FILED
JUN 08 2016
1 NOT FOR PUBLICATION
2 SUSAN M. SPRAUL, CLERK
U.S. BKCY. APP. PANEL
OF THE NINTH CIRCUIT
3 UNITED STATES BANKRUPTCY APPELLATE PANEL
4 OF THE NINTH CIRCUIT
5 In re: ) BAP No. CC-15-1379-TaLKi
)
6 LORNA J. RILEY, ) Bk. No. 2:13-bk-36193-RN
)
7 Debtor. ) Adv. No. 2:14-ap-01422-RN
______________________________)
8 )
CALIFORNIA CAPITAL INSURANCE )
9 COMPANY, )
)
10 Appellant, )
)
11 v. ) MEMORANDUM*
)
12 LORNA J. RILEY, )
)
13 Appellee.** )
______________________________)
14
Submitted Without Oral Argument*** on May 19, 2016
15
Filed – June 8, 2016
16
Appeal from the United States Bankruptcy Court
17 for the Central District of California
18 Honorable Richard M. Neiter, Bankruptcy Judge, Presiding
19 Appearance: Bruce N. Graham of Graham & Associates on brief
for appellant.
20
21
*
This disposition is not appropriate for publication.
22
Although it may be cited for whatever persuasive value it may
23 have (see Fed. R. App. P. 32.1), it has no precedential value.
See 9th Cir. BAP Rule 8024-1(c)(2).
24
**
Appellee did not file a brief; pursuant to the BAP Clerk
25 of Court’s conditional order of waiver, she waived the right to
26 appear in this appeal.
***
27 The Panel unanimously determined that the appeal was
suitable for submission on the briefs and record pursuant to
28 Bankruptcy Rule 8019(b)(3).
1 Before: TAYLOR, LANDIS,**** and KIRSCHER, Bankruptcy Judges.
2 INTRODUCTION
3 California Capital Insurance Company appeals from the
4 bankruptcy court’s judgment in favor of Debtor Lorna Riley in an
5 adversary proceeding objecting to discharge of its claim under
6 § 523(a)(6).1
7 We AFFIRM.
8 FACTS2
9 Prepetition, Appellant commenced an action against the
10 Debtor and her family in California state court. The Debtor and
11
****
12 The Honorable August B. Landis, United States
Bankruptcy Judge for the District of Nevada, sitting by
13 designation.
14 1
Unless otherwise indicated, all chapter and section
15 references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532.
All “Rule” references are to the Federal Rules of Bankruptcy
16 Procedure. All “Civil Rule” references are to the Federal Rules
of Civil Procedure.
17
2
18 Appellant requests that the Panel take judicial notice
of four state court records. It, however, neither filed these
19 documents with the bankruptcy court nor submitted them as
evidentiary exhibits at trial. We normally do not consider
20 documents that were not presented to the bankruptcy court. See
21 United States v. Elias, 921 F.2d 870, 874 (9th Cir. 1990).
That said, the trial transcript shows that the bankruptcy
22 court reviewed the state court complaint. There is no
indication on this record that there was an amended state court
23 complaint. Thus, we grant the request in part and take judicial
24 notice of the state court complaint.
We also take judicial notice of the state court judgment
25 pursuant to Federal Rule of Evidence 201. We recognize that,
with few exceptions, parties may not supplement the record on
26 appeal. See Lowry v. Barnhart, 329 F.3d 1019, 1024-25 (9th Cir.
27 2003). Nonetheless, the Debtor has not appeared in this appeal
and one of the issues on appeal is the preclusive effect of the
28 state court judgment.
2
1 her husband rented a house (the “Property”) from Appellant’s
2 insured; they were later evicted for failure to pay rent. The
3 complaint asserted three cause of actions: (1) breach of
4 contract; (2) the intentional torts of willful misconduct and
5 private nuisance; and (3) general negligence. As to each cause
6 of action, the complaint alleged the same facts: that the Debtor
7 (and her family)
8 [C]aus[ed] or fail[ed] to prevent the vandalizing of
the [Property], by cutting the carpet and carpet pad,
9 spilling paint on the carpet and bathroom floor of the
[Property], painting profanities on the walls of the
10 [Property], leaving trash throughout the [Property],
smashing the masterbath sink with such force that the
11 sink cracked, and otherwise damaging the [Property].
