State Bar of Nevada v. Wike

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

In re: TERRY L. WIKE, No. 24-4402

Debtor. BAP No. NV-23-

______________________________ 1179-LCP

STATE BAR OF NEVADA,

OPINION

Appellant,

v.

TERRY L. WIKE,

Appellee.

Appeal from the Ninth Circuit

Bankruptcy Appellate Panel

William J. Lafferty, Frederick P. Corbit, and

Teresa H. Pearson, Bankruptcy Judges, Presiding

Argued and Submitted May 13, 2025

San Francisco, California

Filed July 31, 2025

2 STATE BAR OF NEVADA V. WIKE

Before: M. Margaret McKeown and Ana de Alba, Circuit

Judges, and Richard D. Bennett, Senior District Judge.

Opinion by Judge McKeown

SUMMARY**

Bankruptcy

The panel affirmed a decision of the Bankruptcy

Appellate Panel reversing the bankruptcy court’s denial of

chapter 7 debtor Terry Wike’s motion for sanctions against

the State Bar of Nevada in a case in which Wike, a Nevada

attorney, sought to discharge a debt he owed to the State Bar

for costs and fees assessed when he was twice suspended

from practicing law in Nevada.

After the bankruptcy was completed, Wike petitioned for

reinstatement of his license. The State Bar claimed that

Wike’s debt had not been discharged, and conditioned his

full reinstatement on repayment of the costs and fees

stemming from his prior suspensions. The bankruptcy court

agreed with the Bar’s position and denied Wike’s motion for

sanctions.

The panel considered whether that debt was exempt from

discharge, as urged by the State Bar, because it was “for a

fine, penalty, or forfeiture payable to and for the benefit of a



The Honorable Richard D. Bennett, United States Senior District Judge

for the District of Maryland, sitting by designation.

**

This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

STATE BAR OF NEVADA V. WIKE 3

governmental unit, and [wa]s not compensation for actual

pecuniary loss.” 11 U.S.C. § 523(a)(7).

The panel concluded that the debt was not exempt from

discharge because the money Wike owed to the State Bar

was for compensation allocable to the cost of his attorney

discipline hearings and not for a fine or penalty. Because the

parties agreed that the disposition of Wike’s sanctions

motion turns solely on dischargeability under § 523(a)(7),

the panel remanded for the bankruptcy court to grant the

motion.

COUNSEL

Daniel M. Hooge (argued), State Bar of Nevada, Las Vegas,

Nevada, for Appellant.

Terry L. Wike (argued), Pro Se, Law Offices of Terry L.

Wike, Las Vegas, Nevada, for Appellee.

OPINION

McKeown, Circuit Judge:

A discharge in bankruptcy is often described as a

financial fresh start. Seeking his own fresh start, Terry

Wike, a Nevada attorney, filed for chapter 7 bankruptcy to

discharge his debts, including a debt he owed to the State

Bar of Nevada for costs and fees assessed when he was twice

4 STATE BAR OF NEVADA V. WIKE

suspended from practicing law in Nevada. After the

bankruptcy was completed, Wike petitioned for

reinstatement of his license. Although the State Bar

provisionally reinstated Wike, it claimed that his debt had

not been discharged and conditioned his full reinstatement

on repayment of the costs and fees stemming from his prior

suspensions.

The question we consider is whether that debt was

exempt from discharge, as urged by the State Bar, because it

was “for a fine, penalty, or forfeiture payable to and for the

benefit of a governmental unit, and [wa]s not compensation

for actual pecuniary loss.” 11 U.S.C. § 523(a)(7). Frustrated

by the Bar’s position, Wike filed a motion for sanctions in

the bankruptcy court. The bankruptcy court agreed with the

Bar’s position and denied the motion. The Bankruptcy

Appellate Panel (“BAP”), however, reversed the bankruptcy

court and held that the debt was not exempt from discharge.

We affirm the BAP and conclude that the debt was not

exempt from discharge because the money Wike owed to the

State Bar was for compensation allocable to the cost of his

attorney discipline hearings and not for a fine or penalty.

Because the parties agree that the disposition of Wike’s

sanctions motion turns solely on dischargeability under

§ 523(a)(7), we remand for the bankruptcy court to grant

Wike’s motion against the State Bar.

