Summary:
The Goldens loaned their then friends, the Malones, $14,700.00. The Goldens then filed bankruptcy, failing to disclose the existence of this loan as, either as an asset or otherwise. While his own bankruptcy was still pending, Mr. Golden commence collection attempts on this loan, with the parties relationship souring dramatically, with allegations of "scandalous behavior" being traded between Mr. Golden and Mr. Malone, including alcohol and drug use, trips to "adult entertainment establishments", etc.. Eventually the Malones also filed bankruptcy and received a discharge. Mr. Golden continued to attempt to contact Mr. Malone, even after receiving warning letters from the Malone's bankruptcy attorney, indicating that he planned to contact Mrs. Malone. The Malones finally re-opened their bankruptcy and brought an adversary proceeding against Mr. Golden for violations of their discharge.
Mr. Golden argued that, since his communications with Mr. Malone never explicitly asked for repayment of a debt, he had not violated 11 U.S.C. § 524(a)(2). The bankruptcy court held that while "the interplay of a friendly relationship and a discharged debt [ca] make determining whether post-discharge communications violate the discharge injunction a difficult call in certain circumstances", such was not the case here. Any "friendly relationship" between the parties had ended well before the recent communications. The use of vague threats by Mr. Golden, even though phrased carefully, provided circumstantial evidence of the intent behind his communications and "the absence of any other reason for a creditor's act other than coercion is circumstantial evidence of the creditor's motives." In re Paul, 534 F.3d 1303, 1309 (10th Cir. 2008); In re Pratt, 462 F.3d 14, 20 (1st Cir. 2006).
The Court then applied the test for the willful violation of discharge from In re Hardy, 97 F.3d 1384, 1389 (11th Cir. 1996) and In re Lumb, 401 B.R. 1, 8 (B.A.P. 1st Cir. 2009):
(1) Whether the creditor knew of the discharge injunction;
(2) Whether the creditor intended the actions that violated the injunction; and
(3) Acts in a way that improperly coerces or harasses the debtor.
Willfulness does not, however, require specific intent to violate the discharge, only that the acts committed be intentional and with knowledge of the discharge. See In re Strumpf, 37 F.3d 155, 159 (4th Cir. 1994) (willfulness in regards to violation of the stay.)
Accordingly, the Court awarded the Malones $1,000.00 in actual damages, $1,000.00 in punitive damages, their attorney's fees and a further injunction (really, as the Court noted, an unnecessary "injunction to enforce an injunction".)
Commentary:
Daniel Golden Chapter 7 was filed in 2009 and as mentioned failed to disclose the loan to the Malones as an asset. It will be interesting to see if the Chapter 7 Trustee in that case (or the Bankruptcy Administrator) seeks a revocation of his discharge for such non-disclosure.
For a copy of the opinion, please see:
Malone v. Golden- Willful Discharge Violation Between Past Friends.PDF
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