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In re O'Berry

United States Bankruptcy Court, E.D. Virginia
Jan 20, 1998
Case No. 97-12429-SSM, Adversary Proceeding No. 97-1224 (Bankr. E.D. Va. Jan. 20, 1998)


Case No. 97-12429-SSM, Adversary Proceeding No. 97-1224

January 20, 1998

John T. Donelan, Alexandria, VA, of Counsel for the plaintiff

H. Jason Gold, Gold Stanley, P.C., Alexandria, VA, for the debtor


This matter is before the court on the plaintiffs motion for summary judgment. A hearing was held on November 25, 1997, at the conclusion of which the court reserved ruling and continued the matter to January 13, 1998, to determine the status of a state court appeal relevant to the motion. That appeal is now concluded, and the motion for summary judgment is ripe for determination. Based on the preclusive effect of the state court judgment, the court concludes that the plaintiff is entitled to summary judgment determining that the debtor's liability is nondischargeable.


Mary Louise Bond O'Berry (the "debtor") filed a voluntary petition for relief under chapter 7 of the Bankruptcy Code in this court on April 2, 1997. The meeting of creditors under § 341, Bankruptcy Code, was held on May 2, 1997. On July 24, 1997, after objections were filed to her claim of exemptions, the debtor filed a motion to convert her case to chapter 11. By order entered October 3, 1997, the debtor's case was converted to chapter 11 over the objection of McCormack Design, Inc., the plaintiff in this action. The debtor remains in possession of her estate as debtor-in-possession.

The plaintiff, McCormack Design, Inc. (the "plaintiff" or "McCormack") timely filed this adversary proceeding on June 27, 1997, seeking to have a judgment it obtained against the debtor after a bitter and protracted eight-day trial in state court determined to be nondischargeable under § 523(a)(6), Bankruptcy Code. The debtor, having lost her appeal with respect to the judgment itself, nevertheless urges that the judgment does not establish all of the elements necessary to find that the debt is nondischargeable under § 523(a)(6), and that this court should, on an independent review of the evidence, find that the debtor's actions do not constitute a willful and malicious injury.

The court has reviewed the pleadings, jury instructions, judgment, and trial transcript in the state court action. While the underlying facts are extensive, those relevant to the present controversy may be briefly summarized.

The plaintiff hired the debtor on March 18, 1991, to market furniture, along with coordinating design plans, to government agencies in the Washington, D.C. area. Tr. at 142. In order to protect her business, Kathleen McCormack, the sole owner of the plaintiff, required the debtor to enter into an employment agreement along with a covenant not to compete. Tr. at 143, 146, 844, 911, 1216, 1221, 1288. After Ms. McCormack instructed the debtor on how to direct market furniture to government agencies, the debtor soon became the plaintiff's most successful seller. Tr. at 856. Sometime in late 1993 or early 1994, the debtor asked Ms. McCormack for a pay raise. Tr. at 178-79. Additionally, beginning in 1994, the parties changed their relationship from less of an employer-employee relationship to more of an independent contractor agreement. Tr. at 178-79. For instance, Ms. McCormack previously paid all of the debtor's expenses, but stopped doing so and changed the debtor's commission structure to compensate for this. Tr. at 189-90. It is at this time that the debtor contends that the parties orally changed their employment contract and "did away with" the covenant not to compete, which the debtor contends became "void" even though there was never an "explicit" discussion of terminating the non-compete agreement. Tr. at 189-93, 362, 879. Ms. McCormack, by contrast, testified that the employment contract was never modified and that she never told the debtor that the contract was terminated or otherwise not valid. Tr. at 855, 905-06.

The plaintiff is a corporation solely owned by Kathleen McCormack. Tr. at 822. Ms. McCormack started the business as a sole proprietorship in 1987 before incorporating the business in January of 1995. Tr. at 823, 825.

Whether the debtor was technically an employee of the plaintiff, or an independent contractor, is the subject of a separate dispute over the debtor's entitlement to benefits under McCormack Design's pension plan.

The covenant not to compete provided, in relevant part, that "for a period of two years after the termination or expiration of this agreement, [the debtor] shall not, within a radius of 50 miles from Washington, directly or indirectly, own, manage, operate, control, be employed by, participate in or be connected in any manner with the ownership, operation or control of any business similar to the type of business conducted by the employer at the time this agreement terminates[.]" Tr. at 1046.

