In re: HAROLD W. DICKENS, III, Dba LAW OFFICES OF HAROLD W. DICKENS, III, Dba LAW OFFICES OF HAROLD W. DICKENS, III, P.C. ( 2022 )

FILED
AUG 17 2022
SUSAN M. SPRAUL, CLERK
U.S. BKCY. APP. PANEL
OF THE NINTH CIRCUIT
NOT FOR PUBLICATION
UNITED STATES BANKRUPTCY APPELLATE PANEL
OF THE NINTH CIRCUIT
In re: BAP No. CC-21-1202-FSG
HAROLD W. DICKENS, III, dba LAW
OFFICES OF HAROLD W. DICKENS, Bk. No. 2:19-bk-22970-BB
III, dba LAW OFFICES OF HAROLD W.
DICKENS, III, P.C., Adv. No. 2:20-ap-01177-BB
Debtor.
HAROLD W. DICKENS, III,
Appellant,
v. MEMORANDUM*
KENNETH S. BRADLEY, MD, an
individual; SOUTHERN CALIFORNIA
PAIN CONSULTANTS, INC., a
California corporation,
Appellees.
Appeal from the United States Bankruptcy Court
for the Central District of California
Sheri Bluebond, Bankruptcy Judge, Presiding
Before: FARIS, SPRAKER, and GAN, Bankruptcy Judges.
*
This disposition is not appropriate for publication. Although it may be cited for
whatever persuasive value it may have, see Fed. R. App. P. 32.1, it has no precedential
value, see 9th Cir. BAP Rule 8024-1.
INTRODUCTION
The California superior court sanctioned attorney Harold W.
Dickens, III for submitting false declarations on behalf of his clients while
defending a defamation lawsuit brought by the appellees. Mr. Dickens
filed for chapter 71 bankruptcy protection. The appellees sought to have the
debt declared nondischargeable under § 523(a)(6) because it arose from a
willful and malicious injury: filing the false declarations with the intent to
defeat the defamation lawsuit. The bankruptcy court granted the appellees’
motion for summary judgment based on the issue preclusive effect of the
state court’s judgment.
Mr. Dickens appeals, arguing that the bankruptcy court erred in
determining that the underlying acts were both willful and malicious. He
maintains that he did not knowingly file the false declarations and
contends that the standard for granting the sanctions differed from the
standard under § 523(a)(6).
We disagree with Mr. Dickens. The issues that the California superior
court had to decide in order to impose sanctions on Mr. Dickens were
identical to the issues before the bankruptcy court under § 523(a)(6).
Among other things, the superior court necessarily found that Mr. Dickens
1
Unless specified otherwise, all chapter and section references are to the
Bankruptcy Code, 11 U.S.C. §§ 101-1532, all “Rule” references are to the Federal Rules
of Bankruptcy Procedure, and all “Civil Rule” references are to the Federal Rules of
Civil Procedure.
2
acted in bad faith under a subjective standard. We AFFIRM.
FACTS
A. The prepetition state court action and sanctions award
1. The underlying dispute
Dr. Kenneth S. Bradley is a medical doctor who specializes in pain
medicine. Two of Dr. Bradley’s former patients, Kashmir Stefani and
Angela Margolis, posted Yelp reviews online that accused Dr. Bradley of
sexually assaulting and sexually harassing them.
Dr. Bradley and his clinic, Southern California Pain Consultants, Inc.
(collectively “Dr. Bradley”), sued Ms. Stefani and Ms. Margolis for
defamation in California superior court. He alleged that they had colluded
to post false Yelp reviews shortly after he had refused to continue
prescribing powerful drugs for them.
Mr. Dickens initially represented both Ms. Stefani and Ms. Margolis.
Later, Mr. Dickens withdrew as Ms. Margolis’ counsel, and she thereafter
represented herself.
