????? Is A Pending Negligence Claim Dischargeable Under Chapter 7 ?????

[Arctura1]

Dear all,

Here is a hypothetical. If X sues Y for negligence and Y files for Chapter 7 while the lawsuit is pending in the state court (no judgment yet!), will the lawsuit and the underlying cause of action, i.e., negligence, be discharged along with other debts of Y?

I know that the lawsuit is automatically stayed while Y's bankruptcy case is pending. What I am trying to find out is whether the pending lawsuit/underlying cause of action will be discharged like other debts.

Any help is welcome, and if you can tell me about a case or a statute that's even better. Thanks!

[Flamingo]

OJ Simpson's case explains it all.

[Arctura1]

OJ Simpson's case explains it all.

Eh? I am not quite sure what that means. Could you be more specific?

[keepmine]

OJ never filed for bk.

Depends on wha thappenen. Debts arising from criminal activity, DUI, etc. aren't dischargeable. Maybe some specifics about the litiagtion may hekp.

[HHM]

Your answer depends on the facts.

There is no "general" exception from discharge for claims arising from negligence.

Generally, when it comes to any sort of "injury" type claim, the claim CAN BE discharged in BK unless the state court finds that the injury willful and malicious (i.e. not negligence), or that the injury was the result of the defendant operating a vehicle while under the influence. Otherwise, yes, the claim is discharged.

[Arctura1]

The debt is not criminal related and has nothing to do with any form of tax. The litigation is about an injured worker suing his employer for negligence (e.g. failure to maintain a safe working environment), not willful and malicious act. Will the employee's pending negligence lawsuit/cause of action be discharged if the employer file for Chapter 7?

Thanks!

[Flamingo]

Just because it is a well known case and well publicized is why I mentioned it. OJ was sued civily by the Goldmans for the deaths of Ronald Goldman and Nicole Simpson. He was found to be liable and ordered to pay the plaintiffs about a bazillion dollars. They still go after him to this day, even though he filed BK in the State of Florida, for that money. There is a probably a clause or clauses of some sort in the lawsuit which state that even if the defendant files BK, they can still go after future earnings or assets. They just recently went after the profits he made for authoring the book on how he imagined his former wife's death and OJ's BK was a long time ago.

You probably need to search in the state in which the event you describe takes place and see if there is any case law, but you can't dismiss negligence in a BK filing. As I stated, they can go after future earnings or assets.

[HHM]

If the employer files BK 7, the business is done. Chapter 7 ia a business is a liquidation and the business closes. Even if the debt was non-dischargeable, there would be nothing left to satisfy the judgment.

[Arctura1]

If the employer files BK 7, the business is done. Chapter 7 for a business is a liquidation and the business closes. Even if the debt was non-dischargeable, there would be nothing left to satisfy the judgment.

Ah, I see that I forgot to mention one fact. It's true that the employer is a corporation and will have nothing left to satisfy the judgment, but the owner of the corporation is also sued in his personal capacity. Assuming that the owner of the corporation also file for Chapter 7, will the negligence lawsuit be discharged for him? Is the injured employee out of luck?

[HHM]

Ah, I see that I forgot to mention one fact. It's true that the employer is a corporation and will have nothing left to satisfy the judgment, but the owner of the corporation is also sued in his personal capacity. Assuming that the owner of the corporation also file for Chapter 7, will the negligence lawsuit be discharged for him? Is the injured employee out of luck?

So, this is not a "hypothetical"

But yes, the employee is out of luck.

[Arctura1]

So, this is not a "hypothetical"

But yes, the employee is out of luck.

Thanks for the info. Do you know a case or a statute that's on point? I know this is pretty technical but any help is welcomed.

Oh and it's a hypothetical because no lawsuit has been filed and nobody has filed BK yet.

[Flamingo]

To the OP (and to HHM at the end of this posting): I posted at the same time you (OP)did and after posting saw you stated it was business related and not between individuals. While you might be able to go after future earnings and assets of an BK'd individual, the same cannot be said of a BK'd business. HHM is correct. But my question on this is, the business was almost certainly covered by insurance at the time of the negligent act. If the case is found in favor of the plaintiff before the BK is discharged, would the plaintiff be able to still recover from the business's insurance company since it was covered by insurance at the time the event occurred? Hope I worded that clear enough....HHM?

[HHM]

Yes, the individual can still collect against the insurer even if the business files BK.

[HHM]

Thanks for the info. Do you know a case or a statute that's on point? I know this is pretty technical but any help is welcomed.

Oh and it's a hypothetical because no lawsuit has been filed and nobody has filed BK yet.

Its not issue of a case, you just need to read through Section 523 of the BK code, if a persons claim does not fit into one of those exceptions to discharge, then it is discharged. And in my reading, there is no exception to discharge that seems to address your "hypothetical".

[Arctura1]

Yes, the individual can still collect against the insurer even if the business files BK.

HHM and Flamingo,

I think you two are in agreement when it comes to the BK/ed business.

But HHM is of the opinion that the owner's personal liability for negligence will be discharged if he individually files for Chapter 7, while Flamingo is of the opinion that the owner's personal liability will not be discharged even if he individually files for Chapter 7.

Could you please clarify this?