FACTUAL BACKGROUND

I. Wike’s Suspension from the State Bar of Nevada

and Provisional Reinstatement

In 2018 and 2019, the Nevada State Bar initiated two

separate disciplinary proceedings before the Southern

Nevada Disciplinary Board against Wike for allegedly

STATE BAR OF NEVADA V. WIKE 5

mishandling client funds in violation of the Nevada Rules of

Professional Conduct. Both matters were automatically

reviewed by the Nevada Supreme Court, which has

“exclusive disciplinary jurisdiction” over attorneys licensed

in Nevada. In re Discipline of Arabia, 495 P.3d 1103, 1107

(Nev. 2021) (quoting NEV. SUP. CT. R. 99(1) (2021)); see

NEV. SUP. CT. R. 76(1); NEV. REV. STAT. § 7.275(1). The

Nevada Supreme Court ultimately suspended Wike and

ordered him to pay the Nevada State Bar $21,138.15 in fees

and costs for his disciplinary proceedings, including $2,500

for each proceeding as “mandated by [Nevada Supreme

Court Rule] 120(3).” Wike was suspended until April 9,

2021.

On April 19, 2021, Wike filed a chapter 7 petition for

bankruptcy in the United States Bankruptcy Court for the

District of Nevada. In his petition, Wike listed a $25,000

debt to the “State Bar of Nevada” as a nonpriority unsecured

claim. Although the State Bar was notified of the

bankruptcy, it did not participate in the proceedings. On

May 20, 2021, Wike’s debts were nominally discharged

under 11 U.S.C. § 727.

While his bankruptcy petition was pending, Wike

petitioned for reinstatement to the State Bar. The Southern

Nevada Disciplinary Board concluded that Wike should be

reinstated on the condition that he pay back the costs and

fees previously imposed by the Nevada Supreme Court.

Reviewing the Board’s recommendation, the Nevada

Supreme Court on February 24, 2022 agreed that Wike

should be provisionally reinstated. In so concluding, the

court addressed Wike’s argument that “his debt to the State

Bar for the cost assessment was discharged in bankruptcy.”

The court held that it could continue to condition Wike’s full

reinstatement “on the payment of those costs,” “regardless

6 STATE BAR OF NEVADA V. WIKE

of whether the cost assessment in the discipline order was

discharged in bankruptcy.” This was so, the court reasoned,

because “[t]he primary purposes of attorney discipline” in

Nevada “are to promote an attorney’s rehabilitation, deter

misconduct, and protect the public.” The Nevada Supreme

Court thus conditioned Wike’s full reinstatement on, among

other requirements, paying the $21,138.15 he owed from his

earlier proceedings.

II. Wike Moves for Sanctions

Over a year after his provisional reinstatement, Wike in

April 2023 filed a motion to reopen his chapter 7 bankruptcy

proceedings with the Bankruptcy Court of the District of

Nevada. After the court granted his motion, Wike filed a

motion for sanctions against the State Bar. He claimed a

violation of 11 U.S.C. § 525(a), which provides in relevant

part that “a governmental unit may not deny, revoke,

suspend, or refuse to renew a license . . . to . . . a person that

is or has been a debtor under this title . . . solely because such

. . . debtor . . . has not paid a debt that is dischargeable in the

case under this title or that was discharged under the

Bankruptcy Act.”1 This provision “prevents discrimination

against a debtor based on a dischargeable debt.” Albert-

Sheridan v. State Bar of Cal. (In re Albert-Sheridan), 960

F.3d 1188, 1196 (9th Cir. 2020).

According to Wike, because the “conditional

reinstatement [was] premised” on the incorrect view that the

fees and costs he owed were “excepted from discharge under

§ 523(a)(7),” the State Bar discriminated against him in

violation of § 525(a). The Bar responded that the “[c]osts

1

The Supreme Court has held that, under the Constitution, States cannot

invoke their sovereign immunity as a defense in bankruptcy proceedings.

See Central Va. Cmty. Coll. v. Katz, 546 U.S. 356, 377–78 (2006).

STATE BAR OF NEVADA V. WIKE 7

imposed under [Nevada Supreme Court Rule] 120 are part

of [a] regulatory scheme” designed “to protect the public and

the integrity of the profession” and that, accordingly, such

costs are “fines” or “penalties” exempt from discharge under

§ 523(a)(7). Thus, the Bar asserted, it did not unlawfully

discriminate against Wike. See FCC v. NextWave Pers.

Commc’ns Inc., 537 U.S. 293, 307 (2003) (explaining that

“when the debt in question is one of the disfavored class that

is nondischargeable,” § 525(a) does not apply, and “[t]he

government may take action that is otherwise forbidden”

(emphasis omitted)).

The bankruptcy court denied Wike’s motion for

sanctions, construing our precedents as holding “that an

obligation to pay the costs associated with . . . attorney

discipline proceedings is excluded from discharge under

[§] 523(a)(7).” Though neither party raised the Rooker-

Feldman doctrine before the bankruptcy court,2 the court

alternatively suggested that the doctrine precluded it from

reviewing the Nevada Supreme Court’s determination that

costs imposed under Rule 120 are dischargeable under

§ 523(a)(7).

