B.B. v. Bradley (In re Bradley)

Summarized by Hale Lake , Hinshaw & Culbertson, LLP
13 years 10 months ago

Citation:

B.B. v. Bradley (In re Bradley), BAP No. MB 11-062 (1st Cir. B.A.P. Mar. 7, 2012)

Tag(s):

Ruling:

The Bankruptcy Appellate Panel for the First Circuit (the “B.A.P.”) vacated the bankruptcy court’s order granting summary judgment to the plaintiff, B.B. (“B.B.”) and remanded the matter to the bankruptcy court. Summary judgment had been granted to B.B. on on the issue preclusive effect of her pre-bankruptcy state court judgment (the “State Court Judgment”), and the B.A.P. reviewed, de novo, the granting of summary judgment on her claim that the debt owed to her by the debtor, John R. Bradley (“Debtor”), pursuant to the State Court Judgment was excepted from discharged under Section 523(a)(6). The B.A.P. found that there was a lack of identity between the elements of B.B.’s state law claims against the Debtor as determined in the State Court Judgment and the elements of a claim under Section 523(a)(6). In order for a debt to be excepted under Section 523(a)(6), one of the elements that must be established is that “the debtor intended to cause the injury or that there was a substantial certainty that the injury would occur.” B.B.’s claim for intentional infliction of emotional distress under California law required B.B. to prove “extreme and outrageous conduct by the defendant with the intention of causing or reckless disregard of the probability of causing, emotional distress.” Based upon the fact that the record before the B.A.P. contained nothing other than the State Court Judgment as the complaint, transcript and detailed findings were not provided, the B.A.P. could not determine that the State Court Judgment was awarded to B.B. based upon the Debtor’s subjective intent to injure her. The B.A.P., therefore, could not use collateral estoppel to establish the required element of “willfulness” for a claim under Section 523(a)(6). Moreover, the B.A.P. recognized that a majority of courts have concluded that a state court judgment that could be based on “reckless disregard” is not the equivalent of “substantial certainty” as required by Section 523(a)(6).

Procedural context:

In 2008, B.B. obtained a judgment against the Debtor in California state court on a number of theories asserting that the Debtor caused her physical and emotional harm. The state court awarded judgment to B.B. in the amount of $12,500,000.00 after a bench trial. In 2010, the Debtor filed for relief under Chapter 7 of the Bankruptcy Code in Massachusetts. B.B. then commenced an adversary proceeding seeking a determination that the judgment debt owed to her by the Debtor pursuant to the State Court Judgment in the amount of $12,500,000.00 was excepted from discharge under section 523(a)(6). Relying on the State Court Judgment, B.B. moved for summary judgment on the grounds that based upon the intentional infliction of emotional distress as found by the state court, the Debtor was collaterally estopped from re-litigating the issues of fraud, malice and the issue of dischargeability under Section 523(a)(6). The bankruptcy court granted B.B.’s motion for summary judgment and the Debtor then appealed to the B.A.P. The B.A.P. vacated the granting of summary judgment to B.B.

Facts:

B.B., the ex-wife of the Debtor, filed a complaint in California state court against the Debtor asserting that he had caused her physical and emotional harm. After a bench trial, the state court issued the State Court Judgment and awarded to Plaintiff $5,000,000.00 for the suffering of past and future loss of earnings and $7,500,000.00 in general damages.

Judge(s):

Haines, Lamoutte, and Kornreich

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