Court Opinion

ID: 9379227
Source: CourtListenerOpinion
Date Created: 2023-03-15 01:00:56.46142+00
Date Added: 2024-06-11T17:16:59.939318
License: Public Domain

FILED
                                                                                 MAR 14 2023
                          NOT FOR PUBLICATION
                                                                             SUSAN M. SPRAUL, CLERK
                                                                               U.S. BKCY. APP. PANEL
          UNITED STATES BANKRUPTCY APPELLATE PANEL                             OF THE NINTH CIRCUIT

                    OF THE NINTH CIRCUIT

 In re:                                             BAP No. AZ-21-1203-FLS
 NEAL JONES and AMY JONES,                          BAP No. AZ-22-1104-FLS
              Debtors.                              (Related Appeals)

 NEAL JONES,                                        Bk. No. 4:15-bk-00508-BMW
                     Appellant,
 v.                                                 Adv. No. 4:15-ap-00283-BMW
 RUCHIR PATEL,
              Appellee.
 NEAL JONES; AMY JONES,
              Appellants,                           MEMORANDUM*
 v.
 RUCHIR PATEL,
              Appellee.

              Appeal from the United States Bankruptcy Court
                        for the District of Arizona
            Brenda Moody Whinery, Bankruptcy Judge, Presiding

Before: FARIS, LAFFERTY, and SPRAKER, Bankruptcy Judges.

                                 INTRODUCTION

      Dr. Neal Jones hired Dr. Ruchir Patel to work at his incorporated

      *
        This disposition is not appropriate for publication. 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 9th Cir. BAP Rule 8024-1.
orthodontic practice in Illinois. Shortly thereafter, Dr. Jones relocated to

Arizona and directed the corporation’s business manager to withhold

Dr. Patel’s salary. Dr. Patel eventually obtained an Illinois state court

judgment against Dr. Jones and the corporation for unpaid wages.

      Dr. Jones and his wife, Amy Jones, filed for chapter 71 bankruptcy

protection in Arizona, and Dr. Patel sought to have the Illinois judgment

declared nondischargeable. After a trial, the bankruptcy court denied

discharge of the judgment debt under § 523(a)(6). It held that the judgment

was enforceable against the Joneses’ community property and that the

Illinois state interest rate, rather than the federal rate, applied to the

judgment.

      In these related appeals, Dr. Jones argues that the bankruptcy court

erred by finding that he intended to injure Dr. Patel and did so without just

cause or excuse. The Joneses also argue that the court erred in holding that

the Illinois judgment is enforceable against the marital community and

accrues interest at the Illinois state rate.

      All of the Joneses’ arguments are meritless. We AFFIRM.

                                       FACTS

A.    Dr. Patel’s employment at Dr. Jones’ orthodontic practice

      Dr. Patel entered into a two-year employment agreement with Sauk

      1
        Unless specified otherwise, all chapter and section references are to the
Bankruptcy Code, 11 U.S.C. §§ 101-1532, and all “Rule” references are to the Federal
Rules of Bankruptcy Procedure.

                                           2
Valley Orthodontics, P.C. (“SVO”), a corporation owned by Dr. Jones in

Illinois. 2 SVO agreed to pay Dr. Patel a monthly salary and did not

condition his compensation on the corporation’s cashflow.

      Around the time Dr. Patel began working at SVO, Dr. Jones relocated

from Illinois (which is not a community property state) to Arizona (which

is a community property state) and set up an orthodontic practice under

two entities. Dr. Patel became SVO’s sole practicing orthodontist.

      About a year and a half into Dr. Patel’s employment, SVO fell behind

on Dr. Patel’s monthly compensation. Although Dr. Patel was “begging” to

be paid, Dr. Jones directed Michael Squires – SVO’s accountant and the

person largely responsible for office management at Dr. Jones’ direction –

to withhold payment to Dr. Patel and instead pay SVO’s other debts and

obligations.

      In an e-mail to Mr. Squires dated March 21, 2013, Dr. Jones stated that

SVO would not pay Dr. Patel in full before the end of his employment

term, so Dr. Patel was “trapped into playing along [with] us.” In the same

e-mail, Dr. Jones directed Mr. Squires to withhold payment to Dr. Patel:

      [C]ontinue to not pay his full monthly salary; without
      communicating this to him, pay him relative to collections; we
      can select some figure that allows us to keep paying everyone
      else, grow a reserve, and stay afloat; don’t budge on [this]
      position; when [Dr. Patel] is motivated to be paid more
      (including to get his back pay), he’ll help the office do better;
      2
        At the time the parties entered into the agreement, the business was known as
Neal Jones, D.D.S., M.S., P.C., an Illinois Corporation.

