In re White
| Decision Date | 30 May 1985 |
| Docket Number | Bankruptcy No. ST-B-85-00019. |
| Citation | 49 BR 869 |
| Court | U.S. Bankruptcy Court — Western District of North Carolina |
| Parties | In re Keith Edward WHITE, (SSN: XXX-XX-XXXX), Debtor. |
COPYRIGHT MATERIAL OMITTED
Thad A. Throneburg, Charlotte, N.C., for debtor.
Albert Walser, Statesville, N.C., for creditor, Julia Harley Long.
THIS MATTER coming before the Court on its own Order to the Debtor to appear and to show cause, if there be any, why this proceeding should not be dismissed pursuant to the substantial abuse provisions of 11 U.S.C. § 707(b).
Prior to this bankruptcy, the Debtor, Keith Edward White, while driving home from the grocery store was involved in an automobile collision with one Julia Harley Long. This accident resulted in Ms. Long being seriously and permanently disabled; and while she was employed prior to this accident, Ms. Long is now unable, and in all probability will be permanently unable, to work.
Subsequently, Ms. Long filed suit against Keith Edward White in the North Carolina Superior Court, Iredell County, North Carolina, seeking recovery for the personal injuries which she sustained. Judgment was returned on November 8, 1984 in favor of Ms. Long in the amount of $400,000.00. White's insurance company paid against this Judgment amount, $25,000.00, or the full policy amount of his insurance coverage. There remains some $375,000.00 outstanding on account of this debt.
On January 31, 1985, Keith Edward White filed a voluntary petition with this Court under Chapter 7 of Title 11. His petition lists only one debt, the $375,000.00 obligation to Ms. Long. His Schedule of Income and Expenditures discloses an excess of $130.77 per month of income over expenses, plus an additional $64.00 per month which the Petitioner contributes to his church. In total, the Debtor has about $195.00 per month which could be paid towards his obligations.
The Petitioner, Keith Edward White, is nineteen years old. He presently lives with his parents, and his earnings augment their limited income (the Petitioner's father's income consists entirely of disability payments of about $500.00 per month; his mother's weekly income is $35.00). The Petitioner is a high school graduate employed as a clerk with C.C. Dicks Air Conditioning Company.
This case presents the Court with the issue of what constitutes a "substantial abuse" of Chapter 7, Title 11 of the U.S. Code. In considering this issue, this Court is presented with the subissue of what constitutes a "consumer debt" under § 707(b) and § 101(7) of the Code.
Section 707(b) provides:
The substantial abuse provision of the Bankruptcy Code was enacted with the Bankruptcy Amendments and Federal Judgeship Act of 1984. As previously noted by this Court, the Amendments Act fails to define the terms in question today, and, indeed, there is little legislative history accompanying this provision. In like measure, due to of the section's recent vintage, there is scant case authority interpreting this legislation.
The initial question for this Court is whether this Petitioner's sole obligation—a Judgment debt arising from an automobile accident attributable to the Petitioner's negligence—is a "consumer debt" as defined by § 101(7) of the Code. The Court is of the opinion that it is not and, accordingly, finds § 707(b) to be inapplicable to this case.
Ms. Long has argued with great persuasiveness that inasmuch as the Petitioner was operating his vehicle for personal purposes when this accident occurred, the attendant liability for his negligent operation is likewise a "consumer debt." The core assumption of this argument is that when one has a personal objective in mind, any liability cast upon the person with respect to this objective is a consumer debt, no matter how unforeseeable it was and irrespective of whether that person intended to assume the liability. In short, with respect to the operation of a motor vehicle, Ms. Long would categorize accident liability identically with liabilities for gasoline for the automobile. As both relate to a personal use, both are consumer debts within her definition of the term.
