Black v. Bonnie Springs Family Ltd. Partnership (In re Black)

Summarized by Thomas Phinney , Felderstein Fitzgerald Willoughby Pascuzzi & Rios LLP
13 years 2 weeks ago

Citation:

9th Cir. BAP, February 11, 2013, BAP Nos. NV-12-1122 and NV-12-1124

Tag(s):

Ruling:

BAP affirmed summary judgment in favor of creditor, which excepted debts from discharge under § 523(a)(6) based upon the preclusive effect of a Nevada state court judgment for abuse of process, nuisance, and "oppression." Although "oppression" under Nevada law is based in part on the awareness of the "probable consequences" of the defendant's actions, which is less than "acting with the desire to injure or a belief that injury was substantially certain to occur” (see In re Su), 290 F.3d 1140, 1142 (9th Cir. 2002)), oppression under Nevada law also requires a finding of "cruel and unjust hardship," which together with the other findings of the state court satisfied the elements of a section 523(a)(6) claim.

Procedural context:

Defendants filed separate chapter 7 bankruptcy petitions, after state court jury trial was completed but prior to entry of judgment. Bankrutpcy court allowed state court to enter judgment pospetition. Creditor then filed Motion for Summary Judgment on a section 523(a)(6) action, which was granted by the bankruptcy court and affirmed by the BAP.

Facts:

Debtors entered into agreement to purchase property from Creditor for residential development. During an extended preliminary period and before escrow closed, Debtors listed the property for sale, filed a complaint against the Creditor for alleged wrongful acts in connection with the agreement, and also filed a complaint with the Nevada County Commissioner for alleged environmental and health and safety issues with Creditor's nearby property (unrelated to the property subject to the agreement). Creditor filed a cross-complaint for Abuse of Process and Nuisance. Creditor won summary judgment on the claims in the Debtor's complaint. A jury trial on Creditor's cross-complaint awarded subtantial damages against Debtors, and included over $2 million in damages for "oppression," although the jury did not award any damages for "malice." The jury found that the Debtors filed their state court complaint and their complaint with the Nevada County Commissioner for the purpose of intimidating the Creditor into making concessions in the agreement, including lowering the sale price. The bankruptcy court found that the state court judgment was entitled to preclusive effect on creditor's section 523(a)(6) lawsuit in the bankruptcy court, and the BAP affirmed.

Judge(s):

DUNN, JURY and KIRSCHER

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