Suppose you’re driving home from a New Year’s Eve celebration. At the party you had one too many glasses of Krug Champagne. Suddenly a light pole leaps in front of you and you hit it. You’re badly injured. You get fine treatment at the hospital, and later receive a bill for $100,000 for the care. You can’t pay it, so you file for bankruptcy protection. Is the medical debt dischargeable?
Notice that the party who was physically injured in the accident is the bankrupt debtor ― not some third party. But is the hospital a party that was also injured as a result of your drunk driving?
I. A Brief History Of Drunk Driving Debts In Bankruptcy
Let’s change our hypothetical fact pattern a bit. Suppose that when you drove home from the New Year’s Eve bash, you hit, not an errant light pole, but another car. In the process you injured the other driver ― someone you didn’t know. Now you have a bill for $100,000 for the other driver’s medical care. Is that debt dischargeable in bankruptcy? There was a time in American history when the answer was a resounding, “Maybe.” (That’s a nice vague answer. Someone once told me that if he didn’t know what he was talking about, he kept his comments vague. However, in this case “maybe” is not a vague answer because it comes with the qualification that it depended on the facts and the court in which the case was heard.)
A. The Relevant Statute At The Time
At the time when the answer to our question was maybe, the relevant statutory provision that plaintiffs used was:
A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt — . . . for willful and malicious injury by the debtor to another entity or to the property of another entity.
11 U.S.C. § 523(a)(6).
But when you left the New Year’s Eve soirée and got into the accident, did you really willfully and maliciously injure the other driver? You didn’t even know the person. The case law at the time was inconsistent. The inconsistency arose, in part, because the Congressional record behind § 523(a)(6) indicated that Congress intended a narrow reading of the statute. As the Court in In re Stanfield, 14 B.R. 180, 182 (Bankr. N.D. Ohio 1981) observed:
The House Report states: “Paragraph (6) excepts debts for willful and malicious injury by the debtor to another person or to the property of another person. Under this paragraph, ‘willful’ means deliberate or intentional. To the extent that Tinker v. Colwell, 139  U.S. 473 [24 S. Ct. 505, 48 L. Ed. 754] (1902)[sic], held that a looser standard is intended, and to the extent that other cases have relied on Tinker to apply a ‘reckless disregard’ standard, they are overruled. H. Rep. No. 95-595, 95th Cong., 1st Sess. 365 (1977), U.S. Code Cong. & Admin. News 1978, p. 5787.”
(While Tinker is an old case from 1904, it appears to be good law. However, the Supremes in Kawaauhau v. Geiger, 523 U.S. 57, 63 (1998) state a little dismissively, “The exposition in the Tinker opinion is less than crystalline.”)
Therefore, on the one hand, some courts held that debt was dischargeable, based on the above-quoted Congressional record.
B. The Debt Was Discharged Case Law
For example, the Court in In re Bryson, 3 B.R. 593, 596 (Bankr. N.D. Ill. 1980) held:
Here the defendant showed reckless disregard. He was drunk when he ran into the plaintiff. But there is no evidence that the defendant intended to injure anyone. His conduct cannot be described as “willful and malicious” under § 523(a)(6). The court concludes that Bryson’s debt to the Williamses is dischargeable.
Similarly, the Court in In re Oakes, 24 B.R. 766,770 (Bankr. N.D. Ohio 1982) held that a debt to the estate of someone he had killed while driving drunk was dischargeable because the debt did “not arise out of a willful and malicious injury . . .”
On the other hand, some courts held that just the fact that the debtor drove while intoxicated was enough to find willful and malicious injury.
C. The Debt Was Not Discharged Case Law
For example, the Court in In re Galvan, 39 B.R. 663, 665 (D. Colo. 1984) explicitly disregarded the Congressional record. Instead, it held (with emphasis added):
At the time of the accident, the debtor had a blood alcohol content of .172. It was undisputed that Galvan had been drinking the night before and into the morning of the accident. Although Galvan may not have subjectively intended to inflict damage to the Paden residence, he embarked upon a course of conduct whereby the possibility of having an injury accident was so great as to be almost a certainty. Therefore the intent to cause the injury may be implied from the conduct. According to this analysis, the injury inflicted by Galvan is deemed intentional. Thus, appellants’ claim is one for willful and malicious injury to property, and it is not dischargeable in bankruptcy.
In other words, because the debtor knew that if he drank heavily and then drove there was a high possibility he would cause an injury accident, the injury he caused was intentional, and thus the injury was willful and malicious.
