Walz v. Smith (In re Smith)

• Decision Date: 03 October 2018
• Docket Number: CASE NO. 17-56312-WLH,ADVERSARY PROCEEDING NO. 17-5173-WLH
• Citation: 592 B.R. 390
• Parties: IN RE: Japheth Jared SMITH, Debtor. Jeffrey B. Walz, Plaintiff, v. Japheth Jared Smith, Defendant.
• Court: U.S. Bankruptcy Court — Northern District of Georgia

592 B.R. 390

IN RE: Japheth Jared SMITH, Debtor.Jeffrey B. Walz, Plaintiff,

v.Japheth Jared Smith, Defendant.

CASE NO. 17-56312-WLH

ADVERSARY PROCEEDING NO. 17-5173-WLH

United States Bankruptcy Court, N.D. Georgia, Atlanta Division.

Signed October 3, 2018

Cliff R. Dorsen, Skaar & Feagle, LLP, Tucker, GA, Kris Kelly Skaar, Skaar & Feagle, LLP, Woodstock, GA, for Plaintiff.

Patricia Lyda Williams, The Williams Law Office, LLC, Duluth, GA, for Defendant.

ORDER DENYING SUMMARY JUDGMENT

Wendy L. Hagenau, U.S. Bankruptcy Court Judge

THIS MATTER is before the Court on Plaintiff's Motion for Summary Judgment (the "Motion"). This matter is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(J), and the Court has jurisdiction over the proceeding pursuant to 28 U.S.C. §§ 1334 and 157.

I. FACTS

Defendant and others hosted and promoted events at nightclubs and other venues in the Atlanta area. Defendant sent blast texts to encourage others to attend these events. Between December 2012 and November 2015, Defendant used an automated system to send Plaintiff 112 text messages promoting such events. Plaintiff responded to the messages and requested Defendant to stop contacting him; he also registered on the national "do-not-call" registry. Defendant continued to contact Plaintiff.

In August 2015, Plaintiff named Defendant as a defendant in a lawsuit in DeKalb County Superior Court and alleged Defendant violated the Telephone Consumer Protection Act (the "TCPA")'s "robocall" and do not call restrictions by repeatedly sending him text messages after he asked Defendant to stop contacting him. No judgment was entered against Defendant, and the lawsuit was administratively closed on March 29, 2018.

Defendant filed a petition under chapter 7 of the Bankruptcy Code on April 4, 2017. Plaintiff filed the complaint on July 3, 2017 seeking a determination a debt owed to him is nondischargeable pursuant to section 523(a)(6) of the Bankruptcy Code and to deny Defendant a discharge pursuant to sections 727(a)(2), (a)(3), (a)(4), and (a)(5) of the Bankruptcy Code. On July 16, 2018, Plaintiff filed the Motion. Plaintiff asks the Court to find Defendant liable under the TCPA in the amount of $112,000 in actual damages, to treble the damages to $336,000, and to determine the claim is nondischargeable pursuant to section 523(a)(6). Plaintiff also seeks to deny Defendant a discharge pursuant to section 727(a)(3) of the Bankruptcy Code for failing to keep records of compensation he received in exchange for promoting events. Defendant responded to the Motion, Plaintiff filed a reply in support of the Motion, and Defendant filed a sur-reply. For the reasons stated below, the Court denies the Motion.

II. SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; Fed. R. Civ. P. 56(c) ; Fed. R. Bankr. P. 7056(c). "The substantive law [applicable to the case] will identify which facts are material." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The party moving for summary judgment has the burden of proving there are no disputes as to any material facts. Hairston v. Gainesville Sun Pub. Co., 9 F.3d 913, 918 (11th Cir. 1993). A factual dispute is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248, 106 S.Ct. 2505. The party moving for summary judgment has "the initial responsibility of informing the ... court of the basis for its motion, and identifying those portions of ‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits if any’ which it believes demonstrate the absence of a genuine issue of material fact." U.S. v. Four Parcels of Real Prop., 941 F.2d 1428, 1437 (11th Cir. 1991) (citing Celotex Corp., 477 U.S. at 323, 106 S.Ct. at 2553 ). What is required of the moving party, however, varies depending on whether the moving party has the ultimate burden of proof on the issue at trial. Once this burden is met, the nonmoving party cannot merely rely on allegations or denials in its own pleadings. See Fed. R. Civ. P. 56(e). Rather, the nonmoving party must present specific facts to demonstrate there is a genuine dispute over material facts. Hairston, 9 F.3d at 918. When reviewing a motion for summary judgment, a court must examine the evidence in the light most favorable to the nonmoving party and all reasonable doubts and inferences should be resolved in favor of the nonmoving party. Id.

III. DISCUSSION

a. The undisputed facts do not prove by a preponderance of the evidence Defendant committed a willful and malicious injury within the meaning of section 523(a)(6)

Plaintiff contends he has a claim that is nondischargeable as a matter of law pursuant to section 523(a)(6) of the Bankruptcy Code. A presumption exists that all debts owed by the debtor are dischargeable unless the party contending otherwise proves nondischargeability. 11 U.S.C. § 727(b). The purpose of this "fresh start" is to protect the "honest but unfortunate" debtors.

