Case 1:23-cv-11996-TLL-PTM ECF No. 7, PageID.719 Filed 12/03/24 Page 1 of 23
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`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF MICHIGAN
`NORTHERN DIVISION
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`FREDERICK LEE KNOCHEL, III, and
`FAMILY CHIROPRACTIC & WELLNESS
`OF MIDLAND, PLLC,
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`v.
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`Appellants,
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`Case No. 1:23-cv-11996
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`Honorable Thomas L. Ludington
`United States District Judge
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`JULIE RONAN
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`Appellee.
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`__________________________________________/
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`OPINION AFFIRMING BANKRUPTCY COURT
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`From 2014 through 2016, Julie Ronan worked as a receptionist for Dr. Frederick Knochel
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`at his chiropractic practice in Midland, Michigan. Throughout her near two-year tenure working
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`for Dr. Knochel, Ms. Ronan alleged he subjected her to sexual harassment. What began as sporadic
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`comments about Ms. Ronan’s weight and physical appearance escalated to unsolicited invitations
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`to attend sex parties, nonconsensual massages, and unsolicited pornographic images placed on Ms.
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`Ronan’s work computer. This hostile conduct came to a crescendo in 2016 when Dr. Knochel
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`forced Ms. Ronan to attend an out-of-state work conference and hid the fact that he only reserved
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`one hotel room. On the first day of the conference, as Ms. Ronan attempted to find other
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`accommodations, she found Dr. Knochel lying in bed with his shirt off, pants undone, and wearing
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`no undergarments.
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`Ms. Ronan quickly left Dr. Knochel’s employ, and sued him and his practice—Family
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`Chiropractic & Wellness of Midland, PLLC—in state court for creating a sexually hostile
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`workplace. The case went to trial, and the jury found for Ms. Ronan. When the dust of the state
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`appellate proceedings settled, Ms. Ronan had secured a $267,414.85 judgment against Dr. Knochel
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`Case 1:23-cv-11996-TLL-PTM ECF No. 7, PageID.720 Filed 12/03/24 Page 2 of 23
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`and his practice. But Dr. Knochel and his practice soon after initiated Chapter 7 bankruptcy
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`proceedings in the United States Bankruptcy Court for the Eastern District of Michigan. So Ms.
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`Ronan initiated adversarial proceedings seeking, among other forms of relief, an order that her
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`state court judgment was nondischargeable under Section 523(a)(6) of the Bankruptcy Code,
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`which exempts from discharge any debts arising from “willful and malicious” injuries.
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`On June 30, 2023, the Bankruptcy Court resolved the Parties’ cross-motions for summary
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`judgment, ruling in favor of Ms. Ronan and holding that the state court judgment is
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`nondischargeable because Dr. Knochel willfully and maliciously harassed her. Dr. Knochel filed a
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`timely appeal with this Court. As explained below, this Court affirms.
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`I.
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`A.
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`Dr. Frederick Knochel, III, is the sole owner of Family Chiropractic & Wellness of
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`Midland, PLLC (“Family Chiropractic”), a chiropractic practice in Midland, Michigan. ECF No.
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`3 at PageID.19. Appellee Julie Ronan worked as a receptionist at Family Chiropractic from late
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`2014 through early 2016. Ronan v. Fam. Chiropractic & Wellness of Midland, PLLC, No. 352706,
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`2021 WL 2025182, at *1 (Mich. Ct. App. May 20, 2021).
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`In 2018, Ronan sued Dr. Knochel and Family Chiropractic in the 42nd Circuit Court for
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`Midland County, alleging Dr. Knochel sexually harassed and discriminated against her by creating
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`a hostile work environment in violation of Michigan’s Elliott-Larsen Civil Rights Act (“ELCRA”),
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`MICH. COMP. LAWS. § 37.2101 et seq. See id.; ECF No. 3 at PageID.20; see also Ronan v. Family
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`Chiropractic & Wellness of Midland, PLLC, Case No. 18-5224-CZ-B (42 Cir. Midland County,
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`Mich., 2018). The case went to trial in June 2019. Id. All Parties agree that the following facts, as
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`Case 1:23-cv-11996-TLL-PTM ECF No. 7, PageID.721 Filed 12/03/24 Page 3 of 23
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`recited by the Michigan Court of Appeals, accurately describe the evidence presented at trial. See
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`In re Knochel, No. 22-20911-DOB, 2023 WL 4306262, at *1, 6 (Bankr. E.D. Mich. June 30, 2023).
