In re: Glenn Fred Hagele, Jr.

 FILED JUL 18 2016 1 NOT FOR PUBLICATION SUSAN M. SPRAUL, CLERK U.S. BKCY. APP. PANEL 2 OF THE NINTH CIRCUIT 3 UNITED STATES BANKRUPTCY APPELLATE PANEL 4 OF THE NINTH CIRCUIT 5 In re: ) BAP No. EC-15-1033-JuDTa ) 6 GLENN FRED HAGELE, JR., ) Bk. No. 14-23470 ) 7 Debtor. ) Adv. No. 14-02200 ______________________________) 8 ) GLENN FRED HAGELE, JR., ) 9 ) Appellant, ) 10 ) v. ) M E M O R A N D U M1 11 ) LAURANELL BURCH, ) 12 ) Appellee. ) 13 ______________________________) 14 Argued and Submitted on June 23, 2016 at Sacramento, California 15 Filed - July 18, 2016 16 Appeal from the United States Bankruptcy Court for the 17 Eastern District of California 18 Honorable Christopher M. Klein, Bankruptcy Judge, Presiding ________________________ 19 Appearances: Emry J. Allen appeared for appellant Glenn Fred 20 Hagele, Jr.; Appellee Lauranell Burch appeared pro se. 21 ___________________________ 22 Before: JURY, DUNN, and TAYLOR, Bankruptcy Judges. 23 Memorandum by Judge Jury Concurrence by Judge Dunn 24 25 26 1 This disposition is not appropriate for publication. 27 Although it may be cited for whatever persuasive value it may have (see Fed. R. App. P. 32.1), it has no precedential value. 28 See 9th Cir. BAP Rule 8024-1. -1- 1 Appellant Glenn Hagele (Debtor) appeals from the bankruptcy 2 court’s judgment holding that his debt to Appellee Lauranell 3 Burch (Burch) is nondischargeable under § 523(a)(6).2 The 4 bankruptcy court held that the state court prepetition judgment 5 entered in favor of Burch and against Debtor for defamation and 6 unfair trade practices established “willful and malicious 7 injury” under § 523(a)(6). For the reasons stated below, we 8 AFFIRM. 9 I. FACTS 10 The instant dispute arises out of a prepetition state court 11 action in which Debtor was found to have published defamatory 12 statements against Burch. Burch is a medical research 13 scientist, employed at the National Institute of Environmental 14 Health Scientists in North Carolina, who holds a PhD in 15 molecular biology and genetics. In 2004, Burch’s eyes were 16 seriously damaged after she underwent Lasik surgery and, as a 17 result of this incident, she suffers from permanent eye damage. 18 As such, since the surgery, Burch has applied her science 19 background to the study of medical literature relating to the 20 complications that can arise from refractive eye surgeries.3 21 Burch has been on numerous television programs devoted to the 22 risks associated with Lasik surgery and generally cautions about 23 24 2 Unless otherwise indicated, all chapter and section references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532. 25 All “Rule” references are to the Federal Rules of Bankruptcy 26 Procedure and “Civil Rule” references are to the Federal Rules of Civil Procedure. 27 3 “Refractive surgery” is a term used to describe surgical 28 procedures that correct common vision problems. -2- 1 the dangers involved. Debtor founded and directs the Council 2 for Refractive Surgery Quality Assurance (CRSQA), which is a 3 patient advocacy group. This organization monitors all internet 4 bulletin boards, newsgroups, and other public forums that 5 pertain to refractive eye surgery, such as Lasik. The principal 6 function of CRSQA is to provide a “balanced response” if an 7 anti-refractive surgery advocate makes inflammatory statements. 8 On December 10, 2007, Debtor filed a defamation complaint 9 against Burch in the Superior Court of Wake County, North 10 Carolina, alleging that Burch was publishing documents 11 containing Debtor’s personal information in violation of N.C. 12 Gen. Stat. § 75-66 (State Court Action). On that same day, 13 Debtor obtained an ex parte temporary retraining order. At the 14 preliminary injunction hearing, on December 21, 2007, the 15 superior court denied Debtor’s motion for a further injunction 16 and dissolved the temporary restraining order. On April 28, 17 2008, Burch filed her first amended answer denying all 18 liability, and asserted two counterclaims against Debtor for 19 defamation and unfair trade practices in violation of N.C. Gen. 20 Stat. § 75-1.1 (collectively, the Defamation Claims). On 21 July 13, 2010, Debtor voluntarily dismissed all of his claims 22 against Burch; however, Burch’s Defamation Claims remained. 