Court Opinion

ID: 4777087
Source: CourtListenerOpinion
Date Created: 2021-08-18 17:01:51.895306+00
Date Added: 2024-06-11T08:09:33.618728
License: Public Domain

NOT PRECEDENTIAL

                       UNITED STATES COURT OF APPEALS
                            FOR THE THIRD CIRCUIT
                                  __________

                                       No. 18-2219
                                       __________

                           In re: BRIAN RICHARD MCCABE

                                J. CONOR CORCORAN,
                                             Appellant
                                         v.

                              BRIAN RICHARD MCCABE
                                    __________

                    On Appeal from the United States District Court
                       for the Eastern District of Pennsylvania
                              (D.C. No. 2-16-cv-05792)
                    Honorable Petrese B. Tucker, U.S. District Judge
                                     __________

                      Submitted Under Third Circuit L.A.R. 34.1(a)
                                 on August 17, 2021

              Before: KRAUSE, MATEY, and RENDELL, Circuit Judges

                             (Opinion filed: August 18, 2021)

                                       __________

                                        OPINION*
                                       __________

       *
        This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does
not constitute binding precedent.
KRAUSE, Circuit Judge.

         Appellant Conor Corcoran filed an adversary proceeding in Bankruptcy Court

seeking a determination that defamation damages imposed by the Pennsylvania Court of

Common Pleas (“CCP”) against Chapter 13 debtor Brian McCabe were not dischargeable

under 11 U.S.C. § 523(a)(6)’s exception for debts arising from “willful and malicious

injury.” At trial, the Bankruptcy Court determined that this exception did not apply and

the District Court affirmed. Because Corcoran has not established that McCabe inflicted

a “willful and malicious injury” within the meaning of § 523(a)(6), we will affirm.

   I.       Jurisdiction and Standard of Review

         The District Court had jurisdiction to review the Bankruptcy Court’s final order

under 28 U.S.C. § 158(a)(1). We have jurisdiction under 28 U.S.C. §§ 158(d) and 1291.

“We exercise plenary review over the District Court’s appellate review of the Bankruptcy

Court’s decision and exercise the same standard of review as the District Court in

reviewing the Bankruptcy Court’s determinations.” In re Miller, 730 F.3d 198, 203 (3d

Cir. 2013) (quotations and citations omitted).

   II.      Discussion

   A debt is not dischargeable under § 523(a)(6) of the Bankruptcy Code if it results

from a debtor’s “willful and malicious injury,” which requires a finding that “the actor

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purposefully inflicted the injury or acted with substantial certainty that injury would

result.” In re Conte, 33 F. 3d 303, 305 (3d Cir. 1994). We construe this exception

“liberally . . . in favor of debtors,” In re Cohn, 54 F.3d 1108, 1113 (3d Cir. 1995), and

Corcoran must establish that it applies “by a preponderance of the evidence,” id. at 1114

(citing Grogan v. Garner, 498 U.S. 279, 287-88 (1991)).

    The Bankruptcy Court determined that Corcoran did not meet this burden because he

provided only circumstantial evidence that McCabe posted the defamatory message at

issue and no evidence that McCabe acted willfully and maliciously. Corcoran does not

challenge this determination on appeal, but rather urges that the CCP’s finding of willful

and malicious injury should be given preclusive effect.

    But as the District Court correctly concluded, “[n]either the default judgment, nor the

punitive damages award, included a finding that McCabe inflicted a ‘willful and

malicious injury’ within the meaning of § 523(a)(6).” J.A. 8. The CCP’s default

judgment as to liability is not entitled to preclusive effect because it “lacks the requisite

element that it be actually litigated.” McGill v. Southwark Realty Co., 828 A.2d 430, 435

(Pa. Commw. Ct. 2003).1 The CCP’s imposition of punitive damages is not dispositive

because, under Pennsylvania law, punitive damages may be awarded in a defamation case

on a finding of either recklessness or knowledge of the statement’s falseness. See Joseph

v. Scranton Times L.P., 129 A.3d 404, 430, 437 (Pa. 2015). The CCP’s damages opinion

1
  The CCP ruled based on Pennsylvania law, so Pennsylvania law governs the preclusive
effect of that ruling. See Paramount Aviation Corp. v. Agusta, 178 F.3d 132, 145 (3d Cir.
1999).
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is also not dispositive because, while the CCP determined that McCabe was “fully

apprised” of the statement’s falseness when he published it, we have held that “act[ing]

deliberately with knowledge of a high degree of probability” that harm will occur is “less

than substantial certainty” as required under § 523(a)(6). Conte, 33 F.3d at 307. Because

the issue the CCP decided is not “identical with the one presented” here, collateral

estoppel does not apply. Safeguard Mut. Ins. Co. v. Williams, 345 A.2d 664, 668 (Pa.

1975).

   Corcoran also argues that the Bankruptcy Court erred by not admitting a copy of the

damages hearing transcript into evidence. The Bankruptcy Court concluded that the

transcript was inadmissible, and the District Court agreed. But we need not reach that

issue because the transcript contains no finding of willful and malicious injury either.

The Bankruptcy Court “reviewed the Statements [in the transcript] and concluded that

none of them could possibly be construed as an admission that [McCabe] posted the

Defamatory Message, much less that [he] intended to cause a willful and malicious

injury.” J.A. 93. We agree. Even if we disagreed with the Bankruptcy Court’s ruling,

because the Bankruptcy Court’s decision not to admit the transcript did not “affect the

outcome of the case,” it was at most harmless error. GN Netcom, Inc. v. Plantronics,

Inc., 930 F.3d 76, 88 (3d Cir. 2019) (internal quotation omitted).

   III.     Conclusion

         For the foregoing reasons, we will affirm the judgment of the District Court.

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