Rutledge v. Rutledge (In Re Rutledge) , 105 F. App'x 455 ( 2004 )


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  •                         UNPUBLISHED
    UNITED STATES COURT OF APPEALS
    FOR THE FOURTH CIRCUIT
    In Re: GRACE C. RUTLEDGE,              
    Debtor.
    E. PRESTON RUTLEDGE,
    Plaintiff-Appellee,
    v.
           No. 03-1668
    GRACE C. RUTLEDGE,
    Defendant-Appellant,
    and
    UNITED STATES TRUSTEE; DAVID R.
    RUBY,
    Trustees.
    
    Appeal from the United States District Court
    for the Eastern District of Virginia, at Newport News.
    Henry Coke Morgan, Jr., District Judge.
    (CA-02-122-4; BK-01-52860; AP-02-5005)
    Argued: June 3, 2004
    Decided: July 15, 2004
    Before WILKINSON, TRAXLER, and SHEDD, Circuit Judges.
    Affirmed by unpublished per curiam opinion.
    COUNSEL
    ARGUED: Jeannine Anne Provencher, RICHARD DUCOTE &
    ASSOCIATES, P.L.C., New Orleans, Louisiana, for Appellant. Rob-
    2                         IN RE: RUTLEDGE
    ert Vincent Roussos, ROUSSOS, LANGHORNE & CARLSON,
    P.L.C., Norfolk, Virginia, for Appellee. ON BRIEF: Richard L.
    Ducote, RICHARD DUCOTE & ASSOCIATES, P.L.C., New Orle-
    ans, Louisiana, for Appellant.
    Unpublished opinions are not binding precedent in this circuit. See
    Local Rule 36(c).
    OPINION
    PER CURIAM:
    Grace Rutledge appeals the district court’s order reversing the
    Bankruptcy Court and ruling that 
    11 U.S.C.A. § 523
    (a)(6) (West 1993
    & Supp. 2004) precluded the discharge of an attorney’s fees award.
    Finding no error, we affirm.
    I.
    Grace and Preston Rutledge are former spouses. As part of their
    divorce proceedings, the Rutledges hotly litigated the question of who
    would retain custody of their two children. Over the course of the
    trial, Ms. Rutledge made numerous allegations that Mr. Rutledge had
    sexually abused one or both of the children. Mr. Rutledge denied the
    allegations and stated that Ms. Rutledge’s purpose in making the false
    allegations was to punish Mr. Rutledge. During his opening statement
    in the divorce proceedings, Mr. Rutledge’s attorney stated that Ms.
    Rutledge had made the false allegations because she "hate[d] Preston
    Rutledge," J.A. 19, and because she was "desperate to construct a case
    to satisfy her desire to punish and convict her husband." J.A. 20. The
    Arlington County Circuit Court judge indicated his agreement with
    Mr. Rutledge’s theory of the case and adopted the opening statement
    of Mr. Rutledge’s attorney, stating: "The mother has a highly
    financed campaign invested in destroying the father," J.A. 20, and
    that "[t]he opening statement by [Mr. Rutledge’s counsel] . . . almost
    made you wince; it was so hard, so cruel; but then it was proven by
    IN RE: RUTLEDGE                              3
    the evidence." J.A. 20. The Circuit Court judge also noted that Ms.
    Rutledge’s actions were "so malicious, so off the charts, so self-
    serving . . . . I do not hold the mother innocent . . . . [Her] hatred . . .
    [is] such that she cannot stop; she cannot say anything good about"
    Mr. Rutledge]. J.A. 21.
    As a result of these proceedings, the judge awarded custody of one
    child to Mr. Rutledge and custody of the other child to Ms. Rutledge.
    Mr. Rutledge requested an award of attorney’s fees for constantly
    having to defend himself from what he claimed were Ms. Rutledge’s
    malicious charges regarding abuse of their children. The judge
    awarded Mr. Rutledge $65,000 to cover part of his attorney’s fees in
    the custody litigation. In awarding the fees to Mr. Rutledge, the judge
    stated, "[I] believe that [Ms. Rutledge] should pay $65,000 in legal
    fees and costs, because I don’t find that so much of what happened
    in this case was to protect the children; it was to get the father." J.A.
    22.
    On October 16, 2001, Ms. Rutledge filed for bankruptcy. On Janu-
    ary 14, 2002, Mr. Rutledge filed a complaint in Bankruptcy Court
