Beacon Talent Agency, Inc. v. Bass

MEMORANDUM ** At issue in this case is a bankruptcy court’s order granting summary judgment to Beacon Talent Agency (“Beacon”), holding that Beacon has a non-dischargeable claim against a Chapter 7 debtor, Marc Lee Bass (“Bass”), based on a California state court judgment. On appeal, the district court reversed and remanded. We have jurisdiction under 28 U.S.C. § 1291 to review the district court’s decision. We review that decision de novo; the bankruptcy court’s findings of fact are reviewed for clear error and its conclusions of law are reviewed de novo. Harmon v. Kobrin (In re Harmon), 250 F.3d 1240, 1245 (9th Cir. 2001). In reviewing the summary judgment, we determine, “viewing the evidence in the light most favorable to the nonmoving party, whether there are any genuine issues of material fact and whether the bankruptcy court correctly applied the substantive law.” Id. “[F]ederal courts ... give preclusive effect to state-court judgments when *496 ever the courts of the State from which the judgments emerged would do so.” Kremer v. Chem. Constr. Corp., 456 U.S. 461, 482, 102 S.Ct. 1883, 72 L.Ed.2d 262 (1982) (quoting Allen v. McCurry, 449 U.S. 90, 96, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980)). California' does not give preclusive effect to judgments awarded in excess of the relief properly requested, including untimely noticed punitive damages awards. See Greenup v. Rodman, 42 Cal.3d 822, 231 Cal.Rptr. 220, 726 P.2d 1295, 1297 (1986) (In Bank); Moffat v. Moffat, 27 Cal.3d 645, 165 Cal.Rptr. 877, 612 P.2d 967, 972 (1980) (In Bank); Burtnett v. King, 33 Cal.2d 805, 205 P.2d 657, 658-59 (1949); see also Cal. Civ. Proc. Code §§ 425.11, 580, 585. The district court thus properly refused to give preclusive effect to the punitive damages award in the state court judgment. See Matera v. McLeod, 145 Cal.App.4th 44, 51 Cal.Rptr.3d 331, 343-45 (2006). Without the punitive damages award, the default judgment did not satisfy the requirements for non-dischargeability under either 11 U.S.C. §§ 523(a)(4) or (a)(6). Under 11 U.S.C. § 523(a)(4), Beacon did not establish that Bass was acting in a fiduciary capacity, see Cal-Micro, Inc, v. Cantrell (In re Cantrell), 329 F.3d 1119, 1125-26, 1128 (9th Cir. 2003), or that he acted with the requisite intent for purposes of embezzlement, compare Transamerica Commercial Fin. Corp. v. Littleton (In re Littleton), 942 F.2d 551, 555-56 (9th Cir. 1991) (holding that embezzlement requires fraudulent intent), with Burlesci v. Petersen, 68 Cal.App.4th 1062, 80 Cal.Rptr.2d 704, 706 (1998) (holding that in California, conversion does not require intent to defraud). Additionally, under 11 U.S.C. § 523(a)(6), Beacon did not establish a willful and malicious injury. See Peklar v. Ikerd (In re Peklar), 260 F.3d 1035, 1039 (9th Cir. 2001) (“A judgment for conversion under California law ... does not, without more, establish that a debt arising out of that judgment is non-dis-chargeable under § 523(a)(6).”). AFFIRMED. Footnotes [**] This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36-3.