(7th Cir. Mar. 12, 2015)
The Seventh Circuit reverses the bankruptcy court’s decision applying issue preclusion in favor of the plaintiff in this nondischargeability action. Prepetition, the plaintiff obtained a state court slander of title judgment against the debtor. The plaintiff then filed the nondischargeability action under 523(a)(6) and argued to the bankruptcy court that the jury findings precluded the debtor from defending against the claim. The bankruptcy court held preclusion applied and the district court affirmed. The court reverses, holding the jury findings indicate that the jury determined that the debtor either acted with the requisite intent or acted negligently. Thus, issue preclusion should not apply and the plaintiff must prove the requisite intent in the adversary proceeding. Opinion below.
Author: Matt Lindblom