Lee v. Weatherford: A Lesson on 11 U.S.C. 523(a)(6)

The January 2022, bankruptcy case of Lee v. Weatherford drew into question some considerations about 11 USC 523 and more specifically section (a)(6) of this law. The court in this case considered whether a debtor who was attacked by a man deserves a discharge of a pre-petition judgment debt connected to his Chapter 11 bankruptcy case.

The Rights of Debtors

The right to begin again is one of the most fundamental rights of bankruptcy after a person eliminates all of their debts. Bankruptcy law, however, establishes limits in regards to what debts can be discharged in bankruptcy. Congress and courts decide that some types of debts survive bankruptcy. Often, debts that survive bankruptcies are unique issues that are the result of lobbying or interest groups. One type of non-dischargeable debt is debt based on intentional wrongdoing including criminal actions or torts and is frequently the result of fraud or misrepresentation. 

The Role of Section 532

Section 532(a) establishes some types of debts excluded from discharge if a party can establish the necessary details. In cases involving a decision about dischargeability, the person pursuing bankruptcy has the duty of establishing all elements of a claim as asserted by a preponderance of the evidence. Exceptions to discharge must be viewed narrowly.

To satisfy the willful injury requirement following section 523, a person must establish that either the debtor had a subjective motivation to inflict an injury or the debtor believed that the injury was substantially closer to the harm or the party who owed money thought the injury was substantially likely to occur due to his or her behavior. Willfulness is a separate element from malice. The standard considers the debtor’s perspective and prohibits applications of Section 523(a)(6)’s non-dischargeability provision without the debtor’s actual knowledge of harm faced by creditors that were substantially certain. Remember, bankruptcy law addresses if a claim is non-dischargeable. Following Section 523, a court debated if an act is part of the underlying tort. Also, you should note that non-dischargeability under Section 523(a)(6) is restricted to a situation in which the debtor has the possessive intent to harm or knowledge such harm is substantially likely to cause their actions. 

Before the debtor pursued bankruptcy, a court awarded the creditor a judgment including 

Compensation for injuries incurred from the party who owed money. Additionally, the jury assigned actual damages, punitive damages, accrued interests, and costs for court greater than $200,00 altogether. 

Following the debtor’s decision to file for bankruptcy, the plaintiff pursued the option of having 

his debt classified as non-dischargeable due to malicious and willful conduct by the debtor. Plaintiff requested the court grant estoppel to a verdict by the jury and the judgment that resulted. The debtor acknowledged injuring the plaintiff except the debtor claimed that the judgment made in summary lacked appropriateness and that no willful injury existed. The debtor then claimed the nature of an assault remains an issue of fact rather than a summary judgment issue. 

The Court’s Analysis

Considering summary judgment, proof of summary judgment was determined by the court to include three documents: the debtor’s affidavit, the charge by the court, and court’s judgment.

Subsequently, the court started considering an affidavit by the debtor, which offered a description of how the events occurred. Following the fight, the court decided the plaintiff was assaulted by the debtor as an issue of law. Then, the jury decided the party who owed money failed to behave in defense of self and bore primary responsibility for injury to the plaintiff. Additionally, evidence established that the plaintiff’s harm was caused by malice on the part of the debtor. As a result, the court awarded over $167,000 in compensation to the plaintiff.

Considering section 523’s wording, the court reviewed the discharge under 727 of the title provides no discharge of a debtor from a debt. Referencing the US Supreme Court’s Kawaauhau v. George decision, the court commented that an injury as a result of deliberation or intent is required instead of merely an intentional act leading to injury. 

The court next reviewed a federal court’s opinion in JD Abrams. Next, the court found the elements of what is malicious and what is willful should be viewed as a two-element test. This analysis questions whether a substantial certainty or motivation to create harm exists.

For the first element, the court is required to decide whether the evidence serves as an issue of law, violence on behalf of the debtor was of substantial certainty to cause an injury. Next, the court found this part of the test was met. Under the second element, the court considered if evidence provided during summary judgment established as an issue of law the debtor had motivation to cause harm.  The court found this existed in the affirmative.

Determining that the facts that comprised summary judgment showed as an issue of law that violence by the debtor was objectively certain to result in harm. The court also found that the debtor behaved with a subjective motivation to harm, the court rejected an exception to the Fifth Circuit which has determined that the two-element test in situations in which a debtor’s conduct was sufficiently justified given the circumstances, like in self-defense cases. The court then found a jury’s verdict had dedicated the case. The jury had decided the debtor acted in self-defense and was 95% responsible for the plaintiffs injuries. Because the court’s final judgment incorporated the charge of the Jury, the court determined that the debtor was prevented due to collateral estopped from claiming self-defense. Because no rationale was given by the debtor in regards to the assault, the court declined the argument that the debtor’s challenge of the plaintiff was warranted given the situation.

The Potential Application of the Holding

Cases initiated under 1 USC 523(a)(6) often revolve around facts and are frequently difficult to establish. In this matter, a court had previously issued determinations of a conclusive nature concerning the action’s components; the court faced little difficulty deciding that the requirement had been met.

Contact an Experienced Bankruptcy Law Attorney

If you need the assistance of an experienced bankruptcy law attorney, do not hesitate to contact attorney Melanie Tavare today for assistance.