Morris v. Brown (In re Brown)
- Citation:
- ___F3d. ___(6th Cir. 2012); Case No. 11-6008 (July 23, 2012)
- Tag(s):
-
- Ruling:
- Sixth Circuit affirms district court order affirming the bankruptcy court's Order granting summary judgment in favor of Appellee Brown dismissing the adversary complaint filed by Appellants Morris and Lynch seeking determination that Brown's debt to them was nondischargeable under 11 U.S.C. § 523(a)(6).
- Procedural context:
- Morris and Lynch argue that under the doctrine of collateral estoppel, the judgments taken by them against Brown at the state trial court level should be given preclusive effect to establish Brown's conduct was willful and malicious and therefore under § 523(a)(6) is nondischargeable. The Court properly noted that state court judgments may be entitled to preclusive effect in nondischargeability actions, but only if the law of that state would apply collateral estoppel to the judgments. Therefore Kentucky law would apply in this case. Kentucky law states that In order for collateral estoppel to apply, a party must
establish (1) identity of issues; (2) a final decision or judgment on the merits; (3) a necessary issue with the estopped party given a full and fair opportunity to litigate; and (4) a prior losing litigant. The Court found there was no identity of issue because the state court was asked to consider whether Brown acted with the intent to convert timber of another and by contrast the bankruptcy court is asked to find “willful and malicious
injury” was required to determine whether Brown “(1) intended to cause injury to the Creditor or to the Creditor’s property, or (2) engaged in an intentional act from which [Brown] believed injury would be substantially certain to result.” So the prior default judgments are given no preclusive effect. Further that the bankruptcy court was correct in finding that Morris and Lynch can provide no evidence that Brown desired, intended or was substantially certain that by cutting the timber he did that Morris and Lynch would be subjected to monetary judgment and therefore granting Brown's summary judgment.
- Facts:
- Brown purchased by contract in 2001 from Morris and Lynch the right to cut timber on land that Morris and Lynch claimed to own. Brown cut the timber. A third party, Gatliff, then filed a lawsuit against Morris, Lynch and Brown claiming the timber was cut from land owned by Gatliff. Morris and Lynch filed a cross claim against Brown for indemnification and contribution. Thereafter, Morris and Lynch took three separate default judgments for various amounts against Brown. Gatliff and Morris and Lynch then entered into an agreed judgment. Brown then filed Chapter 7 bankruptcy. Morris and Lynch filed a complaint to determine Brown's debt to them nondischargeable under 11 U.S.C. § 523(a)(6) for willful and malicious injury by the debtor to another entity or to the property of another entity.
- Judge(s):
- Moore, White and Lucero (sitting by designation).
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