution in a criminal sentence simply does not recreate the civil debtor-creditor relationship that existed in the bankruptcy proceedings. Id. Accordingly, we will not disturb the trial court’s restitution order.

Id. [Shotwell] at 1046.

Slip Op. at 11.

The Supreme Court has granted allocatur to decide the question:

Whether this Court should grant this petition for allowance of appeal in order to determine whether the courts below had the authority to direct payment of restitution which obligation has been previously discharged in his bankruptcy?

Allocatur grants present an excellent opportunity for your group or association to advance your legal and policy goals by filing an amicus brief. Participating as an amicus has proven to be an effective method of advising and influencing courts and often can involve far fewer resources than traditional lobbying.

If you are interested or would like more information, contact Kevin McKeon or Dennis Whitaker.