Affirmed by published opinion. Judge HALL wrote the opinion, in which Judge RUSSELL and Judge WIDENER joined.
OPINION
Carroll Stanley, the debtor in this Chapter 7 bankruptcy proceeding, and the United States Trustee appeal an order of the district court reversing, as clearly еrroneous, the bankruptcy court’s determination that Stanley is entitled to be discharged from a debt owed to First National Bank of Maryland (FNB). Because the debt emanated from Stanley’s infliction of a willful and malicious injury on FNB, we agree with the district court that discharge is inappropriate, and we affirm.
I.
In October 1988, Stanley applied for a $10,000 line of credit with FNB. The application was approved, but only for $8,000, and was secured by a second mortgage on Stanley’s residence in Silver Spring, Maryland. Unknown to the bank, Stanley had, a few months earlier, agreed to purchase a new home elsewhere in Silver Spring.
Stanley drew down virtually the entire credit line a few days after it was approved. FNB mailed statements to Stanley at the end of October, November, and December 1988,
In May 1989, Stanley bought three acres of ummproved property in western Howard County, Maryland, for $199,000; he used the “extra” $72,000 in Ms credit line to fund the down payment and- transaction costs. Bеcause suburban sprawl had begun to reach Howard County, Stanley surmised that his real estate investment would appreciate five or ten thousand dollars in a year; he testified that he hoped to resell the property, repаy both the note holder and FNB, and still make a profit. Stanley realized that his expenses — including the payments on the Howard County property, the two Silver Spring residences,
Unfortunately for Stanley — and apparently unknown to him -at the time of Ms purchase — Howard County had recently stopped issuing building permits. Property owners who applied for permits were instead issued “allocation certificates,” wMch merely ensured the owner’s place in line if and when the moratorium was lifted. Because prospective buyers wanted to build immediately, the market for properties without accompanying permits plummeted. In June 1990, Stanley sold his Howard County property at a substantial loss.
Stanley’s house of cards rapidly collapsed. FNB declared him to be in default of the loan agreement; in February 1992, it obtained a judgment of approximately $82,000 against Stanley on the debt, covering principal, interest, and attorney fees. Stanley filed for bankruptcy under Chapter 13 on April 1, 1992, but, about four months later, voluntarily converted the pеtition to Chapter 7.
In mid-February 1993, FNB filed a complaint in the bankruptcy proceeding, asking the court to except from discharge the bank’s judgment debt against Stanley. The complaint alleged that discharge was barred by Section 523(a) of the Bankruptcy Code because (1) Stanley had incurred the debt through the use of false pretenses (§ 523(a)(2)(A)), and/or (2) Stanley’s actions had inflicted a willful and malicious injury upon FNB (§ 523(a)(6)).
II.
A.
Beсause the district court sits as an appellate court in bankruptcy, our review of the district court’s decision is plenary. Brown v. Pennsylvania State Employees Credit Union,
B.
We have previously had occasion to consider what constitutes a willful and malicious injury under Section 523(a)(6). See St. Paul Fire & Marine Ins. Co. v. Vaughn,
Vaughn received a check for $479,000, and, instеad of abiding by the terms of the arrangement, he spent the surety’s $250,000 share on real estate, antiques, and a luxury automobile. He then filed for bankruptcy. Under the circumstances — and despite a jury verdict to the contrary — we had no difficulty affirming the district court’s judgment that Vaughn had acted willfully and maliciously, and therefore was not entitled to be discharged from his debt to the surety.
We noted in St. Paul that “willful” means “deliberate or intentional.” Id. (quoting H.R.Rep. No. 595, 95th Cong., 1st Sess. 365 (1977), reprinted in 1978 U.S.C.C.A.N. 5963, 6320-21). Thus, we ascribe to the word “willful,” as it pertains to Section 523(a) of the Bankruptcy Codе, a meaning similar to that derived from its use in other areas of the law.
“Malice,” however, does not mean the same thing in Section 523(a) that it often does in other contexts. A debtor may act with malice even though he bears no subjeсtive ill will toward, and does not specifically intend to injure, his creditor. See id. at 1008-09. Hence, a debtor’s injurious act done “deliberately and intentionally in knowing disregard of the rights of another,” i.e., a creditor, is sufficiently willful and malicious, and prevents dischаrge of the debt. Id. at 1010 (citation omitted).
