Martina Silas v. James Arden

• Court: Court of Appeals for the Ninth Circuit
• Decided: January 27, 2021
• Docket: 19-55643
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS JAN 27 2021 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

In re: JAMES ELLIS ARDEN, No. 19-55643

Debtor, D.C. Nos. 1:13-bk-13879-VK ______________________________ 1:13-ap-01164-VK

MARTINA A. SILAS, MEMORANDUM* Plaintiff-Appellee,

v.

JAMES ELLIS ARDEN,

Defendant-Appellant.

Appeal from the United States Bankruptcy Court for the Central District of California Victoria S. Kaufman, Bankruptcy Judge, Presiding

Argued and Submitted December 9, 2020 Pasadena, California

Before: BEA, THAPAR,** and COLLINS, Circuit Judges.

James Arden appeals a bankruptcy court judgment holding that his debt to

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Amul R. Thapar, United States Circuit Judge for the U.S. Court of Appeals for the Sixth Circuit, sitting by designation. Martina Silas is not dischargeable. The debt is from Silas’s successful lawsuit

against Arden for malicious prosecution in California state court. Arden tried to

have the damages he owed discharged in bankruptcy, but the bankruptcy code does

not allow the discharge of debts “for willful and malicious injury.” 11 U.S.C.

§ 523(a)(6). The bankruptcy court concluded that Arden’s malicious prosecution

of Silas caused such an injury. We affirm.

I.

Malice. The bankruptcy court correctly held that the malicious-prosecution

judgment precluded Arden from relitigating the issue of malice. The California

state judgment established that, in prosecuting his malpractice case against Silas,

Arden acted with at least a “subjective intent to deliberately misuse the legal

system for personal gain or satisfaction at [Silas’s] expense.” Silas v. Arden, 213

Cal. App. 4th 75, 90–91 (2012). That determination satisfies each of the elements

of malice under the bankruptcy code: (1) a wrongful act, (2) done intentionally,

which (3) necessarily causes injury, and which was (4) done without just cause or

excuse. In re Su, 290 F.3d 1140, 1146–47 (9th Cir. 2002).

The “deliberate[] misuse [of] the legal system” satisfies the first two

elements: a wrongful act done intentionally. Silas, 213 Cal. App. 4th at 90. And

the tort necessarily causes injury because the misuse must come “at the expense of

the wrongfully sued defendant.” Id. at 90–91. Finally, the tort was committed

2 without just cause or excuse. How do we know? Because a justifiable or

excusable use of the legal system could not reasonably be described as “deliberate

misuse,” and personal gain or satisfaction—an element of malicious prosecution in

California —could not reasonably count as just cause.

A jury found that Arden maliciously prosecuted a malpractice case against

Silas, and its verdict was affirmed on appeal. The resulting judgment forecloses

any argument that Arden did not injure Silas with malice. Thus, the bankruptcy

court did not err by preventing Arden from relitigating the issue of malice.

Willfulness. The bankruptcy court also did not err in determining that Arden

willfully injured Silas. An injury is willful if the debtor acted with “a subjective

motive to inflict injury” or if he “believe[d] that injury [was] substantially certain

to result from his own conduct.” In re Ormsby, 591 F.3d 1199, 1206 (9th Cir.

2010).

Although Arden maintains that he did not act with an improper motive, his

word is not decisive. See In re Su, 290 F.3d at 1146 n.6 (“[W]e are not suggesting

that a court must simply take the debtor’s word for his state of mind.”). Arden is

“charged with the knowledge of the natural consequences of his actions,” In re

Ormsby, 591 F.3d at 1206, and the court “may consider circumstantial evidence

that tends to establish what [he] must have actually known” at the time of the

injury, In re Su, 290 F.3d at 1146 n.6.

3 The bankruptcy court considered the circumstances of the underlying

malpractice suit and found that Arden “prosecuted the [case] on grounds [he] knew

were patently meritless,” and that he “tried to keep the [case] alive long enough to

leverage [Silas] to make a settlement offer.” These findings were not clearly

erroneous.

Arden continued to accuse Silas of misappropriation in the malpractice suit

long after he learned that the allegations were baseless. This supports the

bankruptcy court’s conclusion that Arden “kept [these] allegations in the suit

because the presence of those serious allegations of misconduct would make it

more likely that [Silas] . . . might settle.” While Arden said he left the allegations

in by mistake, the court found this explanation “not credible.” See In re Su, 290

F.3d at 1146 n.6 (explaining that a court need not accept the debtor’s assertions

about his motive as true). What’s more, Arden gathered almost no evidence for the

malpractice case before the discovery deadline, further supporting the court’s

finding that Arden knew the claims were meritless. The court concluded on the

basis of its findings that Arden acted with “a specific intent to harm,” and thus,

willfully. That was not error.

II.

Filing Fee. The Federal Rules of Appellate Procedure require “the

appellant” to “pay the district clerk all required fees” after the circuit has granted

4 permission to hear an appeal. Fed. R. App. P. 5(d)(1). This rule expressly applies

to a “direct appeal by permission under 28 U.S.C. § 158(d)(2).” Fed. R. App. P.

6(c)(1)(B) (“[A]s used in any applicable rule, ‘district court’ or ‘district clerk’

includes—to the extent appropriate—a bankruptcy court or bankruptcy appellate

panel or its clerk . . . .”). It makes no difference that Silas was the one who sought

to have this court directly hear the appeal that Arden had taken to the bankruptcy

appellate panel. As “the appellant” of the bankruptcy court decision, Arden is

responsible under Rule 5(d)(1) for paying the fee associated with his appeal.

AFFIRMED.