Patrick v. Palmer

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UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF CALIFORNIA
In re:
FRANK JAMES PALMER,
Debtor.
________________________________
DARLEEN PATRICK,
Plaintiff,
v.
FRANK JAMES PALMER,
Defendant.
________________________________
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Case No. 23-20165-C-7
Adversary No. 23-02035-C
MEMORANDUM DECISION
In the trial of this adversary proceeding, the Plaintiff,
having bungled her case for nondischargeability under 11 U.S.C.
§ 523(a)(6) by omitting key evidence from the case in chief, lost
on a failure of proof of the essential element of malice,
obtained new counsel, and wants to try again.
Evidentiary materials regarding the previously-omitted state
court trial record have now been proffered to this court for the
first time in connection with Plaintiff’s Rule 59 motion for new
trial or to alter the judgment discharging a $47 million
judgment. Those materials cast sufficient new light on the state
court trial record as to warrant reopening for further evidence
probative of the essential element of malice.
Although this court will entertain further evidence in a
rescheduled hearing, some of the arguments made in support of the
motion can be rejected now so as to be able to keep the focus on
the missing proof of § 523(a)(6) malice.
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I
Difficulty of the Situation
By any measure, this case involves tragedy for an entire
family.
To be clear from the outset, this court condemns and in no
way condones the course of conduct alleged in the civil action.
The case involved intra-family torts committed more than 50
years ago when the Defendant was age 14-17 (or possibly 14-21).
Defendant’s conduct occurred when he was a teenager originally
assigned at age 14 to baby-sit his younger niece, the Plaintiff.
The conduct apparently ceased when the Plaintiff’s mother and
grandmother (Defendant’s sister and mother) discovered it and
forbade it. The mother and grandmother are deceased, hence
unavailable as witnesses.
In her testimony presented in this court as part of
Plaintiff’s case in chief at the § 523(a)(6) trial, the Plaintiff
volunteered under oath “this has never been about the money.” She
explained how she felt the family had taken sides against her
because the Defendant tortfeasor was perceived as a “good man.”
This testimony suggested that vindication within the family was
her key value.
Yet, this Rule 59 motion by Plaintiff is all about the
money.
Ironically, there probably is no money to be had. The record
of the parent Bankruptcy Case indicates that the financial
resources of the Defendant, a septuagenarian social security
pensioner (about $16,000/yr) and Senior Pastor of the Woodbridge
(CA) Missionary Baptist Church (about $27,000/yr), are probably
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entirely exempt from collection under California judgment
enforcement law.
Any victory for Plaintiff on the discharge question in the
reopened case is likely to be pyrrhic. The main utility of this
case outside the family is, regardless of the outcome, its
potential impact on other sex-abuse cases pending in California
courts because it provides a measure of how California juries may
react in such cases.
II
The State Court Trial
The $47 million judgment debt in question was obtained by
way of a jury verdict rendered after trial in the Superior Court
of the County of San Joaquin, California in Case No. STK-CV-UPI-
2021-0000198. The case was filed after California revoked its
statute of limitations regarding the alleged offenses.
The Defendant was determined to be liable for Sexual Battery
and Intentional Infliction of Emotional Distress. The damages
award was $47,000,700.00, consisting of: Past Economic Loss
($7,500.00); Future Economic Loss ($343,200.00); Past-non-
economic loss ($30,400,000.00); and Future non-economic loss
($16,250,000.00).
Because the Plaintiff withdrew her request for punitive
damages, the state trial court granted a motion in limine to
exclude evidence of the Defendant’s financial condition.
Correlatively, another consequence of Plaintiff’s withdrawal
of the punitive damages request was that the issue of malice
became irrelevant. Accordingly, the jury was not instructed on,
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and did not determine, the malice that California law requires
for punitive damage awards.
It could be that withdrawal of the punitive damages request
was a deliberate strategy calculated to avoid focusing the jury’s
attention on the difficult question of malice, which could have
yielded different awards of actual damages.
The absence of an appeal means there never will be a
determination whether $46,650,000.00 in non-economic loss was
influenced by a de facto punitive animus in the jury.
Nevertheless, Plaintiff’s assertion that the non-economic loss
had zero punitive animus is not particularly persuasive.
