United States Court of Appeals
Fifth Circuit
F I L E D
REVISED MARCH 17, 2005
January 12, 2005
IN THE UNITED STATES COURT OF APPEALS
Charles R. Fulbruge III
FOR THE FIFTH CIRCUIT Clerk
____________________
No. 04-30184
____________________
In The Matter of: ROBERT BURKE KEATY, SR; ERIN KENNY KEATY
Debtors
_________________________________________________________________
ROY A RASPANTI
Appellant
v.
ROBERT BURKE KEATY, SR
Appellee
________________________________________________________________
Appeal from the United States District Court
for the Western District of Louisiana
_________________________________________________________________
Before KING, Chief Judge, and HIGGINBOTHAM and DAVIS, Circuit
Judges.
KING, Chief Judge:
This appeal arises from the bankruptcy court’s refusal to
give preclusive effect to findings made by the Louisiana Fourth
Circuit Court of Appeal. Appellant Roy A. Raspanti brought an
adversary proceeding against Appellee Robert Burke Keaty, Sr. in
bankruptcy court seeking a determination that a state court
judgment against Keaty was not dischargeable under § 523(a)(6) of
the Bankruptcy Code. Raspanti asked the bankruptcy court to
apply principles of collateral estoppel to the Louisiana
appellate court’s findings on the issue of whether the debt arose
from a willful and malicious injury as required under § 523(a)(6)
of the Bankruptcy Code. The bankruptcy court did not give
preclusive effect to the state appellate court’s findings,
reasoning that the issue had not been “actually litigated” at the
state court level. Instead, the bankruptcy court held a trial to
determine if the debt owed by Keaty was for a willful and
malicious injury. After that trial, the bankruptcy court
concluded that the debt owed to Raspanti was not for a willful
and malicious injury, and the court thus held that the debt was
dischargeable. The district court affirmed. We conclude that
the bankruptcy court erred in not giving preclusive effect to the
state appellate court’s findings. We therefore REVERSE the
judgment of the district court.
I. FACTUAL AND PROCEDURAL BACKGROUND
In 1985, Connie Byrd employed Robert Burke Keaty, Sr.,
Thomas S. Keaty, and Keaty & Keaty (collectively “the Keatys”) to
represent her son, Gregory Byrd, as a plaintiff in a Louisiana
state court lawsuit. In that suit, the Byrds sued two defendants
for injuries that Gregory sustained at school. In 1987, one of
the defendants settled with the Byrds. Following a fee dispute,
the Byrds and the Keatys executed a compromise agreement by which
the Keatys received $586,200 in fees and costs. The Keatys
continued to represent the Byrds at trial against the other
2
defendant, the school board, in the 26th Judicial District Court
for the Parish of Bossier (the “Bossier Parish proceeding”). In
January 1988, the trial court ruled in favor of the school board,
and the Keatys subsequently filed a notice of appeal on behalf of
the Byrds. Immediately thereafter, however, the Byrds discharged
the Keatys, and in March 1988, Roy A. Raspanti was substituted as
counsel.
Raspanti represented the Byrds in their appeal against the
school board. While the appeal was pending, the Keatys filed an
intervention in the suit seeking additional attorney’s fees
should the appeal against the school board be successful. The
appellate court ultimately reversed the judgment in favor of the
school board and remanded the case. The school board
subsequently agreed to settle the claim, and Raspanti was paid
$588,750 in attorney’s fees. Meanwhile, the trial court
dismissed on summary judgment the Keatys’ claim for additional
fees, reasoning that the compromise agreement executed between
the Byrds and the Keatys settled all of their fee disputes. The
Keatys appealed the judgment, but the Louisiana Second Circuit
Court of Appeal dismissed the appeal as untimely.
In November 1991, the Keatys sued Raspanti in the Civil
District Court for the Parish of Orleans, alleging tortious
interference of contract and unjust enrichment and seeking a
portion of the attorney’s fees collected by Raspanti. In
February 1992, the Keatys filed a second suit against Raspanti
3
seeking an apportionment of the attorney’s fees on a quantum
meruit basis. The two suits were consolidated. In response,
Raspanti filed exceptions of prescription, no cause of action,
and res judicata, as well as a motion for summary judgment and a
motion for sanctions. All of these exceptions and motions were
denied. Raspanti then requested several admissions from the
Keatys: first, that there was no contract between Raspanti and
Robert B. Keaty, Thomas S. Keaty and/or Keaty and Keaty, and
second, that there had never been a contract between any of those
parties. Keaty v. Raspanti, 781 So.2d 607, 609 (La. Ct. App.