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`Multiple witnesses testified that Knochel made demeaning comments about women
`when he was at work and often judged and remembered women by their
`appearance. [Ronan] testified that Knochel would make unflattering comments
`regarding her weight and figure. On one occasion, Knochel referenced the size of
`her arms by “flapping [] bat wings at [her].” [Ronan] was proud of her appearance,
`but[] was self-conscious about her arms. She told Knochel this, but he “continued
`going” until [Ronan] excused herself and went outside to cry. [Ronan] testified that
`when she lost some weight, Knochel told her that she “was a two or three before,
`[but was] a five or six now,” apparently rating her appearance on a scale of 1 to 10.
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`Knochel continuously introduced sexual conversation at the office. For example,
`Knochel told [Ronan] he was involved in a swinger's community and he sent her
`an e-mail invitation for a swinger's party, which she declined. [Ronan] testified that
`Knochel would often joke about how he did not wear underwear because he needed
`to “give his balls room to breathe.” [Ronan] testified that Knochel asked her to call
`a patient who worked for the local health department to bring condoms for him to
`her appointment. [Ronan] initially refused, but she made the call after Knochel
`insisted. When the patient arrived with the condoms, Knochel told [Ronan] and the
`patient that “the small ones weren't gonna fit.”
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`Knochel's behavior went beyond comments. [Ronan] testified that she once
`returned from a lunch break and heard Knochel having sex in the office. She said
`that the receptionist from the adjacent office in the building asked her to address
`the situation because their patients heard the sexual encounter. Knochel would also
`leave explicit pictures on [Ronan’s] work computer. Ronan arrived to work one day
`to find photographs of the woman Knochel was seeing, in various states of undress,
`on her work computer. On another occasion, Knochel saved a picture of a vagina
`as the desktop home screen to [Ronan’s] work computer. [Ronan] said that she
`repeatedly complained to Knochel about his behavior, and he would stop for a time,
`but “then when it happened again, it escalated.”
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`Knochel would ask [Ronan] to give him massages, including rubbing his lower
`back. [Ronan] testified that on one occasion, Knochel was lying on his stomach and
`he “wanted me to do his back and go lower down or, ‘Oh, right there.’” As “it
`became more and more,” [Ronan] told Knochel that she “didn't want to touch him.”
`[Ronan] also recalled a time when Knochel ripped a seam in his pants, and he asked
`her to staple them while he was wearing them even though his “butt cheeks were
`exposed.” [Ronan] suggested that Knochel take the pants off but, after he insisted,
`she stapled the back of the pants while he had them on.
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` business conference in Atlanta ended up being the proverbial final straw. [Ronan]
`told Knochel she would not be able to attend the conference with him because her
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`Case 1:23-cv-11996-TLL-PTM ECF No. 7, PageID.722 Filed 12/03/24 Page 4 of 23
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`daughter had a cheer competition, but Knochel told her she was going to the
`conference. Knochel initially told plaintiff they would be sharing a room to save
`money, but after [Ronan] expressed her discomfort, Knochel assured her that the
`hotel room would be a suite with two separate bedrooms. After arriving at the hotel,
`however, [Ronan] learned that Knochel booked one room with two beds rather than
`a suite. After the front desk told [Ronan] there were no other rooms available at the
`hotel, [Ronan] returned to the room, thinking that Knochel was at the conference.
`Instead, she found him sleeping on the bed with his shirt off and pants undone and
`it did not appear he was wearing underwear. [Ronan] was upset and screamed at
`Knochel to wake up. He, in turn, became very upset and called [Ronan] “a stupid
`fucking cunt” and told her she was being paid for the weekend, so she “was gonna
`do whatever he told me to do.” [Ronan] testified that she went down to the lobby
`and called her aunt, Ruth Rivette, who changed her flight. Ruth testified that
`[Ronan] was “hysterical” and that she was “terrified” of Knochel. [Ronan] testified
`that she “cried on the plane all the way home” and decided to leave her job. Soon
`after the trip, [Ronan] scheduled a meeting with Knochel to discuss why he booked
`only one hotel room. [Ronan’s] then husband . . . accompanied her to the meeting
`because she was afraid to be alone with Knochel. [Ronan] turned in her keys after
`Knochel refused to meet[.]
