Case Information
*1 Before W OOD Chief Judge , M ANION T INDER , Cir cuit Judges .
W OOD Chief Judge . When Jonathan collected commission real estate transaction, he opened up can worms. His former brokerage firm, Group, Inc., contends, support favor, so doing breached legal, contractu al, ethical obligations recognized Wisconsin law. filed two months after *2 decision. In the court, First Weber filed an adversary proceeding which contended Horsfall’s debt was excepted from discharge as a debt aris ‐ ing from a “willful malicious injury.” See U.S.C. 523(a)(6). district courts rejected argument ruled Horsfall’s favor. affirm.
I
From May to August 31, 2002, Horsfall worked as a real estate agent for First Weber. During tenure, Weber executed form Exclusive Right to Sell contract with one Robert Call, who was trying sell property at Overlook Terrace Marshall, Wisconsin (the Call property). contract gave Weber exclusive rights list col lect commissions for sale the Call property during the list ing period, well as the exclusive right collect commis sions sales defined set “protected buyers” one year after the listing period expired. the listing agent Call property.
In early August 2002, Acosta family made offer Call property. Although deal completed, offer established Acostas “protected buyers” accord ing terms listing contract. Call’s contract Weber ended August under pro tected buyer clause, continued exclu sive right collect commission if Call property sold Acostas. right expired one year after end listing period. left end August es tablish his own brokerage, Picket Fence Realty. October year, Acostas contacted about finding new *3 home. Without involving First Weber, Horsfall resuscitated transaction with Call. On October 8, 2002, Acostas Call executed a sales contract for Call property, us ing a form furnished by Picket Fence. The transaction closed on October 28, 2002, well within period protected by First Weber’s exclusivity rights. Picket Fence received $6,000 commission closing. inconsistent with status First agent under Exclusive Right Sell contract; also violated various rules governing Wisconsin real estate practice. closing documents were conspicuously silent about any interest First Weber.
Six years later, First Weber sued both Horsfall Call Wisconsin state court. Call assigned his interest suit First Weber, which dismissed him from action (undoubt edly because Call’s debts had been discharged during intervening years). Against Horsfall, First Weber asserted claims breach contract, tortious interference, unjust enrichment. court granted summary judgment favor Weber on all claims. delivering its opinion, stated “converted” funds owed Weber, elaborate comment. On January 28, 2010, entered judgment against amount $10,978.91. filed Chapter April
listing creditor. Weber responded claim judgment debt non dischargeable under U.S.C. 523(a)(6), which excepts from discharge debts stemming “willful malicious injury” caused by debtor. urged con clusively established, way preclusion, all *4 elements necessary satisfy 523(a)(6). The bankruptcy court denied summary and set case trial.
After hearing evidence trial, bankruptcy court concluded that never harbored animosity toward First Weber and that he believed that his obligations First Weber had ended as August when agency agreement and Call’s listing contract expired. The court was less charitable Call: it credit his story that he thought his obligations First Weber ended with expira ‐ tion listing agreement. court excluded some evi ‐ dence offered by Weber, including proffered expert tes ‐ timony an attorney (Rick Staff), information about Hors ‐ fall’s membership realtors’ association and multiple list ‐ ing service, impeachment evidence indicating that Hors fall made misstatements court submissions. Ultimate ly, bankruptcy court held that Weber “did demonstrate cause [its] claim … much less it willful malicious.” district affirmed, this appeal followed.
II makes three arguments on appeal: first, it serts district courts erred refusing find issue preclusion based judgment; second, contends it entitled summary judg ment its claim debt arose willful mali cious injury; third, urges abused discretion excluding some evi dence. views entire appeal frivolous worthy sanctions. retorts frivo lousness argument itself frivolous. begin *5 5 13 1026 preclusion, because is centerpiece position.
A. Issue Preclusion
A state judgment is entitled same preclusive effect federal would have in court. Allen v. McCurry , 449 U.S. 90, 96 (1980); see 28 U.S.C. § 1738. rule applies equal force cas es. Klingman v. Levinson , 831 F.2d 1292, 1295 (7th Cir. 1987). review determinations preclusive effect law de novo. In Davis , 638 F.3d 549, 553 (7th Cir. 2011) (bankruptcy appeal); Donald v. Polk Cnty. , 376, 382– 1988) (applying Wisconsin law).