                                           3
       pay [Dr. Patel] less, not more until things get better; ensure
       creditors are paid, but not [Dr. Patel]; [Dr. Patel] will likely
       change his attitude and behavior (major source of SVO’s
       problems) when he gets less pay, not more . . . .

       In later e-mails, Dr. Jones told Mr. Squires: “You must be paid, I must

be paid, the [office staff] must be paid, the suppliers must be paid, and the

creditors must be paid[;]” and “I’ve learned that [Dr. Patel] unless [sic] has

to fear something (generates motivation) or he’ll continue being apathetic.”

Mr. Squires followed Dr. Jones’ direction and did not pay Dr. Patel timely

or in full. Dr. Patel ceased working at SVO in September 2013.

B.     The Illinois litigation and judgment

       After SVO defaulted in making payments under a mediated

resolution, Dr. Patel obtained an arbitration award against Dr. Jones and

SVO for $68,455. The Illinois state court confirmed the award and entered a

judgment against Dr. Jones and SVO for $73,254 (the “Illinois Judgment”).3

Shortly thereafter, SVO ceased operations.

C.     The Joneses’ bankruptcy proceedings

       On January 20, 2015, Dr. Jones and Mrs. Jones filed a joint chapter 7

petition in the District of Arizona. The Joneses scheduled the Illinois

Judgment and described the debt as a non-contingent, liquidated,

undisputed community obligation.

       3
        The parties agree that the Illinois Judgment is a final judgment entitled to full
faith and credit.

                                             4
      Dr. Patel filed an adversary complaint against Dr. Jones, seeking to

deny discharge and have the Illinois Judgment declared nondischargeable

under §§ 523(a)(2)(A), (a)(4), and (a)(6). Dr. Patel later filed the operative

amended complaint that sought judgment against both Dr. Jones and “the

community composed of Neal LeBaron Jones and Amy Melissa Jones.” He

alleged that Dr. Jones’ actions “were undertaken on behalf of the

community of Neal LeBaron Jones and Amy Melissa Jones and [the debt] is

therefore a community obligation.”

      In his answer to the complaint, Dr. Jones admitted that all of the

conduct alleged in the adversary complaint was undertaken on behalf of

the marital community and that the debt was therefore a community

obligation.

      The Joneses moved to dismiss the amended complaint. Among other

things, they argued that Mrs. Jones should be dismissed with prejudice.

The court granted the motion as to the § 727(a) claim and all claims against

Mrs. Jones. The order did not address the claims against the “community”

of Dr. Jones and Mrs. Jones.

      1.      The trial on the nondischargeability claims

      The bankruptcy court held a two-day trial on Dr. Patel’s amended

complaint. Mr. Squires, Dr. Patel, and Dr. Jones testified.

      Mr. Squires testified about SVO’s operations and financial affairs. He

read e-mails into the record, including the e-mail in which Dr. Jones stated

                                        5
that “we have [Dr. Patel] trapped into playing along with us.” 4 Dr. Jones’

counsel did not ask Dr. Jones any questions about the e-mails; at oral

argument before this Panel, counsel explained that he made a tactical

judgment not to highlight the e-mails.

      Dr. Jones testified that he did not intend to harm Dr. Patel. Rather, he

explained that he, SVO, and Mr. Squires tried their best to pay everyone,

but they had many expenses and Dr. Patel “was the one that had the

biggest expenditure.”

      2.     The nondischargeability ruling

      On September 1, 2021, the bankruptcy court issued its memorandum

decision holding that the Illinois Judgment was nondischargeable. It

addressed only the § 523(a)(6) claim: whether the Illinois Judgment was a

debt for willful and malicious injury. It stated that, under Petralia v. Jercich

(In re Jercich), 238 F.3d 1202, 1205 (9th Cir. 2001), a debt is nondischargeable

if (1) the debtor’s conduct was tortious under state law; and (2) the debtor’s

conduct was both willful and malicious.

      First, the bankruptcy court held that Dr. Jones’ conduct was tortious

under Illinois law. It considered the five-part test for the tort of intentional

interference with a contract laid out in HPI Health Care Services, Inc. v. Mt.