The jury, responding to special interrogatories, found that the employment agreement was never rescinded and that the covenant not to compete was enforceable. Tr. at 2459-60.

On April 24, 1995, the debtor and Ms. McCormack had a meeting at which the debtor expressed an interest in no longer splitting commissions earned with the plaintiff. Tr. at 875, 878. Because the debtor was not satisfied with the salary and commission she was receiving from the plaintiff, she left her position on May 3, 1995. Tr. at 196. Ms. McCormack testified that at the time the debtor left the plaintiff's employ, she told the debtor that she expected her to abide by the non-competition agreement, and the debtor agreed at that time not to do any harm to the plaintiff. Tr. at 878, 915-16. The debtor, however, did not turn over all of her accounts to the plaintiff. Tr. at 951. Instead, after leaving the employ of the plaintiff, the debtor created her own company, Concept Interiors, Inc., and continued to do design work, service accounts, and to obtain purchase orders from the Air Force at the Pentagon for Trendway, the primary furniture supplier with which she had dealt in selling to the Pentagon while she was at McCormack Design, Inc. Tr. at 196-97, 202-03. The debtor became an authorized dealer of Trendway furniture after leaving the employ of the plaintiff. Tr. at 1255. Ms. McCormack testified that before the debtor left McCormack Design, Inc., Susci Kennedy, the interior designer for the 11th wing at the Pentagon under the McCormack Design, Inc. contact, had inquired whether the debtor would have her own business. Tr. at 481, 960. After the debtor left the employ of the plaintiff, the plaintiff did not receive any further business from Ms. Kennedy's office, but rather, all business was given to the debtor from May 3, 1995, to July 25, 1996. Tr. at 968, 983. Ms. McCormack testified that a conspiracy began on April 24, 1995, among the debtor, Ms. Kennedy, Charles Lee (Trendway's manufacturing representative for the Washington, D.C. area) and Trendway, to interfere with the plaintiff's future contractual relations of its marketing and design work that was on-going at the Pentagon. Ms. McCormack also testified that the debtor "stole her customers" and took "one-third of her business." Tr. at 386, 1101.

The plaintiff then brought suit in the Circuit Court of Fairfax County, Virginia, against the debtor and several other parties asserting various causes of action, including tortious interference with business relations and conspiracy. Among the allegations in the motion for judgment were that the debtor "has solicited and continued to solicit customers of [McCormack] in an effort to wrongfully divert such customers," that the debtor's actions "have induced or caused a breach or termination of or damage to some of these relationships and business expectancies" and that the debtor's "actions were, and are, willful and malicious."

After receiving evidence over the course of eight days in late December 1996 and early January 1997, the jury received the following charge from the state court judge with reference to the tortious interference and conspiracy counts:

MDI has alleged that Defendants O'Berry and CII tortiously interfered with MDFs prospective business relations with certain federal government agencies. You shall return your verdict for MDI on its claim for tortious interference with prospective business relations against the Defendant [if the plaintiff proved] that: 1) MDI has business relations with a probability of future economic benefit to MDI; 2) the Defendant knew of the relations; 3) there existed a reasonable certainty that, absent the Defendants' intentional interference, MDI would have continued in the relationship; 4) the interference was by improper means; and, 5) the interference proximately caused damage to MDI. . . .

Methods of interference considered improper are those means that are illegal or independently tortious, such as violations of statutes, regulations or recognized common law rules. Improper methods may include violence, threats or intimidation, bribery, unfounded litigation, fraud, misrepresentation or deceit, defamation, duress, undue influence, misuse of inside or confidential information or breach of a fiduciary relationship.

MDI has also brought a common law conspiracy claim against O'Berry, CII, Lee and Trendway. You shall find your verdict for MDI on the claim against [them] for conspiracy if MDI proves by clear and convincing evidence that: 1) two or more of the Defendants made an agreement; 2) to accomplish some criminal or unlawful purpose or to accomplish some purpose not in itself criminal or unlawful by criminal or unlawful means; and, 3) MDI was damaged by the Defendants' acts committed in furtherance of the conspiracy. . . .

If you find that MDI is entitled to be compensated for its damages on its claims for tortious interference with contract or prospective business relations or common law conspiracy, and if you further believe by the greater weight of the evidence that O'Berry, CII, Lee, and/or Trendway acted with actual malice toward MDI or acted under circumstances amounting to a willful and wanton disregard of MDI's rights, then you may also award punitive damages to MDI[.]