23 On August 16, 2012, Burch filed a motion for partial 24 summary judgment asking the court to determine liability on the 25 Defamation Claims, leaving the issue of damages to a jury 26 determination at a later time. 27 On December 2, 2012, the superior court issued an order 28 granting partial summary judgment in favor of Burch (Summary -3- 1 Judgment Order), finding: 2 1. The evidence in the record establishes that there is no genuine issue of material fact that Hagele made a number of 3 statements about Burch after May 3, 2007 to Burch’s employer, in press releases, and over the Internet that 4 were false, including statements that falsely accused her of publishing personal information on the Internet. 5 2. The evidence in the record establishes that there is no 6 genuine issue of material fact these statements were of and concerning Burch, published to others, and were defamatory 7 per se because they impeached her in her trade or profession and tended to subject her to ridicule, contempt, 8 or disgrace. Accordingly, these statements constitute actionable defamation as a matter of law. . . . 9 3. Further, the case law of North Carolina establishes that 10 defamation ‘impeaching a party in its business activities’ amounts to a violation of N.C. Gen. § 75-1.1. 11 12 On February 26, 2013, a jury unanimously determined that 13 Burch was entitled to compensatory damages in the amount of 14 $150,000.00 and punitive damages in the amount of $200,000.00 15 (collectively, the Jury Award). On August 9, 2013, the court 16 (1) entered judgment confirming the findings of the Summary 17 Judgment Order and the Jury Award; (2) determined that Burch was 18 entitled to post-judgment interest at the legal rate of 8%; and 19 (3) allowed Burch to recover attorneys’ fees incurred in 20 defending against Debtor’s claims. 21 Due to the malicious nature of Debtor’s conduct, on 22 August 15, 2013, the court issued a permanent injunction 23 requiring Debtor to cease publishing defamatory statements and 24 to remove any statements which had been published (Permanent 25 Injunction Order). The court based the Permanent Injunction 26 Order’s findings and conclusions on the same evidence that was 27 found in the Summary Judgment Order and Jury Award. The 28 Permanent Injunction Order contained findings that: -4- 1 1. The evidence at trial in this matter established that Hagele’s conduct toward [Burch] was malicious. In 2 particular, his defamation of [Burch] was substantial and included a large number of false statements made over an 3 extended period of time directly to [Burch]’s employer and on numerous forums and websites on the Internet. The 4 evidence at trial further established that Mr. Hagele’s defamation of [Dr. Burch] has caused, and is causing, 5 [Burch] to suffer substantial harm. Finally, the evidence at trial established that Mr. Hagele intended [Burch] to be 6 harmed by his conduct. 7 2. Given the widespread nature of Mr. Hagele’s defamation of [Burch] on the Internet, [Burch] is substantially likely 8 to suffer additional harm in the future absent injunctive relief directing Mr. Hagele to remove such defamation. The 9 Court finds and concludes based on the evidence introduced at trial that such additional harm would be substantial and 10 irreparable absent injunctive relief requiring the removal of Mr. Hagele’s defamation of her on the Internet. 11 3. The evidence adduced at trial also established that 12 Mr. Hagele continues to threaten to contact the employers of certain critics of the Lasik procedure, and he continues 13 to threaten to disseminate information about [Burch]. The Court finds and concludes based on the evidence introduced 14 at trial that [Burch] faces a substantial risk of additional harm, and that such additional harm would be 15 substantial and irreparable, absent injunctive relief enjoining Mr. Hagele from further contact with her current 16 employer. 17 4. The record also evidences further inequitable conduct on Mr. Hagele’s part, including his engagement of a purported 18 private investigator who informed Mr. Hagele that he had ‘complete access’ to the home of a critic of the Lasik 19 procedure who passed along to Mr. Hagele emails that he indicated he had ‘intercepted,’ including emails both to 20 and from [Burch]. This inequitable conduct, in addition to intentional and malicious nature of Hagele’s conduct in 21 engaging in the defamation at issue in this case, further warrants entry of injunctive relief. 