Vernon Hospital, Inc., 545 N.E. 2d 672, 676 (Ill. 1989). In particular, the court

discussed the third prong: “the defendant’s intentional and unjustified

      4
       Dr. Jones initially objected to the admission of the e-mails, including the
“trapped” e-mail. He later withdrew his objection.
                                            6
inducement of a breach of contract.” The court referenced Dr. Jones’

written communication and found that he “intended to induce SVO to

breach the Agreement. Dr. Jones expressly and unambiguously instructed

Mr. Squires, acting on behalf of SVO, to withhold wages to Dr. Patel, which

wages Dr. Jones knew were due and owing under the agreement.” It

further stated that Dr. Jones’ actions were unjustifiable:

      Dr. Jones’s intentional inducement was unjustifiable given that
      Dr. Jones induced SVO to breach the Agreement for the
      primary purpose of causing injury to Dr. Patel. In the March
      2013 Directives, Dr. Jones explicitly directed Mr. Squires to
      withhold wages from Dr. Patel, while continuing to pay the
      other debts of SVO, in order to cause financial injury to
      Dr. Patel, whereby [sic] generating “fear” and/or “motivation.”
      Although Dr. Jones suggests that his conduct was justified
      because it was guided by his business judgment and was
      dictated by the inability of SVO to make the agreed-upon
      payments to Dr. Patel, Dr. Jones’s actions were contrary to the
      best interests of SVO, and any alleged inability of SVO to pay
      Dr. Patel pursuant to the Agreement is unpersuasive. During
      the period of time during which SVO was, at Dr. Jones’s
      direction, withholding Dr. Patel’s wages, Dr. Jones was
      withdrawing funds from SVO for his own benefit, including in
      the form of distributions and loans, and directing SVO to pay
      costs related to such things as his personal vacation timeshare.

The bankruptcy court found that “SVO breached the Agreement as a direct

result of Dr. Jones’s wrongful conduct.”

      The bankruptcy court next considered whether the injury was

“willful.” It found both that Dr. Jones had a subjective motive to injure

                                       7
Dr. Patel and that he believed injury was substantially certain to occur as a

result of his actions. The evidence established “a deliberate and malicious

pattern of conduct aimed at inflicting willful injury upon and causing

economic distress to Dr. Patel.” The court found that “Dr. Jones took steps

to ‘trap’ Dr. Patel into continuing to perform services for SVO without

being paid pursuant to the terms of the Agreement, all the while

continuing to siphon funds out of SVO for his personal benefit.”

      Finally, the bankruptcy court considered whether the injury was

malicious. It concluded that “Dr. Jones fraudulently engaged in wrongful

conduct by intentionally inducing SVO to repeatedly breach the terms of

the Agreement, Dr. Jones’s conduct was unjustified, and Dr. Jones’s

wrongful conduct caused injury to Dr. Patel.” Based on “the entire record

before the Court,” it determined that Dr. Jones acted with malice.

      The bankruptcy court entered judgment in favor of Dr. Patel on the

§ 523(a)(6) claim (“Nondischargeability Judgment”). It ordered “that

interest shall accrue on this Judgment at the rate specified in 28 U.S.C.

§ 1961 from entry of this Judgment, until paid.”

      Dr. Jones timely appealed the Nondischargeability Judgment.

      3.    Dr. Patel’s postjudgment motions

      Dr. Patel filed two motions after the bankruptcy court entered the

Nondischargeability Judgment.

      In his first motion, Dr. Patel sought fees and costs and clarification

that the Nondischargeability Judgment did not alter his right to recover

                                       8
postjudgment interest on the Illinois Judgment under Illinois statute. The

bankruptcy court granted this motion, concluding that the

Nondischargeability Judgment only determined dischargeability and did

“not establish the amount of the debt or constitute a new money judgment

under federal law sufficient to trigger 28 U.S.C. § 1961.” Accordingly,

Dr. Patel was entitled to postjudgment interest at the Illinois statutory rate.

      In his second motion, Dr. Patel sought a declaratory judgment that

the Joneses’ marital community was liable for the Illinois Judgment. The

court granted this motion for two reasons. First, the court noted that the

Joneses admitted in their bankruptcy schedules that the Illinois Judgment

was a community debt, and Dr. Jones admitted in his answer to the

complaint in the adversary proceeding that all of his actions were done for

the benefit of the community. Second, even putting aside the admissions,

the bankruptcy court held that the debt is a community obligation under

Arizona state law. It applied the Arizona standard that “[d]ebt incurred by

one spouse while acting for the benefit of the marital community is a

community obligation whether or not the other spouse approves it.”

Lorenz-Auxier Fin. Grp., Inc. v. Bidewell, 772 P.2d 41, 43 (Ariz. Ct. App. 1989).

The court found that Dr. Jones was the primary source of income for his

family and the debt was incurred for the benefit of Dr. Jones and his family.

