United States District Court, E.D. Pennsylvania
IN RE BRIAN RICHARD MCCABE, Debtor.
BRIAN RICHARD MCCABE, Appellee. CONOR CORCORAN, Appellant, Bankruptcy No. 13-19715
the Court are a Certificate of Appeal from an Order entered
by the Honorable Ashley M. Chan, United States Bankruptcy
Court Judge for the Eastern District of Pennsylvania (Doc.
1), Appellant's Brief (Doc. 6), Appellant's
Supplemental Brief (Doc. 8), and Appellee's Brief (Doc.
9). Upon consideration of the Parties' submissions and
exhibits, and the designated record on appeal, the Court
AFFIRMS the Bankruptcy Court's decision.
FACTUAL AND PROCEDURAL BACKGROUND
Court writes primarily for the Parties, it sets forth only
those facts relevant to its analysis.
March 12, 2008, Corcoran sued McCabe in the Philadelphia
Court of Common Pleas (“CCP”) for defamation and
false invasion of privacy. In re McCabe, 559 B.R.
415, 421 (Bankr. E.D. Pa. 2016). On September 2, 2008, the
CCP entered a default judgment against McCabe. Id.
On February 17, 2009, the CCP held a hearing to assess
damages (“Damages Hearing”). Id. The CCP
entered a judgment in favor of Corcoran, assessing $50,
000.00 in compensatory damages and $75, 000.00 in punitive
damages against McCabe. Id. On June 3, 2009, the CCP
issued an opinion in support of its judgment. Id.
The CCP did not explain its reasoning for assessing punitive
damages. In re McCabe, 559 B.R. at 421. On March 19,
2009, McCabe appealed the decision of the CCP to the
Pennsylvania Superior Court. Appellee's Br. 4-5, Doc. 9;
Appellant's Br. 9, Doc. 6. On September 17, 2009, the
Pennsylvania Superior Court entered an order quashing
McCabe's appeal. In re McCabe, 559 B.R. at 421.
November 5, 2013, McCabe filed a Chapter 13 bankruptcy
petition. Id. On October 31, 2014, Corcoran filed an
adversary proceeding in Bankruptcy Court, objecting to the
discharge of the judgment entered by the CCP. In re
McCabe, 559 B.R. at 421; Appellant's Br. 8. On May
19, 2016, the Bankruptcy Court held a trial to determine the
dischargeability of McCabe's debt arising from the CCP
judgment. In re McCabe, 559 B.R. at 421. The
Bankruptcy Court found, inter alia, that: (1) the
judgment against McCabe did not fall within the discharge
exception for willful and malicious injury of 28 U.S.C.
§ 523(a)(6), (2) collateral estoppel based on the
CCP's judgment did not apply in its proceeding, and (3)
the CCP's Damages Hearing transcript was inadmissible.
In re McCabe, 559 B.R. at 427-30.
Corcoran filed an appeal to this Court. Corcoran purportedly
raises seven (7) issues on appeal. However, Corcoran combines
some issues and is not clear on others. The Court interprets
Corcoran's appeal to only raise five (5) issues: (1) the
Bankruptcy Court erred by determining that the 28 U.S.C.
§ 523(a)(6)'s exemption requirements were not met;
(2) the Bankruptcy Court's determination contradicts the
Restatement (Second) of Judgments; (3) the Bankruptcy Court
erred by not admitting the CCP Damages Hearing transcript;
(4) the Bankruptcy Court's decision violates the Full
Faith and Credit Clause under 28 U.S.C. § 1738; and (5)
the Bankruptcy Court violated the Rooker-Feldman doctrine.
STANDARD OF REVIEW
Court has jurisdiction over this appeal under 28 U.S.C.
§ 158(a). When reviewing bankruptcy court proceedings, a
district court sits as an appellate court. In re
Michael, 699 F.3d 305, 308 n.2 (3d Cir. 2012); In re
Goody's Family Clothing Inc., 610 F.3d 812, 815 (3d
Cir. 2010). A district court must “review the
bankruptcy court's legal determinations de novo,
its factual findings for clear error and its exercise of
discretion for abuse thereof.” In re United
Healthcare Sys., Inc., 396 F.3d 247, 249 (3d Cir. 2005).
argues that the Bankruptcy Court's decision should be
reversed for several reasons. For the reasons set forth
below, the Court finds Corcoran's arguments unpersuasive
and without merit. Therefore, the Court affirms the
Bankruptcy Court's decision. The Court will address
Corcoran's arguments as follows: (1) the Bankruptcy Court
erred by determining that the 28 U.S.C. § 523(a)(6)
exemption requirements were not met; (2) the Bankruptcy
Court's decision violates the Full Faith and Credit
Clause under 28 U.S.C. § 1738; (3) the Bankruptcy Court
erred by not admitting the CCP Damages Hearing transcript;
(4) the Bankruptcy Court's determination contradicts the
Restatement (Second) of Judgments; and (5) the Bankruptcy
Court violated the Rooker-Feldman doctrine.
The Bankruptcy Court Did Not Err In Its Determination That
McCabe's Debt Arising From The States Court's Damage
Award Was Dischargeable
argues that the default judgment, entered against McCabe in
the CCP, established McCabe's willful and malicious
conduct, and, therefore, the judgment is non-dischargeable
under 28 U.S.C. § 523(a)(6). Appellant's Br. 14.
McCabe argues that although the CCP entered default judgment,
the CCP did not find that McCabe's conduct was willful
and malicious. Appellee's Br. 8. The Bankruptcy Court
held a trial on the issue of dischargeability.
Bankruptcy Court did not admit the Damages Hearing
transcript, ruling that the transcript was inadmissible for
lack of proper authentication. In re McCabe, 559
B.R. at 430. The Bankruptcy Court determined that
McCabe's debt arising from the states court's damage
award did not fall within 28 U.S.C. § 523(a)(6)'s
discharge exception because Corcoran failed to prove that
McCabe willfully and maliciously injured him. Id. As
this is a legal conclusion, the Court will review the
Bankruptcy's Court decision de novo. In re
United Healthcare Sys., Inc., 396 F.3d at 249.
The CCP's Default Judgment Does Not Meet 11 U.S.C. §
523(a)(6) Exemption Requirements
“discharge [in bankruptcy] does not discharge an
individual debtor from any debt that arises as a result of a
debtor's “willful and malicious injury . . . to
another . . . .” 11 U.S.C. § 523(a)(6). A debt is
non-dischargeable under § 523(a)(6) if the debt arises
from an act done with “actual intent to cause injury,
” meaning there must have been a “deliberate or
intentional injury . . . ” Kawaauhau v.
Geiger, 523 U.S. 57, 57, 61 (1998). “[D]ebts
arising from recklessly or negligently inflicted injuries do
not fall within the compass of § 523(a)(6).”
Id. at 64.
Pennsylvania court enters a default judgment, the party
against whom the judgment has been entered does not have
“the opportunity to have his ‘day in
court'” or to have his “cause of action
decided upon the merits.” Kraynick v. Hertz,
277 A.2d 144, 147 (Pa. 1971). Because injuries resulting from
defamation may be intentionally or negligently inflicted, a
default judgment, or resulting damages, in a defamation case
is not determinative of whether an injury was willful or
establish a defamation claim, a plaintiff must prove:
(1) The defamatory character of the communication;
(2) Its publication by the defendant;
(3) Its application to the ...