Wike appealed the bankruptcy court’s decision to the

BAP, which reversed and remanded to the bankruptcy court.

As a threshold matter, the BAP rejected the bankruptcy

court’s comment regarding Rooker-Feldman. On the merits,

the BAP surveyed our case law under § 523(a)(7) and

concluded that the fees and costs assessed against Wike by

2

“The Rooker-Feldman doctrine takes its name from Rooker v. Fidelity

Trust Co., 263 U.S. 413 (1923), and District of Columbia Court of

Appeals v. Feldman, 460 U.S. 462 (1983). Under Rooker-Feldman, a

federal district court does not have subject matter jurisdiction to hear a

direct appeal from the final judgment of a state court.” Noel v. Hall, 341

F.3d 1148, 1154 (9th Cir. 2003).

8 STATE BAR OF NEVADA V. WIKE

the Nevada Supreme Court do not fall under § 523(a)(7)’s

exception to discharge. Specifically, the BAP relied on three

factors: (1) that the Nevada Supreme Court Rules seemingly

distinguish between “costs” and “sanctions”; (2) that the

costs a disciplined attorney must pay under Nevada Supreme

Court Rule 120 must all be “allocable to the proceeding” and

thus “bear[] the classic hallmarks of compensation”; and

(3) that these costs cannot be construed as “serving a penal

purpose,” because they are automatically imposed on a

disciplined attorney even if he is disbarred, despite the

Nevada Supreme Court’s instruction that disbarred attorneys

are not to face “additional forms of discipline” (citation

omitted). The BAP reversed the bankruptcy court’s

conclusion as to the dischargeability of Wike’s debt to the

Nevada State Bar and remanded the case to the bankruptcy

court to determine whether “other reasons prevent[ed]

[Wike] from full reinstatement” such that “denial of

reinstatement would not be based ‘solely’ on payment of a

discharged debt” (emphasis added). It is from that decision

that the State Bar appealed.

ANALYSIS

I. Jurisdictional Issues

We first evaluate whether we have appellate jurisdiction

over this matter despite the BAP’s remand order and whether

the Rooker-Feldman doctrine precludes us from entertaining

this appeal.

A. Appellate Jurisdiction

Under 28 U.S.C. § 158(d), the federal courts of appeals

“have jurisdiction of appeals from all final decisions,

judgments, orders, and decrees” entered by a BAP (emphasis

added). See Gugliuzza v. FTC (In re Gugliuzza), 852 F.3d

STATE BAR OF NEVADA V. WIKE 9

884, 890–91 (9th Cir. 2017). “[W]hen an appeal is taken

from a . . . BAP ruling that remands the case for further

proceedings in the bankruptcy court,” as is the case here, we

consider four factors in deciding whether the appeal is

effectively from a final decision, judgment, order, or decree:

“(1) the need to avoid piecemeal litigation; (2) judicial

efficiency; (3) the systemic interest in preserving the

bankruptcy court’s role as the finder of fact; and (4) whether

delaying review would cause either party irreparable harm.”

Id. at 894 (simplified).

Under the Gugliuzza factors, the BAP’s decision

constitutes a final order under § 158(d). In its statement of

jurisdiction filed in advance of its opening brief, the State

Bar disclaimed the need for any remand as “unnecessary.”

Although the State Bar stood to benefit from the BAP’s

remand, it made clear that “[t]he central and only issue for

the Court of Appeals to resolve is the dischargeability of the

disciplinary costs under § 523(a)(7).” Accordingly, this case

presents no risk of piecemeal litigation, and it would be far

more efficient for us to resolve all that is left, a pure question

of law as to the applicability of § 523(a)(7) to costs assessed

under Nevada Supreme Court Rule 120. The Bar’s appeal is

thus properly before us.

B. Rooker-Feldman

Although, in this appeal, neither Wike nor the State Bar

have addressed the applicability of Rooker-Feldman, we

consider the issue because the “doctrine is jurisdictional.”

Canatella v. California, 304 F.3d 843, 849 (9th Cir. 2002).

We review de novo the BAP’s application of Rooker-

Feldman. See Cogan v. Trabucco, 114 F.4th 1054, 1060 (9th

Cir. 2024). Under the Rooker-Feldman doctrine, federal

courts “are without jurisdiction to hear direct appeals from

10 STATE BAR OF NEVADA V. WIKE

the judgments of state courts” and the “de facto

equivalent[s]” of such appeals. Cooper v. Ramos, 704 F.3d

772, 777 (9th Cir. 2012) (simplified). We have held,

however, “that a state court judgment entered in a case that

falls within the federal courts’ exclusive jurisdiction is

subject to collateral attack in the federal courts, and that the

Rooker-Feldman doctrine therefore does not bar such suits.”