12 R., Ex. J at 88-92.
13 The state court subsequently struck the Debtor’s answer to
14 the complaint and entered default against her. Appellant
15 eventually obtained a default judgment against the Debtor and
16 her husband and an award of compensatory damages in the
17 principal amount of $20,824.95, plus fees and costs. The Debtor
18 later filed for bankruptcy.
19 As relevant to this appeal,3 the adversary complaint sought
20 a determination that the debt owed to Appellant was excepted
21 from discharge pursuant to § 523(a)(6) based on the issue
22 preclusive effect of the state court judgment.
23 In the course of discovery, Appellant served requests for
24 admission (“RFAs”) on the Debtor. The Debtor never responded.
25 Indeed, she did little in the adversary proceeding until the eve
26
3
27 The adversary complaint also asserted a § 523(a)(4)
claim, which the bankruptcy court also denied. Appellant
28 expressly abandons the § 523(a)(4) claim for relief on appeal.
3
1 of trial when she requested a continuance.
2 Although both Appellant and the Debtor appeared at trial,
3 the bankruptcy court did not take any testimony.4 It first
4 explained the effects of the Debtor’s nonparticipation in the
5 state court proceeding, including entry of the default judgment.
6 Turning to Appellant, the bankruptcy court, however, concluded
7 that the state court default judgment did not establish
8 § 523(a)(6) nondischargeability. It also concluded that the
9 RFAs constituted improper conclusions of law under Civil
10 Rule 36(a) and, thus, that they did not provide an independent
11 basis for Appellant’s § 523(a)(6) claim. As there was no
12 additional evidence introduced at trial, the bankruptcy court
13 entered judgment for the Debtor.
14 Appellant subsequently appealed.5
15 JURISDICTION
16 The bankruptcy court had jurisdiction pursuant to 28 U.S.C.
17 §§ 1334 and 157(b)(2)(I). We have jurisdiction under 28 U.S.C.
18 § 158.
19 ISSUE
20 Whether the bankruptcy court erred in determining that the
21 state court judgment was not excepted from discharge under
22 § 523(a)(6).
23 ///
24
25 4
At a pretrial conference, Appellant had advised the
bankruptcy court that it would submit on its papers and the
26
RFAs.
27 5
The bankruptcy court granted Appellant’s timely request
28 to extend the time to appeal pursuant to Rule 8002(d).
4
1 STANDARDS OF REVIEW
2 We review de novo the bankruptcy court’s determination of
3 whether a particular debt is excepted from discharge under
4 § 523(a)(6). Plyam v. Precision Dev., LLC (In re Plyam),
5 530 B.R. 456, 461 (9th Cir. BAP 2015); see also Carrillo v. Su
6 (In re Su), 290 F.3d 1140, 1142 (9th Cir. 2002)
7 (nondischargeability presents mixed issues of law and fact and
8 is reviewed de novo).
9 We also review de novo the bankruptcy court’s decision as
10 to the availability of issue preclusion. In re Plyam, 530 B.R.
11 at 461. If issue preclusion was available, we then review the
12 bankruptcy court’s application of issue preclusion for an abuse
13 of discretion. Id. A bankruptcy court abuses its discretion if
14 it applies the wrong legal standard, misapplies the correct
15 legal standard, or if its factual findings are illogical,
16 implausible, or without support in inferences that may be drawn
17 from the facts in the record. See TrafficSchool.com, Inc. v.
18 Edriver Inc., 653 F.3d 820, 832 (9th Cir. 2011) (citing United
19 States v. Hinkson, 585 F.3d 1247, 1262 (9th Cir. 2009)
20 (en banc)).
21 Finally, we review de novo the bankruptcy court’s
22 interpretation and application of the procedural rules. See
23 Jackson v. United States (In re Jackson), 541 B.R. 887, 890 (9th
24 Cir. BAP 2015).
25 DISCUSSION
26 Appellant contends that the bankruptcy court erred in
27 determining that the state court judgment was not excepted from
28 discharge under § 523(a)(6) for three reasons: first, by
5
1 declining to give issue preclusive effect to the judgment;
2 second, by determining that the state court’s terminating
3 sanction against the Debtor did not constitute a willful and
4 malicious injury; and, third, by determining that the RFAs did
5 not conclusively establish the existence of a willful and
6 malicious injury. We conclude that there was no error in the
7 bankruptcy court’s determinations.