Actual malice is a sinister or corrupt motive, such as hatred, personal spite, ill will, or a desire to harm MDI.

Willful and wanton conduct is acting consciously in disregard of another person's rights or acting with reckless indifference to the consequences to another person when the Defendant is aware of his conduct and is also aware from his knowledge of existing circumstances and conditions that his conduct would probably result in injury to another.

Tr. at 2342-55 (emphasis added).

The jury returned a verdict on January 9, 1997, finding the debtor liable for tortious interference with prospective contractual relations and awarding the plaintiff $506,000 in compensatory damages and $100,000 in punitive damages. The jury also returned a verdict for the plaintiff on the common law conspiracy cause of action against the debtor and the other defendants in the amount of $75,000. The trial court entered judgment on the verdict, and the debtor appealed, but on October 24, 1997, the Supreme Court of Virginia denied the debtor's petition for a writ of error and recently denied her petition for rehearing.

The jury did award the debtor $33,366.24 on her counterclaim against the plaintiff for unpaid commissions earned while she was still employed by the plaintiff. The plaintiff has been granted relief from the automatic stay to set off the counterclaim judgment against the amounts owed by the debtor.

Conclusions of Law I.

This court has jurisdiction of this controversy under 28 U.S.C. § 1334 and 157(a) and the general order of reference entered by the United States District Court for the Eastern District of Virginia on August 15, 1984. Under 28 U.S.C. § 157(b)(2)(I), this is a core proceeding in which final orders and judgments may be entered by a bankruptcy judge.


Under Fed.R.Civ.P. 56, made applicable to adversary proceedings by F.R.Bankr.P. 7056, a party may move, with or without supporting affidavits, for summary judgment at any time after the parties are at issue. Rule 56(c) provides:

The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. A summary judgment, interlocutory in character, may be rendered on the issue of liability alone although there is a genuine issue as to the amount of damages.

The burden of establishing the nonexistence of a genuine issue of material fact rests on the moving party. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 88 L.Ed.2d 285 (1985). In considering a motion for summary judgment, the court should draw all inferences from the underlying facts in a light most favorable to the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 2513, 91 L.Ed.2d 202 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 530 (1986).


Under § 523(a)(6), Bankruptcy Code, a discharge in a chapter 7 or 11 case does not discharge an individual debtor from debts arising as a result of a "willful and malicious injury by the debtor to another entity or to the property of another entity." The Fourth Circuit has noted that "willful" in the context of § 523(a)(6) carries its ordinary meaning of "deliberate or intentional." St. Paul Fire Marine Ins. Co. v. Vaughn, 779 F.2d 1003, 1009 (4th Cir. 1985). With respect to the requirement that the injury be "malicious," however, the Fourth Circuit has explained:

"Malice" . . . does not mean the same thing in Section 523(a) that it often does in other contexts. A debtor may act with malice even though he bears no subjective ill will toward, and does not specifically intend to injure, his creditor. Hence, a debtor's injurious act done " deliberately and intentionally in knowing disregard of the rights of another" i.e., a creditor, is sufficiently willful and malicious and prevents discharge of the debtor.

Because the St. Paul test requires a deliberate act in "knowing" disregard of a creditor's rights, it is the debtor's subjective state of mind that is relevant; it does not matter that a "reasonable debtor" should have known that his act would adversely affect another's rights. However, a particular debtor's knowledge may be proved by circumstantial evidence: "Implied malice . . . may be shown by the acts and conduct of the debtor in the context of [the] surrounding circumstances."

First Nat'l Bank of Md. v. Stanley (In re Stanley), 66 F.3d 664, 667-668 (1995) (internal citations omitted) (emphasis added); see also Raymond v. Raymond (In re Raymond), 210 B.R. 710, 713 (Bankr. E.D. Va. 1997) (Tice, J.) ("In considering the issue of malice, the court must look at the debtor's actual knowledge or the reasonable foreseeability that his conduct will result in injury to the creditor . . . [A debtor's] malicious intent must be demonstrated by evidence that the debtor had knowledge of the creditor's rights and that, with that knowledge, proceeded to take action in violation of those rights[.]") (original source omitted) (alteration in original).