2. Mr. Dickens’ anti-SLAPP motion
On November 20, 2015, Mr. Dickens filed an anti-SLAPP2 motion in
2 “SLAPP” means “Strategic Lawsuits Against Public Participation.” A cause of
action against a defendant acting to further his “right of petition or free speech . . . in
connection with a public issue shall be subject to a special motion to strike, unless the
court determines that the plaintiff has established that there is a probability that the
plaintiff will prevail on the claim.” Cal. Civ. Proc. Code § 425.16(b)(1). The anti-SLAPP
motion is on a statutory fast track, Cal. Civ. Proc. Code § 425.16(f), results in a stay of all
discovery unless the court orders otherwise, Cal. Civ. Proc. Code § 425.16(g), and is
3
the superior court on behalf of both clients, in which he sought to dismiss
Dr. Bradley’s defamation case. In relevant part, the anti-SLAPP motion
asserted that the Yelp reviews were protected as “statements prior to
litigation or other official proceedings.” The motion alleged that each client
had consulted with “her attorney” before posting the Yelp reviews, so the
postings were protected by the litigation privilege. Ms. Stefani’s
declaration, drafted by Mr. Dickens, expressly stated that: “On August 31,
2015, after reporting Dr. Bradley to the authorities and consulting my
attorney in preparation for suing him, I posted the review about
Dr. Bradley on Yelp.” Ms. Margolis signed, and Mr. Dickens drafted and
filed, a substantially similar declaration. In addition to seeking dismissal of
the defamation lawsuit, they requested attorneys’ fees totaling $14,000.
With the superior court’s approval, Dr. Bradley deposed Ms. Stefani
and Ms. Margolis in April 2016. Both women testified that they had not
contacted counsel when they posted their Yelp reviews and that they did
not consult with or employ Mr. Dickens or any other attorney until after
Dr. Bradley sued them.
Dr. Bradley presented the deposition testimony to the superior court
in his opposition to the anti-SLAPP motion. 3 After a hearing, the superior
decided on the pleadings and affidavits, Cal. Civ. Proc. Code § 425.16(b)(2).
3 Mr. Dickens later claimed that, shortly before Ms. Stefani’s deposition, she
signed a supplemental declaration in which she admitted that the statement about
consulting an attorney prior to posting the Yelp review was wrong. He points to this
declaration as proof that he and Ms. Stefani attempted to correct the mistake. But
4
court held that the Yelp reviews did not implicate the litigation privilege
and denied the anti-SLAPP motion, stating that “[t]he Yelp reviews had no
functional relationship to planned litigation and made no mention of
participating in litigation.”
3. Dr. Bradley’s motion for sanctions
Dr. Bradley then filed a motion for sanctions against Mr. Dickens,
Ms. Stefani, and Ms. Margolis. He sought to recover $84,574.46 in
attorneys’ fees and costs that he had spent defending against the anti-
SLAPP motion. Dr. Bradley contended that the anti-SLAPP motion was
frivolous and based on the clients’ false declarations (that Mr. Dickens
knew to be false).
In response, Mr. Dickens argued on behalf of himself and Ms. Stefani
that Dr. Bradley had failed to provide any evidence that the anti-SLAPP
motion was frivolous, harassing, or brought in bad faith. He did not offer
any declarations or other evidence, and he did not attempt to explain or
justify his presentation of admittedly false testimony to the court.
The superior court issued a tentative ruling indicating that it was
inclined to grant the sanctions motion. The court tentatively ruled that the
anti-SLAPP motion was “frivolous and devoid of merit” and stated:
[I]n light of the deposition testimonies of defendants, it is clear
according to Dr. Bradley, Mr. Dickens never filed or served the supplemental
declaration and never mentioned it in his filings and oral arguments. At oral argument
before this Panel, Mr. Dickens conceded that he did not file the supplemental
declaration.
5
that the declarations submitted by defendants, which were
drafted by defense counsel, were false, in bad faith, and solely
intended to implicate the litigation privilege despite the fact
that the privilege was not available to defendants. Had
plaintiffs not sought to conduct discovery, defendants may well
have prevailed on the motions based on these false
declarations. The disingenuous nature of the declarations was
revealed during discovery. No reasonable attorney would have
submitted declarations which were knowingly false. The
attorney clearly would have had information as to his first
contact with defendants, which according to defendants
themselves, were not before the Yelp posts. Therefore, the anti-
SLAPP motions utilized false declarations and constituted
frivolous and bad faith conduct. Any reasonable attorney
would conclude that the motion was totally devoid of merit.
At the hearing on the motion, the court stated that “what pushed me
over to grant attorney’s fees is what appears to have been a deliberate and
willful attempt to mislead both the court and the opposing party as to
whether the litigation privilege was applicable based upon a contemplation
of litigation by the defendants, who had conferred with an attorney.”
The court took the matter under advisement. The court’s minutes
state that, later that day, the court granted the motion and adopted its
tentative ruling as its final ruling.