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`Ronan, 2021 WL 2025182, at *1–2 (footnote omitted).
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`On June 27, 2019, the jury found both Dr. Knochel and Family Chiropractic liable for
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`creating a hostile work environment based on gender in violation of the ELCRA, and awarded
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`Ronan $150,000 in noneconomic damages. Id. at *2; see also ECF No. 3 at PageID.20, 54. On
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`September 4, 2019, after post-trial motion practice, the 42nd Circuit Court issued a judgment
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`against Dr. Knochel and Family Chiropractic in the amount of $243,739.71. ECF No. 3 at
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`PageID.20. Dr. Knochel and Family Chiropractic appealed, but in May 2021, the Michigan Court
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`of Appeals affirmed. Ronan, 2021 WL 2025182, at *3–4. On July 1, 2021, the Michigan Court of
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`Appeals granted Ronan’s motion to remand the case to the 42nd Circuit Court for consideration of
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`appellate attorney fees, and later that month, Plaintiff was awarded an additional $11,310.00. ECF
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`No. 3 at PageID.20–21. Accordingly, on August 10, 2021, the 42nd Circuit Court issued an
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`amended judgment (the “State Court Judgment”) against Dr. Knochel and Family Chiropractic, in
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`the amount of $267,414.85.1 Id. at PageID.51–52.
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`But, ten days later, Ronan filed another complaint in the 42nd Circuit Court alleging Dr.
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`Knochel fraudulently transferred real estate and redirected his income and Family Chiropractic’s
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`income to avoid paying the State Court Judgment. Ronan v. Knochel, Case No. 21-8049-NZ (42
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`Cir. Midland County, Mich., 2021). Specifically, Ronan alleged that Dr. Knochel (1) transferred a
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`$15,500 residence to his then-girlfriend, Cynthia Lincoln, while the state court sexual harassment
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`proceedings were pending; (2) transferred a $50,000 residence to The Tom McCann Family, LLC,
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`while the state court sexual harassment proceedings were pending, within 30 days of the jury’s
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`verdict; and (3) diverted Family Chiropractic’s patients and income to Relief Care Chiropractic of
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`Midland, PLLC (“Relief Care”), a new chiropractic practice that Dr. Knochel created just six days
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`after the jury’s verdict. ECF No. 3 at PageID.22–23.
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`On September 16, 2022, Dr. Knochel filed for Chapter 7 bankruptcy in the United States
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`Bankruptcy Court for the Eastern District of Michigan (the “Bankruptcy Court”). In re Knochel,
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`III, Case No. 22-20911-DOB (Bankr. E.D. Mich. Sep. 16, 2022). Randal L. Frank was selected to
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`serve as the Bankruptcy Trustee, responsible for representing Dr. Knochel’s creditors—like Ms.
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`Ronan—and equipped with “extraordinary” powers to collect and preserve Dr. Knochel’s assets
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`for subsequent liquidation. See id., ECF No. 6; In re Fordu, 201 F.3d 693, 706 (6th Cir. 1999); see
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`also In re Arnold, 176 B.R. 13, 15 (Bankr. E.D. Tex. 1995) (explaining that Chapter 7 trustees have
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`1 This amended judgment included $150,000 in noneconomic damages; $79,525 in trial attorney’s
`fees; $1,264.18 in trial costs; $12,950.53 in interest on the original judgment (through September
`2019); $2,500 in post-judgment motion practice attorney’s fees, $11,310 in appellate attorney’s
`fees; and additional $9,865.14 in interest under MICH. COMP. LAWS § 600.6013(8). ECF No. 3 at
`PageID.52.
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`a duty to achieve the “desired end result” of proceedings: an equitable distribution of the estate’s
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`assets to creditors).
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`On December 1, 2022, Ms. Ronan removed her fraudulent transfer case from the 42nd
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`Circuit Court to the Bankruptcy Court under 11 U.S.C. § 1452(a), initiating adversarial
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`proceedings. Id., ECF No. 33; see also Ronan v. Knochel, Case No. 22-20236-DOB (Bankr. E.D.
