Kubera v. Edmonds

1 On August 17, 2011, the Plaintiff filed his Memorandum in Support of Defendant’s
Motion to Dismiss Pursuant to Rule 7012(b)(6).
UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
NEW BERN DIVISION
IN RE:
REECE C. EDMONDS, III
DEBTOR
CHAPTER 13
CASE NUMBER: 11-01064-8-RDD
JOHN M. KUBERA
Plaintiff
v.
REECE C. EDMONDS, III
Defendant
ADVERSARY PROCEEDING
NUMBER: 11-00137-8-RDD
ORDER DENYING MOTION TO DISMISS FOR FAILURE TO
STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED
Pending before the Court is the Motion to Dismiss for Failure to State a Claim Upon Which
Relief Can Be Granted 1 filed by Reece C. Edmonds, III (the “Defendant”) on June 20, 2011 (the
“Motion to Dismiss”) and the Memorandum in Response and Opposition to Motion to Dismiss of
SO ORDERED.
SIGNED this 22 day of August, 2011.
________________________________________
Randy D. Doub
United States Bankruptcy Judge
____________________________________________________________
Case 11-00137-8-RDD Doc 15 Filed 08/22/11 Entered 08/22/11 15:01:47 Page 1 of 6

2
Reece C. Edmonds, III (the “Plaintiff”) filed on July 14, 2011 (the “Opposition”). 	The Court
conducted a hearing on August 18, 2011 to consider the Motion to Dismiss.
BACKGROUND
On February 11, 2011, the Debtor filed a petition for relief under chapter 13 of the
Bankruptcy Code. The Debtor filed his schedules and statements on March 10, 2011. The claim
of John M. Kubera was listed on the schedules as a disputed and unliquidated claim. 	More
specifically, that claim arises from a personal injury lawsuit filed by the Plaintiff against the
Defendant in the Circuit Court of Arlington County (Virginia) on January 22, 2008 (the “Civil
Action”) alleging causes of action under Virginia state law for assault, battery, negligence, liability
per se, and infliction of emotional of distress. The Civil Action was set on the trial calendar for
February 14, 2011 but was stayed based upon the Defendant’s filing of a petition for relief under
chapter 13 on February 11, 2011. The parties do not dispute that at the time of the filing of the
bankruptcy petition, the claims were pending adjudication and no judgment had been entered against
the Defendant.
On March 9, 2011, the Plaintiff filed a Motion for Relief from the Automatic Stay in the
main bankruptcy proceeding to which the Defendant objected. The Court conducted a hearing on
April 19, 2011 and, on April 28, 2011, the Court entered an Order Granting the Motion of John M.
Kubera for Relief from the Automatic Stay allowing the Arlington County Circuit Court to
adjudicate that Civil Action in order to liquidate the Plaintiff’s claim. Furthermore, that order
specifically provided “that any judgment obtained by Kubera [the Plaintiff] in the Arlington County
litigation [the Civil Action] be enforced through this Court.”
Case 11-00137-8-RDD Doc 15 Filed 08/22/11 Entered 08/22/11 15:01:47 Page 2 of 6

3
DISCUSSION
The Defendant argues that this claim may be discharged and, therefore, the complaint to
establish non-dischargeability should be dismissed. He contends that because a judgment had not
been entered against the Defendant in the Civil Action prior to the filing of the chapter 13 petition,
section 1328(a)(4) does not apply and the claim, if any, would be discharged under section 1328(a).
The Plaintiff disagrees. He argues that the plain meaning of section 1328(a)(4) does not
require that a judgment be entered or awarded prior to the filing of a petition for relief. He contends
that when enacting the statute, Congress intended to make debts arising from such willful and
malicious actions more difficult to discharge. If the Court was to interpret the statute as suggested
by the Defendant, the Plaintiff asserts that this policy would be undercut if the injured party would
be required to obtain a judgment prepetition as any defendant could seek protection under chapter
13 to discharge the debt without even having litigated the underlying civil proceeding to establish
the facts surrounding the alleged harm.
Therefore, does the Plaintiff’s complaint state a claim for relief, by requesting that a debt be
determined nondischargeable, pursuant to 11 U.S.C. § 1328(a)(4), when damages in a civil action
brought against a debtor have not been awarded prior to the filing of the bankruptcy petition?
Section 1328(a)(4) provides, in pertinent part:
Subject to subsection (d), as soon as practicable after completion by
the debtor of all payments under the plan...have been paid...the court
shall grant the debtor a discharge of all debts provided for by the plan
or disallowed under section 502 of this title, except any debt – (4) for
restitution, or damages, awarded in a civil action against the debtor
as a result of willful or malicious injury by the debtor that caused
personal 	injury 	to 	an 	individual 	or 	the 	death 	of 	an
individual.(emphasis added).
Case 11-00137-8-RDD Doc 15 Filed 08/22/11 Entered 08/22/11 15:01:47 Page 3 of 6