U.S. v. Fretz (In re Fretz), 244 F.3d 1323, 1326 (11th Cir. 2001). The burden is on the creditor to prove an exception to discharge by a preponderance of the evidence. Grogan v. Garner, 498 U.S. 279, 287-88, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991) ; St. Laurent v. Ambrose (In re St. Laurent), 991 F.2d 672, 680 (11th Cir. 1993). Courts should narrowly construe exceptions to discharge against the creditor and in favor of the debtor. Equitable Bank v. Miller (In re Miller), 39 F.3d 301 (11th Cir. 1994) ; St. Laurent, 991 F.2d at 680.

Section 523(a)(6) excepts from discharge an individual's debts incurred by "willful and malicious injury by the debtor to another entity or to the property of another entity." 11 U.S.C. § 523(a)(6). Section 523(a)(6) generally relates to torts and "may apply to a broad range of conduct causing harm to people ... subject to the limitation the injury be "willful and malicious." ' 4 Alan N. Resnik & Henry J. Sommer, Collier on Bankruptcy ¶ 523.12 (16th ed. 2017).

The term "willful" means intentional and deliberate; "malicious" means "wrongful and without just cause or excessive even in the absence of personal hatred, spite or ill will." Lee v. Ikner (In re Ikner), 883 F.2d 986, 991 (11th Cir. 1989) ; Chrysler Credit Corp. v. Rebhan, 842 F.2d 1257, 1263 (11th Cir. 1988), abrogated on other grounds by Grogan v. Garner, 498 U.S. 279 10, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991) ; Sunco Sales, Inc. v. Latch (In re Latch), 820 F.2d 1163, 1166 n.4 (11th Cir. 1987). The debtor, through his acts, must have actually intended the injury , "not merely a deliberate or intentional act that leads to injury." Kawaauhau v. Geiger, 523 U.S. 57, 61, 118 S.Ct. 974, 140 L.Ed.2d 90 (1998) (emphasis in original). In other words, the debtor must have "desired the injury caused by his conduct." Atlanta Contract Glazing, Inc. v. Swofford (In re Swofford), Case No 08-20892-REB, AP No. 08-2053, 2008 WL 7842040, at *2, 2008 Bankr. LEXIS 3900 at *2 (Bankr. N.D. Ga. Dec. 23, 2008). Not every intentional tort falls within the gamut of section 523(a)(6), Miller v. J.D. Abrams, Inc. (In re Miller), 156 F.3d 598, 604 (5th Cir. 1998) ("[m]erely because a tort is classified as intentional does not mean that any injury caused by the tortfeasor is willful"), and conduct that is reckless is simply not enough to obtain relief under section 523(a)(6). Smith v. Burgos (In re Burgos), Nos. 14-12874-WHD, 15-1020-WHD, 2015 WL 9435398, at *2, 2015 Bankr. LEXIS 4311, at *6 (Bankr. N.D. Ga. Nov. 9, 2015). The plaintiff must show the debtor "had a subjective motive to inflict injury or believed his conduct was substantially certain to cause injury." Hot Shot Kids, Inc. v. Pervis (In re Pervis), 512 B.R. 348, 376 (Bankr. N.D. Ga. 2014). The debtor's subjective intent may be inferred from surrounding circumstances. Id.

Plaintiff contends Defendant willfully and maliciously injured him and violated the TCPA by repeatedly sending him text messages. Defendant concedes he may have acted recklessly in sending blast texts, but argues he did not send the messages to cause injury and he did not know the texts would inflict injury and, accordingly, his conduct does not meet the standard of section 523(a)(6).

The TCPA "was enacted to address certain invasive practices related to ‘unrestricted telemarketing,’ and is designed to protect consumers from receiving unwanted and intrusive telephone calls." Schweitzer v. Comenity Bank, 866 F.3d 1273, 1276 (11th Cir. 2017) (citing Mims v. Arrow Fin. Servs., LLC, 565 U.S. 368, 372, 132 S.Ct. 740, 181 L.Ed.2d 881 (2012) ). The TCPA makes it unlawful to use "any automatic telephone dialing system or an artificial or prerecorded voice" to call "any telephone number assigned to a ... cellular telephone service," without the express consent of the party being called. 47 U.S.C. § 227(b)(1).

The TCPA creates a private right of action under which a party can bring suit to recover its "actual monetary loss" or "to receive $500 in damages" per violation, whichever is greater. 47 U.S.C. § 227(b)(3)(B). The TCPA is essentially a strict liability statute – it does not require any intent or actual injury for liability. The statute also allows a court to increase the compensatory award by up to three times in cases of willful or knowing violations. 47 U.S.C. §§ 227(b)(3) & 227(c)(5) ; see also Am. Home Servs., Inc. v. A Fast Sign Co., Inc., 322 Ga.App. 791, 747 S.E.2d 205, 208-09 (2012) (affirming treble damages under the TCPA). The statute does not require a trebling, but it permits an increase up to three times. See Alea London Ltd....