LeMaire, In re

Decision Date26 March 1990
Docket NumberNo. 88-5275,88-5275
Citation898 F.2d 1346
Parties, 22 Collier Bankr.Cas.2d 1008, 20 Bankr.Ct.Dec. 521, Bankr. L. Rep. P 73,296 In re Gregory A. LeMAIRE, Debtor. Paul HANDEEN, Appellant, v. Gregory A. LeMAIRE, Appellee.
CourtU.S. Court of Appeals — Eighth Circuit

Richard G. Nadler, St. Paul, Minn., for appellant.

Richard K. Brainerd, Richfield, Minn., for appellee.

Before LAY, Chief Judge, and McMILLIAN, ARNOLD, JOHN R. GIBSON, FAGG, BOWMAN, WOLLMAN, MAGILL and BEAM, Circuit Judges, En Banc.

JOHN R. GIBSON, Circuit Judge.

The issue before us is whether a civil judgment awarded to the victim of an intentional shooting may be discharged under Chapter 13 of the Bankruptcy Act, 11 U.S.C. Secs. 1301-1330 (1988). Paul Handeen, the victim of the assault and subsequently a judgment creditor, asks this court to hold, as a matter of law, that the judgment arising out of criminal conduct may not be discharged. Alternatively, he argues that the bankruptcy court's holding that the debtor Gregory LeMaire proposed his Chapter 13 plan in good faith was clearly erroneous. We conclude that the court's finding of good faith was clearly erroneous and therefore reverse and remand for further proceedings consistent with this opinion.

On July 9, 1978, at about noon, Handeen went to pick up his son and found LeMaire waiting for him. When Handeen got out of his car, LeMaire shot at him nine times with a bolt action rifle. The first two shots missed Handeen, but the third struck him on the left side of his neck. Handeen then attempted to hide behind the car. LeMaire circled the car, shot at and missed Handeen twice more, and then hit him inside of his left knee. LeMaire circled again and Handeen jerked his head back to avoid the bullet at the time he thought LeMaire would pull the trigger of the rifle aimed at his head. LeMaire fired, and the bullet went through Handeen's right nostril, shattering the roof of his mouth and going through his tongue. LeMaire then fired a shot at Handeen's left arm. The bullet went through Handeen's arm and lodged on his spine. LeMaire fired a final shot through Handeen's ankle. In all, five of the nine shots fired by LeMaire struck Handeen. LeMaire declared that he had intended to kill Handeen. (Tr. Bankr.D.Minn. Oct. 28, 1987, at 23, 35-38). He pled guilty to a charge of aggravated assault and was sentenced to imprisonment for a term of one to ten years. He served twenty-seven months of his sentence and was released in 1981. LeMaire then returned to graduate school at the University of Minnesota and received his doctorate in experimental behavioral pharmacology in January 1986.

Handeen brought a civil suit against LeMaire and obtained a consent judgment. LeMaire paid $3,000 of the judgment, but made no further payments, prompting Handeen to commence garnishment proceedings to collect the $50,362.50 balance on the judgment. Soon after, on January 16, 1987, LeMaire filed this bankruptcy petition under Chapter 13.

Handeen objected to the bankruptcy court confirming LeMaire's Chapter 13 plan; the bankruptcy court, however, rejected his assertion that the civil judgment arising out of the crime was not dischargeable. The court instead confirmed LeMaire's plan, which provided that his creditors be paid approximately 42% on their claims. The plan listed three claims: (1) Handeen's judgment; (2) a student loan; and (3) a claim by LeMaire's parents for loans to LeMaire, including $3,600 expended on his legal fees, $3,000 spent in partial payment on the judgment, and $2,172 lent to buy a computer. The record reveals that LeMaire's debt to his parents was evidenced by a promissory note he signed the day before he filed his Chapter 13 petition.

Handeen appealed to the district court from the bankruptcy court's order confirming LeMaire's Chapter 13 plan. The district court affirmed and, upon appeal, a panel of this court also affirmed. In re LeMaire, 883 F.2d 1373 (8th Cir.1989). We granted rehearing en banc, vacated the panel opinion, and heard oral argument. We now reverse.


Handeen vigorously argues that, as a matter of law, his civil judgment cannot be discharged because it arose from a criminal act. The panel rejected this argument and we do likewise.