Under Wisconsin law, “[c]ollateral estoppel, or issue pre clusion, is a doctrine designed limit relitigation is sues have been contested a previous action between same or different parties.” Michelle T. by Sumpter v. Cro zier N.W.2d (Wis. Wisconsin courts apply following general rule: “When fact or law is actually litigated determined valid final judg ment, determination is essential judgment, determination is conclusive subsequent action between parties, whether same different claim.” Hlavinka Blunt, Ellis & Loewi, Inc. N.W.2d (Wis. Ct. App. 1993) (quoting R ESTATEMENT (S ECOND ) OF J UDGMENTS (1980)). Wisconsin (as most states), question whether
sue preclusion applies depends two criteria. first (the “actually litigated step”) requires “the question fact law sought precluded actually must been litigated previous action [have been] necessary *6 the judgment.” Mrozek Intra Fin. Corp. N.W.2d (Wis. The second (the “fundamental fairness step”) requires the court “determine whether it is fundamentally fair employ preclusion given the circumstances of the particular case at hand.” Id. Relevant factors for the latter inquiry include the availability of review of the first judg ‐ ment, differences in quality extensiveness of the pro ceedings, shifts burden of persuasion, adequa cy of loser’s incentive obtain a full fair adjudica tion of issue. Id. at 61–62. fundamental fairness step eschews formalistic requirements favor “a looser, equi ties based interpretation doctrine.” Michelle T. N.W.2d at 330. order know what “actually litigated,” we must
take a closer look at what state court decided. parties agree Weber’s complaint state court put forth only three theories recovery: breach contract, tortious interference, unjust enrichment. Notably, pleadings did raise a claim for conversion, but Weber’s motion for summary included theory a fourth basis for recovery. There are hints state aware conversion issue: did undertake a detailed analysis conversion claim, transcript reflects twice said “converted” money longing Weber. Although thin reed, we will assume present purposes make finding liability conversion claim. important position bank
ruptcy case because, four theories raised court, only intentional torts interference conver sion could plausibly constitute willful malicious injury. *7 7 13 1026 order find liability on tortious interference claim, state court had find: (1) had contract with third party; (2) interfered with contract; (3) interference was intentional; (4) interference caused damages; (5) not justi fied privileged interfere. See Briesemeister v. Lehner , 720 N.W.2d 531, 542 (Wis. Ct. App. For conversion claim, court had find: (1) intentional control taking property belonging Weber; (2) without ber’s consent; which (3) resulted serious interference right possess property. See H.A. Friend & Co. v. Prof. Stationery, Inc. , 720 N.W.2d 100 (Wis. Ct. App. 2006); Methodist Manor Waukesha, Inc. v. Martin , N.W.2d (Wis. Ct. App. 2002) (“[M]oney may also be converted.”). question us what effect these findings bankruptcy issue non dischargeability willful
malicious injury under U.S.C. 523(a)(6). See Bukowski Patel B.R. (E.D. Wis. 2001) (applying Wisconsin issue preclusion inquiry regarding willful malicious inju ry). bankruptcy district courts concluded state no effect inquiry be cause state court find—and required find—willful malicious term used Bankruptcy Code. If were all we had, we would find analysis be insufficient, because preclusion could apply elements willful malicious quiry even if addressing different ulti mate question. See Klingman (“Where determines factual questions using same standards would use, collateral es toppel should applied[.]”).
8 13 ‐ 1026
In order compare essential ‐ findings with requirements for willful malicious injury, we need a better understanding latter term. Unfortunate ly, case law is “all over lot” when comes defining it. See Jendusa Nicolai v. Larsen , 677 F.3d 320, 322 (7th Cir. 2012) (recounting similar different tests from Second, Fifth, Sixth, Eighth, Ninth, Tenth, Eleventh Circuits). Bankruptcy courts circuit have focused three points: (1) injury caused by debtor (2) willfully (3) maliciously. In re Carlson , 224 B.R. 659, 662 (Bankr. N.D. Ill. 1998), aff’d 2000 WL 226706 (N.D. Ill. 2000), aff’d 2001 WL 1313652 (7th Cir. 2001). As all exceptions discharge, burden creditor establish these facts by preponderance evidence. Grogan v. Garner , 498 U.S. 279, 287 (1991).