The act or conduct at issue here, as in St. Paul, is a conversion — an unauthorized exercise of dominion or control over property belonging to another that seriously interferes with the owner’s rights. See United States v. Stockton,
In this case, the conversion was wrongful. As evidenced by his telephoning the Glenmont branch, Stanley knew that something was amiss when his credit limit was suddenly increased by a factor of ten. Stanley’s explanation that he thought that the bank had granted him а $72,000 “unsecured” line of credit is wholly irreconcilable with his knowledge that, just three months earlier, he had been approved for $2,000 less than the relatively modest secured line that he had requested. We note also that Stanley, though not a loan officer, is an accountant with one year of graduate school education; he is by no means unsophisticated.
In finding that he lacked the requisite malice to be denied discharge, the bankruptcy court concentrated on Stanley’s intent to repay FNB out of the “profits” from the sale of the Howard County property. The bankruptcy court’s finding that Stanley acted with hopeful intentions is probably correct; indeed, Stanley remained current on his FNB payments for over a year. However, that Stanley did not intend for FNB to ultimately suffer a loss is legally irrelevant. For conversion to occur, it is not necessary that the property be damaged, but merely that the owner suffer a serious deprivation of the incidents of ownership.
Consequently, the proper focus in this ease is not on Stanley’s “good intentions,” but simply on his exercise of dominion and control over funds that he knew belonged to another. Stanley’s deliberatе conversion of the funds is the intentional, wrongful act that prevents the discharge of his debt to FNB.
Because the bankruptcy court’s finding that Stanley’s debt was dischargeable was premised on the application of an incorrect legal standard, the deferential standard of review ordinarily accorded such findings does not apply. See Section II-A, supra. Applying the correct legal standard to the facts of this case, we reach the only reasonable conclusion: Stanlеy inflicted a willful and malicious injury on FNB; thus, he is not entitled to be discharged from the resultant debt.
III.
The judgment of the district court is affirmed.
AFFIRMED.
Notes
.Stanley testified that he called FNB’s Glenmont branch, where he had applied for the credit line, and asked the branch manager, Glynis Noyes, whether the statement was accurate. Noyes, whose computer could only access current account information, verified that the limit was indeed $80,000. Although Noyes had since left FNB and was unavailable to testify, the evidence was that she сould only have determined whether a data entry mistake had occurred by checking the loan paperwork, which apparently was- not on file at the branch. Likewise, Noyes’s computer would not have alerted her that Stаnley’s . credit limit had recently increased tenfold.
Stanley could not recall Noyes by name at deposition, but, as a result of reviewing bank documents with her name on them in preparation for trial, testified at the hearing that she was thе person to whom he had spoken. One Glen-mont employee testified — albeit with less than unshakable certitude — that, to the contrary, Noyes had left the branch prior to January 31, 1989. None of the Glenmont employees who testified rеmembered receiving a call from Stanley.
The bankruptcy court found the following regarding the phone call:
We're talking about events now six years almost in the past, five at least, and everyone I think probably forthrightly attempted tо recall what best they [thought] had occurred. The Court did find credible the testimony of the debtor concerning this phone call and finds as a fact that the call came in and that the call was an inquiry concerning what was the credit limit at thаt time.... The Court ... does not find that the absence of a more pointed inquiry at that point somehow constitutes a showing of intent by the debtor to deceitfully take that which the debtor was not entitled to in the debtor’s mind.
. According to the terms of the junior lien, Stanley could not sell his old residence without FNB’s consent. He instead leased it for slightly less than his monthly mortgage payment.
. Section 523 provides:
(a) A discharge under section 727 ... of this title ... does not discharge an individual debt- or from any debt
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(2) for money, propеrty, services, or an extension, renewal, or refinancing of credit, to the extent obtained, by—
(A) false pretenses, a false representation, or actual fraud, other than a statement respect*667 ing the debtor's or an insider’s financial condition;
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(6) for willful and malicious injury by the dеbtor to another entity or to the property of another entity....
11 U.S.C.A. § 523(a)(2)(A), (a)(6) (West 1993).
. Under Section 523(a), a debtor’s misconduct— even where fraud is involved — need only be shown by a preponderance of the evidence. Grogan v. Garner,
. Because we hold that discharge is barred by Section 523(a)(6), we do not reach the district court’s alternative holding that Stanley obtained the funds by false pretenses, barring discharge under Section 523(a)(2)(A).