Courts have held both that a claim arising from a judgment for tortious interference with contractual relations is a "willful and malicious" injury within the meaning of § 523(a)(6), and that the jury's findings from a prior trial are entitled to collateral estoppel effect. See Glemby International Virginia, Inc. v. Webster (In re Webster), 1 B.R. 61, 63-64 (Bankr. E.D. Va. 1979) (Shelley, J.) (decided under the Bankruptcy Act of 1898); Chicago Title Insurance Co. v. Hartman (In re Hartman), 100 B.R. 46, 50 (E.D. Kan. 1989). But see Princess House, Inc. v. Kraft (In re Kraft), 197 B.R. 660, 665 (Bankr. W.D. Mo. 1996). The sole issue before the court on the present motion is whether the preclusive effect of the state court judgment establishes that the debtor has committed a willful and malicious injury.


Collateral estoppel, commonly referred to as issue preclusion, bars relitigation of issues actually litigated and necessarily decided between the same parties in a different cause of action. Brown v. Felsen, 442 U.S. 127, 139 n. 10, 99 S.Ct. 2205, 2213, n. 10, 60 L.Ed.2d 767 (1979). It differs in that respect from res judicata, or claim preclusion, which bars litigation of all grounds for, or defenses to, recovery that were previously available to the parties, regardless of whether they were asserted or determined in the prior action. Id. at 131, 99 S.Ct. at 2209. Although the Supreme Court held in Brown that res judicata does not apply is the specific context of dischargeability litigations, it has squarely held in a subsequent opinion that collateral estoppel does apply. Grogan v. Garner, 498 U.S. 279, 284 n. 11, 111 S.Ct. 654, 658 n. 11, 112 L.Ed.2d 755 (1991); see also Combs v. Richardson, 838 F.2d 112 (4th Cir. 1988) (jury verdict in assault action against debtor precluded debtor from relitigating willful and malicious nature of actions in subsequent bankruptcy dischargeability proceeding).

To evaluate the preclusive effect of a state court judgment, a federal court must apply the preclusion law of the state in which the judgment was rendered. See 28 U.S.C. § 1738; Hildebrand v. Kugler (In re Kugler), 170 B.R. 291 (Bankr. E.D. Va. 1994) (Bostetter, C.J.). Under Virginia law, "collateral estoppel precludes further litigation of an issue in a subsequent proceeding when that issue was actually litigated and its resolution was essential to a valid, final and personal judgment rendered in a prior proceeding." Id. at 297; see also Horton v. Morrison, 248 Va. 304, 448 S.E.2d 629 (1994). The Supreme Court of Virginia recently reiterated the test in Virginia for collateral estoppel to apply:

"The records and judicial proceedings of any court of any . . . State, Territory or Possession . . . shall be proved or admitted in other courts within the United States and its Territories and Possessions by the attestation of the clerk and seal of the court annexed, if a seal exists, together with a certificate of a judge of the court that the said attestation is in proper form. Such . . . judicial proceedings . . ., so authenticated, shall have the same full faith and credit in every court within the United States and its Territories and Possession as they have by law or usage in the courts of such State, Territory or Possession from which they are taken." (emphasis added).

[1.] the parties to the two proceedings, or their privies, must be the same;

[2.] the factual issue sought to be litigated actually must have been litigated in the prior action and must have been essential to the prior judgment; and

[3.] and the prior action must have resulted in a valid, final judgment against the party sought to be precluded in the present action.

[4] Additionally, collateral estoppel in Virginia requires mutuality, that is, a party is generally prevented from invoking the preclusive force of a judgment unless that party would have been bound had the prior litigation of the issue reached the opposite result.

Transdulles Center, Inc. v. Sharma, 252 Va. 20, 22-23, 472 S.E.2d 274, 275 (1996); see also In re Professional Coatings (N.A.), Inc., 210 B.R. 66, 79-88 (Bankr. E.D. Va. 1997) (St. John, J.) (providing an extensive analysis of the requirements for collateral estoppel to apply under Virginia law).

In Combs v. Richardson, 838 F.2d 112 (4th Cir. 1988), the Fourth Circuit was confronted with whether a jury's verdict against the debtor for $3,700 in compensatory and $1,300 in punitive damages for a "malicious beating and striking" precluded the debtor from relitigating the issue of whether his actions were willful and malicious for nondischargeability purposes under § 523(a)(6). Id. at 114. The Fourth Circuit reasoned:

While in many instances an examination of the full record and transcript of the earlier proceeding may be necessary to determine whether the prerequisites of preclusion, and thereby the federal policies implicated in the Bankruptcy Code, are satisfied, we do not require that bankruptcy courts invariably take extrinsic evidence before a prior civil judgment may be assigned preclusive effect. We do hold that a jury's finding that a defendant's actions were willful and malicious will collaterally estop the judgment debtor from relitigating that issue in a discharge proceeding only if an examination of the record of the earlier proceeding satisfies the bankruptcy court that the issue was raised and litigated and that the resolution of the issue was necessary to the verdict in the prior case. . . .

