In re Bullard v. Bullard, 11-6009
| Decision Date | 14 June 2011 |
| Docket Number | No. 11-6009,11-6009 |
| Parties | In re: Marty K. Bullard, Debtor. Jonathan D. Hidy, Plaintiff - Appellant, v. Marty K. Bullard, Defendant - Appellee. |
| Court | U.S. Bankruptcy Court — Eastern District of Arkansas |
Appeal from the United States Bankruptcy Court for the Eastern District of Arkansas
Before SCHERMER, FEDERMAN and VENTERS, Bankruptcy Judges
SCHERMER, Bankruptcy Judge Plaintiff, Jonathan D. Hidy (the "Creditor") appeals from the judgment of the bankruptcy court1 holding that a debt of Marty K. Bullard (the "Debtor") to the Creditor was not excepted from the Debtor's discharge pursuant to § 523(a)(6) of Title 11 of the United States Code (the "Bankruptcy Code").2 The bankruptcy court first explained that collateral estoppel did not preclude it from deciding whether the Debtor's actions met the requirements of § 523(a)(6), and then found that the Debtor's actions were "willful," but they were not "malicious" as required by § 523(a)(6). We have jurisdiction over this appeal from the final judgment of the bankruptcy court. See 28 U.S.C. § 158(b). For the reasons set forth below, we affirm.
The first issue on appeal is whether collateral estoppel applies based on the criminal action or the civil action to bar relitigation of the issues of willfulness and maliciousness in the bankruptcy court. With respect to the civil action, we specifically examine the Creditor's argument that the action was essentially adjudicated by the Arkansas state court based on an admission of liability or failure to contest liability on summary judgment. If collateral estoppel did not apply, the second issue is whether the bankruptcy court properly denied the Creditor's request to except the debt owed to him by the Debtor from the Debtor's discharge pursuant to § 523(a)(6) based on a lack of finding of maliciousness. Because we affirm the bankruptcy court's decision that collateral estoppel was inapplicable and we do not see clear error in the bankruptcy court's finding that the Debtor did not act with maliciousness for the purposes of § 523(a)(6), the debt owed by the Debtor to the Creditor is not excepted from the Debtor's discharge.
The Debtor filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code on April 21, 2010. This appeal arises from the bankruptcy court's decision rendered in an adversary proceeding filed by the Creditor seeking to except the debt owed by the Debtor to him with respect to a pre-bankruptcy incident from the Debtor's discharge pursuant to §§ 523(a)(6) and 727.
Aside from some preliminary facts, the Debtor and the Creditor provide different reports of the evening in question when the Debtor allegedly maliciously injured the Creditor. The parties agree that they ate dinner and consumed drinks at a restaurant with coworkers and friends and that they then went to a different restaurant to have more drinks. They also agree that the friends and co-workers remained at the second establishment for several hours, drinking and conversing at a tiki style bar table that was between four and six feet long, and that the bar had a thatched style roof.
According to the Creditor, the Debtor and a third party were in a heated argument and when the Debtor began acting belligerently, the Creditor told the Debtor to "watch himself." The Creditor testified that the Debtor replied that he was watching himself, the Debtor then threw a glass directly at the Creditor and the glass shattered either when it hit the Creditor's face or when it hit an arm he had put up to block the glass.
The Debtor maintains that his conversation with not "heated" and that the Creditor was involved in the conversation. He explained that he threw the glass out of frustration. According to the Debtor, he could not have directed his throwing of the glass at the Creditor because he was standing and his view of the Creditor was blocked by the thatched roof. Rather, he said he threw the glass down at the table. He did not intend to hit anyone with the glass, but he recognized at trial that by throwing the glass, he "took the chance of hitting anybody." The Debtor explained that he is sorrythat this incident took place, he has lost his job and friends as a result of the incident and he even tried to commit suicide because of it.
After the Debtor threw the glass, it broke and a piece of it went into the Creditor's eye. The Debtor and Creditor then engaged in a brief physical altercation until the Debtor realized that the Creditor was bleeding. The Creditor went immediately to the hospital and after having three or four surgeries, the Creditor ultimately lost all vision in his right eye.
Criminal charges were filed against the Debtor and he eventually pled guilty to the criminal charge of battery in the second degree, stating that part of the reason why he entered the guilty plea was because he did not think that he would have a fair trial and also that he wished to avoid the uncertainty and expense of trial. The Debtor was sentenced to five years of probation and ordered to pay a $3,000 fine.
