January 1, 2011
The purpose of Bankruptcy is to provide a debtor a “fresh start” to allow the debtor to begin anew, without the burden of its debts. However, in some cases, it would be unfair to allow a debtor to have a particular debt discharged and the Bankruptcy Code prohibits discharge of such debts. One example of such a nondischargeable debt is the so-called willful and malicious injury exception.
Section 523(a)(6) of the Bankruptcy Code excepts from discharge any debt “for willful and malicious injury by the debtor to another entity or to the property of another entity.” The legal meaning of the phrase “willful and malicious” has changed over the years and, along with it, so has the breadth of the willful and malicious injury exception.
From 1904 until 1998, the United States Supreme Court interpreted the willful and malicious injury exception very broadly. To except a debt from discharge under the exception, one only needed to prove that the debtor’s act was intentional and necessarily caused injury. The existence of malice was assumed from the fact that an intentional act caused the injury.
This changed in 1998, when the Supreme Court decided the case of Kawaahuau v. Geiger. In that case, a doctor treated a patient’s foot infection with oral penicillin instead of intravenous penicillin because oral penicillin was less expensive. A jury awarded the patient a large judgment in a malpractice suit against the doctor and the doctor, who did not have malpractice insurance, declared bankruptcy. The patient sought to have the debt declared nondischargeable under the willful and malicious injury exception.
The Supreme Court noted that, as used in Section 523(a)(6), the word willful refers to the injury rather than to the act. Therefore, the Court held that the willful and malicious injury exception only applies to intentional injuries that the law calls intentional torts, not reckless or negligent torts, like the doctor’s malpractice.
Julia Jensen Smolka and I recently assisted a client in having a debt declared nondischargeable under the willful and malicious injury exception. Our client had previously been the victim of an attack at the hand of an acquaintance that left our client with a broken neck, a broken nose, lacerations to his forehead, massive blood-loss, two black eyes, and contusions to his cheekbones and face, resulting in a $150,000.00 judgment against his attacker.
Our client’s attacker filed for bankruptcy and sought to have the $150,000.00 judgment discharged. We filed an adversary complaint to determine the dischargeability of the debt. Because the attacker had already been found guilty of committing the intentional torts of assault, battery, false imprisonment, and intentional infliction of emotional distress, there could be no legal argument that he did not commit those acts. The only remaining issue was to show that the attacker intended to injure our client. Based upon the injuries our client sustained, we believed it likely that the court would find that the attacker intended to injure our client.
Ultimately, the attacker did not contest our adversary complaint and we obtained an order declaring the attacker’s $150,000.00 judgment debt to our client nondischargeable. As a result, our client can continue to attempt to collect the judgment debt from his attacker, even after the discharge of the attacker’s other debts in bankruptcy.
If you have questions about the willful and malicious injury exception or any other exception to discharge in bankruptcy, you can contact a DiMonte & Lizak bankruptcy attorney.