Daghighfekr v. Mekhail (In Re Daghighfekr)

161 B.R. 685, 94 Daily Journal DAR 366, 94 Cal. Daily Op. Serv. 212, 1993 Bankr. LEXIS 1925, 25 Bankr. Ct. Dec. (CRR) 91, 1993 WL 546867
CourtUnited States Bankruptcy Appellate Panel for the Ninth Circuit
DecidedDecember 22, 1993
DocketBAP No. CC-93-1194-VBaJ. Bankruptcy No. LA-91-90086-AG. Adv. No. LA-91-07210-AG
StatusPublished
Cited by13 cases

This text of 161 B.R. 685 (Daghighfekr v. Mekhail (In Re Daghighfekr)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Appellate Panel for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Daghighfekr v. Mekhail (In Re Daghighfekr), 161 B.R. 685, 94 Daily Journal DAR 366, 94 Cal. Daily Op. Serv. 212, 1993 Bankr. LEXIS 1925, 25 Bankr. Ct. Dec. (CRR) 91, 1993 WL 546867 (bap9 1993).

Opinion

OPINION

VOLINN, Bankruptcy Judge:

The debtor appeals a bankruptcy court order determining a state court default judgment comprised of special, general, and punitive damages that arose out of a lawsuit for *686 assault and battery to be nondischargeable. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

In 1981, debtor-appellant, Mohammad Da-ghighfekr, assaulted appellee Laurence Mek-hail, breaking his jaw. Debtor pled no contest to a criminal complaint and defaulted when Mekhail brought civil suit. After a prove up hearing in the civil suit, the state court awarded Mekhail $14,793 as special damages, $100,000 as general compensatory damages, and $500,000 as punitive damages. Debtor filed a bankruptcy petition, and Mek-hail commenced an adversary proceeding under 11 U.S.C. § 523(a)(6) 2 to have his judgment determined nondischargeable.

Debtor did not appear at the bench trial. Mekhail appeared as the sole witness. He testified that while he was working as manager of a gas station, debtor cut in front of other customers lined up for service. When Mekhail told him to move his vehicle, debtor responded by punching and kicking him, breaking his jaw and beating him unconscious. Mekhail was hospitalized for six days and had problems thereafter.

The bankruptcy court after hearing testimony as to liability filed a memorandum decision on February 2, 1993. The memorandum decision supports the bankruptcy court judgment finding the state court judgment of $614,942.50 nondischargeable. Debt- or timely appealed the bankruptcy court’s judgment.

ISSUE PRESENTED

Whether the court committed reversible error by holding a state court default judgment nondischargeable in its entirety as to liability and damages, including punitive damages, when no evidence was presented independently as to the damage elements of the judgment in the adversary proceeding.

STANDARD ON REVIEW

Debtor does not dispute the factual findings regarding his assault and battery of Mekhail; rather he asserts that the law requires reversal of the bankruptcy court order because the court was required to find the amount of damages independently of the state court default judgment. This issue of law is reviewed de novo.

DISCUSSION

I. Issue preclusion in a dischargeability proceeding is focused on the nature of the liability.

Debtor admits that his assault and battery were willful and malicious and that his liability for the act is nondischargeable under § 523. 3 Debtor contends, however, that a default judgment has no preclusive effect on a bankruptcy court as to either the nature of the act causing injury or the amount of damages awarded. Although debtor admits nondischargeable liability for the $14,713 special damages proved at the bench trial, he claims that the bankruptcy court had insufficient evidence before it to hold debtor liable for $100,000 in compensatory damages and $500,000 in punitive damages.

Debtor cites In re Dvorak, 118 B.R. 619 (Bankr.N.D.Ill.1990) in support of his assertion that the amount of a default judgment has no preclusive effect. This reading of Dvorak is incorrect. The case states that while a default judgment or an unopposed summary judgment has no preclusive effect as to the issue of the willful and malicious nature of the injury on which the judgment is based, once this issue has been determined by the bankruptcy court, the judgment itself is res judicata as to the amount of the judgment. Dvorak, 118 B.R. at 629. This is the law of the Ninth Circuit. In re Comer, 723 F.2d 737, 740 (9th Cir.1984) (evidence as to amount of default judgment has no relevancy to determination of nature of the debt). The *687 trial court was correct to apply res judicata effect to the state court damage award. Debtor makes subsequent arguments on appeal as to the proper standards for determination of compensatory and punitive damages, but, as indicated, these arguments are not relevant.

II. Punitive damages in a pre-bankrwptcy judgment may be encompassed in a nondischargeability bankruptcy judgment.

Cases have discussed whether punitive damages allowed by a judgment based on willful and malicious conduct should nevertheless be subject to discharge in a proceeding under § 528. See In re Dahlstrom, 129 B.R. 240, 245^7 (Bankr.D.Utah 1991) (citing cases). The Ninth Circuit has decided clearly that punitive damages can be excepted from discharge under § 528(a)(6). In re Britton, 950 F.2d 602, 605-07 (9th Cir.1991) (holding punitive damages imposed under § 523(a)(6) nondischargeable); In re Levy, 951 F.2d 196 (9th Cir.1991), cert. denied, — U.S.-, 112 S.Ct. 2965, 119 L.Ed.2d 586 (1992) (holding punitive damages assessed for fraud dischargeable pursuant to subsection (a)(2), but distinguishing punitive damages assessed for willful and malicious injury pursuant to subsection (a)(6) as nondis-chargeable); In re Adams, 761 F.2d 1422 (9th Cir.1985) (both compensatory damages and punitive damages are nondischargeable pursuant to subsection (a)(6)); Coen v. Zick, 458 F.2d 326 (9th Cir.1972) (addressing the scope of dischargeability under 11 U.S.C. § 35(a)(8) (1976), the precursor to 11 U.S.C. § 523(a)(6)). As the rule of Adams is restated in Levy, punitive damages assessed for conduct found to be willful and malicious under § 523(a)(6) are barred from discharge in bankruptcy. “For punitive damages ... the appropriate exception to discharge is 523(a)(6)....” Levy, 951 F.2d at 199.

A debt for “willful and malicious injury” refers to liability that arises from a willful and malicious act that causes injury. It is the nature of the act, not the extent or quantum of liability that is examined under § 523(a)(6): “All liabilities resulting therefrom are nondischargeable.” Adams, 761 F.2d at 1428 (citation omitted).

The foregoing conclusion is consistent with the statutory formulation of the relationship between the nature or type of liability at issue and the debt or obligation created by such liability.

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161 B.R. 685, 94 Daily Journal DAR 366, 94 Cal. Daily Op. Serv. 212, 1993 Bankr. LEXIS 1925, 25 Bankr. Ct. Dec. (CRR) 91, 1993 WL 546867, Counsel Stack Legal Research, https://law.counselstack.com/opinion/daghighfekr-v-mekhail-in-re-daghighfekr-bap9-1993.