In re Scott

• Decision Date: 25 June 1996
• Docket Number: Adversary No. 95-1497.,Bankruptcy No. 95-13797-AM
• Parties: In re Sandra Joyce SCOTT, Debtor. Sheila HARMON, Plaintiff, v. Sandra Joyce SCOTT, Defendant.
• Court: Bankr. V.I.

203 B.R. 590 (1996)

In re Sandra Joyce SCOTT, Debtor.

Sheila HARMON, Plaintiff, v. Sandra Joyce SCOTT, Defendant.

Bankruptcy No. 95-13797-AM, Adversary No. 95-1497.

United States Bankruptcy Court, E.D. Virginia, Alexandria Division.

June 25, 1996.

COPYRIGHT MATERIAL OMITTED

Caroline E. Costle, Rosenthal, Rich, Grimaldi & Guggenheim, Alexandria, VA, for plaintiff.

Robert L. Tomlinson, II, Arlington, VA, for debtor-defendant.

MEMORANDUM OPINION

STEPHEN S. MITCHELL, Bankruptcy Judge.

A trial was held on April 17, 1996, on the plaintiff's complaint to determine the dischargeability of a debt for advance wages paid to the debtor, who was employed as a caregiver to the plaintiff's elderly mother.¹ The debtor quit not long after receiving the advance, refused to return the unearned portion, and, when sued in state court for breach of contract, fraud, breach of fiduciary duty, and unjust enrichment, filed a chapter 7 petition the day before trial.² The issues before the court are whether the debtor's conduct constitutes fraud, breach of a fiduciary duty, or conversion so as to render the resulting debt nondischargeable and, if so, the amount of the plaintiff's damages. For the reasons stated in this memorandum opinion, the court determines that the debtor's deliberate refusal to return the unearned portion of the advance wages still in her possession when she quit her employment constitutes a willful and malicious injury within the meaning of § 523(a)(6), Bankruptcy Code, and the resulting debt is therefore nondischargeable. This memorandum opinion constitutes the court's findings of fact and conclusions of law as required by Fed.R.Bankr.P. 7052.

Facts and Procedural Background

Sheila Harmon's mother, Helen Frances Frazier, suffers from Parkinson's disease, is paralyzed from the waist down, and is not always fully aware of her surroundings. As a result, she requires around-the-clock nursing care. Mrs. Frazier had come to live with her daughter in 1991. In 1994, she was being cared for in her daughter's home with nursing care being provided by nurses who came to the house. In May 1994, Mrs. Harmon hired the debtor, a certified nursing assistant, to fill in for another nurse who was going on vacation. Shortly thereafter, the debtor was hired full-time and was paid $50 per 8-hour shift.³ Since the debtor had no automobile or other mode of transportation, Mrs. Harmon and her husband allowed her to use an automobile — a recent model Camaro — that belonged to Mrs. Harmon's husband. Until the events giving rise to the present controversy, the relationship between Mrs. Harmon and the debtor was intimate and friendly. The debtor's father was dying of a brain tumor at the time, and she and Mrs. Harmon had long talks about death and about religious issues generally. Mrs. Harmon testified that as a result, she came to trust the debtor as much as she trusted anyone she had met. She expressed her affection for the debtor by giving her birthday and Christmas presents and by paying for a wedding dress for the debtor's daughter. She also gave the debtor $3,000 in September 1994 after the debtor's father died to cover her travel to the funeral and related expenses. The debtor reciprocated with greeting cards.

In December 1994, Mrs. Harmon, who has health problems of her own, was briefly hospitalized with pneumonia. At this time, the debtor, with Mrs. Harmon's blessing, moved the mother to her (the debtor's) house. After Mrs. Harmon returned from the hospital, she realized that caring for her mother in her house was no longer practical, but she did not wish to place her mother in a nursing home. Accordingly, the debtor and Mrs. Harmon agreed that Mrs. Frazier would live, and be cared for, in the debtor's home. The debtor would cover two shifts (evening and night) during the week and every other weekend, and another nurse's aide, Sheila Smith, would take the third (daytime) shift during the week and would take care of Mrs. Frazier at her (Mrs. Smith's) house on the alternating weekends. At this point the debtor's pay was increased to $500 — $600 per week, plus bonuses.