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`Mich. Dec. 1, 2022). In Counts I through III of her amended complaint, Ms. Ronan—as Dr.
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`Knochel’s creditor—sought to void Dr. Knochel’s alleged fraudulent transfers under the Michigan
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`Uniform Voidable Transactions Act, MICH. COMP. LAWS § 566.31 et seq. See ECF No. 3 at
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`PageID.23–29. In Count IV, Ronan sought to pierce Relief Care’s corporate veil. Id. at PageID.29–
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`31. In Count V, Ronan sought an order from the Bankruptcy Court that, under 11 U.S.C. §
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`523(a)(2)(A), the funds Dr. Knochel received from his allegedly fraudulent transfers were
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`nondischargeable. Id. at PageID.32–33. Similarly, in Count VI, Ronan sought an order from the
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`Bankruptcy Court that the State Court Judgment was a nondischargeable debt arising from a
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`“willful and malicious injury” under Section 523(a)(6) of the Bankruptcy Code, 11 U.S.C. §
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`523(a)(6). Id. at PageID.33–34.
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`In February 2023, the Bankruptcy Court dismissed Counts I through IV, and in April 2023,
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`the Parties voluntarily dismissed Count V. See Ronan v. Knochel, No. 22-02036-DOB (Bankr. E.D.
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`Mich. 2022), ECF Nos. 18; 60. All that remained was Count VI—Ronan’s claim that the State
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`Court Judgment was a nondischargeable debt arising from Dr. Knochel’s “willful and malicious”
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`harassment and discrimination under Section 523(a)(6). The Parties filed cross-motions for
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`summary judgment on this remaining claim in April 2023. See ECF No. 3 at PageID.36–49
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`(Knochel’s motion), PageID.60–91 (Ronan’s motion). To understand the Bankruptcy Court’s
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`resolution of this claim and the basis for Dr. Knochel’s appeal, some brief background about debt
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`discharge, and the exception codified at Section 523(a)(6), is in order.
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`B.
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`Chapter 7 bankruptcy proceedings offer debtors like Dr. Knochel “a fresh financial start.”
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`In re Berge, 953 F.3d 907, 913 (6th Cir. 2020). “To achieve that fresh start,” once the Bankruptcy
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`Trustee has collected and liquidated the debtor’s assets, “the Bankruptcy Code allows the debtor
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`to discharge” remaining debts owed to creditors. Id.; see also 11 U.S.C. § 704. Although most
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`debts are dischargeable, the Bankruptcy Code carves out “limited exceptions” to this “general
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`rule.” Id.; see also F.C.C. v. NextWave Pers. Commc’ns Inc., 537 U.S. 293, 306 (2003) (noting
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`nondischargeable debts are “clearly disfavored by the Bankruptcy Code”). Relevant here is one
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`such exception, codified at Section 523(a)(6) of the Bankruptcy Code, which provides that debts
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`arising from “willful and malicious” injuries are nondischargeable. 11 U.S.C. § 523(a)(6). But “the
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`two terms are not synonymous.” In re Berge 953 F.3d at 915. Accordingly, as recently emphasized
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`by the Sixth Circuit, reviewing courts must take a “two-pronged approach” when assessing debt
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`discharge under Section 523(a)(6). Id. at 914.
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`First, the creditor’s injury must have been willfully inflicted by the debtor. “[R]ecklessly
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`or negligently inflicted injuries” will not do. Kawaauhau v. Geiger, 523 U.S. 57, 64 (1998).
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`Instead, the debtor must either (1) subjectively “desire[] to cause the consequences
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`of his act,” or (2) “believe[] that the consequences are substantially certain to result from it.” In re
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`Markowitz, 190 F.3d 455, 464 (6th Cir. 1999) (internal quotations omitted); see also Yeager v.
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`Wilmers, 553 B.R. 102, 107 (S.D. Ohio 2015), aff'd (July 19, 2016) (“A ‘willful’ injury requires ‘a
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`deliberate or intentional injury, not merely a deliberate or intentional act that leads to injury.’”
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`(quoting Kawaauhau, 523 U.S. at 61)).
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`Second, the creditor’s injury must have been maliciously inflicted by the debtor. Unlike
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`willfulness, a finding of malice does not require ill-will or specific intent. In re Trantham, 304 B.R.
