SW Legal studies in Business

Judgments from Willful and Malicious Torts Are Not Dischargeable in Bankruptcy
Description Appeals court affirmed that a damage award for a willful and malicious tort is a debt that cannot be discharged in bankruptcy by the tortfeasor. While other tort awards may be discharged in bankruptcy, those that rise to the level of willful and malicious are not.
Topic Bankruptcy
Key Words Debts; Exemption from Discharge; Torts
C A S E   S U M M A R Y
Facts Kennedy sued the Mustaines for making false and defamatory statements about her to third parties. The court held in her favor and awarded her $65,000 in damages. The Mustaines' insurance company was held not liable for the damages because the defamatory statements were inherently injurious and so were not covered by insurance. The Mustaines filed Chapter 7 bankruptcy and sought to discharge all debts against them, including the $65,000 damage award. The bankruptcy judge held that the damage award was not dischargeable because it was the result of "willful and malicious injury by the debtor." The district court affirmed that holding. The Mustaines appealed.
Decision Affirmed. Because the tort here involved "willful and malicious injury" to the reputation of the creditor, Kennedy, that debt is not dischargeable in bankruptcy. Only acts done with intent to cause injury, not merely acts done intentionally, rise to the level of "willful and malicious injury," for the purpose of debt discharge.
Citation In re Kennedy, 249 F.3d 576 (6th Cir., 2001)

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