668 B.R. 618
9th Cir. BAP2025Background
- M.O., a minor, obtained a state court default judgment for over $1 million against the Del Rosarios (parents) based on their vicarious liability for their son's intentional tort (injuring M.O. at school by placing a pen on his chair).
- M.O. sought to except this judgment from discharge under 11 U.S.C. § 523(a)(6) in the Del Rosarios' subsequent Chapter 7 bankruptcy case, arguing their vicarious liability should render the debt nondischargeable as a “willful and malicious injury by the debtor.”
- The bankruptcy court dismissed M.O.'s complaint under FRCP 12(b)(6), holding § 523(a)(6) requires that the debtor personally commit the willful and malicious act, not merely be vicariously liable.
- On appeal, the principal legal question was whether § 523(a)(6) permits nondischargeability of debts based solely on vicarious liability for another person’s intentional tort.
- M.O. relied on the Supreme Court’s recent Bartenwerfer decision regarding § 523(a)(2)(A) and related Ninth Circuit precedent to support his position.
- The Bankruptcy Appellate Panel affirmed the dismissal, holding vicarious liability does not suffice to trigger nondischargeability under § 523(a)(6).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does § 523(a)(6) except debts arising from vicarious liability for another's intentional tort from discharge? | Bartenwerfer allows imputation of tortious intent under § 523(a)(6), so vicarious liability for willful/malicious injury by their son is nondischargeable. | § 523(a)(6) requires direct, willful, and malicious act by debtor; vicarious liability is insufficient. | No. § 523(a)(6) requires the debtor to have personally acted willfully and maliciously. |
| Effect of Bartenwerfer v. Buckley on § 523(a)(6) | Bartenwerfer supports that vicarious liability (as in fraud cases) can be nondischargeable for all § 523(a) subparts. | Bartenwerfer applies only to § 523(a)(2)(A) (fraud), which does not reference "by the debtor"; § 523(a)(6) does. | Bartenwerfer does not extend to § 523(a)(6); the "by the debtor" language is controlling. |
| Whether default judgment in state court (based on vicarious liability) precludes relitigation of nondischargeability | State court judgment established willful/malicious injury and precludes relitigation under issue preclusion. | Default judgment did not find direct tortious conduct or intent by debtors; nondischargeability is a federal question. | State court did not decide the issue; issue preclusion does not apply to nondischargeability. |
| Applicability of Cecchini and partnership/agency imputation under § 523(a)(6) | Ninth Circuit imputed tortious intent in Cecchini; agency here supports imputation. | Cecchini is inconsistent with modern reading of § 523(a)(6) post-Bartenwerfer; agency not pled; child was out of parents' control. | Cecchini's imputation does not survive Bartenwerfer for § 523(a)(6); agency theory insufficient here. |
Key Cases Cited
- Bartenwerfer v. Buckley, 598 U.S. 69 (2023) (interprets § 523(a)(2)(A) to permit imputation of fraud debts, but distinguishes subprovisions based on statutory language, notably "by the debtor" in § 523(a)(6))
- Strang v. Bradner, 114 U.S. 555 (1885) (addressed common law vicarious liability and fraud exception, but distinction now drawn by statutory language in bankruptcy)
- Kawaauhau v. Geiger, 523 U.S. 57 (1998) (clarified that § 523(a)(6) only covers injuries intended by the debtor, not accidental or vicarious liability)
- Grogan v. Garner, 498 U.S. 279 (1991) (holds that dischargeability is determined under federal bankruptcy law, not by the outcome of a state court proceeding)
- Impulsora Del Territorio Sur, S.A. v. Cecchini (In re Cecchini), 780 F.2d 1440 (9th Cir. 1986) (earlier case imputing intent to partners, but its reading under § 523(a)(6) is undermined by Bartenwerfer and subsequent Supreme Court precedent)