Punitive Damage Award Held Nondischargeable

Posted 04/30/2012 by Roger Cox

May you beat your ex-spouse, file bankruptcy, and discharge the punitive damage judgment resulting from the personal injury claim?  Short answer:  No. 

In In re Larsen, 2012 U. S. App. LEXIS 7793 (7th Cir. 2012), the court described the factual background as follows:

The defendant in this adversary proceeding in bankruptcy, David Larsen, attempted to murder his ex-wife, Teri Jendusa-Nicolai. He was convicted of state and federal crimes and sentenced to life in prison. Although his attempt had failed, he had inflicted severe injuries that resulted in her suffering a miscarriage and the amputation of all her toes; for after beating her with a baseball bat he had sealed her in a garbage can filled with snow and left it (and therefore her) in an unheated storage facility, causing severe frostbite. In a tort suit that she brought together with her present husband and her two daughters, a Wisconsin state court awarded  [*2] her a $3.4 million judgment against Larsen for battery, false imprisonment, and intentional infliction of emotional distress, and her husband and daughters $300,000 for loss of consortium.

After the state court judgment (and presumably, the criminal conviction), the debtor filed for Chapter 7 relief.  The ex-wife filed an adversary proceeding seeking to have her judgment found nondischargeable under 11 U.S.C. § 523(a)(6), which provides that debts “for willful and malicious injury by the debtor to another entity or to the property of another entity” are nondischargeable.

Collateral estoppel (issue preclusion) precluded the debtor from challenging the findings from the state court judgment, and not surprisingly, the Seventh Circuit affirmed the bankruptcy court’s ruling that the judgment resulting from the physical injuries caused by the debtor were nondischargeable.

The opinion is not all that notable for its outcome, but it is authored by Justice Richard Posner, who has long been considered an influential jurist.  Posner examined two things of interest in the opinion:

Punitive Damages:  First, the debtor challenged the applicability of a nondischargeablity finding to the punitive damage portion of the state court judgment.  Posner made quick work of this, noting that “punitive damages are a debt owed by a tort-feasor to his victim, and in this case they are a debt consequent upon a willful and malicious injury.”  Id., citing Fischer v. Scarborough, 171 F.3d 638, 644-45 (8th Cir. 1999). 

Similarly, the court found awards for loss of consortium also nondischargeable, noting that although derivative in nature, they derived from the intentionally caused injury.

Willful and Malicious Injury in other Circuits: Second, Judge Posner compared the various definitions that had been given by other Courts of Appeals to the phrase “willful and malicious injury.”  For example, most familiar to readers in the Fifth Circuit is the concept that “willful and malicious injury” equates to “either an objective substantial certainty of harm or a subjective motive to cause harm.”  Miller v. J.D. Abrams, Inc., 156 F.3d 598, 606 (5th Cir. 1998).

The court noted that other circuits had developed definitions that differ to a certain degree, but after exploring examples from other circuits, Judge Posner concluded as follows:

But whatever the semantic confusion, we imagine that all courts would agree that a willful and malicious injury, precluding discharge in bankruptcy of the debt created by the injury, is one that the injurer inflicted knowing he had no legal justification and either desiring to inflict the injury or knowing it was highly likely to result from his act.

Noting that many courts repeat the mantra that the purpose of bankruptcy is to provide relief for “honest debtors,” Posner observed that the purpose of bankruptcy is actually twofold – that is, to grant the honest debtor a fresh start and “to minimize creditors’ losses from defaults.”    

The Court concluded that the entire state court damage award was nondischargeable.

[The district court’s opinion can be found at Larsen v. Jendusa-Nicolai, 442 B.R. 905, 2010 U.S. Dist. LEXIS 137662 (E.D. Wis., 2010).]

*Roger Cox, a shareholder with the Underwood Law Firm, is Board Certified in Business Bankruptcy Law (and formerly Board Certified in Commercial/Real Estate Law) by the Texas Board of Legal Specialization and a member of the American Bankruptcy Institute.  Mr. Cox is a co-author of Bankruptcy Road Map, published by the State Bar of Texas, and he most recently served on the faculty of the SBOT’s 2011 Advanced Business Bankruptcy Course. 

This column is published for informational purposes only. It should not be construed as legal advice and is not intended to create an attorney client relationship. The views expressed are those of the author and do not necessarily reflect the views of the author’s law firm or its individual partners.

