A stabbing victim won sympathy from a jury but not from the bankruptcy judge when his counsel was three days late in filing an objection to the dischargeability of a debt.
The stabbing victim also won no sympathy from the bankruptcy judge for the debtor’s suspicious attempt at giving the appearance of scheduling the claim when the official notice in fact was flawed, perhaps intentionally.
Before bankruptcy, the debtor stabbed and slashed the creditor. The debtor pled guilty to aggravated assault in state court. In the ensuing civil suit, also in state court, the creditor won an $18,000 jury verdict.
The debtor filed a chapter 7 petition. In the schedules, the perpetrator listed the creditor’s name but neither the creditor’s nor his attorney’s address. Instead, the listed address was that of the state courthouse.
On the deadline for filing an objection to dischargeability of the debt, the victim’s attorney mailed a complaint to the clerk of the bankruptcy court. The complaint was lodged on the docket three days after the deadline.
Doubtless intending to rely on collateral estoppel, or issue preclusion, the creditor’s complaint alleged that the debt was nondischargeable under Section 523(a)(6) as a willful and malicious injury by the debtor.
Although the filing of the complaint was untimely by three days, the creditor still could prosecute the complaint if Section 523(a)(3) were applicable. That section allows the late filing of a Section 523(a)(6) complaint if the creditor did not have notice or actual knowledge of the case in time to meet the deadline.
But wait, there’s more, as Bankruptcy Judge Paul Baisier of Atlanta explained in his May 18 opinion.
The debtor’s counsel had sent an email to the creditor’s counsel mentioning that his client had filed bankruptcy, thus raising the possibility that the creditor had derivative notice of the bankruptcy through his counsel, thus making the complaint untimely under both Sections 523(a)(3) and (a)(6).
Judge Baisier conceded, though, that notice to a creditor’s counsel “is not always sufficient notice to put that creditor on notice of a filing of a bankruptcy.”
But wait, there’s more!
It turns out that the creditor’s counsel in the civil suit was also the attorney who filed the dischargeability complaint three days late.
Judge Baisier concluded that notice of the bankruptcy was “clearly adequate” because the email exchange with the creditor’s bankruptcy counsel occurred some 70 days before the dischargeability deadline. Therefore, he said, scheduling the creditor with the incorrect address “did not relieve the [creditor] of his obligation to act in a timely manner.”
Consequently, Judge Baisier dismissed the dischargeability complaint, perhaps ultimately shifting liability for the $18,000 debt to the creditor’s lawyer’s malpractice carrier.
We wonder if there’s more to the story, because $18,000 doesn’t seem like much compensation for a stabbing and slashing, but perhaps that’s the going rate in Georgia. Luckily, neither combatant was armed with a gun.