In re Nangle
| Decision Date | 04 January 2001 |
| Docket Number | No. 00-6068EM.,00-6068EM. |
| Citation | 257 BR 276 |
| Parties | In re Donald NANGLE, Debtor. Patricia A. Siemer, Plaintiff-Appellee, v. Donald Nangle, Defendant-Appellant. |
| Court | U.S. Bankruptcy Appellate Panel, Eighth Circuit |
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Bruce Nangle, St. Louis, MO, for appellant.
Thomas G. Berndsen, St. Louis, MO, for appellee.
Before KOGER, Chief Judge, KRESSEL and DREHER, Bankruptcy Judges.
The debtor, Donald Nangle, filed a petition under Chapter 7 of the Bankruptcy Code on February 17, 2000. On March 31, 2000, Patricia Siemer commenced an adversary proceeding against Nangle, pursuant to 11 U.S.C. § 523(a)(6) and (a)(7), asking that Nangle's debts to her be determined to be nondischargeable. On June 16, 2000, the bankruptcy court entered an order granting Siemer's motion for summary judgment, determining that the debts owed her were nondischargeable under 11 U.S.C. § 523(a)(6).1 Nangle appeals from this order. We affirm in part, and reverse and remand in part.
Siemer filed a complaint against Nangle in Illinois state court on September 10, 1990, seeking damages pursuant to the federal Fair Debt Collection Practices Act.2 On October 25, 1991, she filed an amended complaint asserting two causes of action. Count I of the amended complaint sought actual damages in the amount of $1,000 for each of Nangle's alleged violations of the Fair Debt Collection Practices Act, in a total amount exceeding $15,000. Count II sought compensatory and punitive damages for Nangle's alleged violations of the Illinois Consumer Fraud and Deceptive Business Practices Act.3 Both counts asserted that Nangle intentionally engaged in various activities which harassed, oppressed and abused Siemer in order to collect a consumer debt from her.4
Following a jury trial and based upon the jury's verdict, the Illinois court entered judgment in favor of Siemer in the amount of $42,841.69. The Illinois Judgment, which was entered on or about July 15, 1992, included actual damages, attorneys fees and costs, and punitive damages of $20,000. Nangle appealed the judgment to the Appellate Court of Illinois, which court issued an order to show cause why Nangle's petition for leave to appeal should not be stricken for lack of jurisdiction. Nangle did not respond to the appellate court's order to show cause, and the appeal was thus stricken on or about December 8, 1994. Nangle took no further steps to contest the Illinois Judgment, which is now final.
On February 25, 1994, Siemer registered the Illinois Judgment as a foreign judgment in the Circuit Court of the County of St. Louis, Missouri. The judgment was "revived" on April 20, 1998. Nangle has never made any payments to Siemer on the judgment. Nangle estimates that, with interest, the unpaid Illinois Judgment has now increased to approximately $72,500.
In Missouri Siemer attempted, through numerous avenues, to discover Nangle's assets for purposes of collection of the judgment. Nangle responded with attempts to stymie such efforts. Siemer noticed Nangle's deposition for October 29, 1999. The deposition notice included a demand to produce documents concerning Nangle's assets. Nangle failed to produce all the documents required, and further refused to respond to certain deposition questions regarding his assets. The Missouri state court entered an order, on January 4, 2000, granting Siemer's motion to compel and ordering Nangle to produce the withheld information within 10 days.
Rather than complying, Nangle moved, by motion mailed 2 days before his production was due, for a continuance and stay of the order to produce. The motion asserted that: (1) Nangle needed 30 days to comply, and (2) Nangle was "seriously exploring the viability of filing a Chapter 7 Bankruptcy proceeding sic as an alternative to subjecting himself to this creditors sic proceeding." The court did not grant Nangle's motion. Nangle did not comply with the court's order, and Siemer brought a motion for contempt.
Nangle failed to appear at the hearing on Siemer's contempt motion, and the court entered an order, on February 17, 2000, granting Siemer's motion and holding Nangle in contempt of court for failure to comply with the order to produce. The Contempt Order imposed a "compensatory fine" against Nangle in the amount of $40,723.32, plus interest at 9 percent per annum from July 16, 1992, until paid in full.5 The order provided that Nangle could "purge" his contempt by paying the fine, and that enforcement of the order was stayed until February 24, 2000 to allow Nangle an opportunity to "purge" his contempt.6
Nangle did not pay any portion of the fine. On the same date that the Contempt Order was entered, but later in the day, Nangle filed a Chapter 7 petition. He claims that he appealed from the Contempt Order, and that his appeal was dismissed by the Missouri Court of Appeals as being premature. However, there is no evidence in the record to support the contention that there was an appeal, or that it was dismissed.