2001). The Keatys denied Raspanti’s request for admissions and
responded that their claims “encompass[ed] contractual claims and
a claim for apportionment of attorney's fees.” Id. However, the
Keatys later admitted, in a written opposition to a motion for
summary judgment filed by Raspanti, that they had no contract
with Raspanti. Id. In light of this, Raspanti reurged his
motion for summary judgment, making the additional argument that
because the Keatys already had been denied additional fees from
the Byrds by the state court in Bossier Parish, they could not
recover additional fees from him. In support, Raspanti pointed
to prior admissions made by the Keatys that the source of their
claim was the contract with the Byrds and that they had no
contract with Raspanti.
On August 13, 1996, the trial court rendered summary
judgment in favor of Raspanti. Keaty v. Raspanti, 695 So.2d 1085
4
(La. Ct. App. 1997). On May 28, 1997, the Louisiana Fourth
Circuit Court of Appeal affirmed. See id. The appellate court
reasoned that the Bossier Parish proceeding had resulted in a
final judgment that the Keatys could not recover additional fees
from the Byrds because the compromise agreement encompassed
claims for both past and future fees. Id. at 1087. Thus, the
court concluded that since the Keatys’ claim was based on their
contract with the Byrds, the Keatys were precluded from seeking
additional fees from Raspanti. Id. The court also made the
observation that the Keatys had acknowledged that their tortious
interference claim was prescribed. Id.
On June 27, 1997, Raspanti filed a motion for sanctions
against the Keatys on the basis that the Keatys’ tortious
interference claim was frivolous. In response, the Keatys filed
exceptions of prescription and res judicata. The trial court
granted the Keatys’ exceptions without written reasons, and
Raspanti appealed to the Louisiana Fourth Circuit Court of
Appeal.
On February 7, 2001, the appellate court reversed the
decision of the trial court and held that the Keatys’ exceptions
of res judicata and prescription had no merit. The court then
went on to assess Raspanti’s sanctions claim de novo. The court
referred to its 1997 decision and noted that Keaty had no claim
for attorney’s fees against Raspanti. The Louisiana appellate
court then made particular findings regarding the Keatys’ claims.
5
Specifically, the court found that the Keatys knew their claims
had prescribed, that their answers to Raspanti’s request for
admissions were disingenuous, and that the proceedings by the
Keatys were knowingly without foundation, crafted for the
purposes of harassment, and designed to prolong the proceedings
deliberately and needlessly. Id. at 612. Accordingly, the
appellate court concluded that the Keatys’ conduct was
sanctionable under Louisiana law1 and remanded the case for an
evidentiary hearing to set the amount of sanctions to be awarded.
The state trial court awarded Raspanti $34,605.08, which the
appellate court increased to $107,605.95 on appeal. Keaty v.
Raspanti, 866 So.2d 1045 (La. Ct. App. 2004).
1
The Keatys were sanctioned under the Louisiana Code of
Civil Procedure. The relevant statute states in pertinent part:
Art. 863. Signing of pleadings, effect
A. Every pleading of a party represented by an attorney
shall be signed by at least one attorney of record in his
individual name . . . .
B. Pleadings need not be verified or accompanied by
affidavit or certificate, except as otherwise provided by
law, but the signature of an attorney or party shall
constitute a certification by him that he has read the
pleading; that to the best of his knowledge, information,
and belief formed after reasonable inquiry it is well
grounded in fact; that it is warranted by existing law or
a good faith argument for the extension, modification, or
reversal of existing law; and that it is not interposed
for any improper purpose, such as to harass or to cause
unnecessary delay or needless increase in the cost of
litigation.
LA. CODE CIV. PROC. ANN. art. 863 (West 1984).
