Court Opinion

ID: 4218424
Source: CourtListenerOpinion
Date Created: 2017-11-07 23:02:01.318736+00
Date Added: 2024-06-11T14:41:40.939217
License: Public Domain

FILED
                                                              NOV 07 2017
 1                         NOT FOR PUBLICATION
                                                          SUSAN M. SPRAUL, CLERK
                                                            U.S. BKCY. APP. PANEL
 2                                                          OF THE NINTH CIRCUIT

 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
                              OF THE NINTH CIRCUIT
 4
 5   In re:                        )      BAP No.      AZ-17-1071-FSKu
                                   )
 6   PATRICIA MARCELLO ANDERSON    )      Bk. No.      14-bk-12221-GBN
     and ANTHONY MARCUS ANDERSON, )
 7                                 )      Adv. Pro. 14-ap-00927-GBN
                    Debtors.       )
 8   _____________________________ )
                                   )
 9   CWB HOLDINGS, LLC,            )
                                   )
10                  Appellant,     )
                                   )
11   v.                            )      MEMORANDUM*
                                   )
12   PATRICIA MARCELLO ANDERSON;   )
     ANTHONY MARCUS ANDERSON,      )
13                                 )
                    Appellees.     )
14   ______________________________)
15                  Argued and Submitted on October 26, 2017
                               at Phoenix, Arizona
16
                            Filed – November 7, 2017
17
              Appeal from the United States Bankruptcy Court
18                      for the District of Arizona
19     Honorable George B. Nielsen, Jr., Bankruptcy Judge, Presiding
20
     Appearances:     Patrick J. Davis of Fidelity National Law Group
21                    argued on behalf of appellant CWB Holdings, LLC;
                      Amy Sells of Tiffany & Bosco, P.A. argued on
22                    behalf of appellees Patricia Marcello Anderson and
                      Anthony Marcus Anderson.
23
24   Before: FARIS, SPRAKER, and KURTZ, Bankruptcy Judges.
25
26        *
            This disposition is not appropriate for publication.
27   Although it may be cited for whatever persuasive value it may
     have, see Fed. R. App. P. 32.1, it has no precedential value, see
28   9th Cir. BAP Rule 8024-1.
 1                                INTRODUCTION
 2        CWB Holdings, LLC (“CWB”) recovered a judgment in state
 3   court against Patricia Marcello Anderson and Anthony Marcus
 4   Anderson for their wrongful recordation and refusal to remove two
 5   lis pendens against CWB’s property.     After the Andersons filed a
 6   chapter 71 bankruptcy petition, CWB argued that the judgment debt
 7   is not dischargeable under § 523(a)(6).     The bankruptcy court
 8   ruled that the state court judgment precluded relitigation of all
 9   issues other than the Andersons’ mental state; more precisely,
10   the court ruled that a trial was necessary to decide whether they
11   had relied on the advice of counsel.
12        After the trial, the court found that CWB did not establish
13   the Andersons’ scienter, because the Andersons’ reliance on the
14   advice of counsel negated the requisite mental state.     Although
15   other courts may have found differently, we cannot say that the
16   bankruptcy court committed clear error when it found that the
17   Andersons relied on their attorneys’ advice.
18        We AFFIRM.
19                             FACTUAL BACKGROUND2
20   A.   Prepetition events
21        1.   The real property sale
22
23
          1
            Unless specified otherwise, all chapter and section
24   references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532.
25        2
            We exercise our discretion to review the documents on the
26   bankruptcy court’s electronic docket. See Woods & Erickson, LLP
     v. Leonard (In re AVI, Inc.), 389 B.R. 721, 725 n.2 (9th Cir. BAP
27   2008). We additionally rely on the Arizona appellate court’s
     factual recitation in CWB Holdings, LLC v. Anderson, No. 1 CA-CV
28   10-0791, 2011 WL 6210526 (Ariz. Ct. App. Dec. 13, 2011).

