Bankruptcy: Adversary Proceedings and section 523(a)(6)

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Bankruptcy: Adversary Proceedings and section 523(a)(6)

The recent bankruptcy case of Lee v. Weatherford (In re Weatherford), Adv. Proc. 21-03059 (Bankr. N.D. Tex., January 19, 2022) interprets 11 U.S.C. § 523(a)(6).

Bar room brawls and bankruptcy don’t often overlap, but they do in this bankruptcy adversary proceeding.  In this case, the Bankruptcy Court considered whether a debtor who had attacked at man during a barroom brawl is entitled to a discharge of a prepetition judgment debt resulting from his chapter 11 bankruptcy case.

Before Christopher Lee Weatherford (“Debtor”) filed for bankruptcy, a state court awarded Alford Lee, III (the “Plaintiff”) a final judgment for injuries he sustained at the hands of the Debtor.  The jury awarded $167,865.49 in actual damages, plus $60,000 in punitive damages, plus additional interest and court costs.  After the Debtor filed for bankruptcy, Plaintiff sought to have the debt declared non-dischargeable under 11 U.S.C. § 523(a)(6) as the product of the Debtor’s willful and malicious conduct.  Essentially, Plaintiff requested that the Bankruptcy Court give estoppel effect to the state court jury’s verdict and resulting judgment.  The Debtor admitted striking the Plaintiff but urged that summary judgment was inappropriate and that willful injury could not be found as a matter of law.  He therefore argued that the character of his assault on the Plaintiff is a question of fact not proper for summary judgment.

Analyzing the summary judgment, the Court found that the summary judgment evidence consists of three documents:  (1) Debtor’s affidavit describing his side of the story; (2) the State court “Charge of the Court,” along with a signed copy of the jury’s findings; and (3) the State Court’s Final Judgment.

The Court first looked at the Debtor’s affidavit, which provided a narrative for the events leading to the Plaintiff’s injury.  Even before entering the establishment, the Debtor and his friends became embroiled in an oral altercation with one of the Plaintiff’s friends.  The altercation continued in the bar as the parties exchanged curses, and words became actions when a peace-keeping bouncer walked away.  The Debtor allegedly defended himself “by throwing punches at the [Plaintiff] until [he] believed the threat to [his] wellbeing was removed.”  The Debtor and two others were arrested that night, but the Plaintiff was not.  The Debtor’s criminal trial resulted in a mistrial, but the Plaintiff’s civil trial against the Debtor resulted in a jury verdict and final judgment in the Plaintiff’s favor.  The state court in the civil action concluded that the Debtor assaulted the Plaintiff as a matter of law.  The jury concluded that the Debtor did not act in self-defense and was 95% responsible for the Plaintiff’s injury.  Further, it found by clear and convincing evidence that the harm to the Plaintiff resulted from the Debtor’s malice.  As such, it awarded $167,865.49 in actual damages and $60,000 in exemplary damages.  The Final Judgment incorporated the Charge of the Court and ultimately ordered that the Plaintiff recover $230,010.38 from the Debtor at 5% interest.  The Debtor did not appeal the Final Judgment, and the time for appeal expired thirty days after the trial court signed the Final Judgment.

Turning to the language of 11 U.S.C. § 523(a)(6), the Court noted that “a discharge under section 727 … of this title does not discharge an individual debtor from any debt … [that is the result of] willful and malicious injury by the debtor to another entity.”  Citing to the U.S. Supreme Court’s decision in Kawaauhau v. Geiger, 523 U.S. 57, 61 (1998), the Court noted that the word “willful” in § 523(a)(6) requires a deliberate or intentional injury, not merely a deliberate or intentional act that leads to injury.  Therefore, the Court noted, “debts arising from recklessly or negligently inflicted injuries do not fall within the compass of section 523(a)(6).”  Id. at 64.

The Court then looked to the Fifth Circuit’s decision in Miller v. J.D. Abrams Inc. (In re Miller), 156 F.3d 598, 603 (5th Cir.1998) in finding that “willful and malicious” are to be examined together with a single two-prong test.  There must be either an “objective substantial certainty of harm or a subjective motive to cause harm.”  Id. at 606.  For the first prong, the court must determine whether the summary judgment evidence proves as a matter of law that the Debtor’s punches were substantially certain to cause injury.  The Court easily concluded that this prong of the test was satisfied, finding that “most punches to the face are substantially certain to cause an injury.”  For the second prong, the court looked at whether the summary judgment evidence proved as a matter of law that the Debtor had a subjective motive to cause harm. The court concluded that it did, finding that the escalating events and the severity of the Plaintiff’s injury supported the court’s conclusion that the Debtor subjectively intended to harm the Plaintiff.  The Court further found that the damage that the Debtor inflicted was substantial, noting that the jury’s award in the Charge of the Court awards $57,000 for damages related to physical impairment and disfigurement.  The Court concluded that “[s]uch damage from punches would not seem to occur absent a subjective motive to cause harm.”

Finding that the undisputed summary judgment evidence established as a matter of law that the Debtor’s punches were objectively certain to cause harm and that the Debtor acted with a subjective motive to cause harm, the Court turned to an exception that the Fifth Circuit has found to the general two-prong test in a case where a debtor’s conduct was “sufficiently justified under the circumstances,” such as in self-defense.  See Berry v. Vollbracht (In re Vollbracht), 276 Fed. Appx. 360, 362 (5th Cir. 2007).  However, the Court quickly concluded that the jury’s verdict had decided this issue.  The state court jury had determined that the Debtor did not act in self-defense and that he was 95% responsible for the Plaintiff’s injuries.  Since the state court’s Final Judgment incorporated the Charge of the Jury, the Court found that the Debtor was collaterally estopped from arguing self-defense.  Since no other alternative justification was provided by the Debtor for the assault, the Court rejected the notion that the Debtor’s attack on the Plaintiff was substantially justified under the circumstances.

Application

Cases brought under 11 U.S.C. § 523(a)(6) are often fact-intensive and difficult to prove.  However, in this case, where a state court had already made conclusive determinations regarding elements of the § 523(a)(6) case of action, the Court had little trouble finding that the requirements under § 523(a)(6) had been satisfied.  Debtors might best be served by filing bankruptcy cases prior to findings made in state court that could ultimately prove conclusive as to the elements of the § 523(a)(6) cause of action.  Better yet, debtors might want to seek alternative conflict resolution measures.