      The bankruptcy court held that it did not matter that Mrs. Jones was

not joined in the Illinois proceedings. It relied on Gagan v. Sharar, 376 F.3d

987 (9th Cir. 2004), and held that Arizona Revised Statutes (“ARS”) § 25-

                                        9
215(D) does not mandate that joinder is an absolute prerequisite to an

execution of community property. It rejected the Joneses’ argument that

Mrs. Jones had not received due process, because she had an opportunity

to participate in the adversary proceeding but had moved the court to

dismiss her from it.

      Finally, the bankruptcy court held that, “because the debt is

nondischargeable, and because the debt is a community debt under

applicable state law, pursuant to § 524(a)(3) of the Bankruptcy Code, the

Community does not receive the benefit of the Chapter 7 discharge as to

the debt at issue.”

      The bankruptcy court entered an amended judgment (“Amended

Judgment”). It ordered that the Illinois Judgment and any interest under

Illinois state law are nondischargeable under § 523(a)(6). It further ordered

that “this Judgment is enforceable against the marital community of Neal

LeBaron Jones and Amy Melissa Jones.”

      The Joneses timely appealed the Amended Judgment.5

                                 JURISDICTION

      The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334 and

157(b)(2)(I). We have jurisdiction under 28 U.S.C. § 158.

      5 Dr. Patel filed a motion to supplement the record on appeal to include
documents filed in the Joneses’ subsequent chapter 11 case. We DENY his motion: the
events in the post-appeal chapter 11 case were not before the bankruptcy court when it
ruled, and they have no bearing on any issue in these appeals.
                                          10
                                     ISSUES

      1.    Whether the bankruptcy court erred in finding that Dr. Jones

acted intentionally and without just cause or excuse.

      2.    Whether the bankruptcy court erred in holding that the Illinois

Judgment was nondischargeable as to the Joneses’ marital community.

      3.    Whether the bankruptcy court erred in holding that

postjudgment interest on the Illinois Judgment accrues at the Illinois

statutory rate, rather than the federal rate.

                          STANDARDS OF REVIEW

      We review de novo the bankruptcy court’s legal conclusions,

including its construction of § 523(a)(6). Hamilton v. Elite of L.A., Inc. (In re

Hamilton), 584 B.R. 310, 318 (9th Cir. BAP 2018), aff’d, 785 F. App’x 438 (9th

Cir. 2019). Additionally, “[w]hether an appellant’s due process rights were

violated is a question of law we review de novo.” DeLuca v. Seare (In re

Seare), 515 B.R. 599, 615 (9th Cir. BAP 2014). “De novo review requires that

we consider a matter anew, as if no decision had been made previously.”

Francis v. Wallace (In re Francis), 505 B.R. 914, 917 (9th Cir. BAP 2014).

      We review the bankruptcy court’s factual findings for clear error. In

re Hamilton, 584 B.R. at 318. Factual findings are clearly erroneous if they

are illogical, implausible, or without support in the record. Retz v. Samson

(In re Retz), 606 F.3d 1189, 1196 (9th Cir. 2010). If two views of the evidence

are possible, the court’s choice between them cannot be clearly erroneous.

Anderson v. City of Bessemer City, 470 U.S. 564, 573-74 (1985).

                                        11
      When considering the “malicious” prong of § 523(a)(6)’s “willful and

malicious” inquiry, the Ninth Circuit has instructed that

      [t]he first three elements . . . of “malicious” are all questions of
      fact which we review for clear error. The fourth element, “just
      cause or excuse,” however, presents a mixed question of law
      and fact. A mixed question of law and fact occurs when the
      historical facts are established; the rule of law is undisputed,
      i.e., “just cause or excuse”; and the issue is whether the facts
      satisfy the legal rule.

Murray v. Bammer (In re Bammer), 131 F.3d 788, 791-92 (9th Cir. 1997) (en

banc). Such mixed questions are reviewed de novo: “The question of

whether a cause is ‘just’ is a textbook example of a legal conclusion

informed by historical facts.” Id. at 792.

      Nevertheless, the parties agree that determinations that are primarily

fact-based are entitled to clear error review. The United States Supreme

Court has clarified that some

      mixed questions immerse courts in case-specific factual
      issues—compelling them to marshal and weigh evidence, make
      credibility judgments, and otherwise address what we have . . .
      called “multifarious, fleeting, special, narrow facts that utterly
      resist generalization.” And when that is so, appellate courts
      should usually review a decision with deference. In short, the
      standard of review for a mixed question all depends—on
      whether answering it entails primarily legal or factual work.

