In re Glass
| Decision Date | 07 March 1997 |
| Docket Number | Bankruptcy No. 96-20929,A.P. No. 96-2006. |
| Parties | In re Bryan N. GLASS and Jennifer L. Glass, Debtors. Shannon WESTFALL, Plaintiff, v. Bryan N. GLASS and Jennifer L. Glass, Defendants. |
| Court | United States Bankruptcy Courts. Tenth Circuit. U.S. Bankruptcy Court — Eastern District of Michigan |
John M. Morosi, for Plaintiff.
OPINION SUPPLYING REASONS FOR DISMISSING COMPLAINT FOR DETERMINATION OF NONDISCHARGEABILITY
Introduction
Shannon Westfall was injured in an automobile accident while riding in a car driven by Jennifer Glass and owned by the latter's husband, Bryan Glass. Westfall sued the Glasses in Michigan state court, and obtained a default judgment against them in the amount of $170,000.
As the vehicle's owner, Mr. Glass was required by law to carry automobile liability insurance. See Mich.Comp.Laws § 500.3101. However, no such insurance was in place at the time of the accident. Facing the full brunt of the judgment entered against them, the Glasses filed for chapter 7 bankruptcy relief. This adversary proceeding was commenced on October 3, 1996, when Westfall filed a complaint alleging that the judgment debt is nondischargeable under 11 U.S.C. § 523(a)(6).
The Debtors did not respond to the complaint, and the clerk entered a default against them on December 19, 1996. See F.R.Civ.P. 55(a) (incorporated by F.R.Bankr.P. 7055). The Plaintiff then asked that the Court enter judgment by default pursuant to F.R.Civ.P. 55(b) (incorporated by F.R.Bankr.P. 7055). After carefully reviewing the complaint, the Court issued an order to show cause why the case should not be dismissed. See generally, e.g., 6 Moore's Federal Practice ¶ 55.052 (2d ed. 1996) .
The Plaintiff filed a brief in opposition to dismissal, and a hearing was held January 31, 1997. At this hearing, the Court dismissed the case because the complaint "failed to state a claim upon which relief can be granted." F.R.Civ.P. 12(b)(6) (incorporated by F.R.Bankr.P. 7012(b)). This opinion sets forth the conclusions of law which formed the basis for that ruling. F.R.Bankr.P. 7052.1
Section 523(a)(6) excepts from discharge "any debt — . . . for willful and malicious injury by the debtor." 11 U.S.C. § 523(a)(6). As this Court previously explained:
An act is willful under § 523(a)(6) if it is "done intentionally." . . . It is malicious if the "actor knows that the act is substantially certain to result in harm to another," and if there is no "just cause or excuse" for the act.
Merritt v. Thompson (In re Thompson), 162 B.R. 748, 750 (Bankr.E.D.Mich.1993) (citations omitted); see also In re Woolner, 109 B.R. 250, 254 (Bankr.E.D.Mich.1990).
The Plaintiff asserted that the judgment against the Debtors should be declared nondischargeable pursuant to § 523(a)(6) because the Debtors' intentional operation of an automobile without the liability insurance required by Michigan law was a willful and malicious act resulting in injury to her. See Complaint at ¶¶ 28-31; Brief at pp. 1 and 6.
Two inquiries must be made. First, the act giving rise to the debt in question must be identified. Was Jennifer Glass' act of driving the car without automobile liability insurance (and Bryan Glass' act of permitting her to drive his car without insurance) the relevant act or was it Jennifer Glass' negligent driving? Second, the Court must determine whether the act, as so interpreted, constituted willful and malicious behavior on the part of the Debtor(s).
In support of her argument that she was injured due to the Debtors' operation of the car without automobile liability insurance, the Plaintiff relied on In re Whipple, 138 B.R. 137 (Bankr.S.D.Ga.1991). In Whipple, as in this case, the creditor had a prepetition judgment against the debtor for injuries received in an automobile accident. Id. at 138. The debtor, who had no liability insurance, subsequently filed for relief under chapter 13 of the Bankruptcy Code. Id. In the process of determining whether the debtor's chapter 13 plan was filed in good faith pursuant to § 1325(a)(3), the court conducted a § 523(a)(6) analysis. Id. at 139. The court determined that if the debtor had chosen to proceed under chapter 7, as opposed to chapter 13, the debt arising from the judgment would have been nondischargeable under § 523(a)(6). Id. at 139-142. Underlying the court's determination was the conclusion that the debtor's failure to maintain automobile liability insurance caused the plaintiff's injury.