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`298, 308 (B.A.P. 6th Cir. 2004). Instead, a debtor acts maliciously by acting “in conscious
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`disregard of [their] duties or without just cause or excuse[.]” Id. (quoting Wheeler v. Laudani, 783
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`F.2d 610, 615 (6th Cir.1986)). A “just cause” is defined as a “‘legally sufficient reason’” and a
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`“just excuse” is defined as a “‘reason that justifies an act or omission or[] relieves a person of a
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`duty.’” In re Berge, 953 F.3d at 915 (quoting BLACK’S LAW DICTIONARY (11th ed. 2019)).
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`To exempt a debt from discharge under Section 523(a)(6), creditors like Ms. Ronan bear
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`the burden of proving both willfulness and maliciousness by the preponderance of the evidence.
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`In re Trantham, 304 B.R. at 306. And although courts must analyze these two elements separately,
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`the same facts and evidence may support them. In re Berge, 953 F.3d at 916; see also In re Martin,
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`321 B.R. 437, 442 (Bankr. N.D. Ohio 2004) (“[I]n a great majority of cases, the same factual events
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`that give rise to a finding of ‘willful’ conduct, will likewise be indicative as to whether the debtor
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`acted with malice.”)
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`C.
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`The Bankruptcy Court entertained oral argument on the Parties’ cross-motions for
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`summary judgment on June 13, 2023. See In re Knochel, 2023 WL 4306262, at *4. On June 30,
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`2023, United States Bankruptcy Judge Daniel S. Opperman denied Dr. Knochel’s motion, granted
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`Ronan’s motion, and held that the State Court Judgment is a nondischargeable debt under §
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`523(a)(6). See id; see also Ronan v. Knochel, No. 22-02036-DOB (Bankr. E.D. Mich. 2022), ECF
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`No. 91. The Bankruptcy Court’s rationale was twofold.
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`First, the Bankruptcy Court concluded that the doctrine of collateral estoppel—also known
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`as issue preclusion—applied. Specifically, the Bankruptcy Court concluded that the issues of
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`willfulness and malice were “actually litigated and necessarily determined” throughout the state
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`proceedings, such that the Parties were precluded from relitigating those issues throughout
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`bankruptcy proceedings. In re Knochel, 2023 WL 4306262, at *7. Indeed, the Bankruptcy Court
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`explained that the elements of Ms. Ronan’s ELCRA claim required her to prove that Dr. Knochel
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`“inten[ded] to injure” her in a direct way. Id.
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`Second, in the alternative, even if the doctrine of collateral estoppel did not apply to
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`preclude relitigation, the Bankruptcy Court reached the “separate and independent” conclusion
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`that “Dr. Knochel willfully and maliciously injured Ms. Ronan, such that the resulting State Court
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`Judgment is nondischargeable under Section 523(a)(6). Id. The Bankruptcy Court’s finding of
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`willfulness largely rested on the “substantial certainty” doctrine:
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`As detailed, Dr. Knochel committed numerous acts, at least 15, that were
`substantially certain to injure Ms. Ronan. On numerous times, he was told by her
`to stop, but he continued. He did not do one or two acts; he did many even after
`Ms. Ronan requested that he stop. On many occasions, his acts caused Ms. Ronan
`to be distressed, anxious or apprehensive; on some she physically reacted.
`Ultimately, she quit her job and a jury determined her damages were $150,000. The
`Court cannot see a scenario where Dr. Knochel did not know the effect of his
`intentional acts, or where he was not substantially certain his acts caused harm or
`injury to Ms. Ronan. The Court has also separated each action and considered
`whether any one action, standing alone, evidences an intent to injure or harm Ms.
`Ronan. In some instances, the intent to injure or harm her is not facially evident.
`This analysis, however, ignores the cumulative effect any combination of acts had
`on Ms. Ronan. It also ignores the relentless acts of Dr. Knochel and completely
`discounts his knowledge or intent his acts would have on Ms. Ronan. This Court
`cannot draw the exact line or point to the exact time when Dr. Knochel's actions
`met the standards required by Section 523(a)(6), but it can state that prior to the
`Atlanta trip, Dr. Knochel met the Section 523(a)(6) elements. Before that trip he
`was substantially certain that his actions caused harm to Ms. Ronan. But he still
`continued and persisted.