Similarly, the Court in Matter of Wooten, 30 B.R. 357, 358 (Bankr. N.D. Ala. 1983) held that a drunk driving debt met the intentional ― and thus the “willful and malicious” ― standard, and was thus nondischargeable (emphasis in original):
Jill and Kevin Prosch were not the object of specific malice, only the victims of Mr. Wooten’s intentional misconduct. His willfulness and maliciousness lay in the fact that he intentionally intoxicated himself and then intentionally drove a “lethal weapon” through the streets of Birmingham, with utter disregard of the consequences.
II. The First Enactment Of 11 U.S.C. § 523(a)(9)
In an attempt to deal with drunk driving debts explicitly, in 1984 Congress added 11 U.S.C. § 523(a)(9) to the Code. The 1984 version of that Code subsection, as quoted in Veryl V. Miles, Interpreting the Nondischargeability of Drunk Driving Debts Under Section 523(a)(9) of the Bankruptcy Code: a Case Of Judicial Legislation, 49 Md. L. Rev. 156 at 156, n.4 (1990), provided:
A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt — . . . to any entity, to the extent that such debt arises from a judgment or consent decree entered in a court of record against the debtor wherein liability was incurred by such debtor as a result of the debtor’s operation of a motor vehicle while legally intoxicated under the laws or regulations of any jurisdiction within the United States or its territories wherein such motor vehicle was operated and within which such liability was incurred.
In this version the debt was nondischargeable only if: (a) it had been reduced to judgment, and (b) the injury took place while debtor was legally intoxicated while operating a motor vehicle.
A. The Reduction To Judgment Requirement
The wording of the first of these two requirements appears to mean that if a debtor filed a bankruptcy case before the injured party obtained a judgment, the debt was dischargeable. For example, in In re Moore, 53 B.R. 259 (Bankr. S.D. Ohio 1985) the plaintiffs had failed to obtain a judgment prior to the debtor’s bankruptcy filing. The debtor therefore argued that one of the § 523(a)(9) prongs had not been met, so § 523(a)(9) could not be used against her. While the Court acceded to the debtor’s defense against the § 523(a)(9) action, it noted that the plaintiffs could still proceed under § 523(a)(6)’s “willful and malicious” theory.
In In re Hudson, 73 B.R. 649, 654 (B.A.P. 9th Cir. 1987), the Ninth Circuit’s Bankruptcy Appellate Panel held:
At the date of the order for relief, the Stackhouses’ only had a claim against Hudson, not a judgment or consent decree. Therefore, the Stackhouses have not met the requirements of § 523(a)(9), as set out in that code section, and the debt is discharged pursuant to § 727(b). While we may not like this result, as judges we must follow the laws as written by Congress. If, as some courts suggest, Congress erred in drafting the statute, then Congress must enact legislation to correct it.
To add insult to injury, the creditors had failed to file an adversary pursuant to 11 U.S.C. § 523(a)(6) to challenge the discharge of the debt under the “willful and malicious” theory before the sixty-day bar date had passed. (Pursuant to Fed. R. Bankr. Proc. 4007(c), an adversary proceeding to challenge dischargeability under 11 U.S.C. § 523(a)(2), (4), or (6) using 11 U.S.C. § 523(c) must be initiated no later than sixty days after the first meeting of creditors under 11 U.S.C. § 341(a), or it is forever lost.) Therefore, the Court held:
The Stackhouses are precluded from recovering by their failure to obtain a judgment against Hudson prior to his bankruptcy, and by their failure to file a timely request for relief under § 523(c).
In re Hudson, at 654.
Before you weep crocodile tears for the Stackhouses, in In re Hudson, 859 F. 2d 1418, 1423 (9th Cir. 1988) the Ninth Circuit Court of Appeals reversed the BAP’s holding based on the assertion that the Congressional intent behind § 523(a)(9) was
(1) to deter drunk driving; (2) to ensure that those who caused injury by driving drunk did not escape civil liability through the bankruptcy laws; and (3) to protect victims of drunk driving. The interpretation of the statute adopted by the BAP advances none of these goals. Rather, it focuses undue attention on the intermittent appearance of the word “judgment” in congressional colloquy at the expense of a recognition of the broader goals of the statute. It makes an unfortunate distinction between debts that are dischargeable or nondischargeable based on whether the victim has reduced it to judgment prior to the debtor’s bankruptcy. Under BAP’s reading, those who do not recover quickly enough from their injuries, those who attempt first to settle their claims and spare the expense of going to court, and those who live in jurisdictions where a simple civil case may take years to come to trial lose their claims.