Later, the superior court entered a written order granting the motion
and imposing sanctions totaling $44,648.66 jointly and severally against
Mr. Dickens, Ms. Stefani, and Ms. Margolis. The written order does not
mention the tentative ruling and provided a slightly different explanation
6
for the ruling:
1. To the extent the special motion to strike was based
on the litigation privilege affirmative defense, it relied on false
and misleading declarations provided by each of defendants
and filed and submitted by their counsel, Harold W. Dickens,
III. The declarations falsely stated that each of the Defendants
was represented by their “Attorney” and were contemplating
litigation at the time they made the Yelp postings which are the
subject of the complaint in this case. Defendants’ deposition
testimony established that these representations were not true.
No reasonable attorney would have filed a special motion to
strike based on such false testimony.
2. To the extent that Defendants’ special motion to
strike asserted that their Yelp postings concerned a matter of
public interest and so fell within a framework of the anti-
SLAPP law, the Court has previously agreed with that position.
However, the complaint in this action and the pleadings and
evidence filed in support and opposition to the motion
demonstrate that it was or should have been known to
Defendants and their attorney that Plaintiffs would be able to
provide the “minimal showing” needed to satisfy the second
prong of an anti-SLAPP motion analysis. By way of example, it
was alleged in the complaint – and confirmed by evidence that
was not disputed by Defendants – that they were each
involuntarily discharged by Dr. Bradley after either failing or
refusing to take urine tests to confirm their use of medications
prescribed by Dr. Bradley. Further, Dr. Bradley alleged in his
complaint, and subsequently confirmed by evidence, that he
disputed Defendants’ claims in their Yelp postings that he had
sexually harassed them. No reasonable attorney would have
filed a special motion to strike in such circumstances, as it was
evident that Plaintiffs would be able to make a minimal
showing of a probability of prevailing on their defamation
7
claims. Filing such a motion represented a waste of attorney
time and judicial resources, and resulted in great and
unnecessary cost to the Plaintiffs in this action.
No one appealed the denial of the anti-SLAPP motion or the award of
sanctions.4
B. Mr. Dickens’ bankruptcy case
Mr. Dickens did not pay the sanctions award. In December 2019, he
filed a chapter 7 petition and scheduled the sanctions award as an
unsecured claim of $57,000.
Dr. Bradley filed a timely adversary proceeding pursuant to
§ 523(a)(6), contending that the anti-SLAPP sanctions award and other
sanctions imposed by the superior court were not dischargeable.5 Later, he
moved for summary judgment on all of his § 523(a)(6) claims. As to the
anti-SLAPP sanctions, he argued that Mr. Dickens’ filing of the false
declarations that claimed the litigation privilege was a willful and
malicious act within the meaning of § 523(a)(6).
Mr. Dickens opposed the motion and filed a cross-motion for
summary judgment. He argued that Dr. Bradley had failed to establish his
tortious conduct or demonstrate willful and malicious acts giving rise to
the debt. He also argued that the superior court never considered the
4
The superior court eventually entered judgments on the merits in favor of
Dr. Bradley. Ms. Margolis lost by default; Ms. Stefani lost after a bench trial.
5
According to Dr. Bradley, the superior court sanctioned Mr. Dickens ten times
between 2016 and 2019, including the anti-SLAPP sanctions, for a total of $74,463.66.
8
“willful and malicious” standard when imposing sanctions for the anti-
SLAPP motion. He contended that a triable issue of fact existed as to his
knowledge of the accuracy of the statements in the declarations. He
claimed that his negligence and unprofessionalism were excused by his
illness, extensive travel in search of health care, and inexperience. He said
that he consulted with another attorney as to the anti-SLAPP motion, so he
was relying on the advice of counsel. He also blamed unnamed members of
his staff for drafting the declaration and Ms. Stefani for not noticing the
mistake.
In reply, Dr. Bradley argued that Mr. Dickens committed an
intentional tort: abuse of process. He contended that Mr. Dickens’ conduct
was willful because Mr. Dickens subjectively intended to injure Dr. Bradley
by filing a false declaration to have the defamation lawsuit dismissed and
increase Dr. Bradley’s litigation expenses. He argued that the conduct was
malicious because the anti-SLAPP motion was frivolous and filed with the
intent to deceive the superior court. He also argued that Mr. Dickens was
attempting to improperly relitigate the superior court’s findings.
Before the hearing on the cross-motions, the bankruptcy court issued
a tentative ruling. It stated:
[T]he state court adopted its tentative ruling as its final ruling.
In the tentative ruling, the court specifically found that the
declarations drafted by defendant were “false, in bad faith, and
solely intended to implicate the litigation privilege despite the
fact that the privilege was not available to defendants. . . . The
9
disingenuous nature of the declarations was revealed during
discovery. No reasonable attorney would have submitted
declarations which were knowingly false.” It is clear from this
language that the state court found that defendant knew the
declarations were false and purposefully used them with the
intention of inflicting harm on the plaintiffs. This is sufficient to
support a finding that the sanctions imposed for this conduct
($44,648.66) are necessarily nondischargeable under section
523(a)(6).
