Dickens v. Bradley (In re Dickens)

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In re: HAROLD W. DICKENS, III, dba LAW OFFICES OF HAROLD W. DICKENS, III, dba LAW OFFICES OF HAROLD W. DICKENS, III, P.C., Debtor.

HAROLD W. DICKENS, III, Appellant, v. KENNETH S. BRADLEY, MD, an individual; SOUTHERN CALIFORNIA PAIN CONSULTANTS, INC., a California corporation, Appellees.

Adv. No. 2:20-ap-01177-BB

BAP No. CC-21-1202-FSG

Bk. No. 2:19-bk-22970-BB

United States Bankruptcy Appellate Panel of the Ninth Circuit

August 17, 2022

NOT FOR PUBLICATION

Appeal from the United States Bankruptcy Court for the Central District of California Sheri Bluebond, Bankruptcy Judge Presiding

Before: FARIS, SPRAKER, and GAN, Bankruptcy Judges.

MEMORANDUM ^[*]

INTRODUCTION

The California superior court sanctioned attorney Harold W Dickens, III for submitting false declarations on behalf of his clients while defending a defamation lawsuit brought by the appellees. Mr. Dickens filed for chapter 7^[1] bankruptcy protection. The appellees sought to have the debt declared nondischargeable under § 523(a)(6) because it arose from a willful and malicious injury: filing the false declarations with the intent to defeat the defamation lawsuit. The bankruptcy court granted the appellees' motion for summary judgment based on the issue preclusive effect of the state court's judgment.

Mr Dickens appeals, arguing that the bankruptcy court erred in determining that the underlying acts were both willful and malicious. He maintains that he did not knowingly file the false declarations and contends that the standard for granting the sanctions differed from the standard under § 523(a)(6).

We disagree with Mr. Dickens. The issues that the California superior court had to decide in order to impose sanctions on Mr. Dickens were identical to the issues before the bankruptcy court under § 523(a)(6). Among other things the superior court necessarily found that Mr. Dickens acted in bad faith under a subjective standard. We AFFIRM.

FACTS

A. The prepetition state court action and sanctions award

1. The underlying dispute

Dr. Kenneth S. Bradley is a medical doctor who specializes in pain medicine. Two of Dr. Bradley's former patients, Kashmir Stefani and Angela Margolis, posted Yelp reviews online that accused Dr. Bradley of sexually assaulting and sexually harassing them.

Dr. Bradley and his clinic, Southern California Pain Consultants, Inc. (collectively "Dr. Bradley"), sued Ms. Stefani and Ms. Margolis for defamation in California superior court. He alleged that they had colluded to post false Yelp reviews shortly after he had refused to continue prescribing powerful drugs for them.

Mr. Dickens initially represented both Ms. Stefani and Ms. Margolis. Later, Mr. Dickens withdrew as Ms. Margolis' counsel, and she thereafter represented herself.

2. Mr. Dickens' anti-SLAPP motion

On November 20, 2015, Mr. Dickens filed an anti-SLAPP^[2] motion in the superior court on behalf of both clients, in which he sought to dismiss Dr. Bradley's defamation case. In relevant part, the anti-SLAPP motion asserted that the Yelp reviews were protected as "statements prior to litigation or other official proceedings." The motion alleged that each client had consulted with "her attorney" before posting the Yelp reviews, so the postings were protected by the litigation privilege. Ms. Stefani's declaration, drafted by Mr. Dickens, expressly stated that: "On August 31, 2015, after reporting Dr. Bradley to the authorities and consulting my attorney in preparation for suing him, I posted the review about Dr. Bradley on Yelp." Ms. Margolis signed, and Mr. Dickens drafted and filed, a substantially similar declaration. In addition to seeking dismissal of the defamation lawsuit, they requested attorneys' fees totaling $14,000.

With the superior court's approval, Dr. Bradley deposed Ms. Stefani and Ms. Margolis in April 2016. Both women testified that they had not contacted counsel when they posted their Yelp reviews and that they did not consult with or employ Mr. Dickens or any other attorney until after Dr. Bradley sued them.

Dr. Bradley presented the deposition testimony to the superior court in his opposition to the anti-SLAPP motion.^[3] After a hearing, the superior court held that the Yelp reviews did not implicate the litigation privilege and denied the anti-SLAPP motion, stating that "[t]he Yelp reviews had no functional relationship to planned litigation and made no mention of participating in litigation."