6
Meanwhile, on December 9, 1999, before the Louisiana
appellate court’s reversal, Robert Burke Keaty, Sr. (“Keaty”) and
Erin Kenny Keaty filed a voluntary petition for relief under
Chapter 7 of the Bankruptcy Code in the United States Bankruptcy
Court for the Western District of Louisiana. On April 6, 2001,
Keaty added Raspanti as a creditor. Thereafter, on June 14,
2001, Raspanti filed a complaint to determine the
dischargeability of his debt pursuant to 11 U.S.C. § 523(a)(6).2
Specifically, Raspanti contended that Keaty’s debt (i.e., the
sanctions assessed by the Louisiana Fourth Circuit Court of
Appeal) should not be discharged under § 523(a)(6) because it was
a debt for a willful and malicious injury (i.e., bringing a
frivolous lawsuit against Raspanti).
On October 1, 2001, Raspanti filed a motion for summary
judgment, arguing that the findings of the Louisiana Fourth
Circuit Court of Appeal amounted to a finding that the debt owed
by Keaty to Raspanti resulted from a willful and malicious
injury, and thus, under the doctrine of issue preclusion, Keaty
was barred from relitigating the issue. The bankruptcy court
denied Raspanti’s motion on March 19, 2002. The court reasoned
that the issue of willful and malicious injury was not “actually
litigated” as required under issue preclusion because “neither
the [Louisiana] trial court nor the appellate court ever
2
This action was brought only against Keaty.
7
conducted an actual evidentiary hearing regarding [Keaty’s]
conduct.” On April 16, 2002, Raspanti filed a second motion for
summary judgment and attached a copy of the entire state court
record. On July 30, 2002, the bankruptcy court again denied
Raspanti’s motion. The court again reasoned that the sanctions
issue had not been “actually litigated” so as to support a
finding of willful and malicious injury under § 523(a)(6) because
the sanctions issue was decided “without the introduction of
exhibits, testimony or any other evidence” and “without any
hearing.”
Thereafter, the bankruptcy court held a trial on Raspanti’s
complaint on November 4, 2002. At trial, Raspanti relied solely
on the state court record. On August 26, 2003, the bankruptcy
court issued an order dismissing Raspanti’s complaint with
prejudice. In its Reasons for Decision, the bankruptcy court
held that Raspanti failed to satisfy his burden of proving each
element of § 523(a)(6) because he presented no evidence that went
to Keaty’s intent or subjective motivation. The bankruptcy court
specifically rejected Raspanti’s argument, which Raspanti had
also put forth in his motions for summary judgment, that the
state appellate court’s findings clearly established all the
elements of § 523(a)(6) and that, pursuant to the doctrine of
issue preclusion, judgment should be entered in his favor. In
rejecting Raspanti’s argument, the bankruptcy court restated the
reasoning it articulated when it ruled on Raspanti’s motion:
8
“issue preclusion require[s] that an issue be ‘actually
litigated’ in the first instance in order for issue preclusion to
apply in the second case. Finding that there was never a trial
on the issue of sanctions, [this] court concluded that issue
preclusion did not apply.” Raspanti v. Keaty (In re Keaty), No.
99-52587 (Bankr. W.D. La. 2003). Accordingly, the bankruptcy
court refused to give preclusive effect to the state appellate
court’s findings to conclude that Raspanti had met his burden of
proving the elements of § 523(a)(6) because “the appellate court
entered sanctions without a trial or evidentiary hearing
whatsoever.” Id.
Raspanti appealed the bankruptcy court’s decision to the
United States District Court for the Western District of
Louisiana. The district court adopted the findings of the
bankruptcy court and dismissed Raspanti’s appeal. Raspanti now
appeals to this court, arguing that the district court erred in
affirming the bankruptcy court’s decision. The issue before us
is whether, under principles of collateral estoppel, the
sanctions issue was “actually litigated” in the state court such
that the Louisiana appellate court’s findings barred the
relitigation of the willful and malicious injury requirement of
§ 523(a)(6).
II. DISCUSSION
A. Standard of Review
9
This court reviews a bankruptcy court’s conclusions of law
de novo. Killebrew v. Brewer (In re Killebrew), 888 F.2d 1516,
1519 (5th Cir. 1989). “A bankruptcy court's decision to give
preclusive effect to a state court judgment is a question of law
that we review de novo.” Gober v. Terra + Corp. (In re Gober),
100 F.3d 1195, 1201 (5th Cir. 1996); accord Schwager v. Fallas
(In re Schwager), 121 F.3d 177, 181 (5th Cir. 1997).