U.S. Bank Nat’l Ass'n ex rel. CWCapital Asset Mgmt. LLC v. Vill. at Lakeridge,

LLC, 138 S. Ct. 960, 967 (2018) (citations omitted) (holding that, where a

determination depends on the “historical facts,” the finding “rests with a

                                       12
bankruptcy court, subject only to review for clear error”). Thus, we apply

the clear error standard to the arguments that the bankruptcy court ignored

or misinterpreted evidence regarding factual questions such as the status of

SVO’s finances, payments to Dr. Patel, and Dr. Jones’ intent.

                                DISCUSSION

A.    The bankruptcy court did not err in determining that the Illinois
      Judgment was nondischargeable under § 523(a)(6).

      Dr. Jones argues that the bankruptcy court erred in holding that the

Illinois Judgment was a debt for willful and malicious injury excepted from

discharge under § 523(a)(6). He limits his arguments to three discrete

points: (1) due process as to a single e-mail; (2) SVO’s financial problems as

a just cause or excuse for harming Dr. Patel; and (3) Dr. Jones’ lack of intent

to harm Dr. Patel. We reject these arguments.

      Section 523(a)(6) excepts from discharge any debt arising from

“willful and malicious injury by the debtor to another entity or to the

property of another entity[.]” The creditor must prove both willfulness and

malice. Ormsby v. First Am. Title Co. of Nev. (In re Ormsby), 591 F.3d 1199,

1206 (9th Cir. 2010). “Under Ninth Circuit law, willfulness and malice are

two distinct elements that must not be conflated.” Comcast of L.A., Inc. v.

Sandoval (In re Sandoval), 341 B.R. 282, 296 (Bankr. C.D. Cal. 2006).

      The “willful injury requirement is met only when the debtor has a

subjective motive to inflict injury or when the debtor believes that injury is

substantially certain to result from his own conduct.” Carrillo v. Su (In re

                                      13
Su), 290 F.3d 1140, 1142 (9th Cir. 2002); see Barboza v. New Form, Inc. (In re

Barboza), 545 F.3d 702, 706 (9th Cir. 2008) (“A ‘willful’ injury is a ‘deliberate

or intentional injury, not merely a deliberate or intentional act that leads to

injury.’” (citation omitted)). This analysis requires an inquiry into the

debtor’s subjective state of mind. See In re Su, 290 F.3d at 1145-46. In other

words, it is not enough to prove that the debtor acted intentionally and

caused an injury. Kawaauhau v. Geiger, 523 U.S. 57, 61 (1998).

      “A ‘malicious’ injury involves ‘(1) a wrongful act, (2) done

intentionally, (3) which necessarily causes injury, and (4) is done without

just cause or excuse.’” In re Jercich, 238 F.3d at 1209 (quoting In re Bammer,

131 F.3d at 791).

      Where, as here, the underlying injury stems from an alleged breach of

contract, the debt is only nondischargeable if the “intentional breach of

contract is accompanied by tortious conduct which results in willful and

malicious injury . . . .” Id. at 1205. In other words, a bankruptcy court must

“undert[ake] a two-part inquiry to determine whether the breach of

contract rendered the debt excepted from discharge, first examining

whether the debtor’s conduct was ‘tortious,’ and then asking whether the

debtor’s conduct was both ‘willful’ and ‘malicious.’” Lockerby v. Sierra, 535

F.3d 1038, 1040-41 (9th Cir. 2008).

      As noted above, Dr. Jones does not challenge the bankruptcy court’s

determinations that his conduct was tortious or that the injury was

“willful.” He only challenges the bankruptcy court’s ruling that the injury

                                       14
was “malicious.”

      1.    Dr. Jones was not denied due process as to the
            “trapped” e-mail.

      First, Dr. Jones argues that he did not have notice and opportunity to

be heard on the issue of malice. He contends that the court’s determination

was based “primarily” on the March 21, 2013 e-mail in which he told

Mr. Squires that he and SVO had Dr. Patel “trapped.” He complains that he

was denied due process because counsel and the court did not examine

him on the meaning of his “trapped” statement.

      Dr. Jones’ arguments are misguided at best. “The fundamental

requirement of due process is the opportunity to be heard at a meaningful

time and in a meaningful manner.” Mathews v. Eldridge, 424 U.S. 319, 333

(1976) (cleaned up). The bankruptcy court did not preclude Dr. Jones from

testifying as to the e-mail or any other matter related to “malice.” The

record shows that Dr. Jones was afforded both notice and an opportunity

to be heard: as the Joneses concede, the March 21, 2013 e-mail was included

in the parties’ exhibit list and admitted at trial without objection;

Mr. Squires read the e-mail into the record; and Dr. Jones’ counsel had the

opportunity to question Dr. Jones about the e-mail but chose not to.

      There is no basis for Dr. Jones’ suggestion that the court or Dr. Patel’s

counsel somehow had an obligation to ask Dr. Jones about the e-mail. The

court never has an obligation to ask any questions of any witness.