8 Section 523(a)(6) excepts from discharge debts arising from
9 a debtor’s “willful and malicious” injury to another person or
10 to the property of another. Barboza v. New Form, Inc.
11 (In re Barboza), 545 F.3d 702, 706 (9th Cir. 2008). The
12 “willful” and “malicious” injury requirements are conjunctive
13 and subject to separate analysis. Id.; In re Su, 290 F.3d at
14 1146–47.
15 An exacting requirement, the willful injury requirement is
16 satisfied when a debtor harbors “either a subjective intent to
17 harm, or a subjective belief that harm is substantially
18 certain.” In re Su, 290 F.3d at 1144; see also Petralia v.
19 Jercich (In re Jercich), 238 F.3d 1202, 1208 (9th Cir. 2001).
20 “A willful injury is a deliberate or intentional injury, not
21 merely a deliberate or intentional act that leads to injury.”
22 In re Barboza, 545 F.3d at 706 (quoting Kawaauhau v. Geiger,
23 523 U.S. 57, 61 (1998)) (internal quotation marks omitted). As
24 a result, “debts arising from recklessly or negligently
25 inflicted injuries do not fall within the compass of
26 § 523(a)(6).” Geiger, 523 U.S. at 64. Thus, as this Panel has
27 stated, “the Supreme Court in Geiger effectively adopted a
28 narrow construction and the most blameworthy state of mind” as
6
1 that required for § 523(a)(6) nondischargeability. In re Plyam,
2 530 B.R. at 464.
3 The malicious injury requirement is established where there
4 is: “(1) a wrongful act, (2) done intentionally, (3) which
5 necessarily causes injury, and (4) is done without just cause or
6 excuse.” In re Jercich, 238 F.3d at 1209.
7 Save for certain situations not applicable here,6
8 § 523(a)(6) is predicated on the existence of an intentional
9 tort. See Geiger, 523 U.S. at 61, 64 (observing that “the
10 [§ 523](a)(6) formulation triggers in the lawyer’s mind the
11 category ‘intentional torts,’ as distinguished from negligent or
12 reckless torts.”) (citation omitted). Whether there exists an
13 intentional tort is typically informed by state law. See
14 generally Lockerby v. Sierra, 535 F.3d 1038, 1041 (9th Cir.
15 2008).
16 A. The state court’s terminating sanction did not support
17 § 523(a)(6) nondischargeability.
18 Appellant argues that the state court’s terminating
19 sanction against the Debtor (that is, striking the Debtor’s
20 answer to the state court complaint) supplied an alternative
21 basis for nondischargeability. We disagree.
22 The bankruptcy court did not make any specific findings in
23 relation to the terminating sanction, and we cannot determine
24 the basis for the sanction on this record. At trial, the Debtor
25 asserted that her form of answer was procedurally defective.
26
27 6
E.g., a criminal violation or a tort-like statutory
28 violation may also suffice for § 523(a)(6) nondischargeability.
7
1 Appellant, on the other hand, alleged that the sanction followed
2 violation of multiple state court orders. Thus, the sanction
3 arose either from the Debtor’s ineptitude or from more serious
4 failures to properly engage in the state court litigation.
5 We need not remand for resolution of this question,
6 however, because whatever the basis for the terminating sanction
7 it was not an act that gave rise to the injury to the Property.
8 And only the claim for injury to the Property formed the basis
9 for the complaint’s § 523(a)(6) nondischargeability claim.
10 There was no attempt before the bankruptcy court or on appeal to
11 monetize the alleged injury relating to the terminating
12 sanction, to explain the alleged injury, or to discuss why any
13 such injury was willful and malicious.
14 B. The state court judgment failed to establish all elements
15 of Appellant’s § 523(a)(6) claim.
16 The bankruptcy court may give issue preclusive effect to a
17 state court judgment as the basis for excepting a debt from
18 discharge. Harmon v. Kobrin (In re Harmon), 250 F.3d 1240, 1245
19 (9th Cir. 2001). We apply the forum state’s law of issue
20 preclusion. Id.
21 California permits application of issue preclusion to an
22 existing judgment: (1) after final adjudication; (2) of an
23 identical issue; (3) actually litigated in the former
24 proceeding; (4) necessarily decided in the former proceeding;
25 and (5) asserted against a party in the former proceeding or in
26 privity with that party. See DKN Holdings LLC v. Faerber,
27 61 Cal. 4th 813, 825 (2015). In addition, the court must
28 determine that issue preclusion “furthers the public policies
8
1 underlying the doctrine.” In re Harmon, 250 F.3d at 1245
2 (citing Lucido v. Super. Ct., 51 Cal. 3d 335, 342-42 (1990));
3 see also Khaligh v. Hadaegh (In re Khaligh), 338 B.R. 817,
4 824–25 (9th Cir. BAP 2006).
