11 U.S.C. § 523(a)(6); Dischargeability; Collateral Estoppel
Strong Industries, Inc. v. McKenzie, 2006 Bankr. LEXIS 827, Adv. No. 05-5008 (Bankr. N.D. Ga. May 21, 2006) (Bonapfel)
Pre-petition, debtor owned and operated an unincorporated swimming pool business and entered into an agreement with the plaintiff, a supplier of pool and spa equipment. Debtor defaulted and the plaintiff sued in state court. After trial, the court entered judgment against the debtor for conversion. After the debtor filed for bankruptcy, the plaintiff filed an adversary and sought summary judgment pursuant to § 523(a)(6) and collateral estoppel.
Judge Bonapfel denied the motion. Under Georgia law, conversion “consists of an unauthorized assumption and exercise of the right of ownership over personal property belonging to another, in hostility of his rights; an act of dominion over the personal property of another inconsistent with his rights; or any unauthorized appropriation,” and conversion can arise from a reckless or negligent act. The state court judgment did not indicate that the elements of willfulness, wrongfulness and intentionality, as required under §523(a)(6), were satisfied. Therefore, the application of collateral estoppel was not appropriate.
Another case with a similar holding is Ryan v. Reynolds, 2006 Bankr. LEXIS, Adv. No. 05-9078 (Bankr. N.D.Ga April 5, 2006)(Murphy)