However, the opinion was not unanimous. There was an eloquent and persuasive dissenting opinion that added to the BAP’s reasoning. The dissenting judge pointed out that the Court had given no cogent hermeneutic on the statutory wording, and instead based its holding on the holdings of other courts ― which had also ignored the statute’s wording.
B. The “Legally Intoxicated” Requirement
The legally intoxicated requirement would appear to be self-explanatory. If the debtor’s blood alcohol level at the time of the accident met the legal definition, the prong was satisfied. However, some courts took the position that the prong was only satisfied if the intoxication itself was the cause of the accident. See, e.g., In re Christiansen, 80 B.R. 481, 483-84 (W.D. Mo. 1987), in which the District Court held:
Since it found that there was insufficient evidence of defendant’s intoxication at the time of the accident, the bankruptcy court did not address the question of whether the intoxication was a causal factor in the accident. . . . This case will therefore be remanded for such a determination.
In sum, while most of the decisions under the 1984 version of § 523(a)(9) arguably had the right outcome in a moral sense, the courts avoided the statutory wording, and imposed their own feelings instead. In other words, they legislated from the bench. This was in contravention of U.S. Const. art. I, § 1, which provides (with emphasis added): “All legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives.”
III. The Present Version Of 11 U.S.C. § 523(a)(9)
The current incarnation of 11 U.S.C. § 523(a)(9) provides:
A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt — . . . for death or personal injury caused by the debtor’s operation of a motor vehicle, vessel, or aircraft if such operation was unlawful because the debtor was intoxicated from using alcohol, a drug, or another substance.
11 U.S.C. § 523(a)(9).
It avoids the aforementioned problems with the first prong of the 1984 version. Now the plaintiff can file the adversary proceeding in the Bankruptcy Court without having successfully sued the debtor in State Court.
However, the statute now states that the injury must have been “because the debtor was intoxicated,” thus following the Christiansen holding (which was the minority view at the time it was entered).
IV. The Question Posed
All of the case law I have found on the subject deals with debts that are for death or personal injury caused by the debtor to someone other than the debtor while driving while lit to the gills. However, our hypothetical involved the injury by the debtor to the debtor.
In our scenario, the hospital’s appeal to § 523(a)(6) is a nonstarter because that Code subsection deals with a debt “for willful and malicious injury by the debtor to another entity or to the property of another entity.”
The hospital might argue that you, the debtor, have a multiple personality disorder, and the personality that was driving drunk intended willful and malicious harm to one the other personalities. If you are appearing pro se, the hearing might go something like the courtroom scene in Bananas. (Especially the portion starting at the 4:00 mark.) The bankruptcy judge will undoubtedly reject that argument.
Therefore, the hospital must win based on § 523(a)(9) or the debt will be discharged.
The hospital can argue that since § 523(a)(9) does not have the qualifying phrase “another entity” found in § 523(a)(6), the statutory language can and must include the debtor. Therefore, if you were injured because you were driving drunk, the debt to the hospital is nondischargeable.
You could appeal to the Ninth Circuit’s Hudson holding ― distilled using the alembic of the Congressional record ― that the purposes of the statute were: “(1) to deter drunk driving; (2) to ensure that those who caused injury by driving drunk did not escape civil liability through the bankruptcy laws; and (3) to protect victims of drunk driving.” In re Hudson, at 1423. Since the apparent Congressional concern was to protect the people who were physically injured in the accident, and the hospital was not even involved in the accident, it lacks standing to prosecute the § 523(a)(9). Any injury the hospital feels is the loss of payment for providing medical care, not for being injured in a car accident.
How would this turn out? It would, of course, depend on the judge. My own sense is that you would win because the hospital is not a drunk driving victim. It is simply a creditor who served a debtor who can’t pay. In other words, the hospital lacks standing to sue under § 523(a)(9).
If you’re in the Central District of California, and are either a creditor wanting to file an adversary proceeding, or a debtor facing an adversary proceeding, call an attorney who is a board-certified bankruptcy law specialist with adversary proceeding experience to represent you.
And if you’re a debtor in the Central District of California who is considering using bankruptcy to deal with your debts under Chapter 7, 11, or 13, call an attorney who is a board-certified bankruptcy law specialist to represent you.