At the hearing, the bankruptcy court said that it would not revisit the
superior court’s findings. It stated that the superior court considered
willfulness and malice and “made the findings and . . . there was an
adequate opportunity for the defendant to be heard on that point and that
was adequately looked into by state court, so I don’t think that there’s a
reason under equity or the facts of this case to revisit that.” It held that the
superior court’s findings were entitled to issue preclusive effect and
granted summary adjudication as to the first cause of action for the anti-
SLAPP sanctions.
The court later entered a written order declaring the anti-SLAPP
sanctions nondischargeable under § 523(a)(6) and denying Mr. Dickens’
cross-motion for summary judgment. The bankruptcy court denied
summary judgment on the remaining claims for relief. Later, at
Dr. Bradley’s request, the court dismissed the remaining claims and issued
a final judgment.
Mr. Dickens timely appealed.
10
JURISDICTION
The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334 and
157(b)(2)(I). We have jurisdiction under 28 U.S.C. § 158.
ISSUE
Whether the bankruptcy court erred in holding that the anti-SLAPP
sanctions award was nondischargeable under § 523(a)(6).
STANDARDS OF REVIEW
We review de novo the bankruptcy court’s decisions to grant
summary judgment and to except a debt from discharge under § 523(a)(6).
Plyam v. Precision Dev., LLC (In re Plyam), 530 B.R. 456, 461 (9th Cir. BAP
2015). “De novo review requires that we consider a matter anew, as if no
decision had been made previously.” Francis v. Wallace (In re Francis), 505
B.R. 914, 917 (9th Cir. BAP 2014).
“We also review de novo the bankruptcy court’s determination that
issue preclusion was available. If issue preclusion was available, we then
review the bankruptcy court’s application of issue preclusion for an abuse
of discretion.” In re Plyam, 530 B.R. at 461 (quoting Black v. Bonnie Springs
Fam. Ltd. P’ship (In re Black), 487 B.R. 202, 210 (9th Cir. BAP 2013)).
To determine whether the bankruptcy court has abused its discretion,
we conduct a two-step inquiry: (1) we review de novo whether the
bankruptcy court “identified the correct legal rule to apply to the relief
requested” and (2) if it did, we consider whether the bankruptcy court’s
application of the legal standard was illogical, implausible, or without
11
support in inferences that may be drawn from the facts in the record.
United States v. Hinkson, 585 F.3d 1247, 1262 (9th Cir. 2009) (en banc).
DISCUSSION
Under Civil Rule 56(a), made applicable by Rule 7056, summary
judgment is appropriate when “there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.”
The movant bears the initial burden of demonstrating an absence of a
genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323
(1986). We must view the evidence in the light most favorable to the non-
moving party and draw all justifiable inferences in his favor. Fresno Motors,
LLC v. Mercedes Benz USA, LLC, 771 F.3d 1119, 1125 (9th Cir. 2014).
In response to the motion for summary judgment, Mr. Dickens
offered evidence that, if believed, would negate some of the elements of a
nondischargeability claim under § 523(a)(6). In the face of this evidence, we
can affirm the bankruptcy court’s summary judgment only if the superior
court decided those issues and the doctrine of issue preclusion bars
Mr. Dickens from relitigating them. Grogan v. Garner, 498 U.S. 279, 284 n.11
(1991) (holding that issue preclusion applies in actions under § 523(a)).
While a judgment for litigation sanctions will often be
nondischargeable, see, e.g., Papadakis v. Zelis (In re Zelis), 66 F.3d 205, 209
(9th Cir. 1995) (holding that a sanctions award was nondischargeable
where the state court had found that the debtor had intentionally filed a
frivolous appeal, necessarily harming the adverse parties), that is not
12
always the case. For example, we have stated that “[s]ection 523(a)(6) does
not make ‘contempt’ sanctions nondischargeable per se, and neither does
any other subpart of section 523(a). Whether contempt sanctions are
nondischargeable accordingly depends not on whether they are labeled as
‘contempt,’ but on whether the conduct leading to them was ‘willful and
malicious.’” Suarez v. Barrett (In re Suarez), 400 B.R. 732, 737 (9th Cir. BAP
2009), aff’d, 529 F. App’x 832 (9th Cir. 2013). A court can hold that sanctions
arising out of an anti-SLAPP motion are “willful and malicious” “only after
analyzing the evidence to determine the plaintiff’s intent.” Hamm v. Burcar
(In re Hamm), BAP No. CC-20-1049-LSF, 2020 WL 5814362, at *7 (9th Cir.