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`Id. at *8. And the Bankruptcy Court concluded Dr. Knochel’s harassment was malicious because
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`the record did not suggest any “just cause or excuse” for the harassment. Id. at *9 (“The Court has
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`searched long and hard to find . . . an acceptable reason for Dr. Knochel's actions[.] The Court has
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`also speculated what Dr. Knochel's testimony could be to successfully defend this cause. While
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`the Court could conjure an explanation for one or perhaps two acts, the litany of actions are too
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`extensive, too numerous, and too flagrant[.]”).
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`On July 26, 2023, Knochel filed a timely notice of appeal to this Court. ECF No. 1 at
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`PageID.3.
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`II.
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`The district court acts as an appellate court when reviewing the final decisions of the
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`Bankruptcy Court. 28 U.S.C. § 158. District courts apply “the clearly erroneous standard of
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`review” to the Bankruptcy Court’s factual findings, and review de novo the Bankruptcy Court’s
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`legal conclusions. In re Gardner, 360 F.3d 551, 557 (6th Cir. 2004) (emphasis in original). “Where
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`a bankruptcy court's determination involves a mixed question of fact and law, the district court
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`‘must break it down into its constituent parts and apply the appropriate standard of review for each
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`part.’” In re A.O. Liquidating Co., 350 B.R. 752 (E.D. Mich. Sep. 29, 2006) (quoting In re Baker
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`& Getty Fin. Servs., Inc., 106 F.3d 1255, 1259 (6th Cir. 1997)).
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`The Bankruptcy Court’s ultimate decision to grant summary judgment “presents purely a
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`question of law,” so it is reviewed de novo on appeal. In re McDonald, 29 F.4th 817, 822 (6th Cir.
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`2022). In bankruptcy proceedings, “the standard for summary judgment is governed by Federal
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`Rule of Bankruptcy Procedure 7056, which incorporates” Civil Rule 56. Id. Under Civil Rule 56,
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`summary judgment is warranted only when, construing the Bankruptcy Code in favor of the debtor,
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`In re Keeney, 227 F.3d 679, 683 (6th Cir. 2000), there is “no genuine issue of material fact,” such
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`that the movant is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317,
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`322 (1986).
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`III.
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`Knochel raises two issues on appeal. First, did the Bankruptcy Court err in concluding the
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`State Court Judgment—as affirmed by the Michigan Court of Appeals—precluded Knochel’s
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`discharge argument under the doctrine of collateral estoppel? Second, did the Bankruptcy Court
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`err in concluding that Dr. Knochel willfully injured Ms. Ronan, such that the State Court Judgment
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`is a nondischargeable debt? Each issue will be addressed in turn.
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`A. Collateral Estoppel
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`The Bankruptcy Court did not err in concluding, as a threshold matter, that the doctrine of
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`collateral estoppel precluded the Parties’ relitigation of willfulness and malice.
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`1.
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`The doctrine of collateral estoppel—issue preclusion—applies in bankruptcy discharge
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`proceedings. Grogan v. Garner, 498 U.S. 279, 284 n. 11 (1991); In re Trantham, 304 B.R. at 305;
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`see also In re Porter, 539 F.3d 889, 894 (8th Cir. 2008) (“The collateral estoppel doctrine applies
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`in bankruptcy proceedings brought under § 523(a)(6).”). And the preclusive effect of a state court
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`judgment is governed by the “preclusion law of the State in which the judgment was rendered.”
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`Marrese v. Am. Acad. of Orthopaedic Surgeons, 470 U.S. 373, 380 (1985). Under applicable
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`Michigan law, “[c]ollateral estoppel precludes [the] relitigation of an issue in a subsequent,
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`different cause of action between the same parties where the prior proceeding culminated in a
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`valid, final judgment and the issue was (1) actually litigated, and (2) necessarily determined.
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`People v. Gates, 452 N.W.2d 627, 630 (Mich. 1990). “An issue is actually litigated if it is put into
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`issue by the pleadings, submitted to the trier of fact, and determined by the trier of fact.” In re
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`Markowitz, 190 F.3d at 462 (citing Latimer v. Mueller & Son, Inc., 386 N.W.2d 618, 627 (Mich.