Looking more closely these three elements—injury, willfulness, malice—a few points are worth making. The term “injury,” while not defined Code, understood mean “violation another’s legal right, which law provides remedy.” Lymberopoulos , 453 B.R. 340, (Bankr. N.D. Ill. 2011) (citation omitted). injury need not been suffered directly creditor asserting claim. Larsen v. Jendusa Nicolai , B.R. (E.D. Wis. 2010), aff’d creditor’s claim must, however, derive other’s injury.
Willfulness requires “a deliberate intentional merely deliberate intentional act leads inju ry.” Kawaauhau Geiger U.S. (1998) (emphasis original). Although Geiger refers intentional torts help explain federal standard, does hold all law intentional torts are “willful” purposes section *9 9 13 ‐ 1026 523(a)(6). See Jendusa Nicolai , 677 F.3d at 322 (“[A]n inten ‐ tional tort needn’t involve intent to cause injury.”). “Will ‐ fulness” can found either if the “debtor’s motive inflict the injury, or the debtor’s act substantially certain result in injury.” See Bukowski , B.R. at (noting sub ‐ stantially similar standards willfulness in the Fifth, Sixth, Eighth, Ninth Circuits).
Lastly there maliciousness, which requires that debtor acted “in conscious disregard [his] duties or ‐ out just cause excuse; does require ill will specific intent do harm.” Matter Thirtyacre , F.3d 1994) (citation omitted). recently commented we had occasion revisit Thirtyacre definition since Supreme Court’s decision Geiger . See Jendusa Nicolai at 323. Understanding definition willfulness must incorporate Geiger ’s admonition requisite intent purposes § 523(a)(6) intent jure rather than intent act, we reaffirm today our definition maliciousness Thirtyacre remains good law. See id. at (noting substantially similar definitions maliciousness Second, Sixth, Ninth, Eleventh Cir cuits).
Returning present case, we conclude bank ruptcy district courts erred failing apply pre clusion first third elements 523(a)(6) quiry (injury maliciousness). necessarily actually found each intentional tort claim. tortious interference claim rested finding Hors fall’s interference caused damages. See Briesemeister N.W.2d 542. Similarly, conversion claim required finding taking property *10 resulted serious interference with Weber’s rights. See H.A. Friend & Co. , N.W.2d at 100. Because injury was required element of claims, state court’s injury find ings were actually litigated necessary to judgment. Mrozek , N.W.2d at 61. also find nothing fundamental ly unfair holding to state decision injury.
The state also precluded relitigation of maliciousness. For purposes section 523(a)(6), maliciousness exists when one acts “conscious disregard one’s duties or without just cause or excuse.” Thirtyacre at 700. Weber’s state law tortious interference claim required finding was “not justified or privileged to interfere” with contractual rights. Briesemeister N.W.2d 542. thus determined Horsfall’s interference intentional he neither justified nor privileged interfere rights. order reach this conclusion, find actions were reasonable or taken good faith. inquiry substantially mirrored federal test maliciousness. As before, there nothing fundamentally unfair about holding finding.
Only one element 523(a)(6) inquiry remains tween result wants: willfulness, mean ing either motive inflict act substantially certain result injury. first element conversion re quires “intentional control taking property belonging another;” third element tortious interference quires interference intentional. Both these necessarily require only intent act, intent injure. Cf. *11 11 13 ‐ 1026 Geiger U.S. at (requiring 523(a)(6) purposes a “deliberate or intentional injury, not merely a deliberate or intentional act leads injury”) (emphasis removed). Neither of state ‐ law claims requires showing intent injure, thus finding not necessary state court’s judgment.