BAP Sept. 29, 2020); see also Healy v. Rose (In re Healy), BAP No. EC-13-1200-
PaJuKu, 2015 WL 3407237, at *7 (9th Cir. BAP May 27, 2015) (affirming the
bankruptcy court’s decision that state court’s ruling was entitled to issue
preclusive effect and anti-SLAPP sanctions were nondischargeable as
“willful and malicious” under § 523(a)(6)), aff’d, 689 F. App’x 516 (9th Cir.
2017).
Thus, we must delve into the details of issue preclusion.
A. Issue preclusion in proceedings under § 523(a)(6)
The bankruptcy court must apply the forum state’s law of issue
preclusion. Harmon v. Kobrin (In re Harmon), 250 F.3d 1240, 1245 (9th Cir.
2001). Thus, we apply California preclusion law.
Under California law, issue preclusion applies if: (1) the issue sought
to be precluded from relitigation is identical to that decided in a former
13
proceeding; (2) the issue was actually litigated in the former proceeding;
(3) the issue was necessarily decided in the former proceeding; (4) the
decision in the former proceeding is final and on the merits; and (5) the
party against whom preclusion is sought was the same as, or in privity
with, the party to the former proceeding. Lucido v. Super. Ct., 51 Cal. 3d 335,
341 (1990). California law further cautions that courts may give preclusive
effect to a judgment “only if application of preclusion furthers the public
policies underlying the doctrine.” In re Harmon, 250 F.3d at 1245.
The party asserting preclusion bears the burden of establishing the
threshold requirements. Id. This means providing “a record sufficient to
reveal the controlling facts and pinpoint the exact issues litigated in the
prior action.” Kelly v. Okoye (In re Kelly), 182 B.R. 255, 258 (9th Cir. BAP
1995), aff’d, 100 F.3d 110 (9th Cir. 1996). 6 Ultimately, “[a]ny reasonable
doubt as to what was decided by a prior judgment should be resolved
against allowing the [issue preclusive] effect.” Id.There is no dispute about the second through sixth elements of this
test. All of the issues that the superior court decided were actually litigated;
Mr. Dickens had a full and fair opportunity to contest each of them and did
in fact contest them (albeit ineptly). The superior court made no
6
Dr. Bradley requests that we dismiss this appeal because Mr. Dickens failed to
properly cite the excerpts of record in his opening brief. Although we agree that
Mr. Dickens could have provided clearer citations, the Panel did not have such
difficulty understanding Mr. Dickens’ citations that it would warrant dismissal. We
DENY Dr. Bradley’s request for dismissal.
14
superfluous or unnecessary findings. The anti-SLAPP sanctions judgment
is final and on the merits. Mr. Dickens was a party to the superior court
proceeding. Applying issue preclusion to the judgment is consistent with
public policy.
The dispute is whether the issues that the superior court decided are
identical to the issues that the bankruptcy court confronted. This requires
us to compare the elements of a claim under § 523(a)(6) with the elements
of a claim for anti-SLAPP sanctions.
B. The elements of a claim under § 523(a)(6) for willful and malicious
injury by the debtor
Section 523(a)(6) excepts from discharge any debt arising from
“willful and malicious injury by the debtor to another entity or to the
property of another entity[.]” The creditor must prove both willfulness and
malice. Ormsby v. First Am. Title Co. of Nev. (In re Ormsby), 591 F.3d 1199,
1206 (9th Cir. 2010). The willfulness analysis is separate from the malice
analysis, and the two elements must not be conflated. Carrillo v. Su (In re
Su), 290 F.3d 1140, 1146 (9th Cir. 2002).
The “willful injury requirement is met only when the debtor has a
subjective motive to inflict injury or when the debtor believes that injury is
substantially certain to result from his own conduct.” Id. at 1142; see Barboza
v. New Form, Inc. (In re Barboza), 545 F.3d 702, 706 (9th Cir. 2008) (“A
‘willful’ injury is a ‘deliberate or intentional injury, not merely a deliberate
or intentional act that leads to injury.’” (citation omitted)). This analysis
15
requires an inquiry into the debtor’s subjective state of mind. See In re Su,
290 F.3d at 1145-46. In other words, it is not enough to prove that the
debtor acted intentionally and caused an injury. Kawaauhau v. Geiger, 523
U.S. 57, 61 (1998).