Dr. Patel’s lawyer had no duty to help his adversary explain away a

                                       15
damning piece of evidence. At oral argument, Dr. Jones’ counsel candidly

admitted that he made a tactical decision not to ask Dr. Jones about the e-

mail. Dr. Patel’s counsel was entitled to make a similar tactical decision

that it was best to let the e-mail speak for itself.

      Dr. Jones implies that the bankruptcy court should have indicated in

advance that it would rely on the e-mail to support one of its findings. He

offers no authority for the novel proposition that the bankruptcy court had

any such obligation to give a preview of its ruling.

      Additionally, even if the bankruptcy court did deny Dr. Jones due

process as to his “trapped” statement (and it did not), the court based its

finding of malice on a host of other evidence. For example, the court cited

other correspondence between Dr. Jones and Mr. Squires, including the

“directives” to pay all other debts and employees except for Dr. Patel;

Dr. Jones’ stated intent to make Dr. Patel experience “fear” and

“motivation”; and the withholding of payment to Dr. Patel while Dr. Jones

took money for himself. Even ignoring the March 21, 2013 e-mail, there was

ample evidence to support a finding of malice.

      2.    The bankruptcy court’s determination that there was no “just
            cause or excuse” was not error.

      Second, Dr. Jones contends that the bankruptcy court erred in ruling

that there was no just cause or excuse for breaching the employment

agreement. He argues that the breach of contract was justified due to SVO’s

diminished cashflow.

                                        16
      The bankruptcy court considered the extensive evidence concerning

SVO’s finances and operations, and in particular Mr. Squires’ testimony. It

found that SVO had trouble collecting its accounts receivable even prior to

Dr. Patel’s employment; that Dr. Jones directed Mr. Squires to pay down

Dr. Jones’ credit card debt rather than Dr. Patel’s salary; that Dr. Jones said

that they had “trapped” Dr. Patel into working for late, reduced, or no

payment; that Dr. Jones instructed Mr. Squires to pay all office staff,

Dr. Jones, and Mr. Squires, but not Dr. Patel; that Dr. Jones implied that

they needed to instill “fear” in Dr. Patel; that, during the time that Dr. Patel

was not paid his full wages, Dr. Jones received distributions and loans

from SVO, made contributions to his retirement accounts, and was still

receiving a monthly salary for “orthodontic services” from SVO, even

though he was no longer practicing in Illinois; and that SVO had cash on

hand at the end of 2011, 2012, and 2013. Based on these detailed findings,

the bankruptcy court found Dr. Jones’ position unpersuasive.

      We discern no error. The bankruptcy court considered Dr. Jones’

arguments that his actions were justified because SVO was simply unable

to pay Dr. Patel. Based on the evidence, it found that SVO was able to pay

Dr. Patel and that Dr. Jones was not acting in SVO’s best interest. The

court’s findings were not “illogical, implausible, or without support in the

record.” See In re Retz, 606 F.3d at 1196.6

      6
       Dr. Jones suggests that his explanation about SVO’s finances must be believed
because the bankruptcy court did not find him uncredible. But the court was not
                                         17
      3.     The bankruptcy court’s findings of intent and injury were not
             clearly erroneous.

      Third, Dr. Jones argues that the record does not support a finding

that he intended to harm Dr. Patel. He points out that SVO paid Dr. Patel in

part after the “trapped” e-mail and implies that only a “zero dollar figure”

would support a “true intent to harm” Dr. Patel.

      In the first place, Dr. Jones ignores the difference between willfulness

and malice. This is important because Dr. Jones only contests the

bankruptcy court’s finding of malice, and not willfulness. Willfulness

requires a finding of intent to injure (or subjective knowledge that one’s

conduct is substantially certain to inflict injury). In contrast, malice does

not require an intent to cause an injury, only an intent to do a wrongful act,

which then results in injury. In re Bammer, 131 F.3d at 791 (Malice “does not

require a showing of biblical malice, i.e., personal hatred, spite, or ill-will.

Nor does it require a showing of an intent to injure, but rather it requires

only an intentional act which causes injury.” (citations omitted)). Dr. Jones

does not dispute that he intentionally directed Mr. Squires to cause SVO to

breach the employment agreement by withholding Dr. Patel’s

compensation. This is enough to support a finding of malice.