4
The exception to discharge provision provided for in Section 1328(a)(4) was added to the
Bankruptcy Code as part of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
(“BAPCPA”). A split of authority has developed as to whether or not a judgment or award is
required prior to the filing of the petition.
The Defendant directs the Court to consider Parsons v. Byrd (In re Byrd), 388 B.R. 875
(Bankr. C.D. Ill. 2007) and In re Nuttal, No. 06-014233, 2007 Bankr. LEXIS 4628 (Bankr. D.N.J.
January 11, 2007). In Parsons, the court recognizes that sparse legislative history and case law exists
relative to this subsection. 388 B.R. at 876-77. 	Because of this void, the court looked to two
treatises for guidance, both of which suggested that the use of the past tense of the word “awarded”
by Congress indicates its intent to require that a judgment or award of damages be entered prior to
the filing of the petition if such debt is to be found non-dischargeable pursuant to Section
1328(a)(4). Id. at 877. The court went on to find that the debt, which resulted from injury inflicted
upon the creditor during a bar fight, was allowed as a claim in the debtor’s chapter 13 bankruptcy
but was dischargeable as no award in a civil action had been made prior to filing. Id.
A number of courts have since considered this provision and have rejected the holdings of
Byrd and Nuttal. 	See Lepore v. Kerner, U.S. Dist. LEXIS 112590 (Dist. N.J. October 20,
2010)(citing Woods v. Roberts (In re Roberts), 431 B.R. 914 (Bankr. S.D. Ind. 2010); In re Morrison
v. Harrsch (In re Harrsch), 432 B.R. 169 (Bankr. E.D. Pa. 2010); Waag v. Permann (In re Waag),
418 B.R. 373 (BAP 9th Cir. 2009); Buckley v. Taylor (In re Taylor), 388 B.R. 115 (Bankr. M.D. Pa.
2008).
In Buckley, the court found that the term “awarded” did not function as a past tense verb but,
instead, considered the phrase “awarded in a civil action against the debtor as a result of willful or
Case 11-00137-8-RDD Doc 15 Filed 08/22/11 Entered 08/22/11 15:01:47 Page 4 of 6

5
malicious injury by the debtor that caused personal injury to an individual or the debt of an
individual to be a “past particip[le]...that serves as an adjective modifying the nouns restitution and
damages.” Buckley, 388 B.R. at 119. In Lepore, the District Court of New Jersey stated that “[a]s
a past participle, ‘awarded’ merely signifies ‘completion or an entry of restitution or damages at the
time of the determination of nondischargeability.’” Lepore, 2010 U.S. Dist. LEXIS 112590 *10
(quoting Waag, 418 B.R. at 379).
With the enactment of BAPCPA in late 2005, courts have been left with a myriad of
ambiguous and inconsistent provisions of the Bankruptcy Code to interpret. This Court finds it
significant that the two decisions interpreting the word “awarded” as a past tense of the word
“award” were both issued in 2007 and since then, a number of courts have rejected that
interpretation. Requiring an injured party to rush to the courthouse to obtain an award prior to the
alleged tortfeasor filing a petition for relief under chapter 13 that could discharge the injured parties’
debt is an absurd result and contrary to good legislative policy and intent. Morrison, 432 B.R. at
174. State law provides a statute of limitations for certain tort claims. As such, a party injured by
the willful and malicious acts of another should not be required to commence a lawsuit earlier than
he or she would prefer solely to avoid having his debt discharged under Section 1328(a)(4). In
addition, a competent defense attorney retained early in a civil case might well advise his client to
file a petition for relief under chapter 13 to not only save on the costs of the civil action but also to
discharge any possible exposure to the injured party.
Clearly, such is not the result Congress intended. Had Congress intended to require that an
award in a civil action predate the filing of a petition, Congress could have specifically said so. It
did not.
Case 11-00137-8-RDD Doc 15 Filed 08/22/11 Entered 08/22/11 15:01:47 Page 5 of 6

6
In this particular case, the automatic stay was lifted to allow the Civil Action to proceed so
that the issue of liability, if any, could be established, and the amount of damages owed to the
Plaintiff, if any, could be determined. This amount would then be the liquidated claim of the
Plaintiff. State court litigation related to personal injury claims, breach of contract actions, and other
torts are often pending at the time a bankruptcy petition is filed. Depending on the facts of each case,
the bankruptcy court may lift the automatic stay to allow the state court to determine liability and
the amount of the claim. 	Given this common practice, Congress certainly knew that such a
determination of liability and the amount of the claim may occur after the filing of the bankruptcy
petition. Therefore, this Court finds that by failing to include any specific requirement in the statute,
Congress did not intend that the award of damages or restitution occur before a defendant in such
an action files a petition for relief.
Therefore, the Motion to Dismiss is DENIED. The Defendant shall have twenty-one (21)
days from the entry of this Order to file his answer to the complaint.
SO ORDERED.
END OF DOCUMENT
Case 11-00137-8-RDD Doc 15 Filed 08/22/11 Entered 08/22/11 15:01:47 Page 6 of 6