Brown v. Ausley (In re Ausley), 507 B.R. 234

Background

Plaintiff Berketa Brown obtained a $104,000 state-court judgment (Feb. 17, 2010) against Joseph and Sheila Ausley for unlawful ouster under Tenn. Code § 66-28-504 after the Ausleys wrongfully evicted Brown using a Writ of Possession issued pursuant to an erroneous computer entry.
The initial General Sessions judge ruled for Brown in open court, but the county computer record mistakenly showed judgment for the Ausleys; the Ausleys obtained and executed a writ based on that error.
Brown confronted court staff, who confirmed the judge’s oral ruling in her favor; Brown’s belongings were returned and she lived at the property briefly thereafter.
The Ausleys refiled a forcible-entry action, repeatedly failed to appear at the circuit-court trial, and the Circuit Court found they unlawfully ousted Brown, awarding $26,350 in actual damages, $51,300 punitive damages, and $26,350 attorney’s fees (total $104,000).
The Ausleys filed Chapter 7 bankruptcy (Mar. 6, 2012); Brown filed an adversary seeking a determination that the state-court judgment is nondischargeable under 11 U.S.C. § 523(a)(6) (willful and malicious injury).
Bankruptcy court held a hearing limited to liability and concluded the Ausleys’ actions were both willful and malicious; the court declined to revisit the state court’s damage calculation and found the $104,000 judgment nondischargeable.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the state-court judgment debt is nondischargeable under 11 U.S.C. § 523(a)(6)	Brown: Ausleys intentionally caused injury by securing and executing a writ despite knowing the judge ruled for Brown; conduct was willful and malicious	Ausleys: State judgment is unfair; argued toward dischargeability (no specific claim they lacked intent or malice)	Court: Judgment is nondischargeable — Ausleys acted willfully and maliciously when they caused the writ and exploited the computer error
Whether collateral estoppel precludes relitigation of willful and malicious conduct	Brown did not rely on collateral estoppel to foreclose relitigation	Ausleys argued state judgment should control liability issues	Court: Collateral estoppel did not apply to the willful/malicious issue because the state-court issue (violation of Tenn. statute) was not identical to the § 523(a)(6) mental-state inquiry
Standard for willful and malicious under § 523(a)(6)	Brown: intent can be inferred from deliberate steps to cause eviction despite knowing the judge’s ruling	Ausleys: implicit denial of requisite intent/malice	Court: Applies Sixth Circuit subjective test (Markowitz): debtor intended the consequences or believed harm was substantially certain; facts establish both willful and malicious conduct
Whether bankruptcy court may relitigate damages already fixed by state court	Brown: damages were established by state court; bankruptcy should only decide dischargeability	Ausleys: sought relitigation of fairness of the state-court judgment	Court: Bankruptcy court cannot relitigate the amount; state-court damages are res judicata and entitled to full faith and credit, so $104,000 (plus interest) is nondischargeable

Key Cases Cited

Markowitz v. Campbell, 190 F.3d 455 (6th Cir. 1999) (adopts subjective test for § 523(a)(6): intent to cause consequences or belief consequences substantially certain)
Kawaauhau v. Geiger, 523 U.S. 57 (1998) (willful modifies injury; requires deliberate or intentional injury)
Grogan v. Garner, 498 U.S. 279 (1991) (creditor bears preponderance burden in nondischargeability proceedings)
Calvert v. Dimmitt & Owens Fin., Inc. (In re Calvert), 105 F.3d 315 (6th Cir. 1997) (default judgments can have preclusive effect under state law)
Heckert v. Trs. (In re Heckert), 272 F.3d 253 (4th Cir. 2001) (bankruptcy court determines dischargeability but may not replace a state court's damage determination)
Comer v. Shapiro (In re Comer), 723 F.2d 737 (9th Cir. 1984) (res judicata bars relitigation of amount fixed by prior state-court default judgment)