                                        2
 1        Mr. Anderson is a sophisticated entrepreneur in the business
 2   of mergers and acquisitions.    In 2002, he set up a wealth
 3   protection plan for the benefit of his children.    Property in the
 4   plan included two parcels of real property located at 8723 E. Via
 5   de Commercio, Scottsdale, Arizona.
 6        In 2005, Mr. Anderson sought to acquire the adjacent real
 7   property located at 8727 E. Via de Commercio (the “Property”),
 8   then owned by Frederick and Barbara Dettmann, for inclusion in
 9   the wealth protection plan.    According to Mr. Anderson, he
10   reached an oral agreement to purchase the Property for $625,000
11   and established 8727 E. Via de Commercio, LLC (“8727 LLC”) for
12   this purpose.    However, the Andersons did not have a written
13   purchase agreement with the Dettmanns.
14        The Dettmanns instead agreed to sell the Property to CWB for
15   $660,000.    They conveyed the Property to CWB via special warranty
16   deed recorded on February 8, 2006.
17        2.     The specific performance action
18        Earlier that day, the Andersons filed a complaint against
19   the Dettmanns in Arizona state court, seeking specific
20   performance of the alleged contract to buy the Property for
21   $625,000 (the “Specific Performance Action”).    About twenty
22   minutes before the deed from the Dettmanns to CWB was recorded,
23   the Andersons filed and recorded a lis pendens against the
24   Property (the “2006 lis pendens”).
25        By letter dated February 10, 2006, CWB’s attorneys demanded
26   that Mr. Anderson release the 2006 lis pendens.    By a second
27   letter dated February 16, 2006, CWB requested that the Andersons
28   execute a quitclaim deed.    Mr. Anderson did not comply.

                                       3
 1        With the state court’s permission, the Andersons filed an
 2   amended complaint, substituting 8727 LLC as the plaintiff in
 3   place of the Andersons personally and adding CWB as a defendant.
 4   The amended complaint alleged breach of contract against the
 5   Dettmanns and constructive trust against CWB and dropped the
 6   prayer for specific performance.
 7        In January 2007, the court dismissed the Specific
 8   Performance Action for lack of prosecution.     CWB requested again
 9   that Mr. Anderson remove the 2006 lis pendens.     The Andersons did
10   not comply.     Instead, 8727 LLC successfully moved the court to
11   reinstate the case.
12        3.      The wrongful recordation action
13        On May 31, 2007, CWB again requested in writing that
14   Mr. Anderson remove the 2006 lis pendens and execute a quitclaim
15   deed.     When Mr. Anderson did not comply, CWB filed a state-court
16   complaint against the Andersons for wrongful recordation and
17   quiet title (the “Wrongful Recordation Action”).
18        In response, the Andersons, acting through their counsel
19   Wilenchik & Bartness, recorded a second notice of lis pendens in
20   October 2007 (the “2007 lis pendens”).     Although the Andersons
21   had been prepared to release the 2006 lis pendens and “go home,”
22   they changed their mind when CWB personally named them in the
23   Wrongful Recordation Action.3
24
25
          3
26          Mr. Anderson said that he was prepared to release the 2006
     lis pendens because of the expense of litigation but changed his
27   mind when CWB sued him. Mr. Anderson claimed that he viewed the
     suit against him personally as an attempt to “punch through my
28   kids[’] trust and take their assets.”

                                        4
 1        4.    Summary judgment in the specific performance action
 2        In November 2007, the Dettmanns moved for summary judgment
 3   in the Specific Performance Action, arguing that the Andersons
 4   and 8727 LLC could not establish the existence of a contract with
 5   the Dettmanns.    The court granted the motion by minute order.
 6        In March 2008, the state court consolidated the Specific
 7   Performance Action with the Wrongful Recordation Action.
 8        On April 1, 2008, the court entered judgment against the
 9   Andersons in the Specific Performance Action and ordered the
10   Andersons to remove the lis pendens within ten days:
11        CWB is the lawful owner of the [Property] . . . [the
          Andersons and 8727] have no right, title or interest in
12        the Property. The Court hereby quashes and renders
          null and void any and all lis pendens recorded by [the
13        Andersons and 8727] against the Property.
          Notwithstanding the foregoing, the Court orders [the
14        Andersons and 8727] to remove any and all lis pendens
          any of them have filed against the Property by filing
15        and recording sufficient Notices of Removal of Lis
          Pendens with the Maricopa County Recorder within ten
16        (10) days of the date of this Judgment.
17        CWB sent the Andersons’ counsel another letter on April 8,
18   2008 demanding removal of the lis pendens.    The Andersons did not
19   comply with either the letter or the court order.    Mr. Anderson
20   and his attorneys – at that time, Dennis Wilenchik and Amy Sells
21   (nee Reyes) – decided that they did not need to comply with the
22   order and remove the two lis pendens because the judgment was not
23   final.    Rather than comply, the Andersons filed a motion to amend
24   the judgment.    The court denied that motion in June 2008.
25        On June 20, 2008, CWB sent another letter to the Andersons
26   asking that they remove the lis pendens.    The Andersons did not
27   comply.
28

