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Actual Intent to Cause Injury is Not Required Under Bankruptcy Code Section 523(a)(6)

On Behalf of | Feb 28, 2019 | Bankruptcy Appellate Panel

In In re Hamilton, BAP Nos. SC-17-1126 and SC-17-1123, the Ninth Circuit Bankruptcy Appellate Panel (“BAP”) considered the intent requirement for non-dischargeability of a debt under Section 523(a)(6). The debtor argued that the Supreme Court case of Kawaauhau v. Geiger, 523 U.S. 57 (1998) required actual intent or specific intent to cause injury to meet the “willful” injury requirement of Section 523(a)(6). The BAP clarified that while Geiger held that an intent to cause harm was required, it did not elaborate as to “the precise state of mind required,” as stated by the Ninth Circuit in Petralia v. Jerchich (In re Jercich), 238 F.3d 1202 (9th Cir. 2001). The BAP commented that the holding in Jercich that the debtor must intentionally commit the act with a substantial certainty that injury will occur is controlling and not at odds with Geiger. As such, the BAP confirmed that a specific intent to cause injury is not required to meet the “willful” standard under Section 523(a)(6) but rather, only a substantial certainty that injury will occur as found in Jercich.

The BAP also considered the proper application of post-judgment interest. The bankruptcy court disallowed post-petition interest to accrue during the pendency of the adversary proceeding but then allowed post-petition interest to accrue at the federal rate after the judgment in the adversary proceeding was entered. The BAP reversed and said that post-petition interest should have accrued at all times after entry of the judgment in state court at the state interest rate when there is a valid pre-petition entry of a state court judgment. The BAP clarified, however, that if there is no pre-petition judgment and the bankruptcy court issues a money judgment for the debt, then federal law would govern both pre and post-petition interest.

If you have any questions, please contact Melissa Lowe or any of the attorneys at Shulman Bastian Friedman & Bui LLP at 949.340.3400. For the full opinion, please click here.