22 23 On April 3, 2014, Debtor filed a chapter 7 bankruptcy case. 24 Thereafter, Burch filed a timely adversary proceeding seeking to 25 except the Defamation Claims from discharge under § 523(a)(6). 26 On December 5, 2015, Burch filed a summary judgment motion, 27 28 -5- 1 arguing that collateral estoppel4 precluded relitigation of the 2 issues decided by the superior court in the Summary Judgment 3 Order, Jury Award, and Permanent Injunction Order (collectively, 4 the Superior Court Judgments). Burch contended that the 5 Superior Court Judgments determined that Debtor caused “willful 6 and malicious injury” to her under § 523(a)(6). 7 On January 15, 2016, the bankruptcy court granted Burch’s 8 motion for summary judgment, finding the debt to be 9 nondischargeable under § 523(a)(6). In doing so, the court 10 relied heavily on Jett v. Sicroff (In re Sicroff), 401 F.3d 1101 11 (9th Cir. 2005), for the notion that, in a defamation suit, 12 there can be no “just cause or excuse” for an intentional lie. 13 Debtor timely appeals to this court. 14 II. JURISDICTION 15 The bankruptcy court had jurisdiction over this proceeding 16 under 28 U.S.C. §§ 1334 and 157(b)(2)(I). We have jurisdiction 17 under 28 U.S.C. § 158. 18 III. ISSUE 19 Whether the bankruptcy court erred in granting summary 20 judgment for Burch on the basis of issue preclusion. 21 IV. STANDARDS OF REVIEW 22 We review summary judgment motions de novo. Gertsch v. 23 Johnson & Johnson (In re Gertsch), 237 B.R. 160, 165 (9th Cir. 24 BAP 1999). De novo review requires the Panel to independently 25 26 4 Although Burch premised her arguments on the application 27 of “collateral estoppel” this Panel, following the trend of most federal courts, uses the more precise term “issue preclusion” 28 when considering the preclusive effect of a prior court judgment. -6- 1 review an issue, without giving deference to the bankruptcy 2 court’s conclusions. First Ave. W. Bldg., LLC v. James 3 (In re Onecast Media, Inc.), 439 F.3d 558, 561 (9th Cir. 2006). 4 “We review rulings regarding rules of res judicata, 5 including claim and issue preclusion, de novo as mixed questions 6 of law and fact in which legal questions predominate.” Khaligh 7 v. Hadaegh (In Khaligh), 338 B.R. 817, 823 (9th Cir. BAP 2006), 8 aff’d, 506 F.3d 956 (9th Cir. 2007) (citing Robi v. Five 9 Platters, Inc., 838 F.2d 318, 321 (9th Cir. 1988)). “Once it is 10 determined that preclusion doctrines are available to be 11 applied, the actual decision to apply them is left to the trial 12 court’s discretion.” Id. Such discretion is exercised in 13 accordance with state law, when state preclusion law controls. 14 Gayden v. Nourbakhsh (In re Nourbakhsh), 67 F.3d 798, 800 (9th 15 Cir. 1995). 16 Under the abuse of discretion standard of review, we first 17 “determine de novo whether the [bankruptcy] court identified the 18 correct legal rule to apply to the relief requested.” United 19 States v. Hinkson, 585 F.3d 1247, 1262 (9th Cir. 2009)(en banc). 20 If the bankruptcy court identified the correct legal rule, we 21 then determine under the clearly erroneous standard whether its 22 factual findings and its application of the facts to the 23 relevant law were: “(1) illogical, (2) implausible, or 24 (3) without support in inferences that may be drawn from the 25 facts in the record.” Id. (internal quotation marks omitted). 26 V. DISCUSSION 27 A. Summary Judgment Standards 28 A trial court will appropriately grant summary judgment “if -7- 1 the pleadings, the discovery and disclosure materials on file, 2 and any affidavits show that there is no genuine issue as to any 3 material fact and that the movant is entitled to judgment as a 4 matter of law.” Civil Rule 56(c)(2), as incorporated by 5 Rule 7056. The trial court does not weigh evidence but merely 6 determines whether material facts remain in dispute. Covey v. 7 Hollydale Mobilehome Estates, 116 F.3d 830, 834 (9th Cir. 1997). 8 A dispute is genuine if there is sufficient evidence for a 9 reasonable fact finder to hold in favor of the non-moving party, 10 and a fact is “material” if it might affect the outcome of the 11 case. Far Out Prods., Inc. v. Oskar, 247 F.3d 986, 992 (9th 12 Cir. 1997). 