                                       5
 1        5.    The order to show cause and release of the lis pendens
 2        On July 1, 2008, the court issued an order to show cause
 3   (the “OSC”) why 8727 LLC and the Andersons should not be held in
 4   contempt for failing to remove the lis pendens.      The hearing date
 5   on the OSC was August 7.
 6        On July 31, the Andersons and 8727 LLC filed releases of the
 7   lis pendens.    Mr. Anderson claimed that he still did not believe
 8   that he needed to release the lis pendens and that he did so as
 9   “a courtesy.”
10        The Andersons and 8727 LLC also filed a notice of appeal in
11   the Specific Performance Action.       They challenged only the entry
12   of judgment against them personally and did not attack the
13   portion of the judgment requiring them to release the lis
14   pendens.   In November 2009, the Arizona appeals court vacated the
15   judgment as to the Andersons; as such, the Andersons were not
16   personally liable on the judgment.
17        6.    Summary judgment in the wrongful recordation action
18        In December 2008, CWB filed a motion for partial summary
19   judgment on liability as to the wrongful recordation.      CWB argued
20   that, in light of the court’s grant of summary judgment in the
21   Specific Performance Action and the finding that no agreement
22   existed between the parties, the Andersons must have known that
23   the lis pendens were groundless or otherwise invalid.
24        Following a hearing, the court granted the motion for
25   partial summary judgment, holding the Andersons liable for
26   wrongfully recording the lis pendens.      After a trial, a jury
27   awarded actual damages of $180,000 to CWB and against the
28   Andersons.   The court awarded CWB treble damages under Arizona

                                        6
 1   Revised Statutes section 33-420(A) and (C), for a total of
 2   $540,000 plus fees and costs (the “Judgment”).
 3        The Andersons appealed the Judgment, but the Arizona court
 4   of appeals affirmed it in its entirety.
 5   B.   Bankruptcy events
 6        1.   CWB’s § 523(a)(6) claim
 7        In August 2014, the Andersons filed a chapter 7 petition in
 8   the United States Bankruptcy Court for the District of Arizona.
 9   CWB filed an adversary proceeding seeking a determination of
10   nondischargeability of the Judgment under §§ 523(a)(2)(A) and (6)
11   and denial of discharge under § 727(a)(2)(A).
12        2.   Motion for summary judgment
13        CWB filed a motion for partial summary judgment on its
14   § 523(a)(6) claim (“Motion for Summary Judgment”).   It argued
15   that the Judgment precluded the Andersons from relitigating the
16   same issues raised in the Wrongful Recordation Action, including
17   willful and malicious injury, and that, regardless of issue
18   preclusion, the Andersons’ actions were willful and malicious.
19        As to the application of issue preclusion, CWB argued that
20   the Judgment established all of the elements of § 523(a)(6).
21   Liability under section 33-420(C) of the Arizona Revised Statutes
22   requires that a person “wilfully refuses to release or correct” a
23   recorded document that encumbers real property “when that person
24   knows that the document is forged, groundless, contains a
25   material misstatement or false claim or is otherwise invalid.”
26   CWB argued that “the Andersons willfully refused to release the
27   lis pendens even after the State Court ordered them to do so.
28   Only when faced with a show cause hearing did the Andersons

                                     7
 1   finally release the lis pendens — 29 months after the first
 2   demand to release had been made.”    It also argued that the
 3   Andersons acted maliciously because they wrongfully recorded the
 4   lis pendens; they intentionally refused to release the lis
 5   pendens, even though the state court said it was groundless;
 6   there was no just cause or excuse; and the state court determined
 7   that CWB suffered actual damages.
 8        CWB alternatively argued that, even if the court did not
 9   apply issue preclusion, the undisputed facts demonstrated that
10   the Andersons’ actions resulted in willful and malicious injury.
11        In opposition, the Andersons argued that “[t]here was no
12   discussion by the Court or by the jury as to the issue of
13   ‘willful and malicious’ actions by the Defendants.”    They also
14   claimed that section 33-420 required only a willful act, not a
15   malicious act.   They asserted that their actions were not
16   malicious and argued that they acted on the advice of their
17   attorneys: “Upon advice of counsel, we did not release the Notice
18   of Lis Pendens based upon his recommendation that we appeal the
19   judgment . . . .”
20        At the hearing on the Motion for Summary Judgment, the
21   bankruptcy court granted the motion in part, holding that CWB had
22   established all elements of § 523(a)(6) except the issue of the
23   Andersons’ scienter.   It recited the extensive facts of the case
24   and stated:
25        Under these facts I have little difficulty in
          concluding that the Plaintiff has established
26        sufficient evidence here for a finding of summary
          judgment, but there’s a nagging problem here that’s
27        loose and that is the advice of counsel defense.
          Again, the Plaintiff has established a strong record
28        for granting summary judgment, but as noted by the

