Understand the complexities and nuances of the Bankruptcy Code to better advise clients and prepare for court.
By Daniel Gill
Civil damages awarded against a man who pleaded guilty to criminal charges for secretly recording his tenant and roommate for his own sexual gratification were determined not to be dischargeable in his Chapter 7 bankruptcy case ( Wilson v. Phillips (In re Phillips) , 2017 BL 5595, Bankr. E.D. Tex., No. 15-60641, 1/9/17 ).
Judge Bill Parker of the U.S. Bankruptcy Court for the Eastern District of Texas ruled Jan. 9 that debtor Lance A. Phillips, who had previously rented a room and bath in his apartment to Andrea Wilson, would not see her judgment for nearly $700,000 wiped out in his bankruptcy case. The injuries he caused by setting up cameras throughout the apartment and surreptitiously recording Wilson were willful and malicious and therefore nondischargeable under Section 523(a)(6) of the Bankruptcy Code, he found. He granted summary judgment in favor of Wilson.
Wilson and a third roommate discovered in Feb. 2010 electronic recording devices in the apartment they shared with and rented from Phillips, including in her bedroom and bathroom. They contacted the police, who arrested Phillips on a number of related charges, the court said.
Phillips pleaded guilty for improper visual recording, stipulating his intent to invade the woman’s privacy. “He further stipulated that he engaged in the videotaping of the Plaintiff without her consent with an intent to arouse or gratify his sexual desire,” the court wrote.
The woman then filed a civil complaint against him and won a default judgment for nearly $700,000, including for current and future “physical pain and mental anguish.”
About six weeks after the default judgment was entered against him, Phillips filed a Chapter 7 case on Oct. 2, 2016. In Chapter 7 bankruptcy, a debtor’s nonexempt assets are liquidated by a trustee, and the proceeds are distributed to creditors. Subject to certain exceptions, the debtor is awarded a discharge, effectively wiping out dischargeable debts (that is, those debts not subject to an exception).
Wilson filed a complaint to have her debt declared non-dischargeable and, relying on the earlier proceedings in the Texas state court and the doctrine of issue preclusion, filed a motion for summary judgment in the case (called an “adversary proceeding").
The court granted the motion. It held that the debtor’s knowing, voluntary plea in the criminal case constituted the claim being “actually litigated” against him. As for the damages, the court found that the evidence provided in support of the default judgment was satisfactory to establish the amount of damages.
"[T]he Court concludes that the collective issues raised and decided in the Criminal Case and the Civil Action have been fully and fairly litigated for the purposes of collateral estoppel and that the Defendant is accordingly collaterally estopped from relitigating those factual determinations,” the court said.
Andrea Wilson was represented by Michael L. Skinner, Thorne & Skinner, Grand Prairie, Texas. Lance A. Phillips represented himself.
To contact the reporter on this story: Daniel Gill in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Jay Horowitz at JHorowitz@bna.com
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
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