[T]he [jury] instructions demonstrate that the question of malice was actually litigated by the parties in connection with the issue of punitive damages. When the jury returned its verdict awarding punitive damages to the plaintiff, its finding that "the defendant acted willfully and maliciously" was an essential prerequisite to that award. We do not imply that every punitive award in a prior tort suit automatically renders the judgment debt nondischargeable in bankruptcy. In this case, the congruence between the statutory standard in § 523(a)(6), and the jury instructions, verdict form, and the nature of the earlier cause of action was complete.

Id. at 114, 117.

In a more recent case involving the preclusive effect of a state court jury verdict against a debtor, the Fourth Circuit again found that collateral estoppel did indeed apply. Hagen v. McNallen (In re McNallen), 62 F.3d 619 (4th Cir. 1995). In McNallen, a Texas jury found the debtor liable to the plaintiff for intentional infliction of emotional distress and intentional invasion of privacy and awarded the plaintiff $5,583 in compensatory and $100,000 in punitive damages. Id. at 622. The Fourth Circuit reasoned that since the Texas jury found that the debtor's actions were "outrageous" and that he acted "with wanton disregard," collateral estoppel precluded the debtor from relitigating the issues of whether his conduct was "willful and malicious" in the context of a dischargeability proceeding. Id. at 626. As the court explained:

[B]ecause the Texas jury determined that McNallen's conduct transgressed the bounds of decency and a civilized community would find it to be atrocious and utterly intolerable, it necessarily found McNallen deliberately disregarded the rights of another. Alternatively, if the jury found that McNallen engaged in conduct knowing that his mother was peculiarly susceptible to emotional distress, then it necessarily determined that he committed a wrongful act that would necessarily result in harm to his mother without just cause or excuse. Moreover, the determination of maliciousness is confirmed by the jury's independent finding in special verdict number four that McNallen acted with wanton disregard.

Id. (Emphasis added).

Turning to the present case, three of the four elements required by Virginia law for collateral estoppel to apply are clearly met and need little discussion. First, the parties to both proceedings are the same. Second, the state court judgment is now final. And third, the requirement of mutuality is met, in that the plaintiff would have been equally bound had the state court entered judgment for the debtor. The issue, then, resolves to whether willfulness and malice were "actually litigated" in the state court trial and were necessary to the judgment.

The court easily concludes that the debtor's actions were "willful" as that term is used under § 523(a)(6). The Fourth Circuit standard for conduct to be considered "willful" is that it must be "deliberate and intentional." Simply stated, the debtor's conduct here was both deliberate and intentional. The jury found her liable for two torts that can only be committed by intentional acts. Under Virginia law, the tort of interference with prospective contractual relations requires that the interference be intentional, and the jury in this case was so instructed. Similarly, a civil conspiracy is an agreement that is entered into intentionally and voluntarily to commit an illegal or unlawful act, or to commit some otherwise lawful act by illegal or unlawful means. The factual issues necessary to finding of tortious interference and conspiracy were extensively litigated between the parties in the state court action, and a finding of intentional conduct was necessary to the jury's verdict. Accordingly, this court finds that the "willful" prong was actually litigated and essential to the judgment, thus precluding the debtor from relitigating that issue in this adversary proceeding.

See Allen Realty Corp. v. Holbert, 227 Va. 441, 449, 318 S.E.2d 592, 597 (1984) (noting that the tort arises when there is "an intentional, improper interference with another's contractual relations, and this interference must (1) induce or otherwise cause a third party not to enter into a prospective contract with the plaintiff, or (2) prevent the plaintiff from entering into a contract.").

See Hechler Chevrolet, Inc. v. GMC, 230 Va. 396, 402, 337 S.E.2d 744, 748 (1985) (a civil conspiracy is "a combination of two or more persons, by some concerted action, to accomplish some criminal or unlawful purpose, or to accomplish some purpose, not in itself criminal or unlawful, by criminal or unlawful means."). See also Glass v. Glass, 228 Va. 39, 47, 321 S.E.2d 69, 74 (1984) (same).