“A ‘malicious’ injury involves ‘(1) a wrongful act, (2) done
intentionally, (3) which necessarily causes injury, and (4) is done without
just cause or excuse.’” Petralia v. Jercich (In re Jercich), 238 F.3d 1202, 1209
(9th Cir. 2001) (quoting Murray v. Bammer (In re Bammer), 131 F.3d 788, 791
(9th Cir. 1997) (en banc)).
C. The elements of an anti-SLAPP sanctions claim
The anti-SLAPP statute, California Code of Civil Procedure (“CCP”)
section 425.16(c)(1), provides that:
[A] prevailing defendant on a special motion to strike shall be
entitled to recover his or her attorney’s fees and costs. If the
court finds that a special motion to strike is frivolous or is
solely intended to cause unnecessary delay, the court shall
award costs and reasonable attorney’s fees to a plaintiff
prevailing on the motion, pursuant to Section 128.5.
Cal. Civ. Proc. Code § 425.16(c)(1) (emphases added).
The “reference to section 128.5 in section 425.16, subdivision (c)
means a court must use the procedures and apply the substantive
standards of section 128.5 in deciding whether to award attorney fees
under the anti-SLAPP statute.” Moore v. Shaw, 116 Cal. App. 4th 182, 199
(2004), as modified (Mar. 26, 2004) (citation omitted); see Carpenter v. Jack in
16
the Box Corp., 151 Cal. App. 4th 454, 469 (2007) (“The import of section
425.16 is that a court must use the procedures and apply the substantive
standards of section 128.5 in deciding whether to award attorney fees
under the anti-SLAPP statute.” (cleaned up)).
CCP section 128.5(a), as it was in effect from January 1, 2015 to
August 6, 2017, provides that a “trial court may order a party, the party’s
attorney, or both to pay the reasonable expenses, including attorney’s fees,
incurred by another party as a result of bad-faith actions or tactics that are
frivolous or solely intended to cause unnecessary delay.” Thus, sanctions
are appropriate where the challenged conduct was undertaken in bad faith
and was also either frivolous or solely intended for delay.
Although there was some confusion in the case law, the better view
(and the view that the California legislature has endorsed) is that CCP
section 128.5 requires a finding of both subjective bad faith and objective
frivolousness.7 The California Court of Appeal has considered the language
7
Prior to the 2017 amendment to CCP section 128.5, some (but not all) of the
California courts of appeal held that the statute does not require a finding of subjective
bad faith. See, e.g., San Diegans for Open Gov't v. City of San Diego, 247 Cal. App. 4th 1306,
1318 (2016) (stating that “one purpose of section 128.5 was to eliminate the subjective
standard and impose an objective standard” and holding that “the trial court erred by
concluding the lack of evidence of subjective bad faith by [appellant] or its counsel
required denial of the sanctions motion”); On v. Cow Hollow Props., 222 Cal. App. 3d
1568, 1575 (1990) (“But the use of the disjunctive in section 128.5, we think, clearly
indicates that sanctions can be based either on a finding of a bad faith action or ‘tactics
that are frivolous or solely intended to cause unnecessary delay.’”). But other courts of
appeal rejected this interpretation and required proof of subjective bad faith. See, e.g.,
Dolan v. Buena Eng’rs, Inc., 24 Cal. App. 4th 1500, 1505-06 (1994) (“[T]he better reasoned
17
of the statute and stated that
there is no room to doubt that bad faith is required under the
present formula. The first clause of the charging language refers
to “bad faith actions or tactics,” a phrase to which everything
that follows is grammatically subject. Thus, an action or tactic
may be subject to sanctions if it is in bad faith and is either
frivolous or solely intended to cause unnecessary delay. . . .
[I]f the action was taken solely to harass or delay, it would
support a finding of bad faith. If its only vice is lack of merit, it
would not.
Javor v. Dellinger, 2 Cal. App. 4th 1258, 1261-62 (1992). Later, the Court of
Appeal reiterated the subjective bad faith requirement:
Whether an action is frivolous is governed by an objective
standard: any reasonable attorney would agree it is totally and
completely without merit. There must also be a showing of an
improper purpose, i.e., subjective bad faith on the part of the
attorney or party to be sanctioned. . . .
Section 128.5 requires much more than a party acting with “no
good reason” to justify an award of sanctions. There must be a
decisions decided under the current statute require a showing not only of a meritless or
frivolous action or tactic, but also of bad faith in taking the action or tactic.”).