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`Case 1:23-cv-11996-TLL-PTM ECF No. 7, PageID.730 Filed 12/03/24 Page 12 of 23
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`Ct. App. 1986). And an issue is “necessarily determined if it is essential to the judgment.” Id.
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`(citing Gates, 452 N.W.2d at 631).
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`2.
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`
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`All Parties agree that they participated in both the state sexual harassment and the federal
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`bankruptcy proceedings. See ECF Nos. 5; 6. They also agree that the State Court Judgment—
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`affirmed on appeal—was final and valid. Id. The only question, therefore, is whether the discrete
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`issues of willfulness and malice were “actually litigated” and “necessarily determined” throughout
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`the state court proceedings. The answer lies within the elements of Ms. Ronan’s hostile workplace
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`sexual harassment claim under the ELCRA, and her proofs at trial.
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`
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`The jury found that Dr. Knochel and Family Chiropractic either “create[d] a sexually
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`hostile, offensive, or intimidating work environment; or a hostile, offensive, or intimidating work
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`environment based on gender.” ECF No. 3 at PageID.54. As instructed by the 42nd Circuit Court,
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`this verdict required the jury to find, among other ELCRA elements, that:
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`(1) Ms. Ronan was subject to conduct or communication on the basis of sex;
`(2) the conduct or communication was unwelcomed or uninvited;
`(3) the unwelcome sexual conduct or communication was intended to, or in fact
`did, substantially interfere with Ms. Ronan’s employment or created an
`intimidating, hostile, or offensive work environment[.]
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`See Haynie v. State, 664 N.W.2d 129, 133 (Mich. 2003) (emphasis added); ECF No. 3 at
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`PageID.556–67. The jury was also instructed on intentionality:
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`[Ms. Ronan] must prove that she was . . . discriminated against because of her sex.
`The discrimination must have been intentional. It cannot have occurred by
`accident. Intentional discrimination means that one of the motives or reasons for
`[Ms. Ronan’s] harassment was her sex. [Ms. Ronan’s] sex does not have to be the
`only reason, or even the main reason, but it does have to be one of the reasons which
`made a difference [for Dr. Knochel] in determining whether or not to harass [Ms.
`Ronan].
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`ECF No. 3 at PageID.561.
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`Case 1:23-cv-11996-TLL-PTM ECF No. 7, PageID.731 Filed 12/03/24 Page 13 of 23
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`In this way, the issue of willfulness—for the purposes of Section 523(a)(6)—was actually
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`litigated and necessarily determined in the state trial court. See In re Porter, 539 F.3d 889, 895 (8th
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`Cir. 2008) (affirming Bankruptcy Court’s holding that the state trial court’s analogous sexual
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`harassment judgment precluded relitigation of whether the defendant-debtor willfully caused the
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`plaintiff-creditor injury for purposes of Section 523(a)(6) discharge). And “[a]lthough there is no
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`malice requirement in the sexual harassment statute, malice is inherent” in the jury’s finding that
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`Dr. Knochel “was liable for sexual harassment” by “engaging in behavior that created an abusive
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`working environment.” In re Jones, 300 B.R. 133, 140 (B.A.P. 1st Cir. 2003) (analyzing the
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`preclusive effect of a state judgment finding debtor liable for sexual harassment, under statutory
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`elements identical to Michigan’s ELCRA); In re Smith, 270 B.R. 544, 549 (Bankr. D. Mass. 2001)
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`(same). Moreover, far from finding a just cause or excuse, the jury expressly found that Dr.
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`Knochel’s sexual conduct and communication was “unwelcome,” meaning—as instructed by the
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`42nd Circuit Court—that the conduct was not “solicit[ed] or incite[d]” by Ms. Ronan. ECF No. 3
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`at PageID.563. Issue preclusion applies.
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`Dr. Knochel and Family Chiropractic—Appellants—assert two arguments to the contrary.
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`The first lacks merit, and the second is unpersuasive. First, Appellants argue—without citing any
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`legal authority—that collateral estoppel does not apply because the “standard for proving willful
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`and malicious injury under [Section] 523(a)(6) is much higher than the standard for proving a
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`claim of sexual harassment under the” ELCRA. ECF No. 5 at PageID.682 (emphasis in original).
