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Debtor Malice* Debtor Malice* JONATHON S. BYINGTON** This Article is about what malice should mean under bankruptcy law. Malice is used in other areas of law as a sorting function—to identify wrongful acts that are especially grievous. For example, criminal law uses malice to separate murder from manslaughter. The Bankruptcy Code uses malice to perform a similar sorting function. Bankruptcy law discharges or forgives certain kinds of debts. It separates debts that society is willing to forgive from debts that are not forgivable. One way it accomplishes this sorting function is through Section 523(a)(6) of the Bankruptcy Code, which excepts from discharge debts for “willful and malicious injury by the debtor.” The Supreme Court has interpreted the word malicious to require “a wrongful act, done intentionally, without just cause or excuse.” But neither the Supreme Court nor the circuit courts have provided meaningful guidance on the degree of wrongfulness that is required. Because intentionally injuring another is inherently a wrongful act, there should be a difference between a mere willful injury and the required “willful and malicious” injury. In addition, a circuit court split has developed on whether malicious requires intent, and if so, what level of intent. This Article seeks to clarify the meaning of malicious. It explains why courts should stop construing malicious to require intent. It also recommends the definition of malicious be changed to require an “extraordinarily” wrongful act so that malice can accomplish its sorting function. TABLE OF CONTENTS I. INTRODUCTION ................................................................................1024 II. BACKGROUND OF MALICE IN BANKRUPTCY LEGISLATION,SUPREME COURT DECISIONS, AND SCHOLARSHIP......................................1028 A. Chronological Development of the Term “Malicious” in Bankruptcy Legislation .......................................................1028 B. The Three Supreme Court Decisions Interpreting the Term “Malicious” ........................................................................1032 1. Tinker v. Colwell (1904) ................................................1032 2. McIntyre v. Kavanaugh (1916).......................................1034 * © 2018 Jonathon S. Byington. ** Professor, University of Montana Alexander Blewett III School of Law. I am grateful for helpful comments from Michelle Bryan, Marie Boyd, Lauryn Gouldin, and Scott Norberg as well as participants of the 2017 Works-in-Progress Conference Program at Chapman University Dale E. Fowler School of Law. 1024 OHIO STATE LAW JOURNAL [Vol. 79:6 3. Davis v. Aetna Acceptance Co. (1934)...........................1035 C. Scholarly Attention on the Meaning of Malicious Has Been Limited ................................................................................1036 III. ANALYSIS OF WHAT MALICE SHOULD REQUIRE UNDER BANKRUPTCY LAW .............................................................................1038 A. Intent Should Not Be an Element of “Malicious” Under § 523(a)(6) ..........................................................................1040 1. Malice Usually Requires Intent Under Non-Bankruptcy Law ......................................................................................1040 a. Malice and Common-Law Murder............................1040 b. Malice and Punitive Damages ..................................1041 c. Malice and Defamation.............................................1043 2. Intent Is the Entire Characteristic of “Willful” Under § 523(a)(6) ....................................................................1044 a. The Statutory Term “Willful” Is Intent-Based and Requires a Deliberate or Intentional Injury ...........1045 b. The Circuit Courts Have Split on the Way They Treat the “Done Intentionally” Element of Malicious.....1046 c. Intent Should Not Be an Element of “Malicious” Under § 523(a)(6) Because It Is Already Encompassed by the Statutory Term “Willful” ...................................1049 B. Determining a Wrongful Act That Is Malicious...................1050 1. Methods Used by Criminal and Tort Law to Identify Wrongful Acts ...............................................................1050 2. A Malicious Injury Under Bankruptcy Law Should Require an Extraordinarily Wrongful Act in Order to Perform Its Sorting Function ...........................................................1053 C. The Definition of Malicious Should Retain the Attributive Function of the Requirement That the Act Be “Without Just Cause or Excuse” ...............................................................1055 IV. CONCLUSION.................................................................................1055 I. INTRODUCTION This Article explores what malice