Cogan, 114 F.4th at 1065 (simplified).

The applicability of § 523(a)(7) to a particular debt is an

issue that falls within the “exclusive jurisdiction” of the

federal courts, and so this case is not barred by Rooker-

Feldman. The Rooker-Feldman question here is resolved by

our en banc decision in Gruntz v. County of Los Angeles (In

re Gruntz), 202 F.3d 1074 (9th Cir. 2000) (en banc). In

Gruntz, we considered “whether a state court modification

of [a] bankruptcy automatic stay binds federal courts” and is

therefore unreviewable in federal court under the Rooker-

Feldman doctrine.3 Id. at 1077–78. The answer, we

explained, was “no”: “Congress has expressed its intent that

bankruptcy matters be handled exclusively in a federal

forum,” and “actions to ‘terminate, annul, or modify’ the

automatic stay are core bankruptcy proceedings,” such that

“[a]ny state court modification of the automatic stay would

constitute an unauthorized infringement upon the

bankruptcy court’s jurisdiction to enforce the stay.” Id. at

1080–82 (quoting 28 U.S.C. § 157(b)(2)(G)). “[T]he

Rooker-Feldman doctrine,” we concluded, “does not render

a state court judgment modifying the automatic stay binding

on a bankruptcy court”—such judgments may be collaterally

3

The bankruptcy automatic stay is a “self-executing” stay, “effective

upon the filing of the bankruptcy petition,” that “prevents any collection

activity against property of the [bankruptcy] estate.” Burton v. Infinity

Cap. Mgmt., 862 F.3d 740, 746 (9th Cir. 2017) (simplified).

STATE BAR OF NEVADA V. WIKE 11

attacked and “declared void” in the federal courts. Id. at

1087.

The same logic applies to a state court judgment

ostensibly construing § 523(a)(7) and § 525(a). Congress

has instructed that “[c]ore proceedings include . . .

determinations as to the dischargeability of particular debts.”

28 U.S.C. § 157(b)(2)(I); see Gruntz, 202 F.3d at 1081 n.5.

Therefore, the Nevada Supreme Court’s order conditionally

reinstating Wike to the Bar is not preclusive under Rooker-

Feldman, because otherwise it “would constitute an

unauthorized infringement upon the bankruptcy court’s

jurisdiction.” Gruntz, 202 F.3d at 1082.

II. 11 U.S.C. § 523(a)(7)’s Exception to Discharge

Under 11 U.S.C. § 523(a)(7), a debt is exempt from

discharge “to the extent such debt 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.” The

statutory text thus establishes “three separate elements, each

of which must be satisfied before a debt is

nondischargeable”: “the nondischargeable debt must (1) be

a fine, penalty, or forfeiture; (2) be payable to and for the

benefit of a governmental unit; and (3) not constitute

compensation for actual pecuniary [loss].” Kassas v. State

Bar of Cal., 49 F.4th 1158, 1163 (9th Cir. 2022) (simplified).

Here, neither party disputes that prong (2) has been satisfied,

as the Nevada State Bar is clearly a governmental unit. The

dispositive question, then, is whether the fees and costs Wike

owes to the Nevada State Bar comprise “‘a fine, penalty, or

forfeiture’ and not ‘compensation for actual pecuniary

loss.’” Id. at 1164 (emphasis added) (quoting 11 U.S.C.

12 STATE BAR OF NEVADA V. WIKE

§ 523(a)(7)).4 In addressing this question, which we resolve

de novo, it is useful to summarize our case law applying

§ 523(a)(7) to payments imposed by the California State Bar

as part of attorney discipline, before applying the lessons of

those cases to the costs that were imposed on Wike under

Nevada law.

A. Section 523(a)(7) Case Law Concerning Debt

Stemming from Attorney Disciplinary

Proceedings

At the outset, we note that we have had a consistent flow

of cases involving the intersection of bankruptcy discharge

and attorney discipline payments in California and that those

cases, while instructive, hinge primarily on California

statutes and the California State Bar’s discipline scheme.

Our first case applying § 523(a)(7) in the context of

attorney discipline payments was State Bar of California v.

Taggart (In re Taggart). In Taggart, we considered whether

the debts that disciplined attorneys incurred from being

“order[ed] . . . to pay the costs of their disciplinary

proceedings” under California law were exempt from

discharge under § 523(a)(7). 249 F.3d 987, 989–90 (9th Cir.

