Court Opinion

ID: 4148357
Source: CourtListenerOpinion
Date Created: 2017-02-24 21:01:44.706459+00
Date Added: 2024-06-11T14:45:22.239206
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                            FEB 24 2017
                    UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

In re: NARINDER SANGHA,                          No.   15-60057

          Debtor,                                BAP No. 14-1397
______________________________

CHARLES EDWARD SCHRADER,                         MEMORANDUM*

              Appellant,

 v.

NARINDER SANGHA,

              Appellee.

                          Appeal from the Ninth Circuit
                           Bankruptcy Appellate Panel
            Kirscher, Pappas, and Taylor, Bankruptcy Judges, Presiding

                      Argued and Submitted February 9, 2017
                               Pasadena, California

Before: SCHROEDER, PREGERSON, and MURGUIA, Circuit Judges.

      Creditor-Appellant Charles Schrader appeals the Bankruptcy Appellate

Panel’s (“BAP”) memorandum disposition vacating the bankruptcy court’s order

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
that granted summary judgment in favor of Schrader against Debtor-Appellee

Narinder Sangha based on issue preclusion. We have jurisdiction under 28 U.S.C.

§ 158(d)(1).1 We affirm the BAP and remand to the bankruptcy court.2

      A California state trial court awarded Schrader a default judgment against

Sangha. The default judgment included a punitive damage award.

      Thereafter, the bankruptcy court granted summary judgment in favor of

Schrader based on issue preclusion. The bankruptcy court held that Schrader’s

default judgment was not dischargeable under 11 U.S.C. § 523(a)(6). The

bankruptcy court found that the punitive damage award, standing alone, precluded

relitigation of § 523(a)(6)’s “willful and malicious” intent requirements3 because

the punitive damage award was based on a California state trial court’s finding of

“malice in fact.”

      1
          We exercise jurisdiction in light of the liberal standard for finality in
bankruptcy appeals. This court can exercise jurisdiction if the issue before the
court is legal and if resolving that issue “would aid the bankruptcy court in
reaching its disposition on remand,” as is the case here. Bonner Mall P’ship v.
U.S. Bancorp Mortg. Co., 2 F.3d 899, 904 (9th Cir. 1993).
      2
        Creditor-Appellant Charles Schrader’s motion to strike portions of Debtor-
Appellee Narinder Sangha’s answering brief is DENIED.
      3
         The “willful” and “malicious” intent requirements are conjunctive and
require separate analyses. Carrillo v. Su (In re Su), 290 F.3d 1140, 1146 (9th Cir.
2002). “Willful” intent must be established before “malicious” intent may be
concluded. See Thiara v. Spycher Bros. (In re Thiara), 285 B.R. 420, 434 (9th Cir.
BAP 2002).
                                           2
      Between the time of the bankruptcy court’s decision and the BAP’s review

of this bankruptcy appeal, Plyam v. Precision Development, LLC (In re Plyam),

530 B.R. 456 (9th Cir. BAP 2014) was decided, which called into question the

bankruptcy court’s reasoning. In re Plyam held that a California state court

punitive damage award, standing alone, does not preclude relitigation of

§ 523(a)(6)’s “willful” intent requirement. 530 B.R. at 463–65 (holding that

“under California law, the general definition of malice in fact encompasses less

reprehensible states of mind” than § 523(a)(6)’s “willful” intent requirement).

      Applying In re Plyam to this bankruptcy appeal, the state court’s punitive

damage award, standing alone, did not preclude relitigation of § 523(a)(6)’s

“willful” intent requirement. In determining whether relitigation of § 523(a)(6)’s

“willful” intent requirement is precluded, In re Plyam requires that the bankruptcy

court review the allegations in Schrader’s second amended complaint together with

the punitive damage award. See 530 B.R. 456 at 465.

      We AFFIRM the BAP. On REMAND, the bankruptcy court shall re-

evaluate whether issue preclusion is available in light of In re Plyam, 530 B.R.
456, 463–65 (9th Cir. BAP 2014). Accordingly, the bankruptcy court must

consider whether the state court default judgment and the allegations in Schrader’s

second amended complaint preclude relitigation of § 523(a)(6)’s “willful” intent

                                          3
requirement. If the bankruptcy court determines that the allegations in the second

amended complaint together with the punitive damage award preclude relitigation

of § 523(a)(6)’s “willful and malicious” intent requirements, then the California

state trial court default judgment in favor of Schrader is not dischargeable.

      AFFIRMED and REMANDED to the bankruptcy court.

                                           4