Corcoran v. McCabe (In re McCabe)Corcoran v. McCabe (In re McCabe)
Bеfore the Court are a Certificate of Appeal from an Order entered by the Honorable Ashley M. Chan, United States Bankruptcy Court Judge for the Eastern District of Pennsylvania (Doc. 1), Appellant's Brief (Doc. 6), Appellant's Supplemental Brief (Doc. 8), and Appellee's Brief (Doc. 9). Upon consideration of the Parties' submissions and exhibits, and the designated record on appeal, the Court AFFIRMS the Bankruptcy Court's decisiоn.
As the Court writes primarily for the Parties, it sets forth only those facts relevant to its analysis.
On March 12, 2008, Corcoran sued McCabe in the Philadelphia Court of Common Pleas ("CCP") for defamation and false invasion of privacy. In re McCabe ,
On November 5, 2013, McCаbe filed a Chapter 13 bankruptcy petition.
Subsequently, Corcoran filed an appeal to this Court. Corcoran purportedly raises seven (7) issues on appeal. However, Corcoran combines some issues and is not clear on others. The Court interprets Corcoran's appeal to only raise five (5) issues: (1) the Bankruptcy Court erred by determining that thе
II. STANDARD OF REVIEW
This Court has jurisdiction over this appeal under
III. DISCUSSION
Corcoran argues that the Bankruptcy Court's decision should be reversed for several reasons. For the reasons set forth below, the Court finds Corcoran's arguments unpersuasive and without merit. Therefore, the Court affirms the Bankruptcy Court's decision. The Court will
A. The Bankruptcy Cоurt Did Not Err In Its Determination That McCabe's Debt Arising From The States Court's Damage Award Was Dischargeable
Corcoran argues that the default judgment, entered against McCabe in the CCP, established McCabe's willful and malicious conduct, and, therefore, the judgment is non-dischargeable under
1. The CCP's Default Judgment Does Not Meet
A "discharge [in bankruptcy] does not discharge an individual debtor from any debt that arises as a result of a debtor's "willful and malicious injury ... to another...."
When a Pennsylvania court enters a default judgment, the party against whom the judgment has been entered does not have "the opportunity to have his 'day in court' " or to have his "cause of action decided upon the merits." Kraynick v. Hertz ,
To establish a defamation claim, a plaintiff must prove:
(1) The defamatory character of the communication;
(2) Its publication by the defendant;
(3) Its application to the plaintiff;
(4) The understanding by the recipient of its defamatory meaning;
(5) The understanding by the recipient of it as intended to be applied to the plaintiff;
(6) Special harm resulting to the plaintiff from its publication; and(7) Abuse of a conditionally privileged occasion.
Joseph v. Scranton Times L.P. ,
The imposition of punitive damages is appropriate if a trier-of-fact establishes "actual malice," meaning "the defamatory publication was made either with knowledge that it was false or with reckless disregard of whether it was false." Bargerstock v. Washington Greene Cmty. Action Corp. ,
The underlying defamation claim here, which resulted in a default judgment, was not litigated on the merits. Because a defamatory act may be either intentionally inflicted or negligently infliсted, the Court cannot conclude that the default judgment included a finding that McCabe inflicted a "willful and malicious injury." Also, because punitive damages may be imposed for reckless conduct, which does not fall under § 523(a)(6), these damages also do not imply a finding of "willful and malicious injury." Kawaauhau ,
In conclusion, neither the defаult judgment, nor the punitive damages award, included a finding that McCabe inflicted a "willful and malicious injury" within the meaning of § 523(a)(6). Therefore, the Court finds that the Bankruptcy Court did not err in its determination that the state court's default judgment did not meet the § 523(a)(6) exemption requirements.
2. The Bankruptcy Court Did Not Violate The Full Faith And Credit Clause
Corcoran alleges that because the CCP default judgment confirmed that McCabe's actions constituted willful and maliсious conduct,
Federal courts must afford the "same full faith and credit" to state court judicial proceedings that "they have by law or usage in the courts of such State ... from which they are taken."
Restatement (Second) of Judgments § 27 cmt. e (1982), provides:
Issues not actually litigated. A judgment is not conclusive in a subsequent action as to issues which might have been but were not litigated and determined in the prior action....
* * *
In the case of a judgment entered by confession, consent, or default, none of the issues is actually litigated. Therefore, the rule of this Seсtion does not apply with respect to any issue in a subsequent action. The judgment may be conclusive, however, with respect to one or more issues, if the parties have entered an agreement manifesting such an intention.
McGill ,
The Bankruptcy Court did not err, or violate
Next, Corcoran argues that the Bankruptcy Court Order and Opinion violated
B. The Bankruptcy Court Did Not Abuse Its Discretion In Denying The Admissibility Of The CCP Damages Hearing Transcript
The Bankruptcy Court did not abuse its discretion in ruling that the CCP Damages Hearing transcript was inadmissible for lack of proper authentication. This Court must review a bankruptcy court's determination concerning the admissibility of evidence for abuse of discretion. In re Goody's Family Clothing Inc. ,
1. Authenticity
First, Corcoran argues that the Damages Hearing transcript was properly authenticated.