3. Dr. Bradley's motion for sanctions

Dr. Bradley then filed a motion for sanctions against Mr. Dickens, Ms. Stefani, and Ms. Margolis. He sought to recover $84,574.46 in attorneys' fees and costs that he had spent defending against the anti-SLAPP motion. Dr. Bradley contended that the anti-SLAPP motion was frivolous and based on the clients' false declarations (that Mr. Dickens knew to be false).

In response, Mr. Dickens argued on behalf of himself and Ms. Stefani that Dr. Bradley had failed to provide any evidence that the anti-SLAPP motion was frivolous, harassing, or brought in bad faith. He did not offer any declarations or other evidence, and he did not attempt to explain or justify his presentation of admittedly false testimony to the court.

The superior court issued a tentative ruling indicating that it was inclined to grant the sanctions motion. The court tentatively ruled that the anti-SLAPP motion was "frivolous and devoid of merit" and stated:

[I]n light of the deposition testimonies of defendants, it is clear that the declarations submitted by defendants, which were drafted by defense counsel, were false, in bad faith, and solely intended to implicate the litigation privilege despite the fact that the privilege was not available to defendants. Had plaintiffs not sought to conduct discovery, defendants may well have prevailed on the motions based on these false declarations. The disingenuous nature of the declarations was revealed during discovery. No reasonable attorney would have submitted declarations which were knowingly false. The attorney clearly would have had information as to his first contact with defendants, which according to defendants themselves, were not before the Yelp posts. Therefore, the anti-SLAPP motions utilized false declarations and constituted frivolous and bad faith conduct. Any reasonable attorney would conclude that the motion was totally devoid of merit.

At the hearing on the motion, the court stated that "what pushed me over to grant attorney's fees is what appears to have been a deliberate and willful attempt to mislead both the court and the opposing party as to whether the litigation privilege was applicable based upon a contemplation of litigation by the defendants, who had conferred with an attorney."

The court took the matter under advisement. The court's minutes state that, later that day, the court granted the motion and adopted its tentative ruling as its final ruling.

Later, the superior court entered a written order granting the motion and imposing sanctions totaling $44,648.66 jointly and severally against Mr. Dickens, Ms. Stefani, and Ms. Margolis. The written order does not mention the tentative ruling and provided a slightly different explanation

1. To the extent the special motion to strike was based on the litigation privilege affirmative defense, it relied on false and misleading declarations provided by each of defendants and filed and submitted by their counsel, Harold W. Dickens, III. The declarations falsely stated that each of the Defendants was represented by their "Attorney" and were contemplating litigation at the time they made the Yelp postings which are the subject of the complaint in this case. Defendants' deposition testimony established that these representations were not true. No reasonable attorney would have filed a special motion to strike based on such false testimony.

2. To the extent that Defendants' special motion to strike asserted that their Yelp postings concerned a matter of public interest and so fell within a framework of the anti-SLAPP law, the Court has previously agreed with that position. However, the complaint in this action and the pleadings and evidence filed in support and opposition to the motion demonstrate that it was or should have been known to Defendants and their attorney that Plaintiffs would be able to provide the "minimal showing" needed to satisfy the second prong of an anti-SLAPP motion analysis. By way of example, it was alleged in the complaint - and confirmed by evidence that was not disputed by Defendants - that they were each involuntarily discharged by Dr. Bradley after either failing or refusing to take urine tests to confirm their use of medications prescribed by Dr. Bradley. Further, Dr. Bradley alleged in his complaint, and subsequently confirmed by evidence, that he disputed Defendants' claims in their Yelp postings that he had sexually harassed them. No reasonable attorney would have filed a special motion to strike in such circumstances, as it was evident that Plaintiffs would be able to make a minimal showing of a probability of prevailing on their defamation claims. Filing such a motion represented a waste of attorney time and judicial resources, and resulted in great and unnecessary cost to the Plaintiffs in this action.

No one appealed the denial of the anti-SLAPP motion or the award of sanctions.^[4]

B. Mr. Dickens' bankruptcy case

Mr. Dickens did not pay the sanctions award. In December 2019, he filed a chapter 7 petition and scheduled the sanctions award as an unsecured claim of $57,000.

Dr Bradley filed a timely adversary proceeding pursuant to § 523(a)(6), contending that the anti-SLAPP sanctions award and other sanctions imposed by the superior court were not dischargeable.^[5] Later, he moved for...