III
11 U.S.C. § 523(a)(6) Malice
Excepting a debt from discharge under § 523(a)(6) requires
proof by preponderance of evidence of conduct that is both
“willful” and “malicious.”
The willful element was easily established and was not
contested.
The element of malice was different. Usually, awards made
after trial in a nonbankruptcy court are supported by records
containing evidence probative of malice or fact-finding
determining the existence of malice under applicable
nonbankruptcy law in a manner that would enable a bankruptcy
court to infer malice from circumstantial evidence.
Such a determination under nonbankruptcy law is helpful in a
subsequent nondischargeability action, but is not necessarily
dispositive of malice for purposes of § 523(a)(6).
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Rather, § 523(a)(6) malice is a concept of federal law about
which there has been robust caselaw development teaching that the
elements of willfulness and maliciousness must be analyzed
separately in a hard-headed lawyerly fashion.
The problem for this court in this case is to determine
whether tortious conduct committed more the 50 years ago by a
teenager was malicious.
Leading cases addressing § 523(a)(6) malice start with the
Supreme Court decision in Kawaauhau v. Geiger, 523 U.S. 57
(1998).
Some pertinent Ninth Circuit cases are: Transamerica
Commercial Fin. Corp. v. Littleton (In re Littleton), 942 F.2d
551, 554 (9th Cir. 1991); Carillo v. Su (In re Su), 290 F.3d
1140, 1146-47 (9th Cir. 2002); Petralia v. Jercich (In re
Jercich), 238 F.3d 1202, 1209 (9th Cir. 2001); Jett v. Sicroff
(In re Sicroff), 401 F.3d 1101, 1105-07 (9th Cir. 2005); Barboza
v. New Form, Inc. (In re Barboza), 545 F.3d 702, 711-12 (9th Cir.
2008); Ormsby v. First Am. Title Co. of Nev. (In re Ormsby), 591
F.3d 1199, 1207 (9th Cir. 2010).
Littleton is particularly pertinent. The court, as trier
fact, is entitled to consider the nature of a willful act as
circumstantial evidence probative of malice, but it is not
required to conclude that circumstantial evidence of the nature
of the act, without more, is sufficient to carry the plaintiff’s
burden of persuasion regarding § 523(a)(6) malice.
The Plaintiff argues that every child sexual molestation is
per se excepted from discharge under § 523(a)(6), invoking the
tort concept of res ipsa loquitur. No matter how sympathetic one
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may be to the Plaintiff, § 523(a)(6) requires a hard-headed,
lawyerly analysis of malice in the context of relevant facts
pertinent to when the tort was committed. Res ipsa loquitur is
not a substitute for an actual determination. The unreported case
Plaintiff cites from the Central District of California was a
case in which the bankruptcy court concluded from circumstantial
evidence that malice was present, which finding would be reviewed
on appeal for clear error.
IV
Bankruptcy Court Power Regarding Non-Bankruptcy Judgments
The Plaintiff emphasizes that none of the damages awarded
were punitive damages and urges that the $47 million judgment
must be accepted at face value and adds that the so-called
Rooker-Feldman doctrine prevents a federal court from hearing
appeals by disappointed litigants from state courts.
A
It is correct that this bankruptcy court has no authority to
alter the $47 million judgment. In its post-trial ruling, this
court noted that there was no evidence the trial judge decided
post-trial motions typical of a case in which there is a very
large verdict.
In this court’s findings it stated it was literally “on the
fence” regarding proof of malice and suggested that a compromise
in the nature of an agreed remittitur might sway its sense that
the large judgment against an impecunious individual, be it
punitive or otherwise, might offend some underlying notions of
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justice. As the parties declined the invitation, this court ruled
that § 523(a)(6) malice was not proved by preponderance of
evidence. Accordingly, the issue is dead. The $47 million
judgment stands.
Nevertheless, non-economic loss awards totaling
$46,650,000.00 against an impecunious defendant from a jury that
had not been instructed about punitive damages, malice, and
Defendant’s financial resources logically suggests punitive
animus in the jury. In short, this court’s doubts about
constitutionality stand.