5 A default judgment is not excluded from an application of
6 issue preclusion; but “the issue must have been ‘necessarily
7 litigated’ in the action resulting in the default judgment.”
8 In re Harmon, 250 F.3d at 1246 n.5 (citation omitted). This
9 requirement, in turn, “imposes two separate conditions: the
10 issue must have been ‘actually litigated’ and it must have been
11 ‘necessarily decided’ by the default judgment.” Id. (citation
12 omitted). Preclusive application to such a judgment, however,
13 is limited to the allegations and causes of action as set forth
14 in the complaint. See Cal. Civ. Proc. Code § 580;
15 In re Williams’ Estate, 36 Cal. 2d 289, 293 (1950) (“Of course,
16 a court in a default action may not grant relief beyond that
17 which is demanded in the complaint. . . .”).
18 The party asserting preclusion bears the burden of
19 establishing the threshold requirements. In re Harmon, 250 F.3d
20 at 1245. This means providing “a record sufficient to reveal
21 the controlling facts and pinpoint the exact issues litigated in
22 the prior action.” Kelly v. Okoye (In re Kelly), 182 B.R. 255,
23 258 (9th Cir. BAP 1995), aff’d, 100 F.3d 110 (9th Cir. 1996).
24 Ultimately, “[a]ny reasonable doubt as to what was decided by a
25 prior judgment should be resolved against allowing the [issue
26 preclusive] effect.” Id.
27 On appeal, Appellant does not address with particularity
28 any of the elements of issue preclusion. But, on de novo
9
1 review, we conclude that issue preclusion was unavailable. The
2 bankruptcy court, thus, correctly declined to give preclusive
3 effect to the state court judgment.
4 1. The allegations as pled in the state court complaint
5 did not include the § 523(a)(6) willful injury
6 requirement.
7 Each of the three causes of action in the state court
8 complaint asserted the same exact allegation: that the Debtor
9 either caused or failed to prevent the “vandalizing” of the
10 Property, followed by a descriptive paragraph of the damage.
11 This allegation, however, does not plainly equate to an
12 allegation that the Debtor subjectively intended to damage the
13 landlord or the Property or that she was substantially certain
14 that damage would occur.
15 Appellant maintains that, based on the default judgment,
16 the Debtor admitted that she was liable for the damages because
17 she “caus[ed] . . . the vandalizing of the [Property] . . . .”
18 Apl’t Op. Br. at 11. This is an overstatement. Appellant
19 disingenuously omits from the complaint’s quoted language the
20 phrase “or fail[ed] to prevent.” Emphasis added. This
21 disjunctive allegation bars the application of issue preclusion
22 here.
23 An alleged failure to do an act may be merely negligent.
24 See Restatement (Second) of Torts § 282 (1965) cmt. a
25 (“Negligent conduct may consist either of an act . . . or an
26 omission to act when there is a duty to do so. . . .”) (emphasis
27 added); id. § 284(b) (defining negligent conduct as “a failure
28 to do an act which is necessary for the protection or assistance
10
1 of another and which the actor is under a duty to do.”);
2 CACI 401 (Negligence - Basic Standard of Care), Judicial Council
3 of Cal. Civ. Jury Instrs. (2011) (“A person can be negligent by
4 acting or by failing to act. A person is negligent if he or she
5 . . . fails to do something that a reasonably careful person
6 would do in the same situation.”) (emphasis added).
7 Here, the default judgment determined that the Debtor
8 either damaged the Property or failed to prevent others from
9 doing so. Thus, the default judgment did not necessarily decide
10 that an intentional tort and injury occurred and left open the
11 possibility that the Debtor acted with mere negligence. Again,
12 a negligently inflicted injury cannot support § 523(a)(6)
13 nondischargeability.7
14 2. The state court judgment’s ambiguity bars application
15 of issue preclusion.