B. Analysis
Section 523(a)(6) of the Bankruptcy Code excepts from
discharge any debt incurred for willful and malicious injury by
the debtor to another entity. 11 U.S.C. § 523(a)(6) (2004).
Section 523(a)(6) of the Bankruptcy Code specifically provides:
§ 523. Exceptions to discharge
(a) A discharge under section 727, 1141, 1228(a),
1228(b), or 1328(b) of this title does not discharge an
individual debtor from any debt . . .
(6) for willful and malicious injury by the debtor
to another entity or to the property of another
entity . . . .
Id. The Supreme Court, in Kawaauhau v. Geiger, 523 U.S. 57, 61
(1998), stated that “[t]he word ‘willful’ in (a)(6) modifies the
word ‘injury,’ indicating that nondischargeability takes a
deliberate or intentional injury, not merely a deliberate or
intentional act that leads to injury.” The Fifth Circuit
extended Kawaauhau’s reasoning in Miller v. J.D. Abrams Inc. (In
re Miller), 156 F.3d 598, 603 (5th Cir. 1998), and stated that
10
“either objective substantial certainty [of injury] or subjective
motive [to injure] meets the Supreme Court's definition of
‘willful . . . injury’ in § 523(a)(6).” (third alteration in
original). The court in Miller went on to define the word
“malicious” and specifically rejected that it meant an act
without just cause or excuse. Id. at 605. Instead, the court
defined “malicious” as an act done with the actual intent to
cause injury. Id. at 606. The court noted that this definition
is synonymous with the definition of “willful” and thus
aggregated “willful and malicious” into a unitary concept. Thus,
the court held that “an injury is ‘willful and malicious’ where
there is either an objective substantial certainty of harm or a
subjective motive to cause harm.” Id. at 606; see also Williams
v. IBEW Local 520 (In re Williams), 337 F.3d 504, 509 (5th Cir.
2003).
To prevail under § 523(a)(6), a creditor must prove by a
preponderance of the evidence that the debt is not dischargeable.
Grogan v. Garner, 498 U.S. 279, 291 (1991). The Supreme Court
has held that collateral estoppel (issue preclusion) principles
apply in bankruptcy dischargeability proceedings. Id. at 285.
Accordingly, “[i]n such proceedings, ‘[p]arties may invoke
collateral estoppel in certain circumstances to bar relitigation
of issues relevant to dischargeability . . . .’” Schwager, 121
F.3d at 181 (second alteration in original) (quoting Gober, 100
F.3d at 1201). Thus, collateral estoppel can provide an
11
alternative basis to satisfy the elements of § 523(a)(6).
When giving preclusive effect to a state court judgment,
this court must apply the issue preclusion rules of that state.
Miller, 156 F.3d at 598 (citing Matsushita Elec. Indus. Co. v.
Epstein, 516 U.S. 367, 373 (1996)); In re King, 103 F.3d 17, 19
n.2 (5th Cir. 1997); Gober, 100 F.3d at 1201. Here, because the
underlying judgment is from the Louisiana Fourth Circuit Court of
Appeal, Louisiana issue preclusion rules apply. Louisiana law
provides in pertinent part:
Except as otherwise provided by law, a valid and final
judgment is conclusive between the same parties, except
on appeal or other direct review, to the following
extent . . .
(3) A judgment in favor of either the plaintiff or the
defendant is conclusive, in any subsequent action
between them, with respect to any issue actually
litigated and determined if its determination was
essential to that judgment.
LA. REV. STAT. ANN. § 4231 (West 1991).