                                      8
 1        State Court of Appeals and interpreting A.R.S. 33-420
          liability is imposed only if the person causing the
 2        filing of the invalid document knows or has reason to
          know the document is invalid, thereby mandating the
 3        finding of scienter on the part of the person causing
          the filing.
 4
          The court expressed skepticism that the Andersons could
 5
     establish that they relied on the advice of their counsel, but it
 6
     nevertheless determined that a trial was necessary.
 7
          3.   Trial
 8
          Only Mr. Anderson and attorney Dennis Wilenchik (who
 9
     represented the Andersons between late 2007 and July of 2008)
10
     testified at trial.
11
          Mr. Wilenchik’s representation spanned the period including
12
     the filing of the 2007 lis pendens, the state court’s January 25,
13
     2008 minute order dismissing the Andersons’ Specific Performance
14
     Action, the April 1, 2008 judgment ordering the Andersons to
15
     remove the lis pendens within ten days, the July 2008 OSC, and
16
     the eventual removal of the lis pendens in July 2008.
17
     Mr. Wilenchik testified that he had no recollection of any
18
     discussion with the Andersons about removing the lis pendens, nor
19
     did he recall ever advising the Andersons not to release the
20
     lis pendens.   Rather, he testified that the decision to remove
21
     the lis pendens was up to the attorney – not the clients - and
22
     that he would not have removed the lis pendens, even if
23
     Mr. Anderson had instructed him to do so:
24
          I don’t believe I would have gone to the Andersons and
25        consulted them as to whether it should be released or
          not. I would have probably, if anything, told them
26        this is the way I see it, if it came up. I don’t
          recall it coming up quite honestly and I certainly
27        don’t recall them dictating to me nor would I listen
          to it as to what I should do with it.
28

                                      9
 1        Mr. Wilenchik testified that he did not believe that he had
 2   to remove the lis pendens - even in the face of the state court’s
 3   order - because he had filed a postjudgment motion to amend.       He
 4   thus thought that it was not necessary to either remove the lis
 5   pendens within ten days or seek a motion to stay pending appeal.
 6        Mr. Anderson gave somewhat shifting testimony.      He stated
 7   that he could not recall any specific conversation with
 8   Mr. Wilenchik about removing the lis pendens, but he recalled
 9   discussing the matter with Mr. Wilenchik’s then-associate,
10   Amy Sells.4    He could not remember any specific conversations or
11   advice, but testified that they determined that they would not
12   release the lis pendens.     He said that the attorneys conveyed
13   “[t]hat it would be a mistake” to do so.
14            Regarding advice by other attorneys, Mr. Anderson gave
15   ambiguous testimony about whether any of his prior attorneys had
16   advised him not to release the lis pendens earlier: “it wasn’t
17   nice, neat conversations where they said, I advise you this, it
18   was merely you handled the case as the attorneys, you know, you
19   did what you think is right, that really was the nature of the
20   advice or the guidance.     It wasn’t conversations where they say,
21   I advise you.     It wasn’t that nice and convenient.”
22        After the parties submitted written closing briefs and oral
23   closing argument, the court announced its findings of fact and
24   conclusions of law.     While the court did not agree with
25   Mr. Wilenchik’s legal views, it found his testimony credible and
26
          4
27          Counsel for CWB pointed out that Mr. Anderson had
     previously testified at his deposition that there were no
28   conversations between April 1, 2008 and July 31, 2008.