Genetic Information Nondiscrimination Act (GINA) in Pre-Employment Screenings

  1. Generally

Passed in 2008, GINA was passed by Congress to prohibit the use of genetic information in health insurance and employment. It is codified at 42 U.S.C.A. § 2000ff. The statute provides that it shall be an unlawful employment practice for an employer to fail or refuse to hire, or to discharge, any employee, or otherwise to discriminate against any employee with respect to the compensation, terms, conditions, or privileges of employment of the employee, because of genetic information with respect to the employee; or to limit, segregate, or classify the employees of the employer in any way that would deprive or tend to deprive any employee of employment opportunities or otherwise adversely affect the status of the employee as an employee, because of genetic information with respect to the employee. 42 U.S.C.A. § 2000ff-1(a). GINA also limits the employer’s ability to request, require, or purchase genetic information of employees or family members of employees. 42 U.S.C.A. § 2000ff-1(b).

  1. “Genetic Information”

The definition of “genetic information” in the statute does not just encompass genetic testing of individuals. “Genetic information” also includes “the manifestation of a disease or disorder in family members of such individual.” 42 U.S.C.A. § 2000ff(4)(a)(iii).

It is this final definition that can most often cause a problem for employers during the pre-employment screening process. It is easily possible for an employer to obtain information related to the medical history of an individual’s family inadvertently. A mere slip of the tongue by the individual during the interview process could divulge the information. A simple Google or Facebook search by the employer could turn up information about the medical history of an individual’s family member.

If an employer receives information that an individual’s family member(s) have suffered from a disease or disorder, the employer may not consider such information in making decisions regarding hiring, compensation, conditions of employment, employment terms, or privileges of employment. Although employers typically will not use this information, the mere fact that the employer received the information (even if unintentional) could give the applicant a sufficient ground to bring a discrimination claim under GINA. Although the employer could likely defend against such a claim, the employer will face the burden of attorneys’ fees and the negative publicity that surrounds any discrimination case.

This column is published for informational purposes only. It should not be construed as legal advice and is not intended to create an attorney client relationship. The views expressed are those of the author and do not necessarily reflect the views of this law firm or its individual partners.


No More Need For A Notary?

Posted 04/26/2012 by John Atkins

A little-known move was made by the Texas legislature effective September 1, 2011, that may have done away with the need for a Notary Public in most circumstances.  Other than for taking an oath of office or another oath required to be taken before a specified official other than a Notary Public, an “unsworn declaration” can be used instead of a notary.  The form of the unsworn declaration is:


My name is _______________, my date of birth is __________, and my address is ____________________________ (including county and zip code).  I declare under penalty of perjury that the foregoing is true and correct.

Executed in __________ County, State of Texas, on the ______ day of ___________



An alternate form is required if the person signing the document is an inmate.  See Section 132.001 of the Texas Civil Practice and Remedies Code for details of the new law.

As with any new law, it is yet to be seen exactly how this will work in practice.  If a notary is available, the best practice is to continue using a notary.  Among other reasons, it eliminates (or at least drastically limits) any question about who actually signed the document because the notary either had to have known the declarant personally or must have reviewed a valid photo ID.  But, if a notary is truly unavailable, this unsworn declaration may now take a notary’s place.

This column is published for informational purposes only. It should not be construed as legal advice and is not intended to create an attorney client relationship. The views expressed are those of the author and do not necessarily reflect the views of the author’s law firm or its individual partners.

European Wind Energy Association 2012 Conference in Copenhagen, Denmark

Alan Rhodes and I were fortunate to have the opportunity this past week (April16-20) to attend the EWEA (European Wind Energy Association) conference in Copenhagen.  We attended the conference in conjunction with Mike Running and Pat Sims representing the Dumas Economic Development Corporation and met with a number of companies from various countries, including Denmark, France, Greece, Korea, Spain, United Kingdom, Scotland, Ireland and Turkey.  While many of the major wind energy companies attend both EWEA and AWEA (American Wind Energy Association) there were many company names at EWEA that we had not seen before.  Some of the companies with which we visited have not yet explored the potential of operations in the United States.  As would be  expected, a number of these companies are concerned about the rate of wind development in the US pending a possible extension of the PTC.  On the other hand and if the PTC is extended, several companies indicated that they believe the US could be a natural extension of their market and continue to explore the possibility of business in the US.  We met with a fairly diverse group representing a number of disciplines, including wind developers, engineers, steel manufacturers, cooling equipment manufacturers, operations and maintenance, safety equipment and training, and technical and workforce training.

