In re Daghighfekr, BAP No. CC-93-1194-VBaJ. Bankruptcy No. LA-91-90086-AG. Adv. No. LA-91-07210-AG.
Decision Date | 22 December 1993 |
Docket Number | BAP No. CC-93-1194-VBaJ. Bankruptcy No. LA-91-90086-AG. Adv. No. LA-91-07210-AG. |
Parties | In re Mohammad DAGHIGHFEKR, Debtor. Mohammad DAGHIGHFEKR, Appellant, v. Laurence MEKHAIL, Appellee. |
Court | Bankruptcy Appellate Panels. U.S. Bankruptcy Appellate Panel, Ninth Circuit |
David S. Hagen, Encino, CA, for appellant.
Appellee did not participate in appeal.
Before VOLINN, BAUM1, and JONES, Bankruptcy Judges.
The debtor appeals a bankruptcy court order determining a state court default judgment comprised of special, general, and punitive damages that arose out of a lawsuit for assault and battery to be nondischargeable. We affirm.
In 1981, debtor-appellant, Mohammad Daghighfekr, assaulted appellee Laurence Mekhail, breaking his jaw. Debtor pled no contest to a criminal complaint and defaulted when Mekhail brought civil suit. After a prove up hearing in the civil suit, the state court awarded Mekhail $14,793 as special damages, $100,000 as general compensatory damages, and $500,000 as punitive damages. Debtor filed a bankruptcy petition, and Mekhail commenced an adversary proceeding under 11 U.S.C. § 523(a)(6)2 to have his judgment determined nondischargeable.
Debtor did not appear at the bench trial. Mekhail appeared as the sole witness. He testified that while he was working as manager of a gas station, debtor cut in front of other customers lined up for service. When Mekhail told him to move his vehicle, debtor responded by punching and kicking him, breaking his jaw and beating him unconscious. Mekhail was hospitalized for six days and had problems thereafter.
The bankruptcy court after hearing testimony as to liability filed a memorandum decision on February 2, 1993. The memorandum decision supports the bankruptcy court judgment finding the state court judgment of $614,942.50 nondischargeable. Debtor timely appealed the bankruptcy court's judgment.
Whether the court committed reversible error by holding a state court default judgment nondischargeable in its entirety as to liability and damages, including punitive damages, when no evidence was presented independently as to the damage elements of the judgment in the adversary proceeding.
Debtor does not dispute the factual findings regarding his assault and battery of Mekhail; rather he asserts that the law requires reversal of the bankruptcy court order because the court was required to find the amount of damages independently of the state court default judgment. This issue of law is reviewed de novo.
Debtor admits that his assault and battery were willful and malicious and that his liability for the act is nondischargeable under § 523.3 Debtor contends, however, that a default judgment has no preclusive effect on a bankruptcy court as to either the nature of the act causing injury or the amount of damages awarded. Although debtor admits nondischargeable liability for the $14,713 special damages proved at the bench trial, he claims that the bankruptcy court had insufficient evidence before it to hold debtor liable for $100,000 in compensatory damages and $500,000 in punitive damages.
Debtor cites In re Dvorak, 118 B.R. 619 (Bankr.N.D.Ill.1990) in support of his assertion that the amount of a default judgment has no preclusive effect. This reading of Dvorak is incorrect. The case states that while a default judgment or an unopposed summary judgment has no preclusive effect as to the issue of the willful and malicious nature of the injury on which the judgment is based, once this issue has been determined by the bankruptcy court, the judgment itself is res judicata as to the amount of the judgment. Dvorak, 118 B.R. at 629. This is the law of the Ninth Circuit. In re Comer, 723 F.2d 737, 740 (9th Cir.1984) ( ). The trial court was correct to apply res judicata effect to the state court damage award. Debtor makes subsequent arguments on appeal as to the proper standards for determination of compensatory and punitive damages, but, as indicated, these arguments are not relevant.
Cases have discussed whether punitive damages allowed by a judgment based on willful and malicious conduct should nevertheless be subject to discharge in a proceeding under § 523. See In re Dahlstrom, 129 B.R. 240, 245-47 (Bankr.D.Utah 1991) (citing cases). The Ninth Circuit has decided clearly that punitive damages can be excepted from discharge under § 523(a)(6). In re Britton, 950 F.2d 602, 605-07 (9th Cir.1991) ( ); In re Levy, 951 F.2d 196 (9th Cir.1991), cert. denied, ___ U.S. ___, 112 S.Ct. 2965, 119 L.Ed.2d 586 (1992) ( ); In re Adams, 761 F.2d 1422 (9th Cir.1985) ( ); Coen v. Zick, 458 F.2d 326 (9th Cir.1972) ( ). As the rule of Adams is restated in Levy, punitive damages assessed for conduct found to be willful and malicious under § 523(a)(6) are barred from discharge in bankruptcy. "For punitive damages ... the appropriate exception to discharge is 523(a)(6)...." Levy, 951 F.2d at 199.
A debt for "willful and malicious injury" refers to liability that arises from a willful and malicious act that causes injury. It is the nature of the act, not the extent or quantum of liability that is examined under § 523(a)(6): "All liabilities resulting therefrom are nondischargeable." Adams, 761 F.2d at 1428 (citation omitted).
The foregoing conclusion is consistent with the statutory formulation of the relationship between the nature or type of liability at issue and the debt or obligation created by such liability. Section 523(a)(6) provides, in relevant part:
11 U.S.C. § 523(a)(6).
As defined in § 101(12), "`debt' means liability on a claim." "Debt" is therefore coextensive with "claim." Johnson v. Home State Bank, 508 U.S. 78, ___ n. 5, 111 S.Ct. 2150, 2154 n. 5, 115 L.Ed.2d 66 n. 5 (1991). Mekhail's default judgment unarguably is a claim in the bankruptcy case. Debtor's possible remedies against this state court judgment included motions to reconsider or vacate the judgment, or to take an appeal from it. The bankruptcy court is not the proper forum to reverse or adjust an adverse judgment. Under § 523, the bankruptcy court has jurisdiction only to discharge or...
To continue reading
Request your trial