Paul Zeppinick v. Luis Ramirez

• Court: Court of Appeals for the Ninth Circuit
• Decided: December 14, 2018
• Docket: 17-60050
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS DEC 14 2018 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

In re: PAUL CHARLES ZEPPINICK, No. 17-60050

Debtor, BAP No. 16-1293 ______________________________

PAUL CHARLES ZEPPINICK, MEMORANDUM*

Appellant,

v.

LUIS RAMIREZ,

Appellee.

Appeal from the Ninth Circuit Bankruptcy Appellate Panel Kurtz, Faris, and Lafferty III, Bankruptcy Judges, Presiding

Submitted December 4, 2018** Pasadena, California

Before: O'SCANNLAIN and IKUTA, Circuit Judges, and KENNELLY,*** District Judge.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). *** The Honorable Matthew F. Kennelly, United States District Judge for the Northern District of Illinois, sitting by designation. Paul Charles Zeppinick challenges the bankruptcy court’s finding that his debt

to Louis Ramirez was nondischargeable under 11 U.S.C. § 523. The facts are known

to the parties, and we do not repeat them here.

I

Zeppinick’s threshold argument is that the bankruptcy court erred because it

gave issue-preclusive effect to the Labor Commissioner’s findings. Zeppinick

waived this argument, however, because he failed to raise it in the bankruptcy court.

See In re Mortgage Store, Inc., 773 F.3d 990, 998 (9th Cir. 2014); In re Kieslich,

258 F.3d 968, 971 (9th Cir. 2001). The bankruptcy appellate panel’s decision to

reach this issue does not alter our analysis because we “review independently the

decision of the bankruptcy court, showing no deference to the decision of the BAP.”

In re Kadjevich, 220 F.3d 1016, 1019 (9th Cir. 2000). Even if Zeppinick had not

waived the argument, the bankruptcy appellate panel did not err in concluding that

the Labor Commissioner’s finding had issue-preclusive effect because Zeppinick

had the opportunity to seek judicial review of the finding but failed to do so. See Doe

v. Regents of the Univ. of Cal., 891 F.3d 1147, 1154–55 (9th Cir. 2018).

II

Zeppinick also contends that the bankruptcy court erred in finding that his

debt to Ramirez was nondischargeable under § 523(a)(6). The bankruptcy court

relied on our decision in In re Jercich, 238 F.3d 1202 (9th Cir. 2001). We held in

2 Jercich that debts arising out of an “intentional breach of contract” are

nondischargeable under § 523(a)(6) if such breach is “[(1)] accompanied by tortious

conduct which results in [(2)] willful and malicious injury.” Id. at 1205.

A

Jercich itself compels the conclusion that Zeppinick’s conduct was tortious.

There, we concluded that an employer’s refusal to pay wages “constituted tortious

conduct” because he “had the clear ability to pay [the employee’s] wages . . . but

willfully chose not to.” Id. at 1207 (internal quotation marks omitted). Here,

Zeppinick admitted at trial that he withheld Ramirez’s wages even though he had

the money to pay him. Thus, his refusal to pay Ramirez’s wages constituted tortious

conduct.

B

Zeppinick’s tortious conduct also resulted in willful and malicious injury.

First, under our precedent, injury is inflicted “willfully” if the “debtor believed that

injury was substantially certain to occur as a result of his conduct.” Id. at 1208. The

bankruptcy court found that Zeppinick’s conduct was willful because he “refused to

pay [Ramirez] the $21,495.74 owed to him” even though he knew “that an individual

making $4,000 per month would be significantly injured if he did not receive this

pay and reimbursement of expenses.” This factual determination was not clearly

erroneous. See Vision Air Flight Serv., Inc. v. M/V Nat’l Pride, 155 F.3d 1165, 1176

3 (9th Cir. 1998) (holding that whether a party’s act “was intentional is a question of

fact”).

Second, an injury is “malicious” if it involves “(1) a wrongful act, (2) done

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

or excuse.” In re Bammer, 131 F.3d 788, 791 (9th Cir. 1997) (en banc). The first

three elements are satisfied here for the same reasons that his conduct was tortious

and that the injury was inflicted willfully.

Zeppinick also argues, however, that he acted with “just cause or excuse”—

and thus his conduct was not “malicious”—because he withheld the wages as a “set

off” against the damages to Bentley’s roof. But under California law, an employer

generally may not withhold wages to offset damages allegedly caused by an

employee. See Barnhill v. Robert Saunders & Co., 125 Cal. App. 3d 1, 6 (Ct. App.

1981); Cal. Lab. Code § 221. Accordingly, Zeppinick’s decision to withhold wages

lacked the “just cause” necessary to negate nondischargeability under § 523(a)(6).

AFFIRMED.