FILED
NOT FOR PUBLICATION
FEB 24 2017
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: NARINDER SANGHA, No. 15-60057
Debtor, BAP No. 14-1397
______________________________
CHARLES EDWARD SCHRADER, MEMORANDUM*
Appellant,
v.
NARINDER SANGHA,
Appellee.
Appeal from the Ninth Circuit
Bankruptcy Appellate Panel
Kirscher, Pappas, and Taylor, Bankruptcy Judges, Presiding
Argued and Submitted February 9, 2017
Pasadena, California
Before: SCHROEDER, PREGERSON, and MURGUIA, Circuit Judges.
Creditor-Appellant Charles Schrader appeals the Bankruptcy Appellate
Panel’s (“BAP”) memorandum disposition vacating the bankruptcy court’s order
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
that granted summary judgment in favor of Schrader against Debtor-Appellee
Narinder Sangha based on issue preclusion. We have jurisdiction under 28 U.S.C.
§ 158(d)(1).1 We affirm the BAP and remand to the bankruptcy court.2
A California state trial court awarded Schrader a default judgment against
Sangha. The default judgment included a punitive damage award.
Thereafter, the bankruptcy court granted summary judgment in favor of
Schrader based on issue preclusion. The bankruptcy court held that Schrader’s
default judgment was not dischargeable under 11 U.S.C. § 523(a)(6). The
bankruptcy court found that the punitive damage award, standing alone, precluded
relitigation of § 523(a)(6)’s “willful and malicious” intent requirements3 because
the punitive damage award was based on a California state trial court’s finding of
“malice in fact.”
1
We exercise jurisdiction in light of the liberal standard for finality in
bankruptcy appeals. This court can exercise jurisdiction if the issue before the
court is legal and if resolving that issue “would aid the bankruptcy court in
reaching its disposition on remand,” as is the case here. Bonner Mall P’ship v.
U.S. Bancorp Mortg. Co., 2 F.3d 899, 904 (9th Cir. 1993).
2
Creditor-Appellant Charles Schrader’s motion to strike portions of Debtor-
Appellee Narinder Sangha’s answering brief is DENIED.
3
The “willful” and “malicious” intent requirements are conjunctive and
require separate analyses. Carrillo v. Su (In re Su), 290 F.3d 1140, 1146 (9th Cir.
2002). “Willful” intent must be established before “malicious” intent may be
concluded. See Thiara v. Spycher Bros. (In re Thiara), 285 B.R. 420, 434 (9th Cir.
BAP 2002).
2
Between the time of the bankruptcy court’s decision and the BAP’s review
of this bankruptcy appeal, Plyam v. Precision Development, LLC (In re Plyam),
530 B.R. 456 (9th Cir. BAP 2014) was decided, which called into question the
bankruptcy court’s reasoning. In re Plyam held that a California state court
punitive damage award, standing alone, does not preclude relitigation of
§ 523(a)(6)’s “willful” intent requirement. 530 B.R. at 463–65 (holding that
“under California law, the general definition of malice in fact encompasses less
reprehensible states of mind” than § 523(a)(6)’s “willful” intent requirement).
Applying In re Plyam to this bankruptcy appeal, the state court’s punitive
damage award, standing alone, did not preclude relitigation of § 523(a)(6)’s
“willful” intent requirement. In determining whether relitigation of § 523(a)(6)’s
“willful” intent requirement is precluded, In re Plyam requires that the bankruptcy
court review the allegations in Schrader’s second amended complaint together with
the punitive damage award. See 530 B.R. 456 at 465.
We AFFIRM the BAP. On REMAND, the bankruptcy court shall re-
evaluate whether issue preclusion is available in light of In re Plyam, 530 B.R.
456, 463–65 (9th Cir. BAP 2014). Accordingly, the bankruptcy court must
consider whether the state court default judgment and the allegations in Schrader’s
second amended complaint preclude relitigation of § 523(a)(6)’s “willful” intent
3
requirement. If the bankruptcy court determines that the allegations in the second
amended complaint together with the punitive damage award preclude relitigation
of § 523(a)(6)’s “willful and malicious” intent requirements, then the California
state trial court default judgment in favor of Schrader is not dischargeable.
AFFIRMED and REMANDED to the bankruptcy court.
4