16 The state court judgment contains no factual findings or
17 conclusions of law; it simply grants judgment in Appellant’s
18 favor against the Debtor and her husband and awards damages in
19 the amount sought in the state court complaint. We cannot tell
20 whether the state court judgment was based equally on each cause
21
7
22 Appellant’s argument that the breach of contract cause
of action was nondischargeable under § 523(a)(6) based on state
23 public policy also fails. In California, tortious breach of
24 contract involves “[c]onduct...[that] becomes tortious only when
it also violates an independent duty arising from principles of
25 tort law.” In re Jercich, 238 F.3d at 1206 (internal quotation
marks and citation omitted). Appellant did not adequately plead
26 this theory of recovery in the state court complaint. But even
27 if we assume that the contract claim was tortious, the Debtor’s
failure to act did not require a conclusion that the breach
28 resulted from more than negligence.
11
1 of action in the state court complaint or rested on only one
2 theory of recovery. In the absence of an express determination
3 to the contrary, we must infer that the state court granted the
4 judgment in the disjunctive. Thus, we cannot rule out the
5 possibility that the basis of recovery was the cause of action
6 asserting general negligence. Again, a negligently inflicted
7 injury can never support a determination of § 523(a)(6)
8 nondischargeability. Geiger, 523 U.S. at 64. This reasonable
9 doubt enjoins the Appellant’s reliance on issue preclusion and
10 the state court judgment. See In re Kelly, 182 B.R. at 258.
11 3. Neither of the intentional torts asserted in the state
12 court complaint satisfy the § 523(a)(6) willful injury
13 requirement.
14 Private nuisance. In California, every nuisance that is
15 not public is considered a private nuisance. Cal. Civ. Code
16 § 3481. A nuisance is defined as “[a]nything which is . . . an
17 obstruction to the free use of property, so as to interfere with
18 the comfortable enjoyment of life or property . . . .” Id.
19 § 3479.
20 Here, the private nuisance cause of action alleged, in
21 the alternative, that the Debtor failed to prevent the damage.
22 Where a defendant’s failure to abate the nuisance gives rise to
23 liability, “then negligence is said to be involved.” City of
24 Pasadena v. Super. Ct., 228 Cal. App. 4th 1228, 1236 (2014)
25 (quoting Lussier v. San Lorenzo Valley Water Dist., 206 Cal.
26 App. 3d 92, 105 (1988)). Once again, negligence is insufficient
27 to establish the § 523(a)(6) state of mind.
28 ///
12
1 Willful Misconduct.8 In the civil context, “[w]illful
2 misconduct is an aggravated form of negligence.” Carlsen v.
3 Koivumaki, 227 Cal. App. 4th 879, 895 (2014). The elements
4 necessary “to raise a negligent act to the level of wil[l]ful
5 misconduct [are]: (1) actual or constructive knowledge of the
6 peril to be apprehended, (2) actual or constructive knowledge
7 that injury is a probable, as opposed to a possible, result of
8 the danger, and (3) conscious failure to act to avoid the
9 peril.” Id. Importantly, however, willful misconduct does not
10 require a subjective intent to injure - “[i]t is sufficient that
11 a reasonable person under the same or similar circumstances
12 would be aware of the highly dangerous character of his or her
13 conduct.” Calvillo-Silva v. Home Grocery, 19 Cal. 4th 714, 730
14 (1998), disapproved on other grounds, Aguilar v. Atl. Richfield
15 Co., 25 Cal. 4th 826 (2001). In other words, willful misconduct
16 may be based on reckless conduct. Once again, a recklessly
17 inflicted injury does not satisfy the § 523(a)(6) willful injury
18 requirement.
19 We finally note that it is inconsequential that the state
20 court complaint – in the form’s boilerplate text – stated that
21 the Debtor “intentionally caused the damage to plaintiff” in
22 connection with the intentional tort causes of action. The
23 torts as asserted did not require an intent to injure.
24 ///
25
26 8
The California Supreme Court has declined to determine
27 whether willful misconduct constitutes an independent cause of
action. Nalwa v. Cedar Fair, L.P., 55 Cal. 4th 1148, 1164 n.8
28 (2012).
13
1 C. The majority of the RFAs did not call for improper legal
2 conclusions; any error, however, was harmless because the
3 RFAs failed to establish all elements required for
4 § 523(a)(6) nondischargeability.
5 Appellant finally argues that the bankruptcy court erred in
6 determining that the RFAs constituted improper legal conclusions
7 under Civil Rule 36. While largely true, we conclude that any
8 resultant error was harmless.