While the criminal case was pending, the Creditor filed a civil action for the tort of intentional battery against the Debtor in Arkansas state court. The Debtor stipulated to liability and, accordingly, a jury trial was held only on the issue of damages. The jury awarded the Creditor compensatory damages totaling $204,204.11, comprised of: (1) $75,000 for permanent injuries; (2) $84,204.11 for medical bills; (3) $10,000 for pain, suffering and mental anguish; and (4) $35,000 for scars, disfigurement and visible results of the injury. The parties stipulated at trial in the bankruptcy court to the fact that even though the Judgment in the civil action did not explain the jury's decision regarding punitive damages, the jury was instructed on punitive damages and decided to not make a punitive damage award.
We review the bankruptcy court's findings of fact for clear error and its conclusions of law de novo. Application of collateral estoppel is an issue of law that is reviewed de novo. Jamrose v. D'Amato (In re D'Amato), 341 B.R. 1, 3 (B.A.P. 8th Cir. 2006) (citation omitted); Jacobus v. Binns (In re Binns), 328 B.R. 126, 127(B.A.P. 8th Cir. 2005) (citing Manion v. Nagin, 392 F.3d 294, 300 (8th Cir.2004)). "The bankruptcy court's determination of whether a party acted willfully and maliciously inherently involves inquiry into and finding of intent, which is a question of fact." Waughn v. Eldridge (In re Waughn), 95 F.3d 706, 710 (8th Cir. 1996)(citation omitted). "A finding is 'clearly erroneous' when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." Anderson v. Bessemer City, 470 U.S. 564, 573 (1985) (quoting U.S. v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948)). We give due regard to the bankruptcy court's opportunity to judge the credibility of witnesses. Fed. R. Bankr. P. 8013.
Section 523(a)(6) of the Bankruptcy Code excepts from discharge debts "for willful and malicious injury by the debtor to another entity or the property of another entity." A party opposing the dischargeability of a debt must prove separately that the debt is for a "willful injury" and for a "malicious injury." Blocker v. Patch (In re Patch), 526 F.3d 1176, 1180 (8th Cir. 2008) (citing Fischer v. Scarborough (In re Scarborough), 171 F.3d 638 (8th Cir. 1999)). Such proof is required by a preponderance of the evidence. Grogan v. Garner, 498 U.S. 279, 291 (1991).
The Supreme Court has ruled that the term "willful" under § 523(a)(6) requires "a deliberate or intentional injury, not merely a deliberate or intentional act that leads to injury." Kawaaihua v. Geiger, 523 U.S. 57, 61 (1998). It stated that "the [§ 523](a)(6) formulation triggers in the lawyer's mind the category 'intentional torts,' as distinguished from negligent or reckless torts." Id. at 61. Satisfaction of the "willful" element "requires proof that the debtor desired to bring about the injury or was, in fact, substantially certain that his conduct would result in the injury that occurred." Patch, 526 F.3d at 1180-81 (citing Geiger v. Kawaauhua (In re Geiger), 113 F.3d 848, 852-54 (8th Cir. 1997) (en banc), aff’d, 523 U.S. 57 (1998)). To be willful, an injury is "a deliberate or intentional invasion of the legal rights of another,because the word 'injury' usually connotes legal injury (injuria) in the technical sense, not simply harm to a person." Geiger, 113 F.3d at 852. For the purposes of § 523(a)(6), "maliciousness" is defined as "conduct 'targeted at the creditor . . . at least in the sense that the conduct is certain or almost certain to cause . . . harm.' " Sells v. Porter (In re Porter), 539 F.3d 889, 894 (8th Cir. 2008) (citations omitted).
As the bankruptcy court correctly noted, it would have been precluded by the doctrine of collateral estoppel from making a determination under § 523(a)(6) if "willfulness" and "maliciousness" of the Debtor's actions were determined in the state court criminal or civil actions.
Collateral estoppel may apply in a dischargeability action brought under § 523 of the Bankruptcy Code. Grogan, 498 U.S. at 285 n.11 (1991). The substantive law of the forum state applies to determine the collateral estoppel effect of a state court judgment. See Scarborough, 171 F.3d at 641; 28 U.S.C. § 1738; State of Minn. v. Moretto (In re Moretto), 440 B.R. 534, 538 (B.A.P. 8th Cir. 2010). The elements of collateral estoppel in Arkansas are: "(1) the issue sought to be precluded must be the same as that involved in the prior litigation; (2) that issue must have been actually litigated; (3) the issue must have been determined by a valid and final judgment; and (4) the determination must have been essential to the judgment." Powell v. Lane, 289 S.W.3d 440, 444 (Ark. 2008) (citing State Office of...
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