4

Prongs (1) and (3) have consistently been evaluated as part of the same

inquiry. See, e.g., State Bar of Cal. v. Findley (In re Findley), 593 F.3d

1048, 1051 (9th Cir. 2010) (similarly framing the inquiry as “whether [a

disciplinary cost] constitutes a fine, penalty, or forfeiture or instead

provides compensation for actual pecuniary loss”); State Bar of Cal. v.

Taggart (In re Taggart), 249 F.3d 987, 991 (9th Cir. 2001) (similarly

framing the inquiry as whether the petitioner’s “debt is compensation for

the State Bar’s expenses rather than a fine or penalty”); Scheer v. State

Bar of Cal. (In re Scheer), 819 F.3d 1206, 1211 (9th Cir. 2016) (similarly

framing the inquiry as whether “[a]t its core, the [debt] is not a fine or

penalty, but compensation for actual loss”).

STATE BAR OF NEVADA V. WIKE 13

2001). Such debts, we held, were not exempt from

discharge. Id. at 991.

In reaching this conclusion, we compared the relevant

disciplinary provision, CAL. BUS. & PROF. CODE § 6086.10

(2001), to a separate section also requiring disciplined

attorneys to make certain payments, CAL. BUS. & PROF.

§ 6086.13 (2001). We noted, first, that while “the fees levied

under § 6086.10 are denominated ‘costs’ and are imposed to

reimburse the State Bar for ‘actual expenses’ and

‘reasonable costs’ associated with disciplinary hearings . . . ,

fees authorized by § 6086.13 are described as ‘monetary

sanctions’ and are not dependent on any expenditure by the

State Bar for their imposition.” Taggart, 249 F.3d at 992

(citations omitted). We observed, too, that because

Ҥ 6086.10 . . . also entitles exonerated attorneys to

reimbursement for the costs of defending themselves,” that

section is “analogous to a section of the California Civil

Procedure Code that provides prevailing parties in civil suits

the right to recover . . . the . . . costs of litigation.” Id. at 992.

Finally, we looked to § 6086.13’s legislative history, which

“makes it clear that the section was enacted in order to create

the possibility of fines in the context of attorney disciplinary

proceedings, which did not exist under § 6086.10.” Id. at

993. In sum, the text, structure, and legislative history of the

relevant provisions of the California Business and

Professions Code “all indicate[d] that costs imposed under

§ 6086.10 [we]re not ‘fines, penalties, or forfeitures,’ but

rather [we]re compensation to the State Bar for ‘actual

pecuniary loss.’” Id. at 994 (original alterations omitted).

Thus, these costs were not exempt from discharge.

Just two years later, in response to Taggart, “California

amended the California Business and Professions Code in

2003” to add § 6086.10(e). State Bar of Cal. v. Findley (In

14 STATE BAR OF NEVADA V. WIKE

re Findley), 593 F.3d 1048, 1050, 1052 (9th Cir. 2010). That

amendment was a gamechanger in characterizing

disciplinary costs in California. Section 6086.10(e), which

remains in effect, provides: “In addition to other monetary

sanctions as may be ordered by the Supreme Court pursuant

to Section 6086.13, costs imposed pursuant to this section

are penalties, payable to and for the benefit of the State Bar

of California, a public corporation created pursuant to

Article VI of the California Constitution, to promote

rehabilitation and to protect the public. This subdivision is

declaratory of existing law.” CAL. BUS. & PROF. CODE

§ 6086.10(e).

In Findley we had the opportunity to consider “whether

the 2003 amendment[] [is] sufficient . . . to conclude that

attorney disciplinary costs imposed under § 6086.10 now

satisfy the requirements of § 523(a)(7) and are not subject to

discharge in bankruptcy.” 593 F.3d at 1050. We answered

that question “yes,” holding that the 2003 “amendment

undermines the Taggart analysis in several ways.” Id. at

1052. To begin, we determined that the amendment

“clarifies that the California legislature’s intent in imposing

attorney disciplinary costs was ‘to promote rehabilitation

and to protect the public,’ rather to provide compensation, as

we inferred in Taggart.” Id. at 1052–53 (quoting CAL. BUS.

& PROF. CODE § 6086.10(e)). We then concluded that the

amendment “eliminates the distinction we identified in

Taggart between the ‘costs’ imposed through § 6086.10 and

the ‘sanctions’ leveled through § 6086.13, by labeling

attorney disciplinary costs as ‘penalties’ imposed ‘in

addition to other monetary sanctions.’” Id. at 1053 (citation

and brackets omitted). The legislative history behind the

amendments, we noted, confirmed the California

legislature’s intent in amending § 6086.10. See id.

