Dering Pierson Group, LLC v. Daniel Thomas Kantos
579 B.R. 846
| 8th Cir. | 2018Background
- Debtor (president of a debt-collection business) prepared and filed a mechanic’s lien for Rockstar Design at Rockstar’s request using facts Rockstar provided; Debtor swore he had knowledge but later testified he relied on Rockstar’s representations.
- DPG (general contractor) contested the lien, demanded its release, and Debtor executed a release about a week after learning the facts were inaccurate.
- DPG sued in state court asserting unauthorized practice of law, fraud, and defamation; state court found for DPG on unauthorized practice of law but did not adjudicate fraud or defamation or award damages; litigation was pending when Debtor filed bankruptcy.
- In Debtor’s bankruptcy, DPG brought an adversary action seeking nondischargeability under 11 U.S.C. § 523(a)(6) for willful and malicious injury.
- The bankruptcy court found DPG failed to prove Debtor acted willfully or maliciously, credited Debtor’s testimony that he acted in the ordinary course of business and relied on Rockstar, and denied nondischargeability; DPG appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Debtor’s filing of the mechanic’s lien constituted a "willful" injury under §523(a)(6) | Filing was intentional and inflicted injury on DPG, so debt is nondischargeable | Debtor intended to secure Rockstar, believed facts were true, and filed in ordinary course; no intent to injure | Court: No clear error in finding plaintiff failed to prove willful injury; claim not nondischargeable |
| Whether Debtor’s conduct was "malicious" under §523(a)(6) | Filing targeted DPG and was substantially certain to cause harm, satisfying malice | Debtor lacked target intent; no reason to think filing was certain to harm DPG and released lien promptly once aware | Court: No clear error in finding plaintiff failed to prove malice; claim not nondischargeable |
| Whether state-court rulings/claims establish collateral estoppel for nondischargeability | State judgment(s) (or findings) preclude relitigation and establish malicious/willful conduct | State court did not decide defamation/fraud; unauthorized-practice ruling alone insufficient to establish willful/malicious injury | Court: Collateral estoppel on defamation not established; collateral-estoppel issue not successful on appeal |
| Standard of review for findings of willful and malicious intent | (DPG) Mixed law/fact review; urges reversal | Factual findings reviewed for clear error; law reviewed de novo; appellant did not show legal error | Court: Applied clear-error standard to factual determinations and affirmed |
Key Cases Cited
- Kawaauhau v. Geiger, 523 U.S. 57 (1998) ("willful" modifies "injury"; requires deliberate, intentional injury—i.e., an intentional tort)
- Fischer v. Scarborough (In re Scarborough), 171 F.3d 638 (8th Cir. 1999) (willful and malicious are distinct §523(a)(6) elements)
- Waugh v. Eldridge (In re Waugh), 95 F.3d 706 (8th Cir. 1996) (malice requires harm be certain or almost certain; intent is question of fact)
- Barclays Am. Bus. Credit v. Long (In re Long), 774 F.2d 875 (8th Cir. 1985) (likelihood of harm can inform malicious intent; mere legal violation insufficient without aggravated circumstances)
- In re Madsen, 195 F.3d 988 (8th Cir. 1999) (malicious conduct must be targeted at the creditor or nearly certain to cause financial harm)
- Anderson v. Bessemer City, 470 U.S. 564 (1985) (standard for "clearly erroneous" factual findings)