Pursuant to Section 727 of the U.S. Bankruptcy Code, an individual Chapter 7 debtor may receive a discharge "from all debts that arose before the date of the order for relief under this chapter." A Chapter 11 or Chapter 13 debtor may receive similar relief pursuant to Sections 1141 and 1328(b), respectively. Under any chapter, this discharge serves the Bankruptcy Code's principal goal of relieving a debtor from his or her prepetition obligations and providing the debtor with a "fresh start" on emergence from bankruptcy. Notwithstanding this goal, a bankruptcy discharge is not all-encompassing: it is limited by Section 523(a), which expressly excepts particular debts from the scope of the debtor's discharge. Among other categories, the list of nondischargeable debts includes debts arising from certain tax or customs duties, money or property to the extent obtained by fraud, domestic support obligations, and government fines or penalties. In addition, Section 523(a)(6) excepts from discharge a debt "for willful and malicious injury by the debtor to another entity."
In In re Soliman, 539 B.R. 692 (Bankr. S.D.N.Y. 2015), the U.S. Bankruptcy Court for the Southern District of New York enforced the "willful and malicious injury" exception to discharge, but clarified that the underlying conduct giving rise to the debt required more than "merely a deliberate or intentional act that leads to injury." Rather, for a debt to be deemed nondischargeable under Section 523(a)(6), that debt must have arisen from conduct on the part of the debtor by which the debtor intended to cause deliberate and intentional injury. In other words, when determining whether a debt is nondischargeable under Section 523(a)(6), a court will look not only to the debtor's intent to act, but rather to the debtor's intent to injure.
The court in Soliman considered the unusual circumstance of whether a debtor could receive a discharge of a judgment debt owed to his neighbor arising from the debtor's attempt to bite off the neighbor's nose. In July 2000, the debtor and his neighbor had an altercation following an elevator ride in the building they shared. According to the neighbor, the debtor attacked him, restrained him against a wall, and bit into the bridge of his nose. The neighbor was hospitalized as a result of his injuries and required numerous stitches to close the wounds caused by the debtor's bite. The debtor was arrested, and subsequently pleaded guilty to a misdemeanor assault charge. During his plea allocution, the debtor admitted that he had assaulted his neighbor; more importantly, during the course of the criminal prosecution, the debtor never advanced any claim of self-defense.
A year later, the neighbor filed a civil suit in state court against the debtor seeking damages for assault and battery. The debtor failed to appear in the civil action, and default judgment was entered against him and in favor of the neighbor in an amount exceeding $100,000. Three months later, the debtor filed a petition for relief under Chapter 7 of the Bankruptcy Code. The neighbor reacted to the bankruptcy filing by initiating an adversary proceeding seeking to declare his judgment debt nondischargeable on the ground that the debtor had caused his injury "willfully and maliciously." Following an evidentiary hearing, the court agreed with the neighbor and determined that the debtor's judgment debt was nondischargeable.
As an initial matter, the bankruptcy court recognized that "Section 523(a)(6) of the Bankruptcy Code excepts from discharge a debt for 'willful and malicious injury by the debtor to another entity.'" Assessing this provision, the court noted that "the terms 'willful' and 'malicious' are separate elements, and both elements must be satisfied." According to the court, in order to establish that a debtor acted willfully under Section 523(a)(6), the complaining party must demonstrate that the injury in question was a "deliberate or intentional injury, not merely a deliberate or intentional act that leads to injury." Accordingly, to satisfy this element, the complaining party must show that "the debtor actually intended to injure the victim, or engaged in conduct that was substantially certain to cause injury."
Likewise, to establish that a debtor acted maliciously, the complaining party "must prove that the debtor's act was wrongful and without just cause or excuse, even in the absence of personal hatred, spite, or ill-will." The court also recognized that malice could be implied under circumstances in which "anyone of reasonable intelligence knows that the act in question is contrary to commonly accepted duties in the ordinary relationships among people and injurious to another."
Assessing the debtor's conduct in Soliman, the court concluded that "there was no real dispute [that the debtor] acted willfully when he bit [his neighbor's] nose in their altercation." As the court colorfully stated: "It is indisputable that when a person pins a victim up against a wall and uses his teeth to forcefully bite down on the victim's flesh, that the person's actions were either intended to injure the victim or were substantially certain to cause injury." The court further concluded that the debtor acted wrongfully when the debtor bit his neighbor's nose, since such an action lacked any just cause or excuse. On this point, the court rejected the debtor's belated assertion of self-defense, citing a lack of evidence to support such a claim. In support of this rationale, the court held that the debtor's purported affirmative defense was precluded by the fact that he had previously pleaded guilty to the assault charges without having advanced any claim of self-defense.
Ultimately, the court concluded that the neighbor's judgment debt against the debtor was a debt for "willful and malicious injury by the debtor to another entity" and was thus precluded from discharge under Section 523(a)(6). While the bizarre facts of Soliman left little room to dispute this conclusion, other cases may not be as clear. As a consequence, parties seeking to render nondischargeable a debt arising from a personal injury allegedly caused by a debtor's intentional action should focus on establishing the debtor's intent to cause injury, and not just the debtor's intent to commit the act that resulted in the injury. Otherwise, the bankruptcy discharge may give the debtor an opportunity to take a second bite—this time, out of the injured party's claim.
This article originally appeared in The Legal Intelligencer and is republished here with permission from law.com.