STATE BAR OF NEVADA V. WIKE 15

In Findley, we acknowledged that the “amended

§ 6086.10 d[oes] retain certain structural elements identified

in Taggart as indicative of a compensatory purpose,” namely

(1) that § 6086.10 “costs continue to reimburse the State Bar

for ‘actual expenses’ and ‘reasonable costs’ and depend on

state expenditures for their imposition” and (2) that there is

“a hardship exemption for § 6086.10 cost awards, but not for

§ 6086.13 sanctions.” 593 F.3d at 1053. But these features,

we cautioned, were “identified” by our court in Taggart “in

order to discern California’s legislative intent in enacting the

prior version of § 6086.10.” Id. at 1053–54. Because the

California legislature “express[ly] state[d] in the 2003

amendment to § 6086.10(e) that it enacted attorney

disciplinary costs to serve penal and rehabilitative ends,” the

fact that these specific features remained unchanged had less

bearing on our ultimate conclusion that, as modified in 2003,

§ 6086.10 costs are exempt from discharge under

§ 523(a)(7). Id. at 1053–54. We also observed that, in any

event, “the disciplinary costs” under California law “apply

only to misconduct that merits public reproval, suspension

or disbarment,” and further stated that such costs “need not

vary with the nature of the offense to be non-compensatory

in nature.” Id. at 1054.

Six years after Findley, in Scheer v. State Bar of

California (In re Scheer), we took yet another look at the

amended § 6086.10 to see whether § 523(a)(7) exempted

from discharge an arbitration fee award that a disciplined

attorney was required to pay as a condition of the

reinstatement of her “right to practice law” in California.

819 F.3d 1206, 1208–09 (9th Cir. 2016). We held that

§ 523(a)(7) did not exempt this particular debt. Because the

debt at issue was simply “an arbitration award for a debt

between two private parties, payable to one of them,” id. at

16 STATE BAR OF NEVADA V. WIKE

1209, and because “the debt in this case was purely

compensatory,” the debt was not a payment “assessed for

disciplinary reasons” by the California State Bar, id. at 1211.

The Bar argued that § 523(a)(7) exempted the debt from

discharge on account of its assertedly “strong regulatory

interest” in controlling attorney conduct. Id. But we rejected

that position, because accepting it “would render any

attorney-client fee dispute nondischargeable” and “would

extend” the § 523(a)(7) exemption “to fee disputes in any

closely regulated industry.” Id.

Building on the jurisprudence of bar assessments, in

2020, in Albert-Sheridan, we analyzed a situation similar to

that of Scheer: whether § 523(a)(7) exempted court-ordered

discovery sanctions from discharge because the California

State Bar conditioned the petitioner’s reinstatement to the

Bar on the payment of those sanctions. 960 F.3d 1188, 1190.

Despite the Bar’s actions, those sanctions were not exempt

because California law “does not provide for [discovery]

sanctions to be paid to the court or any other governmental

entity, but to ‘anyone’ incurring an expense as a result of

discovery abuse.” Id. at 1193. We also observed that

because “the discovery sanctions were commensurate with

[the] expenses” incurred by the petitioner’s opposing party

in the underlying case, the sanctions were “compensatory.”

Id. at 1194.

Finally, in Kassas, just three years ago, we considered

whether an order by the California Supreme Court for the

disbarred petitioner to supply “funds that would eventually

be paid out by the State Bar’s Client Security Fund (CSF) to

victims of his conduct” established a debt exempt from

discharge under § 523(a)(7). 49 F.4th 1158, 1160–61.

There, we held, the debt was not exempt from discharge. Id.

We observed that “the stated purpose of the CSF is ‘to

STATE BAR OF NEVADA V. WIKE 17

relieve or mitigate pecuniary losses caused by the dishonest

conduct of active members of the State Bar,’” id. at 1164

(quoting CAL. BUS. & PROF. CODE § 6140.5(a)), and likewise

that “once the CSF has made payment to a victim, the

attorney’s obligation is to ‘reimburse the fund for all moneys

paid out,’” id. at 1165 (quoting CAL. BUS. & PROF. CODE

§ 6140.5(c)). This “obligation,” we concluded,

“distinguishes these payments from fines and penalties

because they are reimbursement for victims’ actual

pecuniary loss.” Id.

In each of these cases, we closely scrutinized the relevant

California statutes to determine whether the payment

imposed on a disciplined attorney constituted “a fine,

penalty, or forfeiture” rather than “compensation for actual

pecuniary loss.” 11 U.S.C. § 523(a)(7). Here too, then, we

subject the relevant Nevada legal authorities to similar

scrutiny, drawing parallels to the factors we have found

relevant in our prior cases.

B. Wike’s Debt Is Not Exempt from Discharge

We now turn to the specifics of Wike’s debt and the

Nevada attorney discipline scheme. Upon reviewing the

Nevada Supreme Court’s precedents and Nevada Supreme

Court Rules 120 and 102, we conclude that Wike’s debt for

the costs imposed on him under Rule 120 was not exempt

from discharge.