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`Not so. As discussed supra Section I.B, and as recognized by the Supreme Court, creditors must
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`prove discharge exceptions under Section 523 of the Bankruptcy Code by a preponderance of the
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`evidence. Grogan v. Garner, 498 U.S. 279, 286–91 (1991). This is identical to the burden civil
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`Case 1:23-cv-11996-TLL-PTM ECF No. 7, PageID.732 Filed 12/03/24 Page 14 of 23
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`plaintiffs bear when asserting a sexual harassment claim under the ELCRA. Chambers v. Trettco,
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`Inc., 614 N.W.2d 910, 914 (Mich. 2000).
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`Second, Appellants cite In re Busch, 311 B.R. 657 (Bankr. N.D.N.Y. 2004) for the
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`proposition that state sexual harassment judgments categorically cannot preclude the issue of
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`willfulness in discharge proceedings because a sexual-harassment plaintiff need not prove that the
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`defendant intended to injure, which Appellants view as necessary to exempt a debt from discharge
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`under Section 523(a)(6). ECF No. 5 at PageID.680. But In re Busch is nonbinding, was decided
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`over 20 years ago, and has been routinely criticized since. See, e.g., Supreme In re Spagnola, 473
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`B.R. 518, 523 (Bankr. S.D.N.Y. 2012) (declining to follow Busch because it “pars[ed] [relevant
`
`Supreme Court precedent] too thin”); In re Gilmore, 590 B.R. 819, 838, n. 16 (Bankr. N.D. Ill.
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`2018); In re Roth, No. 11-34121 MER, 2014 WL 684630, at *6 (Bankr. D. Colo. Feb. 21, 2014).
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`Moreover, In re Busch was predicated on the United States Bankruptcy Court for the Northern
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`District of New York’s then-rejection of the “substantial certainty” doctrine. In re Busch, 311 B.R.
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`at 669–70 (rejecting as the “minority view” the idea that “a substantial certainty of harm can satisfy
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`the willfulness requirement of § 523(a)(6)”). But that court adopted the substantial certainty
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`doctrine ten years later. In re Chaffee, No. 07-11636, 2013 WL 4716320 (Bankr. N.D.N.Y. Sept. 3,
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`2013). And, more importantly, the Sixth Circuit incorporated substantial certainty within the
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`Section 523(a)(6) willful analysis as early as 1999, and continues to recognize the doctrine today.
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`See, e.g., In re Markowitz, 190 F.3d at 464; In re Kirvan, No. 21-1250, 2021 WL 4963363 (6th Cir.
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`Oct. 26, 2021); In re Berge, 953 F.3d at 915.
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`In sum, the Bankruptcy Court did not err in applying the doctrine of collateral estoppel and
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`concluding that the state court verdict precluded the Parties’ relitigation of willfulness and malice
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`under Section 523(a)(6).
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`B. Section 523(a)(6) Discharge and Willfulness
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`But even if the Bankruptcy Court erroneously applied the doctrine of collateral estoppel as
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`a threshold matter, its ultimate conclusion is unscathed because it correctly concluded that,
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`independent from issue preclusion, Ms. Ronan sufficiently proved that the harassment she endured
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`was willful and malicious. Importantly, Appellants do not contest the Bankruptcy Court’s
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`independent finding of malice—conceding that Dr. Knochel had no “just cause or excuse” for his
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`actions. See ECF No. 5; see also ECF No. 6 at PageID.693, n. 1. The only issue is whether the
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`Bankruptcy Court erred in concluding Ms. Ronan had proven her injury was willful.
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`
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`As discussed supra Section I.B., a creditor can show that a debtor willfully inflicted injury
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`under Section 523(a)(6) by proving—by a preponderance of the evidence—that either (1) the
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`debtor subjectively desired to cause the injury, or (2) the injury was substantially certain to result
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`from the debtor’s intentional actions. In re Kirvan, 2021 WL 4963363, at *4 (citing In re
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`Markowitz, 190 F.3d at 464). Ms. Ronan satisfied her burden under both theories.
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`1.
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`
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`First, the record is flush with undisputed facts suggesting Dr. Knochel subjectively desired
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`to discriminate against and harass Ms. Ronan on the basis of he