If accepted, Weber’s position would risk transform ing every law intentional tort into a non dischargeable debt, contrary Supreme Court’s opinion Geiger . That problem, added “the strong policy of Bankruptcy Code of providing a debtor a ‘fresh start,’” see Meyer v. Rigdon F.3d 1375, (7th Cir. 1994), leads us con clude decision preclude litigating issue of willfulness bankruptcy case.
B. Summary Judgment
We now turn contention it enti tled summary judgment, light preclusion, undisputed facts, some combination two. ar gument runs into a procedural roadblock: overlooks fact after denied summary judg ment under Bankruptcy Rule 7056, went held a full trial. held, when speaking district courts, refusal grant summary normally viewable by if full trial merits then takes place. See, e.g., Eastern Natural Gas Corp. Aluminum Co. Amer., legal sufficiency evidence presented jury trial must tested timely motion under Federal Rule Civil Procedure case trial, Federal Rule Bankruptcy Procedure 9015(c). (Rule 9015(c) provides “Rule F.R. *12 12 13 1026 Civ. P. applies cases and proceedings [in bankruptcy court], except any renewed motion for judgment re quest for a new trial shall filed no later than days after entry of judgment.”) trial the court, thus procedures of Bankruptcy Rule (the analogue Federal Rule of Civil Procedure 52) applied. But basic point of Eastern Gas line of cases is function of a summary judgment motion is exhausted once trial starts. Whether it is trial a jury a trial court, there are alternative more appropriate ways assert evi dence legally insufficient once full trial record has been compiled.
We are satisfied here, however, has pre served its ability argue for judgment as matter law. Very few facts were disputed, bankruptcy judge made clear Weber’s counsel should keep harping its right judgment, given court’s adverse rulings. We therefore move merits ar gument: should been granted mat ter law based some combination preclusion undisputed facts.
C. Judgment at Trial
We apply same standards review district reviewing court’s decision. re Smith , F.3d (7th Cir. 2009). apply de novo view conclusions law clear error review findings fact. F ED . R. B ANKR . P. 7052; see Freeland Enodis Corp. F.3d question whether actor behaved willfully ma liciously one fact. Thirtyacre 700. “When there *13 ‐ are two permissible views evidence, [court]’s choice between them cannot be clearly erroneous.” Dexia Credit Local v. Rogan We must especially deferential toward trial assess ment witness credibility. Anderson City Bessemer City, N.C., U.S. (1985).
At trial, Horsfall and Call each testified. The court found Horsfall “credibly testified that he has nev er had any ill will or animosity towards First Weber … [and he] believed his duties and obligations to First Weber under both agent agreement under Call’s listing con tracts were terminated when contracts themselves were cancelled expired.” contrast, “doubt[ed] veracity” Call’s testimony Horsfall “induced him [Call] to expire his listings [ sic ] First ber list his properties Picket Fence.” found Call’s “claimed ignorance one year exclusion period nature protected buyers incredible light Call’s business real estate experience.” facts credited support conclusions Horsfall did not intend injure First Weber Weber not substantially certain occur. could intended injure Weber if did even realize prior agreements re mained force. Furthermore, even if he known agreements remained force, collection commission Call nothing formally change Call’s liability Weber. Whether he knew not, Call mained liable Exclusive Right Sell contract. That undoubtedly why originally sued both Call court. As happened, *14 Call’s debt to First Weber was discharged Call’s own bank ‐ ruptcy, that not Horsfall’s fault. First Weber acknowl ‐ edges as much its brief before court.
Because Horsfall’s actions did not have effect ex tinguishing Call’s debt to First Weber, injury flowing from those actions was not substantially certain occur. Hors fall’s unethical collection additional commission, while not commended, did not affect First Weber’s legal rights against Call. If First Weber had collected from Call, then perhaps Call would have claim willful malicious injury against Horsfall. But Call not assert any claims bankruptcy, First Weber’s injury was derivative any loss Call. Moreover, found Call knew he remained liable First We ber. First Weber could have collected Call despite Hors fall’s actions, so injury was certain. find no clear error court’s findings.