Underwood’s efforts in the wind energy industry and our contacts continue to confirm the world-wide interest in the continuing development of the wind resources in the US and, particularly, the “wind corridor” running from the Texas Panhandle and South Plains to Canada.

Importantly, the trip so offered Alan and I the opportunity to meet with our Danish friends, which is always a pleasure.  As an added bonus, we made some new friends that were representing the State of Oklahoma at EWEA.

While EWEA is somewhat smaller than American version (AWEA) scheduled for early June, 2012 in Atlanta, however, we look forward to continuing our conversations with a number of the people and companies that were at EWEA and will be attending AWEA in a few weeks.


Gavin Gadberry to Present at THCA – Managing the Madness Program

Gavin Gadberry to Present at THCA’s “2012 – Managing the Madness” – An updated & Refreshed Continuing Education Program for Licensed Nursing Facility Administrators – Gavin Gadberry, a shareholder with the Underwood Law Firm, will be presenting “Regulatory Updates”.  The seminar will be held in Austin, Texas on April May 8-9, 2012.  Visit www.txhca.org for more information.

Gavin Gadberry to Present at Upcoming THCA Nurses Spring Conference

Gavin Gadberry, a shareholder with the Underwood Law Firm, will be presenting at the Texas Health Care Association Nurses Conference.  The seminar will be held in San Antonio on April 25 and 26, 2012.  Mr. Gadberry will present on “Regulatory Updates.”

For more information on the conference, click here.

Bryan Guymon Attends the Stewart Case Workshop Presented by the Texas Municipal League

On April 6, 2012, Underwood attorney, Bryan Guymon, attended the Stewart Case Workshop in Austin, Texas, presented by the Texas Municipal League.  At this workshop, presenters detailed the basics of substandard structure abatement authority, including procedures after the Texas Supreme Court’s decision in City of Dallas v. Stewart.  A panel of attorneys and building officials from the City of Abilene, City of Dallas, and Town of Prosper discussed the implications of this case and gave a practical perspective as to how it affects municipalities.

For more information about the workshop, click here.

Alan Rhodes to present at 2012 High Ground of Texas Spring Meeting

Underwood Law Firm Shareholder Alan Rhodes will provide an agriculture update at the 2012 High Ground of Texas Spring Meeting on Friday, April 13.  Ken Becker the Executive Director for the Sweetwater Enterprise for Economic Development and AJ Swope the Executive Director of Class 4 Winds & Renewables are discussing current activity in the wind industry.

For more information on the meeting click here.  For a meeting schedule, click here.

Fair Labor Standards Act Retaliation

A lab technician for Bostwick Labs was among a group of employees who met with the Chief Operating Officer to complain about a supervisor removing overtime from their timesheets.  Less than a week later the lab technician was fired.  She then filed a retaliation claim under the Fair Labor Standards Act (FLSA).  The trial court dismissed her lawsuit on the basis that her verbal complaint was not sufficient to give her standing to bring a retaliation claim under the FLSA.  The appellate court reversed the trial court’s decision.  The Court cited the EEOC’s position that an oral complaint is sufficient and a number of court decisions.

This decision illustrates the importance of keeping track of FLSA complaints by employees whether they are written or verbal.  Firing an employee shortly after the employee makes a FLSA complaint puts the employer at high risk for a retaliation claim.  Fear of a retaliation claim should not translate to job security for a marginal employee, but prudence might dictate letting some time pass after the complaint before firing the employee.  Minor v. Bostwick Labs., Inc., 669 F.3d 428 (4th Cir. Va. 2012)

Contact Mike H. Loftin at (806) 376-5613 for additional information or assistance.

This column is published for informational purposes only. It should not be construed as legal advice and is not intended to create an attorney client relationship. The views expressed are those of the author and do not necessarily reflect the views of the author’s law firm or its individual partners.

2012 – Third Annual Employment Law Seminar

The Underwood Law Firm is proud to announce the upcoming third annual employment law seminar, “Weathering the Storm.”

The seminar will be held on April 26th in Lubbock and on May 15th in Amarillo.  For more information and to register online, click here.