The requirements for issue preclusion under Louisiana state
law are identical to those recognized by the Fifth Circuit: (1)
the parties must be identical; (2) the issue to be precluded must
be identical to that involved in the prior action; (3) the issue
must have been actually litigated; and (4) the determination of
the issue in the prior action must have been necessary to the
resulting judgment. Charpentier v. BG Wire Rope & Slings, Inc.,
174 B.R. 438, 441 n.1 (E.D. La. 1994); see also Matter of
Whittaker, 225 B.R. 131 (Bank. E.D. La. 1998). Moreover, this
12
circuit has held that because § 4231 is modeled on federal
doctrine and the RESTATEMENT OF JUDGMENTS, we can consult federal
jurisprudence for guidance when interpreting it. See Lafreniere
Park Found. v. Broussard, 221 F.3d 804, 808 (5th Cir. 2000); see
generally Goodman v. Spillers, 686 So.2d 160, 166 (La. Ct. App.
1996) (citing 3 JAMES W. MOORE ET AL., MOORE’S MANUAL, FEDERAL PRACTICE
AND PROCEDURE, §§ 30.04, 30.05 (1996) and RESTATEMENT (SECOND) OF
JUDGMENTS, § 27, cmt. (d) (1980)).
In addition, the scope of collateral estoppel is
circumscribed by the particularized findings of the state court.
Miller, 156 F.3d at 602. Thus, “[c]ollateral estoppel applies in
bankruptcy courts only if, inter alia, the first court has made
specific, subordinate, factual findings on the identical
dischargeability issue in question--that is, an issue which
encompasses the same prima facie elements as the bankruptcy
issue--and the facts supporting the court's findings are
discernible from that court's record.” Dennis v. Dennis (In re
Dennis), 25 F.3d 274, 278 (5th Cir. 1994). Therefore, the state
court’s findings must satisfy the elements of the “willful and
malicious injury” requirement.
In the case at hand, the bankruptcy court refused to give
preclusive effect to the state appellate court’s findings because
it concluded the sanctions issue (whether Keaty had filed the
claim against Raspanti to harass or to cause unnecessary delay or
needless increase in the cost of litigation) had not been
13
“actually litigated” in the state court. Specifically, the
bankruptcy court stated that the sanctions issue had not been
“actually litigated” because there had never been a trial or an
evidentiary hearing on the issue. We disagree with the
bankruptcy court’s legal premise.
There is nothing in the case law defining the term “actually
litigated” to require a trial or evidentiary hearing. Notably,
the bankruptcy court failed to cite any law to the contrary.
Louisiana law does not mandate that an issue must be decided
after a trial or evidentiary hearing to be considered “actually
litigated.” Such a requirement is clearly absent from the
Louisiana statute setting forth the requirements of issue
preclusion. See LA. REV. STAT. ANN. § 4231 (West 1991). Likewise,
at the federal level, there is no requirement of a trial or
evidentiary hearing to conclude that an issue has been “actually
litigated.” See RESTATEMENT (SECOND) OF JUDGMENTS § 27 cmt. d (1982)
(stating that an issue is actually litigated when “an issue is
properly raised, by the pleadings or otherwise, and is submitted
for determination, and is determined,” but not requiring a trial
or evidentiary hearing); 18 JAMES W. MOORE ET AL., MOORE’S FEDERAL
PRACTICE § 132.03 (3d ed. 1999) (failing to state that a trial or
evidentiary hearing is a requirement for issue preclusion).
In fact, courts regularly apply the doctrine of issue
preclusion in instances when there has not been a trial or
evidentiary hearing in the first case. See, e.g., Hirschfeld v.
14
Spanakos, 104 F.3d 16 (2d Cir. 1997). In Hirschfeld, the Second
Circuit reversed the district court’s refusal to give preclusive
effect to an appellate court’s findings, holding that even though
“the process by which appellate courts impose sanctions is a
summary process in which no testimony is taken and no
cross-examination permitted[,] it is not dispositive of the
preclusion issue . . . .” Id. at 19. Courts also apply the
doctrine of issue preclusion to issues decided on summary
judgment--which itself does not require a trial or evidentiary
hearing. See RESTATEMENT (SECOND) OF JUDGMENTS § 27 cmt. d (stating
that an issue is actually litigated when it is, inter alia,
“submitted for determination, and is determined” and that “[a]n
issue may be submitted and determined on . . . a motion for
summary judgment”); 18 JAMES W. MOORE ET AL., MOORE’S FEDERAL PRACTICE
§ 132.03 (“Issue preclusion generally applies when the prior
determination is based on a motion for summary judgment.”).