                                       10
 1   that, while Mr. Wilenchik did not recall ever advising
 2   Mr. Anderson not to release the lien, he must have somehow
 3   communicated that belief to Mr. Anderson.    The bankruptcy court
 4   concluded:
 5             As I’ve indicated, the advice of counsel issue is
          not strongly established by the Defense, but I believe
 6        it was established clearly, that is Mr. Wilenchik’s
          opinion on these matters and clearly in some manner
 7        Mr. Anderson gained that understanding as well and it’s
          very clear to the fact finder that he never received
 8        advice from his attorney that he should release the
          lis pendens sooner than the date that he actually did
 9        so, which was done for economic reasons.
10        The bankruptcy court issued its final judgment (with Civil
11   Rule 54(b) certification) dismissing CWB’s § 523(a)(6) claim.
12   CWB timely filed its notice of appeal.
13                                JURISDICTION
14        The bankruptcy court had jurisdiction pursuant to 28 U.S.C.
15   §§ 1334 and 157(b)(2)(I).    We have jurisdiction under 28 U.S.C.
16   § 158.
17                                   ISSUES
18        (1) Whether the bankruptcy court erred in declining to apply
19   issue preclusion to the issue of scienter.
20        (2) Whether the bankruptcy court erred in dismissing CWB’s
21   § 523(a)(6) claim based on its finding that the Andersons lacked
22   willful and malicious intent in refusing to remove the lis
23   pendens because they relied on the advice of their counsel.
24                          STANDARDS OF REVIEW
25        In bankruptcy discharge appeals after trial, we review the
26   bankruptcy court’s findings of fact for clear error and
27   conclusions of law de novo, and we apply de novo review to mixed
28   questions of law and fact.    Oney v. Weinberg (In re Weinberg),

                                       11
 1   410 B.R. 19, 28 (9th Cir. BAP 2009), aff’d, 407 F. App’x 176 (9th
 2   Cir. 2010) (citation omitted).    De novo review requires that we
 3   consider a matter anew, as if no decision had been rendered
 4   previously.   United States v. Silverman, 861 F.2d 571, 576 (9th
 5   Cir. 1988).
 6        A factual finding is clearly erroneous if, after examining
 7   the evidence, the reviewing court “is left with the definite and
 8   firm conviction that a mistake has been committed.”    Anderson v.
 9   City of Bessemer City, 470 U.S. 564, 573 (1985).    “To be clearly
10   erroneous, a decision must strike us as more than just maybe or
11   probably wrong; it must . . . strike us as wrong with the force
12   of a five-week-old, unrefrigerated dead fish.”    Papio Keno Club,
13   Inc. v. City of Papillion (In re Papio Keno Club, Inc.), 262 F.3d
14   725, 729 (8th Cir. 2001) (quoting Parts & Elec. Motors, Inc. v.
15   Sterling Elec., Inc., 866 F.2d 228, 233 (7th Cir. 1988)).      The
16   bankruptcy court’s choice among multiple plausible views of the
17   evidence cannot be clear error.    United States v. Elliott,
18   322 F.3d 710, 714 (9th Cir. 2003).
19        The availability of issue preclusion is reviewed de novo,
20   but “[i]f issue preclusion is available, the decision to apply it
21   is reviewed for abuse of discretion.”    Lopez v. Emergency Serv.
22   Restoration, Inc. (In re Lopez), 367 B.R. 99, 103 (9th Cir. BAP
23   2007) (citations omitted).   To determine whether the bankruptcy
24   court has abused its discretion, we conduct a two-step inquiry:
25   (1) we review de novo whether the bankruptcy court “identified
26   the correct legal rule to apply to the relief requested” and
27   (2) if it did, whether the bankruptcy court’s application of the
28   legal standard was illogical, implausible, or without support in

                                       12
 1   inferences that may be drawn from the facts in the record.
 2   United States v. Hinkson, 585 F.3d 1247, 1262–63 & n.21 (9th Cir.
 3   2009) (en banc).
 4                                 DISCUSSION
 5   A.   The bankruptcy court did not err in declining to apply issue
          preclusion to the question of the Andersons’ scienter.
 6
 7        CWB argues that the bankruptcy court erred in refusing to
 8   apply issue preclusion to the question of the Andersons’ scienter
 9   because the state court had already determined their willful and
10   malicious intent.   We disagree.
11        The doctrine of issue preclusion prohibits relitigation of
12   issues that have been adjudicated in a prior action.
13   In re Lopez, 367 B.R. at 104.    The party asserting issue
14   preclusion bears the burden of proof as to all elements and must
15   introduce a sufficient record to reveal the controlling facts and
16   the exact issues litigated.    Kelly v. Okoye (In re Kelly),
17   182 B.R. 255, 258 (9th Cir. BAP 1995), aff’d, 100 F.3d 110
18   (9th Cir. 1996).    “Any reasonable doubt as to what was decided by
19   a prior judgment should be resolved against allowing the [issue
20   preclusive] effect.”   Id.
21        Issue preclusion applies in nondischargeability litigation.
22   Grogan v. Garner, 498 U.S. 279, 284–285 (1991).     A bankruptcy
23   court may rely on the issue preclusive effect of an existing
24   state court judgment as the basis for granting summary judgment.
25   See Khaligh v. Hadaegh (In re Khaligh), 338 B.R. 817, 831–32 (9th
26   Cir. BAP 2006).    In so doing, the bankruptcy court must apply the
27   forum state’s law of issue preclusion.     Harmon v. Kobrin
28   (In re Harmon), 250 F.3d 1240, 1245 (9th Cir. 2001); see

