In re: JOSEPH MICHAEL SUNDE, DBA Nevada Quick Divorce, AKA J. Michael Sunde, AKA Joseph Sunde, AKA Mike Sunde and VIKTORIYA SOKOL SUNDE, NV-16-1073-JuKuL

Tenants Joseph and Viktoriya Sunde (the Sundes) lived at the Crocketts’ Greenwich Way rental and made and paid for numerous improvements; two conflicting written leases existed (March 1, 2008 lease and July 15, 2008 lease).
After litigation and an eviction, the Sundes removed/destroyed built-in cabinets, doors, HVAC, and landscaping when vacating; they also recorded lis pendens and other documents and sent allegedly defamatory material to the landlord’s employer.
The Crocketts sued in Nevada state court for breach of contract, conversion, slander of title, abuse of process, defamation, etc.; a jury awarded $30,849 in damages and the state court later awarded $69,580.31 in attorney’s fees under the March 2008 lease.
The Sundes filed Chapter 7; the Crocketts commenced an adversary proceeding seeking nondischargeability of the state-court judgment under 11 U.S.C. § 523(a)(6) (willful and malicious injury).
After a 12-day bankruptcy trial, the bankruptcy court concluded the state-court judgment (damages and attorney’s fees) was nondischargeable under § 523(a)(6); the BAP vacated and remanded because the bankruptcy court failed to identify the tort(s) under Nevada law that supported nondischargeability and failed to connect specific damages/fees to tortious conduct.

Issue	Plaintiff's Argument (Crocketts)	Defendant's Argument (Sundes)	Held
Whether the state-court judgment is nondischargeable under § 523(a)(6)	Sundes’ removal of fixtures, recordings clouding title, and defamatory communications were willful and malicious torts making the debt nondischargeable	The claims were contract-based; Ninth Circuit law requires a showing of tortious conduct under state law to invoke § 523(a)(6)	Vacated and remanded: BAP held bankruptcy court failed to identify the Nevada tort(s) and to link state-court damages/fees to tortious conduct, so record insufficient to sustain nondischargeability determination
Whether the bankruptcy court erred in denying Sundes’ motion to alter/amend judgment	N/A (motion argued that tort was not pleaded/proved and court failed to find a tort)	The bankruptcy court had to identify a tort; Sundes argued absence of tort precluded § 523(a)(6) relief	Remand required for bankruptcy court to decide whether conduct constitutes a tort under Nevada law and whether damages/attorneys’ fees were awarded for that tort; denial of motion was vacated as part of remand analysis

Lockerby v. Sierra, 535 F.3d 1038 (9th Cir. 2008) (§ 523(a)(6) nondischargeability requires intentional tortious conduct when debt arises from contract)
Petralia v. Jercich (In re Jercich), 238 F.3d 1202 (9th Cir. 2001) (intentional breach accompanied by malicious tortious conduct may be nondischargeable under § 523(a)(6))
Ormsby v. First Am. Title Co. of Nev. (In re Ormsby), 591 F.3d 1199 (9th Cir. 2010) (willfulness is subjective intent or substantial certainty of harm; malice may be inferred from wrongful act)
Thiara v. Spycher Brothers (In re Thiara), 285 B.R. 420 (9th Cir. BAP 2002) (standard of review for nondischargeability findings)
Snoke v. Riso (In re Riso), 978 F.2d 1151 (9th Cir. 1992) (a simple breach of contract judgment is dischargeable)
Gambino v. Koonce, 757 F.3d 604 (7th Cir. 2014) (slander of title judgment based on forged deeds held nondischargeable under § 523(a)(6))
Hinkson v. United States, 585 F.3d 1247 (9th Cir. 2009) (clearly erroneous standard for reviewing factual findings)