Although the term "consumer debts" includes personal expenditure debts, the Court cannot concur with such an expansive interpretation. Section 101(7) defines a consumer debt to be a "debt incurred by an individual primarily for personal, family, or household purposes." 11 U.S.C. § 101(7). The key words in this definition are "incurred", "primarily" and "purpose". In general, to "incur" an obligation is to meet with it, to become liable to or to bring it down on oneself. For an incurrence to have been "primarily" for a personal purpose means that this incurrence was of the first importance or was fundamental. To have a "purpose" is to have an intention or an object set before oneself as an aim. Webster's New Collegiate Dictionary (1958).
Thus, to be a consumer debt within the meaning of § 101(7) the liability must have been acquired first and foremost to achieve a personal aim or objective. An automobile accident liability is not such a debt. Here the obligation was incurred incidental to and not first and foremost to achieving the personal aim; which was gaining transportation. The gas debt cited by Long would be a consumer debt in the sense that the Petitioner incurs it in order to acquire transportation. However, this accident liability is not a common debt, because the Petitioner, while negligent, aimed only to gain transportation and not to do another person bodily harm by his use of this vehicle. The two situations are distinguishable in the acting party's primary purpose.
Moreover, there is no evidence of a congressional intention to give the consumer debt definition such an expansive scope within the parameters of § 707(b). On the contrary, the sparse legislative history, implies that a more narrow interpretation is favored. The consumer credit amendments, of which § 707(b) is a part, were the offspring of congressional concern that credit costs were being driven upwards by the ready availability of discharge via Chapter 7 to persons seeking to sidestep consumer credit obligations who had the ability to pay. It was feared that such practices were causing consumer credit rates to rise above the ability of lower and middle-income citizens to afford credit. 130 Cong.Rec.HR. 10 (Daily ed., March 21, 1984). The consumer credit previsions were enacted to prevent such misuse of the bankruptcy system by persons not suffering economic hardship by denying them persons relief under the Code. 130 Cong. Rec.HR. 7497 (Daily ed., June 29, 1984).
While the consumer credit amendments and § 707(b) were designed to prevent abuses, there is no legislative history indicating that any obligations other than consumer credit debts were to be affected. Moreover there is no indication that the general category of personal injury debts was meant to receive different treatment, as a class than other obligations. For examples, the 1984 Act also changed the Code to make drunk driving liability nondischargeable per se § 523(a)(9). Congress' simultaneous silence regarding general personal injury indicates that the omission was not due to oversight but was a decision of Congress not to make such a categorization regarding personal injury liability. It would therefore be an over expansive interpretation of this statute to construe it to encompass such debts.
For these reasons, it is therefore the conclusion of this Court that this debt is not a "consumer debt" as contemplated by § 707(b) of the Code. Consequently, the substantial abuse provisions do not apply to the administration of this case.
In addition to considering the type of debts which this Debtor possesses, the Court must determine whether allowing relief to this Petitioner would constitute a "substantial abuse" of the provisions of this chapter. In reaching this decision, it is important to note that § 707(b) establishes a presumption in favor of granting the relief prayed for by the Petitioner. 11 U.S.C. § 707(b).
The term "substantial abuse" is not defined in the Bankruptcy Code nor in the abbreviated legislative history accompanying the Bankruptcy Amendments and Federal Judgeship Act provisions. This Court has, in a prior ruling, elected to accord the term its ordinary, everyday meaning. (See In re Bryant, 47 B.R. 21 (1984), and abides with that decision in this case.
As this term is not limited, in interpreting "substantial abuse", it is appropriate that the Court consider the totality of the circumstances presented, including the effects upon the petitioner and his creditors should relief under Chapter 7 be granted, or alternatively, denied. It is likewise appropriate to bear in mind the general aim of the Bankruptcy Code to provide a fresh start for a Debtor, while doing equity to and among his creditors, as well as the limitations to the relief that Bankruptcy affords a Debtor and his Creditors.
In considering this Petition, the record evidences the following: The Petitioner has no debts, save and except the Judgment in favor of Ms. Long. He has few assets of negligible value and owns no real property. He lives at home, pays no rent, but attempts to help his parents financially (although no provision for such expenses was made in the schedules accompanying this petition) when their meager income falls short. The Petitioner has a high school education and has recently become...
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