On March 31, 2000, Siemer commenced an adversary proceeding against Nangle, pursuant to 11 U.S.C. § 523(a)(6) and (a)(7), seeking to adjudicate the debts allegedly owed Siemer, for the Illinois Judgment and Contempt Order, nondischargeable.
On June 16, 2000, the bankruptcy court entered an order granting Siemer's motion for summary judgment, determining the debts owed her were nondischargeable under 11 U.S.C. § 523(a)(6), but not ruling on Siemer's § 523(a)(7) claim. In granting summary judgment, the bankruptcy court applied Missouri collateral estoppel law, to both the Illinois Judgment and the Missouri Contempt Order, to find that the respective state court rulings had determined that the debts owing Siemer arose from "willful and malicious" injuries by Nangle against Siemer. Nangle filed a timely notice of appeal from the bankruptcy court's order.
We review the bankruptcy court's grant of summary judgment de novo. Clark v. Kellogg Co., 205 F.3d 1079, 1082 (8th Cir.2000); First Bank of Marietta v. Hogge, 161 F.3d 506, 510 (8th Cir. 1998). Siemer is entitled to summary judgment if she can prove that there is no dispute as to a genuine issue of material fact, and that she is entitled to judgment as a matter of law. Clark, 205 F.3d at 1082; Hogge, 161 F.3d at 510. We apply the substantive law of the forum states, Missouri and Illinois. Clark, 205 F.3d at 1082. We review de novo the bankruptcy court's application of those laws, and if the state law is ambiguous, we predict how the highest court of the state would resolve the issue. See id.; First Colony Life Ins. Co. v. Berube, 130 F.3d 827, 829 (8th Cir. 1997).
"Willful and Malicious" Under § 523(a)(6)
Section 523(a)(6) provides that a debt is nondischargeable where the debt is "for willful and malicious injury by the debtor to another entity. . . ." 11 U.S.C. § 523(a)(6). In order to prevail on her dischargeability claim, Siemer must prove, by a preponderance of the evidence, that the debts resulted from willful and malicious injuries by Nangle. See Grogan v. Garner, 498 U.S. 279, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991); Fischer v. Scarborough (In re Scarborough), 171 F.3d 638, 641 (8th Cir.1999). Beginning with its opinion in Barclays American/Bus. Credit, Inc., v. Long (In re Long), 774 F.2d 875 (8th Cir.1985), the Eighth Circuit has long held that "willful" and "malicious" are two separate and distinct elements which must be proven in order for § 523(a)(6) to apply. See Scarborough, 171 F.3d at 641; Allstate Ins. v. Dziuk (In re Dziuk), 218 B.R. 485, 487-88 (Bankr.D.Minn.1998).
In Kawaauhau v. Geiger (In re Geiger), 523 U.S. 57, 118 S.Ct. 974, 140 L.Ed.2d 90 (1998), the United States Supreme Court held that the term "willful," as used in § 523(a)(6), requires more than intent to do the act that causes injury; instead, Siemer must show that the defendant intended the injury. Geiger, 523 U.S. at 61-63, 118 S.Ct. 974, aff'g 113 F.3d 848 (8th Cir.1997). Reckless or negligent conduct is not sufficient. See Geiger, 523 U.S. at 61-63, 118 S.Ct. at 977; Barclays, 774 F.2d at 881. The Supreme Court noted, with approval, the Eighth Circuit's acceptance of the Restatement (Second) of Torts' construction of an "intentional tort" to define the willful requirement of § 523(a)(6). See Geiger, 523 U.S. at 63, 118 S.Ct. at 977. In Geiger, the Eighth Circuit stated:
We therefore think that the correct rule is that a judgment debt cannot be exempt from discharge in bankruptcy unless it is based on what the law has for generations called an intentional tort, a legal category that is based on `the consequences of an act rather than the act itself.\' Restatement (Second) of Torts § 8A, comment a, at 15 (1965). Unless the actor `desires to cause the consequences of his act, or . . . believes that the consequences are substantially certain to result from it,\' he . . . has not committed an intentional tort. Id. § 8A at 15.
Geiger, 113 F.3d at 852 (emphasis added); see also Long, 774 F.2d at 881 () (citation omitted).
The Supreme Court stated that the term "willful" in § 523(a)(6) modifies the word "injury," "indicating that nondischargeability takes a deliberate or intentional injury, not merely a deliberate or intentional act that leads to injury." Geiger, 523 U.S. at 61, 118 S.Ct. 974. An "injury" has been defined in the Restatement (Second) of Torts to mean "the invasion of any legally protected interest of another." Restatement (Second) of Torts § 7(1). The type of conduct which justifies the "denial of a debtor's discharge under § 523(a)(6) requires the same type of intentional conduct that would give rise to liability...
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