In 2017, the California legislature amended CCP section 128.5 in order to (among
other things) confirm that the statute always required subjective bad faith. See In re
Marriage of Sahafzadeh-Taeb & Taeb, 39 Cal. App. 5th 124, 134 (2019) (noting “the
confusion caused by San Diegans” and discussing the legislature’s urgent action to
clarify that CCP section 128.5 requires subjective bad faith). The legislative history states
that “the standard applied in Section 128.5 is a subjective bad faith standard. . . . [T]his
bill makes a technical correction to clarify that sanctions for actions and tactics under
Section 128.5 must made in subjective bad faith—like it has always been interpreted.”
Cal. Bill Analysis, A.B. 984 Assem., 4/25/2017.
18
showing not only of a meritless or frivolous action or tactic, but
also of bad faith.
Levy v. Blum, 92 Cal. App. 4th 625, 635-36 (2001) (citations omitted); see also
In re Marriage of Sahafzadeh-Taeb & Taeb, 39 Cal. App. 5th at 141 (discussing
the legislative history of CCP section 128.5 and holding that an attorney
can be sanctioned under CCP section 128.5 for frivolous and bad faith
conduct, where “bad faith” is described as “committed with an improper
motive, such as to harass or manipulate opposing counsel or the court”);
Jespersen v. Zubiate-Beauchamp, 114 Cal. App. 4th 624, 633-34 (2003)
(affirming trial court’s decision not to award anti-SLAPP sanctions to
prevailing plaintiff because “there must be a showing the action or tactic
was meritless or frivolous and that it was pursued in bad faith, and
whether the action is taken in bad faith must be judged by a subjective
standard”).
The California Court of Appeal has very recently reaffirmed the rule
that “[c]onduct meriting sanctions under this standard [of CCP sections
128.5 and 425.16] must be objectively frivolous and subjectively undertaken
in bad faith.” Catlin Ins. Co. v. Danko Meredith L. Firm, Inc., 73 Cal. App. 5th
764, 778 (2022) (citations omitted), review denied (Apr. 13, 2022).
In other words, a finding of subjective “bad faith” is essential to the
imposition of sanctions under CCP section 425.16.
19
D. Comparison of elements of § 523(a)(6) and anti-SLAPP sanctions
1. Willfulness
“Willfulness” under § 523(a)(6) depends on the subjective intent or
subjective knowledge of the sanctioned party. Similarly, sanctions under
CCP section 425.16 require “a finding of subjective bad faith, i.e., a showing
of an improper purpose[.]” Orange Cnty. Dep’t of Child Support Servs. v.
Super. Ct., 129 Cal. App. 4th 798, 804 (2005) (cleaned up). The California
Court of Appeal has stated that,
[i]n the context of [CCP section 128.5], “bad faith” means
simply that the action or tactic is being pursued for an
improper motive. Thus, if the court determines that a party had
acted with the intention of causing unnecessary delay, or for
the sole purpose of harassing the opposing side, the improper
motive has been found, and the court’s inquiry need go no
further.
Summers v. City of Cathedral City, 225 Cal. App. 3d 1047, 1072 (1990).
The superior court’s express findings include a finding of bad faith.
In its tentative ruling, the court said that the declarations were
“disingenuous,” “in bad faith,” and “knowingly false.” At the hearing, the
court orally stated that it saw “what appears to have been a deliberate and
willful attempt to mislead both the court and the opposing party as to
whether the litigation privilege was applicable . . . .” Although the court
did not repeat these comments in its final written ruling, the superior
court’s minutes state that the court would adopt its tentative ruling as its
final ruling.
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More importantly, however, the doctrine of issue preclusion is not
limited to a court’s express findings. The findings that the court had to
make in order to support its judgment are also entitled to issue preclusive
effect, even if the court did not expressly make those findings:
It is a general rule that a judgment or decree that necessarily
affirms the existence of any fact is conclusive on the parties or
their privies whenever the existence of that fact is again in issue
between them, not only when the subject matter is the same but
also when the point comes incidentally in question in relation
to a different matter, in the same or any other court. . . . Any
fact or matter that was required to be established or passed on
to sustain the judgment is concluded by it. Matters put in
issue are concluded although not expressly mentioned in the
judgment, if it determines them by necessary implication.
