The Debtor had, after purchasing a 3rd parties interest in an Illinois home, been given title to the home by his then fiance, Ms. Ward, subject to an agreement that he would reconvey the real property to her in the event he pre-deceased her or their relationship ended. So, of course, their relationship ended and he declined to reconvey the property to her. Ms. Ward then commenced a lawsuit in Illinois against the Debtor seeking reconveyance of the property and damages for breach of contract. The Debtor filed Chapter 7, during which Ms. Ward unsuccessfully sought denial of the Debtor’s discharge. Following discharge, Ms. Ward attempted to recommence (again unsuccessfully) the Illinois lawsuit and the Debtor brought this action for violation of his discharge.
The Bankruptcy Court held that a violation of the discharge injunction is addressed under a court’s civil contempt powers and that the following must be shown:
(1) the existence of a valid decree of which the alleged contemnor had actual or constructive knowledge;
(2) that the decree was in the movant’s “favor”;
(3) that the alleged contemnor by its conduct violated the terms of the decree, and had knowledge (at least constructive knowledge) of such violations;
(4) that the movant suffered harm as a result; and
(5) that the violation of the discharge injunction was willful.
The first four criteria must be shown by clear and convincing evidence, the last by the lower preponderance of the evidence.
The only criteria at issue in the present case were whether Ms. Ward’s actions violated the discharge and whether the attempted reinstatement was willful. The bankruptcy court held that since the Illinois lawsuit sought both specific enforcement and monetary damages, she violated the discharge. Particularly as Ms. Ward brought the motion to reinstate pro se, her actions were found to be willful.
The fifth criteria used by the bankruptcy court for finding a discharge violation, is not one of the criteria that the 4th Circuit has explicitly required for civil contempt, but was instead imported from the 11th Circuit case, In re Hardy, 97 F.3d 1384 (11th Cir. 1996), as a criteria that “has found increasing acceptance by other courts, including courts in this circuit.” Almond v. Ford Motor Co. (In re Almond), 2007 WL 1345224, at*5 (Bankr. M.D.N.C. 2007)).
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