13 The plaintiff carries the initial burden of production and 14 the ultimate burden of persuasion that there is “no genuine 15 issue as to any material fact.” Civil Rule 56(c). To meet this 16 burden, the plaintiff must provide conclusive evidence of “a 17 showing sufficient for the court to hold that no reasonable 18 trier of fact could find other than for the moving party.” 19 S. Cal. Gas Co. v. City of Santa Ana, 336 F. 3d 885, 888 (9th 20 Cir. 2003). The burden can shift to the non-moving party, who 21 must “go beyond the pleadings” and by his or her own affidavits, 22 depositions, answers to interrogatories, or admissions on file, 23 designate specific facts to demonstrate that there is a genuine 24 issue for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323 25 (1986). 26 B. Willful and Malicious Injury: § 523(a)(6) 27 Section 523(a)(6) provides in relevant part: “(a) A 28 discharge under section 727 . . . of this title does not -8- 1 discharge an individual debtor from any debt — . . . (6) for 2 willful and malicious injury by the debtor to another entity or 3 to the property of another entity[.]” 4 In the Ninth Circuit, willfulness and malice are analyzed 5 separately and are not to be conflated. See Carrillo v. Su 6 (In re Su), 290 F.3d 1140, 1146 (9th Cir. 2002). Willful injury 7 requires an inquiry into the subjective state of mind of the 8 debtor. In re Su, 290 F.3d at 1145. The standard is met when 9 it is shown that the debtor either had a subjective motive to 10 inflict injury or the debtor believed that injury was 11 substantially certain to occur. Id. However, it is not enough 12 to merely prove that the debtor acted intentionally and caused 13 an injury. Kawaauhau v. Geiger, 523 U.S. 57, 61 (1998). 14 Malicious injury requires: (1) a wrongful act, (2) done 15 intentionally, (3) which necessarily causes injury, and (4) is 16 done without just cause or excuse. Petralia v. Jercich 17 (In re Jercich), 238 F.3d 1202, 1208 (9th Cir. 2001). 18 It is well established that issue preclusion may be applied 19 in exception to discharge proceedings. Grogan v. Garner, 20 498 U.S. 279, 284 (1991). “Issue preclusion ‘bars successive 21 litigation of an issue of fact or law actually litigated and 22 resolved in a valid court determination essential to the prior 23 judgment, even if the issue recurs in the context of a different 24 claim.’” New Hampshire v. Maine, 532 U.S. 742, 748 (2001) 25 (quoting Hasnain v. Chadd (In re Hasnain), 2012 WL 5471453, at 26 *7 (9th Cir. BAP Nov. 9, 2012). 27 C. Preclusion law of North Carolina 28 Federal Courts must refer to the preclusion law of the -9- 1 state in which the judgment was rendered in order to determine 2 the preclusive effect of a state court judgment. Marrese v. Am. 3 Acad. of Orthopaedic Surgeons, 470 U.S. 373, 380 (1985); Diruzza 4 v. Cty. of Tehama, 323 F.3d 1147, 1152 (9th Cir. 2003). 5 Therefore, North Carolina law on issue preclusion applies. The 6 elements for issue preclusion under North Carolina law are: 7 (a) a prior suit resulting in a final judgment on the merits; (b) identical issues involved; (c) the issue 8 was actually litigated in the prior suit and necessary to the judgment; and (d) the issue was actually 9 determined. 10 Royster v. McNamara, 218 N.C.App. 520, 525-26 (2012); McDonald 11 v. Skeen, 152 N.C.App. 228, 230 (2002). 12 1. Prior suit resulting in a final judgment on the merits 13 The first prong of issue preclusion requires a final 14 judgment on the merits. Under North Carolina law, a final 15 judgment is one that determines the entire controversy between 16 the parties, leaving nothing to be decided in the trial court. 17 Ratchford v. C.C. Mangum, Inc., 150 N.C.App. 197, 199 (2002). 18 The parties in the present case do not dispute that a final 19 judgment on the merits was entered in the state court. Thus, 20 the first element is satisfied. 21 2. Identical issues involved 22 The next and most critical prong requires comparison of the 23 issue presented in the prior state court action that resulted in 24 the defamation judgment with the issues presented in the current 25 case, whether Debtor acted willfully and maliciously. Under 26 North Carolina law, the term defamation applies to the two 27 distinct torts of libel and slander. A claim of libel per se 28 that defames a party in its business activities may be the basis -10- 1 of a claim for unfair and deceptive trade practices under N.C. 2 G.S. 75-1.1. See Ellis v. N. Star Co., 326 N.C. 219, 225-26 3 (1990). Therefore, the proof required for each claim is 4 identical. Libel per se is a publication which, when considered 5 alone without explanatory circumstances, tends to impeach a 6 person in that person's trade or profession, or otherwise tends 7 to subject one to ridicule, contempt or disgrace. Renwick v. 8 News and Observer Pub. Co., 310 N.C. 312 (1984). 