      Further, we reject the argument that there was no injury because SVO

paid part of Dr. Patel’s salary. It is true that Dr. Jones could have caused

required to make explicit credibility findings. The court’s decision leaves us with no
doubt that it weighed the evidence and did not believe Dr. Jones’ version of events.
                                            18
SVO to withhold all of Dr. Patel’s salary, but the fact Dr. Jones could have

inflicted even more injury on Dr. Patel is no defense. Therefore, the

bankruptcy court did not err in finding that the injury was malicious and

otherwise satisfied the nondischargeability standard under § 523(a)(6).7

B.    The bankruptcy court correctly held that the Illinois Judgment is
      nondischargeable as to the marital community.

      The Joneses argue that the bankruptcy court erred as a matter of law

in concluding that the Nondischargeability Judgment was applicable to the

marital community, not just Dr. Jones. They contend that, after they

initiated the appeal, the Arizona Supreme Court issued a decision

dispositive of this issue that is at odds with the bankruptcy court’s

decision. The Joneses misrepresent both the content and the timing of the

supreme court’s decision.

      As the bankruptcy court noted, Arizona is a community property

state, while Illinois is not. ARS § 25-215 provides:

      C. The community property is liable for a spouse’s debts
      incurred outside of this state during the marriage which
      would have been community debts if incurred in this state.

      D. Except as prohibited in § 25-214, either spouse may contract
      debts and otherwise act for the benefit of the community. In an
      action on such a debt or obligation the spouses shall be sued
      jointly and the debt or obligation shall be satisfied: first, from
      the community property, and second, from the separate

      7
        The evidence supporting the court’s decision is so overwhelming that we would
affirm even on de novo review.
                                         19
      property of the spouse contracting the debt or obligation.

Ariz. Rev. Stat. § 25-215 (emphases added).

      Thus, ARS § 25-215(C) provides that the Joneses’ marital community

is liable for Dr. Jones’ debt incurred outside of Arizona, if it would have

been community debt under Arizona law. The bankruptcy court found that

the Illinois Judgment was a community debt under Arizona law because it

was incurred for the benefit of Mrs. Jones and the Jones family. The Joneses

do not challenge this determination on appeal.

      Rather, the Joneses focus their argument on ARS § 25-215(D). They

maintain that the Illinois Judgment is ineffective in Arizona, because

Mrs. Jones was not joined in the Illinois proceedings. We disagree.

      The bankruptcy court correctly relied on Gagan. In that case, the

Ninth Circuit examined Arizona precedent including Oyakawa v. Gillett, 854

P.2d 1212, 1218 (Ariz. Ct. App. 1993), and National Union Fire Insurance Co.

v. Greene, 985 P.2d 590, 595 (Ariz. Ct. App. 1999), and held that a creditor

could enforce an Indiana federal court judgment against the debtor’s

marital property in Arizona, even though the debtor’s spouse was not

named in the Indiana proceeding. The Ninth Circuit also held, however,

“that a non-party spouse must be given an opportunity at some time to

challenge enforcement of a judgment against community property in

Arizona.” Gagan, 376 F.3d at 992.

      We agree with the bankruptcy court that Gagan is on point and that

the Illinois Judgment was applicable to the Joneses’ marital community in
                                      20
Arizona, in spite of ARS § 25-215(D). We also agree that Mrs. Jones had an

opportunity to challenge enforcement of the Illinois Judgment because she

had notice of and an opportunity to participate in the adversary

proceeding, but she actively sought to be dismissed from the case.

      We are not persuaded by the Joneses’ argument on appeal, that the

Arizona Supreme Court’s decision in Lattin v. Shamrock Materials, LLC, 503

P.3d 116 (Ariz. 2022), effectively overruled Gagan. Ms. Lattin sued

Shamrock and lost. The court awarded Shamrock attorneys’ fees against

Ms. Lattin, but not her husband. When Shamrock sought to garnish the

couple’s joint bank account, the trial court quashed the garnishment,

because Ms. Lattin’s husband was not named in the judgment. The Arizona

Supreme Court held that the trial court should have allowed the

garnishment. It held that “seeking an award of attorney fees for the

successful defense of a complaint filed by a married plaintiff is not an

‘action on [a community] debt or obligation’ under § 25-215(D).” 503 P.3d

at 119. The court also held:

      If the court enters a judgment for attorney fees and costs in
      favor of the defendant, the plaintiff’s spouse may intervene in
      any subsequent attempt to execute the judgment against
      community assets to argue the judgment is the plaintiff’s sole
      and separate obligation, and community assets cannot be used
      to satisfy the judgment.

Id. at 120 (emphasis added).