To begin with, all of the fees and costs imposed under

Nevada Supreme Court Rule 120 must be “allocable to the

proceeding.” See NEV. SUP. CT. R. 120(1), (3). And while

Rule 120 sets varying minimum “administrative costs”

depending on the sanction imposed on the disciplined

attorney, these costs are also deemed to be “allocable to the

proceeding.” Id. 120(3). Nevada law therefore expressly

18 STATE BAR OF NEVADA V. WIKE

construes Rule 120’s fees and costs as being

“commensurate” with the costs of disciplinary proceedings.

See Albert-Sheridan, 960 F.3d at 1194. On its own, that

construction is a very strong indication that Wike’s debt is

for compensation for actual pecuniary loss. See Kassas, 49

F.4th at 1164–66; Taggart, 249 F.3d at 992, 994.

As in Taggart, the Nevada Supreme Court Rules also

contain two separate sections, one concerning the

assessment of sanctions and the other related to fees and

costs. Nevada Supreme Court Rules 102 and 102.5 permit

the imposition of monetary “penalties or sanctions,”

including restitution, disgorgement, and fines of up to

$1,000, except in cases of disbarment. See NEV. SUP. CT. R.

102(2), 102.5(4)(l); see In re Discipline of Reade, 405 P.3d

105, 106 (Nev. 2016) (referring to a “fine” as among the

“sanctions permissible under” Rule 102). These sanctions

are discretionary and must be “intended to create protection

of the public or increase confidence in the integrity of the

[legal] profession.” See NEV. SUP. CT. R. 102(2); see id.

102.5 (setting forth the factors to be considered in imposing

sanctions). In contrast, Rule 120 is mandatory and does not

describe the assessed payments as sanctions. See NEV. SUP.

CT. R. 120(1), (3) (stating that disciplined attorneys “shall be

assessed” costs (emphasis added)). Rather, the payments are

“costs” and “fees” that, as noted above, must be “allocable

to the proceeding.” Id. Thus, “[a] comparison of the plain

language of these two sections” buttresses the conclusion

that fees and costs imposed under Rule 120 do not constitute

fines or penalties under § 523(a)(7). See Taggart, 249 F.3d

at 992–93.

Unlike the pointed California legislation addressed in

Findley, the Nevada Supreme Court has not sufficiently

established that payments under Rule 120 are fines and

STATE BAR OF NEVADA V. WIKE 19

penalties that “serve penal and rehabilitative ends.” See

Findley, 593 F.3d at 1054. In its unpublished order

provisionally reinstating Wike to the State Bar, the court

stated that “the primary purposes of attorney discipline are

to promote an attorney’s rehabilitation, deter misconduct,

and protect the public” and suggested in conclusory fashion

that any costs assessed under Rule 120 are fines and

penalties consistent with these purposes. But under the

Nevada Rules of Appellate Procedure, this unpublished

order does “not establish mandatory precedent.” See NEV.

R. APP. P. 36(c)(2). Moreover, the court’s unpublished order

is in tension with its prior published opinion in Reade. In

Reade, the Nevada Supreme Court held that it did not have

authority under Rule 102 “to impose a fine in conjunction

with suspension or disbarment,” in part because such a fine

was inconsistent with the purposes of attorney discipline.

405 P.3d at 108–09. After reaching this conclusion,

however, the court still ordered the suspended petitioner to

“pay the costs of [his] disciplinary proceedings” pursuant to

Rule 120, thereby suggesting that costs imposed under Rule

120 do not qualify as fines. See id. at 109. Accordingly, the

Nevada Supreme Court’s caselaw is a wash as to whether

Rule 120 authorizes penalties and fines, and our

interpretation of Rule 120 is therefore dispositive of the issue

before us. Wike’s debt for costs assessed under Rule 120

was not exempt from discharge under § 523(a)(7).

The Nevada State Bar resists this conclusion, but its

position runs headlong into our precedent. Citing In re

Zarzynski, 771 F.2d 304 (7th Cir. 1985), the State Bar argues

that because a government’s expenditure for “a disciplinary

investigation and prosecution is not an actual pecuniary

loss,” compensation for such proceedings does not qualify

as “compensation for actual pecuniary loss” under

20 STATE BAR OF NEVADA V. WIKE

§ 523(a)(7). In particular, the State Bar quotes Zarzynski for

the categorical rule that, under § 523(a)(7), “[t]here is no

[government] pecuniary loss when the [government]

functions as it should in the furtherance of its public

responsibilities.” See 771 F.2d at 306 (alterations from State

Bar’s opening brief).

