In Re Charles Barry Rahm, Bankrupt. Ronald E. Gregg v. Charles Barry Rahm

This case stems from a state default judgment obtained by plaintiff Gregg against the defendant Rahm. When Rahm petitioned for a declaration of bankruptcy, Gregg asserted that the judgment came within the Bankruptcy Act’s exceptions to dischargeability. Because Gregg has failed to provide any evidence that the acts upon which Rahm’s liability was founded were “malicious,” as required for the exception to dischargeability, we uphold the district court’s conclusion that the judgment debt was dischargeable.

I

On August 7, 1975, Gregg obtained a default judgment for $3,032.60 against Rahm. The judgment was founded upon §§ 632 and 637.2 of the California Penal Code, which provide civil penalties when an individual intentionally records another’s confidential communication without his permission. The judgment had its origin in a telephone call from Gregg to Rahm. Gregg, an attorney, had telephoned Rahm, his client, to give advice concerning a pending business transaction and to reconcile apparently inconsistent statements made earlier. Rahm recorded the conversation without Gregg’s consent, thus contravening Cal.Pen.Code § 632.

After the default judgment was entered, Rahm filed a…