                                        13
 1   28 U.S.C. § 1738 (federal courts must give “full faith and
 2   credit” to state court judgments).   Accordingly, we apply
 3   Arizona’s law of issue preclusion.
 4        In Arizona, “issue preclusion is applicable when the issue
 5   or fact to be litigated was actually litigated in a previous
 6   suit, a final judgment was entered, and the party against whom
 7   the doctrine is to be invoked had a full opportunity to litigate
 8   the matter and actually did litigate it, provided such issue or
 9   fact was essential to the prior judgment.”   Chaney Bldg. Co. v.
10   City of Tucson, 148 Ariz. 571, 573, 716 P.2d 28, 30 (1986) (en
11   banc).
12        However, Arizona recognizes that, “even in cases in which
13   the technical requirements for the application of collateral
14   estoppel are met, courts do not preclude issues when special
15   circumstances exist.”   Hullett v. Cousin, 204 Ariz. 292, 298,
16   63 P.3d 1029, 1035 (2003) (en banc) (citing Ferris v. Hawkins,
17   135 Ariz. 329, 331, 660 P.2d 1256, 1258 (App. 1983) (“Principles
18   of issue preclusion should not be applied . . . where ‘there is
19   some overriding consideration of fairness to a litigant, which
20   the circumstances of the particular case would dictate.’”)); see
21   Kirkland v. Barnes (In re Kirkland), BAP No. AZ–08–1143–EMoMk,
22   2008 WL 8444824, at *7–8 (9th Cir. BAP Nov. 26, 2008) (“Even when
23   the threshold requirements for issue preclusion are met, its
24   application may not be appropriate when the policies of judicial
25   economy and avoidance of inconsistent results are outweighed by
26   other substantive policies[.]”).
27        In the present case, CWB sought to give issue preclusive
28   effect to the state court’s Judgment against the Andersons under

                                     14
 1   section 33-420, in order to avoid relitigation of its § 523(a)(6)
 2   claim.   We must compare the elements of § 523(a)(6) with the
 3   state court’s rulings under section 33-420.
 4        Section 523(a)(6) renders nondischargeable any debt arising
 5   from “willful and malicious injury by the debtor to another
 6   entity or to the property of another entity.”   § 523(a)(6).    The
 7   “willful” and “malicious” requirements are conjunctive and
 8   subject to separate analysis.   Barboza v. New Form, Inc.
 9   (In re Barboza), 545 F.3d 702, 706 (9th Cir. 2008).
10        Regarding the “willful” prong, we have stated:
11             The willful injury requirement speaks to the state
          of mind necessary for nondischargeability. An exacting
12        requirement, it is satisfied when a debtor harbors
          either a subjective intent to harm, or a subjective
13        belief that harm is substantially certain. The injury
          must be deliberate or intentional, not merely a
14        deliberate or intentional act that leads to injury.
          Thus, debts arising from recklessly or negligently
15        inflicted injuries do not fall within the compass of
          § 523(a)(6).
16
17   Plyam v. Precision Dev., LLC (In re Plyam), 530 B.R. 456, 463
18   (9th Cir. BAP 2015) (internal citations and quotation marks
19   omitted).
20        In contrast, “a ‘malicious’ injury involves ‘(1) a wrongful
21   act, (2) done intentionally, (3) which necessarily causes injury,
22   and (4) is done without just cause or excuse.’”   Petralia v.
23   Jercich (In re Jercich), 238 F.3d 1202, 1209 (9th Cir. 2001)
24   (citation omitted).
25        The Arizona state court held that the Anderson were liable
26   to CWB under section 33-420:
27        A. A person purporting to claim an interest in, or a
          lien or encumbrance against, real property, who causes
28        a document asserting such claim to be recorded in the