9 Civil Rule 36(a)(1) (made applicable in adversary
10 proceedings by Rule 7036) authorizes a party to request
11 admission of any matter within the scope of Civil Rule 26(b)(1),
12 relating to “facts, the application of law to fact, or opinions
13 about either.” Requests for pure admissions of law, however,
14 are inappropriate. 7 James Wm. Moore et al., Moore’s Federal
15 Practice - Civil § 36.03 (3d ed.); 8B Charles Alan Wright et
16 al., Federal Practice and Procedure § 2255 & n.7 (3d ed.).
17 Litigants are discouraged from using Civil Rule 36 with “the
18 hope that a party’s adversary will simply concede essential
19 elements.” Conlon v. United States, 474 F.3d 616, 622 (9th Cir.
20 2007). “Rather, the rule seeks to serve two important goals:
21 truth-seeking in litigation and efficiency in dispensing
22 justice.” Id.
23 Where a party fails to timely respond in writing to
24 requests for admissions, the matters are deemed admitted and
25 conclusively established in the case; such admissions are self-
26 executing and require no further action by the proponent or the
27 court. Fed. R. Civ. P. 36(a)(3), (b). Admittedly, “[Civil]
28 Rule 36 is harsh in its consequences to the dilatory litigant.
14
1 Failure to respond within the thirty-day time frame
2 automatically results in a material fact being deemed
3 admitted. . . .” Warren v. Cybulski, --- B.R. ----, 2016 WL
4 1176398, at *5 (N.D. Cal. Mar. 28, 2016).
5 The record establishes that the Debtor neither responded to
6 the RFAs nor moved to amend or withdraw them pursuant to Civil
7 Rule 36(b). Thus, the RFAs were deemed admitted to the extent
8 that the requests fell within the scope of Civil Rule 36(a)(1).
9 The bankruptcy court, however, broadly determined that the RFAs
10 did not provide sufficient support for Appellant’s
11 nondischargeability claim; it stated that they all called for
12 conclusions of law. This was error. The record reflects that
13 many RFAs related to factual matters.9 Those RFAs, however, did
14 not independently or collectively establish that § 523(a)(6)
15 nondischargeability was appropriate; thus, the error as to those
16 RFAs was harmless. The remainder of the RFAs were either
17 irrelevant to the § 523(a)(6) claim,10 failed to establish an
18 injury for the purposes of § 523(a)(6),11 were fatally
19 ambiguous12 or, as more generally noted by the bankruptcy court,
20
21
9
RFA Nos. 1-4, 8-9, and 11 (in part) relate to background
22 facts.
23 10
RFA No. 7 predominately pertains to the § 523(a)(4)
24 claim that Appellant has abandoned on appeal. The factual
portion of the RFA is duplicative of the factual portion of
25 RFA No. 6, which we discuss hereafter.
26 11
RFA Nos. 10 and 11 (in part) relate to the argument that
27 we rejected in section A, supra, of this decision.
28 12
See discussion regarding RFA Nos. 5 and 6 below.
15
1 improperly called for conclusions of law.13
2 1. The RFAs utilized over-broad definitions that
3 eliminated their utility in material respects.
4 The draconian consequence of failure to respond to a
5 request for admission is limited by the requirement that the
6 request be clear. Ambiguity must be construed against the
7 drafter. Here, as with the state court complaint, Appellant
8 utilized over-broad definitions that make the RFAs imprecise and
9 limit their utility in establishing all elements of its
10 § 523(a)(6) claim.
11 As is common practice, the RFAs were prefaced with global
12 terms and definitions. This included that “‘Defendant’, shall
13 be deemed to mean Lorna J. Riley, as well as her agents,
14 attorneys, representatives or any other person acting on her
15 behalf and direction.” Emphasis added. RFA Nos. 5 and 6 also
16 reference the Debtor’s family. Appellant’s inclusion of these
17 other entities in the global definition of defendant creates
18 ambiguity as to what the Debtor did; as a result, RFA Nos. 5 and
19 6 fail to establish that the Debtor herself vandalized the
20 Property willfully and maliciously. Thus, RFA Nos. 5 and 6 fail
21 to conclusively establish that the Debtor personally committed
22 all or any of the damaging acts.