Additionally, there were discussions as to a further increase, with the debtor pointing out that nursing home care would cost approximately $40,000 per year. The evidence was conflicting as to whether the debtor asked for a six-month advance or whether the idea for the advance originated with Mrs. Harmon.⁴ Mrs. Harmon testified that she was concerned over the debtor's personal situation (which included the need to move to a new neighborhood and to acquire an automobile) and recognized that the debtor would have a number of up-front expenses. In any event, Mrs. Harmon determined that $28,000 would be a fair amount of compensation to the debtor for the first six months of care for Mrs. Frazier under the new arrangement. On April 24, 1995, she wrote the debtor a check for $29,800,⁵ which was delivered to the debtor at her (the debtor's) house. The debtor then telephoned Mrs. Harmon to determine what the check represented.⁶ Mrs. Harmon explained that she had calculated the $28,000 on the basis of $10,000 for each of the two shifts the debtor would cover for six months (until November 1, 1995), and a bonus of $400 for each of the two shifts.⁷ The debtor agreed to the arrangement. Several days later, Mrs. Harmon gave her a check for an additional $1,000 with the idea that a larger downpayment on the car the debtor was purchasing would result in a lower monthly payment. After receiving the check, the debtor told her that she did not need it for that purpose, and it was agreed that the debtor would use it to purchase groceries for Mrs. Harmon's mother.

The debtor deposited $29,000 of the $29,800 in three bank accounts — an interest checking account, a money market account, and a certificate of deposit — that she opened after receiving the check.⁸ Several days later, she deposited the $1,000 "grocery money" check into the interest checking account. No other funds were deposited in those accounts. Mrs. Harmon testified, and the debtor denied, that after the debtor received the $29,800 check, her attitude changed dramatically, and she became abrupt with Mrs. Harmon and seemed to resent Mrs. Harmon coming to visit her mother. Mrs. Harmon's perception was that the debtor was on the verge of a nervous breakdown.

In late May or early June, Mrs. Harmon received a telephone call from the debtor's husband seeking to borrow money. He had telephoned her for that purpose previously, and on one occasion she had given him $100. This time he told her, somewhat elliptically, that despite his treatment for drug addiction, he had been unable to "stay right," that he owed "certain people" a lot of money, that those people "don't play," that they knew where he lived, and that he didn't want his family or Mrs. Harmon's mother "hurt." Thoroughly alarmed over the possibility that armed drug dealers might turn up at the debtor's house intent on revenge, and nervous for the safety of her mother, Mrs. Harmon discussed the matter with Sheila Smith, who on Friday, June 9, 1994, agreed (since it was her weekend to care for Mrs. Frazier anyway) to move her to Mrs. Smith's house a day early and to keep her there until matters could be resolved.

When the debtor found out about the move, she telephoned Mrs. Harmon from Mrs. Smith's house and told her, "Since your mammy is over at Bunzie's,⁹ she can stay here," and, "Since she brought her over here, she can keep her fat ass." Later that same day the debtor called Mrs. Harmon again and left a message on her telephone answering machine, "Just so you'll know, I f* * *ing quit." The next day, however, she telephoned and told Mrs. Harmon that she would do night shifts. Mrs. Harmon asked her if she would give Sheila Scott $5,000 of the money that Mrs. Harmon had given her. This was to compensate Mrs. Scott for the fact that she would now be handling two shifts and the debtor only one. The debtor agreed to do so.¹⁰ The debtor then worked Sunday night but telephoned Mrs. Harmon at 4:00 a.m. on Monday morning (June 12, 1995) and told her, "I am out of here." At this point, approximately $12,735 of the $29,800 remained in the bank accounts.¹¹

The debtor moved a few days later from Alexandria to Woodbridge, Virginia.¹² She left no forwarding address and acquired an unlisted telephone number. She never gave Mrs. Smith the $5,000 she had agreed to turn over out of the $28,000 in advance pay, but she did give Mrs. Smith $300 of the $1,000 she had received as grocery money. As a result of the debtor's quitting, Mrs. Harmon had to pay substitute nursing aides an additional $18,050 to provide the care needed for her mother. In order to come up with the additional money, Mrs. Harmon took out a second mortgage against her house. She was unable to keep up the payments, and the house, at the time of the hearing, was scheduled to go to foreclosure in three weeks.

Shortly after the debtor quit, Mrs. Harmon retained counsel who demanded the return of the unearned advance pay. When the debtor refused to do so, Mrs. Harmon brought suit against her in the Circuit Court of the City of Alexandria for breach of contract, fraud, breach of fiduciary duty, and unjust enrichment. In addition to an accounting and imposition of a constructive trust, the suit sought compensatory damages of $25,584 and punitive damages of $50,000. The debtor responded by filing a voluntary chapter 7 petition in this court on August 29, 1995, the day prior to the scheduled trial date. By this point, nothing remained of the advance wages that Mrs. Harmon had paid her.

Conclusions of Law and Discussion

This court has subject-matter jurisdiction of this controversy under 28 U.S.C. §§ 1334 and 157(a) and the general order of reference entered by the United States District Court for the Eastern District of Virginia on August 15, 1984. Venue is proper in this District under 28 U.S.C. § 1409(a). This...