Handeen's argument is based upon 11 U.S.C. Sec. 523(a)(6) (1988), 1 which provides that a debt arising from infliction of "willful and malicious injury by the debtor to another entity" may not be discharged under specified sections of the Bankruptcy Code. As the panel observed, there is no question that LeMaire's assault inflicted a "willful and malicious" injury upon Handeen. 883 F.2d at 1376. Handeen's reliance upon section 523(a)(6) is unavailing, however, because LeMaire filed his petition under Chapter 13, which does not include section 523(a)(6) in its list of nondischargeable debts. See 11 U.S.C. Sec. 1328(a) (1988). 2 Although section 523(a)(6) does by its express statutory terms apply to a petition for bankruptcy under Chapter 7, its applicability does not extend to a filing under Chapter 13. Therefore, a debt which falls within the scope of section 523(a)(6), such as the debt owed to Handeen, which may not be discharged under Chapter 7, may nevertheless be discharged if the debtor meets the requirements of Chapter 13. 3


Alternatively, Handeen argues that the bankruptcy court should not have confirmed LeMaire's Chapter 13 plan because LeMaire did not propose it in good faith. Section 1325(a) of Title 11 of the Bankruptcy Code establishes six criteria which a debtor must meet in order to have his Chapter 13 plan confirmed by a bankruptcy court. The critical requirement, for present purposes, is that "the plan has been proposed in good faith and not by any means forbidden by law." 11 U.S.C. Sec. 1325(a)(3) (1988).

In deciding whether LeMaire has met the good faith criterion, we recognize that legislative amendments to section 1325 have affected judicial interpretation of the phrase "good faith," which is defined neither in the Bankruptcy Code nor in its legislative history. Prior to the Bankruptcy Amendments and Federal Judgeship Act of 1984, Pub.L. No. 98-353, 98 Stat. 333 (1984), our analysis focused upon "whether the plan constitutes an abuse of the provisions, purpose or spirit of Chapter 13." In re Estus, 695 F.2d 311, 316 (8th Cir.1982). This required looking to the totality of circumstances to discern whether good faith existed, a task aided by the Estus court listing a number of factors it considered relevant to this analysis. 4 This approach was widely used in other circuits. See Neufeld v. Freeman, 794 F.2d 149, 152 (4th Cir.1986); Flygare v. Boulden, 709 F.2d 1344, 1347 (10th Cir.1983); In re Kitchens, 702 F.2d 885, 888-89 (11th Cir.1983); In re Goeb, 675 F.2d 1386, 1390 (9th Cir.1982); In re Rimgale, 669 F.2d 426, 432-33 (7th Cir.1982).

After Estus, the Bankruptcy Amendments and Federal Judgeship Act of 1984 added a new section 1325(b) which authorizes courts to confirm a plan in which all of the debtor's disposable income for three years is applied to make payments under the plan. 11 U.S.C. Sec. 1325(b). In Education Assistance Corp. v. Zellner, 827 F.2d 1222 (8th Cir.1987), we considered the effect of the new section 1325(b) on the Estus analysis of good faith. We stated that the new section's "ability to pay" criteria subsumed most of the Estus factors and thus narrowed the focus of the good faith inquiry. Id. at 1227. We described the narrower focus as depending upon "whether the debtor has stated his debts and expenses accurately; whether he has made any fraudulent misrepresentation to mislead the bankruptcy court; or whether he has unfairly manipulated the Bankruptcy Code." Id.

Although Zellner modified the good faith determination in response to the new section 1325(b), it is recognized that Zellner preserved the traditional "totality of circumstances" approach with respect to Estus factors not addressed by the legislative amendments. See In re Smith, 848 F.2d 813, 820 n. 8 (7th Cir.1988). Thus, in considering whether LeMaire proposed his plan in good faith, factors such as the type of debt sought to be discharged and whether the debt is nondischargeable in Chapter 7, and the debtor's motivation and sincerity in seeking Chapter 13 relief are particularly relevant. Estus, 695 F.2d at 317. These are factual findings made by the bankruptcy court which we review under a clearly erroneous standard. "When a district court reviews a bankruptcy court's judgment, it acts as an appellate court." Wegner v. Grunewaldt, 821 F.2d 1317, 1320 (8th Cir.1987). In turn, when the case is appealed to this court, we perform the same appellate function as the district court of reviewing legal conclusions on a de novo basis and factual findings under a clearly erroneous standard. Id.

The Supreme Court carefully articulated the principles governing a court examining factual findings under the clearly erroneous standard in Anderson v. City of Bessemer City, 470 U.S. 564, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985). "A finding is 'clearly erroneous' when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." Id. at 573, 105 S.Ct. at 1511 (quoting United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 542, 92 L.Ed. 746 (1948)). Anderson cautions that the clearly erroneous standard does not entitle us to reverse the trier of fact simply because we would have decided the case differently. Id. We are directed that we may not decide factual issues de novo, id., and that when there are two permissible views of the evidence, we may not hold that the choice made by the trier of fact was clearly erroneous. Id. at 574, 105 S.Ct. at 1511. Moreover, where the factual findings call for an assessment of witness credibility, even greater deference to the trier of fact is...

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