9 In the Summary Judgment Order the North Carolina court 10 found that statements made by Debtor about Burch were defamatory 11 per se because the “statements published by [Debtor] impeached 12 Burch in her trade or profession and tended to subject her to 13 ridicule, contempt, or disgrace.” To give this conclusion 14 preclusive effect, however, we must find that the state court 15 specifically made a finding that Debtor acted both willfully and 16 maliciously under federal law when publishing the defamatory 17 statements for a determination that the debt is nondischargeable 18 under § 523(a)(6). 19 3. The willful element 20 As laid out above, the “willful” prong requires an inquiry 21 into the subjective state of mind of the debtor; the standard is 22 met when the debtor either had a subjective motive to inflict 23 injury or believed that injury was substantially certain to 24 occur. In re Su, 290 F.3d at 1145. Considering together the 25 Summary Judgment Order, Permanent Injunction Order, and Jury 26 Award, we find the “willful” requirement satisfied. 27 The Summary Judgment Order included findings that Debtor 28 made a number of statements about Burch to Burch’s employer in -11- 1 press releases and over the Internet that were false, including 2 statements that falsely accused her of publishing his personal 3 information on the Internet. Moreover, the Permanent Injunction 4 Order found that: (a) Debtor’s conduct toward Burch was 5 malicious; (b) Debtor’s defamation was substantial and included 6 a large number of false statements made over an extended period 7 of time directly to Burch’s employer and on numerous forums and 8 websites on the Internet; (c) Debtor threatened to contact the 9 employers of certain critics of the Lasik procedure, and 10 threatened to disseminate information about Burch; (d) Debtor 11 has caused, and is causing, Burch to suffer substantial harm and 12 that Debtor intended Burch to be harmed by his conduct; and, 13 most significantly, (e) “. . . the evidence at trial established 14 that [Debtor] intended [Burch] to be harmed by his conduct.” 15 These findings show that Debtor intended to harm Burch as 16 required by the willful prong in In re Su. Therefore, because 17 Debtor knowingly published defamatory statements against Burch 18 with the actual intent to cause injury to her, Debtor’s conduct 19 was “willful” as that term is contemplated by § 523(a)(6). 20 4. The malicious element 21 As defined above, malicious injury requires (a) a wrongful 22 act, (b) done intentionally, (c) which necessarily causes 23 injury, and (d) done without just cause or excuse. 24 In re Jercich, 238 F.3d 1208. Because the Summary Judgment 25 Order found Debtor committed defamation, the first two prongs 26 are satisfied as a matter of law. See Jeff v. Sicroff 27 (In re Sicroff), 401 F.3d 1101, 1106 (9th Cir. 2005) (“A 28 libelous act, by its nature, is self-evidently wrongful and is -12- 1 committed by an intentional act of publication.”). The third 2 prong is likewise satisfied because Debtor’s statements were 3 directed at Burch’s professional reputation, which would 4 substantially harm her in her occupation. Indeed, the Permanent 5 Injunction Order was issued based on the harm caused by the 6 statements being “substantial and irreparable.” Therefore, the 7 first three elements of malice are directly provided by the 8 libel determination. The fourth element, “without just cause or 9 excuse,” is less straightforward since by its nature the lack of 10 good cause or excuse is not proved by the plaintiff with 11 affirmative evidence; just cause or excuse is a defense for the 12 debtor. 