Garcia v. Garcia, 148 Cal. App. 2d 147, 153-54 (1957) (emphases added); see
also McManus v. Bendlage, 82 Cal. App. 2d 916, 923 (1947) (“A determination
in a prior action as to relative rights and duties of a party to a contract in
controversy is conclusively fixed by the judgment in so far as such rights
and duties were within the issues raised and were actually or by necessary
inference adjudicated.” (emphasis added)). Thus, for example, a judgment
based on a jury verdict has issue preclusive effect on every element of the
claim, even an element that the special verdict form did not cover. See
Howell v. Law Offices of Andrew S. Bisom (In re Howell), BAP Nos. CC-20-
1172-SGF, CC-20-1218-SGF, 2021 WL 1328588, at *7 (9th Cir. BAP Apr. 9,
2021) (“When an element is essential to entry of judgment, it necessarily
follows that if judgment is rendered the element was actually litigated.
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Issues are ‘necessarily decided’ so long as they are at least somewhat
necessary to the decision.” (citations omitted)).
In this case, California law is clear: in order to sanction Mr. Dickens
under CCP sections 425.16 and 128.5, the superior court necessarily had to
find that he acted in subjective bad faith. Mr. Dickens was not entitled to
relitigate the issue of his subjective state of mind in the bankruptcy court.
2. Malice
The superior court’s findings also satisfy the elements of malice.
Those findings establish “(1) a wrongful act, (2) done intentionally,
(3) which necessarily causes injury, and (4) is done without just cause or
excuse.” In re Jercich, 238 F.3d at 1209.
Mr. Dickens has waived any argument concerning the “malice”
element. Although the opening brief makes general references to “willful
and malicious” injury, Mr. Dickens only addresses the “willful” prong in
any depth and ignores the “malicious” prong. See Smith v. Marsh, 194 F.3d
1045, 1052 (9th Cir. 1999) (“[O]n appeal, arguments not raised by a party in
its opening brief are deemed waived.”).
Even if Mr. Dickens had not waived this issue, we would hold that
the element was met.
First, Mr. Dickens engaged in a wrongful act. He drafted and
submitted false declarations of two of his clients to support his anti-SLAPP
motion. If successful, that motion would not only have dismissed
Dr. Bradley’s defamation case but would also have resulted in an
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assessment of fees and costs against Dr. Bradley. The superior court found
that the false statements were knowing, disingenuous, and made in bad
faith. As the superior court noted, Mr. Dickens should have known when
he was contacted by his clients and when he began representing them.
Second, he acted intentionally. He meant to file the declarations.
Third, this act necessarily caused injury. The anti-SLAPP motion
necessarily delayed the case, and Dr. Bradley had no choice but to respond
and incur attorneys’ fees.
Fourth, he acted without just cause or excuse. There is no possible
justification for filing a knowingly false declaration in court.
3. Tortious act
Contrary to Mr. Dickens’ contention, the bankruptcy court correctly
held that Mr. Dickens’ conduct was an abuse of process, which is an
intentional tort under California law.
We have stated that Ҥ 523(a)(6) is predicated on the existence of an
intentional tort. Whether there exists an intentional tort is typically
informed by state law.” Cal. Cap. Ins. Co. v. Riley (In re Riley), BAP No. CC-
15-1379-TaLKi, 2016 WL 3351397, at *3 (9th Cir. BAP June 8, 2016) (citation
omitted).
The Ninth Circuit has held that “[f]iling a frivolous appeal is conduct
akin to malicious prosecution and abuse of process.” In re Zelis, 66 F.3d at
209; see also McCrary v. Barrack (In re Barrack), 217 B.R. 598, 607 (9th Cir.
BAP 1998) (“A debt incurred by abuse of process may present a cause of
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action under § 523(a)(6) either as punitive tort damages or as a sanction.”).
We see no reason why the prosecution of a frivolous anti-SLAPP
motion requesting dismissal should be treated differently from the filing of
a frivolous appeal. To state a claim for abuse of process under California
law, “there must be an allegation of ‘some misuse of the process which is
beyond its scope . . . or a willful act in the use of the process not proper in
the regular conduct of the proceeding.’” In re Barrack, 217 B.R. at 607(quoting Muller v. Muller, 206 Cal. App. 2d 731 (1962)). This fits the facts of
this case, where the superior court found that Mr. Dickens submitted false
and deceitful declarations.
CONCLUSION
Mr. Dickens deserved the sanctions that the superior court imposed.
Cf. Computer Prepared Accounts, Inc. v. Katz, 235 Cal. App. 3d 428, 438 (1991)
(“Without a doubt submitting forged documents to a trial court is sufficient
indication of ‘bad-faith actions or tactics that are frivolous or solely
intended to cause unnecessary delay.’”). We hold that Mr. Dickens is not
entitled to discharge those sanctions in bankruptcy. We AFFIRM in all
respects.
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