23 Section 523(a)(6) clearly requires a “willful and malicious
24 injury by the debtor. . . .” RFA Nos. 5 and 6, however, meet
25 this standard only if one imputes to the Debtor the knowledge
26 and intent of unknown agents, representatives, or other person
27
28 13
See discussion regarding RFA Nos. 6 and 12 below.
16
1 acting on her behalf or at her unspecified direction. Such an
2 application involves inappropriate speculation and calls for an
3 extremely attenuated conclusion of law with respect to agency.
4 We, like the bankruptcy court, are unable to determine that
5 the Debtor acted with willfulness and malice based on the
6 admissions made by the RFAs when they leave open the possibility
7 that the damage to the Property was done by others. And we,
8 like the bankruptcy court, reach this conclusion notwithstanding
9 that the Debtor may have had an unspecified agency relationship
10 with these third parties and may have directed them in an
11 unspecified manner.14
12 ///
13 ///
14
14
15 The Ninth Circuit has imputed the knowledge and intent
of a business partner to a debtor for the purposes of
16 § 523(a)(6). See Impulsora Del Territorio Sur, S.A. v. Cecchini
(In re Cecchini), 780 F.2d 1440 (9th Cir. 1986). This case,
17 however, provides no assistance to Appellant for several
18 reasons. First, the Cecchini decision predates Geiger and did
not require an intent to injure. See id. at 1442–43. As the
19 Panel stated in Sachan v. Huh (In re Huh), 506 B.R. 257, 268
(9th Cir. BAP 2014) (en banc), “the lack of a specific intent to
20 injure holding in Cecchini was effectively overruled by the
21 Supreme Court in its Geiger decision. Consequently, the
continued efficacy of Cecchini as precedent on related questions
22 is compromised.” See also Peklar v. Ikerd (In re Peklar),
260 F.3d 1035, 1038 (9th Cir. 2001) (recognizing the limitation
23 of Cecchini following Geiger). Second, to the extent Cecchini
24 has continued viability, it can be factually distinguished.
There is no evidence of a business partnership here; we cannot
25 utilize the principles of partnership law to impute liability as
the Cecchini court did. See id. at 1444. This conservative
26 treatment of § 523 is consistent with more recent Supreme Court
27 decisions in this area. See Bullock v. BankChampaign, N.A.,
133 S. Ct. 1754 (2013). But cf. Husky Int’l Elecs., Inc. v.
28 Ritz, 136 S.Ct. 1581 (2016).
17
1 2. RFA Nos. 6 and 12 improperly requested conclusions of
2 law.
3 “The distinction between the application of law to fact and
4 a legal conclusion is ‘not always easy to draw.’” Watterson v.
5 Garfield Beach CVS LLC, 2015 WL 2156857, at *4 (N.D. Cal. May 7,
6 2015) (quoting Apple, Inc. v. Samsung Elec. Co., Ltd., 2012 WL
7 952254, at *3 (N.D. Cal. Mar. 20, 2012)). An application of law
8 to fact relates to “matters involving ‘mixed law and fact’” and
9 is intended to narrow the range of issues for trial. Fed. R.
10 Civ. P. 36 advisory committee’s note to 1970 amendment,
11 subdivision (a); see also Asea, Inc. v. S. Pac. Transp. Co.,
12 669 F.2d 1242, 1245 (9th Cir. 1981).
13 A mixed question of law and fact, in turn, pertains to
14 “questions in which the historical facts are admitted or
15 established, the rule of law is undisputed, and the issue is
16 whether the facts satisfy the statutory standard, or to put it
17 another way, whether the rule of law as applied to the
18 established facts is or is not violated.” Pullman-Standard v.
19 Swint, 456 U.S. 273, 289 n.19 (1982).15 Courts generally agree
20 that a request for admission is an application of law to fact
21 “as long as the legal conclusions relate to the facts of the
22 case.” Ransom v. United States, 8 Cl. Ct. 646, 648 (1985); see
23 also Fed. R. Civ. P. 36 advisory committee’s note to 1970
24
15
25 In the context of issue preclusion, the application of
law to fact has also been described as an “ultimate fact.” See
26 Restatement (Second) of Judgments § 27 (1982) cmts. c, j; see
27 also United States v. Hernandez, 572 F.2d 218, 221 n.3 (9th Cir.
1978) (recognizing the Restatement’s definition of an ultimate
28 fact).