13 In opposing the summary judgment, Debtor asserted that 14 there exists a triable issue of material fact on whether the 15 state court necessarily decided the “just cause or excuse” 16 element. Debtor first claimed that the burden of proof was on 17 Burch to show just cause or excuse.5 Next, Debtor asserted 18 Burch failed to prove that there was neither a just cause nor an 19 excuse for Debtor’s conduct. In ruling on the motion, the 20 bankruptcy court relied on In re Sicroff for the conclusion that 21 all defamation would be without just cause or excuse because 22 there can be no just cause or excuse for an intentional lie; 23 thus, the bankruptcy court held that Burch was entitled to 24 judgment as a matter of law. 25 We do not read In re Sicroff so broadly, nor do we need to 26 27 5 This argument is nonsensical since Burch could never have 28 the burden to prove Debtor’s defense. -13- 1 rely on it to reach a decision in this case. In In re Sicroff, 2 the Ninth Circuit was presented with the issue of whether to 3 give the state court libel judgment preclusive effect under 4 § 523(a)(6). The court found the first three elements of 5 “maliciousness” easily satisfied where a university professor 6 was defamed by an intentional act of publication that was 7 directed at the professor’s professional reputation. Id. at 8 1106. Based on an analysis of the record of that case the 9 circuit court ruled there could be no just cause or excuse 10 because the actions were taken to injure the professor’s 11 reputation. Id. at 1107. The bankruptcy court here took this 12 conclusion as a per se rule that there could never be just cause 13 or excuse for defamation. On our record, we need not rely on a 14 per se rule. 15 Although in general a plaintiff has the burden to prove by 16 a preponderance of the evidence that the debt arose from willful 17 and malicious conduct, In re Jercich, 238 F.3d at 1208, just 18 cause or excuse is in the nature of an affirmative defense. 19 Jercich by implication supports the position that a debtor must 20 first put forth the just cause or excuse. In In re Jercich, the 21 Ninth Circuit was presented with the issue of giving a pre- 22 petition state court judgment for unpaid wages preclusive effect 23 under § 523(a)(6). Id. at 1209. After the court concluded that 24 the debtor’s conduct was “malicious,” the court stated that the 25 debtor “pointed to” no just cause or excuse. Id. This 26 statement implies that a debtor carries the burden of going 27 forward on the final element of malice which may be satisfied by 28 the debtor affirmatively asserting “cause or excuse.” Debtor -14- 1 here did not meet this burden. 2 In his responding papers, Debtor argued that he had just 3 cause to file the state court complaint against Burch because he 4 believed his allegations to be true. Therefore, he asserts a 5 material disputed fact as to that issue to defeat summary 6 judgment. This argument misses the mark. The defamation 7 judgment was not premised on his state court complaint, but 8 rather the independent defamatory statements alleged by Burch in 9 her cross-complaint. Nowhere in his opposition does Debtor 10 assert a just cause or excuse for those defamatory statements. 11 This failure by Debtor to put forth the necessary evidence of 12 just cause or excuse makes determination of the summary judgment 13 motion against him proper. With this final prong in place, the 14 malicious element is met. 15 5. The issue was actually litigated in the prior suit and necessary to the judgment. 16 17 The third prong requires the matter to be “actually 18 litigated,” or stated another way, the parties must have 19 litigated whether Debtor engaged in willful and malicious 20 conduct against Burch. Matters are typically “actually 21 litigated” in North Carolina when the parties must have “enjoyed 22 a full and fair opportunity to litigate that issue in the 23 earlier proceeding.” Hillsboro Partners, LLC v. City of 24 Fayetteville, 738 S.E.2d 819 (2013). 25 There is no doubt that this issue has been actually 26 litigated and the parties had a full and fair hearing. The 27 issues before the bankruptcy court were the central issues that 28 were litigated and evaluated by the state court jury and judge -15- 1 in order to determine whether Hagele was liable for the 2 Defamation Claims and whether Burch should be entitled to 3 punitive damages. Thus, this requirements is established. 4 6. The issue was actually determined. 5 As to the last prong, the Summary Judgment Order, 6 Injunction Order, and Jury Award all establish that the court 7 made detailed findings on the issues at hand. Thus, this 8 requirement is established. 