Case Type:
Case Status:
Reversed and Remanded
BAP No. CC-22-1133-CLS (9th Circuit, Jun 02,2023) Not Published
The Ninth Circuit Bankruptcy Appellate Panel reversed and remanded the bankruptcy court's entry of summary judgment in favor of plaintiff's section 523(a)(6) claim against the debtor defendant based on an improper application of the issue preclusion doctrine under Ohio law.
Procedural context:
Plaintiff had obtained a default judgment against the debtor pre-petition on claims for defamation, tortious interference, intentional infliction of emotional distress, and violation of the Ohio Deceptive Trade Practices Act. Debtor did not file an answer but she had filed an opposition to the motion for default judgment. The state court granted the motion and entered the judgment as to liability, and then set a hearing on damages. At the hearing, plaintiff and other witnesses testified as to plaintiff's damages and the court then issued a 67-page findings of fact and conclusions of law. Plaintiff lost an appeal of the judgment at the Ohio Court of Appeals. After moving to California, debtor filed for chapter 7 bankruptcy. Plaintiff then filed a non-dischargeability adversary proceeding under section 523(a)(2)(A) and section 523(a)(6). Plaintiff moved for summary judgment on the 523(a)(6) claim, and the court granted the motion base on Ohio's issue preclusion doctrine.
Plaintiff and debtor were friends based on their involvement in the breeding and showing of Birman cats. The friendship deteriorated as a result of competitiveness and an alleged breach of a breeding contract. According to Plaintiff, debtor then began a campaign of discrediting and disparaging plaintiff through a series of emails and online reviews containing derogatory and untrue statements about plaintiff's cat breeding business and her medical practice. Plaintiff filed a complaint in Ohio, first against an unnamed defendant. She then filed an amended complaint naming debtor. Plaintiff served debtor by mail, which debtor claimed she never received. Debtor's attorney appeared in the state court action to oppose the motion for default judgment but did not file an answer and instead filed a motion to dismiss. The state court granted the motion for default judgment and denied the motion to dismiss as moot. The court then held a hearing on damages at which plaintiff and other witnesses testified as to plaintiff's damages, and debtor testified that she did not send the malicious emails and also contested the extent of damages. The court entered a judgment in favor of plaintiff for approximately $300,000.

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