610 B.R. 479
Bankr. M.D.N.C.2019Background
- Wanu Water, founded by Todd O’Gara, is a small, privately held beverage company; Greg Hunter served on its board until removed in Sept. 2016 but was granted the shares he would have earned through his term.
- In Aug–Sept 2018 Hunter sent emails to Wanu board members, stockholders, and investors criticizing O’Gara’s qualifications and management and alleging possible misconduct; Plaintiffs allege a coordinated campaign with other stockholders to depress Wanu’s value.
- Plaintiffs filed a District Court complaint asserting several California state-law claims (tortious interference, negligent misrepresentation, UCL, libel, conspiracy); Hunter filed Chapter 7 on Oct. 17, 2018.
- Plaintiffs commenced this adversary proceeding to except those claims from discharge under 11 U.S.C. § 523(a)(6); Hunter moved to dismiss under Fed. R. Civ. P. 12(b)(6) (Bankr. R. 7012).
- The bankruptcy court (applying California law to the underlying torts) considered (1) whether Hunter’s communications were subject to California’s anti‑SLAPP statute, (2) whether Plaintiffs plausibly pleaded the state-law torts, and (3) whether any pleaded torts involved the higher § 523(a)(6) willful-and-malicious intent.
- Court ruled that (a) anti‑SLAPP protection was unlikely because the emails were private/business-directed, (b) Plaintiffs plausibly pleaded defamation, UCL and conspiracy under California law but not tortious-interference claims, (c) Plaintiffs failed to plausibly plead the specific intent-to-injure required by § 523(a)(6); UCL claim dismissed with prejudice, other claims dismissed without prejudice with leave to amend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicability of California anti‑SLAPP statute to Hunter’s emails | Hunter’s emails concern corporate governance and thus are protected speech; anti‑SLAPP would strip claims | Hunter contends his emails are protected public‑interest speech | Court: Hunter failed to make threshold showing—emails were private/business directed and not an issue of public interest, so anti‑SLAPP unlikely to succeed |
| Libel (defamation) under California law | O’Gara/Wanu: Hunter’s emails implied provably false facts (undisclosed bases) and caused reputational/investor harm; alleged actual malice | Hunter: messages were questions/opinions and subject to common‑interest privilege | Court: Plaintiffs plausibly alleged implied defamation and pleaded actual malice sufficient to overcome common‑interest privilege, so libel claim survives at state‑law level — but allegations of recklessness do not meet § 523(a)(6) intent-to-injure standard |
| Tortious interference with contract (voting agreements) | Hunter induced stockholders to breach voting agreements, harming O’Gara | Hunter: no breach shown; communications alone insufficient | Court: Plaintiffs failed to allege any actual breach or resulting damages — claim dismissed for failure to state a claim |
| Tortious interference with prospective economic advantage | Hunter’s communications caused prospective and current investors to withhold further investment, harming Wanu and O’Gara | Hunter: allegations are vague; no specific third‑party relationships identified | Court: Plaintiffs did not identify particular relationships or demonstrate probability of lost benefit — claim dismissed |
| UCL (Cal. Bus. & Prof. Code §§ 17200) | Plaintiffs treat Hunter’s defamatory/unlawful acts as unfair business practices and seek restitution/injunctive relief | Hunter: even if conduct unlawful, remedies are equitable and not a "debt" for bankruptcy purposes | Court: UCL claim is derivative of defamation but available relief would be equitable (no restitution alleged); UCL nondischargeability theory rejected — claim dismissed with prejudice |
| Civil conspiracy | Plaintiffs: Hunter conspired with others to disparage O’Gara and injure Wanu; conspiracy renders torts joint and actionable | Hunter: conspiracy alone cannot make a debt nondischargeable unless Hunter himself acted with intent to injure | Court: Conspiracy plausibly pleaded under state law but Plaintiffs failed to allege Hunter’s own willful-and-malicious intent required for § 523(a)(6) nondischargeability |
Key Cases Cited
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility pleading standard)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (legal conclusions not entitled to assumption of truth)
- Kawaauhau v. Geiger, 523 U.S. 57 (1998) (§ 523(a)(6) requires willful and malicious injury; reckless or negligent conduct insufficient)
- TKC Aerospace Inc. v. Muhs, 923 F.3d 377 (4th Cir. 2019) (interpreting § 523(a)(6) intent standard in Fourth Circuit)
- FilmOn.com Inc. v. DoubleVerify Inc., 439 P.3d 1156 (Cal. 2019) (private distribution to limited recipients not an issue of public interest for anti‑SLAPP)
- Bently Reserve L.P. v. Papaliolios, 160 Cal. Rptr. 3d 423 (Cal. Ct. App. 2013) (contextual test for whether statement is defamatory)
- Korea Supply Co. v. Lockheed Martin Corp., 63 P.3d 937 (Cal. 2003) (elements and limits of UCL relief)