It is a closer question whether the debtor's actions were "malicious." Again, however, it is not this court's province to make an independent determination on that issue — regardless of how this court might have ruled had it been the trier of fact — if the issue was fairly presented to the jury in the state court action and was necessary to the verdict. The debtor vigorously contends that the issue of malice was never really litigated in the state court action. However, after an extensive review of the state court transcript and a careful reading of the jury instructions, this court finds that the debtor's position is simply untenable. With regard to the cause of action for tortious interference with prospective contractual relations, the jury found the debtor liable and awarded $506,000 in compensatory and $100,000 in punitive damages. The standard under Virginia law for an award of punitive damages parallels the standard for "malice" as set forth by the Fourth Circuit in Stanley. In this case, the jury was expressly instructed that it could award punitive damages only if it found that the debtor acted either "with actual malice" or in a "willful and wanton disregard of MDFs rights." Either finding would be sufficient to establish the "malicious" prong of § 523(a)(6) under Stanley. While the court has carefully considered the Fourth Circuit's admonition in Combs that not every punitive damage award in a state court suit is nondischargeable, the court believes that requisite "congruence" is present in this case to find that the issue of malice was actually litigated and was necessary to support a judgment that included punitive damages. Accordingly, the debtor is collaterally estopped by the state court judgment from relitigating that issue in this dischargeability proceeding.

With regard to punitive damages, the Supreme Court of Virginia has written:

Punitive or exemplary damages are allowable only where there is misconduct or actual malice, or such recklessness or negligence as to evince a conscious disregard of the rights of others. They are allowed not so much as compensation for plaintiff's loss, as to warn others and to punish the wrongdoer, if he has acted wantonly, oppressively, or with such malice as to evince a spirit of malice or criminal indifference to civil obligations. Wilful [sic] or wanton conduct imports knowledge and consciousness that injury will result from the act done. . . .

[I]n order to recover exemplary or punitive damages, he must show that defendant acted with actual malice, in the sense of personal ill will, or under circumstances of insult, rudeness, or oppression, or in a manner showing reckless and wanton disregard of plaintiffs rights. Also actual malice must be shown by evidence especially addressed to this question

Giant of Virginia, Inc. v. Pigg, 207 Va. 679, 685-86, 152 S.E.2d 271, 277 (1967) (original source omitted); see also Lisk v. Criswell (In re Criswell), 52 B.R. 184, 205 (Bankr. E.D. Va. 1985) (Shelley, J.) ("an award of punitive damages can be supported only by proof of actual malice") (original source omitted).

The civil conspiracy count requires a somewhat different analysis. The jury did not award punitive damages with respect to this count, nor was it required to make an express finding that the debtor acted with malice. Additionally, there is no direct evidence in the trial testimony of actual malice on the part of the debtor. McNallen, however, does not require that a state law tort include an express element of malice in order to constitute a willful and malicious injury under § 523(a)(6); rather it is sufficient that acts constituting the tort necessarily involved a deliberate disregard of the rights of another or would necessarily result in harm. 62 F.2d at 626. As the issues were framed to the jury in the present case, a verdict in favor of the plaintiff on the conspiracy count required the jury to find that the debtor agreed with others to take away the plaintiff's business by criminal or improper means. This necessarily means that the debtor was found to have intentionally disregarded the rights of another person and, under Stanley, this is all that is necessary to establish "malice." Accordingly, the court concludes that the debtor is precluded from relitigating the issue of willful and malicious with respect to the judgment for civil conspiracy because that issue was actually litigated and was essential to the jury's finding on that count.


A separate order will be entered granting the plaintiff's motion for summary judgment.

Summaries of

In re O'Berry

United States Bankruptcy Court, E.D. Virginia
Jan 20, 1998
Case No. 97-12429-SSM, Adversary Proceeding No. 97-1224 (Bankr. E.D. Va. Jan. 20, 1998)
Case details for

In re O'Berry

Case Details

Full title:In re: MARY LOUISE BOND O'BERRY, Chapter 11, Debtor McCORMACK DESIGN, INC…

Court:United States Bankruptcy Court, E.D. Virginia

Date published: Jan 20, 1998


Case No. 97-12429-SSM, Adversary Proceeding No. 97-1224 (Bankr. E.D. Va. Jan. 20, 1998)