    requesting a denial of discharge for attorney’s fees award. Specifi-
    cally, Mr. Rutledge argued that discharge of Ms. Rutledge’s $65,000
    debt should be denied under 
    11 U.S.C.A. § 523
    (a)(6), which provides,
    in pertinent part, that "[a] discharge . . . does not discharge an individ-
    ual debtor from any debt . . . for willful and malicious injury by the
    debtor to another entity or to the property of another entity." Mr. Rut-
    ledge contended that Ms. Rutledge willfully and maliciously injured
    him with her baseless allegations of child sexual abuse during the cus-
    tody dispute that gave rise to the legal fees. He argued that the state
    court that heard the custody matter found this to be true and, there-
    fore, Ms. Rutledge was collaterally estopped from contesting that
    finding in Bankruptcy Court. In the alternative, Mr. Rutledge argued
    that the evidence in the record warranted a finding that Ms. Rutledge
    willfully and maliciously injured him during the child custody matter
    that was litigated in state court.
    The Bankruptcy Court denied Mr. Rutledge’s request for denial of
    discharge. On appeal, the District Court reversed the Bankruptcy
    Court and ruled that the award was not subject to discharge under
    4                           IN RE: RUTLEDGE
    Section 523(a)(6). Ms. Rutledge now appeals and seeks reinstatement
    of the Bankruptcy Court’s judgment discharging the attorney’s fees.
    II.
    For the fee award to be non-dischargeable, Mr. Rutledge must
    prove willful and malicious injury by a preponderance of the evi-
    dence. Grogan v. Garner, 
    498 U.S. 279
    , 288 (1991). Mr. Rutledge
    contends that the state court finding establishes malice, and that Ms.
    Rutledge is collaterally estopped from challenging that finding.
    In Grogan v. Garner, the Supreme Court concluded that principles
    of collateral estoppel apply in dischargeability proceedings. 
    Id.
     at 284
    n.11 (stating that "collateral estoppel principles do indeed apply in
    discharge exception proceedings pursuant to section 523(a)"). Apply-
    ing Virginia’s law of collateral estoppel, Hagan v. McNallen (In re
    McNallen), 
    62 F.3d 619
    , 624 (4th Cir. 1995) (explaining that "the
    forum state’s law of collateral estoppel applies in determining the dis-
    chargeability of debt"), the district court stated that in order to estab-
    lish that Ms. Rutledge is collaterally estopped from challenging the
    state court’s finding of malice, Mr. Rutledge must demonstrate that:
    (1) the parties to the two proceedings, or their privies, were the same;
    (2) the factual issues sought to be litigated actually were litigated in
    the prior action and were essential to the prior judgment; and (3) the
    prior action resulted in a valid final judgment against the party sought
    to be precluded in the present action. TransDulles Center v. Sharma,
    
    472 S.E.2d 274
    , 275 (Va. 1996). The district court noted that the first
    and third elements of the test were clearly satisfied. The district court
    went on to conclude that the second element was also satisfied: the
    issue of willful and malicious injury was actually litigated and was an
    essential part of the state court’s order awarding attorney’s fees. This
    was more than evidenced by the court’s statements, including its com-
    ment that Ms. Rutledge had engaged in a "highly financed campaign
    invested in destroying the father." J.A. 20.
    III.
    We have carefully reviewed the record and considered the parties’
    arguments, as set forth in their briefs and as made at oral argument.
    IN RE: RUTLEDGE                           5
    We conclude that the district court correctly decided the issues before
    it. Accordingly, we affirm on the reasoning of the district court.
    AFFIRMED
    

Document Info

Docket Number: 03-1668

Citation Numbers: 105 F. App'x 455

Judges: Per Curiam, Shedd, Traxler, Wilkinson

Filed Date: 7/15/2004

Precedential Status: Non-Precedential

Modified Date: 8/6/2023