First Weber has pointed no evidence would justify our setting aside credibility determinations. Alt hough spends great deal time arguing erred finding Horsfall entitled commission Call sale, Horsfall listed Call property after leaving Weber, could acted dual agent both Call Acostas, none these points relevant question whether intentionally injured whether injury substantially certain occur.
Ultimately, Weber, supported Wisconsin Realtors Association amicus curiae contends bro kerage certain suffer simply because breached numerous legal ethical obligations under Wis *15 consin real estate law and ignored First exclusive right to collect commission from sale of Call property Acostas. hole that argument that Call ‐ mained fully liable all commission debts owing Weber. Although Weber entitled schedule its contractual claims against bankruptcy court, it failed show that those claims should excepted normal power court discharge debts.
D. Evidentiary Rulings
In this part its appeal, argues various evidentiary rulings so prejudiced it new trial neces ‐ sary. In particular, it takes with bankruptcy court’s exclusion three pieces evidence: (1) attorney Staff’s ex ‐ pert testimony regarding Wisconsin real estate law and ethi cal rules; (2) evidence memberships Na tional Realtors Association multiple listing service; (3) impeachment evidence suggesting made misstatements filings court. To challenge exclusion evidence, We ber must show abused discretion. Thompson Boggs tells us Staff’s testimony offered “articulat[e] expl[ain] brokerage practices, including both education application contracts transac tional issues raised.” question Staff’s credentials, it excluded his testimony unhelpful irrelevant. See F ED . R. E VID . 702. see no abuse dis cretion judgment. A does need an expert explain area law. addition, Staff’s proposed testimo ny irrelevant because showed only inten tionally broke Wisconsin real estate rules (“intent act”); *16 no bearing on whether he intended to inflict injury on Weber.
The court similarly acted within bounds when decided to exclude proposed evidence of Horsfall’s membership in National Realtors Association multiple listing service. Weber offered this to show that was subject various legal ethical obligations. But we al ready have noted, was beside point. Indeed, that breached an array of obligations was not in dispute, nor could been, in light of decision. The matter dispute was whether intended jure Weber or if was substantially certain oc cur. Horsfall’s association memberships say little or nothing about that. It was not abuse discretion exclude this evidence.
Finally, offered evidence misstatements court filings order show Horsfall’s testimony unreliable. The court ruled such “general impeachment” not relevant central case. Federal Rule Evidence 608(b) provides “the court may, cross examination, allow [specific instances witness’s conduct] inquired into if they are probative character truthfulness untruthfulness … witness.” rule permissive, not mandatory, leaving great discretion. deter mined alleged misstatements ancillary sues were sufficiently probative his truthfulness garding material issues warrant their admission. strikes us closer call, standards review matter. has carried its burden show abused discretion, even error prejudicial. *17 ‐ short, we find no abuse of discretion the challenged evidentiary rulings, and so we reject request for new trial this basis.
E. Cross ‐ Motions for Sanctions Finally, we turn the parties’ cross motions for sanc tions. We regard an appeal as frivolous “when the result is foreordained lack of substance appellant’s ar gument.” Matter of Generes 1995) (internal quotation omitted). It important keep bar high, so parties will not be dissuaded from bringing ar guments ultimately may fail, are fair grounds for application extension law. With mind, we see no ground for sanctions against either party here. case involves interplay some knotty areas law, including preclusion bankruptcy. Our own analysis preclusion question differs both courts below. Furthermore, we noted, decisions been “all over lot” respect definition willful malicious purposes 523(a)(6). result here not foreordained, so there no reason sanction filing appeal. Nor do we think should be sanctioned, since he entitled rely findings fact distinctions tween earlier proceeding present case. take opportunity caution parties bar they should lightly label their opponents’ argu ments frivolous. As our sister circuit said recently:
There are good reasons call oppo nent’s arguments “ridiculous” … . reasons include civility; near certainty over *18 statement will only push reader away …; that, even where record supports extreme modifier, better practice usually lay out facts let reach own conclusions.
Bennett State Farm Mut. Auto. Ins. Co. 584–85 2013) (internal quotation omitted). think par ties case would done well follow this advice.
************* district A FFIRMED .