In Re Gregory Dewitt Cantrell, Debtor

We must decide whether a corporate officer who is personally liable for corporate fraud may discharge such debt in bankruptcy.

I

In May 1995, Cal-Micro, Inc., the Cal-Micro, Inc. Employee Stock Option Plan, and the Pauline Countryman 1990 Trust (collectively “Cal-Micro”) filed a complaint in California Superior Court alleging, inter alia, that Gregory Cantrell breached fiduciary duties owed to Cal-Micro while serving as an officer of the corporation. In addition to several other claims, the complaint alleged that Cantrell expropriated corporate funds and assets of Cal-Micro for his own personal use and failed to use Cal-Micro’s assets for the payment of the corporation’s business and operational expenses.

After publication of the summons and complaint, and failing to receive an answer from Cantrell, Cal-Micro duly filed a request for entry of default judgment. On April 12, 1996, the state court granted Cal-Micro default judgment against Cantrell for $1,271,985 in compensatory damages, $10,000 in punitive damages, $4,670 in attorney’s fees, and $463.75 in costs and post-judgment interest. The judgment order did not specify the causes of action upon which entry of default…