The Court holds that the Bankruptcy Court did not abuse its discretion when it determined that the CCP Damages Hearing transcript was inadmissible. The document was not self-authenticating under Federal Rule of Evidence 902. Zenith Radio Corp. v. Matsushita Elec. Indus. Co. ,
2. Bases For Admissibility
Corcoran argues the transcript should have been admitted. The Bankruptcy Court has discretion to admit evidence, regardless of objections. See In re SemCrude L.P. ,
C. The Restatement (Second) Of Judgments Is Inapplicable
The Bankruptcy Court was not precluded from considering whether the judgment arose from a willful and malicious injury because the general rule in Pennsylvania is that default judgments have no preclusive effect. McGill v. Southwark Realty Co. ,
Corcoran, while acknowledging "the general rule in Pennsylvania is that collateral estoppel does not apply to judgments entered by default," argues that suspending this rule is permissible "where it directly conflicts with the Restatement (Second) of Judgments, which was adopted before McGill ." Appellant's Br. 11. Specifically, and in reliance on Restatement (Second) of Judgments § 27(d) cmt. d., Corcoran contends that the default judgment at
It is the "the law of the issuing court" which "determines the preclusive effects of a prior judgment." Paramount Aviation Corp. ,
When an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determinаtion is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim.
Pennsylvania State Univ. v. County of Centre ,
Issues not actually litigated. A judgment is not conclusive in a subsequent action as to issues which might have been but were not litigated and determined in the prior action.
In the case of a judgment entered by confession, consent, or default, none of the issues is actually litigated. Therefore, the rule of this Section does not apply with respect to any issue in a subsequent action. The judgment may be conclusive, however, with respect to one or more issues, if the parties have entered an agreement manifesting such an intention.
McGill ,
The Court does not reach the issue of whether Restatement (Second) of Judgments § 27 cmt. d. conflicts with the general rule that default judgments are not afforded a preclusive effect, as set forth in McGill , because no Pennsylvania court has adopted this provision. However, the principles Pennsylvania courts have adopted indicate that Pennsylvania courts would not afford the default judgment any preclusive effect, as the Parties did not "actually litigate" the claim. McGill ,
D. The Bankruptcy Court Was Not Jurisdictionally Barred From Considering Whether The Judgment Arose From A Willful and Malicious Injury
Corcoran argues that the Bankruptcy Court was "jurisdictionally barred" from "determin[ing] a personal injury tort" under
Under
The Court finds that § 157(b)(5) is not a jurisdictional statute and did not deprive the Bankruptcy Court of jurisdiction. Therefore, Corcoran's argument fails. In addition, the Court concludes that the Bankruptcy Court's determination as to whether the judgment was dischargeable was well within its authority.
E. The Bankruptcy Court Did Not Violate The Rooker-Feldman Doctrine
Corcoran argues that the Bankruptcy Court violated the Rooker-Feldman doctrine by considering whether McCabe actually defamed Corcoran. Apрellant's Suppl. Br. 3. McCabe argues that the Rooker-Feldman doctrine is inapplicable because he is "not attacking the merits of the state court judgment" and although the judgment is valid, the validity of a judgment does not prevent its discharge in bankruptcy. Appellee's Br. 11.
The Rooker-Feldman doctrine did not prohibit the Bankruptcy Court from considering whether the CCP judgment was dischargeable because: (1) bankruptcy courts are еmpowered to discharge state court judgments, and (2) the federal claim was not inextricability intertwined with the state adjudication. As Rooker-Feldman is a jurisdictional doctrine, the Court reviews the issue de novo. In re United Healthcare Sys., Inc. ,
Rooker-Feldman is a jurisdictional doctrine, which stands for the principle that "federal district courts lack jurisdiction over suits that are essentially appeals from state-court judgments...." Great W. Mining & Mineral Co. v. Fox Rothschild LLP ,
The Bankruptcy Court did not violate the Rooker Feldman doctrine by
The Rooker-Feldman doctrine did not prohibit the Bankruptcy Court from hearing the claim because the federal claim was not actually litigated in state court. In addition, the claim was not "inextricably intertwined" with the CCP judgment because the grant of relief requested by McCabe did not require the Bankruptcy Court to determine that the CCP judgment was in error, nor take action that would negate the CCP judgment. Indeed, McCabe did not request that the Bankruptcy Court review or reject the merits of the CCP judgment. Rather, McCabe was attempting to prevent the Bankruptcy Court from giving effect to the CCP judgment. In sum, the Rooker-Feldman doctrine did not deprive the Bankruptcy Court of the subject matter jurisdiction.
IV. CONCLUSION
For the reasons set forth above, the Court AFFIRMS the Bankruptcy Court's decision.
Notes
The Bankruptcy Court reviewed the Damages Hearing transсript and determined that, even if the Bankruptcy Court admitted the CCP Damages Hearing transcript, the transcript contradicted Corcoran's assertion that McCabe intended to cause a willful and malicious injury to Corcoran. This Court finds that the Bankruptcy Court did not abuse its discretion in making this conclusion.
The Rooker-Feldman doctrine applies differently to bankruptcy courts, as "[b]ankruptcy courts have extensive powers to modify or discharge state-court judgments." Loucas v. Cunningham (In re Cunningham) ,