                                     15
 1        office of the county recorder, knowing or having reason
          to know that the document is forged, groundless,
 2        contains a material misstatement or false claim or is
          otherwise invalid is liable to the owner or beneficial
 3        title holder of the real property for the sum of not
          less than five thousand dollars, or for treble the
 4        actual damages caused by the recording, whichever is
          greater, and reasonable attorney fees and costs of the
 5        action.
 6        . . .
 7        C. A person who is named in a document which purports
          to create an interest in, or a lien or encumbrance
 8        against, real property and who knows that the document
          is forged, groundless, contains a material misstatement
 9        or false claim or is otherwise invalid shall be liable
          to the owner or title holder for the sum of not less
10        than one thousand dollars, or for treble actual
          damages, whichever is greater, and reasonable attorney
11        fees and costs as provided in this section, if he
          wilfully refuses to release or correct such document of
12        record within twenty days from the date of a written
          request from the owner or beneficial title holder of
13        the real property.
14   Ariz. Rev. Stat. § 33-420(A), (C).     Subsection (A) deals with the
15   recordation of the document, while subsection (C) concerns the
16   failure to remove the document.
17        We have previously held (in an unpublished disposition) that
18   a finding of liability under section 33-420 satisfies the willful
19   and malicious elements of § 523(a)(6).    In Bosworth v. TEM
20   Holdings, LLC (In re Bosworth), BAP No. AZ-11-1157-JuKiWi, 2012
21 WL 603715 (9th Cir. BAP Feb. 2, 2012), we considered whether a
22   judgment against the debtors for wrongful recordation of a
23   fraudulent power of attorney was sufficient to establish willful
24   and malicious injury for issue preclusion purposes.    We held that
25   “the liability imposed for a knowing violation of the statute is
26   the equivalent of an intentional injury under § 523(a)(6)” and
27   “that the conduct proscribed by ARS § 33–420 required TEM to
28   prove the classic elements of a malicious injury under

                                       16
 1   § 523(a)(6).”   2012 WL 603715, at *6.
 2        Bosworth is not binding precedent and is factually
 3   distinguishable.   First, the Andersons claim that they filed and
 4   refused to release the lis pendens based on the advice of
 5   counsel; the debtor in Bosworth made no such claim.   Second, the
 6   state court in Bosworth found that the debtors knew their filing
 7   was improper; the Bosworth panel declined to address the question
 8   whether issue preclusion would apply if the state court had found
 9   that the debtors only “ha[d] reason to know” that the filing was
10   improper.   Id. at *6 n.10.   In this case, as far as we can tell
11   from the record on appeal, the state court did not explicitly
12   find that the Andersons knew (rather than had reason to know)
13   that the lis pendens were improper.   Third, Arizona law provides
14   that courts have discretion to decline to apply issue preclusion
15   in exceptional circumstances, even when all of the minimum
16   requirements are met.   See Hullett, 204 Ariz. at 298, 63 P.3d at
17   1035.   So the bankruptcy court was not compelled to apply issue
18   preclusion in any event.
19        Therefore, the bankruptcy court did not abuse its discretion
20   in declining to give issue preclusive effect to the state court
21   Judgment as to the Andersons’ scienter.
22   B.   The bankruptcy court’s consideration of the effect of advice
          of counsel on the Andersons’ scienter was not clear error.
23
24        CWB argues that the bankruptcy court erred in finding that
25   the Andersons relied on the advice of their counsel when they
26   refused to release the lis pendens.   We conclude that the
27   bankruptcy court did not clearly err in finding that the
28   Andersons lacked the necessary scienter under § 523(a)(6).