9 In sum, the bankruptcy court did not err in applying issue 10 preclusion to the Superior Court judgment with regard to all the 11 elements of willful and to a finding of malice except for the 12 just cause or excuse defense of malicious. Because Debtor 13 failed to raise a material issue of disputed fact on this last 14 element, summary judgment for Burch ruling that the Superior 15 Court Judgment was nondischargeable under § 523(a)(6) was 16 proper. 17 D. Attorneys’ fees as a measure of nondischargeable damage 18 Debtor asserts that because the attorneys’ fees awarded 19 were based on the unfair competition claim, they are not 20 nondischargeable as based on willful and malicious conduct. 21 We disagree. Under North Carolina law, a claim of libel 22 per se that defames a party in its business activities may be 23 the basis of a claim for unfair and deceptive trade practices. 24 See Ellis v. N. Star Co., 326 N.C. at 225-26. The record shows 25 that the basis for the unfair and deceptive trade practices 26 violation was the very same libel per se that we concluded was 27 willful and malicious. Section 75-16 of the North Carolina 28 deceptive trade practices statute provides for an award of -16- 1 attorney fees to a plaintiff who prevails on an unfair trade 2 practice claim, as did Burch here. Under the holding of Cohen 3 v. de la Cruz, 523 U.S. 213 (1998), fees are nondischargeable if 4 they are recoverable as an element of damages in a non- 5 bankruptcy court for the claim which is found to be 6 nondischargeable. Therefore, because North Carolina law allows 7 the fees, they are properly included in the nondischargeable 8 judgment. 9 VI. CONCLUSION 10 For the reasons stated above, we AFFIRM. 11 12 13 14 Concurrence begins on next page. 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -17- 1 DUNN, Bankruptcy Judge, Concurring: 2 I join in the disposition of this appeal by the Panel but 3 write separately to point out my limited disagreement with where 4 the majority goes in Part C.4. of the Discussion concerning the 5 burden of proof to establish the fourth element of “malice,” 6 i.e., “without just cause or excuse” for purposes of 7 § 523(a)(6). 8 This Panel has held that a creditor seeking to except a 9 debt from a debtor’s discharge bears the burden of proof by a 10 preponderance of the evidence to establish “each element of the 11 exception to dischargeability.” See, e.g., First Del. Life Ins. 12 Co. v. Wada (In re Wada), 210 B.R. 572, 575 (9th Cir. BAP 1997), 13 citing Grogan v. Garner, 498 U.S. 279 (1991). In Jett v. 14 Sicroff (In re Sicroff), 401 F.3d 1101 (9th Cir. 2005), the 15 Ninth Circuit reversed the bankruptcy court’s judgment, affirmed 16 on appeal by the district court, determining that a creditor’s 17 libel judgment against the debtor was dischargeable. In 18 analyzing the record with respect to malice, the circuit 19 concluded that, “Having satisfied the first three elements of 20 ‘malicious injury’ [for § 523(a)(6) purposes], to prevail, Jett 21 [the creditor claimant] must demonstrate by a preponderance of 22 the evidence that Sicroff [the debtor] published his statements 23 ‘without just cause or excuse.’” Id. at 1106 (emphasis added). 24 It concluded that Jett had met that burden. Id. at 1106-07. 25 I recognize the force of the majority’s argument that by 26 its nature, “just cause or excuse” should not be the plaintiff 27 creditor’s burden to bear, as it is in the nature of an 28 affirmative defense to be raised by the debtor defendant. -1- 1 However, in this appeal I don’t think that we need to reach that 2 legal conclusion. In the Summary Judgment Order, the North 3 Carolina superior court held that there was no genuine issue of 4 material fact in the record before it that Debtor made a number 5 of false statements “to Burch’s employer, in press releases, and 6 over the Internet” that falsely accused Burch of publishing his 7 personal information on the Internet. At oral argument, counsel 8 for the Debtor admitted that the Debtor did not submit any 9 evidence of a “just cause or excuse” for his behavior during the 10 course of the North Carolina legal proceedings. On the record 11 before us, I conclude that Burch satisfied any burden of proof 12 she had to meet to establish that Debtor’s conduct that resulted 13 in her claim against him was not absolved by any “just cause or 14 excuse,” and I join my colleagues in affirming the bankruptcy 15 court’s decision. 16 17 18 19 20 21 22 23 24 25 26 27 28 -2-