487 B.R. 202
9th Cir. BAP2013Background
- The U.S. Bankruptcy Appellate Panel affirmatively held that summary judgment could give issue preclusion to a Nevada state court judgment on willful and malicious injury under 523(a)(6).
- Debtors Robert Black and Michael Chernine were defendants in Nevada state court actions arising from abuse of process and nuisance claims by Bonnie Springs entities and related individuals.
- The state court jury found oppression and awarded compensatory and punitive damages; final judgment was entered and later relied upon in the bankruptcy adversary proceeding.
- The bankruptcy court granted summary judgment against debtors, concluding the state court judgment had issue preclusion effect for willfulness under §523(a)(6).
- The debtors argued that the willfulness standard in Nevada abuse of process and nuisance claims was not identical to the willfulness requirement in §523(a)(6).
- On appeal, the panel affirmed, concluding willfulness under Nevada abuse of process and nuisance claims aligns with the willfulness standard in §523(a)(6) for purposes of issue preclusion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether issue preclusion was properly applied to the state court judgment | Bonnie Springs argues the state court judgment should have issue preclusion effect on 523(a)(6) claims. | Black and Chernine contend willfulness in Nevada abuse of process/nuisance differs from §523(a)(6) standard, so issue preclusion should not apply. | Yes; issue preclusion properly applied. |
| Whether willfulness under Nevada abuse of process equals willfulness under §523(a)(6) | Ulterior purpose in Nevada abuse of process equates to intentional injury under §523(a)(6). | Ulterior purpose is broader than intent to injure, so not identical to §523(a)(6) willfulness. | Yes; the standards are congruent for purposes of this case. |
| Whether willfulness under Nevada nuisance equals willfulness under §523(a)(6) | Nuisance requires intentional interference with use and enjoyment; this aligns with willfulness in §523(a)(6). | Nuisance focuses on interference degree, not mental state; may not be identical to willfulness under §523(a)(6). | Yes; willfulness in nuisance aligns with §523(a)(6) for this case. |
Key Cases Cited
- Grogan v. Garner, 498 U.S. 279 (1991) (establishes the general framework for dischargeability and issue preclusion in § 523(a)(6) actions)
- Harmon v. Kobrin, 250 F.3d 1240 (9th Cir. 2001) (discusses application of 28 U.S.C. § 1738 in federal cases)
- Five Star Capital Corp. v. Ruby, 194 P.3d 709 (Nev. 2008) (Nevada four-factor test for issue preclusion)
- In re Su, 290 F.3d 1140 (9th Cir. 2002) (defines willfulness in § 523(a)(6) as subjective intent to injure or substantial certainty of injury)
- In re Jercich, 238 F.3d 1202 (9th Cir. 2001) (explains willful injury requiring subjective motive or certainty)
- Barboza v. New Form, Inc., 545 F.3d 702 (9th Cir. 2008) (definition of willful injury under § 523(a)(6))
- Culley v. County of Elko, 711 P.2d 864 (Nev. 1985) (elements of nuisance)
- Jezowski v. City of Reno, 286 P.2d 257 (Nev. 1955) (definition of nuisance elements including substantial and unreasonable interference)