In the end, however, the distinction between punitive and
actual damages is of little moment. As a matter of basic
bankruptcy law, actual and punitive damages receive equal dignity
except in matters of distribution or subordination under § 510
and § 726.
B
Bankruptcy courts have the power to issue partial discharges
of judgment debt. Saxman v. Educational Credit Mgmt. Corp., 325
F.3d 1168 (9th Cir. 2003).
The rationale is that bankruptcy courts are courts of equity
empowered to take action short of total discharge so long as such
action is consistent with the Bankruptcy Code. Securities &
Exchange Comm’n v. United States Realty & Improvement Co., 310
U.S. 434, 455 (1940); Tennessee Student Assistance Corp. v.
Hornsby (In re Hornsby), 144 F.3d 433, 439 (6th Cir. 1998).
The Ninth Circuit agrees with the Sixth Circuit’s Hornsby
rationale. Saxman, 325 F.3d at 1173 (“We continue to find Hornsby
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to be the better reasoned opinion, and conclude that bankruptcy
courts may exercise their equitable authority under 11 U.S.C.
§ 105(a) to partially discharge [nondischargeable debt].”)
Likewise, the bankruptcy court has the power to enter its
own money judgment notwithstanding the prior entry by a state
court of a money judgment. Sasson v. Sokoloff (In re Sasson), 424
F.3d 864, 869-70 (9th Cir. 2005).
The Sasson court explained: “The fact that a debt has been
previously liquidated to judgment does not deprive the bankruptcy
court of jurisdiction, nor of any of its statutory or equitable
power. The existence of a state court judgment does not deprive
the bankruptcy court of the statutory power ... to enter a new
judgment of nondischargeability.” Sasson, 424 F.3d at 870.
In short, this bankruptcy court has the power to except from
discharge all or part of the $47,000,700.00 judgment.
V
Rooker-Feldman Doctrine
The Plaintiff’s invocation of the Rooker-Feldman doctrine is
unavailing.
Sasson holds that the Rooker-Feldman doctrine does “not
deprive the bankruptcy court of jurisdiction to enter a money
judgment in the nondischargeability adversary proceeding.” 424
F.3d at 871.
The bankruptcy court has exclusive statutory authority to
determine whether a debt is dischargeable in a bankruptcy case.
Sasson, 424 F.3d at 871.
The application of the Rooker-Feldman doctrine in bankruptcy
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is limited by the separate jurisdictional statutes that govern
federal bankruptcy law. Gruntz v. County of Los Angeles (In re
Gruntz), 202 F.3d 1074, 1079 (9th Cir. 2000)(en banc).
The Ninth Circuit’s explanation in Sasson of the procedural
posture squarely applies in this instance:
The Rooker-Feldman doctrine has no application here.
[The debtor] is not seeking to have the bankruptcy court
review the merits of the state court judgment; rather, he is
attempting to prevent the bankruptcy court from giving
effect to the state court judgment. Likewise, the creditor
is not seeking modification of the state court judgment; it
is attempting to save the judgment from bankruptcy
discharge.
Sasson, 424 F.3d at 871.
In short, the Rooker-Feldman doctrine is of no moment here.
Conclusion
The presentation of a more robust record of what happened in
state court arguably could persuade this trier of fact to alter
its conclusion that § 523(a)(6) malice was not proved by
preponderance of evidence at trial of the adversary proceeding.
The parties will need in future proceedings to address the
issues addressed in this Memorandum Decision, including a
demonstration why the financial circumstances of the apparently-
impecunious debtor do not make this bankruptcy litigation
functionally moot.
IT IS ORDERED, Plaintiff’s Motion for New Trial is granted
in part. A Status Conference regarding scheduling of future
proceedings will be held January 28, 2026, at 1:30 p.m.
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November 05, 2025
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INSTRUCTIONS TO CLERK OF COURT
SERVICE LIST
The Clerk of Court is instructed to send the attached
document, via the BNC, to the following parties:
Gabrielle Albert
Keller Benvenutti Kim LLP
101 Montgomery Street
Suite 1950
San Francsico, CA 94104
William T. McLaughlin
5200 N. Palm Avenue, Suite 401
Fresno, CA 93704
William T. McLaughlin
770 L Street, Suite 950
Sacramento, CA 95814
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