Thus, the bankruptcy court erred in concluding that the “actually
litigated” requirement of issue preclusion required a trial or
evidentiary hearing.
The requirement that an issue be “actually litigated” for
collateral estoppel purposes simply requires that the issue is
raised, contested by the parties, submitted for determination by
the court, and determined. McLaughlin v. Bradlee, 803 F.2d 1197,
1201 (D.C. Cir. 1986) (“This court has recently recapitulated the
standards for establishing the preclusive effect of a prior
15
holding. First, the same issue must have been actually litigated,
that is, contested by the parties and submitted for determination
by the court.” (internal quotation marks omitted)); James
Talcott, Inc. v. Allahabad Bank, Ltd., 444 F.2d 451, 459-60 (5th
Cir. 1971) (“As a general rule, where a question of fact is put
in issue by the pleadings, and is submitted to the jury or other
trier of facts for its determination, and is determined, that
question of fact has been ‘actually litigated.’” (citing
RESTATEMENT OF JUDGMENTS § 68, cmt. c (1942))); RESTATEMENT (SECOND) OF
JUDGMENTS § 27 cmt. d (1982) (stating that an issue is actually
litigated when it is “properly raised, by the pleadings or
otherwise, and is submitted for determination, and is
determined”).
There is no question that the sanctions issue was actually
litigated in the state court. First, Raspanti clearly raised the
sanctions issue in his motion for sanctions under Article 863.
Second, Keaty contested Raspanti’s assertion that Keaty filed the
claim for attorney’s fees against Raspanti to harass or to cause
unnecessary delay or needless increase in the cost of litigation
in several pleading documents, including his Memorandum in
Support of Exceptions of Res Judicata and Prescription and in
Opposition to Sanctions Under Louisiana Code of Civil Procedure
Article 863.3 In addition, Keaty’s attorney argued the sanctions
3
In his memorandum, Keaty stated in pertinent part:
16
issue twice before the Louisiana Fourth Circuit Court of Appeal;
first before a three-judge panel and then before a five-judge
panel. Third, the sanctions issue was submitted for
determination by the state trial and appellate courts. Finally,
the state appellate court ruled expressly on, and thus
determined, the sanctions issue. The appellate court made the
express finding that “the entire proceedings by the Keatys
against Raspanti was knowingly without foundation, crafted for
purposes of harassment and carried out in a manner designed to
deliberately prolong the proceedings needlessly.” Keaty v.
Raspanti, 781 So.2d 607, 612 (La. Ct. App. 2001). Therefore, we
conclude that the sanctions issue--the issue of whether Keaty
filed the claim against Raspanti to harass or to cause
unnecessary delay or needless increase in the cost of litigation-
-was actually litigated in the Louisiana Fourth Circuit Court of
Appeal. The state court record that Raspanti submitted to the
Roy A. Raspanti was made defendant in a lawsuit
wherein the plaintiffs sought at least a portion of
attorneys fees realized as the result of their services,
knowledge and skill. . . . Thus, the Keatys claimed
entitlement to, at least, a portion of the attorneys fees
realized as the result of their efforts, services and
skill. The petition was not frivolous, erroneous or
clearly wrong. In good faith, the Keatys asserted that
Roy A. Raspanti was not entitled to the total sum of
attorneys fees he had in his possession. The record
simply does not support the allegation that the pleadings
were not founded in fact and not asserted in good faith.
This statement clearly shows that Keaty disputed the fact that he
filed the claim against Raspanti to harass or to cause unnecessary
delay or needless increase in the cost of litigation.