                                      17
 1        In the context of bankruptcy and dischargeability, the Ninth
 2   Circuit has stated:
 3        It is true that “[g]enerally, a debtor who acts in
          reliance on the advice of his attorney lacks the intent
 4        required to deny him a discharge of his debts.” That
          reliance, however, must be “in good faith.” This court
 5        has held that the advice of counsel claim is not a
          separate defense, but rather “a circumstance indicating
 6        good faith which the trier of fact is entitled to
          consider on the issue of fraudulent intent.”
 7
 8   Maring v. PG Alaska Crab Inv. Co. LLC (In re Maring), 338 F.
9   App’x 655, 658 (9th Cir. 2009) (internal citations and emphasis
10   omitted).   “[T]he debtor’s reliance must be in good faith.”
11   First Beverly Bank v. Adeeb (In re Adeeb), 787 F.2d 1339, 1343
12   (9th Cir. 1986) (internal citations omitted).   The defendant has
13   the burden of proving the requisite elements of advice of
14   counsel.    See Bisno v. United States, 299 F.2d 711, 720 (9th Cir.
15   1961) (declining to give an advice of counsel instruction when
16   the defendant did not testify and establish each element);
17   Stephens v. Stinson, 292 F.2d 838, 838 (9th Cir. 1961) (“Of
18   course, it is usually a question of fact whether clients
19   implicitly relied on advice of counsel. . . .   And, clearly, here
20   the burden of proof shifted to the bankrupts.”).
21        In other words, advice of counsel can negate the mental
22   state required by § 523(a)(6) only if the debtor establishes that
23   counsel actually gave advice and that the debtor acted in good
24   faith reliance on that advice.
25        In the present case, the bankruptcy court found that
26   Mr. Anderson relied on the advice of Mr. Wilenchik and his
27   associate when he refused to remove the lis pendens after the
28   state court ordered the Andersons to do so within ten days of the

                                      18
 1   April 1, 2008 judgment.    The bankruptcy court recognized that the
 2   evidence on this point was thin.      Mr. Wilenchik testified that he
 3   could not remember specifically advising Mr. Anderson not to
 4   release the lis pendens, but he would not have released it,
 5   regardless of what the Andersons instructed him to do, because
 6   the judgment was not final.    The bankruptcy court did not agree
 7   with Mr. Wilenchik’s legal analysis, but it nevertheless found
 8   his testimony credible and determined that Mr. Wilenchik or his
 9   associate must have communicated that advice to Mr. Anderson.
10        Although other judges might reach the opposite conclusion on
11   the same or similar facts, we cannot say that the bankruptcy
12   court clearly erred.    See Anderson, 470 U.S. at 573 (requiring
13   “the definite and firm conviction that a mistake has been
14   committed”).   If the bankruptcy court is faced with multiple
15   plausible views of the evidence, its choice among them cannot be
16   clear error.   See Elliott, 322 F.3d at 714.    There was evidence
17   to support the bankruptcy court’s inference that Mr. Wilenchik or
18   his associate did advise Mr. Anderson not to remove the lis
19   pendens.
20        CWB argues that the Andersons could not have relied on this
21   advice in good faith, because Mr. Anderson was a sophisticated
22   businessman and knew he should not defy a court order.     But the
23   bankruptcy court cited the correct legal standard and carefully
24   weighed the evidence.    It heard testimony that Mr. Anderson
25   relied on the legal advice of Mr. Wilenchik (and his prior
26   attorneys), and Mr. Wilenchik held a very strong belief (correct
27   or not) that he did not need to release the lis pendens.     It was
28   not clear error for the court to conclude that the Andersons

                                      19
 1   relied on the advice in good faith.
 2        CWB argues that the bankruptcy court erred because the
 3   Andersons could not have acted on the advice of counsel when they
 4   initially filed the lis pendens in 2006 and 2007 and repeatedly
 5   refused to release them.    Specifically, CWB twice demanded that
 6   the Andersons remove the lis pendens in February 2006 and May
 7   2007, and the Andersons rejected or ignored both demands.    Both
 8   of these instances predate Mr. Wilenchik’s representation of the
 9   Andersons, so he could not have advised the Andersons to decline
10   CWB’s written requests.    Although the bankruptcy court did not
11   make any explicit findings as to advice by any attorney other
12   than Mr. Wilenchik, it took evidence concerning Mr. Anderson’s
13   pre-2008 interaction with counsel and their litigation
14   decisions.5   The court could have logically concluded that the
15   Andersons’ actions were pursuant to counsels’ advice.    We cannot
16   say that the bankruptcy court clearly erred.
17        Although we may not have made the same findings as the
18   bankruptcy court, we note that the bankruptcy court carefully
19   considered all of the evidence, extensively examined the
20   witnesses itself, and made logical inferences from the evidence.
21   We must defer to the court’s factual findings.
22                                CONCLUSION
23        For the foregoing reasons, we AFFIRM.
24
25
26        5
            Mr. Anderson testified that it was the idea of his then-
27   attorney, E.J. Peskind, to file the 2006 lis pendens. He also
     testified that his attorneys never advised him to release the
28   lis pendens.

                                      20