Whipple's reasoning is not persuasive. Though not clear from the opinion, one can logically conclude that the basis for the debtor's liability in Whipple was her negligent driving and not her lack of insurance. In fact, the existence, or nonexistence, of insurance would not have been admissible into evidence at the state court trial. See Dubose v. Ross, 473 S.E.2d 179, 180 (Ga.Ct.App.1996) (). There is no question that the creditor in Whipple was harmed by the debtor's failure to carry automobile liability insurance since that failure inhibited the plaintiff's ability to recover on the judgment. However, this harm was separate from the one which arose from the automobile accident. The Whipple court even acknowledged this point when it stated that "the party suffering personal injury suffers another, distinct economic injury as a result of the lack of insurance." Whipple 138 B.R. at 141. Moreover, this separate and distinct injury did not even occur until after rendition of the judgment on the first injury — the one which occurred from the automobile accident. Since the debt which the creditor sought to have declared nondischargeable — the judgment — represented compensation for the loss occasioned by the automobile accident, the debt-creating act for purposes of § 523(a)(6) analysis was the negligent driving. Therefore, the court should have addressed whether the debtor's negligent driving was willful and malicious, not whether the debtor's failure to insure was willful and malicious.
For this reason, we reject the reasoning in Whipple and adhere to the majority position. See Pechar v. Moore, 98 B.R. 488, 490 (D.Neb.1988) (); Broussard v. Fields (In re Fields), 203 B.R. 401, 413 (Bankr. M.D.La.1996) (same); Sparks v. Adams (In re Adams), 147 B.R. 407, 415 (Bankr. W.D.Mich.1992) (); Pritchard v. Eberhardt (In re Eberhardt), 92 B.R. 773, 777 (Bankr. E.D.Tenn.1988) (); Austin Mutual Ins. Co. v. Schultz (In re Schultz), 89 B.R. 28, 30 (Bankr.E.D.Wis.1988) (same); cf. Second National Bank of Saginaw v. Weigandt (In re Weigandt), No. 87-09679 (Bankr.E.D.Mich., October 28, 1988) (see attached), aff'd mem, No. 88-CV-10331 (E.D.Mich., January 20, 1989).
The Plaintiff's injuries resulted from the collision. Complaint at ¶ 11 (). The collision itself resulted from Jennifer Glass' negligent driving. Complaint at ¶ 10 (). The inescapable conclusion is that for the debt in question to be nondischargeable under § 523(a)(6), the Debtor's negligent driving must have been willful and malicious. However, the meaning of malice within § 523(a)(6) does not encompass negligent or even reckless conduct. See Woolner, 109 B.R. at 254; see also cases cited infra at 857. As a result, the complaint asserting that Jennifer Glass' negligent driving caused the Plaintiff's injuries does not state a claim for an exception to discharge on account of willful and malicious behavior. Consequently, the debt represented by the judgment is dischargeable.
As stated, the Debtors' knowing operation of an uninsured automobile was not the relevant act giving rise to the debt in question. However, even if the Court agreed that this act should be the focus of the § 523(a)(6) analysis, the Plaintiff's argument still fails. An act is not malicious unless harm is "substantially certain" to follow. Mr. Glass' nonfeasance would subject others to economic loss only if his car became involved in an accident. Such an accident is certainly foreseeable — indeed, that is the whole point of purchasing insurance. But of course, it is not inevitable.2
Only three cases have held for the creditors' view on this issue, and they were written by only two judges. See Barnett Bank of Southeast Georgia v. Ussery (In re Ussery), 179 B.R. 737, 742 (Bankr.S.D.Ga.1995) and Whipple, supra (Davis, C.J.); and Moore v. Pechar (In re Pechar), 78 B.R. 568, 570 (Bankr.D.Neb.1987) (Mahoney, J.). Of these three only Pechar was appealed and, not surprisingly, the district court there reversed the bankruptcy court for the same reasons which this Court now dismisses the Plaintiff's complaint. See Pechar, 98 B.R. 488, 488-90 ().3
The majority viewpoint is that the act of driving without liability insurance is not willful and malicious behavior. See id.; State Farm...
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