Critically, however, Zarzynski specifically concerned

criminal restitution for the costs of the convicted defendant’s

criminal proceeding, see Zarzynski, 771 F.2d at 305, and we

have squarely rejected, as inapplicable in cases involving

attorney disciplinary payments, the categorical rule from

cases construing § 523(a)(7) in the context of criminal

restitution. As we explained in Taggart:

We acknowledge that the few reported cases

that consider whether the costs of attorney

disciplinary proceedings are excepted from

discharge under § 523(a)(7) have held that

such costs are nondischargeable. Those

cases—all concerning attorney disciplinary

systems in jurisdictions other than

California—have, by and large, analogized

the costs of attorney disciplinary proceedings

imposed on disciplined attorneys to the costs

of criminal litigation imposed on convicted

defendants. However, where, as here, the

structure of the statutes imposing fees on

disciplined attorneys, the existence of

mandatory fees in the civil context, and the

legislative history of the statute imposing

monetary sanctions on disciplined attorneys

all indicate that California does not view the

assessment of costs on disciplined attorneys

STATE BAR OF NEVADA V. WIKE 21

as penal in nature, analogy to the criminal

context is inapt.

249 F.3d at 993–94 (emphasis added) (simplified); see

Findley, 593 F.3d at 1052 (reiterating that, in Taggart, “[w]e

distinguished . . . opposing precedents” that, “‘by and large,

analogized the costs of attorney disciplinary proceedings to

the costs of criminal litigation imposed on convicted

defendants,’” and that we “conclud[ed] that ‘analogy to the

criminal context is inapt’” in the attorney discipline context

(quoting Taggart, 249 F.3d at 994)).5 We have since echoed

Taggart’s admonition by cautioning parties against relying

on cases “animated by the unique concerns of state criminal

proceedings.” See Scheer, 819 F.3d at 1211 (simplified); see

also Albert-Sheridan, 960 F.3d at 1195 (explaining that

§ 523(a)(7) cases in the criminal context are unique because

of the “long history of judicial exceptions for criminal

restitution payments in discharge statutes and [judicial]

concern for disturbing state criminal proceedings”

(simplified)).

The State Bar’s position is thus foreclosed by our circuit

precedent. Indeed, the Bar conceded at oral argument that if

Zarzynski’s categorical rule unique to criminal restitution

cases had controlled in Taggart or Kassas, then we would

have reached the opposite outcome in those cases. Applying

5

That Taggart forecloses the State Bar’s reliance on criminal restitution

cases is underscored by the fact that, in Taggart, the California State

Bar, like the Nevada State Bar in this case, argued (specifically citing

Zarzynski) that the costs of an attorney disciplinary proceeding must be

dischargeable because the “protection of the public from conduct

prohibited by law-disciplinary proceedings are sufficiently akin or

analogous to criminal prosecutions.” State Bar Appellee’s Brief at 10,

State Bar of Cal. v. Taggart (In re Taggart), 249 F.3d 987 (9th Cir. 2001)

(No. 99-56343), 1999 WL 33622393, at *10.

22 STATE BAR OF NEVADA V. WIKE

our precedent in the face of the Nevada attorney discipline

scheme, we conclude that the fees and costs assessed against

Wike under Rule 120 are not exempt from discharge.

III. Remand

Because this appeal arises from Wike’s motion for

sanctions against the State Bar under 11 U.S.C. § 525(a), the

remaining question is whether, as the BAP held, we should

remand this matter to the bankruptcy court to resolve any

remaining issues concerning the motion. We see no reason

to do so.

Section 525(a) provides in relevant part that “a

governmental unit may not deny, revoke, suspend, or refuse

to renew a license . . . to . . . a person that is or has been a

debtor under this title . . . solely because such . . . debtor . . .

has not paid a debt that is dischargeable in the case under

this title or that was discharged under the Bankruptcy Act.”

11 U.S.C. § 525(a) (emphasis added). The BAP held that

remand was appropriate for the bankruptcy court to

determine “[i]f there are other reasons preventing [Wike]

from full reinstatement—such as failure to comply with the

[Nevada Supreme Court’s] mentorship and accounting

requirements.” But on appeal, the Nevada State Bar

“stipulate[d] to the fact [that Wike] has completed all

conditions of reinstatement except for payment of his

disciplinary fees” and that “[t]he only condition outstanding

for [Wike] is payment of the disciplinary costs.” Given this

stipulation, there is no need for the bankruptcy court to

consider any other arguments under § 525(a). We remand

with instructions for the bankruptcy court to grant Wike’s

motion for sanctions against the State Bar of Nevada.

AFFIRMED AND REMANDED WITH

INSTRUCTIONS.