Brother of punk band’s co-founder can discharge defamation judgment

November 4, 2016

myspace-no-credit-istock-photoThe brother of the deceased co-founder of a 1990s punk group can discharge a defamation judgment against him stemming from a message posted on MySpace about an attorney’s handling of his brother’s probate estate, a Pennsylvania bankruptcy judge has ruled.

The victim of the alleged defamation, Philadelphia attorney Conor Corcoran, failed to show that debtor Brian R. McCabe caused a “willful and malicious” injury that would bar McCabe from using his Chapter 7 case to discharge the $75,000 judgment, U.S. Bankruptcy Judge Ashley M. Chan of the Eastern District of Pennsylvania said in an Oct. 27 decision.

Corcoran could not even prove that McCabe posted the message that appeared on a MySpace page for the now-defunct band Ink & Dagger in October 2007, the judge said. The page was set up by a fan of the group, not by Ink & Dagger or any of its members, she said.

The message accused Corcoran of pocketing money from a settlement the band’s members reached with Microsoft that resolved a copyright infringement suit, Judge Chan’s opinion said.

The band members, represented by Corcoran, had alleged Microsoft used three Ink & Dagger songs in an Xbox video game without permission. McLaughlin v. Microsoft Corp., No. 05-cv-5519, case closed pending settlement (E.D. Pa. July 28, 2006).

Brian McCabe’s brother Sean was among a group of friends who formed Ink & Dagger in the mid-1990s in Philadelphia. The group broke up in 1999 and Sean, the band’s lead singer, died the following year at age 27.

Brian McCabe, as the administrator of his brother’s estate, hired Corcoran to prepare the estate’s Pennsylvania state inheritance tax return, the opinion said.

The other band members received their shares of the Microsoft settlement promptly but Corcoran had to hold on to the estate’s share until issues with the inheritance tax return were resolved, which took more than a year, according to the opinion.

Once that happened, in December 2007, Sean McCabe’s parents, who were his sole heirs, received the money.

State court suit

Corcoran sued Brian McCabe in the Philadelphia County Court of Common Pleas in March 2008, alleging libel and false-light invasion of privacy based on the MySpace post.

McCabe hired an attorney to represent him but the lawyer never responded to the complaint, and the trial court entered a default judgment in Corcoran’s favor, Judge Chan’s opinion said.

After a hearing to determine damages, the Common Pleas Court awarded Corcoran $50,000 in compensatory damages and $25,000 in punitive damages.

McCabe filed for Chapter 13 bankruptcy in November 2013, and the case was converted to Chapter 7 the next year.

Corcoran filed an adversary complaint in the Bankruptcy Court, citing Section 523(a)(6) of the Bankruptcy Code, 11 U.S.C.A. § 523(a)(6), to prevent McCabe from discharging the defamation judgment.

Section 523(a)(6) bars discharge of any debt “for willful and malicious injury by the debtor to another entity or to the property of another entity.”

Corcoran sought summary judgment, arguing that McCabe’s liability for posting the defamatory message had already been established in the state court proceedings and that the issue did not need to be relitigated in the adversary action. Judge Chan denied the motion and scheduled a trial.

Just before the trial, Corcoran sought reconsideration, claiming he had only then been able to obtain a transcript of the Common Pleas Court’s damages hearing that would prove McCabe posted the message.

In her Oct. 27 ruling, Judge Chan entered judgment in McCabe’s favor, saying he can discharge the judgment because Corcoran failed to prove the necessary “willful and malicious injury.”

She denied the reconsideration motion as procedurally improper and said the transcript was inadmissible because Corcoran failed to take the “basic steps” needed to authenticate it. Even if the transcript were admissible, she said, it would bolster McCabe’s case, not Corcoran’s.

Corcoran had argued that McCabe was the only person who had the means and motive to post the defamatory message.

Judge Chan said McCabe had no financial stake in the settlement money and no reason to be dissatisfied with Corcoran’s representation of his brother’s estate. On the other hand, she said, his mother complained about the delay in receiving the settlement money, including “hollering” at Corcoran on the phone.

It was possible that McCabe posted the message, but it could also have been posted by his mother or anyone else who was a “friend” of the MySpace page, Judge Chan said.

“Because Corcoran has failed to demonstrate that the debtor posted the defamatory message, he obviously cannot demonstrate that the debtor intended to cause a willful and malicious injury to Corcoran pursuant to Section 523(a)(6),” the judge said.

Nor could Corcoran rely on the state court’s punitive damages award as evidence of malicious intent, she said. In Pennsylvania, punitive damages can be awarded for reckless conduct, and recklessness does not fall within Section 523(a)(6), she concluded.

In re McCabe, No. 13-19715; Corcoran v. McCabe, Adv. No. 14-609, 2016 WL 6301133 (Bankr. E.D. Pa. Oct. 27, 2016).