18
1 amendment, subdivision (a) (Civil Rule 36 “does not authorize
2 requests for admissions of law unrelated to the facts of the
3 case.”).16
4 RFA No. 6 called for the Debtor to admit or deny that:
5 “[t]he damage to the premises was done by the [Debtor] and her
6 family willfully and maliciously as those terms are used in
7 . . . [§] 523(a)(6).” Contrary to Appellant’s assertion, this
8 was not an application of law to fact.
9 This RFA was an improper request for a legal conclusion:
10 that the injury - damage to the Property - was willful and
11 malicious. The phrase mirrors the terms of the statutory
12 language, terms that have particularized meanings in bankruptcy.
13 Rather than frame questions in relation to the particular facts
14
16
15 Other courts have deemed the following requests for
admission a legal conclusion:
16 C Defendant’s apartments did not have and were not built with
an accessible route in compliance with the Federal Fair
17 Housing Act Regulations, 24 CFR 100.205, Stein v. Creekside
18 Seniors, L.P., 2016 WL 912176, at *2 & n.4 (D. Idaho
Mar. 4, 2016).
19 C Defendant’s products were defective under Oregon state law,
Benson Tower Condo. Owners Ass’n v. Victaulic Co., 105 F.
20 Supp. 3d 1184, 1196 (D. Or. 2015).
21 C An attack on plaintiff’s computer network and communication
infrastructure referred to in the complaint constituted an
22 illegal act, Music Grp. Macao Commercial Offshore Ltd. v.
Foote, 2015 WL 579688, at *2 (N.D. Cal. Feb. 11, 2015).
23 C Perjury is a felony, peace officers should not commit
24 perjury, committing perjury as a peace officer can lead to
criminal charges, and defendant owed a duty to disclose to
25 plaintiff all exculpatory evidence in any criminal case.
Hupp v. San Diego Cty., 2014 WL 1404510, at *15 (S.D. Cal.
26 Apr. 10, 2014).
27 C The defendant was a public figure as defined by case
authority. Playboy Enters., Inc. v. Welles, 60 F. Supp. 2d
28 1050, 1057 (S.D. Cal. 1999).
19
1 of the case, Appellant simply skipped to the conclusion
2 necessary to except the debt from discharge: that the damage was
3 willful and malicious. Admission of this RFA would leave the
4 bankruptcy court with nothing to do but rubber stamp a judgment
5 in Appellant’s favor.17 This result would also run afoul of the
6 caution advised by the Ninth Circuit, to refrain from using
7 Civil Rule 36 as a mechanism to obtain concessions from the
8 adverse party on essential elements. See Conlon, 474 F.3d at
9 622.18
10 Similarly, RFA No. 12 improperly requested an admission of
11 ultimate liability. And, contrary to Appellant’s argument,
12 RFA No. 12 clearly requests a legal conclusion as it requests
13 admission that: “[Debtor’s] liability to [Appellant] in the
14 judgment in the suit is non-dischargeable.” Nondischargeability
15
16 17
Our conclusion is bolstered by other bankruptcy cases
involving requests for admissions in a nondischargeability
17 proceeding. See, e.g., Warren v. Cybulski, --- B.R. ---,
18 2016 WL 1176398, at *5-6; Loucas v. Cunningham
(In re Cunningham), 526 B.R. 578, 588 (Bankr. E.D. Pa. 2015);
19 Heritage Pac. Fin., LLC v. Trejo (In re Trejo), 2011 WL 5557423,
at *3 (Bankr. N.D. Cal. Nov. 3, 2011), aff’d, 2012 WL 6622617
20
(9th Cir. BAP Dec. 20, 2012).
21 18
See also Veasley ex rel. Veasley v. United States,
22 2015 WL 1013699, at *4 (S.D. Cal. Mar. 9, 2015) (plaintiffs’
requests for admission sought improper legal conclusions where
23 they “essentially ask[ed] that Defendant accede to at least one
24 element of the cause of action for which Plaintiffs, not
Defendant, bear the burden of persuasion and of proof in this
25 proceeding, specifically either the causation or injury prongs
of any and all negligence causes of action.”); Rios v. Tilton,
26 2010 WL 3784703, at *7 (E.D. Cal. Sept. 24, 2010) (in a civil
27 rights action, plaintiff’s requests for admission “improperly
and repeatedly sought defendant’s acquiescence to the entirety
28 of plaintiff’s complaint.”).
20
1 is a question of law.
2 CONCLUSION
3 Based on the foregoing, we AFFIRM the bankruptcy court.
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