Brian McCabe v. ( 2021 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
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No. 18-2219
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In re: BRIAN RICHARD MCCABE
J. CONOR CORCORAN,
Appellant
v.
BRIAN RICHARD MCCABE
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On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 2-16-cv-05792)
Honorable Petrese B. Tucker, U.S. District Judge
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Submitted Under Third Circuit L.A.R. 34.1(a)
on August 17, 2021
Before: KRAUSE, MATEY, and RENDELL, Circuit Judges
(Opinion filed: August 18, 2021)
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OPINION*
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*
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does
not constitute binding precedent.
KRAUSE, Circuit Judge.
Appellant Conor Corcoran filed an adversary proceeding in Bankruptcy Court
seeking a determination that defamation damages imposed by the Pennsylvania Court of
Common Pleas (“CCP”) against Chapter 13 debtor Brian McCabe were not dischargeable
under 11 U.S.C. § 523(a)(6)’s exception for debts arising from “willful and malicious
injury.” At trial, the Bankruptcy Court determined that this exception did not apply and
the District Court affirmed. Because Corcoran has not established that McCabe inflicted
a “willful and malicious injury” within the meaning of § 523(a)(6), we will affirm.
I. Jurisdiction and Standard of Review
The District Court had jurisdiction to review the Bankruptcy Court’s final order
under 28 U.S.C. § 158(a)(1). We have jurisdiction under 28 U.S.C. §§ 158(d) and 1291.
“We exercise plenary review over the District Court’s appellate review of the Bankruptcy
Court’s decision and exercise the same standard of review as the District Court in
reviewing the Bankruptcy Court’s determinations.” In re Miller, 730 F.3d 198, 203 (3d
Cir. 2013) (quotations and citations omitted).
II. Discussion
A debt is not dischargeable under § 523(a)(6) of the Bankruptcy Code if it results
from a debtor’s “willful and malicious injury,” which requires a finding that “the actor
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purposefully inflicted the injury or acted with substantial certainty that injury would
result.” In re Conte, 33 F. 3d 303, 305 (3d Cir. 1994). We construe this exception
“liberally . . . in favor of debtors,” In re Cohn, 54 F.3d 1108, 1113 (3d Cir. 1995), and
Corcoran must establish that it applies “by a preponderance of the evidence,” id. at 1114
(citing Grogan v. Garner, 498 U.S. 279, 287-88 (1991)).
The Bankruptcy Court determined that Corcoran did not meet this burden because he
provided only circumstantial evidence that McCabe posted the defamatory message at
issue and no evidence that McCabe acted willfully and maliciously. Corcoran does not
challenge this determination on appeal, but rather urges that the CCP’s finding of willful
and malicious injury should be given preclusive effect.
But as the District Court correctly concluded, “[n]either the default judgment, nor the
punitive damages award, included a finding that McCabe inflicted a ‘willful and
malicious injury’ within the meaning of § 523(a)(6).” J.A. 8. The CCP’s default
judgment as to liability is not entitled to preclusive effect because it “lacks the requisite
element that it be actually litigated.” McGill v. Southwark Realty Co., 828 A.2d 430, 435
(Pa. Commw. Ct. 2003).1 The CCP’s imposition of punitive damages is not dispositive
because, under Pennsylvania law, punitive damages may be awarded in a defamation case
on a finding of either recklessness or knowledge of the statement’s falseness. See Joseph
v. Scranton Times L.P., 129 A.3d 404, 430, 437 (Pa. 2015). The CCP’s damages opinion
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The CCP ruled based on Pennsylvania law, so Pennsylvania law governs the preclusive
effect of that ruling. See Paramount Aviation Corp. v. Agusta, 178 F.3d 132, 145 (3d Cir.
1999).
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is also not dispositive because, while the CCP determined that McCabe was “fully
apprised” of the statement’s falseness when he published it, we have held that “act[ing]
deliberately with knowledge of a high degree of probability” that harm will occur is “less
than substantial certainty” as required under § 523(a)(6). Conte, 33 F.3d at 307. Because
the issue the CCP decided is not “identical with the one presented” here, collateral
estoppel does not apply. Safeguard Mut. Ins. Co. v. Williams, 345 A.2d 664, 668 (Pa.
1975).
Corcoran also argues that the Bankruptcy Court erred by not admitting a copy of the
damages hearing transcript into evidence. The Bankruptcy Court concluded that the
transcript was inadmissible, and the District Court agreed. But we need not reach that
issue because the transcript contains no finding of willful and malicious injury either.
The Bankruptcy Court “reviewed the Statements [in the transcript] and concluded that
none of them could possibly be construed as an admission that [McCabe] posted the
Defamatory Message, much less that [he] intended to cause a willful and malicious
injury.” J.A. 93. We agree. Even if we disagreed with the Bankruptcy Court’s ruling,
because the Bankruptcy Court’s decision not to admit the transcript did not “affect the
outcome of the case,” it was at most harmless error. GN Netcom, Inc. v. Plantronics,
Inc., 930 F.3d 76, 88 (3d Cir. 2019) (internal quotation omitted).
III. Conclusion
For the foregoing reasons, we will affirm the judgment of the District Court.
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