17
bankruptcy court fully supports our conclusion that the
bankruptcy court erred in finding that the sanctions issue was
not actually litigated at the state court level.4
Our conclusion that the elements of collateral estoppel have
been met, however, is not the end of our inquiry. We must next
determine whether the state appellate court “has made specific,
subordinate, factual findings on the identical dischargeability
issue in question--that is, an issue which encompasses the same
prima facie elements as the bankruptcy issue . . . .” Dennis, 25
F.3d at 278. In other words, we must ascertain whether a claim
for sanctions under Louisiana law encompasses the elements of the
willful and malicious injury requirement under § 523(a)(6) of the
Bankruptcy Code and whether the state appellate court’s findings
satisfy the elements of the “willful and malicious injury”
requirement. As stated above, this circuit has held that “an
injury is ‘willful and malicious’ where there is either an
objective substantial certainty of harm or a subjective motive to
4
Moreover, the bankruptcy court did not question that all
the other elements of collateral estoppel were met. First, both
Raspanti and Keaty were parties in the state court action. Second,
as discussed below, the issue to be precluded (the issue of whether
Keaty acted willfully and maliciously) is encompassed by the issue
of sanctions (whether Keaty filed the claim for attorney’s fees
against Raspanti to harass or to cause unnecessary delay or
needless increase in the cost of litigation). Third, the
determination of the issue of whether Keaty filed the claim against
Raspanti to harass or to cause unnecessary delay or needless
increase in the cost of litigation in the state appellate court was
necessary to the judgment imposing sanctions under the Louisiana
Code of Civil Procedure Article 863.
18
cause harm.” Miller, 156 F.3d at 606. Article 863 of the
Louisiana Code of Civil Procedure allows sanctions against an
attorney who signs a pleading with “any improper purpose, such as
to harass or to cause unnecessary delay or needless increase in
the cost of litigation.” Both § 523(a)(6) and the Louisiana
statute require an inquiry into whether Keaty acted either with
an objective substantial certainty of injury (to cause
unnecessary delay) or a subjective motive to cause injury (to
harass or to increase the cost of litigation needlessly). In
fact, the Louisiana appellate court issued sanctions against
Keaty for intentionally pursuing meritless litigation for the
purpose of harassment and delay. Thus, we conclude that
Raspanti’s claim for sanctions under Louisiana law encompasses
the elements of the willful and malicious injury requirement
under § 523(a)(6) of the Bankruptcy Code.
We further conclude that the Louisiana Fourth Circuit Court
of Appeal’s findings unquestionably satisfy the elements of
§ 523(a)(6). The Louisiana appellate court made the following
findings:
We find that the Keatys knew and must have known all
along that their claim for tortious interference had
prescribed. We find that the Keatys knew that all of
their claims against the Byrds were disposed of in the
Bossier Parish proceedings. . . . We find that the
Keatys’ answers to Raspanti's request for admissions,
in which they denied the non-existence of a contract
between them and Raspanti, was disingenuous. We find
that the entire proceedings by the Keatys against
Raspanti was knowingly without foundation, crafted for
purposes of harassment and carried out in a manner
19
designed to deliberately prolong the proceedings
needlessly.
Keaty, 781 So.2d at 612 (emphasis added). These are clear and
specific findings as to Keaty’s state of mind. They demonstrate
that Keaty’s motive in filing the frivolous claim for attorney’s
fees was to injure Raspanti (by harassing him). They also
demonstrate that Keaty’s actions were substantially certain to
injure Raspanti, since deliberately and needlessly prolonging the
proceedings would necessarily cause Raspanti financial injury.
Thus, we conclude that the state appellate court’s findings
satisfy the elements of § 523(a)(6).5 Specifically, the findings
evidence that Keaty acted willfully and maliciously to injure
Raspanti. Therefore, we conclude that the bankruptcy court erred
in refusing to give preclusive effect to the findings made by the
Louisiana Fourth Circuit Court of Appeal.
IV. Conclusion
Accordingly, we hold that the district court erred in
affirming the bankruptcy court’s decision to deny preclusive
5
The bankruptcy court’s holding does not dispute that the
Louisiana Fourth Circuit Court of Appeal’s findings satisfy the
elements of § 523(a)(6). The bankruptcy court held that Raspanti
failed to satisfy his burden of proving each element of § 523(a)(6)
because he presented no evidence that went to Keaty’s intent or
subjective motivation. The bankruptcy court’s rationale for its
holding, however, rested on its conclusion that the sanctions issue
was not “actually litigated” and not on a finding that the
sanctions issue did not encompass the same elements as the willful
and malicious issue or that the state appellate court’s findings
did not satisfy the elements of the “willful and malicious injury”
requirement.
20
effect to the Louisiana appellate court’s findings. REVERSED and
REMANDED.
21
Raspanti v. Keaty
Combined Opinion