      Lattin is readily distinguishable from the present case. In the first

                                      21
place, unlike in Gagan, there was no foreign judgment in Lattin. The

Arizona Supreme Court did not address the full faith and credit due to

foreign judgments or otherwise overrule Oyakawa, Greene, or Gagan. 8

      In the second place, Lattin only holds that the non-party spouse is

entitled to intervene in the enforcement action against the community

property. The Arizona Supreme Court held that Ms. Lattin’s husband did

not have to be joined in the proceeding that led to the judgment. If

anything, Lattin merely stands for the proposition that Mrs. Jones had the

right to participate in the adversary proceeding if she chose to do so. As the

bankruptcy court correctly held, Mrs. Jones was not denied that right; she

explicitly turned down the opportunity to participate when she sought

dismissal from the case.

      Furthermore, the Joneses fail to address the bankruptcy court’s other

reason for holding that that the marital community was liable for the

Illinois Judgment: that the Joneses had admitted as much in the answer to

the complaint and their bankruptcy filings. The Ninth Circuit has

acknowledged that “[j]udicial admissions are formal admissions in the

pleadings which have the effect of withdrawing a fact from issue and

dispensing wholly with the need for proof of the fact. Judicial admissions

      8
         Additionally, Lattin was published in February 2022, three months prior to the
bankruptcy court’s May 2022 Amended Judgment. Thus, it is disingenuous to suggest
that this is a “new” decision that could not have been raised before the bankruptcy
court.

                                           22
are conclusively binding on the party who made them.” Spokane Law Enf’t

Fed. Credit Union v. Barker (In re Barker), 839 F.3d 1189, 1195 (9th Cir. 2016)

(cleaned up).

      As the bankruptcy court explained, the Joneses were bound by their

admissions: (1) the designation of the Illinois Judgment as a community

obligation in the Joneses’ schedules and (2) Dr. Jones’ answer to the

amended complaint that admitted that all actions were undertaken on

behalf of the community and that the debt is a community obligation. The

Ninth Circuit has “never declared that a bankruptcy schedule constitutes

the ‘formal admission’ required for the application of the doctrine[,]” id. at

1195-96, but there is no doubt that an assertion in an answer meets that

requirement.

C.    The bankruptcy court correctly held that the Nondischargeability
      Judgment does not change the rate of interest on the Illinois
      Judgment.

      The Joneses also appeal the bankruptcy court’s determination that the

Illinois Judgment continues to accrue interest at the Illinois statutory rate,

as opposed to the lower federal rate. They are wrong. As we held in

Hamilton, “interest on a nondischargeable judgment debt should continue

to accrue at the state rate, even after the bankruptcy court determines the

nondischargeability of the debt.” 584 B.R. at 323. We concluded that “[t]he

Nondischargeability Judgment was not a new money judgment under

federal law. It simply determined that the State Court Judgment was not

                                       23
dischargeable. As such, the bankruptcy court lacked authority to override

the state court’s award of interest.” Id. The Ninth Circuit affirmed our

ruling. 785 F. App’x at 439.

      This case compels the same result. Neither the Nondischargeability

Judgment nor the Amended Judgment created a new money judgment or

altered Dr. Patel’s rights under the Illinois Judgment.

      The Joneses completely ignore Hamilton and instead rely exclusively

on Onink v. Cardelucci (In re Cardelucci), 285 F.3d 1231 (9th Cir. 2002). But

Cardelucci has no bearing on the present appeal. In that case, the Ninth

Circuit considered the meaning of “interest at the legal rate” within

§ 726(a)(5) for the purposes of distribution to an unsecured creditor

holding a state court judgment debt. See id. at 1234. That case has nothing

to do with a nondischargeability judgment.

D.    We deny Dr. Patel’s request for fees and other sanctions.

      In both appeals, Dr. Patel requests that we summarily affirm the

bankruptcy court’s decisions or impose sanctions against the Joneses for

incomplete briefs and excerpts that do not comply with the applicable BAP

rules. Although we agree that the Joneses’ submissions are lacking, we are

able to understand the arguments and record on appeal. Further, Dr. Patel

did not file a separate motion seeking fees for a frivolous appeal as Rule

8020(a) requires. Therefore, we DENY his request for summary affirmance

or sanctions.

      Dr. Patel urges us to award him his fees and costs under the Illinois

                                       24
Wage Payment Act, 820 Ill. Comp. Stat. § 115/14. However, he provides us

with no argument or authority that he is entitled to recover fees and costs

in this bankruptcy appeal under that statute. We deny his request without

prejudice, and we express no opinion on his entitlement to fees or costs

under the Illinois statute.

                              CONCLUSION

      The bankruptcy court did not err in holding that the Illinois

Judgment was nondischargeable under § 523(a)(6), is enforceable against

the marital community, and accrues interest at the Illinois statutory rate.

We AFFIRM.

                                      25