should mean under bankruptcy law. Malice is utilized in other areas of law as a sorting function—to identify wrongful acts that are especially grievous. For example, criminal law uses malice to separate murder from manslaughter.1 Tort law employs malice to 1 Compare 18 U.S.C. § 1111(a) (2012) (“Murder is the unlawful killing of a human being with malice aforethought.”), with id. § 1112(a) (“Manslaughter is the unlawful killing of a human being without malice.”). See generally 2CHARLES E. TORCIA,WHARTON’S CRIMINAL LAW §§ 139, 153 (15th ed. 1994) (stating that at common law and by statute in 2018] DEBTOR MALICE 1025 describe conduct that justifies imposing punitive damages.2 The Bankruptcy Code uses malice to perform a similar sorting function. Bankruptcy law discharges certain kinds of debts.3 It separates debts that society is willing to forgive from those that are not forgivable. One way bankruptcy law accomplishes this sorting function is through exceptions to the bankruptcy discharge. Victims of a debtor’s bad conduct occasionally request bankruptcy courts to not discharge the debts owed to them. Section 523(a)(6) of the Bankruptcy Code excepts from discharge debts “for willful and malicious injury by the debtor.”4 The Supreme Court has interpreted the word malicious to require “a wrongful act, done intentionally, without just cause or excuse.”5 The Bankruptcy Reporter is crowded with examples of debtors who intentionally engaged in wrongful acts without a just cause or excuse. For instance, one debtor took his former girlfriend’s Ferrari and hid it despite demands to return the car.6 Another debtor put his car in reverse and intentionally collided it into a vehicle that was directly behind him.7 One debtor sexually harassed an employee.8 Another violated a non-compete agreement by many states, “murder is an unlawful homicide with malice aforethought” and “manslaughter is an unlawful homicide without malice aforethought”); WAYNE R. LAFAVE,CRIMINAL LAW 765–66 (5th ed. 2010) (providing a history of murder and observing that “it will not solve modern homicide cases to say simply that murder is the unlawful killing of another with malice aforethought, that manslaughter is the unlawful killing of another without malice aforethought, and that no crime is committed if the killing is lawful”); MODEL PENAL CODE AND COMMENTARIES, Part II § 210.2 cmt. 1 (AM.LAW INST. 1980) (explaining that the phrase malice aforethought is “used by judges to signify any of a number of mental states deemed sufficient to support liability for murder”); Lee R. Russ, Annotation, Modern Status of the Rules Requiring Malice “Aforethought,” “Deliberation,” or “Premeditation,” as Elements of Murder in the First Degree, 18 A.L.R.4th 961, 962–64 (1982) (discussing the current status of murder laws). 2 W. PAGE KEETON ET AL., PROSSER AND KEETON ON THE LAW OF TORTS 9–10 (5th ed. 1984) (“Something more than the mere commission of a tort is always required for punitive damages. There must be circumstances of aggravation or outrage, such as spite or ‘malice,’ or a fraudulent or evil motive on the part of the defendant, or such a conscious and deliberate disregard of the interests of others that the conduct may be called wilful or wanton.”) (citations omitted). 3 11 U.S.C. § 727(b) (2012) (“Except as provided in section 523 of this title, a discharge under subsection (a) of this section discharges the debtor from all debts that arose before the date of the order for relief under this chapter.”). 4 Id. § 523(a)(6). 5 Tinker v. Colwell, 193 U.S. 473, 485–86 (1904) (quoting Bromage v. Prosser (1825), 107 Eng. Rep. 1051, 1054, 4 Barn. & Cress. 247, 255). 6 State Farm Mut. Auto. Ins. Co. v. Rodriguez (In re Rodriguez), 568 B.R. 328, 346 (Bankr. S.D. Cal. 2017) (holding it was malicious). 7 Grange Mut. Cas. Co. v. Chapman (In re Chapman), 228 B.R. 899, 902, 910 (Bankr. N.D. Ohio 1998) (holding it was malicious). 8 Ganci v. Townsend (In re Townsend), 550 B.R. 220, 228 (Bankr. E.D.N.Y. 2016) (“[T]he factual findings in the District Court Action are sufficient to show that Defendant’s 1026 OHIO STATE LAW JOURNAL [Vol. 79:6 poaching clients from his former employer.9 One debtor recklessly shot a paintball gun in a residential neighborhood and injured someone.10 Prior to surrendering his truck to his lender, one debtor used his key to scratch the paint, removed the “F-150” emblems, and smashed the dashboard interface screen.11 Another debtor posted nude photographs of a woman, along with her home address, on a revenge porn site.12 One debtor drove his vehicle twelve miles per hour over the speed limit and ran a red light (which was determined to not be malicious),13 while a different debtor was found to have been malicious when he crept his car forward at a speed of one to
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